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Plan of Attack

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Open up the process

Sixty-year-old Malley's Chocolates, in Cleveland, is typical of many privately held companies in that it has a few key decision makers. But in 1993, when president Bill Malley and his wife, executive vice-president Adele Ryan Malley, resolved to develop a formal strategic plan for the family business, they found that planning was a good way to bring new voices into company decisions. All five of the third-generation family members who work for the company got involved. The result, says Adele Ryan Malley, is that the younger relatives are gaining a more complete understanding of the operations of the company, which has about $9 million in sales and 205 employees. "It's giving the third generation some more opportunities to take a different look at the business," she says. "Now they understand more about the worries." The same principle applies in any company, even when family isn't involved. Creating a plan offers a great opportunity to delegate, hear opinions from employees, and groom talented young managers.

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Break down your goals; then take names and set dates

Delegating has one more side effect: it forces you to break down your main goals into practical, easy-to-measure steps that you can assign to others. At Frontier, CEO Stewart discovered that the effectiveness of his company's plans improved dramatically once he introduced a simple change: establishing clear accountability. Now every annual goal has the name of one person -- and one person only -- attached to it. Everyone mentioned in the plan gathers once a quarter and reports to his or her peers on the progress made (or not made) in each area. That arrangement brings group pressure to bear, Stewart says, and much more gets achieved. "It's a world of difference."

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Stay in touch

The best planning process in the world won't work if you base it on bad or stale information. Here's where it pays to stay involved. Although your customers and selling efforts probably provide the best information on current market conditions, industry associations can also be valuable sources of news and trends. Don't neglect hometown business connections, either, especially if most of your business is local. At Yantis Corp., involvement in local business is one reason the 21-year-old, $20-million San Antonio highway-construction company survived Texas's real estate woes of the late 1980s. President Tom Yantis recalls that his father, chairman John Yantis, served on the board of a local savings and loan. In the mid-1980s John began to worry about the viability of numerous real estate projects. He convinced his son that a slowdown was coming.

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Plan for the best -- and the worst

Preparing for hard times helped Tom Yantis develop a multipronged strategy that Yantis Corp. still relies on. Instead of specializing in highly profitable -- but cyclical -- private-development work, the company diversified into city, state, and even federal work. Now Yantis tracks the volume of private real estate projects that get approved by local planning and zoning boards -- a good indicator of construction activity six months or more out. With that information, he can vary his business mix and, with several options to choose from, adjust his company's plans as economic conditions change.

Find your own leading indicator

Tracking zoning decisions in San Antonio won't help your North Carolina software company or Idaho clothing store. But, like Yantis, smart CEOs everywhere look for a variable that gives them an advance indicator of coming business conditions. Sometimes those indicators are the ones everyone watches; a survey of 1995 Inc. 500 CEOs found that several track interest rates as a key variable affecting their businesses. However, indicators can be more indirect and still be telling. At Malley's Chocolates, for example, Adele Ryan Malley has found that stock-market prices are a good barometer of the confidence of the company's customers. Why? Malley's typical customers have medium to high household incomes, according to Ryan Malley. "The ones that have the bigger pocketbooks are usually watching the stock market," she says, "and when that goes up or down, they feel very differently" about spending.