Leadership Roles in Enterprise Planning

EE, Leadership Roles in Enterprise Planning ver 1.4 Mar 06 Executive Engineer, Issue 5, April 2006 Leadership Roles in Enterprise Planning Philip Crosby*, NCS International Pty Ltd, Sydney, Australia 7 Leeds Street, Rhodes, NSW, 2138. Phone: 0414 290 004 ABSTRACT Few people in business would argue against the benefits of long range planning, and many organisations now consider this a routine activity. However organisations can fall into a rut with their strategic planning process, and potentially confuse having a strategy with being strategic. In the context of leadership, enterprise (or even project) planning can be deconstructed into its vision, mission, and long range goals determined by top management. The baton may then be passed most effectively to the operating managers (e.g. Project or Line Managers) best placed to deliver results through the implementation of tailored strategies. In this paper, Phil Crosby draws on over 12 years of observational experience of hundreds of technical and scientific organisations, public and private, to present the case that, in many enterprises, the right people may be focussing on the wrong tasks. Keywords: strategic planning; enterprise planning; management; leadership; vision statement; mission statement INTRODUCTION In many organisations, public or private; large, medium (and occasionally) small, the strategic planning session seems to come around as regular as Christmas, and feature equally as large in the firm’s calendar. And rightly so. It is difficult to conceive of an enterprise or project that is so sure of the future, and so confident of its resources, that a periodic look-ahead was deemed unnecessary. For most organisations, strategic planning is seen as the opportunity for top management (i.e. Board of Directors, Executive Team, etc.) to review current plans, and look ahead in terms of opportunities, innovation, and risk. All too often though, insufficient attention is given at these meetings to deliberating on the enterprise’s real potential, purpose and goals. Typically, such sessions are conducted offsite, or in-camera, and frequently attempt to include development of Business Unit or product plans (incorrectly defined as strategic plans) without the benefit of line management input. And perhaps worse, the contributors finalise the process in the mistaken belief that employees throughout the organisation will execute such plans with the zeal of the authors. The purpose of this paper is not to discuss the process of what is generally known as strategic planning itself, nor the content and implementation of resulting action plans. The aim is to describe my investigations into business planning and to propose a different approach to enterprise (or large project) planning. I will argue that by clarifying where top management can do their best work, and by looking at ‘strategies’ differently, managers and employees can become true stakeholders in plans that more effectively fulfil the enterprise’s objectives, and thereby its mission. DEFINITIONS & ROLES It is useful at this point to clarify what is meant by ‘strategic’. Whereas ‘strategy’ is generally understood to refer to a plan to achieve a long term aim, ‘strategic’ is more exactly defined as “forming part of an aim to achieve a specific purpose”1 or “Important or essential in relation to a plan of action”2 Here we have an important clue that when we talk about strategic Page 1 of 5 EE, Leadership Roles in Enterprise Planning ver 1.4 Mar 06 planning, we are by definition referring to specific actions. By misunderstanding this subtle, though important difference between ‘strategy’ and ‘strategic’, it’s easy to see why top management can become diverted from what should be their primary task (that I term Enterprise Planning3), and be drawn into attempting to develop operating strategies, and even on occasions formulating associated action plans and metrics. Not only is this straying into territory requiring specialist operating knowledge, it also quickly soaks up much of the time allocated to top level planning. Time that I argue could be more wisely spent by leaders on discussing and shaping the vision, mission, and objectives of the business. Definitions concerning leadership and management have become blurred in the popular media. Despite the trend to adopt the business jargon of the day, critical observation shows that managers do not always transform into good leaders, or vice versa, although it’s probably fair to say that both roles require some capability of the other. Management though, is about coping with complexity. Good managers bring order and consistency through plans and structure, and monitor results. In contrast, leadership is about directing change and aligning people by communicating an inspirational vision, and then helping them overcome hurdles. One could encapsulate this in the phrase; ‘You lead people, and you manage processes & systems.’4 The other myth about leaders is that they are necessarily charismatic individuals, however Jim Collins in his 5-year study of leadership, found that successful managers “tended to be personally modest, humble, and reserved, but enormously wilful on behalf of the organisation.”5 ENTERPRISE PLANNING If we then accept that the term ‘strategic planning’ is not only misleading, but also something of a misnomer, and that it is the role of leaders to set organisational goals (Enterprise Planning), and the role of managers to develop plans to meet those objectives, we can begin unpacking what Enterprise Planning encompasses, looking firstly at ‘vision’. My research concluded that many organisations fail badly when forming a ‘vision statement’. Rather than deconstruct poor examples, I have developed the following two-part question to test whether a vision statement is meaningful. (1) Does it evoke a picture of how top management believes the organisation should look, perform, and behave; and (2) does it describe the organisation’s resources and market in an ideal, though realistic world? Developing a commonly agreed and clear vision takes skill, time and imagination, but once established, repays this investment by sending a powerful message of leadership and direction. Fig 1 shows some contrasting (de-identified) examples of vision statements. Fig 1.Poor and better vision statements slightly adapted from real examples Poor To be our customers preferred partner in our chosen business The Council will serve and meet the demands of our community and statutory responsibilities in a planned way. Our success in fulfilling our vision is measured by customer Better We will provide clever engineering solutions to the Australia construction industry through profitable agencies staffed by professionals. Our Vision sees our people engaged with the community to enhance the economic diversity of our region. We promote a vibrant and healthy lifestyle, while preserving its rural character. We are a dynamic leader in the quality food business and go to Page 2 of 5 EE, Leadership Roles in Enterprise Planning ver 1.4 Mar 06 satisfaction, Team Member excellence and happiness, return on capital investment, improvement in the state of the environment, and local and larger community support. extraordinary lengths to satisfy and delight our customers. We continually innovate to raise our retail standards. We create store environments across America that are inviting, fun, unique, informal, educational & meeting places. Our people will receive fair wages and benefits, and job fulfilment. Our business will be profitable, and repay the community for its success. Having crystallised the vision, the next step in Enterprise Planning is to meaningfully describe the intent, or purpose of the business, the principles it espouses, and the value it adds for its customers. This is usually called the Mission Statement. While construction of the mission itself is outside the scope of this paper, the Enterprise Planning group can usefully shape their approach and thinking to the task by asking the following questions. (1) What function does/will the organisation perform for society or the economy, and (2) what is the broad framework that defines how it goes about this task? In answering these questions, my research found that the most effective mission statements described customers and markets, principal products, the operating domain, technologies, and expressed the company’s ambitions for value, profitability, growth, and image. Whether drafting the mission statement for the first time, or updating a previous version, Enterprise Planning teams found that they learned a lot about themselves, and the business, in writing it. But is a Mission Statement mandatory for success? Not necessarily according to a study of 218 Fortune 500 companies6. Of these, 40% said they had no mission statement as such, yet clearly they were successful. However deeper analysis showed that the mean scores of the highest performers did reflect a mission statement containing the attributes and information described above. Certainly in any organisation where Enterprise Planning takes place remotely from those in operational delivery, a clear and thoughtfully crafted mission statement was able to communicate a shared sense of opportunity, direction, and significance. The final task for those charged with Enterprise Planning is to develop the organisation’s broad goals and nearer term objectives. In considering these, the top management team will draw directly from the imagery of the corporate vision, the purpose and direction of the mission statement, as well as data from a business environment surveys, competitor and market analyses, and status reports of financial and other resources. From this rich bed of knowledge, experience, and business factors, top management is able to determine the longer range goals (2-3 years), and interim targets (1 year), that the working Directors and operational/project managers need to inform their part of the planning task. Clearly, the combined job of creating an inspirational vision, a guiding mission statement, and associated defined goals and targets within a brief planning session is no mean feat. My research suggests that, if the Enterprise Planning group bring their experience and talent to achieving just this, then not only is their time well spent, but also where their particular task ends. STRATEGY DEVELOPMENT It is now the turn of the operating managers (e.g. Managing Director, GM’s, Business Unit Managers etc) aided by their specialist staff, to fulfil their role in strategic planning. Armed with the goals and targets crafted during top level Enterprise Planning, the operating/project manager’s job is to create practical strategies to achieve these aims, remembering that strategy development is less about thinking things up, and more about setting things down. Page 3 of 5 EE, Leadership Roles in Enterprise Planning ver 1.4 Mar 06 Assigning operational (or line) managers to this task has two advantages. Firstly, if managers contribute personally to the planning process and realise they have a stake in the plan’s success, they’ll automatically derive a sense of ownership. Secondly, their close and frequent contact with the organisation’s market, customers, production systems and resources makes them ideally placed to develop realistic and deliverable strategies. Business planning author Calingo (1989) reinforces this point by saying “line managers possess strategy relevant information which is not necessarily known by corporate managers”7. Having made the leap in thinking from an organisation-wide Strategic Plan to an Enterprise Plan supported by manager-developed strategies, how might these look in practice? Referring to Fig 2, the strategies can be seen to be drawn from an enterprise objective/target, and relate directly to either a business function or business unit (or some other appropriate internal divisor best suited to the organisation). The key point here is that each strategy is crafted by the team responsible for its delivery, and is one of a suite of strategies that start, finish, pause, overlap, and possibly become revised as time passes, none of which requires a reconvening of the top level leadership group. Thus the Enterprise plan devolves into manageable, owned initiatives and action plans created by the people best informed to do so. Each plan is fleshed out with metrics, resources, milestones, responsibilities and authorities. Fig 2. Chart showing contemporaneous nature of strategies derived from goals & objectives Function or B/Unit Objective Target 2005/06 Finance Operat’ns Marketing Etc. Improve cashflow Or… Service#1 Service#2 Product#3 Start exports to European market Strategies (2-3 years) 2006/07 2007/08 Debtors<$1m CAPOs to lease Creditors=30d M. Research Appoint agent Launch P1&2 SUMMARY & CONCLUSION The term strategic planning is poorly conceptualised and poorly executed in many organisations, often having minimal impact on day-to-day operations or bottom line results. Most organisations (except perhaps the smallest) could benefit from an annual strategic review, in the form of a systematic effort to deal with the inevitability of change and to attempt to envision its own destiny. The point being for the organisation to shape its own future, rather than simply prepare for the future. The method proposed in this paper is to apply the experience and skill of leaders at the enterprise level of planning, leaving the development of related strategies to the working managers best equipped and informed to devise and deploy them. By adopting this subtle, though crucial, difference in approach to long range planning, strategies to meet organisational goals and targets will become more dynamic, sharper, and more personally ‘owned’ within the operating entity. Likewise, the annual Enterprise Planning event will be less tense and stressful, as Directors and top-level leaders focus their minds and energies where they work best – at setting vision, direction and future goals. Page 4 of 5 EE, Leadership Roles in Enterprise Planning ver 1.4 Mar 06 ACKNOWLEDGEMENTS Thanks to Sue Chapman MBA GAICD (Managing Director, NCS International Pty Ltd) for helpful reviews of this manuscript, and to Dietrich Georg (Editor Executive Engineer) and the anonymous reviewers for helpful improvements to this paper. REFERENCES 1. The Oxford English Dictionary 2. The American Heritage® Dictionary of the English Language, 2000 3. On the basis of definition in Merriam-Websters Dictionary of Law (1996) as ‘a purposeful or industrious undertaking (especially one that requires effort or boldness)’ 4. The Boeing Company – Leadership Development Program, course notes, 2005 5. Ashby & Miles (ed). Leaders talk Leadership, Oxford University Press, New York, 2002 6. Pearce J & David F. Academy of Management EXECUTIVE, American Management Association, New York, 1997 7. Calingo. L. Achieving Excellence in Strategic Planning Systems. Article in Advanced Management Journal, Society for Advancement of Management, Vinton, VA 24179, 1989 AUTHOR BIO: Phil Crosby initially trained as an electronics and communications engineer with ICL and British Telecom. He then joined Mt. Newman Mining (WA) prior to operating his own electronics engineering business in Sydney. He sold the company and moved into agribusiness in regional NSW whilst completing a business degree in Armidale. In 1989 Phil returned to Sydney as Director/General Manager of MACE, an environmental instrument manufacturer. In 1994, he joined NATA in the field of technical management standards, rising quickly to become NSW/ACT State Manager, then Operations Manager. In 1997 he jointly managed the transition of NATA’s certification arm into a commercial entity, and in 2004 became Business & Strategy Manager responsible for business development. He personally established international offices in Korea, India, Chile, and Turkey. Phil also led several major studies, including a review of ANSTO production systems, and an environment impact assessment of Australia’s Antarctic stations. During 2005, Phil was an embedded executive in Boeing Aerospace in the role of Manager, Industrial Participation Strategy, and completed Boeing’s Leadership Development Program. He is an Officer Member of the Institute of Engineers, Australia Page 5 of 5