Cooking up a Business Plan
Cooking up a Business Plan
I have noticed that firms often make one or other of two common mistakes when undertaking strategic and business planning. I have written a lot about the importance of exploring Strategic Intent (Identity, Purpose and Vision) in order to establish the firm’s high level strategy. But a basic and preliminary mistake is to go through the Strategic Intent exercise and then to think the job is done. If that mistake is made, the firm’s strategy will remain at a conceptual and aspirational level.
The second mistake made by some law firms is to treat strategic planning as a drafting exercise – someone goes away and writes a plan. This is also a mistake unless a strategic planning process has been undertaken to establish strategic intent, to analyse internal resources and the external competitive landscape and to make careful choices between a number of possible strategic options.
Planning the Ingredients
At the end of the day, strategic planning should result in a coherent business or operational plan which can be implemented – and monitored and measured along the way. Like every good dish, ingredients come before method. Excellent ingredients therefore form a good starting point, and the attached table shows the vital elements to be factored into the ultimate recipe. The blue section in the
middle of the table illustrates the strategic framework into which the business plan must fit and towards which the firm must be working if it is to achieve its objectives. The squares around this central core are based on the Kaplan and Norton Balanced Scorecard perspectives.
Asking the Right Questions
The key to successful planning lies in asking the right questions. When considering each of the business plan ingredients, the general questions to be asked and answered include
- What are (or should be) the lines of sight to the firm’s overall strategic intent and its high level strategic goals?
- What steps do we need to take in each of these perspectives?
- If we take action in one perspective, what effect is likely on the other perspectives?
- What are the action plans?
- Who is to be accountable?
- What are the timescales?
- What are the Critical Success Factors (How will we know we have been successful)?
- What are the Key Performance Indicators (the target measurements for each main objective that will encourage appropriate action)?
What is also important to realise that no single ingredient should swamp the ultimate dish, though it has to be recognised that no business plan will work unless it is based on frim financial foundations and unless the firm is deploying the right people. Flavours and elements also have to be balanced and aligned so as not to cause an adverse reaction in other ingredients. This means that all twelve areas within the four perspectives have to be taken into account in every area of the plan and with every action plan. It may be obvious, for example, that an increase in revenue budgets will have an effect on the People Perspective, the Client Perspective and the Operational Perspective but it has not always proved to be so obvious that a bold and aggressive lateral hiring policy can have dramatic effects not just on the People Perspective but on every part of the dish. The point is that the laws of unintended consequences can often be avoided with careful planning.
Questions also need to be raised in each perspective aimed at establishing what is needed to attain the firm’s objectives. Examples might be
- What financial resources do we have or will we need?
- What recruitment or skills development plans do we need to put in place?
- What promotional and business development activities do we plan?
- In what ways can we streamline and improve our processes and services in order to maximise efficiency?
Putting it all together
If the ingredients are carefully chosen and the right questions are asked, the formulation or drafting of the plan becomes easier. Look out for the next issue of the Edge International Review which will include an article by me which addresses how to draft and put in place an action-orientated and highly measurable Business Plan, which reflects the firm’s strategic intent. The key is to frame objectives which are aligned to give the best chances of future success – marketing, branding and general business development and client-focussed goals, efficiency and business process improvement goals and objectives for skills-building as well as sensible but stretching financial targets.