CEOs and CFOs often ask, “So, what is goal-based planning?”
My answer is always, “You probably use it every day. Let me explain…”
If you ever use the map and directions app on your smartphone, you are essentially using goal-based planning.
You (or your phone) know where you are. You know where you want to go. You know if you have a car, bike, fare for public transit, or can walk. You may also know when you want to arrive.
Your goal is your destination, or destinations if you have several.
Your available resources are your car, bus fare, or walking shoes.
You may also have a time-constraint and need to get to the destination in some period of time.
And finally, you probably have some idea what you value more, your time, or the distance you need to travel (perhaps concerned about wear and tear on your Tom Ford Alligator Loafers).
Initially, you see what the app suggests if you take the time to walk.
It will take you roughly 2 ½ hours, and you’ll wear out 7 miles of shoe leather.
You decide that’s too long, so you see what it will take on public transit. If you leave now, you can get there in a little over an hour.
That’s better, but what if you hop in a car, which may be yours or with a taxi service.
The trip will take you 18 minutes, and drive a little over 11 miles.
And then you wonder if you could save gas if you went the shortest distance.
Now you only drive 9 miles, but it takes an additional 2 minutes. Maybe not a bad trade-off.
You look at your watch, and realize you need to get there in 10 minutes.
OH. Maybe you should have planned ahead.
Just like your map app helps you consider the various alternatives, our npv10 Quanta AI helps you consider the various ways your company can achieve its goals, within its constraints, and optimize some metric like profits or production or minimize necessary R&D expenditures. It shows you the directions you could follow to get to your destination.
THIS is goal-based planning.