Successful Business Leadership

By Karen L. Compton

Principal, A3K Consulting

Business planning is an essential element to the success of any business. New businesses need to chart future strategic growth; existing businesses need to chart direction and leadership; while transitional businesses need to define change. So, why do so many businesses fail to plan? And, in doing so, plan to fail? In part, it’s because planning requires hard thought about difficult issues facing your business or industry and developing solutions to address them that can be achieved. Many regard planning as a waste of time, arguing that the plan “will just sit on the shelf.” But, the truth is, the best plans are short, goal orientated, milestone defined and reviewed often to ensure implementation. So, what are the essential elements of a good plan? There are only four—vision, value, sales and organizational analysis.

What is your vision? The basis of any plan should be mission, vision or purpose of the business or service. What does it do? How does it meet the needs of its clients? What is your proposition for why a customer should do business with you? This need not be a cumbersome philosophical statement. Keep it simple in order that it is clear to employees or business partners.

Then ask “what are the core values of the business?” While the vision defines what the business does, core values define how the business will implement the vision. Case in point, Tiffany’s, Macy’s or Target? The vision is essentially the same—to provide a retail selection consistent with a targeted buyer’s demands. What is different however, is the value. Tiffany’s core value is to provide the highest quality; Macy’s value is widest selection; while Target’s value is to offer the “best” price. Each firm’s business model is successful because it seeks to match their core values with their clients’ needs in quality, service and selection. Customers who shop at Tiffany are not looking for the lowest price. Rather, they are looking for the highest quality and in some cases, cache. Contrast that with the Target customer who is looking for the “best” price but is willing to accept a “lesser” quality to meet their needs. But, this blog is on business planning, so why are core values important? Because they define your customer base and affect your sales strategy.

Sales Strategy. Let’s look again at Tiffany. To achieve its sales goals Tiffany’s sales strategy is focused on a customer demographic of high net worth individuals. Their advertising is placed in magazines such as French Vogue®, Vanity Fair® or Conde Nast Traveler®. That is not to say that customers of Tiffany are not customers of Target—many are. But, it is to say that in order to achieve their sales goals they must first understand who they are selling to and what they (the customer) are willing to pay for.

Whether you are selling commodities or services, your sales strategy must start with the end in mind. What do you offer your customer? And what is the value they are willing to pay for that product or service? Once you have answered those questions, it is imperative that you set a business goal for your company, or team. Why? Because everyone needs to know and understand the goal and the steps it will take to achieve it. Have you ever gone on a car trip? The first thing you did was to decide where to go and why—the destination is your vision. The next thing is to select your route. The route you chose to travel—most scenic, fastest time, or multiple visits along the way represents your core values. The last thing you did was to map out your adventure from start to finish. That map represents the goals to be achieved on the way to your destination. So, if the vision is to sell engineering services to design-centered architects; and the value is high quality rapid turnaround designs; then the goal becomes a new sales target that everyone understands and is able to support. If your sales goal is $2.0M in new sales, ask yourself—how will I achieve that? Do I know my customers and my competition? Do I understand the business issues for both in order to achieve my share of the market and to sell value? What are the economics of my customer base that will influence (positively or negatively) their buying decisions? These are all very critical questions to ask, unfortunately many business plans fail to ask and answer the hard questions.

Organizational Analysis. It is not enough, however, to simply state your business’s sales goals. You must outline measurable steps to achievement.

Sales are but one critical component to an organization’s success. But, it’s crowning failures can be seen in a lack of quality human resources, organizational development, leadership, polices/ procedures or technology that inhibit the business from achieving its business goals and objectives. It is therefore important that a planning process examine the internal strengths and weaknesses of the organization. Let’s consider an example. Our goal is to achieve $2.0M in new sales through our engineering company. We have a well defined sales strategy that outlines our new clients, their business goals and even identifies specific projects we can go after in order to achieve the goal. One would think we were well on our way. But, on closer examination we find that the engineering company has three employees—two great engineers and an office administrator. As a result, the company could “sell” $2.0M in new work, but they could never deliver it to their customer. Why? Their sales strategy does not address business issues such as human resources and technology. The company’s business plan would need to reconcile the firm’s sales strategy to its overall vision and goal. So, is it enough to just recognize that the engineering company needs more staff? No. There needs to be a specific hiring plan.

The hiring plan, like the sales strategy, outlines the type of professional the engineering company needs to hire in order to achieve its vision, values and sales strategy. The plan would define the job description of the position, as well as outline roles and responsibilities. Competencies such as management and leadership need to be defined. The hiring plan would also outline the resources needed to fill this organizational void. Returns on investment might be calculated for such resources as job ad placement, recruitment services, professional organization or college advertisement and a recommendation given as to the best vehicle for attracting and retaining the appropriate candidate.

Although this example uses human resources as the limiting factor to achieve the vision and goals, the truth is the limiting factor could just as easily be technology, leadership or a host of internal factors. The point is, it is imperative to assess one’s own organizational capabilities within the planning process, as well as those factors given to the external business environment. It is also important to develop action plans and milestones to addressing the issues identified as part of the plan. Using our human resources example again, the actions may be to:

Develop a hiring plan by March

Present plan to management for approval by April

Begin recruitment process in early May

Select candidate by May month-end

Hire date in June.

It is additionally important that the milestones have ownership. Someone within the organization must to be assigned the role of ensuring that the milestones are met within the specified timelines. Otherwise, progress towards to the vision and goal of the organization will stop.

Finally, the organization’s overall plan should be re-evaluated every 6 months or more often. Why? To assess if the internal and external factors are changing, as well as determine progress to the plan. External factors such as economics, competition or barriers to entry often change every 6-9 months. Internal factors such as human resources, technology or your “competitive edge” may also have shifted within that time, making re-assessment necessary. Remember, the best plans are simple. They provide a clear vision and goals for all of the team. They address impediments to success through clearly defined actions and milestones. And, most importantly, they do not sit on a shelf! They are reviewed to ensure that the road trip we all began is the adventure we all want to achieve!

Karen Compton is Principal of A3K Consulting—a California based business and strategic planning firm specializing in the built environment. Ms. Compton has more than 14 years experience as a business development professional in the architecture, engineering and construction industry. Her clients include local and national firms, as well as colleges, universities and public agencies. Ms. Compton has been published in the Journal of Public Policy and was featured in the April 2006 issue of Black Enterprise Magazine. She can be reached at a3kconsutling@charter.net.