integrated business planning presented to the association for progressive communication october 15...

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

The Evolution ofManagement Concerns

Evolution of Management Concerns

Strategic Planning

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

The Mission

“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.

The Mission

Purpose

Values

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


Without focus


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.


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

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.

Three Classes of Objectives

Innovative

Problem Solving

Regular/Routine

Action Plans

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

Operational Plans



MANAGEMENT




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

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rs

Obj

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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

Results Management



MANAGEMENT




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.

Supporting Discussions

Issues Analyses

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

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

Strategies

Competitive Intensity

Strategic Implementation

Direct Means

Indirect Means

Time Related Aspects.

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

integrated business planning presented to the association for progressive communication october 15...

Documents