In the ever-changing world of Sales and Operations Planning (S&OP), getting everyone to agree on a decision is important but hard to do. It means putting together different, and sometimes conflicting, goals and points of view into a single plan.
Consensus building helps teams and organizations work together, come up with new ideas, and be more aligned, but it can be challenging because different functions and personalities have different goals and points of view. But with the right plans, it is possible to get through the messiness of consensus building and make decisions that have wide support, leading to better strategies and company success.
The Challenge of Consensus in S&OP
There are several reasons why it’s challenging to reach agreement in S&OP. There are different priorities because each area (sales, operations, finance, etc.) has its own goals and ways of measuring success. Complex sets of data from many different sources underpin S&OP decisions, making them difficult to understand clearly. Market conditions, customer needs, and supply chain factors are constantly changing, necessitating constant adjustments and reevaluations. Furthermore, it’s important to remember that S&OP involves people, each with their own unique set of limitations, issues, perspectives, and prejudices.
This can sometimes make driving consensus and decision-making within S&OP feel like a battlefield, where each party is trying to gain ground and defeat the opposing viewpoint. In these negotiations, individuals tend to see the process as a scale, believing that by piling more reasons and facts on theirside, they can tip the balance in their favor.
However, in this warlike mentality, people search for flaws in others and arguments to bolster their own positions. Consequently, rejecting even a small idea can justify dismissing all of them, turning negotiations into a series of attacks and defenses rather than a constructive give-and-take. This adversarial mindset makes reaching a consensus challenging.
Insights to Consider
Reflecting on my experiences (and with the help of a recent book I read by Adam Grant, Think Again), I’ve found that the power of rethinking and embracing the possibility of being wrong are crucial elements in driving consensus in decision-making. Encouraging healthy differences and fostering open communication can lead to better decisions, innovative ideas, and stronger relationships. In S&OP, the harmonization of diverse opinions and objectives is crucial for achieving unified decisions.
By promoting an environment where team members feel comfortable expressing their views and challenging assumptions, we can create a culture of productive debate that enriches the decision-making process.
One of the key perspectives to consider in S&OP is collaboration, consensus, and transparency, which can mean the importance of intellectual humility and being open to new information. Encouraging team members to question their beliefs and consider alternative viewpoints can lead to more robust and flexible planning. Recognizing the limits of our knowledge and being open to new ideas helps avoid the pitfalls of overconfidence and confirmation bias, making teams more receptive to data-driven insights and collaborative solutions. By prioritizing learning and evolution over correctness, we can foster continuous improvement and adaptation in the S&OP process.
Regularly seeking and integrating feedback into planning cycles, promoting respectful discussions, and encouraging diverse perspectives can lead to valuable insights and drive consensus through mutual understanding. Embracing a mindset of continuous testing and adjustment can transform forecasts and plans into dynamic hypotheses that evolve with new data and insights, ultimately leading to more effective and resilient S&OP practices.
Applying Lessons to S&OP
Driving consensus in S&OP decision making can be challenging, but by applying these ten strategies, you can facilitate more effective and inclusive processes:
- 1. Check Your Own Biases at the Door: Embrace the possibility of being wrong and maintain a desire to find the truth. By doubting your own judgment and remaining curious, you can adapt to new information and foster a more open-minded approach to decision-making. Clinging to outdated beliefs and opinions can be detrimental, and accepting the possibility of being wrong can be liberating. There is an importance to being willing to question and revise our thoughts, much like scientists who constantly test and refine their hypotheses.
- Establish Clear Objectives and Guidelines: Clearly define the problem or decision at hand, outline the objectives, and ensure everyone understands the purpose and desired outcomes. Adopting a scientific mindset, where curiosity and evidence guide our thinking rather than intuition and tradition, can help us navigate complex and uncertain environments more effectively.
- Foster Open Communication: Encourage open and honest communication among team members, creating psychological safety or a safe space where individuals feel comfortable sharing their opinions, taking risks, expressing ideas and concerns, speaking up with questions,
and admitting mistakes—all without fear of judgment or retaliation. - Encourage Diverse Perspectives: Actively seek out and consider different viewpoints,
experiences, and expertise within the group. This diversity of thought can lead to more
innovative and well-rounded decisions, helping to identify potential blind spots and challenges. - Facilitate Constructive Debate: Healthy debate is critical for reaching consensus. Encourage team members to challenge assumptions, question ideas, and explore alternative solutions while ensuring discussions remain focused on issues and avoid personal attacks. Consider the importance of cognitive flexibility and the ability to switch between different modes of thinking. This includes knowing when to rely on intuition and when to seek out more data and analysis.
- 6. Build on Common Ground: Identify areas of agreement early in the discussion, and build on these commonalities. Highlighting shared goals and values creates a foundation for collaboration and helps bridge differences.
- 7. Seek Input and Ask Questions: Regularly check in with team members to gauge their comfort levels and gather feedback. Ensuring everyone stays engaged and promptly addressing any concerns reinforces a sense of ownership and collective responsibility.
- Practice Flexibility and Compromise: Consensus often requires compromise. Encourage team members to be flexible and willing to adjust their positions for the greater good, finding solutions that, while not perfect for everyone, are acceptable and beneficial for the group as a whole.
- Summarize and Confirm Agreements: Periodically summarize key points of agreement and areas that still need resolution to keep everyone on the same page. After reaching a decision, validate the agreement and delineate the subsequent steps for execution.
- Follow Up and Reflect: After a decision has been made, follow up with the team to evaluate the outcome and gather feedback on the process. Reflecting on what worked well and what could be improved helps refine your approach to consensus-building for future decisions.
Conclusion
Driving consensus in Sales and Operations Planning (S&OP) is inherently challenging but crucial for organizational success. The process is often complicated by varying priorities, complex data sets, and the inherent biases of the individuals involved. However, by applying structure and these key insights, it is possible to foster a culture of intellectual humility, continuous learning, and collaborative problem
solving.
Embracing these principles can lead to more effective and aligned S&OP processes, ultimately enhancing the organization’s agility and responsiveness in a dynamic business environment. Creating an environment where team members feel comfortable expressing their views and challenging assumptions can lead to more robust and flexible planning, helping to avoid overconfidence and confirmation bias. Continuous learning and adaptation, prioritized over simply being right, drive ongoing improvement in the S&OP process.
IBF’s new book Practical Guide to Sales & Operations Planning is a fantastic resource to learn best practices in S&OP and IBP from world-leading planning experts. You’ll learn how to start an S&OP/IBP process, progress it along the maturity curve, and use it to drive effective decision making that has a direct impact on KPIs like inventory turns, forecast accuracy, cash flow, customer service and more.