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Abstract:
Corporate planning often ends with a hastily prepared business plan,
prepared to satisfy debt or equity funding sources. While a plan
prepared in such a way may meet it's immediate objectives, it is near
worthless as a sound operations planning tool. What is real
corporate planning and how is it done?
A corporate planning process is described below. It is not the
only viable method of corporate planning. But it does serve to
outline the steps necessary to a good corporate plan. The key to
success here, is not only the planning process, but also the successful
implementation of the plan. It must be supported, monitored, and
modified where necessary in order to be effective.
What
Corporate Planning is NOT:
-
The
creation and production of a business plan
-
A
manufacturing or production plan
-
A
program Gantt chart or program schedule
-
A
budget created exclusively from the top-down
A
true corporate plan includes all of the above. But as the
following process example illustrates, it is a sequential process, it is
a comprehensive process and it is an ongoing process which needs to be
managed.
What
Corporate Planning IS:
Phase
I - Strategic Planning
The Strategic planning phase begins the corporate planning
process. This is the planning phase in which all management come
to an agreement as to the mission statement of the company. Then
more detailed strategic plans are created which deal with market
targets, product development issues and competitive issues.
Corporate strengths and weaknesses are discussed and plans are made to
shore up weaknesses and to continue to strengthen competitive
strengths. The customer receives a good bit of focus and
definition during this phase as well.
Once the corporate strategic plan is complete, the department strategic
planning can begin. Department management can now work jointly to
prepare their best implementation of the corporate strategic plan within
their own departments. This planning process can work very rapidly
into operations planning at the department level.
Phase II - Operations Planning
This phase begins with management setting objectives within
their individual departments which would ensure that the company can
meet the strategic objectives set out for the year. Then, with the
assistance of a financial modeler, a corporate operations plan is
prepared which will integrate and orchestrate all of the resources
needed to meet the individual department objectives.
Phase III - Feedback and Control
No planning is ever complete unless it puts measurable standards
into effect, and then compares those standards against actual
performance and actively reviews and manages the variances
accordingly. Standards measurement includes budget to actual
expenditure comparisons on a monthly basis, milestone performance
measurements, market research results, questioning and interviewing.
These phases must all be done to some degree, and they must be completed
in the order given to maximize their impact to the company.
Regarding
Outside Assistance:
It is not always necessary to
contract with a corporate planning consultant to accomplish this
process. Alternatively, it can be very beneficial to employ
outside counsel in developing your corporate plan. It is most
important that a process is in place and is being continually improved
upon. How you get the process going and how it is directed is
entirely at the discretion of corporate management.
A good corporate planning consultant can provide a framework or
structure, oversight, or management of part or all of the process.
The comprehensive modeling of the corporate plan is often best left to a
consultant who has the software tools to prepare a comprehensive
corporate operating plan and model the financial impact of the plan for
the next two years. Having the tools available will save an
enormous amount of time for an internal financial analyst.
Every
Company is Different:
Corporate planning must be a
process personalized to the company. I have never been able to
recommend the same template for every client with whom I have
worked. Corporate cultures and personalities vary considerably.
Corporate strengths and weaknesses vary considerably. Accordingly,
the planning process and its implementation must vary as well.
In summary, a company without a comprehensive corporate plan is
wandering aimlessly. It is imperative that the company have a plan
in place, particularly if the company is growing or moving onto another
field of endeavor. Regarding the implementation process, Nike said
it best in their advertising campaign of some years ago, "Just Do
It". Don't wait. Do it now. Stockholders want to
see a management team who has vision and who knows how to implement and
control this vision.
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