4 Steps for Overcoming Gaps Between Financial Forecasts and Actual Execution

In this week’s issue, I am going to share 4 steps operating leaders can use to help their teams deliver on financial forecasts more consistently.

In a corporate environment where surprises are generally not welcome, it is useful to have a framework to link your operating activities to financial commitments so you can be predictable.

By embedding these steps, you’ll give your team the opportunity to control the controllable and create a safe learning environment to drive accountability and learning in your organization.

The challenge is sometimes we spend too much time on the outcome and not enough on the inputs necessary to deliver those outcomes.

As GE’s Larry Culp once said, “The how much is important but the how is far more fundamental”

Here are the 4 Steps in order I’ve seen work well.

Step 1: Define the operating activity which supports the financial result.

The analogy here is defining with your team what levers will need to be pulled daily (preferred) or weekly to deliver the outcome.

For weight loss in your personal life as an example, it could be the number of salads, you eat in a day. For delivery costs in your business, it could be the number of vehicles you expect to receive or disposition daily or weekly. The point is to have an explicit conversation to align on the activity which will drive the result.

The key here is to define not only the activity but also the frequency at which the activity needs to happen for the desired outcome.

Step 2: Provide visibility on that operating activity you defined on a regular basis.

“You get what you inspect”

Start with tracking how often that activity is happening. Sometimes you will have easy ways to do it. Sometimes it will require partnering with your technology teams to do it. But do not give up on getting this visibility because, without it, you’ll be running blind.

The key here is to get the owner of that operating activity involved in providing that visibility at an agreed period.

Step 3: Check in regularly on the operating activity you expect.

It’s really about getting the reps in.

Check-ins give your team a chance to really get close to the performance of those operating activity metrics weekly or more frequently. The more cycles you create, the quicker the learning and adjustments can occur. Below you can get more information on how to leverage business reviews for this purpose.

https://msr.beehiiv.com/p/how-to-build-engaging-weekly-reviews-for-operations-leaders-nengikrukrubo

Regular check-ins create a culture of accountability and visibility for your team.

Step 4: Adjust as reality unfolds

Not everything will go according to plan.

That’s normal for an operating leader. What’s more important is learning from what is not working and making adjustments. That involves comparing the outcome to the operating activity you expected.

• If you are not executing the operating activity and missing the outcome, you may need to address that as a performance-related problem

• If you are executing the operating activity you planned for but are missing your outcome, you may need to change the operating activity

• And so forth

The key is to give yourself a chance to adjust as reality unfolds

Repeating the 4 steps over time will help you and your team build confidence and capability over time to achieve your financial forecasts.

That’s it for now. Have a great week!

Whenever you're ready, there are 2 ways I can help:

1. Access Weekly Actionable Tips by joining my Saturday reflections.

   • I reflect on my journey managing and leading operational teams and share lessons I’ve learned along the way in a 2-3 minute post every weekend

2. Unlock quick tips by following me on LinkedIn.

   • I share 5-6 short posts tied to each of my actionable tips every weekend.