The impact of company culture on IBP part I: Strategy
Most experts agree that advanced Sales and Operations Planning (S&OP) or Integrated Business Planning (IBP) has a monthly check and balance with the strategic plan and objectives of a business. In this way, a well executed IBP, can monthly measure progress against business objectives and strategy with an 18-36 months horizon. The strategic plan itself is a reference in this process. It is usually updated yearly with a 3-5 year horizon.
To get to a well balanced cross functional strategic plan, a company needs guidance from its core purpose and values. The core purpose is the reason for being; it captures the soul of the organization. Where you can fulfil a strategy, you can’t fulfil a purpose. Core values define what the company stands for. A company will stick to them, even if it became a competitive disadvantage in certain situations.1
Well defined, integrated and truly lived, purpose and values will drive company wide behaviour. Imbedded company behaviours will drive a sustainable company culture, which will last over time. If a well balanced strategic plan is what we need as a reference in IBP, then let’s make sure we also use our company culture in the IBP cycle to guide our decision making.
Some companies decide not to pursue strategic opportunities because doing so would compromise their core purpose or values. A large multi-billion dollar beverage company for example, decided not to enter the very lucrative market of premium RTD’s (Ready to Drink) alcoholic beverages, because the alcohol content was to high. Although the opportunity was achievable and margins were very interesting, the alcohol content would not be in line with their core purpose of ‘bringing more sociability and wellbeing to our world’.
Unfortunately the decision in this example wasn’t made in the monthly IBP cycle. But it shows that IBP can incorporate more then the current 3-5 year strategy and make a link to the company’s culture in decision making. In the IBP meeting, a strategic goal can be met by compromising our core purpose and values to chase profits. We have to ask ourselves if we really want to exchange our core purpose and values to meet our strategic objectives. If so, at least let’s make sure we articulate our core purpose and values as part of the IBP meeting before making a trade off decision to which we all sign up.
1. Collins and Porras, Harvard Business Review on Change, 1998, p.21-54
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