Quality Management Strategic Planning
Article by Warren Alford
?Our plans miscarry because they have no aim. When a man does not know what harbor he is making for, no wind is the right wind.? Seneca
Planning is a major component of any organization and without objectives, all is left to chance. Amazingly, many corporations have adopted the ?let?s see? mentality which has resulted in their loss of the strategic edge and advantage. This may seem far-fetched but actions speak louder than words and the truth is revealed through those actions.
When asked what their objectives are, many organizations respond, ?To make money?. This is a bit of a clich?, which does not represent a true objective. There are many ways to make money for an organization; some positive (?Be the best at fulfilling the customers needs?) and negative (?Cut salaries and jobs?). Both will ?make money? for the company but the positive objective is too vague and the negative objective could be devastating to the company.
Without clear objectives, different departments may waste resources or even compete with one another; which is counterproductive and a serious problem. Objectives are important to not only lead the company to attainment but also to provide a way to get there, while measuring the progress along the way. Objectives should be well thought out and a serious analysis of the company should be made during the process. For leadership to arbitrarily create an objective that ?sounds impressive? or will ?make shareholders happy? may very well be the ?nail in the coffin of their career?.
Objectives must be created by leadership and cascaded throughout the organization. The objectives should be measurable (achievement / timeliness), attainable, easily understood, specific, realistic, in line with the company vision (Figure 6) and communicated to everyone in the company.
While this seems like Business 101 at the Community College level, which sounds very elementary, many companies have omitted these important planning issues. Objectives do not create themselves and from the CEO to the hourly paid employee, all should know, understand and work to attain the objectives. Strategic planning represents the idea of forward -looking leadership and a workforce in step with the planned objectives. Everyone should know the objectives and the only way to know exactly where you are as a company, is to measure those objectives. It should be no secret as to the progress along the way. It must begin with the Vision.
Analyze your company at the high level. Answer the next few questions.What is your company?s Vision?Is it easily understood?Is it exciting to stakeholders / shareholders?Is it clear and comprehensive in meaning?Does it set the tone for employees?Does it create unity of purpose?Is it challenging and attainable?What is your company?s Mission Statement?Is it your company?s core purpose?Is it inspiring?Is it market-focused?Does it reflect what you want the company remembered for?Can it be measured?What are your company?s Guiding Principles?Do the Guiding Principles provide the framework within which the company will pursue and achieve its Mission?Are these values shared throughout the organization?
What are your company?s Broad Strategic Objectives?Are they general enough to prevent frequent revisions?Are they easily understood?Are they in the 5 ? 10 year time frame (3 ? 5 is actually better)?Do they support the Mission Statement?Are they more specific than the Mission Statement?What are your company?s Tactical Objectives?Will they achieve the Broad Strategic Objectives?Can they be accomplished within a defined time period?Are they quantifiable and measurable?If you do not have all of these elements or you answered ?no? to any of the questions, you may need to review, amend and implement as needed.
Strategic Planning begins with collecting and arranging facts and data from the Strategic Thinking process. The most commonly used tool by upper management to collect the information is the SWOT Analysis (Organizational Strengths, Weaknesses, Opportunities & Threats). This tool helps to determine the company?s position. The Strengths / Weaknesses are usually viewed as internal and the Opportunities and Threats are usually external.
For example, the limited cash flow of a company would be categorized as a Weakness while owning 85% of a market share would definitely be a Strength. Knowing trends in market growth will also be useful in preparing the SWOT. A key concern when preparing a SWOT is a lack of objectivity. This may be as simple as making unfounded assumptions that are not supported with facts and data or downplaying a true threat. Intuition and hopes should not be used in preparing the SWOT. If you cannot measure it, you cannot accurately predict it. If the item may become a Threat, treat it as such to be safe.Once the SWOT is complete, it is time to form the framework of the Vision Statement.
The Vision StatementThe Vision Statement is one of the most misunderstood of the Strategic Planning tools. The vision of the organization represents the ?dreams that can come true?. The formation of the statement should include input from all senior leaders and it tells where the company is going in the future. It can be expressed as monetary, competitive or superlative and should be for at least a five-year timeframe.An example of a Vision Statement: ?To become number one or number two in all markets we serve and revolutionize our company to have the strengths of a big company while combining the leanness and agility of a small company.? General Electric
The Mission StatementIf the Vision statement represents dreams that can come true, the Mission Statement goes one-step further to describe the organization, what it does and where it is going in the future.# The Mission defines the purpose of the company and is often combined with the Guiding Principles or Values Statement. An example of a Mission Statement: ?Our purpose is to delight our customers by delivering a quality service, in a cost ? efficient manner through the contributions of all associates.? Prudential Assurance Life
The Guiding Principles (Values)These principles provide a methodology for the pursuit and attainment of the organization?s Mission.Usually constructed into five to seven core values, the Guiding Principles represent shared ideas and give shareholders and stakeholders alike, a representative summary or abstract of business, market, financial and in some cases, moral stance.Example of Guiding Principles: Our company places customer loyalty as our highest priority, even above customer satisfaction;We will consistently exceed our customers expectations;We will actively engage our employees in our business decisions;We treat our stakeholders as partners;Our company remains environmentally friendly and strives to operate with a passive impact on the environment;Our company will treat our employees with dignity, respect and in a professional manner; We will continuously improve our internal and external processes, procedures and relationships.
Broad Strategic ObjectivesA goal is usually long term (3 ? 5 years) while an objective is short term. Objectives ?get the job done?, so to speak.The Broad Strategic Objectives are more specific than the Mission and they commonly fall into the realm of ?what? instead of ?how?. Considerable thought and planning should go into the creation of these objectives as to prevent frequent rewrites. Strategic Objectives should be easy to understand and apply by all employees. They should represent a 3 ? 5 year period, although 5 ? 10 years is perfectly acceptable.
The objectives must also be aligned with the organization?s Guiding Principles and they must support the Mission Statement.As implied by the name, Broad Strategic Objectives are strategic by nature, which requires senior leadership to be intimately involved in the planning, construction, implementation and evaluation of the objectives. Once created, these objectives take on a life of their own. Without top ? down support, these objectives will simply be ?warm and fuzzy? words. No business has ever succeeded by sitting around the campfire singing ?Kum Ba Ya? (except maybe the YMCA). Without actions, these words will not accomplish anything.
The use of Scenario Planning is also a good tool to assist with creating Strategic Objectives. When developing objectives, leadership may be prone to Groupthink, overconfidence or tunnel vision.The Brainstorming technique will help create scenarios that will logically consider cause and effect situations. Once the different scenarios are visualized, appropriate contingency plans can be developed. This works especially well when creating a Risk Management Profile.
Tactical ObjectivesThe last strategic planning level is represented by the Tactical Objectives. These objectives are well-defined methods for achieving the Broad Strategic Objectives. It is usually at this point in which the focus begins to shift to allocation of resources, budgetary assignment and funding.
As the name implies, the tactics are described and the methodology defined. One of the most important attributes for the objectives is being ?measurable?. It is very important to keep that in mind when creating the objectives. ?If it cannot be measured, it cannot be managed?.
These objectives must be specific and detailed. There should be no misunderstandings within the organization and the draft of objectives should be cascaded through the organization for comments and/or feedback. If there are questions, or if the objectives are too vague, they should be amended before deployment. This process may take several amendments and additional objectives may be created from the solicited feedback gathered.
Factors To ConsiderThere are certain factors to consider during strategic planning. There are many tangible and intangible elements that require thought and a thorough understanding before the planning phase is complete.The entire planning phase may last six months or perhaps more depending upon the complexity of the organizational structure and market.
Professor Michael Porter of Harvard Business School developed a list of competitive forces, which should be analyzed to exploit the results of the SWOT analysis. Application of the list to the SWOT will help define the areas that need more attention and the ones that need adjustments.
The Five Competitive Forces are:The threat of new market entrants ? This will have a direct effect on your business and planning the contingency is the best possible mitigation method. The six possible barriers should be considered:Economies of Scale: A new entrant into the market must be prepared to compete on a large scale which requires exceptional operating techniques;Product Differentiation: If brand loyalty is an obstacle, this may force new entrants to invest substantially to counter brand loyalty effects;Capital Investments: Large investments in inventory, marketing, R & D, etc. may be required;Learning Curve: This cost advantage may occur from being further down the learning curve and having assets such as experience and intellectual property rights;Distribution Channels: Existing distributors may be closed or open to new entrants;Government Policies: Regulated industries may enjoy protection from new entrants but changes in regulation may create new entrants who can fill a void or vacuum.
Power of Suppliers ? A supplier will have a better bargaining position if:The industry is dominated by fewer companies;The supplier?s product is unique;The industry is not of major importance to the supplier;There are no substitutes for the product.Power of Customers ? Customers and suppliers are considered to be on opposing sides in an industry. The customer becomes powerful if:Economies of Scale are large and purchases are large;The product is a small part of the buyer?s total cost;The buyer is in a ?low cost? industry and must buy accordingly.Substitute products ? A cap on potential profits may result and cause price reductions throughout the industry.Industry rival ? Significant competition may create price wars and collapse the market profits. Industry rivals have the following characteristics:Numerous market competitors;Slow industry growth;Product is a commodity;Excessive capacity;The exit barriers (cost of leaving the industry) are too high;There is intense rivalry.
A company can use this tool to better position itself in a market, protected by the capabilities and advantages, and it can reduce the threats while taking advantage of future business opportunities.One other consideration is the stakeholder. The objectives and goals must be aligned with the needs of the stakeholder. A stakeholder may be stockholders, leadership, employees, suppliers and customers. ISO also recognizes the community and society as a stakeholder.
It is important to consider these groups collectively and individually to ascertain the needs and ensure the decisions address their needs.
http://www.warrenalford.comhttp://www.amazon.com/Warren-L-Alford-Jr/e/B003KPLSNK
About the Author
Warren Alford is a Quality Assurance Group Leader for a global simulator manufacturing company. In the past, he held the position of Quality Manager of the local QMS for a global flight simulation training company. In that position he was responsible for planning and scheduling the Quality Monitoring Program, including auditor selection and training, performing audits, risk management and keeping upper management informed of the QMS status. He has also served as Lead Auditor during the performance of world-wide concurrent, multi-site Quality audits.Warren?s paperback books and audio books are distributed world-wide.He holds the following professional certifications:ASQ Certified Manager of Quality / Organizational Excellence (CMQ / OE)ASQ Certified Software Quality Engineer (CSQE)ASQ Certified Quality Auditor (CQA) / Lead Quality AuditorPMI Project Management Professional (PMP)Member of American Society for Quality (ASQ) and Project Management Institute (PMI)Warren Alford grew up in Louisiana. He learned to fly at age seventeen and after obtaining his Commercial pilot?s license, flew worldwide as an airline pilot in a career spanning over twenty years.http://www.warrenalford.com
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