Over my many years as a corporate CFO and, more recently, as an outsourced CFO and Financial Planning and Analysis (FP&A) professional, I have been puzzled over why so many hardworking, smart, FP&A teams engage in static linear thinking as it pertains to their financial planning processes. I have come to believe that it is because many FP&A teams have become conditioned to be comfortable with simple budget models that have static, consistent, linear rates of growth over time. They are comfortable budgeting based on events from prior periods by increasing sales revenue, along with associated production costs, based on targeted/desired growth without any reliance on other relevant economic factors and conditions.
