Category: Business Planning

One way to develop and test your plan is to submit it to a business plan competition. These competitions are mostly associated with business schools. Most offer winners consulting assistance and in many cases seed money. But here’s the catch: in most cases, only students can apply and competition can be stiff. But check out the fine print; for the Skandalaris Center at Washington University ($150,000 cash pool) or Rice University ($225,000 to the winner), nonstudents can apply as well.

So, for students and nonstudents alike, this can be a great way to move from idea to solid plan. Here are more examples: MIT’s Clean Energy Prize ($200,000), Wharton ($30,000), and Columbia University ($7000). And while the goal is to win first prize, the motivation and discipline that comes from competing will lead you to a stronger plan, even if you don’t win. In a sense, everyone wins.

Speaking of winning, here are some quick tips to increase your odds of success:

1. Get started early.

Winning plans take months to research, adjust, strategize, and hone. Not to mention prepare the “pitch,” possibly the most important component of most business plan competitions.

2. Build a strong team.

One of the first things judges look at is whether the right team is in place. Make sure you have all the important skills lined up to succeed with the business. If there’s a gap, be explicit about it; indicate that person will be hired once funding is secured.

3. Understand your customers inside and out.

Just as important to judges is how well you understand your target customers. Thorough research is essential, of course, but just as important is clarity on what your customers’ needs, alternatives, and preferences are. Become experts in your niche. Oh, and never say your business has no competition; it’s not true and the judges won’t believe you. Also avoid staking your claim on being the low cost provider. That kind of differentiator will not last. Instead, offer a sustainable advantage that others will have difficulty replicating.

4. Get feedback, revise, get more feedback.

Study the judges, then get people “just like them” to evaluate your plan and your pitch. Revise as many times as it takes to get it right. You won’t get a second chance, so make the most of the few minutes you’ll have to present your plan.

Good luck!

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For more resources, see our Library topic Business Planning.

Copyright © 2010 Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010
Author of Venture Forth! Endorsed by the late Paul Newman of Newman’s Own
Read my weekly blogs on Social Enterprise and Business Planning

There are few topics in strategic planning that generate such diverse and strong opinions as what should be in a mission statement. The statements vary from one-line slogans to multi-page documents.

There are few activities that can become such as waste of time as extensive discussions about what words should be in a mission statement — perhaps planners should spend more time identifying external and internal trends and then what to do about them, than discussing at length what words should be in their mission statements.

One o the best ways to efficiently write a mission statement, and yet leave time and energy for the rest of the important planning process, is to establish certain criteria that the mission statement should meet. Then, after an hour or two of discussing the mission, a subgroup could draft a mission statement that meets the criteria.

Some Proposed Criteria for a Mission Statement

1. Is clearly understandable by people internal and external to the organization (strong requirement)
2. Succinctly describes the purpose of the organization (strong requirement)
3. Succinctly describes the overall type(s) of customers/client served by the organization (strong requirement)
4. Provides sufficient focus and direction that Board members and employees can reference the mission when making major decisions (strong requirement)
5. Succinctly describes the particular customer/client needs and wants to be met the organization (recommended)
6. Mentions the particular results (new knowledge, skills and/or conditions) that the organization tries to help its customers/clients to achieve (recommended)
7. Differentiates the organization from other organizations in the area (recommended)
8. Conveys strong public image (recommended)
9. Mentions the locale in which the organization operates (optional)
10. Mentions any particular strengths and opportunities identified during the strategic planning’s external and internal analysis (optional)

What do you think?

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Carter McNamara, MBA, PhD – Authenticity Consulting, LLC – 763-971-8890
Read my weekly blogs: Boards, Consulting and OD, Nonprofits and Strategic Planning.

Strategy-making begins with an idea. Without a guiding idea there can be no sense of direction. Yet many articles and books about strategy do not address a most important matter: how to generate ideas. To conceive the essential set of ideas that we call strategy, the strategist must understand and master the art of the metaphor. As Aristotle said in Poetics, “the greatest thing by far is to be a master of metaphor.” It is “a sign of genius, since a good metaphor implies an intuitive perception of the similarity in dissimilars.” Effective strategic thinkers display openness to new and different ideas, and one way to generate ideas is through the use of metaphor, or its close relative analogy, perhaps the most advanced form of human thinking.

Good strategy does not fall out at the bottom of an equation. Yes, analysis is necessary… Yes critical thinking is essential… But in the end, great ideas about “what to do” come to us through inspiration.

In a wonderfully insightful book called An Alchemy of Mind Diane Ackerman says that “Metaphor is one of the brain’s favorite ways of understanding the ‘this and that’ of our surroundings, and reminds us that we discover the world by engaging it and seeing what happens next. The art of the brain is to find what seemingly unrelated things may have in common, and be able to apply that insight to something else it urgently needs to unpuzzle.”

In their Harvard Business Review article entitled “How Strategists Really Think,” Giovanni Gavetti and Jan W. Rivkin show that reasoning by analogy plays a major role in the thinking of successful strategists. As an example, these writers point to Intel chairman Andy Grove’s story of how he came up with an important business strategy. Attending a management seminar, Grove heard the story of how fledgling “mini-mills” in the steel industry began in the 1970s to offer a low-end product—inexpensive concrete-reinforcing bars known as rebar. Establishing market share with the low-end products, these steel companies then began to migrate up the hierarchy of products toward the higher-end, more lucrative steel products. U.S. Steel, which had ceded the low-end products to the smaller and seemingly insignificant players, was caught unawares by the companies attacking the market for their core business and lost market share over a number of years.

An epiphany struck Andy Grove as he sat in that management seminar, thinking about the steel industry. Using what Gavetti and Rivkin call “analogical thinking,” Grove saw that Intel was sitting in a similar situation to that of U.S. Steel in the 1970s. Intel had theretofore leaned toward ceding low-end computer chips to niche players, a strategy that, Grove now realized, would put Intel in a dangerous situation. He began to see low-end computers as “digital rebar,” a metaphorical image that helped him in articulating his strategy to Intel management. “If we lose the low end today,” Grove said, “ we could lose the high end tomorrow.” As a result of this thinking, and the deliberations that followed, Intel redoubled its efforts to market the low-end “Celeron processor” for low-end personal computers.

As Diane Ackermans says “… the brain forms metaphors in order to understand ‘one kind of experience in terms of another,’ as new metaphors create new realities…” It is the leap of thought from one set of conditions to an analogous one, that brings us that truly great idea for action. As Ackerman concludes, this is “what metaphor does so well: illuminate some of what can’t be wholly understood. “

Kenichi Ohmae says in The Mind of the Strategist, “In business as on the battlefield, the object of strategy is to bring about the conditions most favorable to one’s own side, judging precisely the right moment to attack or withdraw and always assessing the limits of compromise correctly. Besides the habit of analysis, what marks the mind of the strategist is an intellectual elasticity or flexibility that enables him to come up with realistic responses to changing situations, not simply to discriminate with great precision among different shades of gray. In strategic thinking, one first seeks a clear understanding of the particular character of each element of a situation that makes the fullest possible use of human brainpower to restructure the elements in the most advantageous way. “

To conclude? Perhaps a poem…

We’re coming to the edge

running on the water

coming through the fog

your sons and daughters…

Let the river run

let all the dreamers

wake the nation

come, the new Jerusalem

… by Carly Simon

For more thinking about strategic thinking, see Mark’s website; http://strategybydesign.org

I got a call from an organization that was (as they said) “desperate to finally do good strategic planning.”

A Far Too-Common Approach to “Strategic Planning”

The previous two times they did “planning,” the organization hired a facilitator and:

1. Got Board members together for one retreat.

2. Word-smithed the words on their mission statement. (“Are our services ‘transformational’ or ‘transcendental’? Let’s break into small groups and discuss this!”)

3. Fantasized a very far-reaching, inspirational, feel-good vision statement. (“We’ll solve poverty in our lifetime!”)

4. Then asked the executives to come up with “some goals” to achieve that vision.

5. Then they left the retreat.

That’s Not Strategic Planning, That’s Fantasizing — and It’s a Delusion

The “benefits” of that approach to planning are

1. Board members don’t need to spend much time in planning.

2. The organization doesn’t have to do the work to actually analyze what’s going on outside the organization that might affect the organization

3. It’s easy and it feels good to word-smith words and fantasize visions — it makes “planning” fun!

4. The organization can feel like it’s “planning.”

5. The facilitator is liked a lot — at least for a while.

The Damage Caused from That Approach to “Planning”

The harm from that approach to “planning” is that

1. The organization is no better off in understanding what it needs to survive, much less thrive.

2. Planners cultivate the illusion that planning is one fun “get away.”

3. Planners become very cynical about “strategic planning.”

4. Consultants and facilitators begin to write that “strategic planning doesn’t work.”

What Strategic Planning Should Be Instead

If an organization:

1. Has not done strategic planning before — planning that resulted in an implemented plan.

2. Has many changes going on, outside the organization.

3. Has had several recurring issues in the organization, e.g., in finances, conflicts and turnover.

Then the “fantasy” approach to planning will only make things worse.

Instead, the organization should be doing issues-based planning.

What’s Issues-Based Planning?

In issues-based planning, planners:

1. Identify current, major issues.

2. Suggest strategies to address each issue (they might be right or wrong, but at least they get people focused on the issues and trying to do something about them).

3. Detail the strategies into action plans that specify who is going to do what and by when.

Some consultants might decry, “That’s not strategic!” What’s more strategic than addressing current, major problems so you can then accomplish a successful future?

For more information about issues-based planning, see Should I Use Goals-Based or Issues-Based Planning?

What do you think?

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Carter McNamara, MBA, PhD – Authenticity Consulting, LLC – 800-971-2250
Read my weekly blogs: Boards, Consulting and OD, Nonprofits and Strategic Planning.

Simply put, strategic planning is clarifying the overall purpose and desired results of an organization, and how those results will be achieved.

There are different ways to do that planning, depending on the purpose(s) of the planning, the life cycle or stage of development of the organization, the culture of people in the organization, types of issues the organization is currently facing, and the rate of change in the external environment of the organization.

For example, many people use vision-based or goals-based planning, in which they clarify the results they want to achieve in the future. They develop a vision of what the organization and its customers or clients will look like at some point in the future, and then articulate what they have to do to achieve that vision. They work from the future to the present.

Unfortunately, many people believe that’s the only way to do strategic planning. That’s wrong. Another form of planning is issues-based planning, which clarifies current issues that the organization must soon address and how it will address them. Issues-based planning works from the present to the future. Issues-based planning is usually a shorter term planning and often is focused primarily ( but not exclusively) on internal matters.

There are many different perspectives on how to best do strategic planning — and many different practitioners and facilitators have very strong feelings about how strategic planning should be done.

But first, take a look at a simple analogy in order to further understand strategic planning.

There’s lots more about strategic planning at
https://staging.management.org/plan_dec/str_plan/str_plan.htm

Also see the other posts in this blog about strategic planning.

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Carter McNamara, MBA, PhD – Authenticity Consulting, LLC – 800-971-2250
Read my weekly blogs: Boards, Consulting and OD, Nonprofits and Strategic Planning.
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Many startup businesses set up incentive or commission-based compensation systems for their initial employees. This is often done because they can’t afford to pay staff what they’re worth. As an enticement they offer the opportunity to earn much more than a smallish base salary if these early staff achieve great success. This is common in the for-profit world, for business managers and sales staff; and today many nonprofits or hybrid organizations are exploring this kind of compensation also, mostly for the same reasons.

We tend to get two questions about incentives: Do they work? What percentage?

First, yes, financial incentives work. Offer to pay someone extra if certain results are achieved, and they will go the extra mile to accomplish those results. But only if those results are achievable and clearly, verifiably and consistently measured, if the people offered the incentives have the right skills, and if the rewards are commensurate with the level of effort required. Otherwise – and this happens many times — people get motivated to do the wrong things (sales staff argue about accounting issues and who gets credit for the sale), or they get set up for failure (it’s too difficult to hit targets so they become resentful). So if you use incentives, define your targets carefully and use them with people and situations where there is a reasonable opportunity to succeed. Otherwise you’ll waste money and poison the well, both problems startup business cannot afford.

Secondly, it can be equally challenging to figure out what percentage to pay. Many questions need to be addressed first. What’s your profit margin? How hard is to get a sale? Does the product mostly sell itself or is the sales person the key to success? What do other companies selling similar products pay their sales staff? In most cases, sales commissions are based on sales rather than profits, in part because sales are easier to measure and verify than profits. You don’t want your sales person fighting with your numbers person on how net profit was calculated.

Finally, to throw out some numbers, we’ve seen sales commissions ranging from 5% to 20% of sales. And for venture or business managers, where the commission is typically based on profit rather than sales (and base salaries are larger), we’ve seen figures in the 5-10% range. But mileage may vary, so do your homework before committing to one figure or another.

What do you think?

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For more resources, see our Library topic Business Planning.

Copyright © 2010 Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010. Author of Venture Forth! Endorsed by the late Paul Newman of Newman’s Own. Read our weekly blogs on Social Enterprise and Business Planning. Subscribe to our free social enterprise listserv.

Lately I’ve been rethinking business plans. On the one hand, in the consulting and academic world, what is meant by a business plan is a fairly comprehensive research project with thorough analysis of issues including customers, markets, competitors, pricing, marketing strategies, risks – always followed with detailed multi-paged financial projections looking three to five years into the future. To create this kind of a plan, management works on it for months, or hires a consultant to do it for them. Either way, it’s not unusual to invest a hundred hours or more into creating it.

On the other hand, in most of the business world, what is generally meant by a business plan is a brief written statement indicating goals and overall steps for achieving those goals. The goals might relate to customers, sales, units sold, profits, facilities. It looks out a year, maybe two. This is something the owner or management puts together in a few meetings, when then gets updated every year or two.

These are two very different meanings of the term business plan, and I’m beginning to wonder if both are missing the mark. The comprehensive plan isn’t all that practical for small businesses or nonprofits that lack the time or dollars to do all that work, however valuable it might be to do so. And the brief plan can be very superficial to the point that it does little more than set ambitious goals with minimal guidance on what to do when the business encounters those pesky potholes in the road.

So here’s my idea for a third kind of plan, taking the best of both worlds. For now I’m calling it the Five Page Business Plan. Keep it short and simple, but still useful. It involves doing “just enough” research and analysis into “just the right areas” that will matter for achieving success with this business. Summarize all that in three pages of text, then a page of financial projections and a page about the expertise of the management team and the facilities and key equipment that will be utilized.

Can this offer the best of both worlds? It just might. Will it attract investors? I don’t know, but I do know they’re more likely to read it than the 38 page variety. When I get the chance, I’m going to convert some of the comprehensive plans I’ve written over the years into that format. The idea is to see if it’s possible to get into five pages all that is really important in a business plan. I think it can be done.

What do you think?

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For more resources, see our Library topic Business Planning.

Copyright © 2010 Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010
Author of Venture Forth! Endorsed by the late Paul Newman of Newman’s Own
Read my weekly blogs on Social Enterprise and Business Planning