All businesses need to establish a plan because they need to determine what they will do before they actually do it. Businesses need a plan so that they have the opportunity to act, instead of being forced to react.
Planning need not be a difficult or complicated process if you break it down into two basic components. The first component is the end result you wish to achieve. This end result can be called an objective, goal, outcome or conclusion. The second component is the method for achieving the end result. This method can be called a strategy, tactic, activity or process. In this article, I will use the terms objective and strategy and describe what they are and how they can be used in the planning process.
An objective must be measurable, specific with respect to time, challenging but attainable, and preferably written.
To be useful, an objective must be measurable. Examples of measurable objectives are: increase sales by 15 percent; reduce scrap by $1,000 per month; and reduce lost-time accidents by 90 percent. The numbers are clear and can be reviewed and evaluated at any time.
There must be closure, or a completion date for any objective. To say we will increase sales by 15 percent without a timeframe would indicate that the objective is open-ended. Eventually you might increase sales by 15 percent, but this could be so far into the future as to be almost meaningless. The objective would be more meaningful by inserting a specific timeframe as follows: Increase sales by 15 percent for the current fiscal year.
The objective must be challenging but attainable. People may not try to achieve an objective if it is too difficult. A challenging objective may be to achieve ISO 9002 registration in 14 months, whereas an unreasonable objective may be to achieve ISO 9002 registration within two months. An objective of achieving ISO 9002 registration in five years may not create any motivation or sense of urgency within the organization.
Put objectives on paper. This is just a matter of policy. The best objectives, whether they are for individuals, departments, or entire companies, are best written and shared with everyone having a stake in the outcome.
Once you have developed a measurable, time focused, challenging, written objective, it is time to determine a strategy, or series of strategies, for achieving the objective. Strategies typically describe: which activities will be performed; when activities will be performed; who is responsible for performing the activities; and where activities should be performed.
To meet the objective of increasing sales by 15 percent for the current fiscal year, the "which activities" part of the strategy could be: add three sales reps to the northeast region; increase advertising in trade journals; reduce product prices 10 percent; roll out five new products; and find 25 new customers.
Using the same sales increase objective, we could address the "when" aspect as follows: add three sales reps to the northeast region within the next month; increase advertising in trade journals starting in two months; and reduce product prices 10 percent at the end of the second fiscal quarter.
For the objective of achieving ISO 9002 registration within 14 months, responsibility (the "who" aspect) for this could be assigned to either an individual or group as follows: The responsibility for developing the ISO 9002 work plan will rest with the Director of Quality Assurance. The ISO 9002 implementation team will be responsible for assuring all pre-defined tasks are completed on schedule. The operations manager will be responsible for the timely completion of all ISO 9002 documentation. With clearly defined responsibilities, strategies have a better chance for success.
For the objective of reducing scrap by $1,000 per month, the "where" could be addressed as follows: Statistical process control will be performed on every machine by each operator running that machine. Scrap levels will be posted in every department, and action plans will be developed by each department for scrap reduction exceeding $300 per month.
Setting objectives and developing strategies to achieve these objectives are important aspects of the planning process. Understanding how to set objectives and develop supporting strategies will enable you to plan more effectively.