Setting Directions
To some a Strategic Business Plan is another document to sit on the shelf, valuable only for killing the odd cockroach that crawls across it from time to time. When planning is not done well this is the result. However planning done well links vision to daily activity and moves it from black and white to colour in an instance...
About half of my work in the last 20 years has been in helping organisations setting directions, usually assisting organisations with Strategic or Business Plans. Many still struggle to see the value of a Strategic or Business Plan and to some it is another document to sit on the shelf, valuable only for killing the odd cockroach that crawls across it from time to time. When planning is not done well this is the result. However planning done well links vision to daily activity and moves it from black and white to colour in an instance.
In my experience there are several oft-repeated sins in developing Strategic Plans.
The first of these, and one that I see most often, is organisations focusing only on desired growth areas and ignoring Business As Usual (BAU).While it is natural that one would want to map out in some detail uncharted territory that may be transformational for customers and income, it is important that key current income generators or service performers do not suffer. BAU can suffer from inattention in the planning process with the following consequences:
Firstly, staff not working in the sexy growth areas will not see their role in the Strategic Plan; this is disheartening and often contributes to lack of enthusiasm, productivity and the drive needed to keep the factory fed while the new bride is being prepared.
Secondly it often takes time for the new bride to produce and existing streams of business need to be looked after.
Thirdly inattention can ignore some serious flaws or risks in existing business streams that strategists may not envision.
Fourthly, transitional strategy to the new betrothed is often ignored. How new streams of work are accommodated and developed while BAU is progressing is often as important as the outcome itself, as productivity cannot be undermined by over exertion of the few “labour units” that are responsible for both delivery and growth.
Inadequate or Grandiose visions:When discussing the “vision” in organisations I often hear comments from two extremes. Some hate the word as it reminds them of something ethereal and vague; these people often say we want a simple vision (if any at all) and “what is wrong with the Mission Statement”! The second group falls into the category that the first group usually hates: visions are big and bold and should articulate “BHAGs”[1]. They should be aspirational, and even if not able to be fulfilled, they should capture the hearts and move people to a new state of action.
Seldom do I see a balanced understanding of what a vision statement should be. Perhaps we need to reflect on the purpose of a vision statement. Is it not to provide an explanation of where we want to be in a practical sense? How are our we responding to our customers needs? What do our work areas look like? How do we move there? The vision statement is a succinct articulation of these. I recently came across a definition of a vision statement that seems to fit the bill:
“The word “vision” here does not simply mean a set of goals or a description of an idealized future condition. …a vision has to express a general idea of how goals are to be achieved: the nature of the strategies to be devised, the approaches to be taken, the attitudes to be assumed, and even an outline of some of the methods to be employed. The vision of work articulated by such an organisation is never complete; it has to become more and more precise, be able to accommodate constantly evolving and ever more complex action, and attain increasingly high levels of accuracy in its operation.[2]
Tools Masquerading as Plans:One of the reasons why our vision statements have been maligned and misunderstood is that we have often used the tools that create one aspect of a vision (such as the Boston matrix, McKinsey solutions, etc) that we have done some work with and then said these are the areas that are going to save our business or transform our souls! While I am not maligning these helpful tools, (in fact I support their use) they do not usually make a Plan. Key ingredients for a good plan are outlined below.
Ill-defined terminology:One of the seemingly minor but often alienating issues revolves around terminology. Staff from different backgrounds often come with different meanings for terms and conflict can emerge. For example my understanding of what a “goal” is may be different to yours. The word “objective” is often a source of conflict; is that bigger than a goal or smaller than one? Do we want to use these terms at all? The simple solution is for senior staff to spend some time defining terms that the organisation wants to use and ensure that these definitions are available to all. All can then approach the planning process ready to engage effectively.
Disconnected Plans and Budgets:Having done the hard work of articulating direction it can all be undone when budgets under-resource change activities because committed BAU soaks up available funds. This especially hurts when the BAU may have been ignored in the Plan! It is important that an organisation ensures that its budget reflects the best investment to realise its Plan and the budgeting process needs to be intimately linked with this.
In my Blog on organisational cadence I summarised a Planning Programming and Budgeting Process, aimed at avoiding a disconnect between planning and budgeting. A further technique to ensure alignment that I have seen used to good effect is for level options to be considered in each programme area when managers develop and submit their budgets to the Finance Manager and ultimately the CEO. Each manager has to answer 3 simple questions about each of their projects or programmes:
What are the benefits of the status quo?
What would be the result if the programme budget was reduced by say 25%? and
What would we get if we increased the budget for a particular programme by say 25%?
Senior management and governance can then “purchase” those programmes and projects at the desired level option from each unit that give the best value for money to achieve the outcomes sought by the Plan. This may mean a shift from BAU programmes, or further investment in them, depending on the case. It may also free up money for new initiatives.
What then makes effective Direction setting?
I think that there are two elements that need to be in harmony:
The process needs to be appropriate, and
The content should be comprehensive.
The process is the subject of another blog. As for the contents the attached downloads may be of use.
[1]BHAGstands for Big Hairy Audacious Goal, an idea conceptualized in the book, “Built to Last: Successful Habits of Visionary Companies” by James Collins and Jerry Porras. According to Collins and Porras, a BHAG is a long-term goal that changes the very nature of a business'
[2]Paper on Social Action prepared by the Office of Social and Economic Development at the Baha’i World Centre 26 November 2012 pg 13.