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Leadership Conversations - Perspective Planning and Strategic Scenario Modeling


Perspective planning timelines

Strategic Planners sometimes lose a sense of operational reality and are often encouraged to go into line roles to re-sensitize themselves. As we can all see, perspective plans which were done for 10-15 years to build a brand and a product line are now viewed from a very short term perspective perhaps not more than a fiscal or at best a two year horizon.

Business cycles are getting really short for most products and services given the speed of change, market / consumer acceptance and stakeholder tolerance for under-performance. So, are perspective planning windows relevant today? Is it still better to consider a mix of product portfolios as a revenue mix for the year as a business plan? Is a 3-5 year perspective plan relevant?

Current reality of business models

Business modeling and scenario planning tools are usually well suited for working with one product line or a set of value propositions or even just a step up to the next level of product evolution – Cellphones and Laptops are good examples of these where the basic product does not change but there is an incremental evolution or innovation or disruption.

However, when you overlay a financial or investment model, you might be interested in picking an entire revenue mix or product line up to estimate ROI, investments, market share etc. So a planner traditionally considers a safe harbor in the plan such as revenue retention of 60%, new product mix of 20-25% each year to ensure there are enough safety valves.

Perspective plans

Perspective plans can therefore be run around three basic milestone checks for plan finalization of each product – matching the value proposition (product sales forecast) to each segment as a market reality check and then re-balancing with a bottoms up forecast from the defined sales region to assess any sales gaps and finally checking it with the overall financial mix and margins at the company level (this often determines level of investment /stakeholder support based on net contribution and ROI).

Finally, a perspective plan is checked and tuned for growth momentum considering external boundary factors such as competition, me too products, economic environment and buyer maturity. Needless to say, the perspective plan then needs to be converted into a viable annual operating plan to be further detailed into regional plans.

Strategic scenarios

Now comes the final litmus test – some call it sensitivity analysis while others bracket it as scenario planning – in today’s context the planning timeline is split more into market/consumer/demand specific adoption cycles rather than a number / scale treatment – this helps resolve any geographic roll-out / market anomalies / demand windows. The other aspect is to factor in scenarios based on various sets of variables (market, product); primary goals of the product; assumptions; consumer metrics etc. This gives a much better decision making grid than a linear approach.

In summary

There are many other considerations to getting the perspective plan right such as Omni-channel constraints, price discovery, supply chain anomalies etc. So it is better to cascade the plan down to smaller bits that are time boxed and easy to execute as per the set market boundary / sales regions than a singular top down roll-out from corporate. So while the perspective plan still controls the tollgates such as price mechanisms, policies and product features, the execution is more micro controlled at the operational level and reviewed through regular governance, risk and control practices as well as field interventions.

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