Agencies who conduct Strategic Planning and are on a calendar year are preparing for their Quarterly Planning Update in April. We would like to walk you through the process to assure that all bases are covered as you progress your 2001 Plan this year.
WHY ARE QUARTERLY MEETINGS DIFFERENT FROM MONTHLY MEETINGS?
During your monthly meetings your team reports on the Benchmarks of each Objective. The goal is to communicate whether the Action Plans are working and if they are achieving the levels of activity and results expected each month. By definition, you are not permitted to change Benchmarks, Action Plans or Objectives during the monthly meetings. That is reserved for the Quarterly Meeting. The reason changes aren’t being made when you identify a flaw or problem at the end of any given month is that if the Action Plan was well developed, one or two months is insufficient to determine the success or failure of the Action Plan. Any well-developed Action Plan deserves a full quarter to yield results. If the Action Plan is simply not being implemented, changing it mid-quarter is still futile. If the Action Plan WOULD work, why not try it? Why change it? If the Action Plan was not implemented, the chances are good that its replacement would also not be implemented.
During the Quarterly Meeting the goals of the meeting changes from ‘how far have we gotten’ to ‘is this Plan working to achieve our objective by the end of the year?’ A general rule of thumb for numerical objectives is that if the Benchmarks of the Action Plan have missed (in either negative or positive directions) by more than 10%, SOMETHING must be done at the Quarterly Meeting. Either the Objective Owner must rationalize why the deviation occurred and why the Action Plan should be left intact, s(he) must change the Action Plan to permit achievement of the annual objective, or the Objective itself must be changed to adhere to the realities of the year with respect to that goal.
Whether the Action Plans remain the same, change, or the Objective, itself, changes, the alterations made during the Quarterly Meeting will affect both the objectives of the company and its budget. For instance, if we revitalize an Action Plan by spending more on advertising to achieve the same results that were not achieved in the prior quarter, we must budget an additional expense for the expected revenue generated by the objective.
The Plan drives the budget, both revenue and expenses. Then the budget dictates whether that Plan is financially manageable. It doesn’t help to evolve a great Plan if the only problem is that the agency will spend more than it generates to achieve the Plan. Once the budget is revised to accommodate the Action Plans of the Objectives, the team must evaluate the profit potential to determine if the revisions are approved. If the changes permit the agency’s profit target to be achieved, then the new and revised action plans are triggered and, for the next quarter, we again monitor the Benchmarks of each Action Plan to assure ourselves that the appropriate results take place for the efforts exerted. If the revenues are insufficient to support the expenses of the Action Plans, the team must either revise the Action Plans to permit the profit objective to be met or it must define ways to generate more income with the selected Action Plans. Either way, the agency is still in business to make money and the bottom line must be the only sacrosanct piece of the puzzle.
A FEW WARNINGS:
Don’t let yourself get caught up in the details. The important focus of the Quarterly Meeting is to find out if the Action Plans developed are sufficient to generate the desired results to meet the agency’s Objectives.
Don’t mistake failed Action Plans and failed implementation of good Action Plans. This is a management shortfall. You must manage Objective owners and their teams to properly implement the Action Plans that have been developed before you can assess their success or failure. Too often we have seen perfectly good Action Plans discarded because staff members couldn’t (or wouldn’t) implement them.
Let the Plan drive the budget, but focus on the budget results as the prime purpose of the Plan. If Action Plans are too expensive to make sense from a budget standpoint, change them. Few agencies are truly financially capable of implementing Action Plans that will lose money in the year of implementation in order to gain from future renewals of business generated through them. If you are one of those agencies, congratulations! Having the cash to implement long term Objectives is wonderful. If you are not cash rich and cannot afford to take a loss to achieve goals, make sure you, and your staff, are aware of that fact at the outset of the process.
IF IT ISN’T RIGHT YET – DON’T WORRY!! WE CAN CHANGE IT AGAIN NEXT QUARTER!
Planning is not gambling. If you bet on red or black at the craps table, you stand a 50% chance of losing your money. However, if you plan properly, any mis-steps or mistakes can be corrected at the Quarterly Meeting by changing the Action Plans, Objectives, and Budgets in a truly proactive approach to business operation. You may change your Plan three times in a year before you finally get it right. What’s right?
THE TRUE GOAL OF BUSINESS PLANNING:
The true goal of business planning is to accurately estimate your year-end results as early in the year as possible. Those agencies that we help plan annually can confidently project their year-end revenues, expenses and profits by the end of the first quarter (for better or for worse). While it may not be as exciting as putting it all down on red or black, it is certainly more controllable since you, as owners, control the actions of your employees and can affect those actions through the Planning Process to achieve your business goals each year.