NEWSLETTER
Why I Love Strategic Planning
Michael Allen, President, Z-AXIS Inc.
Even though it takes a lot of our time every November, I am a big fan of our strategic plan and really believe that it helps me run Z-AXIS better.
Here’s why.
I started running Z-AXIS in 2006. We had been in business for 16 years. My predecessor never believed in a formal business plan, and we were owned by a public company that did not believe much in business planning either. So I took over by chasing the next big opportunity, as we had always done. Eight years later our business unit was put up for sale, and my wife Robin and I bought it. My banker said, “Michael, you need a board of directors.” So I began meeting with potential directors, and the first thing they asked for was a copy of my strategic plan.
I said, “My what?”
They assured me that if I did not have it written down…
…. I certainly had it all in my head? I had to tell them that I really did not have one.
Well, that was embarrassing. So I set about creating our first strategic plan. I gathered my management team, we started researching.
No fluff.
We quickly discovered that most business plans are full of fluff. Full of statements like, “We are better than our competitors because we listen to our customers better.”
Now, that is a fine sentiment, but it is not supported by facts. Being an engineer I wanted objective proof (not anecdotal proof) that the statements in our plan – the statements we would use to guide our business – would be actually, demonstrably, true. Because engineers make decisions based on facts, not feelings (okay mostly not). So our first rule was: only statements that could be supported by facts. No fluff.
We figured out what is truly important to us
Next we had to define what was truly important to us. Not just important to me, but to the entire management team — because if it was important only to me, it certainly would not happen.
It took some time, but we gradually realized that the two most import things to us were very simple: the highest satisfaction of customers, and the highest satisfaction of employees. These became our strategic goals. We figured if we made those two things our priority, everything else — such as growth and profit — would take care of themselves. And for almost five years this has turned out to be true.
We got real KPIs, and check them monthly
Then we looked at our four KPIs (Key Process Indicators) and found that not a single one aligned to our newly established strategic goals. Some were close but they really did not align. Things certainly needed to change.
We developed five new KPI’s that aligned directly to our strategic goals. We listed our strengths, weaknesses and opportunities for improvement. We developed a plan for each KPI with month-by-month targets, drawing a map from where we started, to where we wanted to be at the end of the year.
We identified what to change
Most importantly, we listed the reasons why we were not already where we wanted to be. Then we spelled out exactly what we would change to eliminate those reasons.
The first year’s plan was a real game-changer for us. For the first time, we knew what our overall priorities would be for the year. We knew how we would define success. My managers knew what each one needed to do, every day, to achieve it. No more chasing whatever goal seemed like a good idea as it popped up.
When I hire a new manager I make sure they get a copy of the plan on their very first day.
November is for planning.
Since then, we follow that same strategic planning process every November. This will take us over 200 person-hours. Even at this busy time of year, I’m really happy to spend these hours because of the value we get from the plan, and the process.
Our plan focuses on the next business year or two. It is started by me and few of my managers, finished by my full management team, and approved by the board of directors. We make sure it is full of stuff not fluff. We edit it several times a year to ensure that we are making the needed changes, and evaluate whether we need to make adjustments (we always do).
We would not be here, if we hadn’t done the plan.
It is good to sit back and look at the big picture. As we look back on the previous year’s strategic plan, we realize that we would have done less than half of what we had written if we had not created and followed this detailed plan. It’s also very satisfying to see that the reasons we listed at the beginning of the year, for not already being at our end-of-year goal, have long since been eliminated.
With this process we have made such huge improvements that I look back and wonder how we did as well as we did before we created our first plan almost five years ago.