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Business planning has long been a rite of summer at most corporations. There is a two-fold purpose to the exercise. The first is to encourage the divisions and business units to step out of their day-to-day tactical focus to reflect on more strategic, longer-term business opportunities and threats. The second is to lay the foundation for budgeting and operational planning for the coming fiscal year. Unfortunately, in many companies it’s the operational piece that dominates. The process takes on a life of its own, as business units become consumed with the tasks of completing templates and producing PowerPoint decks. What tends to get lost in the flurry of activity is the opportunity to engage in the kinds of value-added conversations -- at all levels of the company-- that challenge underlying business assumptions, generate innovative strategies, and make thoughtful choices among investment alternatives. The resulting plans tend to be little more than extrapolations of the current business.
In today’s demanding global markets, companies can no longer afford that luxury. Business models have lifecycles just as products do, and in most industries the lifecycle has shortened dramatically. In order to create and capture value on a sustainable basis, companies must regularly reinvent themselves in light of market opportunities and their core strengths. Well-structured business planning provides the forum and the discipline to identify and seize those opportunities. It starts with the challenge of rethinking the possibilities of the business -- asking fundamental questions about what business we’re in and how the market is changing -- and defining new growth platforms that can sustain the company’s success. Great companies institutionalize the capabilities to do this reliably, year in and year out.
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