Case Study 4 - Re-designing the Planning Process in a Multinational

The Business

Three parts of a large multinational company had been merged to form one business unit under a single management structure.  The merged entity spanned three continents and had more than 30 separate operating sites.

The Problem

As Jack Welch says: “The budget process at most companies has to be the most ineffective process in management.  It sucks energy, time, fun and big dreams out of an organization.  It hides opportunity and stunts growth.  It brings out the most unproductive behaviours in an organization from sandbagging to settling for mediocrity.”

Jack Welch, (2003) Winning,
HarperCollins Publisher, New York.

The new merged business needed to be managed as a single entity...and this meant that the separate planning and budgeting processes needed to be merged into one streamlined process. This provided an opportunity to improve the effectiveness of the planning process: to reduce the human effort required to complete the plan, and improve the quality of the outcome.

The Approach

The Lean Value Stream Mapping approach was particularly well suited to this problem.  Value Stream Mapping was a great tool for helping us understand the flow of information around and across the business during budgeting, and find ways to streamline it.  It is a highly inclusive and visual tool, which proved useful in engaging the very broad stakeholder group for this project.

Details

The process used was as follows:

  • Established a Project Owner and Core Team for project, ensuring the team had the appropriate level of authority and included representatives of major stakeholder groups.
  • Agreed the project scope, objectives and deliverables with senior executive.
  • Ran Value Stream Mapping workshops in 2 different geographic locations to involve the stakeholder groups from those regions. At each workshop, the participants mapped the current budgeting process, brainstormed ideas for improvement and then mapped a new improved process. 
  • Core Project team consolidated the results from the two regional workshops into a final process map and set of recommendations, which was syndicated with the senior leadership team.  An implementation plan was developed and accountabilities assigned. Key changes were tested on quarterly forecasting process before being trialled in the next budgeting process.
  • During implementation, the core team coached and mentored the people in their region through the new process and helped to overcome roadblocks.  Throughout the budget process, the core team met weekly to resolve process issues and web-based tools were used to manage communications across regions.
  • After the budget process was complete, stakeholders were surveyed to gauge the success of the project and gather ideas for further improvement.

The Results

A process as large and complex as an annual planning and budgeting process cannot be turned around in one year. Some specific improvements achieved in the first year included:

  • Better communication of leadership expectations at the start of the process, which created more alignment and reduced the amount of iteration at the end of the process.
  • Better coordination of activities, reducing rework and allowing issues to be resolved more readily.
  • Better communication of budget deadlines, and ensuring that other business activities did not clash with deadlines.
  • Planning activities separated from the budgeting activities to improve the quality of the plan.