Do More With Planning Assumptions

I have a friend who enjoys playing fantasy football. One of the fantasy football experts my friend likes to read always writes the same column every pre-season, in which he presents player A vs. player B. One player appears poised for a breakout, whereas the other player looks like a legitimate liability. The expert then reveals that player A and player B are in fact the same athlete! The fantasy football expert’s point is simple:

A person can make numbers and statistics say different things by looking at them from different angles. At the end of the day, we must rely on our interpretation of the data, and our assumptions about what’s causing those numbers to make decisions.

In the world of demand and supply planning, assumptions provide teams with a way to clarify and unite behind a clear long-term plan. Consider a global automotive components manufacturer, aiming to update their annual revenue projection. For the plan to be trustworthy, assumptions from groups like marketing, product development, sales teams, production planning, purchasing, and logistics are all necessary. What good is a bullish sales plan if the plants do not feel confident that they have capacity to support?

When each department brings their assumptions to the table regarding a long-term plan, two key things are accomplished: transparency and accountability.

Assumptions tell the story that data alone cannot tell. When various teams within a business communicate their assumptions clearly to one another, it creates a way to check feasibility of the long-term plan. Each team reveals how they intend to achieve the plan from their position, allowing for discussion and sense-checking.

Assumptions are like showing your work on a math problem. The teacher does not simply want the correct answer, but how you arrived at that answer. That builds confidence that the answer is well understood, and you know what it takes to get there. Assumptions work in a similar way by holding people accountable to know HOW they will deliver their plans.

The power comes not just from making assumptions, however, the real magic comes from communicating them across the business and measuring them. By unleashing the power of assumptions, teams can improve their cross functional integration and the accuracy of their plans over time.  

In the end, this shifts critical planning discussions away from “what will happen” and toward the more important, and more proactive “how will we make it happen”.