Preparing a strategic business plan

Transcription

Preparing a strategic
business plan
A P P E N D I X
446
A P P E N D I X – P R E PA R I N G A S T R AT E G I C B U S I N E S S P L A N
strategic business
plan
Summarises and
documents the
strategic analysis
and the
implementation
plans.
A very practical issue faced by organisations and their strategic analysts is ‘How do we
write a strategic business plan?’ The strategic business plan is the link between strategic
thinking and analysis—the strategy formulation—and the action or implementation that
will be necessary to carry out the strategy. The strategic business plan summarises and
documents the strategic analysis and the implementation plans.
Few strategy texts discuss the strategic business plan, yet it is a major outcome of the
strategic planning process and it is in widespread practical use.1 We believe this is because
strategic analysts and academics are excited by the strategic analytical process and can’t
be bothered with the mechanical documentation of the conclusions they have reached. Yet,
for the business strategy to be implemented, documentation is important so that the
strategy can be widely communicated, understood and accepted within an organisation.
Documentation of the strategic business plan also provides a control for comparison of
actual performance during the planning period.
Thus, the strategic business plan is the vital formal documenting of the analysis and the
proposed plan of implementation. In this sense, the strategic business plan contains no new
concepts or techniques. But, properly implemented, it is very important to an organisation,
because of its communication role and because it provides the practical control mechanism
for evaluating whether or not the strategy is being implemented. In this appendix, we
consider the advantages of having a formal strategic business plan, the contents of the
plan, the process for preparing the plan, and issues that make for successful and unsuccessful strategic business plans.
Advantages of having a formal strategic business plan
A formal, written strategic business plan is an important strategic tool, which all organisations should have for the following reasons:
A clear and unambiguous direction is laid out for the organisation. Without a formal
plan, there will inevitably be subsequent disagreement about what the organisation is
trying to do and what was actually agreed in the strategic planning process. Writing it
down makes it objectively clear exactly what the organisation is trying to achieve.
Key assumptions for the organisation are explicitly recognised. Having a formal plan
makes it clear what assumptions have been used in preparing the plan. For instance,
assumptions about economic growth rates, sales growth rates, margins and inflation
rates can clearly be seen, either from the words in the plan or from analysis of the
numbers in the plan.
Everyone in the organisation is able to act in a manner consistent with the goals
specified. While the strategic thinking and analysis processes may have been confined
to a small number of people in the organisation, making the plan explicit and
communicating it widely enables everyone in the organisation to see how all the
planned actions, activities and units fit together to implement the plan.
All actions can be assessed against the stated business and functional strategies. The
plan provides a control against which actual performance can be measured. This is a
fundamental issue for assessing performance in any area of activity. Failure to have
a formal plan means this basic control tool does not exist.
Strategic planning is not the same as strategic thinking. Mintzberg argued that
‘strategic planning’ is really ‘strategic programming’—that is, the articulation and
elaboration of strategies or visions that already exist. Strategic planners supply some of the
information, the formal analyses act as catalysts to encourage strategic thinking and
program the strategy, but the strategic plan is not strategic thinking.2
The use of strategic plans is widespread. Several studies suggest around half of organisations undertake a strategic plan, with others undertaking one-year plans that might be
consistent with a longer-term strategic plan.3
Contents of the strategic business plan
The first strategic business plan
Morkel noted that there is a first strategic business plan for every organisation.4 This is
often the hardest plan to construct, because there is no precedent to follow. He suggested
that a ‘quick and dirty’ approach be taken in the first plan and that refinements should be
added gradually, rather than trying to produce the perfect plan on the first attempt. While
we agree that the first plan will not be perfect, it does act as an important guide for future
plans. Therefore, deficiencies in the first plan, particularly in its structure, may become
institutionalised and difficult to remove. Consequently, we believe that it is worth taking
some time over this first plan, rather than simply rushing to create a plan for the sake of it.
Plan contents
A strategic business plan should contain discussion of all the analytical elements discussed
in this book, together with details of the proposed actions to be taken to implement the
analysis. It should also include a quantitative plan, which shows the actions and results
expected.
The elements of a typical strategic business plan are shown in Figure 1. In practice,
each organisation has quite different ways of presenting the information, and a variety of
different terminology is used. Also, the exact order of items varies from plan to plan, due
to individual preferences and organisational histories. Plans should be done separately for
each identifiable separate organisational unit, being summarised at the organisation level.
The strategic business plan should cover more than just the current year. Most strategic
business plans now cover a three-year period, with one year of fine detail and two years of
major line item detail. (The current year should be the budget for the year, so that the
strategic business plan and the budget are aligned.) The actual period covered will depend
on the sophistication of the planning process within the organisation, the degree of change
occurring within the industry, the importance of capital investment, the time scale of
capital investment, and the willingness of the top management team to project beyond the
current period.
The plan often begins with a summary of the organisation’s current position. This
should include:
a brief description of the organisation
the current statement of business strategy
a summary of the balanced scorecard performance in the current year, together with
comparisons to current year targets and recent prior years (at least the last two prior
years, so that there is at least three years of history to consider)
a discussion of the overall performance of the organisation against the current strategy
and performance goals that exist
a discussion of the reasons why the overall and functional performance has or has not
met the goals specified.5
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FIGURE 1
Elements of a strategic business plan
1 Executive summary
2
n
n
n
n
n
Summary of the organisation’s current position:
Description of the organisation
Business strategy
Financial performance—current year and preceding two years
Operating performance—current year and preceding two years
Discussion of performance
3
n
n
n
n
n
Summary of the external environment:
Macro-environment analysis
Industry analysis
Competitor analysis
Key stakeholder analysis
Summary of organisation’s external strategic position
4
n
n
n
Analysis of the organisation’s capabilities:
Key strategic capabilities
Major strategic gaps
Summary of organisation’s internal position
5 Gap analysis:
n Summary of major external and internal gaps
6
n
n
n
Proposed business and functional/operation strategies:
Proposed business strategy, including any mission/vision
Supporting functional/operational strategies
Discussion of selections
7
n
n
n
Action plans:
Major actions by functional/operational area
Names of individuals responsible for each major action
Dates by which each major action is to be achieved
8 Quantified plans:
n Detailed operational and financial plans (one year)
n General operational and financial plans (major events—two to four more years)
This section sets out the background situation for the strategies and plans that are being
proposed. It enables the reader to understand who the organisation is, what it is trying to
achieve, the extent to which the strategies have been or are being achieved, and why
this has occurred. Chapter 5 provides information on how to measure organisational
performance for this assessment.
The plan should contain a summary of the external environment. This section covers
the analysis that an organisation would undertake, based on concepts in Chapter 3. It
should include:
coverage of key macro-environment factors that will affect the organisation over the
period of the strategic business plan
an industry analysis covering the current position and future trends in buyer and
supplier relationships, the potential for new entrants and the power of substitutes
an analysis of major competitors, including expected trends
an identification of key stakeholders and their expectations
a
summary of the strategic position of the organisation relative to the current and
expected future demands of the environment.
The plan should also include an analysis of the organisation’s capabilities. This section
covers the analysis that the organisation should undertake based on concepts discussed in
Chapter 4. It should include:
an identification of strategic capabilities
an identification of major strategic gaps6
a summary of the strategic position of the organisation relative to the demands of, and
trends in, the industry and the expectations of the current strategy.
A gap analysis should draw together the external and internal analyses of the organisation. Chapter 6 covers gap analysis. It should cover both the external opportunities and
threats and the internal capabilities and gaps, bringing together the internal and external
position of the organisation, in order to explain rationally the subsequent choice of business
and operational strategies for the future.
This should then lead to the proposed strategies for the organisation. This section
should include:
a reaffirmation of the existing business strategy, including any related mission or vision
statement(s), or any change that is being made and the reasons for the change
the supporting functional/operational strategies needed to achieve the business
strategy
reasoning for the selection of both the business and functional/operational strategies,
whether or not they involve change.
For the plan to be implemented, the changes proposed at the business and functional
strategy level must be turned into action plans by functions, by projects and by individuals.
The action plans will be the largest part of the strategic business plan, in terms of volume,
as the detail required to implement the business strategy extends to all parts of the organisation. For each function or operation, this section should include:
the specific functional/operational strategies to be pursued, preferably with some
explanation of how they will assist the business strategy to be implemented
how, by whom and when each functional/operational strategy is going to be achieved.
Where there is no change (e.g. the marketing strategy remains unaltered), the strategy
should still be specified, with the notation that no particular change action is required,
so that a complete set of strategies is specified in the total plan.
Each action plan should be assigned to an individual and given a date by which the
action plan is to be achieved. This is a very important decision. Assignment to an
individual, rather than a group, enforces personal responsibility, a factor that was found to
be very important in winning organisational behaviour.7 It is easy for groups to agree what
should be done, but to disagree on just who is responsible for actually doing it. If this step
is not followed, the plan runs a very real risk of not being implemented because no one was
assigned the responsibility to carry out the important change tasks.
The date is similarly important. It acts as a control mechanism for follow-up. Without a
date, an individual can say the task is ‘in hand’, ‘in progress’ or ‘under way’, with the
organisation having no real control over just when the task will be completed. Individuals
will always disagree about their recollections of responsibilities and times unless they are
clearly documented. Table 1 gives an example of action plans. Treating the implementation plans for the business strategy as a project management task, with intermediate dates
at which certain tasks have to be achieved, is a valuable way of reinforcing the importance
action plans
The set of specific
actions which, taken
together, are
expected to result in
the achievement of
the proposed
strategy.
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TABLE 1
An example of some action plans
Who is
When to be
Problem
Action
responsible
completed
We don’t really
understand what
customers think
Undertake market
research with key
customers
Marketing manager
July 200X
Too many quality
defects
Get team to analyse past
defects by cause; focus on
solving key causes
Operations manager
Stage 1 January 200X
Stage 2 December 200Y
of and management of the individual actions. Chapters 12–14 consider issues of implementation that lead to the development of operational-level strategies.
Finally, the plan needs quantified plans to show the expected effects of implementing
the action plans. While these quantified plans will certainly include financial measures and
outcomes, they should also include other quantified measures relevant for particular
functional/operational strategy assessment. For instance, measures of market share,
productivity, numbers of suggestions for improvements, absenteeism, on-time delivery,
percentage of returns, etc. should be included, if they are important measures in the
strategic control system.
The extent of quantification may vary. While quantification of the first year of the plan
should be detailed—it should be the same as the operating plans and budgets for the
year—detailed quantification of subsequent years is of limited value, as our ability to
forecast the future accurately is quite limited. The day of the quantified five-year strategic
business plan is over. Nevertheless, some quantification for a two- to three-year period can
be very useful for modelling purposes. To the extent that strategic actions undertaken in
this year will not have an effect until following years, it is important to show the expected
effects of such actions. For instance, the decision to open a new production facility in two
years, which requires building commencement now, is expected to have an effect on sales
volumes and costs in two years’ time. It should be possible to make reasonable estimates
from the capital expenditure proposals for the project, or from other information used to
make this decision.
Confidentiality of strategic business plans
Many organisations are afraid that some aspects of their plans are too confidential to be
documented—for instance, the planned closure of a plant, the takeover of a competitor, the
introduction of a new product range. Not to include these aspects, or to include their
planned results but not recognise the causes of the sharp changes in the planned results,
means the plans themselves will be deficient documents. However, the leaking of
information (e.g. to employees that a plant is to be closed) may also have negative consequences for the organisation.
Our belief is that much so-called confidential information tends to leak out anyway. The
strategic business plan merely documents decisions that have already been agreed in
principle. If the strategic business plan is a confidential document, including this type of
information in it should not greatly increase the chances of leakage. Further, inclusion of
the information may enable these issues to be considered more rationally than when the
information is given only to an exclusive few. For instance, the knowledge that a plant is
expected to be closed within 12 months often acts as a spur to employees to consider how
to improve performance so that the decision can be reversed. Positive outcomes are
possible here, whereas if the closure decision is announced unilaterally and with a short
time scale, negative results (e.g. low productivity, low morale, sabotage) are quite likely.
Organisations that are obsessed with secrecy are likely to create uncertainty, suspicion
and a lack of trust among their employees, due to the shortage of information. Without
information, employees will assume the worst. The more accurate and widely distributed
and discussed the plan is, the more likelihood there is that it will be accepted and
understood. This is a critical issue for implementation, as we have demonstrated in
Chapter 14. For this reason, we do not believe that the details of the strategic business plan
should be kept confidential from employees in normal circumstances.
The strategic business planning process
In a conventional top-down approach, the top management team meets for a two- or threeday period once a year to consider all the analytical elements and to produce the essence
of the business strategy and the broad-scale operational strategies for the planning period
(see Strategy @ work 1). The operational expression of that (i.e. the strategic business plan,
including the specific required operational plans) is prepared subsequently. The whole
detailed process is then brought together, reviewed and approved at a series of meetings
(strategic planning committee, top management team, board of directors, corporation),
before the outcome is finally communicated to the organisation.
Another approach—often used by public sector organisations—is to gather information
from outside the organisation and from various stakeholder groups within the organisation
and to bring this material together gradually from the bottom to the top of the organisation.
STRATEGY @ WORK 1
T H E S T R AT E G I C P L A N N I N G W O R K S H O P : M A K I N G I T W O R K
Most organisations have a two- to three-day
strategic planning workshop to set the strategic
directions for the year. Many of these are
regarded as unsuccessful by participants. How
can they be made most valuable?
Set the agenda clearly, allocate times and
objectives to each section, and stick to it.
Only invite those who can really make a
difference (generally ten or fewer people).
Minimise pre-reading to essentials, but make
sure it is read beforehand.
Allow everyone to have their say, but recognise that some opinions are more valuable
than others.
Pay attention to the quality of the conversation.
Ensure that discussions are brought to a close
and momentum is maintained.
Consider
using a facilitator so that the CEO
can take part in the conversation without
dominating it.
Develop a manageable number of clear
actions.
Ensure the executive team is unified and
aligned at the end of the workshop.
Ensure action plans are formulated, responsibilities allocated and the results of the
workshop communicated.
Have subsequent half- or one-day follow-up
sessions to reinforce and work on the
outcomes.
Source: Based on Frisch, B. & Chandler, L. 2006, ‘Off-sites that
work’, Harvard Business Review, June:117–26.
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This process involves many more people, and captures many more ideas, than the top-down
process. It has the big advantages that many perspectives are considered and that
individuals who are involved in the process are more likely to be committed to any
subsequent strategic business plan that emerges. However, it takes longer and is subject to
problems and conflicts over different perspectives, different assumptions, and the natural
desire of individual groups to want to enhance their own position during the process.
A hybrid approach is to gather information from many areas inside and outside the
organisation, and to summarise and discuss it at the top, with the top management team
deciding on the strategy through incorporating that widespread information. This is
perhaps the best approach, as it ensures that many viewpoints are available, while limiting
the decision-making process to a feasible number of people to get a clear strategy. It does
depend, of course, on the ability of the top team to understand the information and for them
to effectively incorporate it and sell the decisions made to the various stakeholder groups
subsequently.
The use of mid-period or ongoing reviews provides the opportunity to ensure that the
feedback during the period is incorporated and any necessary adjustments are made,
which is particularly important if errors of judgment have been made by the top group or
as aspects of implementation proceed differently, and more slowly, than expected. It also
demonstrates that strategy is a process, not a once-a-year meeting unrelated to the actual
business operations.
The process itself
Responsibility for the planning process and its conduct rests with the CEO. The CEO and
the top management team determine the process and timing. In some cases, a facilitator is
brought in to assist. This enables the CEO and the top management team or other groups
to share their views equally, without an insider with a vested interest (such as the CEO)
taking a controlling position in the process and vetoing ideas that are not acceptable to
their personal interests or values. In some cases, an ad hoc or permanent planning group
is given the task of conducting the process. Where the planning group is closely related to
the accounting unit, as it often is in order to link the process to the budgeting process, the
process tends to be heavily financially oriented, rather than strategically oriented.
However the process is conducted, it is clear that operational managers have responsibility for carrying out the actions agreed in the plan. Failure of those operational managers
to carry out the activities in the plan will mean that the plan will not be achieved, so it is
essential that the process contains ways to gain the commitment of operational managers
and all employees. Chapter 14 covers the processes available for achieving this.
Writing the plan
Two alternatives are usually considered to decide who should be responsible for actually
writing the plan that has been agreed. The first approach is to give the task to a central
specialist individual or group. It then becomes their responsibility to draw the required
detailed information from the various functional/operational groups to match the broad
ideas agreed in the strategic planning workshop and to put the integrated plan together.
This approach is based on the following assumptions:
The specialist and the functions are equally familiar with the proposals for the plan.
The functions are under severe time constraints, so that the specialist will get the task
done more quickly.
The
specialist will write and integrate the plan better than if a series of individual
functional personnel do their own parts of the plan.
The task is only one of documentation, as the decisions have been agreed by those
responsible for their implementation.
A variation on the approach is to employ an outside consultant, either to utilise professional expertise, or to alleviate management time pressures. While this approach will
almost certainly produce an expertly written and beautifully presented document within a
limited time frame, a lack of commitment to the document by those responsible for its
implementation often results in the plan failing to be implemented.
The second approach is to ask each part of the organisation to write its own part of the
plan. The assumptions of this approach are:
By being involved in and committed to decisions which affect them, individuals will
take responsibility.
Specialists cannot understand the intricacies of the function/operation, so they cannot
resolve any planning conflicts that occur between functions, or in technical aspects
within a function.
Whether or not the plan looks ‘nice’ is not really important. What matters is whether or
not it actually works.
Some organisations use responsibility for writing the plan as an educational experience
for managers by sharing the task around, thereby awakening managers to the necessary
interconnections between major functions. This approach also ensures that there is a fresh
view every year or so on the writing task.
Each approach can work, provided its assumptions are valid. The key issue is to ensure
that the plan is agreed, understood and feasible, and that individuals are committed to its
achievements.
Communicating the strategic business plan to the organisation
The process of preparing the plan, and the actual writing of it, are far less important than
its ultimate acceptance and use within the organisation. Many strategic business plans fail
to be effectively communicated to the organisation, so operations go on regardless of the
plan. Such failure reduces the credibility of the strategic business-planning tool itself. Yet,
there is evidence that those organisations that undertake strategic business planning do
better than those that do not.8
Making the strategic business plan successful
An organisation can maximise the chance of the strategic business plan being an important
and useful part of the strategic tools of the business by ensuring that the plan has the
following characteristics:
It is simple but comprehensive. A turgidly written strategic business plan, full of
caveats and different scenarios, will be more confusing than helpful. So, the style of
writing and presentation of the strategic business plan is actually quite important, even
though it is primarily a task of documentation. It must be understood by those who need
to make it work. Having those who have to implement the plan as writers has many
advantages, but a well-written, consistently styled strategic business plan written by an
individual at the centre of the organisation can achieve the same ends. Keeping the
strategic business plan as short as possible, yet comprehensive, is also important, if
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STRATEGY @ WORK 2
3 M ’ S S T R AT E G I C B U S I N E S S P L A N ‘ S T O R I E S ’
Diversified conglomerate manufacturer, 3M,
grew dissatisfied with the bullet point strategic
plans it was producing. Outsiders—and, more
importantly, insiders who were not part of the
planning process—simply could not tell from the
set of bullet points how the units perceived themselves to be different from their competitors. This
was because bullet points leave critical relationships unspecified and critical assumptions about
how the business works unstated. Further, such
strategic business plans lacked a sense of excitement—necessary if employees were to be
committed to them.
To address these issues, 3M began to write its
plans using narratives from storytelling. First, the
plan sets the stage. It defines the current situation
in an insightful, coherent manner. Next, the plan
introduces dramatic conflict. What challenges
does the organisation face? What are the critical
issues for success? Finally, the story reaches a
resolution, in a satisfying, convincing manner.
How will the organisation overcome the
challenges?
Requiring a plan to tell a story forces the plan
writer to bring to the surface buried assumptions
about cause and effect. It creates a richer picture
of the context. Flaws in the logic—like those in a
story—are glaringly obvious and readers find it
more interesting and compelling to read.
Source: Based on Shaw, G., Brown, R. & Bromiley, P. 1998,
‘Strategic stories: How 3M is rewriting strategic business
planningÕ, Harvard Business Review, May–June:4.
the plan is to be absorbed by operating managers. Consulting firms and several
organisations have developed a ‘Plan-On-A-Page’ concept. This approach provides the
complete essentials of the strategic plan on a single page, which can be widely
distributed and displayed throughout the organisation.
Another approach to simplicity has been the introduction of narrative stories, which
are more engaging than dry business documents. For instance, 3M introduced the
practice of writing its divisional strategic business plans as stories, in order to make
them more understandable to employees (see Strategy @ work 2).
It is credible and feasible. Many plans fail because operating managers simply do not
believe in them (often through lack of involvement in the process). Some plans fail
because, even though they are feasible, lower-level managers simply do not believe that
top managers will provide the resources or support to enable the plan to be achieved.
It is widely circulated, widely understood and widely accepted. Not only do many
people in the organisation need to have access to the strategic business plan and to
understand it, but they also need to accept it (see Chapter 2). This is not an easy task
to achieve. It requires good internal communication, openness to questioning and
debate, and time for the plan to be absorbed, particularly if it is radical in its proposals
(see Chapter 14). The plan covers not only the business strategy, but also how to
achieve the business strategy. This must also be accepted if it is to actually happen.
The budget is linked to the plan. Managers do not want to report on two conflicting
systems. If forced to do so, they will concentrate on achieving the (short-term) budget
rather than the (long-term) strategic business plan. The budget already exists when the
strategic business plan is formulated, so the budget for the new period must be adjusted
to account for any changes in strategy in the plan. Therefore, the budget must be linked
to, and integrated with, the strategic business plan, not the other way around (see
Figure 2).
The reward system is linked to the plan. Managers and employees will do what is
necessary and achievable to maximise their personal performance under the existing
FIGURE 2
Linking the strategy, strategic business plan and budget
Formulate
strategy
Write strategic
business plan
Long-term control
Aligned
Determine budget
based on strategy
Make budget first year
of strategic business plan
Short-term control
reward system. For the strategic business plan to be successful, it must be consistent
with the reward system. (Or the reward system must be changed to encourage
behaviour consistent with the plan.)
It is timely. The strategic business plan must be available before the start of the
planning period so that there is time for the actions that are required to be put into
place. In many government organisations, this simply does not occur, making the
strategic plan of little value.
It is monitored and reviewed. Often the strategic business plan is prepared, filed and
forgotten, with emphasis returning to the operating budgets (which may or may not be
consistent with the strategic business plan). Unless the strategic business plan is
constantly being used to assess business performance, and unless the operating
budgets are directly linked to the strategic business plan, the plan will simply gather
dust and have little influence on organisation behaviour.
Reasons for plan failure
There are many reasons why even brilliant strategic business plans fail. Fundamental
reasons include the inability to determine a clear strategy, or to distinguish the purpose of
the organisation from the implementation actions. Also, the planning process often fails to
produce the critical insights required to develop innovative, value-creating ideas.9 Other
reasons include:
There is a failure to focus on implementation. Too often there is a belief that, once the
strategic plan is prepared, the job is complete. But it is not until the implementation
projects in the plan are actioned that the strategy is implemented.
It may not be accepted by the functional/operational groups on which its
implementation relies. Fundamental functional/operational information may have been
overlooked, particularly if the plan has been prepared by central specialists, making the
plan unworkable. Alternatively, the functional/operational specialists may deliberately
ignore the plan because they were not involved in its final version and do not agree
with it. Getting functional/operational managers to sign off on the plan, either
physically or by having their names against specific task responsibilities, is one way of
increasing commitment to the plan. Knowledge that there is a follow-up process to
review performance against the plan is another way to increase commitment.
It is so detailed and long that few people actually understand what the organisation is
trying to achieve. It is extremely difficult for most organisations to predict detailed plans
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more than a year in advance. It is quite likely that much of the detail is actually wrong.
Further, there is a large time cost involved in preparing such detailed plans. Large plans
are also often communicated to few people. All these aspects multiply the chance of
failure for such a plan.
Its circulation is limited. Many managers simply never see the strategic business plan
and so they make their own decisions in ignorance of what the organisation’s overall
plan actually is.
It is out of date. The plan may have had a long gestation period so that, by the time the
plan is finalised, the circumstances have changed, invalidating key aspects.
Alternatively, the plan is not completed by the start of a particular financial year, so that
the operating budget and the strategic business plan—which ought to be compatible—
are not. Managers will then choose the short-term, more detailed operating budget as
their performance target rather than the less detailed, less evaluation-oriented strategic
business plan, for they will certainly be judged by performance against budget.
Mintzberg argued that the process of strategic planning has three fundamental fallacies
that significantly affect its success rate.10 First, planners overestimate their ability to predict
the future. He argued that ‘visionary’ managers actually create their strategies in intuitive
and creative ways, rather than base them on their ability to predict the future from data.
Second, he argued that plans should involve those who actually have the data, not those to
whom the data is passed, and who are often quite detached from how activities and
operations actually work. The use of only hard data denies the value of qualitative
information. Hard data is also often out of date. Third, he argued that attempts to formalise
the strategy process, through such things as planning workshops and agendas, ignored the
ongoing learning dimension involved in strategy making. He argued that planners should
be documenters of the strategic thinking, not creators of it. This is also our view.
Summary
In this appendix, we have considered the strategic business plan—that is, the documentation of the
strategic thinking of the organisation. We have outlined the advantages of having a formal strategic
business plan, and considered its contents and the processes for constructing it. Finally, we considered
how to make the strategic business plan successful and why strategic business plans tend to fail. The
strategic business plan is an important part of the complete process of strategic thinking, analysis and
action. Its role is underestimated by texts. This appendix shows how the strategic business plan fits into
the strategy process and how it can be used most successfully to help implement strategy.
Endnotes
1 Hubbard, G., Pocknee, G. & Taylor, G. 1996, Practical Australian Strategy, Prentice Hall, is a rare exception.
This chapter draws heavily from that chapter.
2 Mintzberg, H. 1994, ‘The fall and rise of strategic planning’, Harvard Business Review, January–February:107–14.
3 See Fenton-Jones, M. 2007, ‘Strategic planning delivers outperformance’, The Age, 6 February; Bonn, I. &
Christodoulou, C. 1996, ‘From strategic planning to strategic management’, Long Range Planning,
4
5
6
7
29(4):543–51; and Goodwin, D. & Hodgett, R. 1991, ‘Strategic planning in medium size companies’,
Australian Accountant, March:71–5.
Morkel, A. 1990, Strategic Business Planning, Do It Yourself, 3rd ed., Australian Institute of Company
Directors.
‘Functional goals’ are goals for those major areas or activities of the organisation that impact on the overall
goals. Such goals may be related to important activities or to processes, as well as to functions. Similarly, the
word ‘goals’ used here may be called ‘objectives’, ‘targets’ or ‘measures’ in other organisations.
In many cases, capabilities and gaps are termed ‘strengths’ and ‘weaknesses’ in practical strategic business
plans. We discussed in Chapter 4 why we believe capabilities and gaps are more appropriate than the
traditional strength and weakness analysis.
Hubbard, G., Samuel, D., Heap, S. & Cocks, G. 2002, The First XI: Winning Organisations in Australia,
Wiley.
8 Bonn & Christodoulou 1996, op. cit.
9 Campbell, A. & Alexander, M. 1997, ‘What’s wrong with strategy?’, Harvard Business Review,
November–December:42–51.
10 Mintzberg 1994, op. cit.
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Preparing a strategic business plan

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