After the prolonged recession and slow growth economy we’ve faced over the last few years, the organizational cupboards have been mostly devoid of any good news. Across many industries, it has been common to see forecasts coming in below operating plan, suppliers shuttering their operations, and excess inventory being built due to unmet demand. In short, no shortage of bad news.
Inside every organization, someone has the job of delivering all this bad news, and that task often falls to supply chain leadership in the person of demand planners or S&OP leads. These are the people who have been on the hook as they facilitate the discussions to review business results and forecasts.
In the wake of several years of bad economic news, it would be easy to fall into the trap of negativity – yet negative attitudes are not rewarded in most corporate cultures. The dilemma for these supply chain leaders is delivering the reality of the bad news without being considered “nattering nabobs of negativism.” A tough task.
“The Tyranny of Positivity”
Certainly, delivering a pessimistic outlook in the form of business results and a forecast runs counter to our aspirational culture. In the U.S., in particular, we are a “can do” people. We have been influenced by business writings and popular culture about the power of both being and thinking positive. Whether it is Tony Robbins, Norman Vincent Peale’s “The Power of Positive Thinking” or the latest positivity tome, “The Secret,” by Rhonda Byrne, we have been acculturated to being positive and visualizing great outcomes. We have leaders like General Colin Powell saying that “perpetual optimism is a force multiplier,” meaning that being optimistic yields exponential results. It seems almost un-American to be negative.
A good friend calls this obsession with being positive the “tyranny of positivity.” At times this constant focus on positivity can seem “tyrannical,” because as we all know, not all results are favorable.
Inevitably, despite the best intentions and most positive outlook, reality will creep in. Over the last few years, consumers flat out stopped buying, retailers contracted their inventories, SKU rationalization became a dominant theme, and many new products fell short of expectations. Forecasts were missed, and demand planners and S&OP leads had to present the results, often putting them at odds with the folks that want to continue riding on the positivity train, regardless of whether it is heading in the right direction.
Even when bad news comes, people still look for the silver lining or positive spin in the results. Research came out years ago asserting that professional forecasters of every type were five times more likely to react to a positive trend than to a negative trend. As my father used to say, “The weekend forecast for Cape Cod is always sunny with a chance of clouds.” It is simply in our nature to find the good in the bad.
In best practice, the most effective demand plans (and the resultant supply plans) are reality-based with a slight tinge of optimism. The baseline forecast should align with trends, activities, shipment history and plans, and the optimism comes from giving a knowing nod to the well-articulated and -quantified assumptions attached to sales and marketing activities. The benefit of being reality-based is that the organization does not over- or under-commit resources – and if the aspirations and assumptions do not pan out, they can be removed from the plan because they have been identified separately. Such demand plans are prudent and conservative, with an opportunity for growth if some of the external factors and go-to-market plans begin to align.
10 Tips for Delivering the Bad News
So how do you deliver bad news in an environment that craves positive thinking? It’s not easy. Having been a demand planning manager and an S&OP leader through two recessions, I have had to deliver a lot of bad news. Below I offer some tips to managing the delivery of bad news based on my own experience having done some things right and, well, some things not so right.