Gaining a Supply Chain Edge

What To Do With 2009? "Forget About It" Is Tempting, But Not Right

One's first reaction to the question, "What to do with 2009?" may understandably be, "Forget about it." Say goodbye, gone and good riddance! Certainly I agree, but wait a minute. I do not think we can legitimately do this without further review, because, whether we like it or not, the 2009 data is a portion of our history, and we are forced to deal with it.

Dealing with it by just forgetting about it does not result in our closing out 2009, but rather it prolongs the agony we all felt in 2009.

Before I continue with this thought, let me pick up on a parallel track that helps me make this point even stronger.

Remember the survey showing that 75% of all men thought they were in the top 10% of all male athletes? Now, some of the women reading this will say yes, and the other 25% of the men will think they are in the top half. But, most men know this is because men interpret the question as being asked about men of their own age in the sport in which they perform best - not all male athletes in all sports.

Of course, some women may be rolling their eyes, and with good reason. Now let me go on to a related, but unfortunately, never-conducted survey that I also believe would ring true. I believe 75% of all the CEOs in the world (male and female CEOs) believe their organizations will be in the top 10% in growth in the coming years.

What do these two thoughts about 2009 data and 75% of CEOs seeing their organizations in the top 10% have to do with each other?

They both have to do with the base of data that we use going forward to conduct planning, budgeting, forecasting and target setting. Let me be even clearer by asking these 8 big questions:

1) Do you want to include 2009 (and possibly 2008 as well) data in your planning exercises going forward?

2) Do you want to include 2009 (2008) data when doing forecasting going forward?

3) How do you want to handle 2009 (2008) actuals when developing budgets going forward?

4) How do you want to handle 2009 (2008) performance when developing future targets for KPIs?

5) When planning the future, how do you want to handle the CEO's view of growth?

6) When forecasting future business levels, how do you want to handle the CEO's view of growth?

7) When establishing budgets, how do you want to handle the CEO's view of growth?

8) When establishing KPIs for the future, how do you want to handle the CEO's view of growth?

The answer to all these questions is the same, and it is not "Forget about it."

The best possible answer to all of the above inquiries is: "with realism and thoughtfulness." Let me explain.

If, for example, your business performed in 2008 and 2009 in accordance with a long-term trends and your CEO has a good history of presenting achievable goals and your industry is not undergoing significant change, well then, stop reading this blog post, and go back to the bliss within which you live.

Now for the other 999 of us out of 1000, this blog post is for you and has in mind your goals of organizational excellence. You must proactively address "What to do with 2009?"

I strongly believe that in answering these 8 big questions, you must:

1) Adjust historical data to what would have been without the economic turmoil of the last 17 months prior to doing future planning.

2) Adjust historical data to what would have been without the economic turmoil of the last 17 months when doing forecasting going forward.

3) Adjust actual financial results to what would have been without the economic turmoil of the last 17 months when developing budgets going forward.

4) Adjust KPIs to what would have been without the economic turmoil of the last 17 months when developing future KPI targets.

5) Reflect upon the CEO's optimism when planning the future and filter this optimism with considerable sensitivity analysis so that you do the best job of planning for reality.

6) Reflect upon the CEO's optimism when forecasting the future and filter this optimism with considerable sensitivity analysis so that you do the best job of forecasting reality.

7) Reflect upon the CEO's optimism when establishing budgets and filter this optimism with considerable sensitivity analysis so that you do the best job of budgeting for reality.

8) Reflect upon the CEO's optimism when establishing KPIs for the future, and filter this optimism with considerable sensitivity analysis so that you do the best job of establishing realistic KPIs.

I am sure that you are noticing a pattern here.

So, "Forget About It" does not work to put 2009 behind you. In fact, if you do not proactively address the impacts of the Great Recession and make the appropriate adjustments, the evil of the economic meltdown of the last 17 months will continue to play havoc with your ability to perform.

Only after these adjustments are all made do I then believe the best thing you can do with 2009 is to just "Forget about it."

Other Resources

Great Comeback Executive Briefing

Organizational Excellence

Bold Leadership Book


Jim
Tompkins Associates

TAGS: Supply Chain
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