Written by Crystal Lee
While so often we talk about the need to be decisive, sometimes being decisive, means deciding to NOT make a decision.
Wait, what?
This is a pivotal concept within the larger framework of Integrated Business Planning (IBP).
CFOs across the world can likely recall moments in their careers where an incident arising out of nowhere was ‘handled’ by the business only to later see ‘unexpected’ negative financial impacts of that decision, even well into the next year. In scenarios where current challenges seem urgent and overwhelming, it is not uncommon for businesses not utilizing IBP to harm their future earning potential by making short sighted decisions. Without proper understanding of the next fiscal year, when faced with pressure to react and ‘decide’, teams can make rash tradeoff choices that will ultimately compromise future projections entirely.
So, what is a team to do?
Sometimes, believe it or not, the answer is to wait. Continue analyzing the performance of the standing plan as a way to validate the assumptions behind the future plan, and wait for assumptions to materialize or change.
However, this option only exists if the issue was seen far enough in advance that you can afford to wait.
When an issue arises, it doesn’t have to derail the future expectations of a business. When IBP is robustly leveraged, teams have afforded themselves the benefit of time – they see issues sooner, giving them more time to understand the issue, the options, and the impact of those options. The team has the necessary time to analyze the right course of action before making the kind of decision that could hamstring future projections for the year ahead.
Nothing is more valuable in periods of uncertainty than more time; with time, things become clear. Creating time for a business is creating an opportunity to continue to collect data before decisions are made that will undoubtedly impact future performance.
From the vantage point of a CFO, cash is king, IBP buys time, and time equals money. The more time available to consider the right decision, the more likely the business is to make the right decision.
Read our white paper and watch our webinar on this topic.