A leading fortune 500 specialty retailer wanted to transform its complex and dynamic financial planning process to a more transparent, agile and feedback driven process. This required an integrated strategy and needed to link capability development across people, processes, and platforms to sustain the transformation.
The Problem
The financial planning of the client had been revamped to a highly detailed and granular process to provide rigor and operational focus during the 2008 great recession. But, as the business grew and evolved, their financial planning process, although meticulous, became increasingly complex, rigid, and heuristics driven.
The organization had one audacious goal:
To transform the existing quarter-long arduous financial planning process into a month-long nimble week cycle that would be efficient and allow them to adapt to evolving business complexities. This transformation would require a complete change in toolset, skillset, and mindset.
The Mu Sigma Approach
In order to redesign the financial planning process, we started by re-examining the organization’s existing habits, demolished some, retained a few others, and identified new ones, using the process of ‘Creative Destruction’.
We orchestrated a series of design thinking workshops to redream the future of financial planning with leaders from Merchandizing, Supply Chain, and Store Planning, leveraging the Art of Problem Solving.
These workshops enabled first principles thinking, challenged the status quo, maximized collaboration between business functions, helped establish buy-in from leadership, and catalyzed some of the best conversations we have had on this topic in the past ten years.
In parallel, we also mapped out the network of complexities that exists in the financial planning process and performed a comprehensive assessment of the current state to derive deeper insights, such as
• The Strategic focus was diluted as plans percolated from company leadership to the rest of the organization
• Evolving business dynamics constantly challenged the relevance of many of their existing processes
• Across business units, disparate assumptions led to multiple unnecessary iterations
• Operators were held accountable to financial metrics over which they had little control
• The platforms used to generate these numbers were inconvenient or inefficient, causing increased manual interventions and delays
The Solution
Equipped with the ideas from the workshop and learnings from the current state assessment, we came up with a design that augments the art of human decision making with the science of machine learning, simulation, and automation to enrich and accelerate the financial planning process.
The new system was a combination of frameworks, habits, and applications augmenting the heart of planning:
• Algorithmic baseline driven plans enabled through analytical modules integrated with existing financial systems
• Synchronous planning across business units through transparent and real-time intermeshing
• Modular solution design through prototypes to ensure adaptability to evolving business needs
• Rationalized planning frequency, metric granularity, and manual interventions through the planning cycle
The Impact
The realization of this transformation is a 2-year journey with incremental value additions along the way – designed to minimize operational risk.
The redesigned financial process:
• Reduced cycle time by 65% annually (42 weeks to 15 weeks)
• Reduced manual effort by 80% annually (23k to 9k man-hours)
• Provided agility to adapt to evolving business dynamics
• Ensured complete transparency and feedback-driven decision making
