Strategic planning no-carbs

Every business book stresses the need for companies to do strategic planning. Every motivational speaker emphasizes the need to set goals to be successful in business and life. Yet few contactors have a workable strategic plan. Most have no plan at all.

Why the disconnect?

Construction is not a complex business, though some make it such with high-tech tools and complex cost accounting systems. Typical in construction we categorize how we manage work into three types: getting work, doing work and keeping score.

Of the three types, contractors enjoy most the doing work; less enjoy getting work;and fewer really relish keeping score. While most managers consider strategic planning as part of keeping score, I feel it should be another type of managing work,driving the business. Owners and senior managers generally do not plan their business; rather they keep themselves busy getting work and doing work. They are working in the business not on the business. They grow more by random opportunities rather than by design. When there is a market downturn, they are challenged to stay above water lacking the random lifejackets.

Some contractors question the need for a strategic plan. At best, they already have a business plan they submitted to the bank, so why a strategic plan? One owner even suggested that “strategic” is a bad word among contractors and to be avoided. A study by the Construction Financial Managers Association (CFMA) found that contractors who “regularly engage with the big–picture, long term vision and mission for their company are larger and more successful than their peers who do not.” Examples cited in the study are:

 

 

Contractors with strategic plans

Contractors without strategic plans

Return on Assets

4.8%

4.6%

Return on Equity

16.8%

12.7%

Months of Backlog

9.3

7.2

 

Some contractors feel that strategic planning is only for the large companies, but this is somewhat a chicken and egg issue. Did the plan lead to growing large, or does being large drive the need for a plan? Small contractors, who do strategic planning, do not go through as extensive of a planning process as larger companies, but still develop a plan and implement it. The reality is that any organization will do better if it knows where it is going, and the research proves it.

The report said “no time” was most often the cited reason contractors gave for not doing strategic planning. In construction, we are always too busy to stop and sharpen the saw. How does a company overcome the time crunch? The answer is almost too simple. Just do it! We all have the same 24 hours of time. There is never enough time to do everything we want to do. Making time for creating a simple strategic plan will save time and resources in the long run. What is a “simple” plan? It is one that answers these three questions:

  • Who are we? (Our purpose for existing.)
  • Where do we want to be in a few (five to 10) years? This is our strategic vision.
  • What actions do we plan to take this year to move towards the vision?

Whether you use all the terms of strategic planning (vision, mission, strategic intent, values, etc.) or not isn’t as important as having simple and meaningful answers to the questions and frequently communicating those answers to your employees. A simple plan need not take months to develop and several thick binders to document. It can be one to two pages. Managers become leaders by setting and communicating the direction the company is to go. Companies become more successful by having and following a strategic plan.

Strategic plans don’t need to have five year, three year and one year goals or objectives. That’s old school thinking. The plans of the clients I coach have an overall strategic vision of what they want to be in the future. Some call this the “True North.” Then they have the actions they plan to take in the next year to move in the direction of True North. This not only keeps it simple, but also keeps people focused on the time period they can have the most influence, the current year.

The strategic planning process doesn’t have to be complicated. The planning process I facilitate for companies usually consist of one full day. I call this No-Carbs planning. It is best done off-site, but can be done at the company’s training room. Either way, the important thing is that the planning team is committed to not allow work interruptions take them out of the effort. One president told his staff to not interrupt the planning meeting “unless blood was involved.”

A typical agenda for a strategic planning No–Carbs session includes:

  • A welcome/review of objectives, agenda, meeting expectations, the facilitator’s role and meeting the Code of Conduct.
  • Define or reaffirming the company’s significant purpose, such as why we exist and where we are going (our vision or True North).
  • A situation analysis: what we accomplished last year, where we are today, a review of customers and competition, environment scan (economy, labor, legal, technology, employees, market reports) and a SWOT analysis (strengths, weaknesses, opportunities and threats).
  • Identify key actions to take during the next year.
  • Determine how we will hold ourselves accountable and communicate our plan. (Most plans fail because of poor communications and poor accountability.)
  • A summary of the meeting and the next steps, and a meeting process evaluation.

The outcome of a No-Carbs planning session is a one-page summary (see example in Figure 1).

Figure 1 – Example of Strategic Plan No-Carbs Summary

 

When a company has a strategic plan, the planning process can cascade to all departments and employees. Each should align their planned actions for the year with the strategic actions. Any new endeavor or even a new project should be bounced against the strategic plan to make sure all efforts are going the same direction.

Actions need to have specific outcomes and due dates and should be review at least quarterly.

Companies with no strategic plans can and are successful in good times, companies that are successful over many years are more likely to get there with a plan than by default. Would you start a major project with no plans? The difference between managers and leaders is that leaders have a vision of where the company is going and plans to get there. What’s in your strategic plan?

Dennis Sowards is a construction industry Lean consultant and frequent speaker at the SMACNA and PHCC National Conventions. He is a guest writer for Contractor Magazine. His company is Quality Support Services Inc. and he can be reached at [email protected].

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