Business Planning from Business Strategy

Posted by   Bert Engelbrecht


What is Business Strategy?

Business Strategy refers to the navigational manoeuvring required to enable the achievement of the Strategic Position. The Journey.

What is Business Planning?

Business Planning refers to the exercise of compiling a complete set of sub-business plans through which the achievement of the Business Strategy will be enabled. The Business Strategy spells out how the business manoeuvring will be executed in order to achieve the Strategic Position. The Business Plans are the plans required to set performance requirements and mechanisms, as well as to gear a business in order to fulfil its Business Strategy. The Enablers of Business Strategy and The Fix-it Plan component of the Business Strategy.

Classical Problems

  1. Where organisations typically fail is to ensure the alignment of their Business Plans with the Business Strategy and thus the Business’ Strategic Position.
  2. Strategic Positioning is not a matter of choice only, it’s more a result of the influence of the business’ external - and target environments. It is derived from the external and target environments.
  3. Executives are extremely good at strategising, companies fail miserably to interpret and deliver on these business strategies. We fail ultimately to translate Business Strategy accurately into the correct permutation of change initiatives that will ensure the achievement of the Business Strategy. Typically we miss our annual targets. In hindsight we then claim “Maybe they were too ambitious, but next year we will …”
    1. We fail to express the strategy in such a way that mere mortals can understand it.
    2. Strategies hardly ever contain more than a Vision statement, with a flavour of “What would you like the vision to be?”, a Mission statement, with a similar flavour, and a few new business objectives or performance targets, which often merely represent an inflationary jack-up of the previous years business objectives. To supplement the strategy we even have the audacity to include a new Organisation Structure as the major component of the strategy. Thus, the point of departure is wrong. A business’ reason for existence should be the point of departure, which should primarily be extrapolated from the future’s external – and target environments of the business, not “What would you like it to be?”. A new Organisation Structure is the result of changed processes, which should directly enable the achievement of the business strategy.
    3. We fail to gear the organisation to ensure that the new strategies can be achieved. We do not often change our business processes to ensure that they will directly enable the achievement of the new Strategy. We hardly ever ensure that newly aligned processes, which are equipped by a set of newly aligned resources, enable our Business Strategy.
    4. We hardly ever ensure that our Business Plans stem from the same origin, the Strategic Position, have the same structure, are complete, are in line with the business strategy and actually all pull the business in the same direction by not contradicting each other.
    5. We don’t have formal methods and standards and skills to facilitate the accurate delivery of Strategic Positioning, Business Strategy, and supporting Business Plans.
    6. Too many projects are executed and continued or are executed for too long, while some should already have been terminated, as a result of launching and managing projects in a “Strategy Vacuum”. New Business Strategic position and Business Strategy implies new projects and re-alignment of existing projects. Projects are required to align business processes, by changing existing processes, creating new ones and terminating redundant ones. Projects are also required to align all nine potential resources that processes could require to execute; technology and or infrastructure, skill, workforce, legal alignment, raw material, energy, management enablement mechanisms, operational capital and information. Business change projects and resource alignment projects have to be Strategically Aligned.
  4. Sub-Business Plans are fragmented and built in isolation from one another by department heads with political agendas in mind.
  5. Sub-Business Plans are not balanced relative to one another, or well integrated. Typically, as an example, priorities of one Sub-Business Plan is relative to its own context only, not relative to a broader context like those priorities of Sub-Business Plans around it.
  6. Businesses often have an incomplete set of Business Plans to enable the achievement of the Business Strategy and thus the Business’ Strategic Position.

The required Format of a Business Plan

The introduction of a Master Business Plan is necessary to provide context. Any Master Business Plan has to originate from the organisation’s Strategic Position. This provides context for the Sub-Business Plans.

Context of the Business Plan

  1. What is the world around us going to look like? A clear description of the external – and target environments of the business at a particular point in time.
  2. What are the Business’ Critical Success Factors within the context of its external - and target environments?
  3. What is the new reason for existence of the business relative to its external – and target environments?
  4. What architectural components do the new business consist of?
  5. What does the new Organisation Structure of the business, which directly reflects the Business’ Strategic Position, look like? This will determine what combination of Sub-Business Plans will be developed.
  6. What are the five drivers to the Sub-Business Plan, which will ultimately dictate the correct permutation of project plans to ensure alignment to the business’ Strategic Position is achieved. It also dictates the content of the Sub-Business Plans, the resourcing of the plans, their context relative to one another and ultimately an enterprise contextual prioritisation that all contribute directly to the Business’ Strategic Position.
    1. Business Priorities, which represent an objective prioritisation of new requirements.
    2. Architectural Priorities, which represent preferred construction and deployment sequence of new business and technological components.
    3. Where Business Priorities contradict Architectural Priorities we have to Accommodate Business Priorities into Architectural Priorities.
    4. Perform a Gap Analysis, this is to determine the quantity of resources the projects that have to bridge the gap, at three different architectural layers, will require.
    5. Determine the fix-it priorities according to which resource misalignments can be addressed.

Format of each Sub-Business Plan

Any plan should contain the following categories of things:

  1. Who is responsible?
  2. For delivering what?
  3. How many or much of it?
  4. To what standard or quality?
  5. By when?
  6. Utilising what resources?
  7. To achieve what?
  1. Each Sub-Business Area’s Operational Plans
  2. Each Sub-Business Area’s Efficiency and Effectiveness Enhancement Plans
  3. Each Sub-Business Area’s Resource Alignment Plans
  4. Each Sub-Business Area’s Fast Track Fix –It Plans
Board Functions
      
Business Engineering
 SubjectNameDate Posted
Business Planning from Business Strategy Bert Engelbrecht10 June 2004
Best Practice Bert Engelbrecht14 June 2005