First things First: Setting out the Plan – Part II
The previous Managing in Recession article described the first 2 steps in setting out the Plan. We now look at the third step – the core areas of the business.
Step 3. The 6 core areas in any business.
Most business plans are far too long, verbose, unquantified and hopeful. They are usually ill written, and lack simple, plain,graphics and accurate English. Most are never enacted, monitored or even read!
The sole purpose of the plan is to justify and outline the key actions to be taken, by whom, when, and with what planned results for this and subsequent years. It goes on to put these actions in a context that explains the reasoning for their priority rating and to set in motion an understood means of monitoring progress.
There are just 6 activities that each CEO needs to keep under review: the proper management of the:
In each case the structure of the plan has 4 parts:
- Where are we today (think in terms of strengths and weaknesses);
- Where will we be in three years time* (*see below) think in terms of scenarios*, opportunities and threats;
- What are the key actions to be made to get there;
- How will these actions be reported and monitored.
You will have already established the mission statement( see Article 1) and this will influence every judgement within the plan, including the opportunity to challenge it in the light of developments. It is not much good basking in the spotlight of being best at commercial office building if the market is likely to be dead for the next three years!
Some guidelines for writing the Plan:
- Form a group of trusted staff to help you.
- Think hard, fast, and honestly. Be grounded and share the fear.
- Confront the brutal facts, avoid the hopeful forecast that things will somehow get better.
- Write in simple Anglo Saxon English. Avoid all archebabble, all technodrivel, and spell out the detailed implications of each and every word.
- Use best guesstimates where you don’t know the answer, but acknowledge them and ensure that the next action is to find out the detail.
- Feedback, monitoring and setting forward indicators* is vital.
- Go for the few obvious must do actions in each area, and be determined to do them. Most plans lead to no effective action partly for a lack of managed feedback but mostly because the leadership sets far too many actions for teams that, in a recession, will already be hard pressed.
- If you must go into lengthy detail then put it into an Appendix.
*A word about Time Scales, Scenarios and Leading Indicators:
The plan should focus on the 6 key areas of business, be written in simple English and concentrate on the immediate key actions.
- Time Scales: I suggest 3 years. This is a relatively immediate period. It focuses the mind on what you do now that will impact the next year, what further actions that will set you up for year two and where you want to be by the end of year 3. Most architects have forward order books that run out in that period so that they will need to rebuild their business in the 3 year time scale. However for some this time scale may be inappropriate. The life of an oil well is 30 years so BP plans for 30 years. In much the same vein a design firm may have an order book of major projects that take it into year 4 or 5. It may be that in year 4 or 5 there emerges a significant succession challenge. In cases such as this amend the time scale accordingly. For some the order book is running out within one year so focus more strongly on the immediate term.
- Scenarios: look ahead with your leadership team, brain storm “possible” options that could impact the business, then investigate what you will do about them:
- What if the recession lasts for 3, 4 or 5 years?
- What if a core client ceases trading?
- What if you lose key staff etc etc?
Look at each of the 6 areas of the business this way, confront the worst case scenarios and at the least have thought through how you might react. The more you have rehearsed scenarios** the more rational you will be able to be should they take place, and the more aware you will be of their emerging as a reality.
- Leading Indicators: we are all used to lagging indicators such as the traditional accounts. Usually published 16 to 18 months after the event, they and their predecessors show trends that can be useful. But in a recession you are looking for on going indicators that confirm a trend going forward. For example a detailed review of your client record in the past will show that you have always needed a number of possible leads in the pipeline (say 40), that typically 20 of these had gone to the probable and then bid stages, and that of those 10 had been successful. So monitor your forward load pattern against these tried and trusted rules of thumb. Investigate each of your core activities for a central leading indicator and use it to monitor the future.
** For more on Scenarios see “The Art of the Long View” by Peter Schwartz, pub Currency Doubleday 1991.