Business Planning – It’s a lot more than strategy
Boards are responsible for strategy and management for operations. Business planning develops the strategy and ensures it is well executed. Each choice sets up future possibilities and closes off others. This is about making the best choices. This is about changing behaviour.
Why is Planning Important?
Planning is a thought experiment saving the energy and resources of actually doing it. Planning is learning to be ready and able to meet any opportunity. It is not about specific anticipated future opportunities.
A Learning Process
At Acumentum we had three strategies:
- a 90 day induction process for employees
- a formal coaching and mentoring system everyone had a mentor and a ‘management’, ‘design’ and ‘technical’ coach
- an annual 3 day business planning and learning workshop (usually off site) to kick the year off and provide learning activities to ensure the company had the skills to implement the business plan
This identified our core values. Values cannot be found in a book the people in the company provide them. Understanding those values helps shape the culture as the company grows. I’ve personally made the mistake of failing to exclude people, who whilst being impressive, did not share the same values and were not culturally in tune with the team. Looking back the damage done was heart-breaking.
Leadership and Management
They both are required and there are few silver bullets. Leaders need to be authentic, consistent and connected with their team. It is only a matter of time before a team will be undermined by a lack of authenticity, inconsistency or spin.
High Performance Culture
Learning objectives in planning ensures the work the business does builds skills and assets that enhance the future earnings of the company. By accepting mundane projects a company is reducing its future earnings. To move up the value chain each project must be more challenging than the last.
The Planning Process
It should be well structured and easily understood. The strategy should be set by the board, communicated and executed by the leadership group with the support of the whole company.
Session One: The Audit
A good plan shows where the business is today (not where you wanted it to be). Evidence not opinions. Know your environment. What market(s) do you operate in? What type of organisations are typical customers? How many ideal customer organisations exist in your target market(s)? What value is created by your core business activities? Who are your competitors? How easy is it to attract staff? How fast has your company grown over the past 3 years?
Session Two: Assess
Leave predictions to soothsayers. Will this sector grow? What technological or economic forces might impact this industry? What if our customers no longer required our main product or service? In our 2002 planning Acumentum failed to ask this questions and we failed to move as our customers’ needs changed.
Session Three: The Plan
The plan is straightforward; goals, objectives (Specific, Measureable, Achievable, Results oriented, Time framed) and a plan of actions that will achieve the goals. The goals must be realistic but not conservative. Goals must be set within the purpose of the organisation.
The plan must identify actions and the resources (time, tools and materials) required. Alternative plans should be developed. Certainty/risk is important. In the end, your plan is a choice of options with tradeoffs.
Session Four: Doing it!
The plan must be an integral part of everyday business. It must be a real project not something people do in their spare time.
Ongoing Verification and Review
Management must verify what is being done and what is being achieved.
Conclusion
Effective business planning creates fit agile companies that can respond and exploit the best opportunities that come their way. As we learn the company will be able to meet the challenges it faces. Always stretching but never straining!
Russell Yardley is a pioneer in the multimedia and internet industries. Has a science degree and studied law at the University of Melbourne. IBM gave him a sound knowledge of computer technology, management and marketing. In 1985 Russell launched his own company Decision Engineers Pty Ltd. Since then he has invested in and led ASI Decision Engineers (1986), Applied Learning Australasia (floated ASX 1993), Acumen People & Productivity (1991), Acumen Multimedia (1995) renamed Acumentum (2002). A member of the Australian eGovernment Mission to the UK (2001) and the Australian European High Tech Tour (2002), Victorian Premier’s Task Force on Communications and Multimedia (1994-1999), Victorian Government Technology Round Tables (2000-2002), Ministerial Advisory Group for ICT (2003-2006).
See also Russell’s blog on Business Planning
