What's Wrong With Your Corporate Planning Process?

Posted by admin on January 17, 2010

Does your corporate planning process consistently deliver the outcomes you expect or has strategic planning been devalued (literally or figuratively) within your organization due to its declining efficacy?

Corporate planning in today’s rapidly-changing and uncertain business environment requires a process that empowers organizations to achieve operational excellence on a day-to-day basis while also planning for the future. If your corporate planning process has lost its luster, consider what may be wrong.

12 Common Mistakes in the Corporate Planning Process:

 

Mistake #1: The timeframe of the plan is longer than 12 months.

Long term planning certainly has its place in a corporate planning process but a shorter timeframe of 12 months allows organizations to utilize valuable current information. A rolling 12-month plan that is updated on a quarterly basis offers the quality that a longer term plan with its inherently missing, incomplete, or inaccurate data simply cannot deliver.

Mistake #2: The plan consists of more than 5 strategic goals.

Organizations often have a long wish list of goals, ranging from pie-in-the-sky to mundane. Dreaming up goals is generally not an issue. Instead the issue is having the discipline to narrow down your goals to a manageable and achievable level. When you consider that each goal will lead to a sequence of activities and deliverables that will need to be managed and implemented throughout the organization, it’s easy to see how a long list of goals can inhibit your success. Narrowing down strategic goals requires a relative valuation of potential goals to determine which are worth pursuing and the prioritization of each. There are a number of ways to do this such as using the variables, “Importance of the outcome” and “Satisfaction with the current-state” to help score and rank your goals. 

Mistake #3: Goals within the plan are not tied to measurable outcomes.

Organizational goals should be constructed in terms of outcomes that will mean something tangible to your customers and the markets your organization serves. Your goals should be defined in such a way that they can be measured and managed throughout the layers of the organization in ways that propel action and achievement.

Mistake #4: Employees are unaware of the goals and how they are expected to contribute to the outcomes.

When the corporate planning process fails to consider the individuals who will actually implement the plan, breakdowns happen and desired outcomes are rarely attained. Detailed plans of action are needed for each initiative and goals should be carefully communicated throughout the organization.

Mistake #5: Key suppliers and partners of the organization are unaware of how the organization’s goals might affect them and how they can contribute to the organization’s success.

By communicating your organizational goals to key suppliers and partners you can gain much needed buy-in and assistance to achieve desired outcomes. Asking for price reductions, extended payment terms, or quantity discounts can be greatly facilitated when your suppliers and partners are made part of the process.

Mistake #6: The corporate plan leaves room for interpretation.

This mistake typically circles back to the way your organizational goals have been defined. If there is ambiguity in the way goals are defined, those goals will be easily misinterpreted by members of the organization and will then result in execution that misses the intended mark. Starting with a clearly defined outcome, much of this interpretation and resulting ambiguity can be replaced by clearly defined expectations. For example, a clearly defined outcome may be written as, “Reduce packaging cost for product XYZ by 2%.” An ambiguous poorly written goal might read, “Drive down costs of XYZ product.”

Mistake #7: Job descriptions fail to support the organization’s desired outcomes.

When job descriptions and job responsibilities align with corporate goals organizations more readily achieve accountability and understanding from individuals throughout the organization. When job description and responsibilities are effectively communicated individuals become tuned with their roles and the expectations surrounding them resulting in empowered team players.

Mistake #8: The performance measures of employees and officers are unrelated to the organization’s goals.

Taking the above point a bit further, organizations must set performance measurements and incentives for employees and officers. These performance measurements should be derived from the job descriptions and job responsibilities, and the resulting incentives must be strong enough to empower all layers of management to measure and manage efforts toward the achievement of plan goals. While this certainly adds a layer of complexity to the organizational planning process, neglecting this step will result in subpar performance.

Mistake #9: Organizational culture is overlooked in creating executional plans.

The corporate planning process must consider the culture in which the plan will live. Without this, it is impossible to fulfill the organization’s potential to dominate within their marketplace. Company culture determines how the organization works and how work will be completed. Aligning strategy, tactics and governance to address these dimensions will greatly affect the outcome of planning efforts.

Mistake #10: Customer value is overlooked in the planning goals.

Customer-centric planning puts your number one stakeholder – the end customer – at the forefront of the organization’s activities and goals. By creating goals that reflect the type of value the organization can create for the customer, you’ll “put a face to the name” and more effectively connect members of the organization with the desired outcomes. Certainly, not all goals need to be customer-centric but to overlook this aspect is to potentially miss important opportunities.

Mistake #11: The organizational plan fails to distinguish between operational and strategic planning.

An effective corporate planning process allows the organization to plan strategically at the enterprise level and then operationally at the business unit level with each part supporting the other. Failing to reach all the way down through the organizational layers is a common problem with corporate planning processes. Considering that strategic planning is designed to help companies gain sustainable competitive advantage, planning must address the entire business ecosystem – from top to bottom.

Mistake #12: The plan fails to account for seasonal peaks and valleys.

It is well-understood that organizations must balance the realities of financial budgets during the corporate planning process. Yet, the organization must also take into account relevant business economic cycles within the business.  Economic cycles will impact market conditions, access to capital, energy, focus, and many other factors (both positively and negatively) to inhibit or accelerate an organization’s ability to accomplish its desired outcomes.  To the extent that you know and understand economic cycles, you can build a layer of realistic contingency into your corporate plans thus improving results. 

No doubt we’ve all made at least one of the 12 mistakes outlined in this article. Yet, there’s no reason why our planning processes cannot evolve and improve by understanding what makes for a more effective process in today’s business environment. In the end, a corporate strategic planning process should consistently define and deliver upon meaningful goals through a repeatable and effective process that addresses these 12 common mistakes and much more. Will you continue to strive for a better corporate planning approach?

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For permission to use or reprint any portions of this copyrighted article, contact Method Frameworks at articles@methodframeworks.com.

About the Author:

Joe Evans is the President and CEO of Method Frameworks.  Joe is a published author, frequent speaker and recognized expert in corporate strategic planning. To contact Method Frameworks about scheduling Mr. Evans about an upcoming speaking engagement, visit www.methodframeworks.com/business-speaker or email requests to media_relations@methodframeworks.com.

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