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Your financials

First, if you aspire to senior management, you must be fluent with financial data.

Take one of two American Management Association courses, either the

• AMA’s Course on Financial Analysis Seminar # 1552, or
• Fundamentals of Finance and Accounting for Non-financial Managers Seminar # 2218

The financial presentation to the planning team involves a comparison overtime between you and either a national benchmark, an industry benchmark or your direct competitor.

Later, as you propose a strategy, I'll show you how to estimate a strategy's value.

A Strategic Planner's Responsibility is to Anticipate Consumer Demand - Using a National Benchmark

How do your sales compare to the US consumers national spending patterns?

The best national measure of consumer spending is personal consumption expenditures (PCE), measured monthly by the Bureau of Economic Analysis (BEA). Simplistically, our combine cash in - our earnings from salaries and investments - plus cash from borrowing LESS what we saved equals US personal consumption expenditures.

Embedded in PCE are businesses and consumers reaction to inflation or deflation. If inflation growth is greater than improvements in PCE from raises, you are losing purchasing power. When inflation slows, everything else being equal, PCE increases. PCE includes the effect of inflation (called the PCE deflator in BEA speak). It helps if you can factor out inflation using the PCE deflator, which is called Real PCE.

Hourly earnings growth from raises or new hire drives PCE improvements. With more earnings in the economy, consumers can either spend more or set funds aside "just in case." In 2010 , the national saving rate is near 5% and consumers are holding back - cash is being held in reserve. (See St Louis Fed FRED chart for latest data - note the anomally that consumers are spending but earnings are not growing coming out of the Great Recession.)

Increased employment also improves hourly earnings, but unfortunately, new hiring lags in a recovery. Bosses wait to hire until they are sure.

Most analyst report the change in Real PCE compared to the same month last year (noted as year on year or YoY) or to the previous month (month on month or MoM).

The extra analytical step is to determine the rate of change from the previous data point. For example, Real PCE grew 1.80% YoY month two and was up the previous month one's YoY growth of 1.71%, its rate of growth is 0.5%.

A fundamental strategic planner's responsibility is to anticipate the pace of the growth. The YoY rate of change in your sales lets you analyze the pace compared to PCE.

Strategists, strategy consultants and facilitators should insist on sober analysis of consumer spending patterns before presenting their plans to the C level. These analyses should explain their customers' attitude about discretionary income. Ask them about their concerns, their need to save, are they seeing tax increases, do they expect a raise, are their health costs going up, can they borrow? Get a sense of how the Great Recession is changing their spending habits!

To broaden your perspective, read Joseph H. Ellis' Ahead of the Curve, A Common Sense Guide to Forecasting Business and Market Cycles. He observed that this recovery is following the 1974 pattern and suggests we need to see at least 2.0% YoY rate of increase in Real PCE to spur industrial spending and then create jobs.