On Management

Dec. 21, 2004
Failing to plan is planning to fail.

Satchel Paige, the famous baseball pitcher, once said, "If you don't know where you're going, any road will take you there." Companies that think they know where they want to go typically develop strategic plans to serve as road maps. Yet, amazingly, in many large and sophisticated companies, these are complex, incomprehensible plans that fill thick binders and are never shared with the people who are responsible for implementing them. (After all, this stuff is "sensitive, confidential information.") The hallmark of a good strategic plan is not bulk; it is clarity and focus. The best plans are concise and written in simple language. Some so-called plans are not plans at all; they are merely compilations of industry or competitive background information. Sure, it's necessary to understand the history, market trends and demographics, and other factors. But having all of that information does not ensure a good, clear, concise, or well-communicated plan. In fact, just the opposite often occurs. The real essence of the plan is buried in reams of data -- often self-serving in nature, usually far too internally focused, and frequently tucked away in a locked cabinet (to protect this "confidential stuff"). There it sits, untouched, from the time one plan is completed until another must be started. Business changes too fast these days for such an archaic approach. If the plan can't be shared with those who must execute it, how will they know what to do? If the plan document is so thick and complex that only the most tenacious reader can wade through it, what good is it? Nobody has enough time these days. Broad, effective communication of a strategic plan that fills an inch-thick binder is impossible. But a truly focused plan can be communicated clearly in about five or six pages and understood by everyone from hourly workers to the board of directors. Key questions the plan should answer: 1. What business are you in? How big is the market? How fast is it growing -- and in which directions? What is the scope of the market segment you hope to carve out for yourself? 2. What is the competitive situation? In your target markets, who owns how much of them now -- and what do they do that permits them to hold that share? Also, where are they most vulnerable or strongest? 3. What is your strategy? List about five or six short (one- or two-line) specific strategy statements that outline what you plan to do -- and what you hope to achieve. 4. How are you going to do that? For each of the strategic points above, list one or two terse statements about how you expect to accomplish them -- and by when. 5. What are the critical assumptions? Invariably, various assumptions underlie the plan -- assumptions that, if they turn out to be wrong, can blow the whole plan out of the water. What are they? 6. What are the critical unresolved issues? Certain events, some beyond your control, may cause the plan to either sink or succeed. List them. 7. What are the financial projections? In about five or six lines, detail the high-level, five-year projections for: sales, operating profit (in both dollars and percentages), return on assets, capital required, and cash flow. Besides these essentials, a given business also may require one or two unique financial metrics. If written concisely, all of this will fit on five or six pages. If written clearly, it will be understandable by a 10th grader. Otherwise, it's probably too jargon-filled or stilted. Preparing a concise plan like this will take the senior management of a company just as long as creating the one in the big binder. That's because it requires real thought, clear focus, and careful wording. Little of the actual development of the plan can be delegated, but it must be a product of extensive listening to input from all levels of the company. The final outcome must be shared with all levels, in varying detail depending on their responsibilities. Without these two steps there will be insufficient "buy-in" by large groups of people in the company. And no buy-in means no success. As the old saying goes: "Failing to plan may be planning to fail." John Mariotti, a former manufacturing CEO, is president of The Enterprise Group, a consulting business. He lives in Knoxville. His e-mail address is [email protected].

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