One of my favorite quotes related to planning comes from American inventor and businessmen
Thomas Edison.
He said being busy does not always mean real work.
The object of all work is production or accomplishment and to either of these ends there must be
forethought, system, planning, intelligence, and honest purpose, as well as perspiration.
Seeming to do is not doing.
Edison's words stress the significant role that planning has not only for individuals,
but also for organizations.
Planning can be described as the process of establishing goals as well as outlining strategies
to achieve those goals.
Experts have found that planning contributes to increased effort, persistence, and even
serves to focus energies on matters that are deemed to be important to organizational success.
But with so many moving parts to businesses today, how do they engage in effective planning
at all levels of the organization?
Planning from the perspective of a business is actually a multi-level process.
If you recall back from our discussion of the traditional management hierarchy, there
are three levels of management.
From top to bottom we have top managers, middle managers, and first-line managers.
Each level of management possess different responsibilities and also plays a different
role in the planning process.
Top managers are responsible for creating what are known as strategic plans.
These strategic plans are long-term, commonly covering the next two to five years, and communicate
the organization's goals as well the actions needed to achieve those goals.
The starting point to any strategic plan is the vision and mission statement.
These two statements are very important, and are designed to shape decision-making in the
organization.
An organization's vision statement serves to convey what it would like to achieve or
accomplish and serves as a guide to current and future decision-making.
Although vision statements can be any length, it's usually a better idea to keep them short
to avoid diluting efforts.
Amazon's vision statement is to be the earth's most customer centric company; to build a
place where people can come to find and discover anything they want to buy online.
Despite only a few sentences, Amazon's vision statement clearly communicates what it wants
to achieve and thus serves as an excellent guide to decision-making.
After a vision statement is crafted, top managers then create a mission statement for the organization.
A mission statement is an actual declaration of the organization's purpose or reason for
existence.
While the vision statement communicates what an organization wishes to accomplish, the
mission statement communicates what an organization actually does.
For example, Google's mission is to organize the world's information and make it universally
accessible and useful.
That mission of Starbucks is to inspire and nurture the human spirit—one person, one
cup and one neighborhood at a time.
Both of these statements are short and simple, but accurately communicate why each of these
organization's exists.
Like a vision statement, an organization's mission statement serves to assist top managers
and others in evaluating potential courses of action.
This helps an organization ignore those actions that are not consistent with their established
mission.
If you're having a difficult time grasping the difference between the two statements,
one way to look at them is like cause and effect.
An organization that executes on its established mission is more likely to achieve its established
vision.
Now that a vision and mission statement have been established, top managers are responsible
for setting strategic objectives.
A strategic objective is a specific goal that serves to unify the efforts of the organization.
Like all goals, strategic objectives are time-bound meaning there is a specific date that they
are to do be achieved.
For example, top managers may decide on a strategic objective that entails establishing
twenty-five percent market share in a certain market by the end of 2016.
This objective will then have a trickle down effect as managers at lower level of the organization
develop separate goals that, achieved together, will increase the chances of the organization
accomplishing its strategic objective.
Now that top managers have engaged in strategic planning, its the responsibility of middle
managers to engaging in planning of their own.This planning is referred to as tactical
planning, and typically ranges from six months to two years in length.
By creating tactical plans, middle managers are outlining how the organization intends
to use its resources to achieve its strategic objectives.
These resources commonly include labor, technology, infrastructure, and financial capital.
Looking back to our original strategic objective, we may develop a tactical plan that includes
increasing advertising expenditures in under-represented markets and developing partnerships with key
retailers as actions to accomplish our objectives.
After tactical plans have been developed, first-line supervisors have the responsibility
of applying those plans to their areas of responsibility.
This type of planning is referred to as operational planning, and involves creating short-term
goals pertaining to the production or delivery of products.
Commonly ranging from thirty days to six months, operational plans are designed to help an
organization accomplish goals established in its tactical plan.
A possible operational plan could be to increase production in anticipation of increased demand,
or even optimizing product distribution to decrease delivery time.
Despite the involvement of a different set of managers, it's important that each stage
of the planning process is consistent with the other.
In fact, the reason that planning begins at the top of the organization and not the bottom,
is so subsequent goals and objectives can be set with a primary objective in mind.
If planning started at the bottom, imagine the inconsistencies that would develop as
each business unit pursued its own goals and objectives.
Organizations do not simply strive to be busy, but strive to utilize their resources in an
effective, efficient, and focused manner to accomplish their established goals.
If you still have questions on the planning process go ahead and leave a question below
and I'll do my best to get back to you in timely fashion.
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Thanks for watching.