1. Integrated
Business
Planning
Process
Presented
to
the
Association
for
Progressive
Communications
By Charles P. Sitkin, Consultant
In affiliation with Carnegie-Mellon University
2. Outline
of
Presentation
• Evolution of Management Concerns
• Strategic Planning
• The Mission
• Strategic Excellence Positions
• Goals and Objectives
• Action Plans
• Operating Plan and Budget
• Results Management
3. Integrated
Planning
Process
Strategic
Plan
Operational
Plan
Results
Management
Mission
Goals
Objectives
Strategies
Financial
Projection
Analyses
Key
Result
Areas
Operational
Objectives
Performance
Indicators
Action
Plans
Budgets
Control
System
Results
Connective
Action
Reward
System
7. Business,
Operational,
Strategic?
• Business Plan
• Normally prepared to acquire financing
• Operational Plan
• Identifies specific results to be accomplished within a given
time period
• Budget
• Expresses operational plan in financial terms
• Strategic Plan
• Identifies the basic concept and direction of an organization
8. Strategic
Planning
Process
Mission
Statement
Regulation
s
and
Laws
Issues
Strategic
Excellence
Position
Goals
Objectives
Strategy
Strategy
Strategy
Action
Plans
Annual
Budget
10. “I firmly believe that any organization in order to survive
and achieve success must have a sound set of beliefs on
which it premises all its policies and action…”
“Next I believe that most important single factor in
corporate success is faithful adherence to those beliefs…”
“And, finally I believe if an organization is to meet the
challenge of a changing world, it must be prepared to
change everything about itself except those beliefs as it
moves through corporate life.”
Thomas Watson, Jr.
12. Mission
• Shared purposes provide FOCUS by driving strategy
• Shared values provide CONTROL by guiding execution
13. Example
Mission
Statement
Bread Machine Industry Association
The mission of the BMIA is to expand and promote the long-term
growth and use of all aspects of the bread machine industry for the
mutual benefit of our members and consumers
___________
Freehold Actors’ Studio & Lab
The mission of Freehold is to deepen the transformational power of
theatre to inspire through education, experimentation and performance.
15. Strategic
Excellence
Positions
Products/
Markets
A
Products/
Markets
B
Products/
Markets
C
Marketing
R
+
D
Production
Personnel
Finance
16. Strategic
Excellence
Positions
Products/
Markets
B
Products/ SEP
Markets
A
Products/
Markets
C
Marketing
R+D
Production
Personnel
Finance
17. Strategic
Excellence
Positions
Strategic success means to achieve better and more stable
results than the competition. Achieving that requires
superior competence, or the ability to excel, in a set of
distinctive capabilities which have special value to a
particular part of the marketplace.
Note that excellence by itself is not enough. It must be
excellence in areas of strategic significance, i.e., that
determine the outcome of competition in the marketplace.
The strategic excellence than forms the basis for the
organization to achieve better results than the competition.
In this sense it is a position which the organization
“occupies” from which follows strategic success.
18. Strategic
Excellence
Position
Company
SEP
• Honda
• Quality
• Gillette
• Innovation
• Rolls Royce
• Status/Prestige
• Microsoft
• Integration
• APC Nodes
• ?
19. SEP
Example
BMIA Example
• Provide for the Unified Presence of the bread machine
industry category in its marketplace
• Provide for intra-industry communications within the
bread machine industry.
21. Goals
• Define the key areas in which to expect strategic results
and what is expected.
• Not measurable as stated, but contain factors that will be
measurable as Objectives.
• With Mission and SEPs determine what Objectives
should be selected.
23. Objectives
• Statement of measurable results
• Tied to Goals, provide the basis for operational planning
and budgeting
• Four general characteristics:
• Starts with the word “To”
• Specifies a single measurable result
• Specifies a target date or time span for Completion
• Must be realistic and attainable, but represents a significant
challenge
24. Goal
and
Objectives
Example
Goal One
Educate consumers about the benefits of bread machines, facilitate their
purchase decisions, and encourage usage.
Objectives
1.1 To create a media kit for a distribution to key newspapers, magazines,
and the 1997 Housewares Show by January 10, 1997.
1.2 To host a New York City magazine editors event “Coming Out Party”
for all new bread machine products (members only) by June 30, 1997.
1.3 To explore partnerships with like minded industry associations for the
purpose of producing a jointly sponsored media campaign in 1997.
1.4 To evaluate and report on the possibility of a BMIA web page by
August 31, 1997
25. Three
Classes
of
Objectives
Innovative
Problem
Solving
Regular/Routine
27. Action
Plans
• Specify steps or actions required to attain an objective.
• Designate who will be held accountable for seeing each
step or action is completed
• Define when these steps or actions will be carried out
• Define resources needed to be allocated in order to carry
out the required steps or actions
• Define feedback mechanisms needed to monitor
progress within each action step
28. Action
Plan
Action
Steps
Project
Title
Accountability
Schedule
Resources
Feedback
Mechanism
Primary
Others
Start
Complete
Dollars
Time
Objective:
30. Integrated
Planning
Process
Strategic
Plan
Operational
Plan
Results
Management
Mission
Goals
Objectives
Strategies
Financial
Projection
Analyses
Key
Result
Areas
Operational
Objectives
Performance
Indicators
Action
Plans
Budgets
Control
System
Results
Connective
Action
Reward
System
31. Comprehensive
Business
Planning
Mission
Statement
Regulation
s
and
Laws
Issues
Vision
Goals
Objectives
Strategy
Strategy
Strategy
Action
Plans
Annual
Ops
Plan
&
Budget
33. Operational
Objectives
• Statements of measurable results to be accomplished
within the time frame of the operational plan.
• Standards of performance related to financial and
operating results that can be tracked on a regular basis
34. Budgeting
• Determine the level of financial resources required to
achieve the operational plan’s objectives
• Allocate available financial resources to ensure their
optimum use in achieving the plan’s objectives
• Control the use of available resources to ensure the
achievement of plan objectives
35. Budgeting
Problems
• Budgets can grow to be so complex that they become
expensive, cumbersome, and even meaningless
• Budget objectives may come to supersede enterprise
objectives – budgets should be considered a tool, not an
end in themselves. Enterprise goals should supersede
business unit plans
• Budgets may contribute to inefficiencies by continuing
initial expenditures without proper evaluation
• Budgets as a pressure device defeat their basic purpose
37. Integrated
Planning
Process
Strategic
Plan
Operational
Plan
Results
Management
Mission
Goals
Objectives
Strategies
Financial
Projection
Analyses
Key
Result
Areas
Operational
Objectives
Performance
Indicators
Action
Plans
Budgets
Control
System
Results
Connective
Action
Reward
System
38. Results
Management
• Control Systems
• Management Reports
• Organizational Results
• Individual Results
• Corrective Action
• Reward System
39. “I believe the real difference between success and failure in a
corporation can vary often be traced to the question of how well
the organization brings out the great energies and talents of its
people. What does it do to help these people find common cause
with each other? And how can it sustain this common cause and
sense of direction through the many changes which take place
from one generation to another…”
“The basic philosophy, spirit, and drive of an organization have
far more to do with its relative achievements than do
technological or economic resources, organizational structure,
innovation and timing. All these things weigh heavily in success.
But they are, I think, transcended by how strongly the people in
the organization believe in its basic precepts and faithfully they
carry them out.”
Thomas Watson, Jr.
42. Steps
in
Operational
Analysis
1.
Identify
Issues
2.
Prioritize
Issues
3.
Analyze
Issues
4.
Summarize
Issues
Major
Conclusions
Alternative
Courses
of
Action
43. Identify
Issues
• Most critical issues facing the business unit, what might
be their impact
• Issues likely to have greatest effect on profitability
• Issues likely to have greatest effect on long-term success
of the business unit
• What changes have taken/will take place effecting the
business units performance in the coming year
• What cross-functional problems or opportunities are lilkey
to have impact on the business unit’s performance
• What are major impediments to conforming to your
Mission
44. Analyze
Issues
• What is the Issue
• What data/information is available (or needed) to resolve
the issues
• What appear to be the factors causing this to be an issue
for the organization
• What types of results are needed in this area.
46. Key
Result
Areas
Guidelines
• Those 4 to 6 major areas wherein performance is
essential during the coming year
• Include both financial and non-financial areas
• Will no cover the entire organization—will identify the
critical few areas where priority efforts should be directed
• Most will require cross-functional effort
• Each will be limited, generally, to 2 or 3 words and will not
be measurable as stated, but will contain factors that
could be measurable
47. Indicators
of
Performance
• Measurable factors, falling logically within a given key
result area, on which objectives may be set
• May be hard numbers, percentages, significant
achievements, or problems to be overcome
• Identify what will be measured, not how much or in which
direction
• Represent factors that can be measured on an ongoing
basis
48. Example
Indicators
of
Performance
Key Results Areas
• Return/Profit
• Productivity
• People Development
• Market Penetration
Indicators of Performance
• Return on Revenue
Donations to Sales Ratio Net
profit
• $ sales per employee Unit
produced/month
• Percent hire Days of training/
employee
• Percent of market share,
Percent growth by product
50. Competitive
Intensity
Potential
Entrants
Industry
Competitors
Rivalry
among
existing
firms
Suppliers
Substitutes
Bargaining
power
of
suppliers
Buyers
Threat
of
new
entrants
Bargaining
power
of
buyers
Threat
of
substitute
products
or
services
Source:
Michael
Porter
52. Direct
Means
• Action Plans and Project Plans
• Procedures/Management Systems
• Planning and Budgeting
• Management Information Systems
• Organizational Structure
53. Indirect
Means
• Communication
• Symbolic Actions
• Institutionalizing Actions
• Fostering Innovation
• Corporate Culture
54. Time
Related
Aspects
• Research and Development
• Manufacturing Life Cycle
• Marketing Cycle
• Economic Trends
• Competition
55. Strategic
Plan
Outline
• Executive Summary
• Current Situation and Vision
• Critical Issues
• Mission
• Strategic Excellence Positions
• Goals and Objectives
• Action Plans
56. Operation
Plan
Content
• Executive Summary
• Business Unit Description
• Product and Services
• Operational Analysis: Issues and Conclusions
• Key Result Areas & Indicators of Performance
• Operational Objectives
• Action Plans
• Budgets
• Plan Implementation and Review Schedule
• Appendices
