Economics has long been called “the dismal science.” The reason is that economists tend to make predictions that prove wrong. So, here we are in August 2011, and the consensus view is that developed countries such as the U.S. will experience slow and uneven GDP growth over the next 12 months. I’d bet good money the economists are right this time. And that’s beyond dismal—it’s downright depressing.
 
Given this backdrop, I expect that the people running globe-spanning organizations will be working harder than ever to grab growth opportunities in chaotic emerging markets. They’ll also be pushing their managers in mature markets to mine more revenue and profit from high-value customers—those known to have hearty appetites and reliable cash flows.  What’s more, CEOs and CFOs will be demanding (if not screaming for) credible data from finance to prove to Wall Street they’ve got everything under control.

This is a cloud with a silver lining for financial planning and analysis (FP&A) professionals who have, until now, been arguing in vain for process improvement. Now they can underscore the wisdom of evolving the processes, tools, and techniques used to plan and manage performance. My latest white paper How Corporate Financial Analysts are  Dealing with Uneven Growth makes the case using performance metrics on forecasting speeds.

Which boats are floating and why?

You can bet that over the next 12 months, all boats will not rise with the tide. That means managers will need detailed and trustworthy views of which boats—products, channels, regions, etc.— are floating when and why.  They’ll need solid evidence so they can make on-the-spot decisions about where to stop, start, or continue spending money as actual performance trends emerge.
  
For their part, finance executives will reach for (or argue harder for) better tools and processes to speed decision-making. They’ll be particularly sensitive to cycle speed: faster FP&A cycles give business managers more lead time to understand and respond to emerging trends that were not previously identified in a scenario modeling exercise.

Listening Posts Have a Role

This may also be the year that finance executives embrace a paradigm shift which, although not new conceptually, now stands a very good chance of changing the way businesses control and deploy resources. The hallmark of this change involves fusing planning with much more relevant analysis. It means using analysis that is informed by “listening posts” scattered across large, complex theaters of operation.  By capturing timely insights from these front line managers and incorporating them into the planning and forecasting process, companies can leverage that precious commodity: lead time.

Increasingly, large companies are seeing that they cannot compete effectively without faster and more reliable forecasts of the underlying drivers of business growth and value creation.