It is estimated that up to 73% of business transformations fail, with overall strategic initiatives not faring much better. The most pessimistic statistics suggest that up to 67% of all business strategic initiatives might be failing, an even more jarring number. But today we have more access to rich, accurate information, detailed analytics, and flexible strategic mindsets. So what gives?

The key culprit, especially for financial planning and analysis (FP&A), is the strategic gap. In brief, even the best strategy must be executed effectively. Consider the isolated FP&A team coming up with an innovative new plan for company financial modelling, then finding their design completely impossible to execute due to push back from broader company culture – people simply don’t stick with the new system, and fall back to old, less-accurate models whenever they get the chance. Sound familiar?

So, what exactly can be done to bring strategic initiatives more in line with realistic, obtainable goals, and how can you best position your FP&A strategy for practical implementation? 

Continuous Strategic Planning is Key

Many organisations still rely on annual budgets that are not only difficult to apply but also usually a source of financial inaccuracy. Agile planning is absolutely necessary since no one can predict the future, and unexpected changes are a straight-up fact for balance sheets. When it’s so tough to call the ball way in advance, making small but frequent changes will allow your enterprise to dynamically respond to any challenges it might face.

To fully adopt agile strategic modelling, continuous strategic planning (also known as a ‘rolling’ planning approach) is necessary. The basic premise of continuous strategic planning for FP&A is real-time budgeting that allows you to respond rapidly to changing circumstances, reacting to each iteration of the data instead of taking early leaps based on current trends. 

Continuous strategic planning has several benefits:

• It is the building block of extended FP&A (xP&A), the policy building out multiple financial models to react dynamically no matter how the situation develops.
• It allows you to be far better prepared for uncertainty and changing circumstances. 
• It helps improve the accuracy of your reports and hone your strategy to the actual, practical needs of your enterprise as opposed to acting on outdated data from an annual financial statement.

Integration, Collaboration, Implementation

While there are a number of important concrete steps you can take towards implementing xP&A within your organisation, by far the single most important point of successful xP&A is good, effectual communication. Better communication can lead to a smoother integration of strategies, FP&A and otherwise, a process that’s crucial for closing the strategic gap. It’s hard to implement an effective strategy as an isolated department, but when you’re in conversation with the rest of the enterprise, strategic realisation can unfold naturally.

To deliver on the strategy of xP&A, you’ll need to:

• Create open lines of communication between your FP&A team and the wider organisation.
• Centralise FP&A operations as part of a single Center of Excellence.
• Shift from single-scenario annual forecasting to variable multi-scenario modelling to anticipate how the business should react to a number of possibilities. 
• Build out a single source of truth for your data which your Center of Excellence can rely upon and communicate to the rest of the company.

Insights are only valuable when they get to where they need to go within the organisation, and a centralised, collected FP&A team is in the perfect position to deliver those insights across the enterprise. For example, integrated FP&A teams can offer valuable context to marketing departments when they’re deciding what initiatives to pursue, or figure out the financial logic of warehouse logistics systems while plans are being considered.

Flexibility Above All

In the Covid-19 pandemic, we saw a dramatic instance where, unfortunately, companies that failed to rapidly adapt to changing financial conditions encountered serious difficulties while those who managed to dynamically, quickly shift their strategic models to a drastically different economic landscape were able to rapidly grow. So, how can we achieve flexible FP&A?

• Place strategy at the core of financial planning. This will help equip you properly for successfully implementing your strategic initiatives. 
• Take full advantage of advanced analytics. To achieve sweeping and positive business transformation, you need to approach it from an integrated standpoint and build good data to intelligently drive your decisions.
• Invite stakeholders into relevant FP&A conversations and build a strategy that starts with FP&A but works across the whole organisation. 

Wrapping it Up 

It’s often been said that we’re in the agile phase of strategic thinking – the stage of strategic thought that focuses on flexibility in planning and rapid, quickly responding iterations - and it really can’t be emphasised enough just how important it is to build a responsive and agile FP&A strategy. It makes all the difference between an efficient and high-performing strategy and one that’s dead in the dust.

To implement an effective strategy, FP&A needs to work with the entire organisation. And in order to integrate with the wider enterprise, continuous strategic planning, xP&A, and Centers of Excellence all ultimately aim towards the same strategic goal: Flexibility. By adopting a flexible mindset, you can prepare both your FP&A team and the whole company to respond to challenges, large and small.