Do you review or Do you preview ?

Picture this: You’re stuck in traffic, late for your engagement, anxiously staring at the Google Maps app on your phone – and the app is flooding you with copious amounts of information about how you got this far – average speed, number of turns, number of traffic lights, when you reached each intersection and when you were supposed to have reached each intersection… while the only question on your mind is – “Just tell me when I’ll get there and is there a faster way to get there from here on”.

So, how often have you been in “review” meetings where you’re being shown slides and slides of updates on what has happened so far? Project “status”, “Year to Date” financials, “Month to Date” production, “Orders booked in the last quarter”, “Attrition in the last month”, “Highlights and Lowlights” (or even better, “Key accomplishments”), and so on. And when it comes to how one might make up lost time to meet targets, the answer often is “we need to really stretch and focus on this during the remainder of the period”. This, of course, is like Google Maps telling you to “drive faster” to reach your destination on time. Needless to say, 90 minutes and 60 slides later, everyone walks out of the forum with varying levels of excitement and clarity about the future.

Moving from Reviews to Previews

“Our job is to manage the future, not report the past”, is a principle that I learned from one of the most effective leaders I worked with. Based on this principle, one of the most important family of processes I would seek to design and implement in any organization is the “LE” or “Latest Estimate” process. In the Google Maps example, these processes help project the “ETA” or “Expected Time of Arrival”, point out upcoming traffic delays, and suggest “alternate routes” to get to the destination faster, where possible.

• In a business context, there are several examples of LE business processes that are essential, and I have seen the benefits of.Quarterly financial performance: Right from the first day of the quarter, the LE process projects the revenue and profit expected that quarter. The CFO / Head of Finance typically convenes the heads of all business units on a fortnightly basis to review updated projections. In the event of a looming shortfall in one area (e.g. business unit, plant, account, etc.), business unit leaders have time to react and raise output in a different area. In a pinch, expenses in certain cost centers can be controlled in the short term to minimize profit shortfall.
• Manufacturing planning and execution: The production planning process starts well ahead of, and continues well beyond publishing the month’s plan on the last day of the previous month. “T-15 day” previews help identify and mitigate risks to upcoming scheduled production runs, while daily catch-ups must focus on “Required Run Rate” to achieve the month’s target. As the month progresses, weekly or fortnightly replanning sessions must be focused on dynamically refining production plans for the balance of the month. These processes enable production managers to anticipate problems in producing certain products and either mitigate these problems or divert idle capacity to other products thereby still meeting monthly revenue targets.
• Product Development: R&D projects typically last several months or years. They are, more often than not, plagued by delays, which have a significant adverse impact on the commercial value of the project to the point of making them irrelevant. NPD (New Product Development) reviews that focus on “project status” and “key technical challenges” sidestep uncomfortable questions around which projects need to continue and which not. A preview mechanism that focuses on the “Projected End Date” of every project and its impact its commercial value is essential to making go/no-go decisions as well as to introducing alternative projects into the pipeline to meet long-term revenue targets. And how does one know whether the projected end date is realistic? Look at the progress of pre-planned interim milestones and look at the pattern of repeated shifts to the end dates. My own R&D reviews covered a few hundred projects by tracking how many of them met their respective interim milestones each quarter, followed by a deep dive into high value projects.
• Staffing and recruitment at scale: I’ve been part of several operations which depended on large-scale personnel deployment. These include IT services, Pharma Services and Manufacturing. Growth, attrition and skill diversity make it challenging to keep demand and supply for talent in sync. Building a model for staffing factoring in forecasts for demand, attrition and variety helps preview talent availability and act early enough to minimize mismatches.

There are several other areas such as sales pipeline tracking, capacity expansion projects, etc where preview processes are essential to help take action early enough to meet targets.

What does it take to make the switch?

The need to move from analyzing the past to projecting the future may look obvious, but making this switch is easier said than done. This not only requires data systems and management processes to be put in place but also changing communication, mindsets and culture at multiple levels.

A start can be made by simply communicating the preview information (“ETA”) across team members across all functions and levels who are involved in each effort. This sets a common future target that everyone can work towards, and a common basis for decision making across the board.

Leaders then need to understand which of their team members are optimistic (i.e. those that overpromise) and which are conservative (i.e. those that under promise), to apply the necessary “correction factors” to the forecasts they project, and work with them to get to more realistic projections over time. Towards this, optimistic team members need to be coached to face and share bad news sooner rather than later. The conservative ones need to be encouraged to give up their “back pocket buffers” by giving them comfort that they will not be penalized for missing their forecasts in the end.

For the success of previews, it is critical to avoid rearview mirror questions such as “Why did this not happen”, or “why didn’t you think of this earlier”. Such questions tend to bring back team members natural tendencies of being overly optimistic or conservative to avoid uncomfortable discussions. One may however, in a non-accusatory setting, provide space to vent for frustrations and then ask what we would do next time to avoid a forecast miss.

Last but not least, previews are most effective when every governance process, right down to the daily morning shopfloor stand-up meeting, is designed as a preview and not a review.

When is it still useful to Review the past?

All of this is not to say that reviews are not relevant. There are several uses of conducting reviews, some of which are:

• Reviewing past patterns of hits and misses can help identify repeating issues which can be addressed systematically
• As mentioned earlier, analyzing under / over delivery against plans can help recalibrate our understanding of different team members’ forecasting tendencies as well as redefine planning baselines.
• Reviewing status provides the basis for resetting targets, upwards or downward.
• Last but not least, there is indeed a need to spend time to celebrate teams’ achievements from time to time.

An important point to note in all the above applications is that in contrast with previews that are most effective when conducted every day, it is sufficient for reviews to be conducted from time to time.

Conclusion

Organizations stand to gain a lot by shifting their focus from 80% reviews / 20% previews to 80% previews / 20% reviews. Making the shift, however, requires discipline and diligence from the top down. Perhaps the biggest shift that is required is to make teams feel safe when their forecasts go wrong, because, let’s face it, pretty much all forecasts are wrong at least by a little bit. However, when previews are done well, they help improve success rates of meeting targets.