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Business Planning for
      Success

    Five Essential Steps
By Walter Adamson
Principal, Digital Investor

September 200...
The Opportunity

 Develop a sustainable and effective plan:

    Clear link from actions to strategy
    Aligned with stru...
What we will do

 There are five stages:

 1. ABCD Planning
 2. Mission, Objectives, Strategies, Actions
 3. The Balance o...
Phase 1 – ABCD Planning

   Understand today and envisage tomorrow:


                                    A. Acknowledge t...
Phase 1 – ABCD Process



 The ABCD Planning
 process helps cross the
 gap and bridge the
 company to the new
 strategic i...
Phase 1 – ABCD Steps

 The steps:

   A is the AS IS – today
   B is the STRATEGIC INTENT
   C are CONTRAINTS and CRITERIA...
Phase 1 – ABCD Key Points

 A and B are the hard parts:

   A - Confronting the genuine status and
 capabilities and stren...
Phase 1 – ABCD The Intent

 The Strategic Intent must be clear:

    Which drives the Mission and its
    Objectives, Stra...
Phase 1 – ABCD Challenge

 The biggest challenge is for successful
 companies that have grown to a certain point
 and now ...
Phase 1 – ABCD Capabilities

 Understanding capabilities:

    What capabilities exist today (point A)
    What capabiliti...
Phase 1 – ABCD Output

 The output from Phase 1 includes:

                                   B – Strategic Intent
       ...
Next – Phase 2

 There are five stages:

 1. ABCD Planning
 2. Mission, Objectives, Strategies,
    Actions
 3. The Balanc...
Phase 2 – MOSA

 Developing, executing and maintaining a
 clear Mission, and set of Objectives,
 Strategies and Actions is...
Phase 2 – MOSA - Mission

 The Mission is why we exist:
   Our products and services
   Our markets and standards
   Our p...
Phase 2 – MOSA - Mission

 Guidelines for Mission statements:
    The Mission statement must “work” not only today
 but fo...
Phase 2 – MOSA - Mission

 Examples of Mission statements:
    Become the company most known for changing
 the worldwide p...
Phase 2 – MOSA - Objectives

 The Objectives are specific outcomes:
    Where we will be
    By when
    And perhaps how m...
Phase 2 – MOSA - Objectives

 The Objectives have time-deliverables:
                             Mission

               ...
Phase 2 – MOSA - Strategies

 The Strategies are “the how and who”:
                            Objective


              ...
Phase 2 – MOSA - Strategies

 Strategies are WHAT we will do:
    To deliver the Objectives, by
    Breaking down the Stra...
Phase 2 – MOSA - Strategies

 $64 question – how to design Strategies:
    Nominate Key Result Areas (above Objectives)
  ...
Phase 2 – MOSA - KRAs

 The KRAs are designed to:
   Embrace the objectives and priorities for the year
   Consists of Str...
Phase 2 – MOSA - KRAs

 KRAs can be grouped into different types:
   Performance – improving today
   Transformation – lea...
Phase 2 – MOSA - KRAs

 Each KRA has an Objective:
                Key Result Area & Objective


                         ...
Phase 2 – MOSA - Actions

 HOW we will implement Strategies:
    Contained within Waves
    With measures
    And targets
...
Phase 2 – MOSA + Vision

 The Vision is the “light on the hill”:
    How a Vision is used
    The impact of Vision
    The...
Phase 2 – MOSA + Vision

 A Vision statement is important:
    A Vision is a guiding image of success
    It can drive beh...
Phase 2 – MOSA + Vision

 Examples of Vision statements:
    We try harder
    Crush Reebok
    We make people happy
    A...
Phase 2 – MOSA + Values

 Knowing what you value is important:
   It drives behaviours
   It enhances empowerment
   It dr...
Next – Phase 3

 There are five stages:

 1. ABCD Planning
 2. Mission, Objectives, Strategies, Actions
 3. The Balance of...
Phase 3 – Loose and Tight

 The balance of what is loose and what is
 tight is often the most critical structural and
 ope...
Phase 3 – Loose and Tight

 Some of the most common causes of failure
 result from an inappropriate balance.
 Failures occ...
Phase 3 – Loose and Tight

 Despite the simple nature of the concept, it
 needs investment in terms of money and
 time to ...
Phase 3 – Loose and Tight

 The scorecard directly relates to the Key Result Areas
 of strategy, by analyzing the Vision a...
Phase 3 – Loose and Tight

 As a first pass the Balanced Scorecard can:

    Include financial, and sales indicators
    I...
Phase 3 – Loose and Tight
                  Individual Successes Corporate Successes

                                    ...
Phase 3 – Loose and Tight

 Once the decision about balance is made then the
 key to effective management is the scorecard...
Next – Phase 4

 There are five stages:

 1. ABCD Planning
 2. Mission, Objectives, Strategies, Actions
 3. The Balance of...
Phase 4 – Project Reviews

 Regular review of key projects is essential:

    Quarterly at least
    Executive Working Gro...
Phase 4 – Project Reviews




 The key global projects that are enabling the
 execution of the strategies are always “tigh...
Phase 4 – Project Reviews

 Projects in Key Result Areas are a “tight”:

    They must be reviewed and reported
    Regula...
Phase 4 – Project Reviews

 Many companies, especially those expanding
 overseas, have floundered when key global
 project...
Next – Phase 5

 There are five stages:

 1. ABCD Planning
 2. Mission, Objectives, Strategies, Actions
 3. The Balance of...
Phase 5 - Alignment

 Strategic intent, strategic plans, balanced scorecards
 and good project management are all necessar...
Phase 5 - Alignment

 Exceptional performance comes from:

   Peak human performance
   Peak business performance, and
   ...
Phase 5 - Alignment

 The most crucial elements of successful
 corporate performance, as reported by
 CEOs, are:

     Str...
Phase 5 - Alignment

 The Structure must align with the Strategy:

    The shape of the organisation is important
    Clea...
Phase 5 - Alignment


   Once Strategy is right, and the Execution
  can be conceived, there must be alignment
           ...
Phase 5 - Alignment

 The practical steps, start with Strategy:

    Build execution capabilities
    Begin to convert Str...
Phase 5 - Alignment

 Alignment is a verb, not a noun:

    It must be maintained, and
    Improved, through a feedback lo...
Summary and Attachments


 1. Summary – 5 steps to success
 2. Attachment - Example




                                  ...
Summary – 5 Steps to Success

 1. Get the Intent clear – and understand how big an
 effort and how risky it is to get ther...
Attachments - Example

            Key Result Area Customers
         Objective To utilise best IT applications
          ...
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Business Planning for Success - 5 Essential Steps

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Five Essential Steps. There are five stages necessary to achieve success in business planning: 1. ABCD Planning, 2. Mission, Objectives, Strategy & Action, 3. The Balance of Loose and Tight, 4. Monitoring Key Projects, 5. Organisational Alignment.

Subtitle: Enhancing alignment and value for IT investments.

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  1. 1. Business Planning for Success Five Essential Steps By Walter Adamson Principal, Digital Investor September 2005 adamson@digitalinvestor.com.au www.digitalinvestor.com.au
  2. 2. The Opportunity Develop a sustainable and effective plan: Clear link from actions to strategy Aligned with structure and culture Clear and consistent themes Focus attention and effort where needed Slide 2 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  3. 3. What we will do There are five stages: 1. ABCD Planning 2. Mission, Objectives, Strategies, Actions 3. The Balance of Loose and Tight 4. Monitoring Key Projects 5. Organisational Alignment Slide 3 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  4. 4. Phase 1 – ABCD Planning Understand today and envisage tomorrow: A. Acknowledge today B. Plot the intent ABCD Planning process C. Manage within means D. Understand the risks ABCD planning has to start with an authentic view of the current situation - obtaining that clarity is often the most difficult part. Slide 4 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  5. 5. Phase 1 – ABCD Process The ABCD Planning process helps cross the gap and bridge the company to the new strategic intent, while managing the risk of transition. Slide 5 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  6. 6. Phase 1 – ABCD Steps The steps: A is the AS IS – today B is the STRATEGIC INTENT C are CONTRAINTS and CRITERIA, and D is the DESIGN of Pilots (prototypes of the new business model – used to test the feasibility of the Plan). Slide 6 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  7. 7. Phase 1 – ABCD Key Points A and B are the hard parts: A - Confronting the genuine status and capabilities and strengths and weaknesses today is often threatening B - Developing the Strategic Intent, which requires clarity of vision and purpose is challenging and requires effort Slide 7 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  8. 8. Phase 1 – ABCD The Intent The Strategic Intent must be clear: Which drives the Mission and its Objectives, Strategies and Actions, Which in turn require judgments about what is Loose and what is Tight, and the Tight are reported through the Scorecard. Slide 8 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  9. 9. Phase 1 – ABCD Challenge The biggest challenge is for successful companies that have grown to a certain point and now need to take the next step: How to move from A to B? What constraints are there? How to manage the risk? Slide 9 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  10. 10. Phase 1 – ABCD Capabilities Understanding capabilities: What capabilities exist today (point A) What capabilities are needed (point B) The capabilities encompass organisational competencies and individual competencies, and the means to deliver these competencies. Slide 10 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  11. 11. Phase 1 – ABCD Output The output from Phase 1 includes: B – Strategic Intent A – As Is Vision SWOT Values Capabilities Mission C – Constraints D – Prototypes Money Manage Risk People Competencies Slide 11 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  12. 12. Next – Phase 2 There are five stages: 1. ABCD Planning 2. Mission, Objectives, Strategies, Actions 3. The Balance of Loose and Tight 4. Monitoring Key Projects 5. Organisational Alignment Slide 12 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  13. 13. Phase 2 – MOSA Developing, executing and maintaining a clear Mission, and set of Objectives, Strategies and Actions is vital: The Mission is why we exist Objectives are where you want to be Strategies are what you’ll do to get there Actions are how you’ll achieve the strategies Names may change but there is no substitute for these components in an effective Business Plan. Slide 13 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  14. 14. Phase 2 – MOSA - Mission The Mission is why we exist: Our products and services Our markets and standards Our preferences “Our mission is to be the world's most dynamic science company, creating sustainable solutions essential to a better, safer and healthier life for people everywhere.” Slide 14 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  15. 15. Phase 2 – MOSA - Mission Guidelines for Mission statements: The Mission statement must “work” not only today but for the intended life of the strategic plan of which the mission statement is a part. Focus is a primary benefit of the Mission statement. It should be broad enough to allow for the diversity (new products, new services, new markets) required of your business. And it must also be specific enough to provide the focus necessary to the success of the business. Slide 15 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  16. 16. Phase 2 – MOSA - Mission Examples of Mission statements: Become the company most known for changing the worldwide poor-quality image of Japanese products. FedEx is committed to our People-Service-Profit Philosophy. We will produce outstanding financial returns by providing totally reliable, competitively superior, global, air-ground transportation of high- priority goods and documents that require rapid, time-certain delivery. To develop, design and deliver great communications solutions to every customer. Slide 16 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  17. 17. Phase 2 – MOSA - Objectives The Objectives are specific outcomes: Where we will be By when And perhaps how measured “No less than 30% of our customers will be ASX 200 by end-2006 and have an average annual revenue of greater than $1m each.” Slide 17 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  18. 18. Phase 2 – MOSA - Objectives The Objectives have time-deliverables: Mission By end-May 2006 Objective 1 By end-2006 Objective 2 Objective 3 By end-December 2005 Slide 18 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  19. 19. Phase 2 – MOSA - Strategies The Strategies are “the how and who”: Objective What Strategy 1 How Action 1, by when, by WHOM Action 2, by when, by WHOM Action 3, by when, by WHOM Slide 19 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  20. 20. Phase 2 – MOSA - Strategies Strategies are WHAT we will do: To deliver the Objectives, by Breaking down the Strategies into Waves Providing focus on Key Result Areas And incremented in Actions “Develop a skilled and empowered workforce with a ‘can do’ attitude.” “Enhance our KPIs and benchmark, and use them to drive the business.” Slide 20 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  21. 21. Phase 2 – MOSA - Strategies $64 question – how to design Strategies: Nominate Key Result Areas (above Objectives) Develop Strategies for each Objective And a series of “Waves” each lasting 1 year Develop Waves for each Strategy The Waves provide a basis to keep the transformation initiatives, budgets and financial targets knitted together – and this keeps the results visible on an annual basis. Slide 21 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  22. 22. Phase 2 – MOSA - KRAs The KRAs are designed to: Embrace the objectives and priorities for the year Consists of Strategies and Waves Each Wave owned by a senior executive Waves contain Actions The executive is the Project Director for the collection of Actions within each Wave The Waves become part of the responsibility of the people running the day-to-day business. Slide 22 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  23. 23. Phase 2 – MOSA - KRAs KRAs can be grouped into different types: Performance – improving today Transformation – leading to tomorrow Mandatory – compliance and governance For example: KRAs - Performance / People / Products Can be grouped as above Contain multiple projects Slide 23 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  24. 24. Phase 2 – MOSA - KRAs Each KRA has an Objective: Key Result Area & Objective What Strategy 1 How Wave 1, by when, by WHOM Wave 2, by when, by WHOM Wave 3, by when, by WHOM Slide 24 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  25. 25. Phase 2 – MOSA - Actions HOW we will implement Strategies: Contained within Waves With measures And targets “Document customer delivery efficiency KPIs in Account Plans. Responsibility: BM. By March 2006.” Slide 25 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  26. 26. Phase 2 – MOSA + Vision The Vision is the “light on the hill”: How a Vision is used The impact of Vision The process of creating a Vision Having a clear Vision helps in times of change and in implementing change. Slide 26 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  27. 27. Phase 2 – MOSA + Vision A Vision statement is important: A Vision is a guiding image of success It can drive behaviours It drives shared commitment Starts from values, intuition and dreaming Best drafted by one or two people and come back to the group for discussion. Slide 27 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  28. 28. Phase 2 – MOSA + Vision Examples of Vision statements: We try harder Crush Reebok We make people happy An Apple on every desk First Choice through Excellence The way to think of this is that the VALUES drive the VISION which in turn drives the MISSION. Slide 28 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  29. 29. Phase 2 – MOSA + Values Knowing what you value is important: It drives behaviours It enhances empowerment It drives the Vision, and Mission It’s about the means not the end Ask yourself what you aspire to, in the way that your people behave and treat each other and your clients and partners. Slide 29 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  30. 30. Next – Phase 3 There are five stages: 1. ABCD Planning 2. Mission, Objectives, Strategies, Actions 3. The Balance of Loose and Tight 4. Monitoring Key Projects 5. Organisational Alignment Slide 30 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  31. 31. Phase 3 – Loose and Tight The balance of what is loose and what is tight is often the most critical structural and operational key to success. Failures occur when: A local unit has all loose and no tight; Key Result Areas are not tight; Excessive “tight” kills responsiveness. Slide 31 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  32. 32. Phase 3 – Loose and Tight Some of the most common causes of failure result from an inappropriate balance. Failures occur when: Too tight – bureaucratic, slow, unresponsive, ineffective Too loose – fast but wrong, inefficient, lack of governance and corporate cohesion Slide 32 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  33. 33. Phase 3 – Loose and Tight Despite the simple nature of the concept, it needs investment in terms of money and time to enable effective implementation. The CEO should be the champion The project should never be a project for the human resources department! Needs a coordinated effort to find out how value is created in the organisation. Slide 33 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  34. 34. Phase 3 – Loose and Tight The scorecard directly relates to the Key Result Areas of strategy, by analyzing the Vision and Mission: Requires alignment of the vision and the objectives Much more than financials and operational efficiency Include “the customer”, and Internal learning and growth perspectives Long term sustainability of the organisation is found in the customer, internal business process and the learning and growth perspectives (not in profit and shareholder focus!). Slide 34 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  35. 35. Phase 3 – Loose and Tight As a first pass the Balanced Scorecard can: Include financial, and sales indicators Include internal efficiency Include all the Key Result Areas (as one sector) In the longer-term, in a full implementation, the scorecard should be cascaded down into each operating unit and support unit, with clear linkages to performance assessment, and to corporate strategy. Slide 35 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  36. 36. Phase 3 – Loose and Tight Individual Successes Corporate Successes e.g. Managed IP services Integrated Business 2 3 Strategy Expand in Expand existing into new markets markets 1 Stand-alone Easy Fixes Develop core Operating with Quick capabilities Gains Units Balanced Strategy Autonomous Strategy Slide 36 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  37. 37. Phase 3 – Loose and Tight Once the decision about balance is made then the key to effective management is the scorecard: If it is not on the scorecard then Financial Operational it is not “tight”, since the scorecard is the tool for visibility into all the selected tight Key Result variables. People Areas Highlight with “traffic lights”. Slide 37 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  38. 38. Next – Phase 4 There are five stages: 1. ABCD Planning 2. Mission, Objectives, Strategies, Actions 3. The Balance of Loose and Tight 4. Monitoring Key Projects 5. Organisational Alignment Slide 38 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  39. 39. Phase 4 – Project Reviews Regular review of key projects is essential: Quarterly at least Executive Working Group All business change programs Report on success Manage risks going forward Slide 39 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  40. 40. Phase 4 – Project Reviews The key global projects that are enabling the execution of the strategies are always “tight” and have to be tightly managed through regular reviews. Slide 40 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  41. 41. Phase 4 – Project Reviews Projects in Key Result Areas are a “tight”: They must be reviewed and reported Regularly Independently – including Project Director Quarterly or better Summary statistic on Balanced Scorecard Slide 41 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  42. 42. Phase 4 – Project Reviews Many companies, especially those expanding overseas, have floundered when key global projects have surprised the Board: Regular reviews are about risk management Ensure ongoing alignment with the business Ensure project does not have “a life of its own” Ensure that good money is not following bad. Slide 42 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  43. 43. Next – Phase 5 There are five stages: 1. ABCD Planning 2. Mission, Objectives, Strategies, Actions 3. The Balance of Loose and Tight 4. Monitoring Key Projects 5. Organisational Alignment Slide 43 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  44. 44. Phase 5 - Alignment Strategic intent, strategic plans, balanced scorecards and good project management are all necessary but not sufficient to achieve success. Very often, there is a mismatch or a lack of alignment and synchronisation between the strategy and execution, and the culture and organisational structure. This gap restricts the performance of the organisation and causes friction in the timing and value-realisation of the intended strategy. Slide 44 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  45. 45. Phase 5 - Alignment Exceptional performance comes from: Peak human performance Peak business performance, and Relates to clarity, consistency and commitment Better aligned organisations perform better. Slide 45 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  46. 46. Phase 5 - Alignment The most crucial elements of successful corporate performance, as reported by CEOs, are: Strategy Execution Structure Culture Slide 46 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  47. 47. Phase 5 - Alignment The Structure must align with the Strategy: The shape of the organisation is important Clearly linked to Mission and Objectives Need to know where you want to go and what shape we need to be to get there. Slide 47 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  48. 48. Phase 5 - Alignment Once Strategy is right, and the Execution can be conceived, there must be alignment of Structure and Culture. The most effective tuning and alignment of Structure and Culture will enable the most effective Execution of Strategy. Slide 48 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  49. 49. Phase 5 - Alignment The practical steps, start with Strategy: Build execution capabilities Begin to convert Structure Begin to convert Culture Execute in parallel – in a measured way Slide 49 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  50. 50. Phase 5 - Alignment Alignment is a verb, not a noun: It must be maintained, and Improved, through a feedback loop Strategy > Execution > Structure > Culture Alignment – Plan-Do-Check-Act Slide 50 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  51. 51. Summary and Attachments 1. Summary – 5 steps to success 2. Attachment - Example Slide 51 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  52. 52. Summary – 5 Steps to Success 1. Get the Intent clear – and understand how big an effort and how risky it is to get there. 2. Build the Execution plan – and a clear link from Strategy to Actions. 3. Judge the Balance – and if it is not on the Scorecard then it is not “tight”. 4. Watch the Key Projects – since they will determine your success. 5. Align the Structure and Culture – with the Strategy and Execution. This will deliver the most effective and assured platform for business performance. Slide 52 Enhancing alignment and value for IT investments ©2005 Walter Adamson
  53. 53. Attachments - Example Key Result Area Customers Objective To utilise best IT applications and tools to provide outstanding customer service. Strategy Resource IT function to best-in-class. Talent recruitment and management Wave Measure Targets Carriage Actions Benchmark salaries Performance Management Slide 53 Enhancing alignment and value for IT investments ©2005 Walter Adamson
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