Mario's Corner - June 2018.

What Is Business Planning and How Can It Help Your Organization Succeed - If Done Properly 


Welcome to my firm's website.  I like to share my thoughts on Strategy,

Business Planning, Innovation, and Execution here on a monthly basis.

 

To access previous columns, hover your pointer over "Mario's Corner" in

the navigation bar and select the column you would like to read.  In a mobile

device browser, these are listed under "Mario's Corner" in the menu.

-------------------------------------------------------------------------------------------​-----------------

 

I am frequently asked by prospective clients to explain what exactly Business Planning is, what are its key components, and why they should use it for their organizations.


The first step is to define what it is.  A Business Plan is the creation of a formal, written statement of an organization's short and long-term business goals and objectives.  The purpose then shifts to creating an action plan to achieve these.  Many famous quotes have been attributed to Yogi Berra, the New York Yankees catcher famous for his malapropisms, and one of these applies to Business Planning.  Yogi said that "If you don't know where you are going, you will wind up somewhere else."  This is a perfect summary of why a company needs to do planning.  Basically, the Plan needs to answer four key questions:


-  Where are we as a business today?

-  Where do we want to be in the future?

-  What resources will we need to get there (and what don't we need)?

-  How will we monitor the progress we are making?


The answers to the first two questions help to address where the organization is today, what changes it needs or would like to make, and what objectives and goals the organization needs to pursue.


The next crucial question the organization needs to answer once it chooses its goals and objectives is: how will the company allocate its resources and define which ones are needed or not needed to achieve these?  By answering this question, a company can decide what activities/areas to emphasize in the future and which ones it can minimize and/or discontinue.  This is crucial since this answer helps define how the company will allocate its people and define what skills it will need (or no longer need) in the future.  This has tremendous implications in both people and time dedicated to future efforts.  


An example of a company that pivoted after creating a Business Plan is GE.  This company decided in the last few years to get out of the entertainment and financial businesses.  Thus, it sold NBC Universal to Comcast in 2009 and sold most of its GE capital assets to various companies including The Blackstone Group and Wells Fargo.  Although it can be argued that these moves were a mistake since GE stock has declined 50% in the last year (from $28.50 to approximately $14.00 today), one needs to look at these moves in light of GE's goals and objectives in its Plan.  Since GE has decided that it cannot continue to grow at the pace that it did under Jack Welch and Jeffrey Immelt, its previous CEO's, this might be the right choice for it.  Remember, this is the same company that first became successful by selling light bulbs - a business that contributes less than 1% of its profits, and that it is also divesting.


Finally, the organization needs to put an action plan together that will help it achieve its plan and it needs to define metrics that will help it measure its progress.  This is one of the key areas companies usually fail to address.  If not done, the company could indeed "wind up somewhere else."


The process of Business Planning includes many tools that will help management to help define the strategy for its business.  There are many steps that can be used, but usually, the following are conducted: assessment of the business regarding its strengths and weaknesses as well as the existing opportunities and threats (called a SWOT analysis), competitive analysis (who is the competition and what is it doing?), external environment assessment, development of Key Business Initiatives and Key Performance indicators, and finally, development and application of metrics.


A Business Plan ultimately needs to lead to actionable tactics that can be executed and implemented.  Otherwise, the Plan is useless.  This is where most efforts fail.


Putting the right internal team together and bringing in external, objective consultants to facilitate the process and to ensure the company does not "drink its own Kool-Aid" will ensure that the Plan is aspirational, but also realistic and achievable.


Unfortunately, many companies end up either creating a Plan that is never implemented or disregard this crucial process.


Business Planning is ultimately the responsibility of the company's leadership.  If done properly, it can help the company thrive and excel.


​------------------------------------------------------------------------------------------------------------------------------------------​​


Please do not hesitate to call me at 1 (617) 391-0347 or e-mail me at mariocastaneda@bluesailconsulting.com to talk about this or any other subject.  I always like to hear from clients and readers.  


Also, please don't forget to read my interview with BostonVoyager magazine.  To read it, click here.

 

Please contact us if you want to find out how we can help your organization create an effective, actionable Business Plan

 

I look forward to seeing you again here in July!

 

Best Regards,

 

​Mario