Every function, if you think about it, helps or hinders the corporation in dealing with the scrutiny of all the major stakeholders – lenders and investors, customers, regulatory bodies, statutory bodies, tax authorities, vendors, employees, and the community (in case of manufacturing plants, one can separate the community into two parts, treating media at large as a separate stakeholder). It needs to work out its action plans in the light of corporate policies and objectives in such a way as to help the organisation manage and respond to the various expectations.
Looking far enough into the future
All of this entails that the function have an adequate planning process (which typically happens to be annual), scanning relevant information, to create sufficiently detailed plans (including capital and revenue expenditure budgets) looking forward through the upcoming year (that is, the performance period) in considerable detail, and (typically) two further years in reasonable approximations. The vision of the organisational leaders, by the way, could be several further years longer. So long as they keep validating their ideas, they might make it to their vision. Else, they might be stuck indefinitely with underperforming business models (look around – there are several examples all around).
At the level of functional leaders, they too might have long term hopes and aspirations for their respective functions – typically, acquisition of more advanced technologies and methods. Here, the need to keep validating their ideas are two-fold: vis-a-vis the direction of evolution of the respective technologies and methods in the world at large, and vis-a-vis the strategic direction of the business.
Various related aspects also come into play in all of this. Converting decisions to outsource and insource certain services into negotiation and renewal / signing of vendor contracts; making changes to spares inventories based on risk re-assessments; addressing auditor comments, etc.
It should then have an adequate process of tracking progress vis-a-vis the stated annual plan through the year, reporting out on variances and taking decisions accordingly (on its own as well as by taking feedback from relevant corporate stakeholders), on changes to be made to the plans as well as the actions. This is the tough one: It is hard to come across plainly stated reviews in corporate setups – often, neither do people state plainly how their own performance turned out, nor how others’ performance turned out. While every book on Japanese Management mentions the value of ‘Root Cause Analysis’ (RCA) or ‘Why-Why Analysis’, it is actually hard to come across an efficient RCA inside organisations. It is even harder to come across leaders stating their forebodings. And forebodings are powerful sources of insights into what might unfold. Minus such plain statements, working through complicated conversations to derive impactful actions is a challenge. Unfortunately, this challenge is ubiquitous.
It is the quality of this monitoring process that determines the responsiveness of the function to significant changes. In recent years, the need for organisations to get back to the drawing board to recast goals and plans in the middle of the year, due to rapid and significant changes in the environment of business, has increased significantly. Hence the importance of monitoring.
(A finer point: this is not about responsiveness to customer needs. This is way too slow for that! Making Sales and Service teams responsive to customer needs cannot be about having teams that take ‘Initiative’ and display ‘Courage’, ‘Passion’, etc., as it is often portrayed in leadership competency models. It has to be part of standard process (naturally, since we are talking about entire teams displaying such qualities, consistently). Ask people in the service industry to learn how it is done…)
Functions should have an adequate planning process, typically annual, scanning relevant information, to create sufficiently detailed plans (including capital and revenue expenditure budgets).
When interviewing employees of a function, it is usually quite easy to make out how strong that function’s planning and monitoring process is, and how centralised are these processes. Again, no prescriptions. All sorts of approaches work in their respective contexts. As Mintzberg puts it, even strategy could be “emergent”. However, at the time of strategic planning processes, the expected roles of various functions might undergo shifts. Those shifts must then reflect in how the function manages itself. The only prescription possible is implementation rigour, which entails planning, budgeting and reviewing.
Related Readings :
MARTIN R. The Big Lie Of Strategic Planning, HBR ( Jan- Feb 2014 )
