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Leadership: Defining your vision

February 7, 2012 in Leadership, Management, Strategy, Operations with Comments Off

Leaders must set a direction, then concentrate the attentions of everyone on it.

Influential leadership author, Warren Bennis, asserts that it is crucial for business leaders to set a direction, and “concentrate the attention of everyone in the organisation on it”. This involves defining a vision for the future of your business that is clear and compelling enough for your people to follow.

Defining your vision

Establishing a clear company vision helps to ensure your business goes in the direction you want it to. It gives focus to management, employees, suppliers, collaborators, and even customers. In essence, it defines a roadmap for where your business and its people are heading. So how can you begin to define your vision?

Strong awareness helps. It pays to know what is going on inside and outside of your organisation, and have access to strong information and intelligence. This means using management, employees and other sources to inform and guide your thinking. Such awareness allows you to make well-judged, forward-thinking decisions. But while others can inform and guide, they should not direct or dictate your vision. As a leader it is your job to look into the unknown and set a direction for the future as you see it.

Upon sound intelligence you can build an educated view of the future. According to Bennis, a vision needs to provide people with a “bridge to the future”. In the first instance this means defining where you want to be one, three, five, or ten years from now. From these points, leaders must ‘reverse engineer’ to provide specific, practical and achievable plans which detail the key steps required to realise the vision. Sometimes referred to as ‘futurecasting’, the process of visualising and road-mapping the future is an important leadership role.

Part story, part plan 

Bennis stresses the importance of “giving meaning” to a vision “through communication”. BusinessWeek adds that there should be four components to a vision: “A compelling story, an image, it must be achievable, and it has to be forward-looking.” A vision could be described as part story, part plan. The story must be clear, compelling and easy to communicate, while the plan provides the specifics required to make it happen.

Communication might begin with impassioned speeches, but be sure to follow with practical steps which aim to turn vision into reality; such as building specific goals into management, employee or supplier responsibilities, or conducting regular management meetings and monitoring to ensure your vision is rigorously pursued. More generally, look for opportunities to constantly ‘give meaning’ to your vision through strong communication and management. Tell your story of the future, then inspire, compel and enable others to follow your lead.

Improving business decisions

February 7, 2012 in Leadership, Management, Strategy, Operations with Comments Off

Interesting insights from McKinsey and Harvard Business Review

McKinsey & Company share interesting insights on strategic decision-making in interviews with Martin Sorrell, chief executive at advertising firm WPP, Randy Komisar, partner at investment firm Kleiner Perkins Caufield & Byers, and former Xerox chairman Anne Mulcahy.

Decision-making should be quick, flexible and informal, says Sorrell. “This is not to say the process shouldn’t be rigorous: run the analyses, suck up all the data, and include some formal processes as well”. “The only way to avoid making mistakes is to avoid making decisions”, adds Sorrell; “Instead, learn from mistakes and listen to feedback.”

Komisar suggests creating a balance sheet, “where everybody around the table is asked to list points on both sides”. Rather than giving judgements, contributors first outline the good and the bad points relating to a decision. Once done, participants share their opinions and discuss the decision based on objective insights and personal judgements. “By assembling everyone’s insights rather than their conclusions, the discussion can focus on the biases and assumptions that lead to the opinions.” Komisar adds: “Listen to the little voice… It’s great to see a leader who will echo the little voice in the back of the room that has a different point of view – and thereby change the complexion of the discussion”.

“You need internal critics”, says Mulcahy, “who have the courage to give you that feedback”. Timeliness is also important: “Decisions have shelf lives, so you really need to put tight timeframes on your process.”

In an article for Harvard Business Review, Tom Davenport explains that animation studio Pixar conduct a ‘postmortem’ on major aspects of a project, where team members are asked to present five things they would and would not do again. Postmortems weed out problems, says Davenport, providing crucial feedback which helps to learn from mistakes when making future decisions.

Instinct is important, “but only when four tests are met”, says McKinsey. The familiarity test asks whether we have experience in similar situations, because: “If we have plenty of appropriate memories to scan, our judgment is likely to be sound.” The feedback test questions the availability of reliable feedback in past situations, and whether the right lessons were learnt. The measured-emotions test asks if a decision evokes highly charged emotions which can unbalance judgement. And the independence test asks if we are “likely to be influenced by any inappropriate personal interests or attachments?”. “If a situation fails even one of these four tests, we need to strengthen the decision process”, argues McKinsey.

Turn insights into better decisions

According to these insights, decision-making should be quick, flexible and informal (to avoid missing opportunities), but also rigorous and process-driven. The process should include analysis of relevant data, pros and cons, personal opinions, judgements, instincts, and past experiences such as feedback and lessons learnt. Where no relevant experience exists, or where instincts or judgements are weakened by bias, charged emotions or personal interests, further analysis must be done to strengthen the process and avoid bad decisions. Listening to the ‘little voice’ and ‘internal critics’ could provide the necessary challenge which further tests the quality of decisions.

These insights could be used to create simple decision-making tools, such as Komisar’s balance sheet or McKinsey’s four tests. So why not take a few moments to jot down your own ideas for a quick-but-rigourous decision-making process to suit your business and management team?

Top tips for a better business plan

February 7, 2012 in Leadership, Management, Strategy, Operations, Tips with Comments Off

Do a lot or do a little

Sometimes writing a business plan is a task confined to the bottom of an in-tray or dismissed entirely as an arduous chore. But remember – a business plan can be as long and detailed or as short and snappy as you like. And because your business plan should ideally be a dynamic, working document, you can add to it as you go. Those that appreciate the virtues of writing a business plan may argue that the more you put in the more you get out. But crucially, it’s important to realise that at the very least, a little planning is better than no planning at all.

Write for your audience

If you are preparing a business plan to attract interest from potential stakeholders,  such as investors, banks or partners, looking at things from your audience’s perspective helps you decide what pertinent information to include. Investors will expect to see detailed financial forecasts and growth plans illustrating your suitability for investment. If your audience is yourself, in that you are preparing a business plan for your own day-to-day use, you might choose to focus more closely on other areas such as detailed operational or strategic plans.

The art of the start

If your business plan fails to interest and engage from the outset your audience are likely to switch off. The ‘executive summary’ is positioned at the start of a business plan, acting as a synopsis of key messages. It should inspire readers to read on, or alternatively – if your business plan is for internal use – it could serve as a handy reference point or motivational pick-you-up on a bad day.

Focus on opportunities and strengths

Your business plan is your message to potential stakeholders – and yourself – that your business has potential. An emphasis on identified opportunities and strengths helps reinforce your business’s key success factors. But be realistic. If you make financial forecasts based on outlandish evaluations of your potential, you might run into problems later on.

Think strategically

Objectives are best pursued with sound strategies. Your business plan is an opportunity to flesh out strategies capable of delivering your aims. Thinking strategically makes your business plan more than just the necessary paperwork to raise finance or attract investors. As a working document, your business plan can be a truly functional resource to steer your business in the right direction.

Know your market

Your marketplace has the potential to influence your objectives and strategies, dilute your strengths, or impact your finances. It therefore follows that fully understanding your marketplace is vital to future planning.

Highlight key people 

Investors often buy into people, not just businesses, so emphasising the strengths of your key personnel is important if you are looking to raise finance. If you are preparing a business plan for internal use, the act of writing down the strengths and core responsibilities of key staff could be a useful exercise, if only to confirm that your people’s skills are fully utilised.

Number crunch

Numbers are important because, ultimately, your business’s potential is only as strong as your financial plan. Realising your future objectives may require capital investment or adequate cash flow, and your potential profitability will be high on the list of questions from an investor’s perspective.

Keep structured

A sensible structure helps you compile, write and use a business plan effectively. Potential investors and stakeholders will expect to see information laid out in a logical and easily navigable way. Structuring your plan may help you write and use it too. For example, you could divvy up different sections to be managed by different people (based on their knowledge and strengths), bringing plans together bit by bit. Visit the Business Link website for links to examples of sample business plans that follow typical structures.

Keep it up

Plans are made for doing, so it’s important to revisit your business plan regularly, if only to make sure you are achieving what you set out to. If your plans turn out to be unrealistic, set new goals and evaluate why things didn’t go to plan. There may be reasons to explain differences between your plan and reality, such as a shift in strategic direction or a downturn in market conditions, but consciously making the comparison helps you differentiate between an intentional change and a loss of focus or direction.

What’s your problem?

February 7, 2012 in Creativity, Innovation, Leadership, Management, Personal Development, Strategy, Operations with Comments Off

What problems exist in your own working life? What problems face your business or customers? What’s stopping you or your business from being more effective, productive and successful?

Proactively searching for problems can create opportunities to improve yourself or your business.

But often, people don’t like to admit they have a problem. So in a personal context, simply pausing to ask and honestly answer the question could be half the battle. What’s your problem? The answers may be obvious – sources of frustration you encounter on a daily basis. Or you may need to dig deeper, by systematically reviewing your working life and exposing problems, or asking others for feedback on how aspects of your job role or behaviour can create problems.

At times you may unwittingly deflect the responsibility for problems onto others. Objectivity is therefore important. Be open and honest when considering the root causes of problems. And whoever is to blame, remain positive and remember that a problem identified equals an opportunity to improve.

The same focus on openness and seeing problems as opportunities can be important in an organisational context, where a team rather than individual effort can more effectively highlight problems. Managers often encourage a proactive approach to problem solving, saying: “Don’t bring me problems – bring me solutions”. But an HBR article suggests this approach could result in problems being overlooked, because some problems – particularly the biggest ones – may not have obvious or easy solutions.

HBR suggests that a “culture of improvement” should be fostered, which “makes it safe” to bring up problems. One example of which can be seen on Toyota’s assembly lines: workers are instructed to pull a cord when they see a problem, which summons a manager to look into the problem immediately. Such an approach can be easily extended beyond the assembly line: in any organisational context, businesses can benefit from encouraging employees to find and expose problems.

A collaborative approach may also be important when identifying problems that customers face. For instance, customer facing employees may have the best insights into customer problems, issues or challenges. By working together, problems can be highlighted, from the bottom up, and given the management attention and business resources they need to be solved.

The ten-minute business plan

February 7, 2012 in Leadership, Management, Strategy, Operations with Comments Off

If you’re new to business planning, it’s a painless start. If you already have a plan, ten minutes might be all you need to reaffirm past thinking or highlight areas for review. Either way, it must be worth ten minutes. Right?

Before you begin – a few dos and don’ts

  • Do decide who your audience is. Are you planning for internal strategic use, or to raise finance?
  • Do grab past financial figures and future forecasts if you have them.
  • Do get key staff involved if you want, and make it a practical team exercise.
  • Don’t look at your old business plan. Approach this with a fresh head.
  • Don’t worry about missing bits out. You can fill in the gaps later.

Your ten minutes start now…

Spend two minutes making notes on each of the following points. If you like, have a break after each one to collect your thoughts on the next.

1. Your opportunity

Describe what your business does and why. Write down what makes your business unique, and why this translates into an opportunity. Define your market potential and the value you bring to customers. Express a vision for the future of your business.

2. Your objectives

List your key objectives, that are specific, measurable, achievable, realistic, and time-based. Exactly what do you want to achieve, and by when? Where should your business be in 10/5/3/1 years time? What are your key aims and measures of success?

3. Your strengths and weaknesses

Strength is good, but weakness turned into strength is even better. First list your strengths; the things you are really good at, the areas you are the most competitive. Then outline your biggest weaknesses and threats, and try to define contingencies if things don’t go to plan. Later you can devise strategies for improving your weak areas. (A business plan for external audiences might not focus so heavily on weaknesses, but even so – if you are asked it pays to have constructive answers to hand).

4. Your environment

Estimate your total market size, value and growth potential. List your competitors, and where they sit in relation to you in the marketplace. Describe your current customer base, and define your ideal costumer. Consider how environmental influences – such as an economic downturn – might affect all of these factors.

5. Your finances

Look at your current financial state, past performance and financial forecasts. Work out if you can fund your objectives as outlined above. Identify future capital requirements and periods of cashflow shortfall, and devise a plan for raising the finance you need.

…Now relax

Ok, we admit: there’s more to business planning than this. In most business plans you’d find strategies for achieving specific objectives and marketing goals. You’d talk about your management team, and delve deeper into market research and financial planning. And you’d tie everything together with an engaging and succinct executive summary.

But regardless of its weaknesses, our ten-minute business plan represents an easy-going, effective start for those without a business plan. For those with an existing plan, it’s a quick and easy review.

If you like, you could tweak this process to better suit your needs, and repeat it every few months. In doing so, you can ensure your business plan stays close to your business reality.