Driver-based planning can be a game-changer for your organization—but only if everyone is in on the game.
So, yes, it’s smart to be thinking about how you can encourage buy-in for driver-based planning to assure that you reap the maximum benefit of the approach. There are some specific steps you can take to improve your ability to get both executives and business partners on board.
Driver-based planning focuses on identifying your key business drivers and then building plans around them so you can develop more robust and targeted business strategies, as well as craft budgets aligned with those drivers.
From there, you can then dial those drivers slightly up or down to produce different business outcomes, which provides your executive team with more data points and options.
So how do you increase buy-in for the approach? Here are five ways:
To achieve success with driver-based planning, senior leaders must support the process so that downstream business line leaders and other key managers understand its importance. It’s essential to encourage executives to consistently reinforce the message that the process is fundamental to business success. The bottom line: If the executive team doesn’t think capabilities such as sales forecasting are important, departmental managers won’t either.
When you’re implementing driver-based planning, make sure you spend sufficient time and effort identifying and analyzing your major drivers. You should also incorporate risk mitigation into your forecasts and consider common risk factors, such as shifts in cost or access to capital, compliance, and price volatility. Making sure you’ve nailed the right drivers is crucial to success. It’s much easier to consistently get buy-in when business partners agree on the drivers and start to see real results from the approach.
The last thing you want to do with a driver-based approach is to create more silos. So instead of creating stand-alone driver-based plans by individual departments, consider financial modeling focused on cross-departmental factors that tie to the overall corporate objective. This will give leaders and employees across the company a better understanding of how other departments define success, ultimately improving collaboration and decision-making. For example, the efficiency of the marketing department and the product improvements from the R&D department have direct effects on how effective your company’s sales reps are in today’s fiercely competitive marketplace.
Transparency is crucial in achieving the maximum benefit from driver-based planning, as well as building trust among those involved in the process. Make sure business partners are drawing data from a single source of truth, and that year-to-date numbers and projections are as accurate as possible. Transparency makes it easier to create more valuable scenario plans, such as increasing the headcount plan and then seeing the ensuing changes flow through the budget in terms of capital spend for items such as laptops, benefits expenses etc.—as well as anticipated potential revenue.
Everyone likes a success story. And if you are using driver-based planning effectively, it should be leading to better results and greater visibility into the business. To assure that business partners stay on board, make it a habit of sharing success stories and tracking how driver-based planning has made a positive impact on the business. If you can drill down even further and show specific benefits to individual departments, then all the better.
Indeed, driver-based planning can be a game-changer. Yet, it’s not a solo venture. You need the entire team at your organization to be on board to reap the rewards.