Your Company’s Planning Process is Essential to Your Long-term Success

Posted by on December 15, 2009

Now more than ever, the planning process your company follows is vitally important to the organization’s long-term business success. As the recession’s fallout has proven to us, businesses that failed to plan effectively in the years leading up to this economic slump have suffered the consequences of lost revenue, net losses and in many cases – business failures. In the new normal business climate, a prescriptive planning approach will no longer address the dynamic needs of business organizations. The time is now to compare Traditional planning approaches with innovative planning processes like Plan4, from the thought leaders at Method Frameworks. Given the option, why wouldn’t you use a superior outcome-driven planning approach that actually will provide success in defining and achieving business goals? This article examines some key characteristics that your strategic planning process should include.

What are the characteristics of an outcome-driven planning process and why is this type of planning process more effective?

In the new normal, business organizations must adapt their behaviors and processes to remain competitive and fiscally viable. All cylinders must be firing in precision timing across the enterprise, with no unnecessary delays in execution or wasting of resources. Success doesn’t happen by accident – it must be planned for. In this new era, the corporate planning process provides one very major opportunity area for business enterprises to improve performance and position for growth.

An effective planning process will deliver the goods when it comes to providing the right organizational goals, defined in unambiguous language and threaded throughout the business enterprise levels. Additionally, a truly effective planning process will build into the plan all of the linkages to execution so that the outcomes can and will be realized. To accomplish this, the planning process must be holistic in its view of the organization as an extended enterprise – looking not just internally, but also at the external business relationships as inputs to planning. Enterprise vision, strategy and tactics must be carefully orchestrated to encapsulate well-constructed and goal-supporting job descriptions, complete with defined accountabilities, measurements and performance rewards that all tie back elegantly to the plan’s defined key outcomes. To complicate this requirement further, the planning process should inherently base execution tactics on organizational culture and hierarchy of the business in order to optimize communications, develop tactics and manage outcomes.

Always be thinking results

The planning process should be outcome-driven in its nature. You may be thinking that all strategic plans are by default goal-oriented and therefore meet this objective. The reality is that most planning processes receive a failing grade on this point. Simply setting broad organizational goals that are not intrinsically linked to customer outcomes leaves 90% of plans with vague articulations of objectives that are not well thought out. This allows for variability to creep in from the get-go when others from within the organization that are less familiar with the plan try to interpret the plan’s intentions and attempt to employ tactics to achieve the underlying objectives of the plan goals. The outcomes being planned for should be defined and “packaged” so they can be easily communicated within the organization, crisply defined using a controlled vocabulary and be highly measurable. It is also of high importance that the planning process not allow for over-loading. Planning for too many outcomes and too many high-priority goals will be detrimental to the success of the process, so limiting the number of key outcomes to a handful strikes the right balance. There will be more about how to handle the goals you’ve left off the list in a bit.

Plan within the organization’s eco-system and for the dynamics of the eco-cycle

When considering any change to the organization, we must be respectful of the business eco-system – that delicate interoperability that exists between the internal business functions that are affected by elements of the plan in support of the defined key outcomes. The business eco-system is also inclusive of the supply-chain relationships and vendor partners. The planning process should consider impacts to external business relationships and of course, most importantly…customers. To accomplish the holistic approach of addressing the business eco-system, the planning process must dictate representation from across the business functions. The process must offer holistic coverage of the business eco-system, functioning with executive management and with lower-levels of management that are empowered to take action as defined by the plan and within agreed upon parameters. Likewise, the planning process must take into account the relevant business economic cycles that will affect market conditions, access to capital or otherwise constrain resources. To the extent that these cycles are known and understood well enough to be good predictors, the planning process should leverage eco-cycle data into the plan. By reflecting the general timing of eco-cycles in the resulting plan, we’ve built in the "opportunistic" and responsive dimension to planning that normally does not exist.

Determine value, then prioritize

Because a realistic strategic or operational plan cannot be expected to address all plan goals at once, relative valuation and then prioritization of outcomes must be a part of the process. Ideally, the planning process will be oriented around shorter planning cycles that attenuate plans to budgets in short plan windows (quarterly and on 12-month rolling cycles ideally). The planning process should be oriented to offer greater detail in the initial 12-months and a gradient of less and less detail from quarter to quarter…focusing on what is more certain in the business environment. A recommendation is that the planning process focuses on the top quartile of key outcomes based upon the valuation ranking and those key outcomes become the “active” component of the plan that gets detailed further into tactical initiatives. The remaining percentage of key outcomes still get worked, but go into the planning queue until the plan is reviewed again in the next business quarter.

Integration of the plan throughout the business

Last but not least, it is essential that a planning process address communication. The Plan4 process used by Method Frameworks is built on five keystones that are at the heart of this unique planning process and the supporting frameworks: 1) Accountability, Performance, and Reward, 2) Organizational Acceleration, 3) Energy and Focus and 4) Communication and 5) Clarity and Visualization. For the purposes of this article, only the Communication keystone is addressed. For more information on the other keystones, please refer to www.methodframeworks.com/our-advantage/keystones/index.html.

According to the “law of requisite variety” (Weick, 1969), organizations, to survive, must develop equivalent communications mechanisms to match the diversity of the organizations’ environment. In lay terms, you must have communications outlets that are inline with and as diverse as the organization itself. It is irresponsible for an organization to go about planning activities without the appropriate communications approaches.

The planning approach, and more specifically, the communications strategies within the process, take into consideration that some amount of “fuzziness” is required for the organization to respond appropriately in an ever changing environment. For example, an organization in the midst of planning is consistently responding to the external environment. The information needed to “control” (a.k.a. Steer) that organization needs to be flexible and agile. The book, “Designing Organizations” (Butler, 1991), uses the example of a car. It states that it is not possible to control a car safely under the variability of normal road conditions with a simple information system that would only permit stop-go speed and left-ahead-right steering commands; the variation in available speed and steering positions would not normally be sufficiently high to cope with the variation in road conditions. The same is true for organizational communication. If the organization is trying to adapt to complexity, information, and overall change, then communications strategies must be calibrated to respond (and quickly) to the needs of the organization.

So now what?

To summarize, in the new normal era, doing traditional strategic planning is no longer good enough to insure that organizations will reach their goals. A more evolved process is required in today’s world to overcome the many challenges organizations now face. A planning process that is not outcome-driven and is not woven through the organization’s culture, hierarchy and communications channels will not be nearly as effective as a planning process that satisfies these requirements. Likewise, the planning process successful organizations follow must involve the full enterprise eco-system and plan for the eco-cycles existing in the business model and environment the business operates within. Limiting the number of goals being set during the planning process will help the organization focus energy for execution of goals more crisply. Likewise, it the business leaders will be able to communicate about the desired outcomes and how the enterprise layers will contribute to the tactics of achieving those outcomes far more succinctly.

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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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