The average lifespan of Standard & Poor’s 500 companies is 15 years compared with 67 years in the past (80 years ago). The World Economic Forum released a report to share 2025 top 10 emerging technologies such as osmotic power system and GLP-1s for neurodegenerative disease which we are not familiar with. Remaining resilient and navigating uncertainties becomes essential to entrepreneurs on top of the traditional agenda of growth acceleration. How should we evolve financial planning to adapt to the complex and volatile environment?
Event-based planning could be the answer. Instead of performing financial planning within a fixed timeframe, owned by finance professionals and financial implication as focal point, event-based planning focuses on key event changes which trigger the whole planning process to rethink all business and finance elements. For instance, a team identifies key events for the coming new product launch such as competitors’ new product launch schedule, the growth of customer numbers and the internal operation readiness. As time goes on, the business team finds out the competitor product will be launched earlier than what is expected. This key event kicks off the event-based planning need which revisits the business and financial strategies, and resource allocation which were planned before. They made the decision to increase their marketing investment to accelerate the market share penetration which will reach the sales peak (revenue) earlier.
Event based planning improves the quality of analyses and decision making via a systematic and information-based planning approach. It also increases the organization’s agility to respond to challenges which enhances resilience in a volatile market and captures new opportunities. Having an impactful event-based planning requires certain elements.
1. Key events identification: An in-depth business analysis helps to identify the relevant key events and the threshold level. Identifying too many events will put the company in an over-reacting mode. The opposite of too few events will bring a situation of inadequacy. Constant review of key events ensures they are correlated to the latest internal and external environments.
2. Data availability and quality: Information is the foundation of event-based planning. Feeding real-time information enables the organization to react to the market changes in the fastest manner. Validation in place ensures quality information.
3. Organizational change: Cross functional teams are set up to analyze the events’ implications which enables holistic review, prevents silos and accelerates actions to be taken.
4. Cultural and organizational transformation: Moving to event-based planning leads to the mindset and behavioral change. A collaborative working approach and matrix organization structure are vital. People need to embrace unexpected changes such as non-scheduled planning which do not align with the human nature of looking for stability. Training can help build the essential mindset and a common understanding of how event-based planning works. Management commitment is the cornerstone of driving the new way of planning.
5. Pilot run: Organization can start event-based planning for one business unit. The learning can help to accelerate the company wise implementation and avoid pitfalls.
Traditional financial planning requires finance professionals to consolidate inputs from business stakeholders for financial prediction in a fixed schedule. Supporting event-based planning requires financial professionals’ mindset and behavioral change on top of our technical expertise. Team work is one of the success factors as finance professionals will partner with business teams to interpret the key events and recommend actions. Navigating ambiguity is important as the insights of the key events may conflict with each other. Agility comes to the scene as we need to run planning in a nonscheduled timeframe and manage key events in a speedy manner. Strong influencing skills become critical as financial professionals are part of the cross functional team instead of the owner of the planning.
Financial planning is undergoing an evolution and let's embrace the new way of working as financial professionals.
