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"It is impossible for ideas to
compete in the marketplace if no forum for The Business Forum Journal
The Magic
of Planning: Why Most Plans Fail By Thomas R. Northup
Strategic planning is the most important activity a CEO, a Division Manager and even a department manager can undertake. Effective planning focuses the team. Focus drives performance and performance drives results. Effective planning will produce consistent results. Profitability and revenue will increase year after year. A Harvard study of small to medium sized companies, Figure 1, demonstrates the importance of planning. Companies with equal capabilities with and without planning had vastly different results. The message is that strategic planning will produce competitive advantage in your marketplace. Large companies have departments devoted to strategic analysis and planning. Business units in large companies find it necessary to plan their activities to coordinate with the corporate strategy. Small to medium sized companies do not understand the value of planning and do not plan. Typically the CEO of a smaller company admits, "We are too busy with day-to-day issues and do not have the time for planning."
Figure One The business environment has changed significantly during the last decade. Rapidly changing technology, quick information transfer and global competition have shortened the business cycle. Faced with these changes, Leaders find it difficult to drive their companies to deliver sustainable results. As a result, companies have far less time to react to changing conditions and place themselves at a tremendous disadvantage when they focus only on the short term. Effective Planning Model The Leader must balance day-to-day issues and long term vision, which are not mutually exclusive. While daily productivity and short term results are important, effective planning allows the organization to proactively react to longer term market changes. The leader must give both short and long term issues the proper emphasis for the organization to truly prosper. The most successful organizations focus on a planning model that integrates both short and long term needs, creating an effective planning process that produces consistent sustainable results over time. The model in Figure 2 shows all three areas: the strategic plan, the operational plan and results management, integrated into a framework that drives results towards the long term vision of the organization. This model integrates both processes: finding where the company wants to go and how it will get there. In this model, the management team develops the plan. When the team takes responsibility for thinking through and completing the analysis, it owns the plan. Successful CEOs understand that they must personally commit to this success and drive the process.
Figure Two The integrated process starts with strategic planning, which usually focuses three to five years into the future and evaluates what business the organization is in and how to position itself to get there. A detailed analysis of the past provides a starting point for decisions about the future. The plan covers both external and internal aspects, determining the key success factors in each market segment and within the organization. Management evaluates performance against these benchmarks and determines the gap between where the company is now and where it wants to be. The key is to identify how to turn these success factors into core competencies. Operational planning identifies the results that implementation of the strategic plan will produce during that year. An operational plan works best when it crosses functional areas, requiring the input and coordination of several departments. This breaks down departmental silos and develops stronger organizational teamwork. While senior management usually does strategic planning, operational planning should include lower levels of the organization. Focusing on the issues throughout the organization ensures wide commitment from key people. Plans often fall behind in execution. Continuous effort is crucial to results management. Every day short term priorities take management time and delay results. Management must use focused discipline to regularly monitor and control progress. The effective leader understands the importance of active involvement by everyone in the planning process. His personal high payoff activity is to challenge his team to think more strategically every day. Assess Your Planning Process We all plan to some degree already. However, you should assess your current planning process and compare it to the integrated planning model. Use these questions as thought starters and idea generators.
To determine your planning gap, evaluate the effectiveness of your current practice compared to the best practice as defined in the integrated planning model. If your gap is large, you should explore how to better utilize planning to focus you and your team. Summary The integrated planning process defines best practice in strategic planning. Many plans fail to some degree because the three areas are not integrated into a coordinated process. Plans often fail to fulfill their potential in each of the three categories because:
Planning that has active management participation in all its phases is the most important activity a leader and his team can undertake. Organizations that follow the integrated planning process raise their effectiveness to a level that cannot be reached by any other means. The focus they develop generates competitive advantage in their marketplace. Integrated planning requires the effective manager to share power with his management team. In this way he builds personal motivation among the management team by allowing them to contribute to creating the direction of the organization. The benefit is a very strong team working with mutual trust and shared accountability. The combined best thinking of the team rises to a very high level as the planning process draws on the wealth of knowledge that employees, with differing professional interests, experiences and perspectives, bring to their jobs. The magic of effective planning is the development of a proactive, highly successful organization where profitability and revenue increase year after year. If you would like to explore strategic transformation, I would be happy to meet with you to discuss the state of your business. I will ask you to complete three assessments that evaluate your organization strategically, in leadership and personal productivity. This is your commitment to a focused high quality interchange. There is no obligation. We will meet as long as necessary to have an in depth review. My objective is to first build our relationship. If we agree to continue working together, great, if not then my hope is that our discussion will lead you to constructive change. Tom Northup
949 689-4085
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