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Planning Your Small Business Success Journey – Six Steps to a Dynamite Action Plan

You are considering starting a small business. Most startups fail. So why should yours be any different. Any strategist will tell you that there are many factors that contribute to the success or failure of any endeavor, but the one factor that will guarantee failure is lack of a realistic detailed action plan.

Step 1: Set Realistic and Specific Goals

The key to knowing what goals are realistic and specific is experience. In an established business, past history provides the clue. In a franchise, the franchisor can help you set realistic and specific goals based upon years of experience in the industry. For an independent startup, much research is needed. Talk to other businesses in the area you are considering opening your business. Talk to other business owners in your industry. You will want to ask about customer traffic, revenues, and costs. Then set your goals in each specific area.

Step 2: Identify Activities, Resources, and Responsibilities

I know it worked for Kevin Costner in Field of Dreams, but in the real world, if you build it, no one comes. You have to inform your customers about what you do and why they should patronize you. In many startups you have to lure your first customers in using couponing and special events. Identify the specific marketing and sales activities that will bring your customers in. Have a detailed list of all resources available in your area such as signage, media, and public relations. Outsource what you can. Hire when necessary. Do it yourself if you must. Have a detailed list of responsibilities for each activity and hold your contractors, your staff, and yourself accountable.

Step 3: Define Your Timetable

Your timetable is often closely related to capitalization. Industries have time-tested standards for profitability. A house painter may be profitable in 6 months, but a restaurant takes 3 years to be profitable. If you are considering investing your life savings and need to be profitable in the first month to make your mortgage, find a less expensive business to open. Chart your course carefully.

Step 4: Create Contingency Plans for Other Possible Outcomes

General George Patton once said, “Every plan is perfect until the first shot is fired.” What is your contingency if you get a different result than the one you planned for? If you run a special expecting 20 sales of a particular item, what is your plan if you sell 10? What if 30 people want the special? Always have a plan to liquidate excess with minimal or no loss, or to get more product quickly if needed. If you have done your marketing correctly, people will show up wanting to do business with you. Don’t disappoint them. If there is a piece of equipment that is critical to your business such as a brewer in a coffee shop, know where you backup is. That doesn’t necessarily mean you have another in the cabinet, but have a relationship with your repair service so you can rent one within the hour.

Step 5: Merge your Plan of Action with your Timetable

Every plan must be linked to a realistic and specific timetable. In step 4, you set a timetable to reach the overall objective you identified in step 1. Now, set specific milestones linked to the activities you identified in step 2. These can be graphed with project management software, or a simple outline will do. Just make sure you have identified which tasks need to be identified first before others can be started. Think these through carefully. Building from the bottom up makes sense, but don’t lay your carpet before your roof is finished.

Step 6: Delegate, Supervise, and Evaluate

Launching a startup is a daunting task. Often first time entrepreneurs take on too much themselves and burn out. Then they look for someone they can turn the reigns over to while they focus on what they enjoy most. This is called management by abdication and usually ends in disaster. To implement the plan, the entrepreneur needs to focus on delegation, supervision, and evaluation. This gets the job done faster without burning out the owner.

Entrepreneurship is hard work and high risk. So why do so many try it? Because there is nothing quite as rewarding as building a business that can run without you and provide you with financial security for a lifetime. It may seem the odds are stacked against the first time entrepreneur, but a good detailed action plan goes a long way to level the playing field.

17 "Must Ask" Questions for Planning Successful Projects

Why do some projects proceed without a hitch, yet others flounder? One reason may be the type and quality of the questions people ask at the very start. Below are 17 insightful queries that can expose the uncertain aspects of your project, and thereby help you avoid expensive surprises later on.

1. How Would You Describe Your Project?

Explain as expressively as possible the ultimate, “big picture” vision and purpose of your completed endeavor. How will it look, feel, taste, sound, perform, increase productivity, help your customers, or otherwise benefit human kind?

2. What Are Your Goals and Objectives?

What are you trying to accomplish? List the project goals and objectives in terms that are clear, concise, achievable, and measurable. Example: “Produce a four-hour video training series on self-defense along with a training resource guide and database, to be accessible by college students on the Internet by May 2006.”

3. Who Will Benefit From Your Project?

Examples of audiences or beneficiaries include: Clients, customers, customers’ customers, local communities, wildlife, students, and specific population segments.

4. Will You Be Creating Any Products?

Examples include: Books, publications, studies, reports, manuals, video, audio, multimedia productions, tools, instructional materials, graphics, software and information systems, Web sites, databases, widgets, and special equipment.

5. Will You Be Providing Any Services?

Examples include: Providing telephone support, business software training, day care, statistical analysis, copy editing, and customer satisfaction surveying.

6. What Methods Will You Use?

For example, will you start by researching your audiences’ needs? Will you use phases for design, development, implementation, pilot testing, and rollout?

7. What Kind of Schedule Do You Anticipate?

Will your project or program involve an incremental implementation process that might occur over many months or years? If so, what long-term phases are you anticipating? Are there critical milestones within these phases? Can you create a detailed schedule for near-term tasks you will be performing?

8. Will You Need Any Partners or Collaborators?

Many types of projects will benefit from teaming up with partners who can offer complementary strengths or a long-term track record in an important area. Do you anticipate joining forces with other organizations, consultants, or agencies to complete the project? If so, what experience, expertise, credibility, funding, or other benefits will each party bring to the table?

9. Will You Need Specific Information or Advice?

Do you plan to seek information and help from subject matter experts or other advisors? Will you need to perform research, and if so, what sources will you tap? Examples include Internet resources, company documentation, service reports, trouble logs, customer feedback, surveys, focus group data, evaluation forms, census data, libraries, and formal studies.

10. Will You Need Special Systems or Equipment?

Some projects require setting up a technology infrastructure to create or deliver the products or services. Examples of items in your infrastructure might include: Servers, networks, computers and peripheral devices, and multimedia, sound, or video systems.

11. Will You Need to Use Special Tools or Templates?

Some projects require using a certain set of software tools or a specific set of templates or techniques. It’s important to specify these at the beginning so that everyone will be clear about what’s required.

12. How Will You Evaluate Project Success?

How will you measure the progress and effectiveness of your project? Will you collect information on how you are carrying out your stated objectives (process evaluations), and how well you are serving the needs of your target audiences (outcome evaluations)?

13. Who Needs to Review and Approve Decisions?

Will there be a clear process for submitting items for review and approval, and a set timeframe for receiving comments back? What protocol will be used? A key consideration is whether there will be a single responsible party with the authority to reconcile differing opinions if a review team can’t reach a consensus.

14. How Might Your Project Evolve over Time?

Why should what happens in the future be so important today? One reason is that implementing downstream opportunities can be hindered or helped by decisions that occur at the start. It’s not unusual for a short-lived, “one-time only” effort to take on a life of its own by adding unexpected phases, variations, and versions – so why not plan ahead?

15. Who Will Be Responsible for What?

This aspect is especially important when multiple parties will contribute to the outcome, and even more so when they are dependent on one another. For example, your detailed schedule for Task X might specify that “Completing Task X depends on Person Y in Company C providing the ABC Results by such-and-such a date.”

16. What Risks Should You Plan to Manage?

Nothing is more difficult that anticipating, flagging, and managing potential risks to a project as a whole, or to the successful completion of your part of it. After all, no one wants to admit potential failure, right? However, risk is a normal part of everyday life, and with proper attention, we can manage it!

17. What Open Issues Remain?

What issues and concerns remain after all topics above have been considered? You and your team may be keeping a running list of unanswered questions and unknowns. What are these items, and how and when do you think they will be resolved? Do they present risks until they are answered?

By thinking through the questions above, you can achieve your project goals with much less guesswork and far fewer problems than you may have experienced in the past.

Integrative Business Planning – A Case Study On Insufficient Planning

Introduction

Entrepreneurs would always do some form of business planning before they start a new venture. Quite often this will result in a formal business plan. The format will probably be determined by one of the following:

A business planning software package;
A guidebook on business planning;
Another business plan;
An external consultant.

Although all the above can have satisfactory results, they all have potential pitfalls. One serious pitfall (when using one of the first three methods) is the way that the entrepreneurs tackle the problem. Although all of the methods cater for the addressing of the apparent salient features and even for the interdependence between them, they can not cater for all the intricacies and multi-directional relationships that exist between various features in a business.

Outsourcing the whole business planning process to a consultant also does not solve all the problems. A consultant would need to work quite interactively with the entrepreneurs to be of real value.

Over more than a decade Ventex Corporation advised and assisted companies from business planning right up to harvesting and beyond. This case study highlights the importance of having a well thought-out and executed integrative business planning process. It shows how apparent small issues, that are neglected in the planning process, can have grave consequences for the entrepreneurs.

Salient Features in an Integrative Business Planning Process

The first aspect of integrative business planning is to ensure that all the salient features are catered for. These features can differ drastically from one business to another. Some of the more general features are:

The Business – The opportunity, the business concept, products and services and growth strategy.
Marketing – Marketing strategy (price, promotion, etc.).
Market Research – Customers, market size, trends and competition.
Development – New products, services, markets and facilities.
Operations – All aspects.
The Team – Management team, skills needed, training, board composition and organisms.
Finances – Investment-, financing- and dividend decisions and policies. Also cashflows, profit margins, costs and growth.
Risk Management – Business-, operational- and financial risks as well as potential fatal flaws.

Multi-Directional Relations to Keep in Mind in Business Planning

Unfortunately the salient features can not be seen in isolation. Every feature impacts on various other features and are also impacted by many other features. These multi-directional relationships occur within each individual broader feature (e.g. finances) as well as between different features (e.g. between finances and marketing).

Higher profit margins can for instance decrease the volumes sold, but increase the net profitability. On the other hand can higher volumes (with lower gross margins) increase the volumes sold, but decrease the profitability.

Higher volumes on the other hand can increase the stress factor in production personnel (that already work at maximum human capacity), causing higher absenteeism, lower production levels, extra hiring costs and a corresponding decrease in profitability. Unfortunately these intricacies can not be ignored and an integrative approach of business planning goes a long way in handling it.

An Example of Things that can go Wrong

Ultimate Holidays had a very ambitious business concept in the tourism industry. The industry was booming at the time and they planned in detail to build a luxury lodge that would combine a health hydro, hotel school, conference facilities, adventure center and eco-cultural tourism. (Details are changed for confidential purposes – all the detail does, however, simulate the real-life scenarios close enough to demonstrate the actual learnings).The experience of the entrepreneurs includes business, entrepreneurship, tourism, archeology, law and politics. This project of around $320 million was a life-long passion for all of them. They covered in-depth the architectural designs, legal requirements, development and operational planning issues, the marketing plan and personnel development policies. They also ensured that they had senior politicians and excellent service providers on board.

The business did, however, never got of the ground. What did the experienced entrepreneurs not see? What could they have done differently? They thought they had covered all the various aspects of the business. Analyzing the facts, the following major problems stood out:

The entrepreneurs were not flexible – they had strong pre-conceived ideas;
No detailed market research was done. Specifically not on occupancy rates in the niche industry and on critical investment criteria that investors are looking for;
All the planning was done on individual aspects that were optimized as far as possible. The way that these factors might have effected other factors were never considered.

The entrepreneurs were quite arrogant. They believed that any entrepreneur would be stupid not to invest and they would typically say that they only want investors that share their dreams and that the finances will sort itself out.

The business plan promised a “conservative” 22% internal rate of return (IRR) over a seven-year period. This included the expected capital growth of the facility. Expected occupancy rates were given as 50% in year one, rising to more than 75% by year four. The IRR and occupancy rates were much lower initially and were purely based on thumb-suck. The entrepreneurs then just chanced the figures to make financial sense without changing any of the other related factors.

Investors were often very keen on the concept, until they realized that the occupancy rates were inflated. The real figures based on realistic values indicated an IRR of only 15% – at least five percent below what the investors expected. The financial risk was just too high. Furthermore a breach of trust occurred.From the entrepreneurs’ viewpoint this was an insurmountable problem – they wanted it their way. In the end nobody invested. Much effort was applied and personal expenditures were sky-high. A high visibility in the business and tourism industry was also created. In the end some of the entrepreneurs were financially (and emotionally ruined) and all of them lost credibility.

The important questions in hind-sight are: Could the entrepreneurs saved this project? Could they have included all the features and genuinely expected an IRR of above 20%?

If the entrepreneurs used an integrative business planning process, they would have first ensured that all the salient features were examined. Secondly they would have ensured that all the multi-directional relationships (causality) between the different features were balanced.

By mapping the relationships between the various salient features it showed for instance that:

Occupancy rates are caused by service levels, product offering, marketing and price.
Occupancy rates on the other hand can affect the turnover, profitability and marketing (through word-of-mouth).
Profitability is caused by turnover (through occupants and outside guests), occupancy and cost of doing business (cost of sales and other expenses).
Profitability on the other hand have a direct bearing on the IRR, cashflow and sustainable growth of the business.

Only a very small portion of the multi-directional relationships that exist within and between the various salient features are shown above.

The entrepreneurs should have asked more in-depth “what-if” type of questions. They could start with questions such as: What would happen to the occupancy rate if the price per night increase by 10%? What would happen if the various aspects of the business are phased- in? Would it be possible to cut marketing costs and increase the occupancy rate? The last question typically seems like an oxymoron. This is part of integrative business planning – to look at the two opposites and try and find a solution where both aspects are catered for. In practice this can probably be achieved by using more free advertising in newspapers, internet articles and blogs and by working directly with the tourism associations of the region.

A major aspect (constraint) of this whole new venture was the high capital lay-out. By concentrating on this salient feature it was shown that costs could have been drastically reduced without having any detrimental effect on the occupancy rate. By using a light steel frame construction instead of the normal brick could have caused tremendous savings. The erection time could have been halved with savings in labor and interim interest. The long distances would have resulted in much less transport costs (light steel frames are much lighter than brick). Additional savings are also possible due to other construction benefits and different finishes. No negative effects would have been foreseen.

The building costs of the health hydro was 50% of that of the main complex, but the projected figures showed that it would only produce 33% of the turnover of the main complex (at much lower gross profit margins). This component could have been phased-in at a later stage when the complex was already in full production and when the potential occupancy and profits were much higher.

The analysis of the business showed, that by just changing these two factors (construction method and phased-in hydro) and by using a realistic occupancy rate, that the expected IRR will be in excess of 21%. Further solutions to decrease capital expenditure could have been explored and this could have resulted in a further increase of the IRR. The high road building costs (to the complex) could possibly have been shared with the government and other potential developers (e.g. of a shopping complex or a time-share game farm close by).

Summary

By neglecting some of the salient features or by not acknowledging and planning for important casualties can be problematic or even fatal for a new business. All the salient features need to be covered and at the same time the multi-directional relationships between them need to be balanced. One aspect of the business can not be optimized to the detriment of some of the others. An integrative business planning approach is needed to find the optimum balance for the company as a whole.

The Three Levels of Planning

There are three levels of strategic planning: Corporate, business, and functional. Strategy may be planned at each level, but the plans for every level of an organization should align to insure maximum unity of effort. Without alignment, departments and functions will be working at cross-purposes, and the overall corporate strategy will be less effective. Here is how strategist view each of the three levels of strategic planning:

Corporate level: Planning at this level should provide overall strategic direction for an organization, sometimes referred to as the “grand strategy.” This is a concise statement of the general direction which senior leadership intends to undertake to accomplish their stated mission or vision. Corporate level strategy is usually decided by the CEO and the Board of Directors although other senior leaders will often contribute to the strategy formulation. Strategic options at the corporate level will likely require a commitment of a significant portion of the firm’s resources over an extended period, and the results will have a significant impact on the future health of the organization. Strategic planning at this level will usually include a robust analysis and identification of several strategic options based on the assumed future operating environment. In a multi-business firm, careful consideration will be given to the overall core competencies of the firm and where the boundaries lie between corporate and business level responsibilities.

Business level: Each business within an organization will develop a strategy to support the overall business within its specific industry. Business level strategy is reflects the current position of the firm within its industry, and identifies how the available resources can be applied to improve the position of the firm in relation to its competitors. There are a variety of ways that businesses will compete, but more often than not it is based on the USP (unique selling proposition) of the firm which distinguishes the company and its products from other competitors. If there are no differences between one firm’s products or services from other competitors, then the product or service becomes a commodity. Competition among firms that offer commodities is usually rooted in price competition, and the low-cost providers usually take over. On the other hand, businesses that distinguish themselves can compete on their unique selling proposition. If they can successfully demonstrate why they are different and how that difference can provide a better level of service or quality product, then the business can command a higher margin for the premium service or product. This is the “value” added by the firm, and the business strategy should focus on how the firm adds value.

Functional level: Functional level describes support functions of a business: Finance, Marketing, Manufacturing, and Human Resources are a few examples of the functional level. Strategies at this level should be defined to support the overall business and corporate level strategies. If the functional level leaders can describe their activities and goals in relation to the business or corporate levels, then everyone in the organization will be aligned and as such contribute to the overall goals and objectives for the organization. So for example, functional leaders for IT or HR must ask if the strategies for their functions match and support the overall strategic direction of the businesses they support or of the overall firm itself.

The best strategic planners understand how important it is for a firm to have alignment among the corporate, business, and functional levels of strategy. The overall corporate level strategies will not be effective if the supporting business and functional level strategies are inconsistent with the overall strategic intent of the senior leaders. Thus, it is not only important to pick the right strategy for the corporate level, but also equally important to make sure that the business and functional level strategies support the overall grand strategy for the organization.

CFO Succession Planning – 3 Tactics to Use If You’re Not Being Groomed for the CFO Position

CFO succession planning doesn’t exist in a majority of companies. As a result, talented mid-level executives are left with considerable uncertainty about their opportunities for continued professional advancement. However, there is a way for aspiring CFO candidates to prosper and grow within this environment of uncertainty.

It’s very natural to want to be your company’s next CFO. After all, you’re smart. You’ve worked hard. Your college degrees and professional designations have provided you with the insight and skills required for success. And deep down, you know you deserve the promotion plus the recognition and rewards that go with it. As country music superstar Tim McGraw accurately sings, “Everybody wants to be the big dog, Wanna wag that big dog tail.”

But, to position yourself as the candidate of choice the next time a CFO position opens up (and they tend to open up rather frequently), you must do much more than shape the company’s balance sheet. You must understand the company’s business. You must understand the company’s politics. You must understand your own strengths and weaknesses. And last but not least, you absolutely must play a very active role in the long-term succession planning and candidate grooming process.

Here are the facts. The November 2007 issue of CFO magazine reports that your company’s current CFO is not planning his successor. And, on a more personal note, neither your company nor your CFO is actively grooming you to assume the duties of the CFO. This article is based on interviews with 1,400 CFOs who were asked, “Have you identified a successor for your position,” and the results were astonishing. A full 83% of respondents indicated that they have not identified a successor for the CFO role. And further, when asked, “If not, why not,” 74% of the respondents replied, “Not planning on leaving in the near future,” and 12% answered, “No qualified candidates currently working in the organization.”

Bottom line, only 17%, or less than one in five companies, have identified a successor for the CFO position. Their reasons may vary, but CFO turnover statistics indicate that companies would be wise to have a well defined CFO succession planning process in place. And that spells opportunity for you.

Although 74% of CFOs may not be planning to leave in the near future, the reality is that the average CFO tenure is less than five years, which is south of recent years when the average tenure was seven to twelve years. Regulatory liabilities and overall business pressures have driven CFO tenure downward simultaneously with the increased complexity of CFO recruitment. With the average executive tenure decreasing you can expect the number of internal promotions to decrease also, unless a real and robust succession planning process exists organizationally. Your career is in your hands.

Prior to evaluating your succession planning goals, answer this question, “Am I ready and capable to be the CFO of this or another organization?” Your ego and confidence will say yes. However, for greater clarity you should talk with mentors, cross-functional leaders and an executive recruiter you have developed a relationship with. They see you in comparison to the broader CFO ranks and will give you candid feedback to balance your self-perception with market demands. Once you are certain of your readiness to become CFO you can assess your company’s succession planning process.

With more than 225 executive searches behind me, I’ve identified three key areas that you can explore to help you better evaluate your personal CFO succession planning preparedness, as follows:

1. How long have the current CEO and CFO been in place and what was their previous tenure? CEOs turn over more frequently than CFOs and often, a new CEO will bring his or her own CFO. While it’s hard to predict CEO and CFO tenure, the best future predictor is past performance.

2. Does your CFO have a track record of successfully developing others into a CFO role, either internally or externally? The fact that your CFO has been there a while or looks to be settling in is not necessarily bad for your development. In fact, this can be positive situation as long as your CFO has experience developing leaders to the point they are recruited away.

3. Ask for a specific succession plan and the relative frequency and style of communication you can expect throughout the process. Lack of a plan or lack of interest to discuss a plan will give you flashing lights of caution. In addition, ask for a thorough annual or semi-annual evaluation relative to your capabilities, experiences and acumen from cross-functional leaders. These individuals will share breadth they see valuable to a successful CFO. If your company is committed to a succession planning process, these steps will be built into it and will be relatively easy to self-administer. On the other hand, if your company is not actively involved in a succession planning process, your efforts will typically be recognized and rewarded with an informal roadmap to success. Either way, you win!

It’s crystal clear that you are responsible for assessing your company’s succession planning and driving your career into the CFO suite. Answering the above questions will give you a better understanding as to whether you are in control of your career trajectory or whether others are planning the process with you.

A Tool For the Future – Assumption-Based Planning

The future is one of the most fascinating and talked about subjects today. You can see the future being practiced on a daily basis as people plan events and develop business ventures in a global dimension. Understanding the future is no longer achieved by performing magic or reading someone’s palm but is now recognized as a social science that can be identified as Strategic Foresight, Futures’ Studies, and Futuring (just to name a few), and becoming instrumental in developing new concepts and ideas in the fields of nanotechnology, neurotechnology, biotechnology, and electronics technology for the future.

One of the tools derived from strategic foresight or planning is called Assumption-Based Planning (ABP). This tool can be used to help people and planners from all walks of life recognize and incorporate assumptions in a plan during times of great uncertainty. James Dewar defines ABP as, “a tool designed for improving the robustness and adaptability of plans-reducing the number of avoidable surprises in any plan or planning.” You may be asking yourself at this moment how assumption-based planning can accommodate you for your future? The key is in knowing how to recognize assumptions through creative thinking and include the assumptions in your plans to avoid surprises that could destroy your plans. This article will demonstrate how assumption-based planning can become a tool to circumvent the element of surprise and utilize creative thinking and planning in the development of your own ABP.

Origination of ABP

The Rand Corporation developed the ABP in 1990 to assist the US Army in trend-based planning. James A. Dewar explains that the ABP is a “post-planning” tool (recognizing that planning is an iterative process) that concentrates on the assumption that there are possibilities in which a plan can fail; preparing for alternatives that affect an already-developed plan. “Specifically, the ABP works to decrease the risks that assumptions represent.” ABP originated as a five-step plan defining ways on how a plan could fail. Dewar maps the assumptions below.

Step 1 – Load-bearing and vulnerable assumptions – Load-bearing assumption is like a load-bearing beam; pull it out and the roof caves in. Vulnerable assumption is one that could fail within the expected lifetime of the plan. Both of these assumptions can resort to an alternative plan.

Step 2 – In a broken assumption, the hedging action prepares the planner for failure.

Step 3 – Signposts – warning signs that can be used to monitor assumptions that are mostly likely to produce surprises.

Step 4 – Shaping actions – help the assumptions play out to the planners’ satisfaction.

Step 5 – Hedging actions – prepares the planner for the possibility that the assumption will fail despite efforts to secure it.

Today’s global leaders need to consider the ever changing global environment and incorporate assumptions into their strategic foresight planning. On a personal basis, parents and children can learn to develop an ABP utilizing Dewar’s model, which can prepare them in creating and incorporating assumptions in the development of a futures’ plan for their activities, events, and their future. On a personal dimension, let’s visualize how an ABP can be applied to a family reunion event.

Forecasting a Family Plan Using an ABP

Let’s take the ABP into a personal level utilizing the imagination and creative abilities of the family members who will plan a family reunion. Imagine your family is planning a family reunion one year from today’s date. This is the plan; you incorporate assumptions into your post plan to develop a plan that ‘might’ meet the satisfaction of the family. Here are the assumptions:

Consider the family members that need to ask for time off from employers, which employers may not grant.
Consider travel costs over a person’s budget.
Consider the additional expenses each family will incur in case an unexpected emergency occurs and cancels their travel plans.
Consider the donations needed from each family to cover expenses for reunion and family member unable to supply. Will you pick up their tab?
Consider the possibility of some family members cancelling at the last minute.
Consider family members that do not contribute their part financially and need to be confronted.
Consider if hotel accommodations do meet with standards of family members.
Consider if reunion plans do not accommodate all age groups.
Consider any health or meal restrictions.
Consider available health professionals locale in case of emergency.
Consider activities for children and adults.

I believe you are seeing the picture of an ABP. It is taking all possible, probable causes and creating assumptive behaviors and/or actions that could alter a strategic foresight plan. If you write out Dewar’s model, and you are a visual learner, the model can be converted into a visible table that can benefit both planner and family member. Taking the location as part of the assumptive process, the ABP helps identify the ‘what if’s’ to the reunion’s ABP. Consider some of the assumptions in the example below:

Load-bearing vulnerable – Location provides for indoor and outdoor events
Broken assumptions – Location is vulnerable to inclement weather and power outages
Sign-Post – Family reads reviews of previous customers
Shaping Actions – Family asks location manager to guarantee generator in case of power outage.
Hedging Actions – Family makes back-up generator reservation in case with 24-hour cancellation allowance.

Conclusion

People use the ABP on a daily bases and do not realize the creative abilities involved in the assumptions’ process. From the personal spectrum to the corporate environment, the ABP is an adaptable instrument that can benefit those who utilize the plan. Regardless of the structure of a leadership environment, whether top to bottom initiatives or flat, leaders, corporate executives, and everyday people can adapt the ABP process into their daily agenda. Cornish wrote about the lessons learned from great explorers such as Lewis and Clark, for example, in his book. He mentioned how these famous explorers used maps and ‘hearsay’ about the territory to develop their expedition. There may have been a prototype of an ABP in their plans which allowed them to consider assumptions and work around failures to successfully complete their ventures. Whatever the case may be, they were able to succeed and accomplish the task set before them.

Can an ABP tool work for you? Do you have the ability and imagination to interject assumptive planning into your daily agendas, work plans, strategic plans? The Book of Jeremiah, chapter 29, verse 11 in the Old Testament states, “For I know the plans that I ‘have for you’ declares the Lord, ‘plans for welfare and not for calamity to give you a future and a hope…” If we can draw inspiration that our plans can be successful, then tools such as the ABP can help us make our dreams come true. I like to compare the ABP to an apple, you can count the seeds in an apple but can you count the apples that will come from the seeds when they are planted and produce fruit? Creativity and imagination will forge the future of successful planning instruments.

The CEO’s Guide To Succession Planning – Managing Risk & Ensuring Business Continuity

Introduction

Once reserved for the upper echelons of senior management, and often viewed as replacement planning should catastrophe strike, today’s succession planning is being redefined. The discipline has broadened in both breadth and scope to become a central component of board-level strategy.

Succession planning focuses on managing risk and ensuring continuity across all levels of the organization – risk of untimely departures of critical personnel, risk of retirees taking their skills and knowledge with them and leaving nothing behind, and risk of losing high value employees to competitors. It does so by helping your business leaders to identify top performers within the organization, create dynamic “talent pools” of this critical talent that other leaders can leverage, and prepare and develop these high performing employees for future roles.

If this was easy, everyone would be doing it. The problem that exists today is that succession planning is barely automated, let alone optimized. This CEO guide provides five key tips for jump starting your succession planning efforts.

1. Automate and Reduce Costs

Today’s succession planning efforts are characterized by fragmented, inconsistent, paper-based processes. Indeed, 67% of companies are still primarily paper-based, according to a global survey conducted by SumTotal.

Conventionally, business and HR leaders will spend weeks or even months manually scouring different parts of the organization for information needed to build lists and pools of nominees and successors for specific job families or positions. The information required to generate the lists often includes self assessments, past performance appraisals (often paper-based), and 360 feedback. After a lengthy period of information gathering and aggregation followed by manual analysis (e.g., nine-box, gap analysis), the results are printed and collated into large three-ring binders for use in executive planning meetings. This time-consuming, inefficient, and costly process is still commonplace today.

To effectively transform succession planning from a manual, paper-based process to one that is systematic and technology-enabled, CEOs must focus on laying a solid foundation supported by strong executive leadership.

Program & Process Foundation

Establish dedicated management function (e.g., program management office) with CEO-sponsored executive leader or council (with senior representation from line-of-business, geography, and corporate HR)
Define core succession process along with key constituents and tasks at each step of the process; Clearly articulate touch points to other business processes (e.g., performance management, career development)
Understand implications of change with emphasis on managers & employees
Align program with broader business strategy
Determine initial scope (e.g., enterprise-wide, divisional)
Define processes independent of technology

Technology Foundation

Must support and enable key processes
Must integrate learning and development
Must link seamlessly to other business processes, especially performance management
Must be flexible and configurable to meet unique needs
Must centralize and consolidate key information and data
Must be easy for managers and employees to use

2. Drive Succession Planning Deeper into Your Organization

Many CEOs still view succession planning as replacement planning to designate successors in the event of a catastrophe befalling senior company leaders. Indeed, succession planning penetrates only the highest levels of the organizational hierarchy, according to survey data. Only 35% of companies currently focus their succession planning efforts on most critical roles within the organization.

Yet a most dramatic transformation is underway: 65% of the organizations surveyed plan to extend succession planning to all critical positions within the two years. Applying succession planning beyond the top layers of management is critical to retaining high performers across all levels of the organization and mitigating the risk of untimely departures of personnel in high-value positions.

The key to extending succession planning into the organization is to provide career development planning to employees. Indeed, fully 97% of business and HR leaders believe that a systematic career development process positively impacts employee retention and engagement. These leaders also believe that providing career advancement opportunities as well as dedicated development planning to employees are the two most important mechanisms for retaining high performers.

Retaining existing employees not only has the potential to minimize the effects of talent shortages, it also provides significant and tangible cost savings (since replacement costs range from 100%-150% of the salary for a departing employee).

3. Establish Dynamic Talent Pools to Improve Pipeline Visibility

Centralized talent pools provide CEOs with global visibility into their talent pipeline and overall organization bench strength. They provide a mechanism for ensuring that the organization’s future staffing plans are adequate, thereby reducing risk and ensuring continuity. To be truly effective, talent pools need to be dynamic in nature. For instance, if an employee is terminated, that person should be automatically removed from existing successor pools. Alternatively, if an employee closes a key skill or certification gap that had previously kept her from being considered as a successor, the pool should be updated appropriately. Talent pools that are inaccessible or not up-to-date are of little use to decision makers.

A key element of making talent pools accessible is in-depth searching for talent exploration. A talent pool is not much good if managers cannot easily view, track, update, and search for potential successors. Dynamic talent pools should take the guess work out of succession planning by aligning employee assessments, competencies, development plans, and learning programs. Proactive system monitoring ensures that as employees learn and grow, talent pools are dynamically updated to reflect the changes. It is this element in particular – supported by robust reporting and analytic capabilities – that helps CEOs make more objective staffing decisions and better plan for future staffing needs.

4. Promote Talent Mobility to Retain High Performers

Industry analyst firm Bersin & Associates defines talent mobility as “a dynamic internal process for moving talent from role to role – at the leadership, professional and operational levels.” The company further states that “the ability to move talent to where it is needed and by when it is needed will be essential for building an adaptable and enduring organization.”[1]

Talent mobility is:

A business strategy that facilitates organizational agility and flexibility
A mechanism for acquiring and retaining high performing and potential talent
A recruiting philosophy that favors internal sourcing over costly external hiring
A method for aligning organizational and individual needs through development
A proactive and ongoing approach to succession planning rather than a reactive approach

A systematic talent mobility strategy enables business leaders to more effectively acquire, align, develop, engage, and retain high performing talent by implementing a consistent, repeatable, and global process for talent rotation. Without a cohesive talent mobility strategy, CEOs face several risks:

Focus on costly external recruiting vs. internal sourcing
Wrong hires (cost can be 3-5x person’s salary)
Increased high performer churn
Reduced employee engagement
Reduced flexibility as business conditions change

CEOs should consider the following integrated processes – and a complete technology platform to support them – to promote and enable talent mobility:

Current workforce analysis:Includes detailed talent profiles, employee summaries, organization charts, competencies, and job profiles.
Talent needs assessment: Assess employees on key areas of leadership potential, job performance, and risk of leaving.
Future needs analysis:Development-centric succession planning to create and manage dynamic, fully-populated talent pools.

5. Integrate Succession Planning to Broader Business Processes

Succession planning is not a silo. It implicitly relies on other talent processes and data, especially assessments that provide a performance and competency baseline. Yet unlike a performance management process, which can be executed in a relatively self-contained fashion (assuming it has access to core employee data), the same is not true for succession planning.

Succession planning requires foundational data (e.g., competencies, job profiles, talent profiles, and employee records) and inputs (e.g., appraisals, feedback). Outputs include nominee pools, successor pools, development/learning plans, and reports. To facilitate the level of integration required to get succession planning right, a single, natively-integrated technology platform that centralizes key talent processes and information is required. With this single platform, the time to develop succession plans can easily be reduced from weeks or months to mere hours. The benefits can be significant: reduce costs, reallocate personnel from tactical activities to more strategic endeavors, and mitigate the risk of untimely departures of essential personnel.

Additionally, a single technology platform promotes the linkage of learning and career development to succession planning. By bridging these processes, nominees who are not ready for advancement can be assigned detailed development plans that guide them to improve the competencies and skills required for new job positions. Learning paths and specific courses can be established for employees to facilitate their career growth. By providing learning opportunities and development plans to employees, CEOs can take a more active role in promoting employee growth, retention, and engagement.

Finally, with a single system of record, reporting and analysis is vastly improved, since all relevant talent data resides within a single data structure. Strategic cross-functional metrics can be readily established (e.g., measure the impact of learning and development programs on performance). Reporting and analysis are key to the CEO’s success in managing employee resources and implementing strategies that support corporate objectives and initiatives.

Conclusion

Organizations can realize significant efficiency gains and cost savings by moving from a manual, paper-based succession process to one that is fully technology-enabled. The shift to a single technology platform facilitates extending succession planning deeper into the organization, since a well-architected solution seamlessly links succession to career development and learning. A complete platform improves senior management’s global visibility into the talent pipeline and bench strength, and promoting talent mobility to retain high performers becomes a viable engagement strategy. Succession planning, done correctly, is all about process and supporting technology integration. Without integration, succession planning becomes just another organizational silo.

Endnotes

[1]Lamoureux, Kim. “Talent Mobility: A New Standard of Endurance.” Bersin & Associates, November 30, 2009.

Marketing Planning – Don’t Do SWOT

SWOT (Strengths, Weaknesses, Opportunities, Threats) is a popular framework for developing a marketing strategy. A Google search for “SWOT” and “planning” turned up almost 93,000 hits (August 2004), most all of which laud the use of SWOT. Some students have said that it is the most important thing they learned at the Wharton School.

Although SWOT is promoted as a useful technique in numerous marketing texts, it is not universally praised: One expert said that he preferred to think of SWOT as a “Significant Waste of Time.”

The problem with SWOT is more serious than the fact that it wastes time. Because it mixes idea generation with evaluation, it is likely to reduce the range of strategies that are considered. In addition, people who use SWOT might conclude that they have done an adequate job of planning and ignore such sensible things as defining the firm’s objectives or calculating ROI for alternate strategies. I have observed this when business school students use SWOT on cases.

What does the evidence say? Perhaps the most notable indication is that I have been unable to find any evidence to support the use of SWOT.

Two studies have examined SWOT. Menon et al. (1999) asked 212 managers from Fortune 1000 companies about recent marketing strategies implemented in their firms. The findings showed that SWOT harmed performance. When Hill and Westbrook (1997) examined the use of SWOT by 20 companies in the UK in 1993-94, they concluded that the process was so flawed that it was time for a “product recall.”

One advocate of SWOT asked: if not SWOT, then what? Borrowing from corporate strategic planning literature, a better option for planners is to follow a formal written process to:

Set objectives
Generate alternative strategies
Evaluate alternative strategies
Monitor results
Gain commitment among the stakeholders during each step of this process.

I describe this 5-step procedure in Armstrong (1982). Evidence on the value of this planning process, obtained from 28 validation studies (summarized in Armstrong 1990), showed that it led to better corporate performance:

20 studies found higher performance with formal planning
5 found no difference
3 found formal planning to be detrimental

This support was obtained even though the formal planning in the studies typically used only some of the steps. Furthermore, the steps were often poorly implemented and the conditions were not always ideal for formal planning.

Given the evidence, SWOT is not justified under any circumstances. Instead, use the comprehensive 5-step planning procedure.

References

Armstrong, J. S. (1982) “The Value of Formal Planning for Strategic Decisions,” Strategic Management Journal, 3, 197-211.

Armstrong, J. S. (1990), “Review of Corporate Strategic Planning,” Journal of Marketing, 54, 114-119.

Hill, T. & R. Westbrook (1997), “SWOT Analysis: It’s Time for a Product Recall,” Long Range Planning, 30, No. 1, 46-52.

Menon, A. et al. (1999), “Antecedents and Consequences of Marketing Strategy Making,” Journal of Marketing, 63, 18-40.

ERP (Enterprise Resource Planning)

The emergence of the Internet, evolving customer demands, pressure to accelerate business process, and the need to establish more collaborative relationships with key suppliers and business partners are all pushing organizations towards ERP solution. So, what is ERP?

Enterprise Resource Planning (ERP) is described as an “information system package that integrates information and information based processes within and across functional areas in an organization” [1].

Traditional stand-alone applications were designed for specific customers, with limited functionality, and isolated from other applications. On the contrary, ERP is a business tool that integrates all the applications required by an organization as a whole, and connects the organization to other enterprises in a network form. It is usually compromised of several modules such as: a financial module, a distribution module, or a production module. Today, ERP have added new functions such as supply chain management, product data management, electronic commerce and warehouse management. Thus, ERP opens a window of opportunity for businesses to compete globally, respond to competitive pressures, and increase revenue.

ERP Characteristics & Basic Operations:

ERP facilitates company-wide Integrated Information System covering all functional areas like Manufacturing, Selling and distribution, Payables, Receivables, Inventory, Accounts, Human resources, Purchases etc.

– ERP performs core business activities and increases customer service satisfaction.

– ERP facilitates information flow across different sections or departments of the organisation.

– ERP bridges the gap between business partners allowing ongoing collaboration.

– ERP is a good solution for better project management.

– ERP is built as open system architecture, meaning it allows automatic introduction of the latest technologies such as: Electronic Fund Transfer (EFT), Electronic Data Interchange (EDI), Internet, Intranet, Video conferencing, E-Commerce etc.

– ERP not only addresses the current requirements of the company but also provides the opportunity of continually improving and refining business processes.

– ERP provides business intelligence tools like Decision Support Systems (DSS), Executive Information System (EIS), Reporting, Data Mining and Early Warning Systems (Robots) for enabling people to make better decisions and thus improve their business processes.

– ERP tracks a wide range of events in an organisation, and plans for future activities based on these events.

ERP driving forces:

1. The need to increase supply chain efficiency.

2. The need to increase customer access to products or services.

3. The need to reduce operating costs.

4. The need to respond more rapidly and flexibly to a changing market place.

Global ERP Implementation:

Historically, most international companies have managed their systems on regional basis, because there was no single solution that was globally acceptable.

In today’s dynamic business environment there is a strong need for the organisations to become globally competitive. The key for success lies in customer satisfaction, through understanding customer needs, and providing quality goods and services in the shortest time possible. To support a global outlook, many firms implemented or are in the process of implementing Enterprise Resource Planning (ERP) Systems, in order to improve level of coordination among national entities of the same firm, and also with business partners. However, to achieve this level of coordination it is important to have a global market strategy, a common IT infrastructure, and business processes in place.

An analysis of past global ERP projects, highlight on the importance of aligning organisation structure with business process and business strategy with IT strategy in order to compete in the international market. ‘Threads’ is a good example of an international company that replaced its legacy system with ERP. ‘Threads’ had a national organisation structure that operates on country by country basis.

To obtain a global view ‘Threads’ decided that its time for change by transforming the company from a local to a global geographical perspective. Hence, making Europe as one market for their business operations, and also ensuring competitiveness through a focus on the quality, price, and customer service. The intended organization structure and supporting global ERP is shown in [2].

Enabling Technologies:Traditional ERP systems required sophisticated and expensive information technology infrastructure such as, mainframe computers. Nowadays, with the advancement of information technology and the cost reduction of computers it becomes possible for SME’s to think about ERP Systems. Moreover, the power of Three Tier Client Server architecture and scalable relational data base management has made it easier to deploy ERP Systems in multiple locations.

Implementation of ERP

Implementing an ERP project is a process consisted of many phases. Following, a step by step approach will simplify the process and is more likely to yield a better result. The normal steps involved in the implementation of an ERP are as below:

o Project Planning

o Business & Operational analysis including Gap analysis

o Business Process Reengineering

o Installation and configuration

o Project team training

o Business Requirement mapping

o Module configuration

o System interfaces

o Data conversion

o Custom Documentation

o End user training

o Acceptance testing

o Post implementation/Audit support

In short, implementing ERP can transform the way an organization conducts business. It helps the enterprise link its resources, utilise and allocate them in the best possible manner and control them on real time basis. For instance, in the case of ‘Threads’ the transformation from Legacy system to ERP system resulted in a reduction of data redundancy, reduction of overheads, an increase in customer responsiveness and customer service levels throughout the firm. This has been facilitated by implementing a common global ERP system throughout its European operation.

Critical factors for Success of ERP:

The successful implementation of an ERP project requires management to plan carefully, and have all needed human and financial resources in place. Below is a list of the main critical factors for the success of ERP:

1- Top Management Support:

Among the most important factors for the success of ERP project is the top management commitment and support. The role of top management includes, developing an understanding of the capabilities and limitation of the proposed system, setting goals, and communicating the corporate IT Strategy to all employees [3].

2- Project Management:

Another important factor for the success of ERP is managing the project life cycle from initiating to closing phase. The Project Manager (PM) has sole responsibility and authority for planning and controlling the project scope to meet the deliverables in the given time frame and budget.

3- Selection of the appropriate package:

Selecting the appropriate package is an important managerial decision. Analysing and evaluating the organisation needs and processes help in taking the right choice that best suits the business environment. A careful selection of the right package results in minimum modification and successful implementation and use. On the hand, selecting the wrong software may mean a commitment to architecture and application that do not fit the organizational strategic goal or business process [3].

4- User training and education:

A quality implementation can de derailed by poorly trained employees who do not know how to properly operate the ERP system. The knowledge transfer to employees is arguably more important than the quality of the system. For that reason, companies should use consultants to run training sessions on how the system works, and how they relate to the business process.

5- Business Process Re-engineering:

Business Process Reengineering is a pre-requisite for going ahead with implementing ERP system. An in depth BPR study has to be done before taking up ERP. Business Process Reengineering brings out deficiencies of the existing system and attempts to maximize productivity through restructuring and re-organizing the human resources as well as divisions and departments in the organisation

6- Dedicated Resources:

One of the main critical factors for ERP success is determining the human and financial resources needed to implement the system. This should be done at an early stage of the project. Failing to commit the required resources often result in schedule and cost overdue.

7- Project Team Competence:

Another key element of ERP success or failure is related to the knowledge, skills, abilities, and experience of the project manager and team members. The project team should work in a coordinated way to achieve one goal. Hence, it is vital for team members to have technical and business skills to complement their work.

8- Clear goals and objectives:

Setting clear goals and Identifying the Objectives of the ERP Project is the third most critical success factor. The initial phase of any project should begin with a conceptualization of the goals and possible ways to accomplish these goals. It is important to set the goals of the project before even seeking top management support [3].

9- Ongoing Vendor Support:

Ongoing vendor support represents an important factor with any software package. ERP systems require ongoing vendor support to keep them up to date with the latest modules and version. In addition to this, vendor support provides technical assistance, and maintenance.

10- Interdepartmental communication:

Good communication is a key component for the success of ERP. Hence, it is essential to communicate effectively between team members and the rest of the organization, in order to keep everything working properly.

To conclude, ERP implementation could become a complex and risky process, if not managed properly. Organizations need to identify the critical issues that affect the implementation process. Such as: selecting the appropriate software package, securing commitment and support from top management, cooperation from business partners, having adequate knowledge among team members, training employees and keeping them informed. All those issues and other more can minimize the failure of ERP project and maximizes the success of ERP implementation.

References:

[1] Kumar, K. and Van Hillegersberg, J. ERP Experiences and Evolution, Communication of the ACM, (43:4), pp. 23- 26, 2000.

[2] Holland C. and Light B. (1999) Global Enterprise Resource Planning Implementation Retrieved August, 27, 2005 from: http://csdl2.computer.org/comp/proceedings/hicss/1999/0001/07/00017016.PDF

[3] Somers T.M., and Nelson K. (2001), The Impact of Critical Success Factors across the Stages of Enterprise Resource Planning Implementations, published in 34th Hawaii International Conference on System Sciences 2001, Hawaii

[4] Holland C.P, and Light B. (1999), A Critical Success factor Model for ERP implementation, IEEE Software, May/June 1999, pp. 30-36

[5] Hammer M. and Champy J. (1994) Reengineering the Corporation, New York, Harper Business.

[6] Kerchevak M. (2005) Five Steps to an ERP Solution, Retrieved September 3, 2005 from: http://archives.tcm.ie/businesspost/2005/06/05/story5254.asp

[7] Robinson S. (2004) A Developer’s Overview of ERP, Retrieved September 1, 2005 from: http://www.developer.com/design/article.php/3446551

Important Facts about Strategic Planning

Every person has a goal; regardless of what areas of their lives it is being associated. A goal will remain a goal unless it was successfully achieved. Many would ask why some people are successful and some are not. Well, the answer lies on strategic planning.

Strategic planning is the process of developing strategies and defining objectives to reach a particular goal or set of goals. If you labeled your planning as “strategic” then you must expect that it would perfectly operate on a grand scale. It will achieve success in a broader field.

It is very different from “tactical” planning which focuses more on individual detailed tactics of activities. “Long range” planning however projects current programs and activities into a modified outlook of the outside world where it describes the phenomenon that will likely occur.

Strategic planning is creating more desirable results in the future through influencing the external world, and adapting current actions and programs to achieve a more favorable result in the outside environment.

There are different reasons why most people are doing strategic planning.

1. To acquire the capability in obtaining the desired objectives.

2. To fit well on both the organization’s core competencies and resources, and to the external world. Make sure that your plans are appropriate and feasible.

3. To acquire the capability in providing competitive advantage that is sustainable within the organization.

4. To prove that it is flexible, dynamic, and adaptable even to changeable situations.

5. To be sufficient in providing favorable results without cross-subsidization.

These advantages will not be realized without its methodologies. Strategic planning depends on STP (three-step process) process. “S” for situation where it was been thoroughly evaluated, “T” for Target where goals and objectives are defined, and “P” for path where the routes of goals and objectives are clearly mapped.

However another alternative approach can also be used. It is known as the Draw-See-Think-Plan procedures. “Draw” creates the desired image and achievements. “See” evaluates current situation and detects gaps between ideal situation and current situation. “Think” develops specific actions that must be done to bridge the gaps between ideal situation and current situation. “Plan” lists down required resources for the execution of activities.

Strategic planning is also considered a set of creative and logical steps.

1. It clarifies the objectives to be achieved. These objectives are ranked according to the level of its importance. It can either be TRO (Top Rank Objective), 2nd Rank Objective, 3rd Rank Objective and so on. The lower rank objectives answers the “How” question while higher rank objective answers the “why” question. However TRO is exempted because the objective here is defined.

2. It gathers and analyzes the information. It includes internal assessment on resources, and external assessment which include environmental scanning. Morphological analysis is used by both internal and external assessments. SWOT analysis can also be incorporated to assess the aspects of environments and organizations that are essential in achieving the strategic plan objectives.

3. It evaluates objective feasibility in the SWOT view. SWOT is the acronyms which stands fro Strengths, Opportunities, Weaknesses, and Threats.

4. It develops strategy involving SWOT.

5. It develops action programs creating a more attractive strategy.

To summarize everything, strategic planning provides overall strategic direction on the core management of the company. It gives a more specific direction in areas such as marketing strategy, financial strategy, human resource strategy, organizational development strategy, and deployment information technology strategy to achieve success.