Want Better Performance? Try Better Planning
When done effectively, strategic planning is among the most potent competitive weapons a company can have. Planning helps everyone better understand the departmental and companywide objectives they're developing, while the plan itself keeps everyone on track. If you don't have a plan, employees won't know where they're going, let alone how they're supposed to get there. Here's a round-up of definitions, tips, and techniques to help you get the most out of your strategic-planning efforts:
Goals and strategic planning. No doubt your company has long-term goals. You aspire to be #1 in your market, or the quality leader, or the low-cost provider. You seek 20% sales growth or 10% earnings growth every year. You want to make the Fortune 500 - or the Inc. 500. The strategic plan shows how you're going to get there over the long haul. It positions the company in the marketplaceand establishes a context for the annual plan.
- Checkpoint #1: Are your goals and strategic positioning public? Are theyout where everyone can see them? When Patrick Kelly set out to build PSS/World Medical (Jacksonville, Fla.) into the first national physician-supply company, he put big banners announcing the goal in every one of the company's offices and warehouses. People need to know not just thedestination but the route - the competitive advantage that will get the company where it's going. InPSS's case, the company was able to deliver a higher level of service than its competitors - andevery employee could tell you exactly how it did so.
Annual planning. The annual plan maps out this year's objectives. The process followed by Interroll Corp. is pretty typical. Managers gather for all-day sessions. They review the previous year and assess the external environment. They examine the company's strengths, weaknesses,threats, and opportunities (SWOT analysis) and map out five strategic objectives. Thencomes the nitty gritty: detailed sales forecasts, account by account and month by month. Marketingplans and budgets. Budgets for cost centers. All the numbers get assembled into what districtmanager Martin Clark terms a "planned P&L by product class for each month" - in other words, amonth-by-month picture of what's supposed to happen during the year.
- Checkpoints #2 and #3: A plan is good only if it's accurate. Those salesforecasts - where do they come from? How detailed is the data behind them, and are salespeoplewilling to commit to them? And those budgets: were the people affected involved in helping todetermine them? "Every single person gets involved in our planning process," says CFO Andrea Spears ofThe Lamb Group Companies (Chicago). "We ask teams to tackle different areas of the budget. They haveto ask themselves what it's going to cost to realize our goals." The more participation, the more learning - and the more buy-in.
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Using the annual plan. Don't let it gather dust. The point of planning is to get everybody readingfrom the same page - which means they'd better be looking at that page week after week and monthafter month.
- Checkpoint #4: Do you ask people to compare weekly and monthly performanceto plan on a regular basis? Can they explain variances? The point of a plan is not to constrain a company's actions; there are always unforeseen threatsand opportunities, and companies must often decide to make mid-course corrections. Rather, the plan serves as a point of reference - a benchmark that helps you understandwhat you didn't foresee and how you'll have to change if you move off-plan.
Copyright © 1999 Open-Book Management, Inc.