Challenges of classic planning

Traditionally, planning is an exercise undertaken at specific moments in time (often annually or bi-annually) and that involves a top-down holistic effort to capture and lay down a map of where the company/product/project will go in the next 6 months or 1 year.

However, as the pace of change of the global economy increases, and new methodologies such as Agile and Lean that emphasise short planning cycles are adopted, this way of planning has become increasingly challenging to perform, with diminishing returns.

Specifically:

• Companies are finding it more and more difficult to fix a plan one year in advance, because of the increase in the volatility and the pace of changes to their business environment.
• When the plans have been made, they tend to become obsolete within a few months of being made: the natural variability of projects and programs, and the perpetual changes in the business environment cause reality to quickly diverge from the plan, and as a result, the plan to become useless.
• Because they are only used a couple of times a year, processes to develop a plan for the year ahead are seldom optimized. As a result, the cost and energy required to build the plan is significantly higher than it could be.
• Projects, programs and products are seldom synchronised on the calendar or financial year. This means that the portfolios they belong to do not neatly fit in the organization’s planning calendar.

In view of this, it might seem simpler just to do away with plans altogether. However, companies do need an up-to-date view of their development and operations and the ability to project themselves into the future:

• to make decisions (and quickly exploit opportunities),
• to communicate with stakeholders, and
• to plan their capabilities (and ensure they have the right competencies when they become needed).

Characteristics of continuous planning

To answer these challenges, continuous planning proposes to replace the classic predefined and regular planning occasions with a continuous implementation of the planning in rapid parallel cycles. Planning is no longer triggered by a given date in the calendar, but by internal and external events as they occur.

As a result:

• The plan stays more up-to-date: since the plan is updated every time a change occurs in the internal or external environment, the latest version of the plan automatically includes all changes up to that point.
• The plan is more accurate: because the plan can be updated at any time to incorporate new information, organizations do not need to project themselves into the future quite so strongly, and can afford to have a more simple, less detailed plan. Instead, the plan will be quickly updated as projects evolve and more specific and detailed data become available. This means less “guesstimates” and more accurate data.
• Top management (including financial and business people) get involved in the planning process more regularly and frequently. This in turn allows planning to become a tool that leaders can use to think about changes and the impact these will have on the business.
• Because re-planning occurs much more frequently, there is an additional motivation to improve and streamline the process (and make it more easily repeatable)

However, switching to continuous planning requires a massive change in mindset, at all levels of the organization. Specifically, all the people involved in one way or another in the planning process (which is most of any organization) need to shift the way they look at planning:

• From a static, time-bound and ritual exercise to a dynamic, open-ended process that reacts to changes in the internal and external environment.
  This means that the way they work with the planning will change: instead of something constant that provides a fixed goalpost, the plan becomes something that can change from day to day, and those changes must be taken into account in the daily execution of the plan.
• From something whose value is in the end document (the plan) to something whose value is in the process, specifically in the way the activity of planning helps understand problems and risks.
• From something they get involved in maybe twice a year, to something they must engage with perhaps on a daily basis.

That being said, continuous planning is seldom (if ever) applied at all levels of the organization. Instead, companies will choose to apply it only to some levels (and most often at the team / operational level).

Considerations for implementing continuous planning

Prerequisites

1. Choosing the level at which to implement continuous planning:
   Continuous planning is seldom applied at all levels of the organization. Companies wishing to implement it should therefore look at their planning practices, and identify at which levels implementing continuous planning would generated the greatest benefits.
2. Ensuring that stakeholders at all levels of the organization make the leap to a mindset of continuous planning:
   Regardless of the level at which continuous planning is implemented, it is important that all levels be aware of the principles of incremental development, and that they understand what continuous planning can and cannot do. There is no point in implementing continuous planning for instance at the product level if the business level is still going to insist on having a 1 year plan (and vice versa).
   Similarly, it is important to make sure that those who are involved in the planning process are engaged and comfortable with being involved more intensely with the planning process
3. Understanding of key business drivers:
   Not all the changes to the internal or external environment will have the same impact on the organization’s plan. Since planning become a much more frequent activity, it is important that the organization understand what its key business drivers are, and how to build (and easily retrieve) information about these drivers to make the process more fluid

Tools

To support the implementation of continuous planning, organizations will need a system that is simple to use, in particular for

• retrieving real-time data
• updating the master data
• moving information from one place to another
• comparing between different versions of the plan

Two techniques are particularly used in conjunction with continuous planning:

• Roadmapping
• Rolling forecasts