President Dwight D. Eisenhower, the great World War II general and strategist, once famously said that “plans are nothing; planning is everything.”

Encapsulated in that remark is a great truth: Plans are worthless on their own. It’s the planning process — the ability to incorporate real-time adjustments based on external factors — that matters, not a static, written document that often becomes obsolete shortly after it’s approved.

Since the financial crisis and prolonged downturn that began in 2008, many companies have discovered this the hard way. Plans that were developed in the course of a schedule-driven annual exercise, based on historic performance and flawed economic assumptions, proved to be worse than useless. Companies not only failed to prepare themselves for changes in the market, but also misled their investors and created an atmosphere of skepticism and doubt.

At least companies acknowledge that there’s a problem. According to Accenture research, internal dissatisfaction with traditional planning processes is on the rise. Only 11 percent of surveyed companies described themselves as “fully satisfied” with their planning capabilities, compared with 17 percent two years ago and 20 percent 10 years ago. Satisfaction (or lack thereof) with the planning process is closely linked to corporate performance.

More than two-thirds of companies surveyed reported that planning accuracy diminished because of economic volatility, even as more than 80 percent of respondents said that the importance of creating accurate plans has increased.

In this new environment, effective planning requires mastery of three areas in particular:
1. Flexible and dynamic planning processes;
2. More sophisticated analytics and frameworks for resource allocation; and
3. A broader planning perspective to account for the greater weight given to future value and intangible assets.

While corporate managers cannot predict the future, they can anticipate a broad range of possibilities and can create a structure for quick and decisive action, no matter what course events take.

Creating Flexible and Dynamic Processes

Companies seeking to make their planning processes more flexible and responsive need to remember one word: focus.

Too many organizations rely far too much on their own historical performance as a benchmark for setting targets. In our survey, only half of the companies used three or more major sources of external data for planning purposes. A great deal of time and effort goes into tracking and assembling information that has little predictive power. As they say in the mutual fund business, past performance is no guarantee of future results.

Companies should instead focus on the most material and volatile aspects of their businesses, and they should do so at a higher level of detail. Accenture’s work with clients across industries indicates that high-performing companies take greater advantage of external information about customers, competitors, investor expectations, and regulatory developments. They incorporate external benchmarks into their business targets.

Another key contributor to flexibility and responsiveness is effective scenario planning. This is a relatively new practice, but it’s taking hold rapidly. Three-quarters of respondents who report that they use scenario planning also say that they’ve been using it more extensively as a result of recent economic volatility. Scenarios can help managers anticipate material changes in the business environment and make decisions (including, of course, corrections) more rapidly and effectively.