The lack of system thinking in IBP

IBP suffers a deadlock in maturity. Independent companies and maturity measurement all point in the same direction. Find below some evidence that IBP gets stuck in early stages.

  • Gartner found in 2010 that 67% of companies can’t get further then step two from their four step maturity model.
  • An Oliver Wight white paper on the transition from S&OP to IBP tells us that most companies ‘get stuck in between Stage 2 and Stage 3’ from a four stage model.
  • According to a 2012 ebook from Kinaxis, most companies are stuck in step 1 and 2 in Larry Lapide’s four step model.
  • A 2013 Supply Chain Insight report tells us that 57% companies don’t get further then stage 2 of a 5 stage maturity model.
  • In the book Bricks Matter, we can read that ‘36% of companies’ S&OP processes are stalled or are moving slowly’.

Although practitioners tell us through questionnaires that this is because of senior leadership support, the organizational silos or process discipline, I think it is because of a lack of holistic or system thinking.

System thinking was defined by Senge, Lannon-Kim in 1991 as; System thinking is a discipline for seeing wholes, recognising patterns and interrelationships and learning how to understand those interrelationships in more effective, efficient ways’.

mckinsey 7s

A well known system approach, the 7s model, was develop in the 80’s by McKinsey. Ironically around the same time as S&OP was born. Another irony is that integrated business planning is about holistic thinking across functions, but in our implementations we don’t take a system or holistic approach. Companies will focus mostly on the process and technology and a little bit on people and change.

This is the same for consultancies and technology vendors who usually offer a system driven or a process driven solution to implement IBP.

During workshops a remark is made how important people and behaviours are. An Oliver Wight white paper on the transformation of S&OP to IBP even spells out that ‘the importance of people and behaviours should not be underestimated’. An accompanied picture shows ‘what clients tell us’ is that people and behaviours are more important than process and tools.

So let me get this right! I know what the biggest issues are because my worldwide blue chip client base tells me in well paid consulting time. I then tell you what the biggest issue is, but I don’t offer you a solution for it? Instead I will talk to you about process until the cows come home and ask you to solve the biggest issue yourself! Am I the only one that thinks something wrong here?

If you’ve read my blogs you know by now that I focus on culture, behaviour and the importance of the right brain in implementing IBP. In McKinsey’s 7s model this would probably fit in shared values and skills. Solving culture and behaviour only will not solve the dead lock of IBP maturity, but at least it is a step forward from this awful process, KPI’s and technology focus that has IBP in its grip for the last 30 years.

IBP requires holistic thinking across functions to be effective. Until we start implementing IBP from a holistic or system thinking perspective we will not get rid of the deadlock of IBP maturity.

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