Published: 04 June 2020
Do I need a Business Plan or Strategic Plan?
With the economic turmoil that all companies of every size are currently facing it is now the right time for organisations to look at changing both the way they conduct business, as well as considering what products and or services they will deliver in future. As well as this, forward thinking organisations will look at their strategy if they have a formal, documented one, and if not, how they can adapt what they currently do in order to both survive and prosper in these unprecedented times.
Many business owners know and understand the value of creating a Business Plan. The Business Plan is typically a key component of the loan / capital process and can serve as a foundation for your organisation, however, the Business Plan only tells us half of the story. In order to get the whole picture and have a framework on which to build your business you will also need a Strategic Plan.
So, what is the difference between a Business Plan and a Strategic Plan? In the simplest terms, this list is not exhaustive but covers some of the main differences:
|Business Plan||Strategic Plan|
|Covers the 'Who' and the 'What'||Gives us the 'How' and the 'When'|
|Who is running the business?||What does success look like?|
|What makes them qualified?||What are the current improvement priorities?|
|What do they do that adds value?||How will you measure success?|
|Who is your competition?||What metrics will you track?|
|What do your competitors offer?||How will you track progress?|
|What makes you different?||What needs to happen to achieve the goal?|
|Who is your target customer?||What resources do you need?|
|How big is the market?||When will each task take place?|
|Where are they located?||Who will do what?|
|What do they want?||When will targets be achieved?|
|How will you provide what the customer requires?||What milestones have been set?|
|How do you connect with your market?||How will you celebrate success?|
The Strategic Plan is the action plan for your business. It details the tasks, milestones, and steps needed to drive your business forward from your current reality towards your vision. Typically, a Strategic Plan looks 3-5 years ahead with annual breakthrough objectives, 1st level annual improvement priorities and a targeted measure to improve.
Annual improvement priorities are set and broken down into monthly increments to allow the accountable person / department time to plan and execute the tasks and to gain traction over the 12-month period ensuring milestones are set and agreed.
It is fair to say that with both the Business Plan and Strategic Plan that you will need resources whether they be internal or external to help you in the development and execution of your strategic intent. Remember, your business needs a clear and concise sense of direction – a vision, that is well documented and communicated to all staff at all levels to ensure buy in and to have the optimum impact. Businesses without this will not know how they have / have not achieved success or what projects and tasks have positively contributed to the 3 to 5 year plan.
As well as strategy a real deep dive into the following areas may also need to be assessed and addressed:
Workforce capabilities – do we have the skill set, have key skills been lost, do they need to be replaced, can I re-train current workforce, what other expertise do I need to have in the business
Capital investment choices – what equipment, offices, plants, and general space they need, what plans and projects do I need to put on hold or stop as well as identifying any new requirements
Organisation structure – is the current structure fit for purpose. Does it need to be scaled back or are we missing key roles, how do our functions work together and interact. Are our goals aligned to the business needs? Do our vision, mission and values still remain valid if we are looking to change direction or diversify.
Now more than ever during this economic recovery period do we need to ensure that our workforce is engaged with the business needs in order to drive us forward to meet the demands of an ever- changing work environment – the survive and prosper mentality. We need to ensure that we have a solid system to manage our strategic objectives to drive business performance and align everyone in the organisation regardless of job title or position – we are all in this together. This may require some companies to bring about a massive change in their mindset and style of functioning.
People often look at Toyota as a highly successful company and the Global benchmark for Operational Excellence and no one could disagree that they are extremely successful and that their production system continues to lead the way where others follow, but we need to remember that this did not happen overnight. The management skill that Toyota have developed is that they lead from the top and deliver from the bottom up. They realised that they needed to fully embrace the use of Hoshin Kanri also known as Strategy Deployment to align their leadership and a number of other methodologies to allow the development of operators / production personnel to embrace continuous improvement and self-directed work teams also known as high performance work teams. Our experienced Toyota trained Executives here at BTA understand the critical importance of Strategy Deployment and have taken the best elements of Hoshin Kanri and other techniques to develop GAMe™ which is intended to speed up the process of introducing this concept to any business. Ultimately, it is a systemic approach for defining a strategy and, more importantly, a management system that engages all people to support that strategy while building horizontal and vertical alignment. In a bid to ensure that goals and objectives are achieved in accordance with the strategic intent of the business there are just 4 key requirements to achieve a desired outcome in any organisations endeavour:
Clarity – about what really matters and organisational direction
Consensus – about how best to get there
Courage – to actively choose to ‘not do’ or ‘not do now’
Commitment – to stick with the plan
Our intention when developing GAMe™, was that in organisations using the system everybody would be aware of their own and their management's Critical Success Factors (CSF’s) and Key Performance Indicators (KPI’s). Departments would not compete against each other, projects would run to successful conclusions, and the business would be viewed as a set of co-ordinated processes. Taking the best elements from some of Toyotas well know tools and techniques, GAMe™ has been developed as a robust process to deliver Goal Achievement at all levels of the organisation.
How Can a Strategic Plan Help Your Organisation?
Depending on your location and industry, you are probably experiencing effects of the Covid-19 pandemic in different ways. You may be busier than ever, or you may be figuring out how to help your business survive. Different opportunities and even diversification of the products and services you provide may be in place, however supply chain issues or other factors may have came into play. Every business will be different.
Based on our experience, we strongly believe this can help you greatly. So, what do you do?
There are 7 steps in the process of developing your strategy as outlined below:
1. The leadership of the company develops a strong vision answering the question “Why does the company exist?”.
2. The leadership team defines key objectives and also a mission that if achieved, will create a competitive edge for the company. These are major objectives usually requiring the effort of every single person in the business, these are not monthly or quarterly objectives but long term goals.
3. The leadership team, along with the senior management, breaks down the objectives into annual goals or Annual Improvement Priorities (AIP’s)
4. Once the AIP’s are agreed, they need to be “deployed” across all levels of the organisation. This is the process of “goal setting” which starts at the top and is propagated to each employee.
These first 4 steps are known as the ‘catch ball’ with dialog going both ways: from managers to their teams and vice versa. The key point is that goal ‘metaphorically the ball’ is tossed back and forth until there is a shared understanding of the following:
- Where are we going?
- How do we get there?
The benefit of discussing the goals with the people who will be actively working on them is that they will think through the details much more thoroughly compared to the management. Practically speaking, this is the essence of the ‘catch ball’ process.
5. With the next step, the real execution starts. This step goes hand in hand with the next two.
6. The monthly reviews make sure that the tasks are being executed in accordance with the plan. If they are not, what are we going to do differently to get back on plan, this is where the PDCA process comes in. This may also provide cross functional support where other departments offer assistance to get the plans back on track. This review will also provide an opportunity for the team to discuss and agree that they are still working on the ‘right’ things, and identify if adjustment may be required due to the effects of external forces. The pandemic of 2020 will have had such an impact on the strategy of lots of organisations who will have had to alter their roadmap.
7. At the end of the year there is an annual review which validates that the selected AIP’s have been achieved and deliver the expected results. This then allows the selection and assignment of the next round of AIP’s.
No matter what its size, an organisation is driven by its mission vision and values; these factors are in large part realised by the employees within that organisation. To achieve desired results and excel in its business, a company needs its employees to perform at their peak to be able to contribute to the strategic objectives and improvement efforts required to accelerate the delivery of results.
Having clear goals and priorities that are understood by everyone in the organisation, and processes to manage the delivery of these goals is what differentiates successful companies from those that are mediocre or poor performers. It is a must that as an organisation you develop the highly skilled employee’s that successful companies need, teaching a systematic way of developing employees to reach their individual goals, and organisations realise greater success. This should essentially eliminate the waste that comes from inconsistent direction and poor communication. People perform best when they have a purpose, when they understand not just what to do – but why it’s important.
You must allow leaders to build and condition the culture of an organisation into one in which the work they are doing is value-added and aligned in its approach to long-term growth and sustainability. Understanding that we get the best out of our people by ensuring we communicate the strategic intent of our business to all stakeholders. You must support them in reaching and achieving goals that contribute to the overall purpose, empowering them to develop their own plan of how they will achieve success, will result in developing your employees to become winners.
You need to teach your leaders how to lead people to sharpen their skills, their mind, their body, and their spirit. When people have clear goals with strong purposes, they can visualise becoming the best with everything falling into place.
Encouraging improvement across all levels of an organisation will:
- Make leaders and coaches out of managers
- Improve a person’s skill level, creating a vision for the long-term personal success of the individual
- Encourage individuals to visualise what they want to achieve, teaching them how to set smaller goals on the road to realising their greater vision
- Support individuals to work toward achieving success, their self-esteem will be raised and further pushes them to do better, this also improves their confidence
Every company is made up of a diverse group of people gathered together to produce products and deliver services. The higher the quality of these goods and services the greater the chance of success. Survival in this highly competitive world depends on how well people can work together, and how well they bring out the best from each other. As leaders, utilising Strategy Deployment will allow you to recognise that the small done by many will out pace the large done by a few.
Published: 04 June 2020