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Integrated Business Planning

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Integrated Business Planning How To Best Meet Your Mission Charles P. Sitkin, Consultant in affiliation with Carnegie-Mellon University Budgeting Determine the level ... – PowerPoint PPT presentation

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Title: Integrated Business Planning


1
Integrated Business Planning
How To Best Meet Your Mission
  • Charles P. Sitkin, Consultantin affiliation with
    Carnegie-Mellon University

2
Outline of Presentation
  • Evolution of Management Concerns
  • Strategic Planning
  • The Mission
  • Strategic Excellence Positions
  • Goals and Objectives
  • Action Plans
  • Operating Plan and Budget
  • Results Management

3
Integrated Planning Process
4
The Evolution ofManagement Concerns
5
Evolution of Management Concerns
6
Strategic Planning
7
Business, Operational, Strategic ?
  • Business Plan Normally prepared to acquire
    financing
  • Operational PlanIdentifies specific results to
    be accomplished within a given time period
  • Budget
  • Expresses operational plan in financial terms
  • Strategic Plan
  • Identifies the basic concept and direction of an
    organization

8
Strategic Planning Process
9
The Mission
10
  • I firmly believe that any organization in order
    to survive and achieve success must have a sound
    set of beliefs on which it premises all its
    policies and actions...
  • Next I believe that the most important single
    factor in corporate success is faithful adherence
    to those beliefs...
  • And, finally I believe if an organization is to
    meet the challenge of a changing world, it must
    be prepared to change everything about itself
    except those beliefs as it moves through
    corporate life. Thomas Watson, Jr.

11
The Mission
  • Purpose
  • Values

12
Mission
  • Shared purposes provide FOCUS by driving
    strategy.
  • Shared values provide CONTROL by guiding
    execution.

13
Example Mission Statements
Bread Machine Industry Association The mission of
the BMIA is to expand and promote the long-term
growth and use of all aspects of the bread
machine industry for the mutual benefit of our
members and consumers. Freehold Actors Studio
Lab The mission of Freehold is to deepen the
transformational power of theatre to inspire
through education, experimentation, and
performance.
14
Strategic Excellence Positions
15
Strategic Excellence Positions
Without focus
16
Strategic Excellence Positions
17
Strategic Excellence Positions
  • Strategic success means to achieve better and
    more stable results than the competition.
    Achieving that requires superior competence, or
    the ability to excel, in a set of distinctive
    capabilities which have special value to a
    particular part of the marketplace.
  • Note that excellence by itself is not enough. It
    must be excellence in areas of strategic
    significance, i.e., that determine the outcome of
    competition in the marketplace.
  • That strategic excellence then forms the basis
    for the organization to achieve better results
    than the competition. In this sense it is a
    position which the organization occupies from
    which follows strategic success.

18
Strategic Excellence Positions
19
SEP Example
  • BMIA Example
  • Provide for the Unified Presence of the bread
    machine industry category in its marketplace
  • Provide for intra-industry communications within
    the bread machine industry.

20
Goals
21
Goals
  • Define the key areas in which to expect strategic
    results and what is expected.
  • Not measurable as stated, but contain factors
    that will be measurable as Objectives.
  • With Mission and SEPs determine what Objectives
    should be selected.

22
Objectives
23
Objectives
  • Statement of measurable results.
  • Tied to Goals, provide the basis for operational
    planning and budgeting.
  • Four general characteristics
  • Starts with the word To
  • Specifies a single measurable result
  • Specifies a target date or time span for
    Completion
  • Must be realistic and attainable, but represents
    a significant challenge.

24
Goal and Objectives Example
Goal One Educate consumers about the benefits of
bread machines, facilitate their purchase
decisions, and encourage usage. Objectives 1.1
To create a media kit for distribution to key
newspapers, magazines, and the 1997 Housewares
Show by January 10, 1997. 1.3 To host a New York
City magazine editors event "Coming Out Party"
for all new bread machine products (members Only)
by June 30, 1997. 1.4 To explore partnerships
with like minded industry associations for the
purpose of producing a jointly sponsored media
campaign in 1997. 1.6 To evaluate and report on
the possibility of a BMIA web page by August 31,
1997.
25
Three Classes of Objectives
Innovative
Problem Solving
Regular/Routine
26
Action Plans
27
Action Plans
  • Specify steps or actions required to attain an
    objective.
  • Designate who will be held accountable for seeing
    the each step or action is completed.
  • Define when these steps or actions will be
    carried out.
  • Define resources needed to be allocated in order
    to carry out the required steps or actions.
  • Define feedback mechanisms needed to monitor
    progress within each action step.

28
Action Plan
29
Operational Plans
30
Integrated Planning Process
31
Comprehensive Business Planning
Strategy
Laws and Regulations
Mission
Annual Ops Plan Budget
Statement
Action
Strategy
Goals
Vision
Objectives
Plans
Strategy
Issues
32
Operational Planning Framework
Performance Indicators
Key Result Areas
Issues Analysis
Action Plans
Objectives
Budgets
33
Operational Objectives
  • Statements of measurable results to be
    accomplished within the time frame of the
    operational plan.
  • Standards of performance related to financial and
    operating results that can be tracked on a
    regular basis.

34
Budgeting
  • Determine the level of financial resources
    required to achieve the operational plans
    objectives.
  • Allocate available financial resources to ensure
    their optimum use in achieving the plans
    objectives.
  • Control the use of available resources to ensure
    the achievement of plan objectives.

35
Budgeting Problems
  • Budgets can grow to be so complex that they
    become expensive, cumbersome, and even
    meaningless
  • Budget objectives may come to supersede
    enterprise objectivesbudgets should be
    considered a tool, not an end in themselves.
    Enterprise goals should supersede business unit
    plans
  • Budgets may contribute to inefficiencies by
    continuing initial expenditures without proper
    evaluation
  • Budgets as a pressure device defeat their basic
    purpose

36
Results Management
37
Integrated Planning Process
38
Results management
  • Control Systems
  • Management Reports
  • Organizational results
  • Individual Results
  • Corrective Action
  • Reward System

39
  • I believe the real difference between success
    and failure in a corporation can very often be
    traced to the question of how well the
    organization brings out the great energies and
    talents of its people. What does it do to help
    these people find common cause with each other?
    And how can it sustain this common cause and
    sense of direction through the many changes which
    take place from one generation to another...
  • The basic philosophy, spirit, and drive of an
    organization have far more to do with its
    relative achievements than do technological or
    economic resources, organizational structure,
    innovation, and timing. All these things weigh
    heavily in success. But they are, I think,
    transcended by how strongly the people in the
    organization believe in its basic precepts and
    faithfully they carry them out. Thomas
    Watson, Jr.

40
Supporting Discussions
41
Issues Analyses
42
Steps in Operational Analysis
1. Identify Issues
2. Prioritize Issues
3. Analyze Issues
4. Summarize Issues
Major ConclusionsAlternative Courses of Action
43
Identify Issues
  • Most critical issues facing the business unit,
    what might be their impact.
  • Issues likely to have greatest effect on
    profitability.
  • Issues likely to have greatest effect on
    long-term success of the business unit.
  • What changes have taken/will take place effecting
    the business units performance in the coming
    year.
  • What cross-functional problems or opportunities
    are likely to have impact on the business units
    performance.
  • What are major impediments to conforming to your
    Mission.

44
Analyze Issues
  • What is the Issue.
  • What data/information is available (or needed) to
    resolve the issue.
  • What appear to be the factors causing this to be
    an issue for the organization.
  • What types of results are needed in this area.

45
Key Result Areas
46
Key Result Areas Guidelines
  • Those 4 to 6 major areas wherein performance is
    essential during the coming year.
  • Include both financial and non-financial areas.
  • Will not cover the entire organizationwill
    identify the critical few areas where priority
    efforts should be directed.
  • Most will require cross-functional effort.
  • Each will be limited, generally, to 2 or 3 words
    and will not be measurable as stated, but
    will contain factors that could be measurable.

47
Indicators of Performance
  • Measurable factors, falling logically within a
    given key result area, on which objectives
    may be set.
  • May be hard numbers, percentages, significant
    achievements, or problems to be overcome.
  • Identify what will be measured, not how much or
    in which direction.
  • Represent factors that can be measured on an
    ongoing basis.

48
Example Indicators of Performance
Key Results Areas Indicators
of Performance
  • Return/ Profit
  • Productivity
  • People development
  • Market penetration
  • Return on RevenueDonations to Sales RatioNet
    profit
  • sales per employeeUnits produced/month
  • Percent ethnic hireDays of training/employee
  • Percent of market sharePercent growth by product

49
Strategies
50
Competitive Intensity
51
Strategic Implementation
  • Direct Means
  • Indirect Means
  • Time Related Aspects.

52
Direct Means
  • Action Plans and Project Plans
  • Procedures/Management Systems
  • Planning and Budgeting
  • Management Information Systems
  • Organizational Structure.

53
Indirect Means
  • Communication
  • Symbolic Actions
  • Institutionalizing Actions
  • Fostering Innovation
  • Corporate Culture.

54
Time Related Aspects
  • Research and Development
  • Manufacturing Life Cycle
  • Marketing Cycle
  • Economic Trends
  • Competition.

55
Strategic Plan Outline
  • Executive Summary
  • Current Situation and Vision
  • Critical Issues
  • Mission
  • Strategic Excellence Positions
  • Goals and Objectives
  • Action Plans

56
Operational Plan Content
  • I. Executive Summary
  • II. Business Unit Description
  • III. Product and Services
  • IV. Operational Analysis Issues and
    Conclusions
  • V. Key Result Areas Indicators of
    Performance
  • VI. Operational Objectives
  • VII. Action Plans
  • VIII. Budgets
  • IX. Plan Implementation and Review Schedule
  • Appendices

57
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