Starting a Business – Page 29 – Management Library

May 17, 2010February 18, 2022

How Much Should Your Board Be Involved in Management?

Group of business professionals in a business meeting room

Experts often have very strong beliefs and feelings about what should be the extent of involvement of Board members in making top-level policies versus in implementing those policies in the day-to-day affairs of the organization. Those experts usually assert that Board members should attend primarily to the top-level policies.

However, various factors influence how involved Board members are in policy-making versus in “management,” that is, in implementing the policies.

New and small organizations might have rather hands-on Board members because those organizations usually have very little in resources, particularly in expertise and funding.
Larger, established organizations usually have members who attend primarily to top-level planning and policies because those organizations have adequate resources to effectively implement the plans and policies.
If Board members have little confidence in the CEO, there have been frequent operational problems, or the CEO is leaving the organization, then Board members often are more involved in management affairs — at least temporarily.
Very autocratic cultures usually place strong value on respecting the role of top-level leaders, in which case Board members (perceived as being very top-level leaders) would probably not be involved in the more subordinate management affairs.
Very egalitarian cultures that highly value equal treatment and participation of all people might perceive Board members and employees as having somewhat equal influence in the affairs of the organization, in which case the members might be more involved in management than typically expected.
If an organization has been struggling to work toward its mission and top-level priorities, then Board members should probably focus much more on policy making. That helps to ensure that the priorities are indeed relevant and realistic, and are effectively being addressed.

Regardless of the level of involvement of Board members in the affairs of management, the members have to attend to top-level policy at various times — members can’t delegate those top-level responsibilities to anyone else in the organization.

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.

May 14, 2010March 28, 2023

What Do We Need: Strategic or Business Plan?

Depends. All too often, these two terms have become blurred. But they are different concepts. Here’s a good way to distinguish them, quoting from the Free Management Library’s strategic plan blogger, Carter McNamara:

Strategic Planning Should Be Organization-Wide

Strategic planning is best viewed as clarifying the overall purpose and priorities of the organization. There are many different ways to do strategic planning, and the contents of the plan vary, depending on the purpose of the planning. However, the focus of the planning should primarily be organization-wide.

Business Planning Should Be Product- or Service-Specific

Business planning is best viewed as planning for a specific product or service. The customers and clients for a particular product or service might be very different than for another product or service. You wouldn’t advertise or sell race cars the same way you’d advertise or sell minivans. Each needs a different business plan.

I would add several things to Carter’s description. First, while some strategic plans include financial projections and others do not, financials are an essential component of every credible business plan. Secondly, strategic plans often take a longer term perspective of 3-5 years or more as they envision an organization’s future; in most cases, business plans look out at most three years, as they focus on the more immediate changing realities of the marketplace. Finally, while it is possible to imagine that the strategic plan could be implemented by someone other than the current management team, a business plan is meaningless without identifying who will do it and why they will be successful.

Carter’s weekly strategic planning blog provides useful information on how to do strategic planning. We’ll provide the same service here in the business planning blog.

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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

May 11, 2010February 18, 2022

Short Is Beautiful

Person working on a brief and simple business plan

Good business plans do not need to be long business plans. With rare exceptions, keep your plan to no more than twenty pages, including financials and appendix. If you can say what needs to be said in fewer pages, that’s even better. It’s unlikely anyone will actually read a longer plan, so don’t waste your time writing it. Short plans get read.

Of course, it has to be compelling, credible, and well written. But all that doesn’t matter if they need to plow through fifty pages to understand what you’re talking about. Your business concept might be novel, but you shouldn’t need to write a novel to explain it.

Speaking of length, it’s also a good idea to keep your financial projections brief as well. Forecast out only three years at most, and put them on two pages – one page would be even better. All too often I see extremely long and complex excel spreadsheets with tiny print spread out across five, ten pages, with more pages of financial notes. Trust me, they won’t get read. Instead, create a one or two page financial projection summary, along with key ratios and metrics. Add a page of notes explaining key assumptions and you’re done.

Writing a short plan forces your management team to focus: a important criteria for success in starting or growing a business. And if you’re using your plan to seek financing, a short plan is more likely to get read. That will increase your odds of getting the financing you seek.

For business plans, short is beautiful.

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For more resources, see our Library topic Business Planning.

May 10, 2010February 18, 2022

Strategic Planning or Business Planning?

Creative planning techniques for an organization

It seems that the two phrases “strategic planning” and “business planning” are used interchangeably, much more than ever. I believe it’s better to see the phrases as different than to generalize them as the same.

Strategic Planning Should Be Organization-Wide

Business Planning Should Be Product- or Service-Specific

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.

May 10, 2010February 18, 2022

Board Orientation vs. Training vs. Development

Woman having a training session with a board member

When you ask Board members if they’ve been trained, it’s not uncommon that they’ll answer, “Yes”. But many times, they’ll be wrong.

Board Orientation

Board orientation is about the unique aspects of the organization. It might include introductions and team building among Board members, overviews of the organization’s products and services, celebration of the organization’s successes, review of various Board policies, and clarification of when meetings occur. The content of this orientation depends very much on the particular organization. Board orientations are very useful for giving Board members an understanding of the organization they are governing.

Board Training

Board training is about the roles and responsibilities of any governing Board, that is, of any Board of a corporation, whether it be for-profit or nonprofit. The training would review the fiduciary duties of Board members and what members should do to fulfill each of those duties. The content of this training might be very similar across different organizations, although it would be modified slightly for certain differences between for-profit and nonprofit Boards (largely regarding Sarbanes Oxley and SEC regulations). Board training is useful to orient members to a country’s rules and regulations that govern corporations.

Board Development

Board development includes a variety of activities intended to raise the quality of the Board’s operations up to a new level. Board development might include a Board evaluation, orientation, training, organization of committees or task forces, coaching to the Board Chair, development of certain Board policies, and a post-evaluation of the Board. Board development is extremely useful to help a Board to significantly improve its operations, for example, its recruiting, orientating, training, organizing, meetings, decisions and policies.

So the next time you’re thinking about the needs of your Board, consider whether you need Board orientation, training and/or development.

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.

May 8, 2010March 28, 2023

Executive Summary Says It All

Team members working on their organisation's executive summary

The most important section of your business plan is its executive summary. That’s right. It’s the first thing that people read, and it should crystallize everything that’s compelling and essential about your business and how you will succeed with it. And you need to do that all on one page. Gulp.

If you’re looking for investors, they won’t read past the first page if it doesn’t grab them. That doesn’t just mean great writing, but also great content that demonstrates that you know what you’re talking about.

Who will be running your business is clearly the most important part of your business. But for the business plan, it’s the executive summary that has to be good or they’ll never get around to reading about your amazing management team or anything else in your plan.

Now, please don’t conclude from this that a compelling executive summary is all you need. That compelling executive summary only works if it’s well supported in the body of the plan. Grandiose assertions don’t win over investors, and a business strategy built around such assertions will fail also.

So you need a powerful plan that’s topped off with the best executive summary you can write. And rewrite and rewrite and rewrite until it’s just right.

Indeed, Guy Kawasaki argues that you should spend 80% of your time writing a great executive summary. I think that overstates priorities a bit, but the point is, this section needs to do more than just summarize the plan. It “says it all” on one page in what might be your only chance to get in front of a key investor.

So work on it until it sings. And if you can’t make it sing, it might just be that your great idea is not (yet) such a great idea. Work on it until it is.

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For more resources, see our Library topic Business Planning.

-Written by Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010 – LinkedIn
Twitter: RolfeLarson — Author of Venture Forth! Endorsed by Paul Newman of Newman’s Own

May 5, 2010February 18, 2022

OK, Mr. Blankfein, How are you going to put ethics first?

From the Wall Street Journal on May 5, 2010:

“Frankly, at this point we have to go with an open mind and determine what we may be doing wrong,” Mr. Blankfein told customers of its private-wealth-management business during a 30-minute conference call. “On a very microscopic level, we’re going to use this as an opportunity for a deep dive on our practices and how we run things.”

Goldman Sachs Chairman and CEO Lloyd Blankfein said the firm will always put clients first.

He pledged to clients that he wants Goldman to “be the leader in things like ethics, in putting clients first.” Mr. Blankfein added “we don’t want people to be OK with Goldman Sachs. We want people to be bragging that they have their accounts with Goldman Sachs.”

Making Ethical Culture a Priority

The challenge for any organization to make ethics a priority is a big one. For Goldman Sachs, it will require a deep level commitment of not just the senior staff, but from all of its Managing Directors. In today’s environment employees, as well as external stakeholders, have no tolerance for superficial ethics programs and pronouncements. Putting clients first because of Goldman’s ethics will not happen merely because every employee is given a curriculum of web-based training modules to sit through. Goldman’s leadership will need to come to understand where there are gaps between the expectations of its clients and the expectations of its directors. These gaps are real and need to be openly discussed. Clearly laying out those gaps will be the first step to creating a dialogue where real alignment of interests can happen. Keeping in mind what will earn real buy-in from clients, and from Managing Directors will be the only way Mr. Blankfein will keep his pledge.

May 3, 2010February 18, 2022

The Fragility of Transparency

A laptop screen showing business analytics

Today in Boston the Board of Beth Israel Deaconess Medical Center today fined chief executive Paul Levy $50,000 for engaging in a personal relationship with an employee that over time “created an improper appearance and became a distraction within the hospital,” according to a statement by Board Chairman Stephen Kay.

Mr. Levy has had a stellar reputation in Boston as a business leader with a strong track record of transparency. He is a known blogger and has posted frank and open discussions of painful staff cutbacks during the 2009 recession. His openness was well received.

Challenges to the Ethical Culture

In an interview on WGBH’s Greater Boston tonight, I discussed the challenges Mr. Levy and the BIDMC Board face in addressing the ethical culture issues of having such a high standard of transparency, and the risks when that standard is not met.

Even if Mr. Levy’s actions did not violate the hospital’s code of conduct, he would be well advised to be sensitive the divisiveness that can be caused by a perception of a double standard. Inconsistency is one of the most caustic negative values an organization can face in its current culture.

Mr. Levy’s posting of an apology on his blog soon after today’s Board announcement was a good first step. The challenge in the days and weeks ahead is to ensure that transparency with regard to his previous actions is consistent with the behavior he expects for all Beth Israel staff.

David Gebler, President
Skout Group, LLC

(617) 314-6280
dgebler@skoutgroup.com
www.skoutgroup.com

May 2, 2010February 18, 2022

Use Grand Vision and Strategic Vision in Strategic Planning

A vision, during strategic planning, is depiction of the organization and its customers at some point in the future. Like mission statements, there are many different perspectives about what should be in a vision statement.

Vision statements can depict the overall result sought by the organization. They also can be used to inspire and motivate members of the organization. However, depending on the culture of the organization, vision statements can breed distrust and cynicism if they’re used only for that reason. Also, because they can be so very broad in nature, they often don’t provide focus and direction during planning. That’s why it’s useful to have a grand vision and a strategic vision in planning.

What’s a Grand Vision?

A grand vision is broad depiction of the organization and preferably its stakeholders as they will be far into the future, for example, “Our organization is seen world-wide as the most respected in our industry, and our customers agree our services are a benchmark in our industry.”

What’s a Strategic Vision?

A strategic vision is depiction of the organization and its customers as they will be shortly after implementing the strategic plan, for example, “Our organization commands 10% market share in our industry, as a result of market expansion and increase in sales across those markets.” The strategic vision can provide clear focus and direction for planners during planning and later on when implementing the plan.

Use Both Grand Vision and Strategic Vision in Your Planning

You might start by having planners articulate a grand vision that is truly inspirational and motivational to all members of the organization. Don’t stop there. Either at the beginning of planning or near the end when planners have discussed goals for the plan, articulate a strategic vision that provides clear focus and direction.

What do you think?

Here’s many more resources about strategic planning.

May 2, 2010February 18, 2022

Find and Feed The Feeling

Business plans tend to be mostly head, and mostly left brain at that. They describe a business idea for making and selling stuff, and good ones present strong reasons and compelling data. That’s important, and trumps so many plans that offer little more than grandiose assertions and generic arguments.

But the heart of any business plan – and the heart of any business – can only be found in the hearts of its customers. And by heart I mean the kernel feeling this business will satisfy. What core need or desire or emotion will your products or services satisfy among your customers? What itch will it scratch, what nagging problem will it solve, what deep satisfaction will it give?

At our core, we humans are driven far more by our emotions than by our analysis, however much we may justify our decisions with arguments and data. And that applies to what we buy as well.

So as you plan your business, and do your research to understand your customers, drill down to what will truly drive them to desire your product or service. Find that core feeling, and organize your business around feeding it.

If you need help with this, think Steve Jobs. Somehow Apple has been able to figure out what millions of us really want, without us knowing it beforehand. And once that product comes out, be it the iPad or the iPhone or the iPad, millions find they cannot live without it. Research helps, but it never gets you all the way.

You don’t have to be Steve Jobs to do this. Just find the feeling and feed it. That’s the core of your business plan.

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For more resources, see our Library topic Business Planning.