integrated business planning presented to the association for progressive communication october 15...
TRANSCRIPT
Integrated Business Planning
Presented
to the
Association for Progressive Communication
October 15 -16, 1998by
Charles P. Sitkin, Consultantin affiliation with Carnegie-Mellon University
How To Best Meet Your Mission
Outline of Presentation Evolution of Management Concerns Strategic Planning The Mission Strategic Excellence Positions Goals and Objectives Action Plans Operating Plan and Budget Results Management
Integrated Planning Process
STRATEGIC PLAN OPERATIONAL PLANRESULTS
MANAGEMENT
MissionGoalsObjectivesStrategiesFinancial Projections
AnalysesKey Result AreasOperational Objectives Performance IndicatorsAction PlansBudgets
Control SystemResultsCorrective ActionReward System
Business, Operational, Strategic ?
Business PlanNormally prepared to acquire financing
Operational PlanIdentifies specific results to be accomplished within a given time period
BudgetExpresses operational plan in financial terms
Strategic PlanIdentifies the basic concept and direction of an
organization
Strategic Planning Process
Regulationsand
Laws
Mission Statement
Strategy
Strategy
StrategyIssues
ActionPlans
AnnualBudget
*Strategic Excellence Positions
“I firmly believe that any organization in order to survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...
“Next I believe that the most important single factor in corporate success is faithful adherence to those beliefs...
“And, finally I believe if an organization is to meet the challenge of a changing world, it must be prepared to change everything about itself except those beliefs as it moves through corporate life.”
Thomas Watson, Jr.
Mission
Shared purposes provide FOCUS by driving strategy.
Shared values provide CONTROL by guiding execution.
Bread Machine Industry Association
The mission of the BMIA is to expand and promote the long-term growth and use of all aspects of the bread machine industry for the mutual benefit of our members and consumers.
Freehold Actors’ Studio & Lab
The mission of Freehold is to deepen the transformational power of theatre to inspire through education, experimentation, and performance.
Example Mission Statements
Strategic Excellence Positions
Strategic success means to achieve better and more stable results than the competition. Achieving that requires superior competence, or the ability to excel, in a set of distinctive capabilities which have special value to a particular part of the marketplace.
Note that excellence by itself is not enough. It must be excellence in areas of strategic significance, i.e., that determine the outcome of competition in the marketplace.
That strategic excellence then forms the basis for the organization to achieve better results than the competition. In this sense it is a position which the organization “occupies” from which follows strategic success.
Strategic Excellence Positions
Company SEP
Honda Quality
Gillette Innovation
Rolls Royce Status/Prestige
Microsoft Integration
APC Nodes ?
SEP Example
BMIA Example
Provide for the Unified Presence of the bread machine industry category in its marketplace
Provide for intra-industry communications within the bread machine industry.
Goals
Define the key areas in which to expect strategic results and what is expected.
Not measurable as stated, but contain factors that will be measurable as Objectives.
With Mission and SEPs determine what Objectives should be selected.
Objectives
Statement of measurable results.
Tied to Goals, provide the basis for operational planning and budgeting.
Four general characteristics: Starts with the word “To” Specifies a single measurable result Specifies a target date or time span for Completion Must be realistic and attainable, but represents a significant challenge.
Goal and Objectives Example
Goal OneEducate consumers about the benefits of bread machines, facilitate their purchase decisions, and encourage usage.
Objectives
1.1 To create a media kit for distribution to key newspapers, magazines, and the 1997 Housewares Show by January 10, 1997.
1.3 To host a New York City magazine editors event "Coming Out Party" for all new bread machine products (members Only) by June 30, 1997.
1.4 To explore partnerships with like minded industry associations for the purpose of producing a jointly sponsored media campaign in 1997.
1.6 To evaluate and report on the possibility of a BMIA web page by August 31, 1997.
Action Plans
Specify steps or actions required to attain an objective.
Designate who will be held accountable for seeing the each step or action is completed.
Define when these steps or actions will be carried out.
Define resources needed to be allocated in order to carry out the required steps or actions.
Define feedback mechanisms needed to monitor progress within each action step.
Action Plan
Project Title
Objective:
Action Steps Accountability Schedule Resources Feedback MechanismPrimary Others Start Complete Dollars Time
Integrated Planning Process
STRATEGIC PLAN OPERATIONAL PLANRESULTS
MANAGEMENT
MissionGoalsObjectivesStrategiesFinancial Projections
AnalysesKey Result AreasOperational Objectives Performance IndicatorsAction PlansBudgets
Control SystemResultsCorrective ActionReward System
Comprehensive Business Planning
Mission Statement
StrategyV
isio
n
Go
als
Ob
jec
tiv
es
Strategy
StrategyIssues
ActionPlans
AnnualOps
Plan &Budget
Laws and Regulations
Operational Planning FrameworkIs
sues
Ana
lysi
sK
ey R
esul
t Are
as
Perf
orm
ance
Indi
cato
rs
Obj
ectiv
esA
ctio
n Pl
ans
Bud
gets
Operational Objectives
Statements of measurable results to be accomplished within the time frame of the operational plan.
Standards of performance related to financial and operating results that can be tracked on a regular basis.
Budgeting
Determine the level of financial resources required to achieve the operational plan’s objectives.
Allocate available financial resources to ensure their optimum use in achieving the plan’s objectives.
Control the use of available resources to ensure the achievement of plan objectives.
Budgeting Problems
Budgets can grow to be so complex that they become expensive, cumbersome, and even meaningless
Budget objectives may come to supersede enterprise objectives—budgets should be considered a tool, not an end in themselves. Enterprise goals should supersede business unit plans
Budgets may contribute to inefficiencies by continuing initial expenditures without proper evaluation
Budgets as a pressure device defeat their basic purpose
Integrated Planning Process
STRATEGIC PLAN OPERATIONAL PLANRESULTS
MANAGEMENT
MissionGoalsObjectivesStrategiesFinancial Projections
AnalysesKey Result AreasOperational Objectives Performance IndicatorsAction PlansBudgets
Control SystemResultsCorrective ActionReward System
Results management
Control Systems Management Reports Organizational results Individual Results Corrective Action Reward System
“I believe the real difference between success and failure in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people. What does it do to help these people find common cause with each other? And how can it sustain this common cause and sense of direction through the many changes which take place from one generation to another...”
“The basic philosophy, spirit, and drive of an organization have far more to do with its relative achievements than do technological or economic resources, organizational structure, innovation, and timing. All these things weigh heavily in success. But they are, I think, transcended by how strongly the people in the organization believe in its basic precepts and faithfully they carry them out.”
Thomas Watson, Jr.
Steps in Operational Analysis
1. Identify Issues
2. Prioritize Issues
3. Analyze Issues
4. Summarize IssuesMajor ConclusionsAlternative Courses of Action
Identify Issues
Most critical issues facing the business unit, what might be their impact.
Issues likely to have greatest effect on profitability. Issues likely to have greatest effect on long-term success of
the business unit. What changes have taken/will take place effecting the
business units performance in the coming year. What cross-functional problems or opportunities are likely to
have impact on the business unit’s performance. What are major impediments to conforming to your Mission.
Analyze Issues
What is the Issue. What data/information is available (or needed) to
resolve the issue. What appear to be the factors causing this to be an
issue for the organization. What types of results are needed in this area.
Key Result Areas Guidelines
Those 4 to 6 major areas wherein performance is essential during the coming year.
Include both financial and non-financial areas.
Will not cover the entire organization—will identify the critical few areas where priority efforts should be directed.
Most will require cross-functional effort.
Each will be limited, generally, to 2 or 3 words and will not be measurable as stated, but willcontain factors that could be measurable.
Indicators of Performance
Measurable factors, falling logically within a given key result area, on which objectives may be set.
May be hard numbers, percentages, significant achievements, or problems to be overcome.
Identify what will be measured, not how much or in which direction.
Represent factors that can be measured on an ongoing basis.
Example Indicators of Performance
Return/ Profit
Productivity
People development
Market penetration
Return on RevenueDonations to Sales RatioNet profit
$ sales per employeeUnits produced/month
Percent ethnic hireDays of training/employee
Percent of market sharePercent growth by product
Key Results Areas Indicators of Performance
Direct Means
Action Plans and Project Plans
Procedures/Management Systems
Planning and Budgeting
Management Information Systems
Organizational Structure.
Indirect Means
Communication
Symbolic Actions
Institutionalizing Actions
Fostering Innovation
Corporate Culture.
Time Related Aspects
Research and Development
Manufacturing Life Cycle
Marketing Cycle
Economic Trends
Competition.
Strategic Plan Outline
Executive Summary Current Situation and Vision Critical Issues Mission Strategic Excellence Positions Goals and Objectives Action Plans
Operational Plan Content
I. Executive Summary
II. Business Unit Description
III. Product and Services
IV. Operational Analysis: Issues and Conclusions
V. Key Result Areas & Indicators of Performance
VI. Operational Objectives
VII. Action Plans
VIII.Budgets
IX. Plan Implementation and Review Schedule
Appendices