Tuesday, January 11, 2011

Executive Decisions part 2

Welcome to part two of my brief review of techniques I've learned over the years for driving business improvements. These tools are typically used in a workshop setting with key stakeholders in the business or business sub-area to develop a detailed, usable strategic business plan.

Which reminds me of a saying one of my bosses and business mentors used to have. Whenever we brought large groups of people together, he would remind everyone that "this is a very expensive meeting" and that we needed to make sure that it added real value to the business. Otherwise, it was a waste of money. Please consider this when you're setting up your strategic planning session - if it's just a bunch of busy-work, you're wasting the hourly rate of every participant times the number of hours you spend in the workshop times the number of participants. That could EASILY add up to thousands of dollars of YOUR business's money. Make it count or spend it elsewhere!

Now, back to the workshop agenda!Yesterday we covered part 1 of the (usually multi-day workshop), Definition of your company and all of its key elements. In other words, you defined what your company ALREADY IS or SHOULD BE. In today's section, we delve into determining what your company WILL BE.

2. Visualization - the next step is to look out into the future and put serious thought into where the business is and ought to be headed. I usually take a three-step approach. I suggest tackling a far-future visualization, usually five-to-ten years. I also recommend a short-term visualization of one year, because that's really the meat of your strategic plan - what to do in the coming calendar or fiscal year. In-between, I like to tailor the medium-term visualization to the needs of the workshop and the business, however 18-months is pretty typical. Here's how they work:

Five Year Visualization: imagine how you want your business to look in five to ten years, assuming a realistic best-case scenario. It can be somewhat vague, but the more specific you can make it, the more useful a tool it will be. The idea is to identify general directions, key successes you'd need to have made, and any major changes you foresee in the business. An ideal five-year visualization should include planned staffing changes, major projects, significant product changes, any anticipated shifts in marketplace, any new facilities (including moving, expanding or renovating existing offices), and certainly anything really significant like sales or IPOs. It's okay for your five-year to be a bit on the rosey side as long as you feel that your company's future is or could be legitimately rosey. Ultimately, you're going to create a series of five 12-month plans that should get you in the ballpark of your five-year visualization if all goes well. Even if all doesn't go well, you've got something to shoot for, which is better than just flailing around. Besides, you'll be updating your five-year visualization each year, so it's always going to be a future outlook, never a near-term realization.

12-Month Visualization: this is the real, practical, meat-and-potatoes exercise. What do you want/need/plan to get done THIS YEAR? It needs to be extremely specific, actionable, and realistic. You may not actually accomplish it all, but it should encompass everything you really should try to do. Start with a brainstorming exercise and then distill that down to your actual list of activities for the coming year. That will in turn inform your goals and priorities, but we'll get to those later. The 12-month visualization should, on the one hand, bring you 20% of the way to your five-year outlook. And, on the other hand, it should absolutely form the foundation of a strategic operating plan for the coming four quarters. Plan to spend a fair chunk of time nailing this down, especially if you've never done this exercise before. Each subsequent year, as you get better at planning and build on what you did the year before, the workshop will get more efficient.

18-Month Visualization: again, this can actually be tailored to whatever timeframe works best for you, but the intention is two-fold. First, it should be an outgrowth of your 12-month Visualization that extends the timeline and shows that the work you're doing in the coming year doesn't end when that year is done. The 18-month visualization is all about continuity and momentum, documenting your team's expectations for life beyond the coming year. The other function is for it to serve as a further stepping-stone toward the five-year outlook. Sort of a "second shot" at nailing down the key accomplishments that need to occur to achieve the long-term vision you have for your business. For me, the core of the 18-month visualization is as follows: "Assume that you've executed a detailed strategic plan over the course of the coming year and have been largely successful at achieving your 12-month vision. What projects will still be underway at the end of the year, and what specific further changes do you need to make in the following six months to continue to build momentum and grow the business?"

When those three sections are complete, you should really be able to see what needs to happen right away and what you expect to happen in the future to move your company toward your ideal state. Now, bear in mind that there are lots of tools you can incorporate into this workshop that I'm not covering - everything from detailed budgetary and financial analysis to team-building exercises and so forth. That doesn't mean they have no value, rather that this is meant to be an overview, not a comprehensive manual. Two tools that fit especially well in this part of the workshop would be a gap analysis and a risk mitigation matrix. I'll try to remember to come back to those at some point, but you can google them if you want to skip ahead. If I ever write a book on this subject, I'll include them for sure.

The next steps in the process help you focus your attention in the areas you and your workshop participants decide are the most important. You want to identify your priorities and goals based on the 12-month visualization, so you know what to give your limited resources to and exactly who's doing what. We'll cover those tomorrow.

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