Dialogue Insights

April 2007

Why Plan?
by Robert M. Donnelly

You would think that anyone starting a business would have a well thought out and written business plan -- wouldn't you?

How about someone who has been in business for years -- maybe?

But the truth is that many CEOs of growing firms do not have a well done business plan. Some don't even have a good budget. Case in point: Arnie Miller, CEO of Matrix Essentials. When I met Arnie he was running a $220 million business with about 800 employees and no business plan. He was running alright, running just to keep up.

I wrote a seminal article for Inc. magazine a while ago about one of their Inc. 500 firms entitled "Stop the treadmill -- I want to get off." It was about another CEO of a rapidly growing firm who was in danger of losing his business and his family because what he set out to achieve -- fast growth -- was strangling the life out of him and leaving him no time for his family.

In both these cases, and many more, I was able to get these CEOs to step out of the combat zone and put away their fire extinguishers long enough to focus on the age old questions facing any CEO:

Where are we now?

Where do we want to be?

How are we going to get there?

Without a plan, every day is a crisis. What else can it be?

When the only plan you have is to sell more today than yesterday, and when that doesn't happen panic sets in, there is no way you can think clearly. Many CEOs of growing firms that I have met spend more time planning their vacations day-by-day, and sometimes hour-by-hour, than planning for the future growth and profitability of their business.

Planning is anticipating the inevitable, but if you do not know what the inevitable will be you certainly can't plan for it.

Business is a numbers game pure and simple.  It's about customers, competitors and you  unique selling proposition. Many CEOs I have met cannot clearly articulate what their unique selling proposition is, or in other words what is really different about their product or service than those of their competitors? The fundamental rule of the marketplace is that if you are not offering anything different, even if it's just better customer service, why should customers select
your product or service over those of your competitors? For that matter, why should they even seek you out?

Isn't that the fundamental problem that American car manufacturers have gotten into? Except for a few niche models there really is nothing unique or different about their cars when compared to their foreign competitors, notably Toyota. Toyota has achieved excellence in the three basic components of perceived
customer value: quality, service and price.

Did that happen by chance? No -- it was planned.

Planning is the process by which an organization can become what it wants to be. Planning is the identification of what we as a company can do to satisfy the specific requirements of a defined collection of  customers better than our competitors. It is our core technology converted into our unique selling proposition for those customer types.

Planning is the identification of a problem that a distinct number of customers have and the packaging of your solution in such a way that it makes it difficult, if not impossible, for your competitors to duplicate for those customers. It is the work required to identify these types of opportunities and the allocation of resources in the form of a strategy to exploit them.

These strategies need to be clearly laid out  in a narrative describing in detail who is going to do what with what resources in a specific time frame, and what are the expected profitable outcomes; and how are we going to control and measure progress along the way quarter-by-quarter.

The real purpose and value of planning is to  determine what we must accomplish this week, or this month, or this year so that our business will continue to grow profitably over the next years.

Success at planning requires information -- information about customers and their changing requirements. If the customer gets to the future before you do, they will leave you behind. I have met many CEOs of growing firms who really do not know their customers as well as they need to. In reality, you are in the
customer business. 

One of the first questions I ask when I meet  the CEO on a new planning assignment is "who is your most profitable customer?" Typically, the response is "you mean who we sell the most to?"

Or, "our most profitable products are?" No, I am interested in which customers buying what mix of products represent your most profitable customers?

Business is about solving problems for customers. The goal should be to delight the customers with solutions to problems before  they know they have them. Isn't that what any well managed company does? It is part of their
planning process. They are constantly looking for ways to deliver excellent customer satisfaction by modifying their products to keep up with their constantly changing requirements.

Isn't that what Toyota has done with the Camry? And now with the Avalon and Lexus? Are you planning for the changing requirements of your customers?

Bob can be reached at rmdonnelly@aol.com or you can visit his site www.doctorbusiness.com.

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This column originally appeared in the December 2006 issue of Chief Executive.
Reprinted with author permission.

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An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc. 500 firms and is associated with NYU's Stern Graduate School of Business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer. He is the author of GUIDEBOOK TO PLANNING - A Common Sense Approach to Building Business Plans for Growing Firms.

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