Where have all the business plans gone?

With corporate failures making headlines, it’s time to examine strategies communication matters.
By Sandy French
|Canadian HR Reporter|Last Updated: 09/25/2001

It’s getting a little discouraging these days. Every time I pick up a newspaper or business magazine, the headlines and stories are all about companies that are downsizing, experiencing plummeting share prices or going out of business.

Are you like me? Do you wonder what’s going on when some of the biggest and most successful companies in the world are struggling? Here’s just a few recent examples:

•Market darling, Lasik Vision goes belly-up, and retail giant Dylex goes from financially healthy to insolvency in three short months.

•Air Canada, after merging with arch rival Canadian, sees debt skyrocket and share prices drop like a stone.

•Hitachi and Toshiba announce the elimination of 40,000 jobs.

•Less than three years after its launch, and tens of millions of dollars later, Conrad Black abandons the

National Post

and retreats to London.

I’m not going to pretend to understand all the complex issues or questions these companies have faced in the past that led them to their current situations.

What I do know is that many companies today have not been able to adapt to the changing marketplace for one significant reason — failure to create a dynamic business plan. To be strategic, a company needs relevant, realistic and measurable goals that chart its course. It sounds simple enough, so where is the disconnect?

I’ve come to the conclusion that it’s not the concept but the process that’s flawed. Most companies agree on the need, the difference lies in the areas of what a good plan should include, how it’s developed, communicated and lived. All effective business plans follow a similar template with a planning process that always includes three linked elements: creation, communication and management.

Creating the plan

Many executives fool themselves into thinking they’ve created a plan when all they’ve really done is to set financial targets (that is, a sales plan disguised as a business plan). It’s usually driven by the finance or sales groups, and they often have a catchy tag line — $2.3 million by 2003. Having a financial target is important but there’s more to it.

You’ll also see a lot of plans that are really nothing more than a set of vague, macro objectives. They look good in PowerPoint, but are difficult to carry out.

To create a solid plan there needs to be an understanding of what a good one looks like. It includes:

•vision (something doable and inspirational);

•strategic goals (maximum four or five);

•tactics (accountabilities, timelines, resources); and

•metrics or scorecard (both in process metrics and result metrics).

A plan should be achievable and reflect the reality of the marketplace that a company operates within. For this to happen, it’s critical that the process of creating the plan is integrated and aligned with all functional areas. Companies often don’t understand this, and end up creating plans in silos. Plans are all gathered and neatly laid out in one document, unfortunately, there’s no common link or appreciation for how various groups need to work together to leverage each other’s strengths. Consequently they often clash with one another instead of spending energy on their real opponents — the competition.

Communication

The next time you have a moment try this little experiment. Walk around your company and ask your colleagues, from different levels and functions, if they know where the company is going, what their division or department goals are and what their role is in making it happen. Do they see the relationship between their positions and what the company is trying to achieve?

I’ve found two distinct approaches to the communication challenge exist. On one hand, there are businesses that enthusiastically agree on the need to do a much better job of keeping employees informed. Others do the exact opposite. In the latter, there seems to be concern, even fear, about sharing the knowledge on where the company is going.

Bottom line? The plan is just a group of words used to comfort executives if it’s not communicated throughout the organization. To do this properly, it should be rolled out from the executives down through managers when it’s first being developed, and then on an ongoing basis throughout the year. It’s difficult for employees to deliver on expectations if you haven’t communicated with them.

Managing the plan

How much time do you spend with your team reviewing your plan? My guess would be very little. I believe many of the companies in trouble today have skipped this part of the process.

Everyone is so busy that they don’t take the time to step back and analyze what’s on track, what’s off, what’s changed and what hasn’t. No matter where you sit in the organization you can bet that whatever assumptions you made at the beginning of the year will see some changes in Q1.

Managing the plan is never over. It’s a key, ongoing task for any company. Following a formal review process forces you to look at the assumptions you’ve made and determine whether they’re still valid. This, along with the metrics or scorecard, will help pinpoint where there are issues and where action needs to be taken. If you don’t look, you’re bound to be surprised — good managers and executives hate surprises.

I’m not suggesting that a business plan is the cure all. There are certainly unpredictable factors that will arise. But the idea that the economy or some other government action is to blame is wearing a little thin. Good companies have good plans. They know where they’re going and what it will take to get there, and they make sure that all levels of the company are aligned behind the same direction. Yes, a business plan is old news and not very sexy but there’s also nothing glamorous about massive layoffs, plummeting share prices or filing for Chapter 11. So what are you planning to do?

Now where did I put that business section?

Sandy French is the president of Northern Lights, a leading Canadian internal communication agency. He can be reached at (416) 593-6104 ext. 222 or sfrench@northernlights.ca

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