We have consulted with many organizations in the past 30 years. It’s safe to say that a very high percentage had no effective plans or planning processes.
Many have annual budgets that often become so mired in detail that efforts lapse into frustration and last minute (undocumented and uncommunicated) decisions.
Sometimes data is twisted to rationalize opinions. Often, valuable assumptions and information are buried deep within lengthy explanations.
When their annual plans are finally complete, the only things remembered are the top-line and bottom-line projections. The plan – “how-to get there” – is oft forgotten.
Once completed, few teams refer to their plans, review them or update them.
One synchronous planning process integrates all three plans – Strategic, Annual and Monthly. It is Leadership’s tool for maintaining organizational alignment.
The End in Mind
Planning and executing plans are the basic disciplines that drive value at every level of business.
Planning and execution is an iterative process.
Plans change, and they communicate change – what, when, and who’s leading.
Plans keep everyone on the same page.
Effective plans – Strategic Plans, Annual Operating Plans and Monthly Plans – are synchronized, fact-based and goal oriented.
Each plan is a working document – 3 to 5 pages – and is brief, flexible and easily accessible.
Plans provide tools for evaluating progress.
Successful people plan continuously. Moreover, they always have contingency plans.
To get plans out management’s heads and onto paper, begin by eating the elephant one bite at a time.
Planning begins with the end in mind. Ask:
- Where do we want to be? By when? Why? How?
- How do we get from here to there?
Look out 3-to-5 years to provide context, growth targets, and to leverage the right resources.
Consider goals, business scope (products, markets), capabilities, processes and arrangements, and execution.
Answers provide a general direction for the Strategic Plan.
Then segment the Strategic Plan into Annual Plans, and then Monthly Plans. All altogether, One Synchronous Plan.
The Strategic Plan
Creating and executing strategy is a major leadership challenge. Anyone can ponder opportunities. Skilled leadership teams choose the better opportunities and invest their resources to achieve them.
Observe a typical company’s 3 to 5-year opportunity horizon:
- You need to re-shape your customer base;
- You need to upgrade your image and marketing strategy;
- You have key customers demanding cycle time and cost reductions;
- You will be introducing new products and services;
- You need internal software and management process upgrades;
- You have a competitor salivating over your most profitable distribution channel; and
- You have key people planning retirement.
Get together your senior managers and key staff to build a Strategic Plan. It will likely take a few meetings and painful repetition. Build consensus and ownership.
As the leader, sketch out your guidelines and early observations. Challenge them to embrace the desired results. Listen to their concerns. Outline broad planning strokes.
Consider goals, business scope, capabilities, processes and arrangements, and execution.
Scribe a framework of broad goals and objectives.
Consider products, services, life cycles, major projects, customers, markets, facility locations.
Are the right people in the right places? Bend, fold and twist the organization. Keep it real and keep re-focusing on legitimate strategies and actions for getting there. Expect conflict. Manage it.
Refine how-to get there. Brainstorm possibilities, processes, and third-party arrangements. Anticipate problems and contingencies, identify early actions, prioritize expected time-frames, and early accountabilities.
Determine progress measurements and objectives for markets, product families and significant projects. Thumbnail gross margin targets.
Summarize the efforts into draft plans and priorities into a 3-to-5-page Strategic Plan that includes year-by-year goals and targets, organizational structure, financial benchmarks, and assumptions.
Effective planning takes leadership, consistent effort, discipline, focus, and flexibility. Some cultures are starting from zero. If you’re starting from zero, consider getting an outside facilitator.
Segment the Strategic Plan into doable annual pieces. Some objectives and issues will need addressing sooner than others. Balance the agenda and pace-of-play with available resources – people, time and money.
Annual Plans should include protecting the base-business, targeting new customers, forecasting sales, balancing inventories, hiring and cultivating talent, investing in products and equipment, projecting profits and cash flows; among others.
Step back. Are each year’s Annual Plans doable? Or, are you just wishful thinking? Make amendments. Consider the impact on the overall Strategic Plan.
Break down the Annual Plan into quarterly pieces. Are contingency plans needed to balance people, time and money issues? Too aggressive? Not aggressive enough?
Detailed Monthly Plans are the specific actions and responsibilities that move the business toward accomplishing the Annual Plan and its strategic goals.
Achieving monthly plans and targets are critical to success. If you make the month, you make the year. If you make each year, you increase the likelihood of realizing the strategy.
Soon after the month is complete, performance should be reported and compared against that month’s plan. The key questions are:
- Are we on the path to meet Annual Plans?
- If not, why not?
- What needs correcting? By whom? By when?”
If there are delays and disconnects, include corrective actions into the next Month(s) Plans. Assign accountability.
At the monthly meeting, review the next few months’ (90-day horizon) goals and plans.
The result is that everyone is using current information and realistic assumptions. Adjustments and reasons for changes are communicated clearly and timely. Update changes to plans promptly.
Clear communication permits everyone to add value. Benefits are top-down and bottom-up. Resources are conserved, and everyone adds value.
Quarterly (or Semi-annual) Reviews
Using the synchronous planning process, leaders and key staff have a concise set of tools for evaluating performance in all three dimensions – aligning the Strategic Plan, Annual Plan, and Monthly Plans.
Schedule quarterly (or semi-annual) reviews to evaluate each quarters’ and year-to-date results. Analyze results and Monthly plans through the lens of the Strategic Plan and the Annual Plan to assure that current activities are contributing to longer-term goals.
Conditions change. Plans must be flexible and periodically amended. Keeping them brief and focused makes them easy to use, amend and communicate as working documents.
When plans are usable and understandable, the information is consistent, and fewer assumptions are necessary. Efforts to support the next year’s planning cycle are greatly simplified.
This year’s repetitions provide the foundation for continuing next year’s planning process.
Core issues are always top-of-mind. As Leader, you’re always in the mode of anticipating, thinking and evaluating core issues rather than reacting.
Planning anticipates and improves execution, customer service, cash flows and profitability. Take control. Create the path. Manage it. Communicate it.
Terry Myers, Principal of Business Edge, is an experienced Management Consultant. He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value. Contact Terry at email@example.com, or Tom at firstname.lastname@example.org.