The “Hat Trick”

As a follow on from my last blog, I will deal with each one of the Blockers in the following weeks.

The first blocker, and often the most difficult to control, is the Hat Trick.

One of the greatest difficulties that entrepreneurs, owners or managing directors of companies have is to separate their roles and responsibilities; they wear many hats. These hats include:
• Shareholder (owner)
• Non-Executive Director (superannuation or trust fund)
• Executive Director (of the company)
• Chief Executive Officer/Managing Director (CEO/MD)
• Key executive team member
• Leadership team member
• Workforce (task performance)

Let’s discuss these roles.

Shareholder (owner)
Shareholders are the owners of the companies. They can often misuse their influential and powerful position and assume authority to get their own way. They may also not have clarity in their own objectives. This is a particular problem when the shareholder is also an executive in his or her own organisation. They may have built the company from the ground up and are the entrepreneur or main driving force in the organisation. However, misuse of their ownership status, often to get their own way, can be a complete shut-off for team member engagement. It can also lead to company stagnation when the owner reaches the limit of their capability.

Non-Executive Director
Owners are often non-Executive Directors of one or more companies in a sometimes-complex structure. These non-Executive Directors may have arisen through a recommendation by their external accountant or solicitor. Such entities include superannuation and trust funds. The main drivers for these structures are often tax minimisation and protection of personal assets. Continuous review, reform and change in the tax and company laws can lead to ineffective and costly structures, with the owner of the business being a non-Executive Director in one or more companies in the structure. The role of a non-Executive Director is very different to that of an Executive Director, and lack of understanding can lead to inappropriate behaviour or unrecognised risks.

Executive Director
Any Director of a company has statutory obligations and a duty of care and responsibility to ensure that the company is effectively delivering the shareholders’ expectations. Directors often become involved in management issues, and this can be most confusing for everyone within the organisation.

Key Executive
Key executives are members of the executive team, and are charged with the responsibility of taking the company in the direction of, and towards the achievement of, the goals that have been set in conjunction with the Directors, who act on behalf of the shareholders’ requirements.

Leadership Team
Members of the leadership team may not necessarily be key executives in authority terms, but are vitally important in ensuring that communication is effective within the organisation, and that the workforce is able to move in the right direction. All research and recognised surveys show that the people in the organisation relate most to their immediate team leader; the person to whom they report.

Workforce
The workforce is the people who deliver the products and services to the customer, or manufacture the products and create the services. Essentially, they are the “horse power” of the organisation. Many times I have seen owners being workers and actually doing the jobs that they have employed people to do for them. This is a natural tendency because people are operationally focused. When you become a Key Executive or a Director, you should be spending substantial amounts of time in Strategic Planning and thinking about the future of the organisation, not in looking after yesterday’s problems or doing the work. Easier said than done!

In my next blog I will discuss the next blocker – Strategic, Operational and Financial – the Three Legged Stool.

Why do plans fail to be implemented?

I would like to share with you a brief list of what I believe to be the top reasons for the best laid plans never being effectively implemented:

• The “Hat Trick” — wearing the wrong or inappropriate organisational “hat” for the current occasion
• SOFT (Music) Strategic, Operational and Financial — the three-legged stool; timely and known to all people who need to know them to do their jobs well
• Opportunity Cost of Time — lack of effective prioritising
• No Hi-Fives — lack of focus on the five most important things to do each day, week, month and year
• Focus on the (financial) past
• Wrong products and services
• No team ownership
• W2W2 — the Wrong people, in the Wrong place, at the Wrong time, doing the Wrong thing; we need the Right people, in the Right place, at the Right time, doing the Right thing (R2R2)
• Poor Communication — one of the greatest performance killers in any organisation
• Lack of CASH
• Others specific to the organisation

Remember, a plan without effective implementation is just a plan. Therefore, now that we are organised it is important that we actually move forward. This makes planning a “living” process, not a static one.
I will detail each of these reasons in the coming blogs. Your input and comments are as always very welcome.

A “Living” Process

Planning is too often seen as a one-off exercise. In my experience, the most successful plans are treated as “living” documents, which are used on a regular and frequent basis as a directional guide and performance-tracking device.

Reviewing your Business Strategy

Once your business plan has been created and effectively implemented with commitment from your key people, how do you ensure that the plan remains effective?

The importance of a quarterly review, assessment and re-alignment cannot be overstated. The One Page Business Plan (1PBP®) review should incorporate both the 1PBP® and the Integrated Balanced Scorecard (IBSC™). After or during the review, the plan should then be rolled out for a further five quarterly periods and adjusted to accommodate changes made in any of the key objectives, assumptions or external factors.

Ideally, the web-enabled One Page Planning and Performance System (1PPPS™) is the implementation tool of choice, as it facilitates your business plan to be a truly living process. The use of the 1PPPS™ will save time, increase individual and team accountability, and provide meaningful and current communication between key members of the team.

How are you “living” your plan?

“Whom do you value most within your organisation — your clients or your employees?”

How do you respond to this question? Historical wisdom dictates that clients are more important. You may recall the signs:

Rule #1: The customer is always right

Rule #2: When in doubt, see Rule #1 above

I believe that most companies are beginning to see (and many have already recognised) that their employees are their greatest assets. After all, their thoughts and ideas are what ultimately influence the business decisions.

I have been conducting a survey since the late 1990s that comprises Board members, executive and leadership teams, and employees from several organisation levels with whom I have worked. My question has been, “If you can only choose one, are your clients or employees your company’s most important asset?” In the late 1990s, up to 80% of contributors selected their clients. Since the year 2005, over 80% have favoured their people. What an extraordinary recognition and re-focus in only a few short years!

Too often, people are considered a current and long-term liability on the balance sheet (provisions for annual and sick leave, current and longer-term, redundancy, and so on) and a cost on our profit and loss statement (wages, salaries, superannuation, employee benefits). One day, we will recognise the worth of our employees by finding an acceptable method of recording their value, possibly by including them as current and long-term assets on our balance sheet.

Quality employees obtain quality clients who are profitable and long-term; however, good clients can be driven away by poor employees. We all know the saying “It only takes one bad experience” which a client will typically share with 15 to 20 others for significant damage to be made to our business. Regrettably, a good experience may typically be shared with only one to five others, but this still forms the basis of a sustainable referral business.

Whom do you value as your most important asset?

How much time, energy and effort do you commit to this asset?

Many people spend inordinate amounts of time putting together strategies for the future of their companies. Often, these are complex and difficult to follow and understand. Also, they may not include the key executive members of the company who are expected to implement these strategies. This is a recipe for failure, as nobody has any ownership of the process, except the entrepreneur, owner or Managing Director of the organisation.

Some reasons for failure to act

Plans fail to be implemented for a wide range of reasons. Grounds for lack of implementation and follow-through can include:
· Confusion between the duties and responsibilities of owners, directors, executives and workers
· No Hi-Fives (prioritization)
· Too much focus on the financial past
· Having the wrong people, in the wrong place, at the wrong time, doing the wrong thing (W2W2)
· Poor communication
· Wrong products and services
· Lack of cash

Focus, Clarity, Brevity, Passion

The intention of this blog and its primary objective is to provide substantial guidance to the implementation of Strategic Business Plans that have been developed using the 1PBP® (One Page Business Plan) process. The focus of this detailed program is on a brief, practical and effective process, providing measurable outcomes for its users. This process is also the essence and foundation on which both the 1PBP® and Implementing the 1PBP® books are built.

Pareto’s Principle — the 80/20 Rule (putting 20% of the effort in to getting 80% of the results) — and focusing on the five most important things are the foundations of the program. The four key words are:
• Focus
• Clarity
• Brevity
• Passion

I hope this blog adds further value to you, and enables you to successfully implement Strategic Plans that will get you from “Where you are now” to “Where you want to be”. A note of caution — persistence pays! Unless you set an example from the top, and your executive and leadership teams engage with and use the process, your chances of success are substantially reduced. Good luck and good fortune. Please give me feedback on how you progress. I always welcome communication with those who are striving to achieve their personal and business visions.

Monitoring – the Essential Element

A plan without effective implementation is just a plan!

There are many ways of tracking the progress of the implementation of a strategic or tactical plan. Most tracking processes are historically based and therefore the information is not as current as it could be. An online system was developed by The One Page Business Plan Company, based in San Francisco, California, nearly a decade ago.  This system is known as the The One Page Planning and Performance System (1PPPS™). 

The 1PPPS™.

This is a breakthrough business application, which takes the best of the One Page Business Plan (1PBP®) process to the web in order to create a powerful Strategic Planning and performance management system. With this system, you can navigate to any plan with the click-through organisation chart. The 1PPPS™ is a highly reliable and proven web-enabled implementation tool that replaces many current paper-based reporting and communication systems. It gives the responsibility for keeping it current to the owner of each element of the implementation, and progress can be reviewed, but not changed, by all athorised users of the program.

System Benefits

All standard company reporting systems, with the exception of standard financial reporting packages (balance sheet, profit and loss, cash flow) and detail project management programs, can be replaced using the 1PPPS™. This leads to up-to-date information being available to all team members who have, and manage, their performance and team commitments through a password protected “seat” at the 1PPPS™ team “table” online. This is accessible 24/7 through a simple and secure web login, and can be viewed by any authorised team member simultaneously with other team members, from any computer, anywhere, at any time. Reduction in meeting preparation time, team travel and engagement time, administration costs and consumables, can be many times the investment in the 1PPPS™ system. This can be readily calculated. Both individual and team performance improves, information is available in real time, and implementation is substantially enhanced.

This is not a software tool — it is a business mentoring and performance enhancing implementation tool.

Each 1PBP® has five components that work together to describe the profit centre, department, project or program being built, why it is being built, how it will be built and the specific measurable results that will be accomplished (a consolidation plan) via the:

• Vision

• Key Strategic Objectives — also known as Key Objective Statements (KOS)

or Key Strategic Objectives (KSO)

• Key Performance Indicators — numerical (KPIs)

• Key Performance Indicators — project (KPIs)

Vision

This is the Strategic Intent statement for the organisation.

“Gold” case study Vision: “Your trusted partner of choice in financial investment management.”

Values

As established with your leadership team.

“Gold” case study Core Values:

• Professionalism

• Reputation

• Creative Innovation

• People

• Partnership

Key Strategic Objectives

“Gold” case study Key Strategic Objectives:

• Growth of profitable business sectors

• Optimise product and service portfolios to achieve market penetration

• Client retention and grow out portfolios market sector

• Become a value-driven organisation

• Create a people value-driven organisation

• Profiling — the brand

Key Performance Indicators

Every Key Performance Indicator (KPI) has its own Performance Scorecard. Performance data is linked directly to the written KPI. One Page Business Plans may have up to nine KPIs (numerical) and each KPI will have a one-page Performance Scorecard. Each one-page Performance Scorecard shows actual, budget, forecast and last year actual, both graphically and quantitatively. This may be customised in many ways, and is often “last year”, “this year forecast incorporating actual-to-date”, or “budget for this year and next year”. This provides a three-year rolling performance view.

Business Project Reports

One-page business project reports are linked directly to each KPI (project). One Page Business Plans may have up to nine KPIs (project) and each KPI will have a progress report, which allows a manager to reflect upon the percentage completion of their project, and write a concise progress report using key words and short phrases. At the start of each project, it is simple to load in four to 10 project milestones. These are critical path indicators.

Status Tracking

The system tracks the status and version of every manager’s plan using the simple “colour” system — for example, approved plans are green, drafts are yellow and un-posted plans are red, etc. The status of every plan is obvious at a glance.

The 1PPPS™ provides a straighter path to profitability:

• Plans and resources are aligned more quickly

• Critical initiatives are implemented on time

• Development of key managers is accelerated

• Peer pressure is a powerful incentive for team members to achieve the commitments they have been given and accepted

• Bottom line results are achieved with greater predictability

This program is fully proven and is currently being used by over 3,000 people responsible for implementing their part of their appropriate plan.

For an online tour visit   http://www.brianbirley.com/page/1237519

I believe it is essential to take into account the fact that businesses are not a stop-start, 12-month process.

One of the greatest blockers to Sustainable Competitive Advantage is the concept of “the budget”. The budget was introduced to businesses and personal planning as a template to structure the way forward, and to measure progress against that structure.

Traditional practice has us choose a 12-month accounting period. In the southern hemisphere, our entire business horizon runs typically from 1 July this year to 30 June next year. We’re all aware that businesses do not operate this way, so why do we plan accordingly?

When the budget is prepared, it comprises nothing more than 365 “best guesses” (days) rolled up into 12 “combined guesses” (months)! Worse still, the budget process is often a protracted and high-resource commitment that will ultimately change throughout the period it is being prepared, and detracts from focusing on the daily activities of the business.  And yet, many businesses and individuals rely on this fixed “best guess” to guide their activities for the next 12-months. This surely can’t make any sense from a business perspective.

To over this limitation and to recognise the reality that businesses are a continuum, I have introduced five periods of three months, not four as in the traditional accounting concept.  In addition, there is a three-year set of Targets.  This means that at any time we have a minimum short-term horizon of 12-months (four quarterly periods) and a running average of 15-months (five quarterly periods), keeping an eye on the next 24 to 36-months.  In addition, I recommend a 24 to 30-month “rolling program”. This consists of the past 12-months actual and the next 12 to 15-months forecast, and is updated on a monthly basis.

A word of warning - prepare for resistance from the financial community, particularly from your trained in-house financial specialists!

Part B of this blog will explain the 24-month rolling cycle, its benefits to you and your company, and how to overcome resistance. This will enable us to manage our businesses as an ongoing process, without the restriction of fluctuating time horizons or medium-term best guesses.

The management process should not be considered either “top-down” or “bottom-up”. Both elements are important, but a well executed plan will only be fully effective if the “horizontal” or “peer” structure, and interaction and co-operation between peers, is effective.  This interaction prevents “silos” of activity developing.  These silos are often well meant by the employee concerned, but because they are often not fully focused on achieving the strategic objectives, they can be a waste of resource and a source of frustration for the employees involved in all parts of a company or organisation…

The Strategic Planning Process is primarily top-down. The Board of a company has the primary responsibility to develop strategies to deliver shareholder objectives. These strategies are then passed to the executive management team (via the CEO or Managing Director), who then formulate tactics, programs and actions to deliver these strategies.

Equally, there is an upward process that should overlay the business plan for each company, business unit or team in a company, over the strategic objectives delivery program. This is what I call the “budget keep program” – the retention of activities and programs that have been and are working, and are reasonable expected to keep working for the company in the next year or more.

An often overlooked process is horizontal alignment - how do peer team members, business units or group companies work together most effectively? An effective way of capturing this element is to transparently roll out the One Page Business Plan (1PBP®).  I do this through my unique version of the Integrated Balanced Scorecard (IBSC™).

If the organisation structure is a mismatch to the desired Vision and Key Strategic Objectives this can be a severe blocker to implementation. It is important not to make the mistake of trying to shoehorn the strategy into an existing organization structure, and a re-think is often required.

Responsibilities have to be assigned and agreed to; they are a form of ownership and accountability. In order to achieve this, the most senior people in the organisation must not only believe in the process, but must also promote it and train their teams to use it. This will ensure that everybody within the organisation is familiar with the simplicity and effectiveness of the process. This leads to the linking of the 1PBP® strategic business objectives with Human Capital Management, through the Job Outcome Definition (JOD™) process. This process will give a far higher probability of successfully achieving the desired strategic objectives than an organization left mainly to it’s own under guided devices.

Contributed by Paul Ronis
Arguing about performance-based pay is running neck-and-neck with grousing about bonuses - whether they be too big or too small - as popular topics this holiday season. In their upcoming paper, “Give & Take: Incentive Framing in Compensation Contract,” Judi McLean Parks (Washington University,  St. Louis) and James W. Hesford (Cornell University) test out their hunch that certain compensation packages may be linked to rising fraud, losses from which are currently estimated by the Association of Certified Fraud Examiners to total something like $994 billion annually.

Since compensation packages are considered a central tool in managerial control systems, managerial accounting research has long taken an interest in how compensation packages influence behavior. A primary foundation of such research is agency theory, a model that assumes agent and principal are self-interested; but in divergent goals, that agents will shirk, “if necessary, [with] guile and deceit,” and that principals will attempt to control agents through monitoring or by aligning the interest of the agents with their own. In theory, performance-based compensation systems are one way to accomplish the latter. This may have worked well at GM in the 1980s when line-workers were put on performance-based pay, so that when GM did well, they did well. But when the agents themselves are reporting the results, such contingency packages may instead encourage financial mis-management and deceit.

In an effort to supplement empirical studies of performance-based pay and to include penalty-contingencies, which are actually quite common, McLean Parks and Hesford undertook a controlled study. Rather than the obvious choice of rats as participants, the authors brought in a random sample of students, paying them for solving anagrams under three compensation packages: flat salary, performance-based bonus and performance-based penalty. Each student was given a package with instructions, a “high-quality attractive pen” (keep your eye on these) and self-evaluation forms. Once they turned in the self-scored performance sheets, they threw away their actual work, allowing plenty of opportunity for fraud.

Basic results: those receiving flat salaries were the most honest in their reporting, those on bonus-contingent schedules were less honest, and those on penalty-contingent schedules were the least honest. Even worse, when no ethics statement was signed, those on penalty-contingent pay were three times as likely as those on salary, and twice as likely as those on bonus-contingent pay, to steal those attractive pens.

The authors unearthed a concern about the use of ethics statements, such as the attestations all CEOs must sign under Sarbanes/Oxley. Although, overall, 46% of those who did not sign such statements stole their pens and only 29% of those who did sign statements did not “misappropriate assets,” the details are more complicated. Those facing performance-based penalties were more likely to misrepresent their performance if they had signed such statements than if they had not. The authors suspect that the existence of the statements themselves suggested to the agents that the principals were weak on apprehending fraud. Why else would they be required to sign such statements?

McLean Parks sums up: “For years we have touted the basic mantra of pay for performance because that’s the way you get the best performance. Maybe you get the best performance reported, but what’s the underlying performance?”

Not really in the holiday spirit, but you can read the full study, still under review, here:

https://www.business.utah.edu/humis/docs/organization

Source – link.. http://tlrii.typepad.com/

CHANGE THE RULES: PARADIGM SHIFTS

Paradigm, a term popularised by Joel Barker in the early 1990s, is defined by him as
“a set of rules and regulations (written or unwritten) that does two things:
establishes or defines boundaries; and tells you how to behave inside the boundaries in order to be successful.”

The key to anticipatory management is to watch for shifts in the established set of rules. This shift is termed a paradigm shift, which “occurs when there is a change to a new game, a new set of rules. Watch for people messing with the rules, because that is the earliest sign of significant change. When the rules change, the whole world can change.” (1992 “Paradigms: The Business of Discovering the Future” Joel Barker – Harper Business, ISBN 0-88730-647-0)

Joel Barker attempts to explain the impact of radical and dramatic change. He has used his new measures of management and managerial skills as “an explanation for the change required in management thinking” to be able to survive, and thrive, in a world of accelerating and increasingly dramatic change.

I shared with you earlier that I used to be a “problem-solving” manager, and I used to come into work and “react” all the time. Where we have to be now is to anticipate, identify opportunities, and act, not react. That is where the strategy comes in. That is why we have to project ourselves into the future – Strategy is future think.

In the food industry, a quality system called an HACCP (Hazard Analysis and Critical Control Point) is run – it looks at the risks. The basis of the whole system is to try to anticipate the risks that you are faced with and try to eliminate or minimise those risks. That is the whole basis of the quality system. Shouldn’t we try and anticipate what can possibly change, as an opportunity or a threat, and how we can maximise the opportunities and minimise the threats?

Bill Gates, in his book “Business at the speed of thought” published in 1999, said that he was preparing to replace all the Microsoft main programs by 2010 before someone did it for him.

What do you have to do to stay ahead of your competitors and to take advantage of the major shifts in business models and technologies that are shaping the first decade of the 21st Century?