Watch: Integrated Business Planning: Decision-Making by Design

Donald McNaughton, business advisor and member of the board of Oliver Wight Americas, explains why so many IBP initiatives fail to result in actual decision-making.

IBP has been around for decades, but there are still “many foundational processes that could be improved,” McNaughton says. Chief among them is the ability to make timely and effective decisions. Call it the “decision-making deficit.”

The problem can be chalked up to both people and processes. In the case of the first, it’s natural for executives to fear being wrong, causing them to delay key decisions as long as possible. On the process side, McNaughton describes three layers to address: the foundational IBP process, a decision-making “engine” for determining what kinds of decisions need to be made and by whom, and a defined nine-step “decision flow” that covers everything from inputting raw data to making ultimate determinations across multiple time horizons.

In addition, McNaughton says, companies need to think of decisions as existing in tiers: rule-based, shorter-term tactical, within specific functions, cross-functional and enterprise-level.

Within that process, companies tend to get stuck earlier than one might think, generally at the first two tiers, McNaughton says. They might create a whole series of compelling dashboards, populated with a raft of data and shared among multiple managers for review. “Then somebody says, ‘Did we make any decisions?’”

An effective program determines which issues need to be conveyed to top management, he says. “Not everything is going to flow up to executives. A structured process clearly defines who makes decisions.”

It’s also crucial that decisions be presented with options for action, McNaughton says. Otherwise, “that’s approving, not making decisions.”