Post on 21-Apr-2017
transcript
Business Planning for Success
Five Essential Steps
By Walter AdamsonPrincipal, Digital Investor
September 2005
adamson@digitalinvestor.com.auwww.digitalinvestor.com.au
Slide 2
©2005 Walter Adamson
Enhancing alignment and value for IT investments
The Opportunity
Develop a sustainable and effective plan:
� Clear link from actions to strategy
� Aligned with structure and culture
� Clear and consistent themes
� Focus attention and effort where needed
Slide 3
©2005 Walter Adamson
Enhancing alignment and value for IT investments
What we will do
There are five stages:
1. ABCD Planning
2. Mission, Objectives, Strategies, Actions
3. The Balance of Loose and Tight
4. Monitoring Key Projects
5. Organisational Alignment
Slide 4
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 1 – ABCD Planning
Understand today and envisage tomorrow:
A. Acknowledge today
B. Plot the intent
C. Manage within means
D. Understand the risks
ABCD planning has to start with an authentic view of the current situation - obtaining that clarity is often the most difficult part.
ABCD Planning process
Slide 5
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 1 – ABCD Process
The ABCD Planning process helps cross the gap and bridge the company to the new strategic intent, while managing the risk of transition.
Slide 6
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 1 – ABCD Steps
The steps:
� A is the AS IS – today
� B is the STRATEGIC INTENT
� C are CONTRAINTS and CRITERIA, and
� D is the DESIGN of Pilots (prototypes of the new business model – used to test the feasibility of the Plan).
Slide 7
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 1 – ABCD Key Points
A and B are the hard parts:
� A - Confronting the genuine status and capabilities and strengths and weaknesses today is often threatening
� B - Developing the Strategic Intent, which requires clarity of vision and purpose is challenging and requires effort
Slide 8
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 1 – ABCD The Intent
The Strategic Intent must be clear:
� Which drives the Mission and its
� Objectives, Strategies and Actions,
Which in turn require judgments about what is Loose and what is Tight, and the Tight are reported through the Scorecard.
Slide 9
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 1 – ABCD Challenge
The biggest challenge is for successful companies that have grown to a certain point and now need to take the next step:
� How to move from A to B?
� What constraints are there?
� How to manage the risk?
Slide 10
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 1 – ABCD Capabilities
Understanding capabilities:
� What capabilities exist today (point A)
� What capabilities are needed (point B)
The capabilities encompass organisationalcompetencies and individual competencies, and the means to deliver these competencies.
Slide 11
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 1 – ABCD Output
The output from Phase 1 includes:
A – As Is
SWOT
Capabilities
B – Strategic Intent
Vision
Values
Mission
C – Constraints
Money
People
Competencies
D – Prototypes
Manage Risk
Slide 12
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Next – Phase 2
There are five stages:
1. ABCD Planning
2. Mission, Objectives, Strategies, Actions
3. The Balance of Loose and Tight
4. Monitoring Key Projects
5. Organisational Alignment
Slide 13
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA
Developing, executing and maintaining a clear Mission, and set of Objectives, Strategies and Actions is vital:� The Mission is why we exist
� Objectives are where you want to be
� Strategies are what you’ll do to get there
� Actions are how you’ll achieve the strategies
Names may change but there is no substitute for these components in an effective Business Plan.
Slide 14
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - Mission
The Mission is why we exist:
� Our products and services
� Our markets and standards
� Our preferences
“Our mission is to be the world's most dynamic science company, creating sustainable solutions essential to a better, safer and healthier life for people everywhere.”
Slide 15
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - Mission
Guidelines for Mission statements:
� The Mission statement must “work” not only today but for the intended life of the strategic plan of which the mission statement is a part.
� Focus is a primary benefit of the Mission statement.
It should be broad enough to allow for the diversity (new products, new services, new markets) required of your business. And it must also be specific enough to provide the focus necessary to the success of the business.
Slide 16
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - Mission
Examples of Mission statements:
� Become the company most known for changing the worldwide poor-quality image of Japanese products.
� FedEx is committed to our People-Service-Profit Philosophy. We will produce outstanding financial returns by providing totally reliable, competitively superior, global, air-ground transportation of high-priority goods and documents that require rapid, time-certain delivery.
� To develop, design and deliver great communications solutions to every customer.
Slide 17
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - Objectives
The Objectives are specific outcomes:
� Where we will be
� By when
� And perhaps how measured
“No less than 30% of our customers will be ASX 200 by end-2006 and have an average annual revenue of greater than $1m each.”
Slide 18
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - Objectives
The Objectives have time-deliverables:
Mission
Objective 3
Objective 2
Objective 1 By end-May 2006
By end-2006
By end-December 2005
Slide 19
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - Strategies
The Strategies are “the how and who”:
Objective
Strategy 1 What
How
Action 1, by when, by WHOMAction 2, by when, by WHOMAction 3, by when, by WHOM
Slide 20
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - Strategies
Strategies are WHAT we will do:� To deliver the Objectives, by
� Breaking down the Strategies into Waves
� Providing focus on Key Result Areas
� And incremented in Actions
“Develop a skilled and empowered workforce with a ‘can do’ attitude.”
“Enhance our KPIs and benchmark, and use them to drive the business.”
Slide 21
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - Strategies
$64 question – how to design Strategies:
� Nominate Key Result Areas (above Objectives)
� Develop Strategies for each Objective
� And a series of “Waves” each lasting 1 year
� Develop Waves for each Strategy
The Waves provide a basis to keep the transformation initiatives, budgets and financial targets knitted together – and this keeps the results visible on an annual basis.
Slide 22
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - KRAs
The KRAs are designed to:� Embrace the objectives and priorities for the year
� Consists of Strategies and Waves
� Each Wave owned by a senior executive
� Waves contain Actions
� The executive is the Project Director for the collection of Actions within each Wave
The Waves become part of the responsibility of the people running the day-to-day business.
Slide 23
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - KRAs
KRAs can be grouped into different types:
� Performance – improving today
� Transformation – leading to tomorrow
� Mandatory – compliance and governance
For example:
� KRAs - Performance / People / Products
� Can be grouped as above
� Contain multiple projects
Slide 24
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - KRAs
Each KRA has an Objective:
Key Result Area & Objective
Strategy 1 What
How
Wave 1, by when, by WHOMWave 2, by when, by WHOMWave 3, by when, by WHOM
Slide 25
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA - Actions
HOW we will implement Strategies:
� Contained within Waves
� With measures
� And targets
“Document customer delivery efficiency KPIsin Account Plans. Responsibility: BM. By March 2006.”
Slide 26
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA + Vision
The Vision is the “light on the hill”:
� How a Vision is used
� The impact of Vision
� The process of creating a Vision
Having a clear Vision helps in times of change and in implementing change.
Slide 27
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA + Vision
A Vision statement is important:
� A Vision is a guiding image of success
� It can drive behaviours
� It drives shared commitment
� Starts from values, intuition and dreaming
Best drafted by one or two people and come back to the group for discussion.
Slide 28
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA + Vision
Examples of Vision statements:
� We try harder
� Crush Reebok
� We make people happy
� An Apple on every desk
� First Choice through Excellence
The way to think of this is that the VALUES drive the VISION which in turn drives the MISSION.
Slide 29
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 2 – MOSA + Values
Knowing what you value is important:
� It drives behaviours
� It enhances empowerment
� It drives the Vision, and Mission
� It’s about the means not the end
Ask yourself what you aspire to, in the way that your people behave and treat each other and your clients and partners.
Slide 30
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Next – Phase 3
There are five stages:
1. ABCD Planning
2. Mission, Objectives, Strategies, Actions
3. The Balance of Loose and Tight
4. Monitoring Key Projects
5. Organisational Alignment
Slide 31
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 3 – Loose and Tight
The balance of what is loose and what is tight is often the most critical structural and operational key to success.
Failures occur when:
� A local unit has all loose and no tight;
� Key Result Areas are not tight;
� Excessive “tight” kills responsiveness.
Slide 32
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 3 – Loose and Tight
Some of the most common causes of failure result from an inappropriate balance.
Failures occur when:
� Too tight – bureaucratic, slow, unresponsive, ineffective
� Too loose – fast but wrong, inefficient, lack of governance and corporate cohesion
Slide 33
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 3 – Loose and Tight
Despite the simple nature of the concept, it needs investment in terms of money and time to enable effective implementation.
� The CEO should be the champion
� The project should never be a project for the human resources department!
Needs a coordinated effort to find out how value is created in the organisation.
Slide 34
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 3 – Loose and Tight
The scorecard directly relates to the Key Result Areas of strategy, by analyzing the Vision and Mission:
� Requires alignment of the vision and the objectives
� Much more than financials and operational efficiency
� Include “the customer”, and
� Internal learning and growth perspectives
Long term sustainability of the organisation is found in the customer, internal business process and the learning and growth perspectives (not in profit and shareholder focus!).
Slide 35
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 3 – Loose and Tight
As a first pass the Balanced Scorecard can:
� Include financial, and sales indicators
� Include internal efficiency
� Include all the Key Result Areas (as one sector)
In the longer-term, in a full implementation, the scorecard should be cascaded down into each operating unit and support unit, with clear linkages to performance assessment, and to corporate strategy.
Slide 36
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 3 – Loose and Tight
Autonomous Strategy Balanced Strategy
Stand-alone
Operating
Units
Integrated
Business
Strategy
Easy Fixes with Quick
Gains
Develop core capabilities
1
Expand in existing markets
2
Expand into new markets
3
Individual Successes Corporate Successes
e.g. Managed IP
services
Slide 37
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 3 – Loose and Tight
Once the decision about balance is made then the key to effective management is the scorecard:
If it is not on the scorecard then it is not “tight”, since the scorecard is the tool for visibility into all the selected tight variables.
Highlight with “traffic lights”.
Financial Operational
PeopleKey Result
Areas
Slide 38
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Next – Phase 4
There are five stages:
1. ABCD Planning
2. Mission, Objectives, Strategies, Actions
3. The Balance of Loose and Tight
4. Monitoring Key Projects
5. Organisational Alignment
Slide 39
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 4 – Project Reviews
Regular review of key projects is essential:
� Quarterly at least
� Executive Working Group
� All business change programs
� Report on success
� Manage risks going forward
Slide 40
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 4 – Project Reviews
The key global projects that are enabling the execution of the strategies are always “tight”
and have to be tightly managed through regular reviews.
Slide 41
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 4 – Project Reviews
Projects in Key Result Areas are a “tight”:
� They must be reviewed and reported
� Regularly
� Independently – including Project Director
� Quarterly or better
� Summary statistic on Balanced Scorecard
Slide 42
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 4 – Project Reviews
Many companies, especially those expanding overseas, have floundered when key global projects have surprised the Board:
� Regular reviews are about risk management
� Ensure ongoing alignment with the business
� Ensure project does not have “a life of its own”
� Ensure that good money is not following bad.
Slide 43
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Next – Phase 5
There are five stages:
1. ABCD Planning
2. Mission, Objectives, Strategies, Actions
3. The Balance of Loose and Tight
4. Monitoring Key Projects
5. Organisational Alignment
Slide 44
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 5 - Alignment
Strategic intent, strategic plans, balanced scorecards and good project management are all necessary but not sufficient to achieve success.
Very often, there is a mismatch or a lack of alignment and synchronisation between the strategy and execution, and the culture and organisational structure.
This gap restricts the performance of the organisationand causes friction in the timing and value-realisation of the intended strategy.
Slide 45
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 5 - Alignment
Exceptional performance comes from:
� Peak human performance
� Peak business performance, and
� Relates to clarity, consistency and commitment
Better aligned organisations perform better.
Slide 46
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 5 - Alignment
The most crucial elements of successful corporate performance, as reported by CEOs, are:
� Strategy
� Execution
� Structure
� Culture
Slide 47
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 5 - Alignment
The Structure must align with the Strategy:
� The shape of the organisation is important
� Clearly linked to Mission and Objectives
Need to know where you want to go and what shape we need to be to get there.
Slide 48
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 5 - Alignment
Once Strategy is right, and the Execution can be conceived, there must be alignment
of Structure and Culture.
The most effective tuning and alignment of Structure and Culture will enable the most
effective Execution of Strategy.
Slide 49
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 5 - Alignment
The practical steps, start with Strategy:
� Build execution capabilities
� Begin to convert Structure
� Begin to convert Culture
� Execute in parallel – in a measured way
Slide 50
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Phase 5 - Alignment
Alignment is a verb, not a noun:
� It must be maintained, and
� Improved, through a feedback loop
Strategy > Execution > Structure > Culture
Alignment – Plan-Do-Check-Act
Slide 51
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Summary and Attachments
1. Summary – 5 steps to success
2. Attachment - Example
Slide 52
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Summary – 5 Steps to Success
1. Get the Intent clear – and understand how big an effort and how risky it is to get there.
2. Build the Execution plan – and a clear link from Strategy to Actions.
3. Judge the Balance – and if it is not on the Scorecard then it is not “tight”.
4. Watch the Key Projects – since they will determine your success.
5. Align the Structure and Culture – with the Strategy and Execution.
This will deliver the most effective and assured platform for business performance.
Slide 53
©2005 Walter Adamson
Enhancing alignment and value for IT investments
Attachments - Example
Resource IT function to best-in-class.Strategy
Talent recruitment and managementWave
Performance Management
Benchmark salaries
CarriageTargetsMeasureActions
To utilise best IT applications and tools to provide outstanding customer service.
Objective
CustomersKey Result Area