Next to great people, the most important way to guarantee success is through a well-defined and well-executed planning process. How you plan is as important as who is doing the planning, and each year a company should strive to improve its strategic planning process. While the steps can vary significantly from company to company, the following are best practices for almost any organization.
1. Affirm your longer term vision
Before diving into setting current year priorities, it’s always a good idea to affirm the longer term picture of where you want your organization to go. What are your longer term goals and strategic thrusts, and how well have we been moving toward them? What longer term changes do we need to make? Get alignment on the longer term vision before beginning to develop the annual plan. Then, use your longer term vision to begin brainstorming your possible annual priorities.
2. Develop your numerical targets
This step by itself can become quite complex. It can include the development of a profit/loss statement budget, a forecast of capital purchases, and a projection of cash flow. Many companies start with a sales forecast for the upcoming year based on known market conditions and anticipated changes to internal people, processes, and products. In addition to their budgets, some companies develop best case and worst case versions of their budgets, to help them think through contingencies in case the projections turn out to be too high or low. This work paints an important numerical picture of the upcoming year.
3. Prioritize your area of greatest need and your “critical number”
In a previous blog, I wrote about the need to determine your area of greatest need in the upcoming year based on the 4 Decision model: people, strategy, execution or cash. Once you have alignment on the key decision area, brainstorm and choose one metric to be the critical number that the organization will focus on for the year to measure progress in the area of greatest need. Then, set a numerical target for that metric that will represent a game changing performance for your team. This will become the focus of several or all of the key improvements for the upcoming year.
4. Develop a list of priorities / improvements
Once you have identified your critical number and a target, brainstorm approaches on how to achieve the target. Hitting a stretch target may require you to change in some dramatic and positive ways. It’s common to develop a list of 15 or more individual ideas, and it’s best to have a number of good ideas to make it easier to determine which are the great ideas. Once your team has exhausted its efforts in finding ways to attain the number, then you need to prioritize the list down to between 1 and 3 improvements that your company will actually do in the upcoming quarter. This is perhaps the hardest part for some teams – letting go of good ideas in favor of great ideas. But a company with too many priorities really has no priorities. Once you have identified the keys to attaining the critical number, brainstorm other possible improvements for the year that could be done to move the company forward in the direction of your long term and shorter term goals. Choose one of two of these as additional annual priorities, leaving you with between 3 and 5 total priorities for the year.
5. Project Plan the Priorities
Once you have identified the key improvements for the year, assign a person to be accountable for each, and have the accountable person do an action plan or project plan showing the path the company must take in order to make the improvement happen. Next, share the action plan with the planning team to make sure everyone agrees. Without the action plan and agreement by the team, the chances the improvement will actually get done drops dramatically. Significant improvements don’t happen without a plan.
To partner with Business Improvement LLC to build a company that develops and achieves great plans, visit Business Improvement or call 1.215.830.1222 to speak directly with Doug Diamond.