Every year I spend time with clients helping them understand the kind of planning they need to do now in order to be on the road to success the following year; I also like to share an outline of the process with you.

You have to have a plan
Anyone leading a company, even a company of one, needs to know

• what you want to do, and
• how you’re going to do it.

This brings you to the crux of the matter—how do you plan for a sustainable business?

Choose your approach

• SOP (seat of the pants): Used frequently throughout business history, and extensively in the late Nineties. The CEO (top dog) discusses her desires over lunch with other (hopefully) senior staff members. Separately, each manager prepares a budget, including headcount for his department based on
  • what he thinks is needed to accomplish what the head honcho says she wants and
  • increasing his own leverage within the company (although these two are frequently reversed).

• PBO (operating plan w/budgets and objectives): Requires more thought and effort, but is the approach of choice for well-run companies. It requires the
  • creation of a viable operating plan to achieve the objectives; and a
  • detailed budget by which to implement it.

SOP, in all its glorious variations, spells chaos (which can be accomplished with no help from me), so we’ll focus on PBO.

What’s PBO?

Three interlocked pieces—each critical to success.

1. A budget that states

• how much is available to spend during the upcoming year and
• who is responsible for spending it.

2. The specific objectives that the company needs to accomplish during the year,

• financial, e.g.,
  • increase revenues 10%
  • increase services to 25% of revenues; and the
• quantified managerial, e.g.,
  • raise productivity 8%
  • reduce turnover 15%

3. A description of how the company plans to achieve the objectives in order to move forward on accomplishing the company’s long-term twin goals of profitability and success.

The end result is a detailed business roadmap for the coming year.

Where’s the rocket science?
The three parts are interrelated and must be tightly linked, so changing one affects all.

That’s it. Simple, right? Unfortunately, many executives treat them as separate entities wreaking havoc on their subordinates. They don’t get, or don’t care, that it’s a domino effect and that when one changes they all must change.

Which are you?

• The boss who can’t be bothered to do the hard work and make the tough decisions and doesn’t worry about jerking his people around because ‘they’ll get over it’; or
• the boss who believes that with a good plan, known objectives and a viable budget all the managers—executives to the lowliest supervisor—will buy-in and execute intelligently throughout the year?

As always, it’s your choice.

Image credit: http://www.sxc.hu/photo/914885

This entry was posted on Friday, November 19th, 2010 at 1:15 am and is filed under Business info, Strategy. You can follow any responses to this entry through the RSS 2.0 feed.
Tags: management, planning, success
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