business plan versus the strategic planning process

8/4/2019 Business Plan Versus the Strategic Planning Process

1/14

2009

The Difference Between Writing a

Business Plan and the Strategic

Planning Process

By Robert NortonCEO Coach, Training and Serial Entrepreneur

www.AirTightMgt.com (508) 381-8013

AIRTIGHT MANAGEMENT IS THE FIRST EVER STANDARD FOR

THE INTERNAL MANAGEMENT SYSTEMS OF SMBS

THERE ARE SIX SYSTEMS THAT ARE REQUIRED AT DIFFERENT

STAGES OF DEVELOPMENT

PERMISSION IS GIVEN TO REDISTRIBUTE THIS DOCUMENT IN ITS COMPLETE FORM WITHOUT

MODIFICATION.


2/14

Copyright AirTight Management www.AirTightMgt.com (508) 381-8013 Page 2

Table of Contents

Introduction and Background on AirTight Management and Author ................................................ 3

AirTight Management is the Science and Structure of Management

Systems.......................................................................................................................................... 3

Key Elements of a Good Strategic Planning Process ............................................................................. 6

Highly Successful Business Model Tweaks ........................................................................................ 7

Driving Differentiation by Probing the Options .................................................................................... 7

The Macro Level Steps of a Good Strategic Planning Process ............................................................... 9

Tools that should be used in the Strategic Planning Process ........................................................... 10

The Vision Pie A Model to Flush out a Comprehensive Vision ...................................................... 11

Conclusion ..................................................................................................................................... 12

Your Major Options to Proceed ...................................................................................................... 12

Our Three Blatent Commercial Offers For You .......................................................... ..................... 13


3/14


Introduction and Background on AirTight Management and Author

AirTight Management

Less than 1 in 100 companies will grow to even $5,000,000 in sales or more. When they do mostfounders will be replaced by "professional" CEOs and others by investors or boards. Sometimes even bythe choice of the founder who realizes he or she has outgrown their experience level. This is because theskills to run and grow a company once it reaches several million dollars are very different than the skills toget it there. Even though these skills can be learned they are not easy to learn on the job.Learning this way will be VERY expensive!

This document and AirTight Management are for serious entrepreneurs, CEOs and senior managers whowant to grow significant companies with more than ten employees. Using these practices will be overkillfor single person businesses, small retailers or small service businesses with just a few people sellingtheir time and expertise.

The Six Systems provides complete solutions to all the management problems of growth using live

training. Our Six Systems are the only infrastructure to need to take your company to $100 million ormore. Large companies literally pay millions of dollars to install software to do just some of thesefunctions. AirTight allows you to do these things and more with easily trained conventions and simpletools like spreadsheets and word processors.

We will teach your management team ALL the Systems you need to transition to "professionalmanagement". Our Six Systems approach is more comprehensive than any other available because itcovers all aspects of the business across all disciplines. AirTight Management was developed over 20years by a CEO who grew two businesses to over $100 million in sales rapidly and read over 1,000 bookson management over that time.

Today we provide this training with a complete tool kit in live seminars, as an audio training set and on-site training and implementation help formats. We guarantee that AirTight Management practices will

greatly improve your company from both a strategic and operational (execution) perspective. These SixSystems will both save money and drive additional sales in short order.


4/14


Target Audience

This document is written for CEOs and senior

managers with influence and responsibilities

for the corporate Strategic Planning Process.

Purpose of this document

This document is design to help people make

the transition from a seat of the pants

business plan writing process to a more

through and complex collaborative process

that will generate better results when acompany has some experienced management

team members or can include outside

expertise in this process.

This process is also necessary when a business

is complex. This can happen by having multiple

markets, multiple products or simply because

it is a new business model without a proven

market.

Many people make the mistake of going

directly to writing the business plan without

the preparation work required.

About the Author

Bob Norton, CEO

Bob Norton is a serialentrepreneur with in-depthexperience launching andgrowing companies in manyindustries as both a CEO andas a strategic andmanagement consultant. Ashort list of his key

achievements include: Mr. Norton has grown two companies from

startup to over $100 million in sales andbeen a CEO since 1989.

Speaker and author of four books onentrepreneurship and growing companies

Creator ofThe CEO Boot Camp, AirTightManagement and other advancedmanagement and leadership trainingprograms for CEOs, entrepreneurs andsenior executives

27 years experience developing productsand services and growing businesses of allsizes including startups, turnarounds andworking in two multi-billion dollarenterprises (International ThomsonOrganization and Grumman (now NorthropGrumman).

20 years as CEO with four startup launchesand four other startups in senior positions asVice President, CTO, and Director ofSoftware Development.

Generated over $1+ billion in totalshareholder value (while at these

companies). Launched more than 50 products and

services that generate over $1 billion inannual sales.


5/14


The Difference Between Writing a Business

Plan and a Strategic Planning ProcessIt is often misunderstood exactly what the

difference between writing a business plan and

developing a strategic plan really is. Many

people may use these two terms somewhat

interchangeably but they are not the same at

all. In fact they are, and should be very

different.

In any complex project conceptual design mustbe done collaboratively BEFORE any writing

begins.

Writing a business plan before flushing out the

strategy is not just dangerous but almost

guarantees a sub-optimum plan will emerge.

Once you start writing you, and/or your team,

become mentally and emotionally invested in a

specific vision and plan. This shuts down the

creative process to explore, adjust yourbusiness model and improve. Thinking through

ALL the conceptual options and tweaking your

business model has more leverage than

anything else you can do. You must ask a lot of

What if questions that will help you explore

key changes to increase results.

The Strategic Planning Process is the most

complex and important process in your

organization.

The result of a strategic planning process should

be a complete vision that addresses all the

strategic level elements of a vision. This include

the strategies for product development (and

ongoing innovation), marketing, sales,

operations and finance. As you write a business

plan you may add tactical details but these are

often better left to the people who are

implementing.

The strategic plan should determine the what

will be done and detail major objectives, usually

no more than quarterly but often annually. The

how these objectives will be accomplished is

generally a more detailed process, often calledthe operational or business plan, which contains

specifics and financial models.

The writing of the business plan must not even

start until the strategic planning process is

complete. One reason for this is that the

strategic plan is the long-term (3-5 years)

foundation, while the business plan is more

focused on the short term (1 year) specifics, all

the while knowing it will be updated next yearbase on actual results and learning. In todays

world things are changing much more rapidly,

so it is a given that the plan must be revisited

regularly. For most SMBs this means semi-

annually and for some even quarterly.

You cannot really develop specifics on the one

year operations plan without the context of the

longer term plan. Of course the business plan

will contain elements of the strategy. Think of

the business plan as the documentation of

specifics, while the strategic planning process is

the process of exploring many conceptual

options at the highest level without concerning

yourself about any details of execution.


6/14


The writing of a business plan should not even

start until the strategic planning process is

mostly complete because the strategic plan is

the long-term (3-5 years) foundation, while the

business plan is mostly about the short term (1

year) specifics. Of course the business plan can

contain elements of the strategy. I would think

of the business plan as the documentation,

while the strategic planning process is the

process of figuring out the actual plan at the

highest levels.

Key Elements of a Good Strategic

Planning Process

A good strategic planning process is going to

accomplish the following objectives to validate

the business model and allow that plan to be

written:

1. Product definition

2. Market research

a. Definition of the target market

and customer (buyer)

b. Competitive intelligence

3. Risk analysis4. Collaborative input from all senior

managers representing all five key

disciplines (sales, marketing, product

development, operations and finance).

5. Total synergy and communications of

the management team to understand

areas outside their expertise

(understanding)

6. Input and buy-in from other key

employees (physiological ownershipand pride of authorship that drives

commitment)

These things are all activities that lead up to the

writing of the business plan. In other words

writing the business plan is simply the final act

of documenting the results from all these other

necessary activities.

The collective conclusions of these more

granular processes are what guarantees abetter plan. Attempting to write a detailed

business plan before these strategic design

steps are complete is bad planning. This would

be like framing a house before the foundation is

in place. It will result in lots of wasted time and

effort and even confuse people.

Each of these steps will flush out additional

opportunities to improve and tune the business

model. Lets look at just a few examples of

small business model changes that created

enormously successful businesses in already

mature markets.


7/14


Highly Successful Business Model Tweaks

Company/Product Break Through

Business Model

Tweak

Staples Replaced delivery with alarge store retail format

Dominos Pizza Guaranteed 30 minute

delivery

Federal Express Next day delivery

iPhone A phone with no

buttons (all soft keys)

Jiffy Lube Standardized,

comprehensive and fast

oil change with 17 point

inspection

McDonalds The burger, fries andmilkshake standardized

and cheap

Starbucks Strong (expensive)

coffee with focus on

experience and service

Payless Shoes Self serve - Eliminate

the sales person and cut

the shoe prices in half

This list of one sentence, fairly minor businessmodel tweaks made at least a $1 BILLION

difference in each case. In fact this little tweak

to the business model was the difference

between a hugely success business and an also-

ran one that goes nowhere.

So ask yourself: Did these business model

permutations come up while writing a business

plan or in discussions with other about the

concepts before that?

I would bet that virtually all of these came up as

a result of interactive, conceptual discussions.

Some are so simple that no doubt the idea

came from a single person BUT that idea was

most likely generated in an interactive

environment. The innovation process is

enhanced by brainstorming and a group of

people but must be focused to be productive.

In addition to the above reasons for using this

more elaborate process we must consider the

dynamic markets and customers of today andthe need for constant and never ending

improvement (CANI or Kaizen). Decades ago

this was an optional, though best practice,

philosophy. Today it is necessary to survive.

Driving Differentiation by Probing

the Options

Strategic planning requires that you test and

validate as many assumptions about the

business as possible. It requires free and

innovative thinking. If your mind is focused on

the writing it is not in its most creative mode.

Even when a business is fairly predictable there

will be many possible scenarios to think about

to optimize results. Think of the list of variables

that can be considered to improve a business

model and make it a break out business. Forexample:

1. Price

2. Target industry

3. Target customer

4. Psychographics

5. Demographics

6. Packaging

7. Delivery methods

8. Sales channels9. Sales process

10.Hundreds of feature options

11.Bundled services

12.Bundled products

13. Image

14.Exclusivity


8/14


15.Customization

There are an almost unlimited number of

permutations (remember factorials from high

school?) when there are this many variables to

adjust. Each change creates a slightlydifferentiated business and several can often

create a very unique business. Differentiation

drives all the things that create a strong

business model including:

1. Pricing power (profit margins)

2. Word-of-mouth

3. Cost effective marketing

4. High sales conversion ratio

5.

Repeat business

6. Referral sales

7. Distributors wanting to resell your

offerings (because they are

complimentary, not competitive.

When a business is young there are still many

unknowns and opportunities to make small

changes in the business model that can have a

large impact on the value generated for the

owners.

Some people may use the business plan writing

process as the iterative way to develop the

plan. I know I personally did this in 1989 with

my first major business launch because I did not

know any better then. However, this is hugely

inefficient because the level of effort required

writing all that text, detail and other things

mostly goes to waste through repetitive

changes. More importantly though many

possibilities are not properly explored when

writing, that are explored when talking

interactively and brainstorming.

It is a simple fact that groups come up with

better answers than any one individual.

Strategic Planning

Process

Business

Plan

Collaborative group

process

Individuals writing

independently

3-7 years Focus on year one

with some

extrapolation

What you will do = LT

objectives

More about how you

will do it

Concepts Specifics

Open ended

Brainstorming

Focus on how to

accomplish key

objectives

Looking outside the box Improving what has

already been decided

inside the box


9/14


The Macro Level Steps of a Good Strategic Planning Process

This model represents the macro level stepsthat should be taken in a good strategic

planning process to design, or optimize, a

business model. Lets review them

individually. However, please note that each

of these steps individual is complex and a 30 to

60 minute lecture in our CEO Boot Camps.

Therefore this detail is beyond the scope of

this document.

0. Defining the product is obviouslydefining the functionality and can

potential have hundreds of variables.

Whenever there are changes in the

product it can, and usually does,

impact the other steps in this broader

process.

1. Vision (see later)2. Market research requires collecting all

the data on the market to help define

the idea target customer. It also

requires doing competitive intelligence

and defining the messaging that this

market will respond to.3. Competitive landscape is mapping

visually the relative positions of

competitors to show (and get

everyone to understand) the

differentiation of your company

4. Skill Set Matrix is analyzing all the skillsyour need to be successful

1. Risk analysis requires looking at whatcan go wrong and the possible costs

and reactions to those possibilities.

This will often lead to a lower riskstrategy and business model.

The circular arrow indicates that these steps are iterative,or repeated until done.


10/14


What is crucial to understand about this process is that each time you change something in one area it

will have a ripple effect and change things in the other areas. Therefore you typically need to repeat the

process several times, though it gets faster with each cycle.

Tools that should be used in the Strategic Planning Process

1. Market research for data gathering (80% on Internet today)

2. Competitive landscape mapping

3. Competitive intelligence

4. SWOT Analysis

5. One-page Strategic plan document (available on request)

6. Risk analysis tool or framework

7. Brainstorming

8. Mindstorming

9. Messaging and branding framework

Yes this is all real work that will take many weeks to complete but the result is a plan that is solid with a

team that understands it and can implement it better. Without a collaborative process the team will

have both a lack of understanding and a lack of mental commitment, or ownership, in the plan.

Updating the plan in subsequent years, or shorter cycles if there are major external changes, will be

much easier and quicker with focus on specific areas that are at issue.


11/14


The Vision Pie A Model to Flush out a Comprehensive Vision

Note: A separate whitepaper is available free at www.CLevelEnterprises.com with a complete

description of a corporate vision which is in many ways a superset of the strategic plan.

Many companies offer business planning software and templates but these are just the writing and do

not help with the key issues that need to be flushed out by the entire management team. The

templates the include also guarantee you are not properly differentiated, as your business hsould be like

no other ideally. It is the strategic planning process that is valuable to get input from all team mebers

and buy-in from them. It is just a simple fact of life that a group can almost always come up with a

superior solution when compared to even the bet individual because the dynamic interaction will take

that best individuals ideas and improve on them.


12/14


If you throw your business plan in the trash after it was done 90% of the value is there in the heads of

the team and that is what counts most.

The process must be spread out over at least six to eight weeks and held in a very structured way. There

are so many variables and issues that any single meeting can go off in many directions and never resolveanything. These many problems and discussion must be broken down into focused discussions with clear

objectives.

Conclusion

So the strategic planning process is actually a set of processes but it is this breaking down into

manageable steps that will the human mind to grasp the pieces. By breaking this very complex process

down into steps we can involve more people, get better input and most importantly get people tounderstand and have ownership and pride in the resulting plan. The resulting rigor is guaranteed to

create a superior strategic plan AND business plan. They will then sell the plan (since it is theirs) to their

underlings and increase success.

Your Major Options to Proceed

1. Use this as a guide and try to do this well the first time. We do not recommend this for obvious

reasons. When was the last time you did something well on the first try? Especially something so

complex?

2. Buy our complete strategic planning kit with all the files, models and training you need for only

$369 (you couldnt even data enter all this stuff, even if you knew it all, for this price folks!) This

can work well if you have an experience management team with at least three members who

have ten or more years experience in the key disciplines where the risks in your business exist.

3. Hire a professional Strategic Planner with many years experience to facilitate your process. This

generally runs from $8,000 to $25,000.


13/14


Our Three Blatent Commercial Offers For You

OPTION #1 - The Strategic Planning Kit For Small and Medium Size Businesses

AirTight Management Systems #1 - The Strategic Planning Process is the most critical process

in your organization. Without doing strategic planning right nothing else can ever correct the

issues a bad plan can create. To get the most out of your management team you need a tightly

choreographed process that will allow maximum collaboration to leverage all the wisdom,

experience and knowledge in your business.

This AirTight Management System Implementation Kit provides not just the skills training and

process tools but also all the files on CD you need: Sample strategic plans, blank templates,

printable worksheets (Word files), and even agendas for the key meetings.

This kit includes the following items:

Audio training on developing

your corporate vision further and

the foundational principles of

company growth and what must

evolve as a company grows

Strategic planning process

outline and roadmap diagramwith three Strategic Planning

Manuals for your team

The famous one page strategic

plan. Step #1 of the three step

strategic planning process

Audio training on the strategic planning process itself

Audio training on managing risk and driving innovation. Innovation always

requires some risk taking so these must be done together.

Two audio training CDs on strategic positioning and the tools to develop

maximum differentiation, pricing power and competitive advantage. This is

what they teach at Ivy League business schools, only customized for small

and medium size businesses to be highly practical.

One data CD with all the forms, worksheets and agenda items you need with

PowerPoint templates, spreadsheets and sample plans and a license to use

this with up to 100 person companies (additional license fee for larger

companies).


14/14


The business design tools CD from the CEO and Advanced Entrepreneurship

Boot Camp (a $129 value) which includes models and worksheets for

marketing, branding and optimizing/designing your business models.

A professional strategic planning facilitator can cost from $10,000 to $25,000. With this kit you can get

many of the same benefits at a fraction of the cost. You can create anoptimum strategic plan and achieve superior results for your company using

this kit and process.

Only: $369 Click here to purchase now More Information

Includes 7 audio CDs plus the licensed DISC with all tools, models and samples

OPTION #2 - Attend our next Strategic Planning Workshop for $995 and get the above kit included

free. This is a special offer only to those who mention this offer specifically at registration so we can

bring the kit to the event.

OPTION #3 - Mr. Norton will also personally facilitate a strategic planning meeting for your team at a

cost of $3,500 per full day. Two days with 4-6 weeks between is generally recommended but three days

may be recommended for complex businesses. Facilitators normally cannot bring 20 years experience as

a CEO to the process but Mr. Norton can participate as a team member and facilitator due to the

experience. Most other work can be done over the phone and by email as the plan develops. Call (617)

571-7591 to discuss your needs.

business plan versus the strategic planning process

Documents