Confession to make. When I was reading Eric Wilson’s insightful and entertaining article about what forecasters can learn from Punxsutawney Phil on Groundhog Day, I couldn’t stop thinking about a couple of sentences, like those songs that get stuck in your head. No matter how hard you try, they stay there.
The culprit sentences were “it really doesn’t matter if he’s right or not, and people throw him a party and celebrates what he says. If only we were treated with the same respect at our companies.”
If you haven’t had a chance to read Eric’s article, the “he” is Phil, a cute hairy marmot that forecasts the weather. In essence, Phil is a forecaster as you are in demand planning—part of S&OP—or in financial planning and analysis (FP&A).
Why is Phil getting applause, fame, and unconditional support when presenting a forecast? What is he doing differently than a demand planner or FP&A practitioner? These are the kinds of questions that I had in my mind.
As time passed and it seemed that these questions wouldn’t go away, I decided to demystify what Phil does to go from tears to cheers when presenting your forecast.
This article contains my thoughts to make that transformation from frustration to celebration happen. Below I have listed 7 actionable steps that our furry friend Phil applies.
Actionable Way #1: Focus on the process and not on the results.
With Phil’s forecast, as Eric states in his article, nobody cares if Phil is right or wrong. That’s not the point. The focus is on the process preceding the forecast’s presentation.
Shift your focus to the process instead of the actual forecast. What is relevant is what you learn in the process; for example, the data sources to use.
A quote from Dwight D. Eisenhower summarizes best: “I have always found that plans are useless, but planning is indispensable.”
Actionable Way #2: Agree on metrics and targets.
Metrics and targets are clear in Phil’s forecast. In this tradition, if Phil sees his shadow, it implies that there will be six weeks more of winter.
If Phil doesn’t see his shadow, the forecast is an early spring. What we are measuring here is the shadow.
Metrics and targets are important in demand planning, S&OP, and in FP&A. In the most advanced S&OP processes—also known as integrated business planning (IBP)—there are operational as well as financial metrics for growth, profitability margins, working capital and cash flow. It’s critical to get alignment on the KPI scorecard.
Actionable Way #3: Speak the language of leadership.
Phil speaks to the president and then the president communicates the result to all the congregation. The president and Phil understand each other because they speak the same language.
Demand planning, marketing and sales, finance, operations, supply chain must speak the same language.
While the native language for demand planning and supply chain can be physical units and metrics, it’s fundamental to have translators to speak the language of the business that is finance and accounting. This ensures a clear understanding from leadership.
Actionable Way #4: Obtain executive support.
The Pennsylvania governor, the members and president of the inner circle were all present in Punxsutawney to support and cheer Phil.
Demand planning and FP&A are the windows into the future. They have a critical impact on how the organization evolves. By obtaining executive support, demand planners and FP&A practitioners can overcome challenges on their path for a brighter future.
Actionable Way #5: Encourage stakeholder engagement.
Groundhog Day is a full party that everyone feels part of. Of course, there is Phil, but also live bands, songs, dance, and more. It is such a party because of the engaged participants.
Make the other teams participate and engage with your forecast. We want to work on breaking apart the functional silos. Have conversations with other teams. Sit in their meetings. The results of these simple actions will surprise you.
Actionable Way #6: Have one set of numbers.
Phil delivers one forecast only. It’s either six weeks more of winter or an early spring. There are no groups arguing about a different result. All go with Phil’s forecast.
One set of numbers is key. This actionable step builds on the previous one, as there is no other way to achieve it than with a high stakeholder engagement and involvement.
Wouldn’t it be great that demand planners, sales and marketing, strategy, FP&A/ finance talk to each other to have one sales forecast?
Actionable Way #7: Make it a party.
Phil’s forecast is a celebration. It doesn’t matter if he is right or wrong. All is joy about it.
Of course, you want your forecast to be accurate because of its critical importance to your organization. However, having a more collaborative approach with a high stakeholder engagement increases the chances of a more accurate forecast.
Let’s celebrate the process. Let’s embrace the learning experience with each of your forecasts.
Demand planners and FP&A: cheers to your next forecast!
