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Growing Talent Development Firms: Planning Your Plans
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Wednesday, September 27, 2017
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Management guru Peter Drucker once said, “The best way to predict the future is to create it.” The more difficult challenge, of course, is how to go about creating the future if the only thing we really know about it is that it will be different from what we know today. Despite Louis Pasteur’s famous saying that “fortune favors the prepared mind,” does planning of any sort make sense in this volatile, uncertain, complex, and ambiguous world?

Former President Dwight D. Eisenhower had an interesting spin on the concept of planning when he said, “In preparing for battle, I have always found that plans are useless, but planning is indispensable.” To his point, I think what planning can do for us is bring the future into the present so that we effectively respond to it. This is certainly the case for the talent development industry, as it is for almost all others. But, while planning seems to make sense, the types of plans could become useless unless each is well defined with specific intended outcomes.

There are three types of overall plans which sometimes get confused with one another: business, strategic, and operating plans. Let’s look at each one of these.

Business Plans

The main purpose of a business plan is to assist in the conceptualization, or even birth, of the entity. It spells out what the business model will be, what it is expected to provide and deliver, whom it is intended to serve, whom it will compete against, and how it expects to operate. It is a high-level proposal for getting an entity off the ground, including its business and marketing strategy and start-up and implementation plans. It is often presented to potential investors to gauge their interest, and as such always includes a financial pro forma for at least the next five years.

Strategic Plans

These are created to help map out the future of the business by first clarifying its long-term mission or purpose for being, its vision for what the business will achieve, and the values by which it will operate. Author and speaker Simon Sinek calls these the why, the what, and the how of the business. Getting clear on the why will drive the what and subsequently the how. Typically, strategic plans have an expiration date, after which they are revised. Usually, this has been for a five-year timeline. However, in this fast-paced, changing world, most organizations are opting for a shorter timeframe.

My earlier blog post in this series (May 2015) provided a detailed process by which such a plan could be created. The steps after clarifying your mission, vision, and values include determining your growth metrics—that is, how will you measure success; the critical few must-do strategic imperatives; the key initiatives or projects for accomplishing each imperative; the critical actions for each initiative delineating roles, timelines, and milestones; and those things the business will stop doing that aren’t adding any value to moving forward effectively.

Operating Plans

The third type of plan is one that has the shortest timeframe—it corresponds to the annual budget cycle. The operating plan itemizes the specific revenue sources and expenses required to achieve them. The result is a monthly profit and loss (P&L) statement that cumulates over the budget year until final numbers are collected, spelling out the financial state of the business. Like any P&L statement, it provides a critical and relatively frequent glimpse into how the business is doing, under what margins it is operating, what expense categories it is tracking, and ultimately its profitability. The operating plan provides a lens through which the business’s performance can be monitored and assessed. Necessary adjustments can be made going forward.

These three types of plans are obviously closely related. Indeed, they are sequential, with the business plan serving as the foundation, upon which the strategic plan is built, and from which the annual operating plan is constructed. The table below offers a brief comparative summary of these plans.

Plan Type

Business Plan

Strategic Plan

Operating Plan

Term

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Evergreen

3-5 years

1 year

Purpose

Establish the business

Define the business

Measure the business

Goal

Foundation setting

Vision achievement

Financial effectiveness

Review

Once or twice

Periodically and quarterly

Annually and ongoing

It is important to fully understand how to best utilize these three critical elements of business planning if you expect to build and grow your firm. What have you done to incorporate these three planning options into your business cycle? How have you integrated them to build upon and support one another?

For more insight, check out The Complete Guide to Building and Growing a Talent Development Firm.

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