Integrated Strategic and Business Planning

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Integrated Strategic and Business Planning Powered By Docstoc
					 Integrated Business Planning


      How To Best Meet Your Mission


                 Presented
                   to the
Association for Progressive Communication
           October 15 -16, 1998
                              by
                Charles P. Sitkin, Consultant
         in affiliation with Carnegie-Mellon University
      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



                                                      RESULTS
 STRATEGIC PLAN          OPERATIONAL PLAN           MANAGEMENT


Mis sion                 Analys es                Control System
Goals                    Key Res ult Areas        Res ults
Objectives               Operational Objectives   Correc tive Action
Strategies               Performance Indicators   Rew ard System
Financ ial Projections   Action Plans
                         Budgets
  The Evolution of
Management Concerns
Evolution of Management Concerns
Strategic Planning
Business, Operational, Strategic ?

   Business Plan
    Normally prepared to acquire financing
   Operational Plan
    Identifies specific results to be accomplished within a
        given time period
   Budget
    Expresses operational plan in financial terms
   Strategic Plan
    Identifies the basic concept and direction of an
       organization
Strategic Planning Process
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.
 Example Mission Statements

     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.
Strategic Excellence Positions
Strategic Excellence Positions

         Without focus
Strategic Excellence Positions
        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
    a
 Hond           Qu ality
 Gillet te           vati on
                In n o
 R olls Royce   Stat us/Presti ge
         ft
 Micro s o      In tegration
         d
 APC N o es          ?
            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
                     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 One
        Educate 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      Accou ntability               Schedu le             Resources      Feedback Mecha nism
               Primary       Others        Start     Comple te   Dollars      Time
Operational Plans
Integrated Planning Process



                                                      RESULTS
 STRATEGIC PLAN          OPERATIONAL PLAN           MANAGEMENT


Mis sion                 Analys es                Control System
Goals                    Key Res ult Areas        Res ults
Objectives               Operational Objectives   Correc tive Action
Strategies               Performance Indicators   Rew ard System
Financ ial Projections   Action Plans
                         Budgets
Comprehensive Business Planning



                                                             Strategy
 Laws and
                    Mission
Regulations




                                                Objectives
                   Statement                                                     Annual


                                        Goals
                               Vision
                                                                        Action    Ops
                                                             Strategy
                                                                        Plans    Plan &
                                                                                 Budget
          Issues                                             Strategy
Operational Planning Framework
         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
Integrated Planning Process



                                                      RESULTS
 STRATEGIC PLAN          OPERATIONAL PLAN           MANAGEMENT


Mis sion                 Analys es                Control System
Goals                    Key Res ult Areas        Res ults
Objectives               Operational Objectives   Correc tive Action
Strategies               Performance Indicators   Rew ard System
Financ ial Projections   Action Plans
                         Budgets
     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 Issues
       Major Conclusions
       Alternative 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 will
    contain 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

    Key Results Areas        Indicators of Performance
   Return/ Profit          Return on Revenue
                             Donations to Sales Ratio
                             Net profit
   Productivity            $ sales per employee
                             Units produced/month
   People development      Percent ethnic hire
                             Days of training/employee
   Market penetration      Percent of market share
                             Percent growth by product
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

				
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