In an agile world, things are happening fast, sometimes very fast. In 2007, we all were looking somewhat curiously at the upcoming new smartphone called iPhone. Even if some of us saw the potential of the new appliance, I’m sure none of us could ever believe Apple’s market domination a couple of years later.
Not all of us have a paradigm shift to take care of. But still major questions about our businesses that in the end of the day may be the difference between success and disaster. In an agile world it’s not an alternative to make a long-term plan and stick with that whatsoever happens. Things are moving so fast that you would have to re-write your business plan every other month.
So how do you act in demand strategy decision making in an agile world?
Best practice is usually not to make decisions before you need to. In some extent, this may look too defensive, but it isn’t. It’s not that you wait until you have been surpassed by your competitors; it’s about being aware of situations that will require decisions at some point in the future. It’s a proactive approach that is not very easy to implement, but will provide an agile perspective to be able to catch good opportunities and minimize risk.
Create the demand plan. This will be The Plan for the entire demand process management to lean on, that tells what to do. To be able to create such plan, you first need to formalize routines to aggregate credible historical information from all business areas and project it to the future to form a forecast, incorporating trends and buying patterns. But the forecast is not enough. You need to get the forecast on longer term focus, defining and describing the assumptions behind the forecast, as well. Assumptions may be regarding customers, opportunities, competitors, economy, market shares, etc.
Define and communicate Key Performance Indicators (KPI:s) that drives towards the strategic goals defined in your business plan. See a recent blog post for examples https://salesprocessblog.wordpress.com/2012/11/20/how-to-know-you-are-on-track-in-sales/
Get commitment from all other business functions to engage in one plan. Include Sales, Supply Chain, Marketing, New Product and Financial in the plan by having them to provide their view. For example, it’s not only about selling more, you have to sell right, too. To sell lots of products, which the company has not planned for and secured in stock is devastating for customer relations and can even harm the brand.
Plan and perform review meetings with the leaders from above functions once a month. In the meeting you would review the performance from last month; the KPI:s, but also discuss upcoming issues that may impact the business objectives. This would help you to create strong and fruitful bridges between sales staff and supply chain. To get profitability it is crucial that sales staff understands the signals coming from supply chain and vice versa.
Make decisions, but even more important in my agile perspective: decide upon decisions points – that’s when you have to decide. Use the review meeting to benchmark against the business plan and judge whether the gaps and issues are one-time, short-term or long-term trends that needs to be included in the updated demand plan; sooner or later. Decide directly upon the short-termers, set a fixed date for the one-timers and long-termers, regarding when you have to decide upon them.
Demand strategy decision making in an agile world requires you to separate the decisions you need to take immediately and those you can wait to take. Risk is increased if you take decisions too early, while new opportunities may occur. Risk is also increased if you take decisions too late, since you gamble with your market leader position.
To manage the gaps against your business plan in an agile world you need to integrate all business functions in your company to agree on one plan, which will minimize the risk because the 360 degree view on issues and gaps.
The output is a demand plan you can trust and an action plan to act upon, as well as a time-line of decision points so you are aware of situations that, sooner or later, will have an impact on your strategic business objectives.
The Demand Review (John E. Schorr, Oliver Wight America, 2007) http://www.oliverwight-americas.com/business-management-articles/pdf/the-demand-review-john-schorr.pdf