What’s the value of the strategic planning process?

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Maybe that question should be addressed to individualcompanies as “what’s the value of your strategic plan?

We’ve all read that the majority of small to mid-sizedcompanies don’t have a strategic plan. Of those that do have a documented planonly 10% execute them.

There must be a reason why strategic planning is such a lowpriority with the majority of businesses.

Since becoming a business coach I’ve had the opportunity toreview numerous documents and work with many companies in developing theirplans. The one common thread that came through from most of them was, theysimply don’t know how to plan.

In many cases if they documented one it was poorly conceivedand soon became lost in the day-to-day realities of business. Many are nothingmore than a series of spreadsheets built to show increasing sales and profityear over year. Some financial forecasting is warranted in a plan but they area measurement of plan attainment, not the plan itself.

A good strategy starts with a clear vision. This is thefirst step and one that is frequently overlooked. If you don’t start yourplanning process on a solid foundation, how can it ever be successful?

Most management teams have great difficulty committing wherethey want to go and what they want the business to look like in five years. Iusually get a response I want to grow X% or I want my sales to be X dollars bythat timeframe. That isn’t a vision statement, that’s an off the wall forecast.A clear vision is one you can articulate to all stakeholders and use as adecision tool by asking does this investment take me closer to or further frommy strategic goal?

A vision statement must include specifics, what will we looklike in 5 years? How many locations? What markets will we be in? What productswill we sell? What will we be known as within our chosen industry?

After you can answer questions like this and articulate thevision clearly then you are ready to begin the planning process.

Effective leadership needed drive change in your business in 2010.

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If you are like the majority of company leaders the short answer is not much until it’s forced to happen.

Just like the famous new years resolutions for weight loss or some other worthwhile goal frequently falls by the wayside the goals of business leaders for their organizations frequently go off track.

March is the last month of the first quarter of 2010. By now you should have a good idea of where your plans and goals are headed foe the year.

There is an old saying that people change only when the pain to change becomes less than the pain of staying the same.

Experience has shown this to be all too true.

We’ve all read that over 50% of business that fail don’t have a business plan. What is probably not as well known are the following facts:

• ·     90% of well crafted and documented strategies fail due to poor execution.
• ·     Over 70% of business improvement initiatives and programs fail due to inability to sustain focus.
• ·     Nearly 90% of leadership teams spend less than 1 hour per month on strategy.
• ·     On average 95% of employees don’t know or don’t understand the company’s strategy and don’t even have access to it.
• ·     92% of organizations don’t measure performance.

 The current recession has forced many companies to make changes. The question is, were those changes proactive or reactive in nature? Change is a constant, and how you plan for it and deal with it is up to you.

My role as a business coach gives me a broad inside look at many types and sizes of organizations. I like to tell people I have two types of clients, the inspired and the desperate. Unfortunate there are too few inspired and far too many desperate.

In my business I am constantly looking at programs and tools available to small and mid-sized business leaders. There is no shortage of information and products to choose from. What must be considered prior to buying a product or service is what is the desired outcome? Clearly sustainability is an issue in the majority of companies regardless of the challenge. The statistics above prove that.

 A seminar on quality, or motivation usually lasts as long as it takes for the participant to get back to the office and get hit with “business as usual”. The only thing that drives true change is spaced repetition of a new concept and accountability.

True change management starts with a clear vision, is supported by a documented plan that aligns people and processes to support that vision, and is sustained by leadership and accountability.

There just isn’t any other way.

Follow the link for a free whitepaper “How to Recession Proof Your Business “

Biggest problems facing small business?

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The short answer is it depends on who you ask. In doing some research for this article I literally found dozens of “biggest problems” depending on what the writer wanted to sell me.

There are surveys that call out numerous external problems ranging from the high cost of health insurance, taxes, government regulations, and the list goes on.

In my current role as a business coach I find business owners and CEO’s frequently list their biggest problem as whatever is hot at the time I’m talking to them.

I decided to go with my own history on this one since over the years I seem to have developed an unfortunate and extensive history of dealing with problems.

I founded a value added logistics company in 1989 that grew rapidly from no sales and eight employees to sales of over $40MM with more than 600 employees in the U.S and Europe. I sold out of that venture after ten years and bought a small HVAC manufacturing company with a small group of investors and ran that for five years.

These companies were in different industries and on different growth paths but the problems I experienced were quite similar.

Currently as a business coach I see the inner workings of many companies in various industries.

So what are the biggest problems facing small to mid-sized business today? My version is as follows:

Cash –It’s hard to get and there is never enough. If you are a fast growth company you can rapidly outgrow your available sources, if you are an underperforming company you can’t get it. The majority of companies don’t manage it well.

Lack of a clear plan– the SBA says that over 50% of businesses that fail don’t have a plan. I can say from my 30 plus years of experience not only is that number conservative, buy most businesses don’t know how to plan. Lack of a plan worsens the cash problem by allowing you to waste cash chasing tempting diversions, and throwing money at problems.

Ineffective leadership – this issue takes many forms. In my experience it is frequently in the form of depth of leadership. The founder of the company is

hands- on and effective but has little or no management depth behind him or her. This eventually causes the company to stop growing and eventually could lead to failure.

Sales / marketing effectiveness- this leads back to planning and leadership. Many companies have not taken the time to decide what their USP is. They try to compete in conflicting areas, such as lowest price and highest service. One takes away dollars and the other adds cost. Part of the planning process should include a very clear answer to one simple question, “with all of the products and service available to my customers why should they buy from me?”

Lack of execution- this may be the biggest of all. Research has shown and my own experience backs up the following facts:

·     Over 90% of strategies that are developed are never executed.

·     75% of improvement projects fail.

·     85% of leaders spend less that 1-hour per month on strategy.

·     Over 90% of employees don’t know the company’s strategy. (This is a direct result of top management not documenting and communicating it)

·     Well over 90% of organizations don’t have meaningful performance measurements in place.

One thing all of these problems have in common is they are all internal and within the control of the management team. Business must look internally for problem solutions and position themselves to survive in an increasingly global and competitive economy.

Leadership is key for middle mangers job search.

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America is in the midst of a leadership crisis.

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The daily news bombards us with stories about major corporations failing, government spending spinning out of control, and political and corporate leaders marching off to jail.

Interestingly, this leadership vacuum exists only at the higher levels of government and industry. It doesn’t exist in small and mid-size businesses.

I know that’s a fact because the owners, CEOs, and senior executives of these businesses tell me so. For over forty years I’ve worked as a manager, coach, and consultant with hundreds of executives. Not one has ever said to me, “This company is not doing as well as it should because of my lack of leadership skills.”

Who’s to blame for their company’s problems? It’s they. Over and over again I’m told, “They don’t care; they didn’t do it right; they don’t get it.”

I’ve never understood why these executives don’t just fire “they” and hire somebody else. Come to think of it, I bet many of them have tried that, but somehow they keeps sneaking back on the payroll.

Take an objective look at your leadership skills.

Of course, the above paragraphs are meant to be tongue-in-cheek humor. It’s just my way of saying that our natural tendency is to blame others. But as a leader in business, you must objectively assess your own leadership skills.

All companies have problems. In order to solve your company’s problems, you’ll need to understand and change the leadership style that got you into trouble in the first place. Start by looking for areas where you personally can improve. Until you change, not much else will. Before you can lead others effectively, you must first be able to lead yourself.

Over the course of my career, I have known literally hundreds of executives. I can’t think of one of them, myself included, who could not benefit from some level of on-going leadership evaluation, coaching, and development.

Yet many executives, especially owners and CEOs of small businesses, find it hard to acknowledge that they have room for growth. They’re reluctant to ask a coach or someone else for help. And because they’re top dog in their company, they do only what they want to do rather than what they need to do.

Take an honest look inside your organization. How many of these issues are present?

• Excessive meetings with no agenda and no results
• Consensus-driven decision making (CYA for all us older folks)
• Lack of personal accountability
• Poor communication between entities
• Reluctance to terminate poor performers
• Misaligned and uncoordinated efforts (silo effect)
• Personality conflicts and power struggles
• Apathetic and unmotivated employees
• Inconsistent results
• Poor time management
• Reactive rather than proactive effort
• Micro-management
• Declining sales and / or market share
• Lack of teamwork
• Duplication of effort
• High employee turnover
• Substandard quality
• Numerous unresolved issues and postponed decisions

You may not want to acknowledge this, but to some degree all of these issues can be attributed to ineffective leadership.

Lead by example.

Your commitment to excellence, integrity, fairness, and open communication will be visible to people in your company. It will inspire them to rise to the performance level you exhibit.

Notice that I didn’t say “to the performance level you expect.” Expectations are mere words. When people respond to expectations, it’s often out of a sense of duty, a desire to please, or the fear of punishment.

Leadership, on the other hand, entails action. When you act as a leader, people will want to follow you to be where the action is. Your example will motivate them to grow and achieve.

Once you’ve developed your plan and communicated your vision, there will be a short honeymoon period. But soon people will be looking to you for results. Will there be real change, or will it be back to business as usual?

Simply wanting your vision to be realized doesn’t work. You need to take the lead and make it happen. When you walk the talk, people will follow. Develop a vision you believe in. Live it, breath it, take responsibility for it, and generate enthusiasm for it. People will respond.

Improved leadership processes required for strategy execution !

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As the owner, CEO or senior executive of a business, you share many things in common with the coaches of professional sports teams. Can you imagine the head coach of a team – say in the National Football League – going into a game without a game plan? Of course not! That coach would soon be out of work. Coaches literally spend hundreds hours preparing for a 60-minute event.

A good coach not only develops and documents a strategy to win; he makes sure it’s understood by every player on the team. Every successful coach knows that a plan is essential for success.

But every successful coach also knows that a plan alone is not sufficient for success. The best plan in the world is useless if it’s not implemented. When the whistle blows to start the game, the players can’t simply stand on the sidelines and talk about what a great plan they have. They must take the field and play to win.

A coach that doesn’t learn from failures and make adjustments so that his team consistently wins soon finds out what the letters NFL really mean: Not For Long.
Why should you view your business as any different?

Your role as an executive is to execute!

It never ceases to amaze me – I’ll work with a company for weeks to develop a comprehensive strategic plan, and then nothing! Nada! It’s as if management says, “OK, now that we’ve finished the plan, we can check that off our list and get back to business as usual.”

They know they have issues that need to be changed. They pay good money to hire outside assistance to facilitate a planning process. They complete their plan. Then they proceed to ignore it!

Why? Is it fear of change? Fear of making a mistake? Fear of confronting people? A lack of confidence in themselves and/or their staff? Probably it’s a mixture of some or all of these.

For most executives, implementation is harder than planning. It takes determination and courage to actually do what you say you want to do. Implementation requires commitment, accountability, and change. That’s where the majority of companies fail.

Bold actions require bold leadership.

The absence of a decision is a de facto decision. That goes for all aspects of business planning and execution – from acknowledging problems to resolving them.

Tolerating poor personal performance from a staff member is choosing mediocrity. It lowers the bar for the entire staff.

Failing to take action about substandard quality is a decision about quality. It sends a message about core values to everyone in the organization.

It’s wise to gather the facts before making decisions. But postponing action “until there’s a better time” or “until there’s more data” is too often a cover-up for plain old fear to act.

Want to diminish focus and credibility in your organization? Here’s a sure-fire way: Develop a plan, communicate it to your people, and then fail to execute it.

When you fail to act on your plans, you undermine motivation, enthusiasm, pride, respect, commitment, and productivity. Yet 90 percent of American companies do just that, as shown by the chart below.

Paul R. Niven, The Balanced Scorecard (New Jersey: John Wiley & Sons, 2006).

Talk about an alarming statistic! If only 10 percent of American companies take the necessary actions to implement their plans, no wonder we’re losing our edge.

Many executives confuse busyness with effectiveness. They think they’re accomplishing a lot when people come to them all day long with questions and problems. It makes them feel important. They like being the center of the storm.

But executives who react instead of act accomplish little. They don’t produce progress because they’re concentrating on the minutia and ignoring the momentous. They’re playing around instead of playing to win.

But remember that your employees are watching your actions. They’ll respond to your leadership based on how you execute your plan.

To help you maintain your focus on decisive action, here are four principles for you to periodically review:

• If the status quo isn’t working, change it.
• If you don’t make a decision, you’re making a decision.
• If you don’t like making tough decisions, you’re not alone. But winners do it anyway.
• If you want to exercise real leadership, you must act.

You have to “walk the talk” every single day to attain excellence in any organization. You must take the field and play to win!

Action without vision is a nightmare. Vision without action is a daydream.

Japanese proverb

Will economic recovery create jobs for small business?

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I read in this morning’s paper that economic recovery is going to be slow, but it didn’t give many specifics. I guess I am increasingly curious what the experts mean by economic recovery. Is it recovery to where we were in the 1970’s, the 80’s or two years ago? Define recovery!

I think the experts and the government are looking at short-term indicators and missing the big picture. A friend recently sent me a link to a youtube video that was both amazing and frightening. For those of you interested the link is youtube video.

I have no way to predict the future and have no way to validate some of the information contained in this video, but I believe the trends that it talks about are real and happening now. A few of the more interesting points highlighted are:

• The 25% of India’s population with the highest IQ’s is greater than the total population of the United States.
  
• The top 10 in demand jobs in 2010 didn’t exist in 2004.
  
• The U.S. Department of Labor estimates today’s learner will have 10 to 14 jobs by age 38.

That information coupled with the fact that fewer U.S. students are graduating with math and science degrees makes me wonder if real economic recovery is possible.

As the chart shows we are last in this group in math science and engineering.

The chart from the International Education Report By Michael Hodg

The chart from the International Education Report By Michael Hodg

Overall the United States spent an average of $8,701 per student on elementary and secondary education in 2005, up 5 percent from $8,287 the previous year. We’re spending money but simply not keeping up.
Until we resolve some of the big picture issues real economic stability cannot happen. The government cannot create wealth and real jobs; the private sector has to do that. In order to do that business needs the brainpower to compete globally.

I am constantly talking to businesses about the need to anticipate and get ahead of change. Most are reluctant to do so. I read somewhere the “change occurs only when the pain to change is less than the pain of remaining where you are”.

I think, as a nation we are approaching that point and business needs to lead the reformation. If we are to see job creation and growth at acceptable rates we need to insure our education system is on the same page. Small business must take an active role in education reform

Lack of a better sales process to blame for most business failures?

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We read about businesses failing every day in the newspaper. In the articles documenting the latest list there are always reasons given for the failure, the economy is usually the number one cause.

I’d like to offer a different and less popular opinion. In most cases I’ve seen the reason your business fails is you!

Sound harsh? My experience as a business coach has proven this to be correct.

A great example of this appeared recently in the Tupelo newspaper. An article appeared with a list of restaurants that failed in 2009. The reasons given by the owners were “poor timing and the economy”. Tupelo being a smaller city my wife and I had visited all three of the establishments named over the course of the year so I was in an excellent position to review the article. All three restaurants had three things in common, high prices, poor service and mediocre food.

One in particular, a sandwich shop, that stands out in my mind had an ordering process that involved standing in line to order, and then moving to another station and standing in line to repeat your order and pay for it. Total wait for an expensive and really poor take out sandwich was over 45 minutes. Now this particular shop was located in a strip mall that was exactly four doors down from a Mexican restaurant that is not only surviving it’s thriving. Apparently the economy issues haven’t moved that far down yet.

The point is it’s easy to assign blame but it the long run it really doesn’t matter who’s to blame, your business has failed and you are left with the consequences.

Small and mid-sized businesses are critical to the national economy. A newsletter from the Small Business Administration dated September 2008 provides the following interesting figures about U. S. small businesses. It says the firms with fewer than 500 employees –

• Represent 99.7% of all firms with employees.
• Employ about half of private sector employees.
• Create between 60% and 80% of all new jobs during the last decade.
• Generate more than half of non-farm gross domestic product.
• Employ 40% of our nation’s scientists, engineers, and computer workers.

As important as these firms are to the overall economy all too often they are launched and operated without the resources needed to succeed.

I tell my clients to “find a need and sell the outcome”. Another way of saying it is find a customer base, determine their wants and needs and supply a cost effective solution. Many businesses start with the opposite strategy, develop a product and look for customers. Regardless of the movie line “if you build it, they won’t necessarily come”.

Most business failures occur for several reasons:

• Lack of a clear plan / vision/ direction.
• Lack of execution by management.
• Insufficient capital, or due to lack of a plan wasting the capital they do have.
• They don’t ask for help until it’s too late.
• They don’t understand their markets, their customers, or their competition.

There are other reasons of course, but strong well-run companies are able to survive downturns, the economic swings weed out the weak and poorly conceived.

Can the Stimulus really create jobs for small business?

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The headlines in this morning’s paper say the stimulus lacks validation. In other words there is no proof that the billions of dollars spent thus far are creating jobs. Is that a surprise to anyone?

The best explanation I’ve found on a stimulus package was on an anonymous website blog. It read as follows:

Can the government create real jobs really?
Let’s say you have five kids. Four have jobs, one doesn’t.
You feel bad the fifth doesn’t have a job, so you take 25% of the income from the four employed kids and “hire” the fifth kid to do shovel ready projects around the house.
Does the fifth kid really have a real job now? Is it self-sustaining? How long before the other four kids get tired of paying the fifth kid?
Of course it’s not a real job…
When our government makes temporary jobs to hire people for shovel ready jobs, jobs that are not self-sustaining, jobs that can only exist as long as people with real jobs are able to pay for these jobs out of their own pockets… these aren’t real jobs either.
To create jobs you must add value and create wealth. The money would be better spent on tax credits to encourage companies to invest in R&D, product development and expansion. If companies expand they create jobs and hire people. Those people get paychecks and create demand for new products and services, which in turn creates more jobs.
Depending on where you read it the stimulus package is somewhere around $780 billion dollars. And again depending on where you get your information it’s designed to “create” or save 6.5 million jobs. If my math is correct that’s about $120,000 per “job”. If the explanation above is correct, and I believe it is, we’re spending $120,000 for every non-sustaining job created by the government.
Does that say that each person hired to do highway work is being paid $120,000? Of course not, which makes the problem worse, the money isn’t going into the economy to create demand, it’s being absorbed in large part by government, which as we all know adds no value to the economy and creates no wealth.
The only way to create jobs is make more money available to the private sector to encourage innovation and develop new products and services. Even with the government’s ability to print money there is only a finite amount available. Every dollar spent by the government is a dollar that is taken from private enterprise.
To create a sound economy we absolutely must reduce the size and cost of government and invest in our future. The only way the stimulus package would make sense is if Obama reduced government spending by $780 Billion and made it available to private enterprise through bank loans, grants and more reasonable credit for sound companies. Small business creates jobs, if a proportionate amount of money was set aside in the form of credit access, job creation would be a reality.

American’s job satisfaction falls to record low.

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According to an Associated Press article this morning only 45% of Americans are satisfied with their jobs. That’s the lowest level ever recorded and down from 49% in 2008.

The article said there were a variety of reasons:

• Fewer workers found their jobs interesting
• Incomes haven’t kept up with inflation
• Health care costs have eaten into take home pay.

This is obviously a huge problem since job dissatisfaction has direct implications on things such as:

• Productivity
• Innovation
• Product quality
• Customer satisfaction
• Costs in the form of scrap and rework.

I did some research after I read this article to see what the politicians and “experts” were saying as to the cause of this serious issue. There were few reasons cited except money, recognition, or advancement.

I think these things have always been an issue. Everyone wants more money, when they get it it’s a temporary fix. Recognition and advancement have always been in the forefront as well. The survey began in 1987 and at that time nearly 61% were happy with their jobs and I’d bet those three reasons were issues then also.

So what’s different between 1987 and 2008 that would cause a 16% drop in job satisfaction? That’s really the question to be answered.

I think it ties directly to leadership. I said in the preface of my book a few months ago that I think the biggest crisis facing America is the lack of leadership at all levels.

You can take that specifically to the jobsite or factory and look how it ties to employee dissatisfaction. In my role as a business coach I’ve personally seen things such as:

• Employees feel helpless, many feel it doesn’t matter if they do a great job or a mediocre job, the pay / recognition is the same.
• They have no control over their destiny. The economy, cost pressures etc. all affect them directly but the lower they are in the food chain the less they can control it.
• Nobody listens to them, innovation and ideas are held back because nobody asks, or acts on them if they do get heard.
• Poor performers are often kept in place of good performers because of seniority or friendships lowering employee incentive.
• Management often gives conflicting direction with shifting priorities causing employees to be unclear of expectations.
• Managers often don’t take the time to provide meaningful feedback, especially positive feedback.

Leaders must understand that employee satisfaction ties directly to their bottom line and invest time and money in employee development. Lack of leadership weakens and organization in many ways, the most obvious being:

• Lack of innovation
• Poor teamwork
• Increased costs
• Employee turnover

One thing I’ve heard often in the past few years during the economic downturn is “there are no jobs, there is nowhere for employees to go”. That’s only partially true, there may not be a lot of options for average employees to go but there is always somewhere for top employees to go, if not immediately at some point in the future.

Poor leadership often causes an organization to be comprised of average or below average employees due to better employees having options and moving on.