5. Balance the desire for detail with predictive ability. Too often, all future periods and line items are planned, budgeted, or forecast at the same level of detail. This is both misleading and dangerous. Predictive ability varies by line item — for example, sales typically are less predictable than administrative expenses — and by time period (the further out you look, the less predictable things become).

6. Develop compensation systems that balance rewards for near- and long-term performance and include measures of competitive success rather than relying on static plan- or budget-based targets. This means de-coupling incentives from plans or budgets and developing systems that reward a combination of real growth with superior competitive or market performance.

7. Build a system of performance reporting, key performance measurement, tolerances, and early alerts that provides management with near-real-time monitoring of key business trends (market demand, orders, pricing, costs, cycle times, etc.) so that positive and negative trends are identified very early in their development, giving management time to react and respond. This should be a core BPM capability from the product, line-of-business, geography, and customer-segment standpoints.

8. Reposition the budget as a tool for determining the optimal allocation of resources under a range of possible future scenarios, so that as performance reporting tracks changing conditions there’s a game plan in place that can be put into action. As performance reporting solidifies the view of what is actually happening, the budgets can be updated to reflect a changing set of future scenarios based on the current reality.

9. Think of your forecast or outlook process as the glue that ties reporting and budgeting together; as real time events change, the forecast is updated to reflect the current view of the future, providing management with the framework for identifying the tactical (or, in the worst case, strategic) changes that need to be made and built into subsequent plans and budgets.

10. Finally, and most importantly, embrace uncertainty. Recognize that fast, confident decision-making is much easier when you have confidence that incorrect decisions will be rapidly identified and decisive action taken.

None of these practices could be described as rocket science, but the experience of the last few years has shown that, for many organizations, progress has been too slow. At this point, adoption of these techniques is not optional — it’s a prerequisite for survival.

For those embarking on the journey, there’s some good news. First, well-defined best practices exist for all of the mandates I’ve listed here. Second, today’s technology can already provide much of the functionality that’s required; we just need to decide to use it. Technology is no longer the impediment — we are! Organizations that are the most successful in adapting to the new environment will reap rich rewards; the mediocre will wither and die. Make your choice now.