Financial Planning is like sailing a boat

Financial Planning and Analytics professionals make a living from looking at huge amounts of information about an organisation and then making sense of it. Big changes in the figures are prioritised, investigated and analysed until there is an understanding of the cause, the immediate impact and the longer-term ramifications. Re-planning activities should then take place and management decisions generally follow. Then the process starts again, or continues to loop around, with new reports, new analysis and potentially new plans.

This Performance Analytics process is happening at every serious organisation right now and when done effectively keeps that organisation on track or heading back to the chosen track if it has been diverted.

If I use a sailing analogy, a captain wishes to sail to a destination but every time they plot their actual position, they find they are in a slightly different place to where they thought they would be, so they adjust their course accordingly. A good captain will be adjusting to take into account the prevailing wind speed and direction and possibly the tides too. Their course, when plotted, is rarely a straight line, but a series of mini diversions and adjustments. In planning terms, this is called “Course Correct”.

Why some organisations have a train track mentality

Some organisations don’t see their course in quite the same way. They are planning as if they are on a railway track. Their destination is planned, and they remain convinced that the train will arrive at that destination. They create their initial plans, perhaps annual budgets or forecasts, but never revisit them since they have a business to run and are generally too busy doing this to divert resources to re-planning.  They focus their time on looking at relatively few metrics and in effect they only concentrate on the time of arrival rather than the route. Because of their train track mentality, they discuss how to manage their resources or manage their people to speed up or slow down that train. Changing the route is not seen as an option unless they have taken a very wrong turning.

If you want an easier life, I very much advise you to work for a company that plans like a train driver, but only for an organisation that stays on track. If you want to guarantee you arrive at your destination, then set course and adjust as necessary. Plan like a sailor.

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Blog Author

Paul Baron, Engagement Manager, Simpson Associates


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