development and implementation of a market-based planning system

Administration and Policy in Mental Health Vol. 19, No. 2, November 1991

DEVELOPMENT AND IMPLEMENTATION OF A MARKET-BASED PLANNING SYSTEM

Larry Williams, M.A., Pamela Bilbrey, M.S., M.B.A., and Linda Roush, M.A.

A B S T R A C T : Planning is not new to the mental health field and marketing is becoming accepted as an important element of the business. However, few mental health facilities have successfully combined planning and marketing into a comprehensive managerial discipline that approaches the challenges of the 1990s and beyond. This report describes a Florida community mental health center's process of integrating the principles of marketing into the planning process.

Historically, most mental health organizations have executed minimal planning. The planning these agencies performed was most often to meet the needs and/or requirements of accrediting bodies and licensing agencies. This type of planning, also referred to as long-term planning or program planning, has focused on the growth of service demands, on the expansion of services and the addition of new facilities to accommodate this growth. This traditional planning has relied u p o n the extrapolation of past trends and has been almost exclusively internally-focused. The process does not consider the needs, wants, and desires of the marketplace nor does it look at the organization's services from a consumer's perspective.

Market-based planning turns this process around and focuses on both the internal and external environments and perhaps even more importantly on the consumer. The need to ascertain the wants and needs of the market makes the gathering of facts and information a vital part of the process. This less traditional planning process requires creative thinking and the ability to entertain

Larry Williams is a Business and Industry Consultant at Lakeview Center, Inc., 1221 W. Lakeview Ave., Pensacola, FL 32501. Pamela Bilbrey is Vice President, Marketing and Special Projects, and Linda Roush is Marketing Specialist, at Lakeview Center.

121 �9 1991 Human Sciences Press, Inc.

122 Administration and Policy in Mental Health

TABLE 1 Comparison of Traditional Planning vs.

Market-Based Planning in Health Care Settings

Traditional Approach Market-Based Approach

1. Focuses on formulating annual goals and objectives, developing a budget and scheduling routine activities

2. Financial component of plan dominates

3. Planning done on ad hoe basis

4. Planning is a managerial activity

5. Reactive management 6. Views the environment as a given

7. Emphasis on program, service or facility expansion

Addresses the development of an overall direction or strategy for the organization The marketing plan is the keystone element in the total strategic plan Planning done on a continuous basis with ongoing assessment of needs, opportunities, and risks Planning involves all levels of staff in the organization Proactive management Views the environment dynamic- ally, alert to underserved markets and promising potential markets Emphasis on meeting identified market needs

and perhaps embrace the idea of change. Utilized to its fullest, market-based planning is a management discipline and philosophy that provides direction to all aspects of the organization's operations.

Over the past 35 years Lakeview Center, Inc. has grown from a small child guidance clinic to a progressive health care agency involved in the delivery of over 40 distinct mental health, substance abuse, and vocational rehabilitation services. Like most community mental health centers, Lakeview Center's early years were not geared toward strategic planning and marketing activities. As MacStravic (1977, preface) states:

"Health care organizations . . . have tended to follow a nonmarketing approach or even an antimarketing approaching their planning and developmental efforts. Their basic philosophy has been that they should provide the best possible services as they see them, and they hope enough people will make use of those services to make their efforts worthwhile. In other words, the organization decides what it wants to do, and the public is supposed to be willing to have it done to them."

In the 1980s the mental health industry began to see changes occurring at an accelerated rate with predictions for continued change in the environments affecting health care. These changes included the phase-out of federal funding, state funding levels that do not keep pace with inflation, the intrusion of for- profit chains in markets that were previously the exclusive domain of the nonprofit sector, the rapid emergence of alternative delivery systems, and the

Larry Williams, Pamela Bilbrey, and Linda Roush 123

increased sophistication of the individual consumer and the corporate buyer of health care services. With rapid change came a sense of uncertainty of direction and an unclear future. With these changes also came the realization that organizations must be specific about the directions in which they intend to move. The difficult question became how to identify these strategic directions and to manage successfully the change process. Market-based strategic planning became an alternative to explore. Strategic planning as defined by Pfeiffer, Goodstein, and Nolan (1989, p. 56) is the "process by which the guiding members of an organization envision the organization's future and develop the necessary procedures and operations to achieve that future." Since there is no such thing as the strategic planning system (Steiner, 1979), it was important to design a strategic planning system to fit the unique characteristics of Lakeview Center. The outcome goal for Lakeview Center's market-based planning was to improve the effectiveness of the organization's operations and to improve each service unit within the organization. A plan to develop a formal corporate strategic plan as well as individual plans for each of the service units was initiated.

It was imperative to the long-term success of the planning effort that the organization's readiness to enter into formal strategic planning be determined. As noted by Pfeiffer et al. (1989, p. 80) "the most sophisticated techniques employed by the most competent and experienced consultants and managers are doomed to failure if the organization itself is unready to undertake a project of planned change."

Two factors influenced the decision to move forward with a formal planning process. The first was the growth toward a "marketing orientation" (Kotler, 1975; 1987) within the agency. With the myths of marketing as contrary to the mission of human service agencies dispelled, the organization was beginning to realize how marketing could enhance the delivery of high quality services. After eight years experience with a large internal marketing department, staff throughout the organization were better educated about the benefits and potential of marketing in the health care arena. Secondly, management's commitment to plan became heightened when faced with the challenges of decreasing funding and rising competition. The need to address these environ- mental changes required a formalized planning effort.

Because the organizational planning process was to provide a framework for guiding virtually all of the decisions regarding the health of the organization, it became critical to formally plan for the process. Planning systems often break down because of faulty preparation where adequate time and revenues were not allocated (Gray, 1986). Planning to plan involved having management address a number of fundamental questions including:

�9 How much commitment to the planning process exists? �9 Who will facilitate the process?


�9 Who will be involved in the process and at what level? �9 How long will the process take? Is the organization willing to commit the

time? �9 What information is needed in order to plan successfully? �9 Are there anticipated technical and/or political problems that may occur? �9 How does the organization's fiscal year fit into the process? �9 How will the strategic plans be monitored, revised and utilized on a long-

term basis?

The responses to these questions assisted in the development of several objectives for the design of a planning system:

�9 To develop a planning system that would integrate the principles of marketing;

�9 to develop a planning system that could be utilized as an ongoing management tool;

�9 to involve all staff in the planning process.

Once these objectives were established, a plan to plan utilizing a format similar to one described by Rausch (1982) was developed identifying the activities, purposes, and staff involved.

IMPLEMENTING THE PLANNING PROCESS

With the plan to undertake this project in place, the president, Strategic Planning Task Force, and the vice-presidents assembled to construct a market- based plan for Lakeview Center and to insure its implementation. This section encapsulates a two year introduction of the concept of market-based planning and the application of the principles to a community mental health center. For the implementation to be successful, several points in the development and presentation of the concepts during this period were critical and are emphasized in this discussion.

Management's Endorsement

Management 's support and involvement is crucial for the process to be successful. According to Abendshien (1988, p. 8), "Those responsible for plan development and execution must reach a consensus regarding the organization's position, strategic direction, and development priorities. This consensus, or 'buy-in,' is achievable only through the direct involvement of board members and top-level managers in the planning process."

The first level of management to champion the process included the president and the four vice-presidents who head Lakeview Center's major divisions.


TABLE 2 The Plan to Plan

Activity Participants Purpose

1. Identification of corporate issues

2. Develop and train a Strategic Planning Task Force

3. Produce revised corporate mission statement; update corporate goals and strategies

4. Develop a center-wide planning process

5. Pilot test planning process and revise as indicated

6. Educate staff on principles of planning marketing

7. Engage in the market- based planning process

8. Evaluate each service unit and revise, if necessary potential collaboration among service units;.

9. Quarterly reporting of progress toward accomplishment of objectives

Board of directors, president, vice- presidents, planning consultant

Marketing specialists, planning consultant, financial analyst

Strategic Planning Task Force, president vice- presidents

Strategic Planning Task Force, president, planning consultant

Strategic Planning Task Force

President, Strategic Planning Task Force, senior managers

Strategic Planning Task Force, service unit managers, line staff

President, vice- presidents, Strategic Planning Task Force

Strategic Planning Task Force, service unit managers

Identify key corporate strategies

Develop a cadre of planning facilitators to assist service unit managers in developing and implementing their strategic plan

Provide basic guidelines for development of service unit plans that are consistent with corporate strategies

Develop a planning process specific to the needs of the corporation and its service units

Determine suitability of the planning process

Build managerial expertise in planning and marketing

Analyze current situation, forecast future situation, and develop goals objectives

Determine conformity with corporate guidelines and identify areas of review and approve budget and resource allocation

Ascertain progress and identify need for changes in the plan


A proposal, entitled Vision 90's, was packaged for presentation to the other levels of management beginning with the board of directors and senior management.

Because the board of directors role in the process is to oversee, they had to be acquainted with the process, the major steps, the time constraints, as well as the issues (McManis, 1990). The board of directors was presented with current trends in the mental health environment, the Vision 90's proposal, and a round table discussion of the issues at a full day retreat.

Numerous steps were taken to initiate senior management involvement and acceptance. While implementation was to come from the bottom upward, motivation to complete the process was to be sent from the top down through memorandum to the supervisory staff from the president, a feature article in the organization's internal publication, a video presentation by the president, and an introduction to the concepts by a consultant.

The Training Chain

The next step was to train a core group of individuals, known as the Strategic Planning Task Force, which would be responsible for disseminating the information on how to accomplish the process. After the task force had completed a thorough study of strategic planning, a management consultant was brought in to lead the task force through the facilitation process.

Then, the task force arranged a pilot course of the training process using one major division with several service units. The task force provided team build- ing exercises, described the need for planning, explained the steps to the market-based approach, and facilitated the service units through the process. Surveys from the participants showed two major areas for improvement in the training process:

Time involvement. During the pilot course, training was divided into two full days of lecture and exercises. It was concluded that the same results could be achieved by condensing the explanation of the steps and allowing more time to complete the process.

A Guiding Workbook. Many of the planning concepts were new to the supervisory staff who had a clinical rather than a business background. During the pilot course handou~ts were used to illustrate some of the points. Supervisors expressed a need for more illustration and guidance on how to complete several of the analyses. A workbook was designed using forms and short explanations of the principles to describe the steps involved and to record the results.

After the pilot course was completed, the senior management staff under- went training on every aspect of the planning process. Over the next five months these supervisors examined general societal trends and trends specific to the health care industry. Workshops were presented on marketing strategy and techniques. The Vision 90's campaign was introduced with some fanfare


including buttons and note pads emblazoned with the Vision 90's logo. Each supervisor with the assistance of the Strategic Planning Task Force was responsible for training the staff in their service unit and for completing the process using the strategic planning workbook.

Components of Market-Based Planning Process

The concepts of market-based planning are similar to those in most strategic planning processes (Barry, 1986; Espy, 1986; Pfeiffer et al., 1989; Steiner, 1979). The following elements of the process were utilized to tailor a planning process for Lakeview Center.

Strategic Planning Principles. Training on the principles emphasized differences between marketing-based planning and traditional planning. The process was presented as a way of envisioning the future of a service unit and how to make that vision a reality using a market driven approach that assesses the consumers' needs and perspectives, takes into account a service unit's competition, and then, develops an action plan based on this information. The process was set up to empower and give ownership to those responsible for carrying out the plan from managers to line staff.

Mission Statement. The mission statement for Lakeview Center was written by the president, the vice-presidents, and the chief financial officer. It answered the questions: What needs is the organization attempting to fill? Who is the organization attempting to serve? How will the organization's services be carried into the marketplace? and What makes the organization unique? As part of the planning process, each service unit then developed a compatible mission statement specific to that unit.

Situation Audit. The situation audit is the foundation of strategic planning (Rausch, 1982). This audit answers where the position of the corporation is at the moment and where the corporation needs to be in the future. Three analyses are used to determine these answers:

SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) -assesses the internal and external factors that affect the services.

Consumer Analysis-determines consumers' perceptions and needs and whether the services provided meet those needs. This analysis focused on attracting, keeping, and satisfying the various consumer constituents.

Competition Analysis-identifies the competitors for clients and resources and determines each competitor's strengths and weaknesses.

Strategy Development. This part of the process utilized the information gathered during the situation audit to formulate goals, objectives, strategies, and action plans. The key to the development of the action plans was specific, measurable steps.


Financial and Budgeting Plan. Driven by the goals and objectives statement, the development of the budget took into account the anticipated increase or decrease in service levels as well as the introduction of new services.

Monitoring and Evaluating. It is important to view the marketing-based planning process as a dynamic part of the corporation's management strategy (Rubright, 1981). Along with the overall organization, each service unit identified critical factors that it considered might affect its service, and therefore, should be monitored. The unit also set the frequency and methods with which these factors would be monitored and a time-limited schedule for their evaluation. This market-based method of evaluation provides for the ongoing process of planning, evaluating the planning, and planning again.

DISCUSSION

Twenty-four service units involving 172 staff members completed the market-based planning process over a three month period. The hours allocated by each service unit to accomplish this task was dependent upon the complexity of that service unit with the time ranging from six to 40 hours.

To ascertain the potential benefits of the planning process, staff completed an opinion questionnaire. Results of the questionnaire indicate a high level of agreement tha t the process met the goals of the planning system. As indicated from the number of staff involved in the planning and the results of the questionnaire, the first goal of high staff involvement in the process appears to have been achieved. The opinions expressed in the questionnaire indicate an overall impression that management believes the planning process has been useful as a management tool. As such it is hoped the plans will guide the day- to-day management decisions, as well as long-term goals.

The survey indicated that management strongly believed they and their staff were better aware of the factors involved in the situation audit including internal and external factors that might affect the service units, consumer attitudes toward the units, and competitor awareness.

At present no conclusions can be reached on the long-term effectiveness of the strategic planning process at Lakeview Center. At this writing the plans for each service unit have just been completed, therefore, any outcome would be preliminary. The continuing evaluation of the process and its outcomes at Lakeview Center will focus on how the planning has effected new service development based on market needs; effected the repackaging of existing services; integrated planning with quality assurance outcomes; influenced management decisions; assisted in the development of a consumer orientation; and integrated the budgeting process and service level plans with the overall market-based plan.


The implementation of Lakeview Center's market-based strategic planning is an ongoing process. Changing the mind-set of nearly 650 employees was not easy. The strategic planning task force proved to be invaluable. With several service units yet to complete the process, the task force continues to facilitate the planning, to offer clarification or guidance, and to monitor the progress of the plan.

REFERENCES

Abendshien, J. (1988). A guide to the board's role in strategic business planning. Chicago, IL: American Hospital Publishing.

Barry, B. (1986). Strategic planning workbook for nonprofit organizations. St. Paul, MN: Amherst H. Wilder. Bryson, John M. (1988). Strategic planningfor public and nonprofit organizations. San Francisco, CA: Jossey-Bass. Cooper, P., & Robinson, L. (1982). Health care marketing management. Rockville, MD: Aspen. Espy, S. (1986). Handbook of strategic planning for non-profit organizations. New York, NY: Praeger. Gray, D. (1986). Uses and misuses of strategic planning. Harvard Business Review. Johnson, E., & Schewing, E. (1982). Successful marketing for service organizations. New York, NY: American

Management. Kotler, P. (1975). Marketing for nonprofit organizations. Englewood Cliffs, NJ: Prentice-Hall. Kotler, P. (1987). Marketing for health care organizations. Englewood Cliffs, NJ: Prentice-Hall. Lauffer, A. (1984). Strategic marketing for not-for-profit organizations. New York, NY: Free Press. MaeStravic, R. (1977). Marketing health care. Germantown, MD: Aspen. McManis, G. (Sept./Oct. 1990). The board's role in strategic planning. Health Care Executive. Pfeiffer, J., Goodstein, L., & Nolan, T. (1989). Shaping strategic planning. Glenview, IL: Scott Foresman. Ransch, B. (1982). Strategic marketing planning. New York, NY: American Management. Rubright, R., MacDonald, D. (1981). Marketing health and human services. Rockville, MD: Aspen. Steiner, G. (1979). Strategic planning: What every manager must know. New York, NY: Free Press.

development and implementation of a market-based planning system

Documents