Grow vs. Scale
My company develops business forecasting and planning software. Our clients develop inaccurate sales forecasts. It’s a match. They come to us when they see that inaccurate forecasts not only skew sales plans, but spread harm across the organization in the form of flawed and costly supply-chain and financial policies. The costs are multiple: too much safety stock, too many rushed supply orders, too much in financial reserves, too many stockouts, too much lost revenue and goodwill. These are all common problems with a very consistent theme: a REACTIONary operating environment.
The answer is pretty simple. Gain foresight and preparedness with analytics-based forecasting and planning for:
- accurate sales forecasts,
- what-if scenario planning,
- and data-driven, shared risk management.
Anything short of the analytics approach to business forecasting and planning will mar the accuracy and effectiveness of all that follows, from supply planning, to financial and human resource allocation, to basic operating efficiency. Add it up and you’re hemorrhaging profit.
To be at the top of your game, you’ve got to be ahead of it. That’s a true market leader. (Grow vs. Scale)
As I’ve said, inaccurate forecasts dull planning and risk-management efforts and hold organizations back from their potential to grow, or better yet, to scale. Grow vs. scale? This is a key distinction.
I meet often with reps and execs at midsize organizations who complain that while their businesses are growing in operations and revenue, they’re not making gains in profitability. A recent article in Harvard Business Review sums this up neatly. Author Rob Carucci explains: “Growth means adding revenue at the same pace you are adding resources; scaling means adding revenue at a much greater rate than cost.”
My takeaway is this: to successfully scale, midsize organizations must embrace and invest in operating cultures and technologies that portray the future with relative accuracy. From there, leadership can assess a calculated and realistic market potential, and apply advanced-analytic methods to test ideas and devise ways ahead of time to scale to that potential.
Time and again I’ve witnessed: the results of REACTionary scrambling are no match for informed analysis, carried out ahead of time, and in the calm of reflection.
Time for Integrated Business Planning (IBP)
Integrated Business Planning (IBP) and forecasting is the backbone of enterprise decision making. It’s primarily a process for top leadership to coalesce around the demand forecast, and then devise integrated plans that favor the organization as a whole over individual team metrics. So while it is indeed a management process, it is also a technology platform with tools of enablement, such as advanced-analytic forecasting, automation, and collaborative-workflow design. But it really all starts with the forecast.
The details in the forecast data form your baseline prediction, and are therefore the basis of all strategic enterprise decisions. These decisions range from capital investments, to hiring, to new product launches. Serious stuff. And they all start with baseline statistical forecasts, followed by the knowledge and insight of executives gathered around those forecasts.
No Time for Spreadsheet Status Quo (Grow vs. Scale)
It boils down to this: if you help run a midsize company that is trying to scale, why base your strategic moves on inferior technology? This is pennywise and pound foolish. Inferior technologies do not deliver a unified platform for enterprise collaboration. As a result, your organization remains hemmed in by inferior and outdated business processes.
Instead, bring accurate forecasts to the table, don’t trust them blindly, and dress and devour the information as you would the homemade ham at Christmas dinner.
Before I leave you … (Grow vs. Scale)
Leave spreadsheets and add-on apps in the past. They’re error prone, anti-collaborative cost centers that won’t help you scale to ACTION.