CHAPTER 1

Fail to Plan ... Plan to Fail

In the words of the great UCLA basketball coach John Wooden, "In anything,failing to plan is planning to fail." The message he conveyed many years agorings true today. Most busy managers focus more on the "what" of theirefforts—the tangible results they are measured against. The emphasislacking in many situations is on the "how" of their efforts, that being the planto get there. In a global marketplace, the view of American managers is thatthey, for the most part, are fast on the implementation but lack the detailedplanning process necessary to make their efforts successful. One Europeanmanager described it as "shooting from the hip." Irrespective of your ownperception, the impact of poor planning on a business can result in suchproblems as false starts, waste and duplication, and dissatisfied customers.

Why Plan?

A manager in one of my client companies once commented, "Why plan? It only getsin the way of getting things done." Although this is a shortsighted view ofplanning, many managers believe that the value of planning is diminished becausethey must act more quickly, especially in competitive situations, and don't wantto be held back by a list of objectives that are no longer realistic. Of course,this is a misconception that will be explored later, in that a good plan musthave flexibility and contingencies to produce successful results.

It's important to dispel some of the myths regarding business planning to createa level playing field going forward. Exhibit 1-1 lists a few to ponder:

To illustrate the point, consider the case of the man who wanted to cut back onhis personal budget to save money this year. He planned to do his own gardeningand yard work rather than hire a landscaper. One morning, he decided that hewould trim a large tree in the yard. He climbed up the tree, sawing the branchesbelow him. When he reached the top, he realized that he had cut off the onlyroute back to the ground. Fortunately he was able to alert a neighbor, who cameover with a ladder to rescue him. Just think how some basic planning could haveeliminated the problem.

The Hierarchy of Business Planning

One way to think about planning for results is to envision the hierarchy orlevels of planning that should occur in an organization, irrespective of itssize, industry, or for-profit versus nonprofit. It might be helpful to see thisplanning as a hierarchy of thinking and ideas that come together to complete apicture. This becomes the vision of the future both in the long term (strategicplan) and in the short term (business plan). The third level is the planning forinitiatives each year that will help drive both the long- and short-termpriorities. Here is the hierarchy with some examples of each level.

Strategic Planning

The strategic planning process considers the external and internal impacts onthe business, as well as looking at customers and markets to determine productand service fits. The resulting information combined with a competitive analysisleads to strategies that have the potential to grow the business and sustainprofits over a long period (sustainability). This process is top-management-driven and feeds the business planning process. The strategic plan is revisitedevery year to fine-tune assumptions and adjust to market conditions. The mostsuccessful companies use linking mechanisms to bridge from one stage of planningto the next. To link strategic and business planning, a strategy statement orsummary of the strategic planning process is used to provide input into thebusiness plan.

A medical device company in a highly competitive market used the expression fornew product development, "First is first and second is last." This meant thatthey had to deliver new products to the market ahead of their competitors.During the strategic planning process, top management developed a productpipeline strategy that would unfold over several years. This information waspassed down to key functions, such as R&D, product marketing, sales, purchasing,and manufacturing to incorporate into their business plans.

Business Planning

The business plan is completed by all department managers in profit centers andcost centers. The business plan focuses on how to achieve revenue projectionsand fixed budget targets. The linking mechanism to bridge to departmental plansand business initiatives is the business plan document. It contains specificinformation regarding annual goals for revenue, profitability, etc., that can beused to complete detailed action plans.

A large manufacturing company developed a training program for managers called"Know the Numbers" in which all departmental managers where trained on theProfit and Loss Statement, including what was measured and how they could impactbottom-line numbers for their departments and overall company performance. Oneof the objectives of the training program was to create the mindset thatmanagers were using the financial resources of the company as if they werewriting checks from their personal checking accounts.

Functional/Departmental Plans and Business Initiative Planning

This is an annual planning process of functional/departmental plans andsupporting initiatives that will directly impact the achievement of businessstrategies and may have multi-year objectives in mind.

Although these plans and initiatives are prepared annually, a monthly reportingof progress against plans and initiatives is recommended for visibility to real-time performance. This creates opportunities for adjustments and corrections.

The Value of a Mission Statement in the Planning Scheme

Whether it's a company mission statement or at the functional or personallevels, the mission statement has enormous value in planning.

Creating a mission statement should not be considered an obligatory exercise.Your mission states the reasons you exist in the business. It should reflect thereason that your business opens its doors every day. The mission shouldrepresent your commitment to the business and why you operate it.

When your mission statement represents and reflects your purpose it will attractand communicate to your customers and direct the work of employees. It can alsoprovide a backdrop for decision making, asking the question, "Is this consistentwith our mission?" With that in mind, ask yourself these questions:

* What is the purpose the entity serves for the business?

* How would you describe the output of your work process?

* Who are your target customers, both...