|
Previous
In the process of implementing this process there are several pitfalls companies should try and avoid. Five of the more common pitfalls are described below. Any one of these could severely hamper a company's chance of achieving its objectives.
Pitfall #1 Focus on Well-defined Objectives
A company should limit their objectives to only those they can reasonably achieve. Most fast growing, small to medium-sized companies have a founder that is a visionary. Identifying opportunities is usually not the problem for these companies. The growth of the company combined with the visionary talents of the founder typically generates many opportunities.
The problem generally comes from a lack of focus. The company must realize that they have limited resources and must limit their objectives to just those that they can achieve with the resources they have or can reasonably acquire. It is better to do a few things well than many things poorly. The opportunities should be prioritized; the company can then determine how many can reasonably achieved. Shelve the others until the proper resources have been acquired to accomplish them.
Pitfall # 2 Lack of clarity
The company needs to make its objectives easy to understand. What may seem clear to senior management may be difficult for the rest of the organization to understand. Someone not close to the process should review the objectives for clarity prior to communicating them to the entire organization.
Typically corporate objectives have evolved from many weeks of meetings. Most employees of the company were not privileged to those meetings and only have what has been used to communicate these objectives to them. Make these communications simple and easy to understand.
Pitfall #3 Do not dictate how to accomplish the objectives
Senior management should allow middle management to develop their own plan on how their departments can contribute to the corporate objectives. Executives that define the objective and the plan on how to accomplish these objectives, stymie the creative talents of their employees. The company should allow middle management to use their own talents to create their own plans.
There is always time to manage their methods if there are additional or better ways to accomplish the objectives. However if middle management is not allowed to develop their own plan first, the company will not benefit from these talents. They either will not allocate precious time to what has have already done, or will not want to take the chance to propose an alternative plan to what the boss has developed.
Pitfall #4 Failure to allocate proper resources
The company needs to allocate the proper resources to accomplish the objectives. When proper resources are not allocated, failure is soon to follow. Once the objectives have been clearly defined time needs to be spent to determine just what is needed to achieve the objective.
If the tasks are greater than the resources available or the resources that can reasonably be made available, the company needs to revisit the list of objectives. Perhaps the company will need to trade one opportunity for an opportunity they put on the shelf.
The typical battle for resources begins. Departments may ask for more than they need, and management will have to make a judgment call on what they are allocated. The
key to determine what is needed and what is not is to assign all resources to a departmental objective. Departmental goals should be identified for each employee. Every outside service, contract, etc. should have an objective assigned to it.
This process typically identifies improperly allocated resources, funds and or personnel that can be reallocated toward the accomplishment of key corporate objectives.
Pitfall # 5 Failure to report progress
OK the company has now gone through the process and aligned their resources with corporate objectives; they can now just sit back and relax. WRONG! The likelihood that the exact resources needed to execute the plan or proper tasks for successful achievement of objectives have been identified is very low.
To monitor the success of the company, a performance measurement system needs to be implemented. Most companies have financial performance measurement tools in place and these are quite useful. However, these tools typically provide a very late indication of how a company is performing against its plan. Operational drivers should also be identified and reported against. For instance, identify what steps are in the sales cycle. Report how many potential clients are in each step. Determine how long each step typically takes and what percentage of clients generally move from one step to the next. Then the company can accurately forecast revenue to the end of the sales cycle. By accurately predicting the results of actions taken today, an organization can adjust their plans if necessary much sooner than waiting for the financial reports to report the historical transactions.
Similar drivers in other areas of the plan can be identified and monitored. It is very likely that revisions will need to be made to the plan. Additional personnel may be needed to achieve the tasks identified, or adjustments to the plan may be needed to accomplish the objectives. The sooner those weaknesses in the execution or in the strategy are identified; the sooner adjustments can be made.
Why most companies fail in the process?
Most fast growing companies lack the skill set to implement a process that assures that proper objectives are identified, and then align their resources towards those objectives. For those companies that have the proper skill set they typically are overloaded with other tasks that receive the urgency of the day. These factors cause poor execution of strategic plans.
Companies who do not allocate enough resources destine their plan to failure. Companies that have the in-house expertise should free them up so that they have enough time to implement a process that will allow the plan to succeed.
If they do not have the in-house expertise or their in-house expertise does not have the time to properly implement their plan, they should hire a consultant to help. However, they should not hire a consultant to write their plan. Each company possesses the true experts of their own business. They are the best ones to identify what are the critical objectives and how best to execute against those objectives. A plan written by a consultant rarely becomes the company's plan and employees are less likely to buy into it.
Too many companies improperly allocate time and effort between developing a plan and implementing a process that helps to insure successful implementation of that plan. Many times proper execution of an average plan is far more valuable than poor execution of an excellent plan. I encourage anyone who is in the strategic planning process to give implementation the proper mind share.
Concluded.
* Dennis Crumb is a CPA, MBA, teaches Corporate Finance at Regis University and provide consulting services for small to medium sized business focused on buisness planning and financial forcasting. To know more, visit the link www.crumbandassociates.com
|
