Posts Tagged ‘product_definition’
Strategy and Goal Setting By Function
Sunday, January 17th, 2010Part Three of a Five-Part Series by ActSeed’s Dan Jacobson
In my previous article I highlighted the importance of a structured planning process. This article includes tips on the mechanics for creating strategy and setting goals by business function. This exercise will create the level of detail and consensus required for effective operational and financial modeling.
Function planning has traditionally taken the form of bottoms-up activity-based modeling. The premise was that a set of operational and financial goal were provided to a functional manager, the manager identified general resource requirements (people, equipment, infrastructure, capital, and technology) to meet the unit output and cost goals. By setting the fixed and variable costs of each requirement, the manager could produce an operational model. This model could then be tweaked to reflect revisions in goals and cost assumptions.
The traditional approach is still relevant, but the new options for technology and delivery chain procurement and management require a more dynamic and creative approach. Recent history is full of examples where someone in an industry changed the paradigm by modifying their production, sales, or delivery chain. Often turning on a dime. Are the shorter business cycles and plethora of options a reason not to plan? Quite on the contrary, it is a reason to plan creatively.
Too often people get confused when thinking about the relationship between goals, objectives, and strategies. I’d like to keep it simple by using an analogy.
Get your leadership team into the mindset of developing a battle plan. You’ve already begun by setting some primary direction for your company and products. Your next step is to operationalize this direction by major company function. This will allow you to make actionable plans that have associated activities, costs, and timelines. The example provided in the graphic “Functional Goal Setting” first addresses the difference between goals, objectives, and strategies. GOALS asks the question “where are we headed?”. OBJECTIVES asks the question “how can we put some numbers to this?”. STRATEGY asks the question “what do we need to do?”. After addressing goals, objectives, and strategy, your team’s next challenge should be to consider alternate approaches to execute, monitor, and adjust. LEVERAGE asks the question “how can we take advantage of internal strengths and external options to be better, faster, or cheaper?”. RISK asks the question “what can we do to improve the likelihood of reaching our goals?”. For each major functional goal you will likely have subsets of objectives, strategies, leverage options, and associated risks. For example, you may choose to outsource a set of functions but you may at the same time be giving up some control over execution. Ultimately the greatest benefit will come with your leadership group’s spirited debate on how they will work together to execute and fine tune, within their spheres of control, to achieve your corporate level imperatives.
Using the battle plan analogy, think of the Army, Navy, Coast Guard, Marines, and Homeland Security executing a coordinated and responsive field campaign. Each has resources and executable orders. They may also be working with NATO forces (your channel and supply-execution chain partners). Don’t hesitate getting your team leads into discussions with these third parties (assuming you have a reasonable level of trust and non-disclosure in place). They may provide you with options or examples that your own group may not have considered. Also, their ability to coordinate and work with you will be enhanced if they understand your execution model. Each party need to go into battle expecting that their best, most detailed plans will be refined and adjusted. But their shared understanding of the end game and functional game plans can only make these changes more efficient. How many business school case studies have been based on a company with a great product idea and no ability to execute? Was it because they weren’t smart enough or didn’t understand their market? Sometimes, but not often. Typically the problems compound from day one due to the lack of a coordinated execution plan. What do investors look for now more than ever? Ideas and talent, as well as a thought-through, creative, and achievable execution plan. Now I’ll get off my soap box.
Finally, don’t provide some vague instructions to your team and expect them to come back with high quality functional plans. Spend some time and provide them with a format of the topics you’d like them to address, a common deliverables format, and some examples for discussion. It may also be helpful to provide some basic and general assumptions – such as the rate to be used for labor overhead or the costs for contracted personnel or services. Don’t prematurely ask your team to develop a detailed financial model. Have them focus on outcomes, activities, cost drivers, and alternatives.
In the graphic I’ve provided a few simple examples. Make sure your functional leads have a clear understanding of the deliverable. Assure them that you want them to be creative, but at the same time not waste time on esoteric analysis. Your team will likely find this exercise to be a bit tedious at first, but will find it much easier and efficient if they work through an example and finally “get in the groove” to start populating the deliverable. This exercise is also a great way to gauge the facilitation and analytic skills of your team members. Functional planning and coordination can be an important component of your performance management process.
In my next article I’ll provide some perspective on translating your planning deliverables into refined financial and metrics models.
Organizing the Process and Assessing Your Environment
Monday, December 7th, 2009Part Two of a Five-Part Series by ActSeed’s Dan Jacobson
In my previous article I highlighted the importance of understanding the needs and interests of your audience targets. The next step is putting a process in place to develop and iterate your plan, including assessment of your business and operating environment.
Efficiency and integration of ideas should be your major goals in developing a business plan. Each of your key team members, including yourself, have other responsibilities, so a clear set of deliverables, activities, and timeline will minimize distractions and delays. There are three primary areas of focus as you organize the process and assess your environment:
- The first is definition of the product/service concept, target market, and related technical development.
- The second is the specification of an execution and delivery model.
- The third is the iteration and integration of functional execution plans for translation into a financial model.
Make an honest assessment of your staff and those directly involved in your enterprise. Very few early stage companies can claim (or afford) to have strong representation across all aspects of their venture. Yet, strong functional representation and relevant experience (particularly venture and emerging company experience) is critical in developing a solid, integrated plan. For this reason, you should begin early to create and manage an informal, yet involved “Advisory Board”. You can think of it as a “Delphi” group providing input and perhaps even completing deliverables for your plan. Members can also provide “eyes and ears” on potential competitors and partners, and also facilitate introductions to partners, vendors, and investors. Members may later serve in a more formal capacity on a Board of Directors. A workable number of advisors is typically three to seven people, ideally representing expertise in the spectrum of your market, product,/service, funding sources, and execution model. Advisors are often given a nominal stock position or options, depending on the level of their involvement. The purpose of this group is to provide coverage where you need it, alternatives, and also honest, objective feedback on the viability of product/service and execution model.
The following two graphics together describe an iterative process for business planning.
- Iterative Business Planning Process
The purpose of the Initial Definitional and Planning stage is to develop a rough-cut, but integrated outline of your key business dimensions. In this example, I’ve grouped them into Product/Service/Market, Execution, and Administration. No effective plan can be static, so I recommend three planning horizons, including Development, Introduction, and Expansion. You can call them anything you want, as long as you express them as assumed timelines for developing your product/service, initially introducing it to the market, and then expanding your operations. The key questions posed for each dimension are fundamental.
In the Development horizon key questions include: What is the product/service concept, requirements to develop, and target markets? What market will we bring this to, and how will we sell it? What basic business and compliance functions do we need, and what are the implications for staffing or professional services?
In the Introduction horizon key questions include: Are there opportunities to phase the development and introduction of the product/service, both\for financial and time to market reasons? How we organize and operate distribution and provide the required forms of support, including technical and customer service? How will we obtain the human resources and infrastructure required to support product/service introduction?
Finally, in the Expansion horizon, key questions include: Which enhancements or extensions of the product/service will allow us to capitalize on the market and financial opportunity? How will we expand our market and channel operations to efficiently meet sales and operational goals? What insight and infrastructure do we need to efficiently manage our enterprise?
You may not have direct team coverage for each of the Planning Leads identified in the graphic. This is where your Advisory Board can be valuable. Get their involvement to cover the identified disciplines where you lack coverage or strength. Your Initial Definition and Planning Iteration should generate an outline view of your business model and plan, identify major issues and risks, key assumptions, and general enterprise requirements as you move through the planning horizons. The rough-cut initial iteration should provide enough detail to support a subsequent, function-based planning iteration.
The purpose of the Subsequent, Integrated Planning Iterations is to develop more detail in functional sub-plans and integrate these sub-plans with regard to the operational intelligence you’ll need to operate efficiently and effectively. The graphic shows a typical set of linear operational functions – yours may be somewhat different. Think of this as breaking your Initial and Definition and Planning function and team into sub-groups focused on relatively discreet functional components. Using the rough-cut plan as a starting point, these sub-teams should be tasked with developing the next level of plan details. Avoid having your sub-teams write any lengthy narrative about this next level. Instead, their efforts will be more efficient and consistent if you provide them with an outline of objectives, topics, and a simplified, consistent reporting format. Planning Leads should obviously represent your grouping of operational functions.
Sub-teams can begin a new planning cycle by developing the next level of detail for their function. After assigned tasks are completed, the next step is to integrate the sub-team deliverables across functions. In the graphic I show this as a non-linear Operational Intelligence process, focused on level-setting the plans and identifying the information needed to operate as an integrated enterprise. A good approach to integration is a structured, facilitated session represented by each of the Planning Leads. The session should be lead by a good facilitator who can provide structure on the objectives, structure, and deliverables for the facilitated session. Without this structure your session may go off on tangents or levels of detail that will keep you from achieving closure of the planning cycle. There are many ways to organize the session; however, one of the best is to have each Planning Lead present their sub-group deliverables while the other Planning Leads make notes on assumptions, issues, and dependencies. Then, in a second round of discussion each of the Planning Leads can field questions from each of the other Planning Leads to refine and level-set assumptions and dependencies of each sub-team deliverable. In a third round, the discussion should address the information and systems needed to operate the integrated enterprise. A successful integration session should generate the target level of planning detail. If not, a second cycle may be scheduled to drive to the next level. It is the responsibility of the top management team to specify the planning horizon, level of target detail, and timeline for each planning cycle.
The structured, disciplined approach I’ve described may sound a bit onerous, but it can be scaled to any situation. The benefits you’ll derive from structure and discipline include better and more actionable results, a faster timeline, and a shared level of understanding and buy-in.
More details on functional-level strategy, goals, and the role of the financial model will be included in my next article.
