Message from Henry

No one likes unpleasant surprises.  Yet, too often, companies spend months developing an annual business plan only to be unpleasantly surprised just a few months into the fiscal year.

We are devoting this edition of the Rak Report to minimizing the need for the all-too-frequent task of re-planning. Simply stated, companies can avoid re-planning if they plan correctly from the start.

The first and foremost step in proper planning is "controlling the controllables", which means having a detailed, comprehensive understanding of the factors that can be controlled; that is, brand positioning, marketing spending effectiveness, assortment, and innovation.  In our experience, 80-85% of your destiny is in your hands.  "Uncontrollable" factors like seasonality, weather, government actions, etc. tend to have relatively minor impacts on volume.  The key to controlling the controllables is a comprehensive due-to analysis that weaves together the right response measurements of each controllable factor.  For annual planning, response modeling needs to be done quarterly to get ahead of major controllable factors and minimize the need for a re-plan.  For longer-term strategic planning, market structure-based simulations provide a multi-year perspective on the impact of changes to the controllables.

The second step is objectivity.  The people leading the response modeling process should be incented based on accuracy in order to make the model as objective as possible.  There should also be a continuous improvement mindset to improve the accuracy of the models over time.

The third step is broad-based ownership of the decisions.  Often, brand management and marketing analytics are isolated from each other.  They, along with everyone who owns the outcome, need to have a voice in the creation of the plan.

Collectively, the three steps provide a plan to grow your business based on knowing how to compete and how to go to market better than your competition.

And that's a plan every company can count on.