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The Difference Between Writing a Business Plan and the Strategic Planning Process

By Robert Norton
CEO Coach, Training and Serial Entrepreneur www.AirTightMgt.com (508) 381-8013

2009
AIRTIGHT MANAGEMENT IS THE FIRST EVER STANDARD FOR THE INTERNAL MANAGEMENT SYSTEMS OF SMBS THERE ARE SIX SYSTEMS THAT ARE REQUIRED AT DIFFERENT
STAGES OF DEVELOPMENT
PERMISSION IS GIVEN TO REDISTRIBUTE THIS DOCUMENT IN ITS COMPLETE FORM WITHOUT MODIFICATION.

Table of Contents
Introduction and Background on AirTight Management and Author ................................................ 3 AirTight Management is the Science and Structure of Management Systems.......................................................................................................................................... 3 Key Elements of a Good Strategic Planning Process ............................................................................. 6 Highly Successful Business Model Tweaks ........................................................................................ 7 Driving Differentiation by Probing the Options .................................................................................... 7 The Macro Level Steps of a Good Strategic Planning Process ............................................................... 9 Tools that should be used in the Strategic Planning Process ........................................................... 10 The Vision Pie A Model to Flush out a Comprehensive Vision ...................................................... 11 Conclusion ..................................................................................................................................... 12 Your Major Options to Proceed ...................................................................................................... 12 Our Three Blatent Commercial Offers For You ............................................................................... 13

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Introduction and Background on AirTight Management and Author

AirTight Management
Less than 1 in 100 companies will grow to even $5,000,000 in sales or more. When they do most founders will be replaced by "professional" CEOs and others by investors or boards. Sometimes even by the choice of the founder who realizes he or she has outgrown their experience level. This is because the skills to run and grow a company once it reaches several million dollars are very different than the skills to get it there. Even though these skills can be learned they are not easy to learn on the job. Learning this way will be VERY expensive! This document and AirTight Management are for serious entrepreneurs, CEOs and senior managers who want to grow significant companies with more than ten employees. Using these practices will be overkill for single person businesses, small retailers or small service businesses with just a few people selling their time and expertise. The Six Systems provides complete solutions to all the management problems of growth using live training. Our Six Systems are the only infrastructure to need to take your company to $100 million or more. Large companies literally pay millions of dollars to install software to do just some of these functions. AirTight allows you to do these things and more with easily trained conventions and simple tools like spreadsheets and word processors. We will teach your management team ALL the Systems you need to transition to "professional management". Our Six Systems approach is more comprehensive than any other available because it covers all aspects of the business across all disciplines. AirTight Management was developed over 20 years by a CEO who grew two businesses to over $100 million in sales rapidly and read over 1,000 books on management over that time. Today we provide this training with a complete tool kit in live seminars, as an audio training set and onsite training and implementation help formats. We guarantee that AirTight Management practices will greatly improve your company from both a strategic and operational (execution) perspective. These Six Systems will both save money and drive additional sales in short order.

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Target Audience
This document is written for CEOs and senior managers with influence and responsibilities for the corporate Strategic Planning Process.

About the Author

Bob Norton, CEO

Purpose of this document


This document is design to help people make the transition from a seat of the pants business plan writing process to a more through and complex collaborative process that will generate better results when a company has some experienced management team members or can include outside expertise in this process. This process is also necessary when a business is complex. This can happen by having multiple markets, multiple products or simply because it is a new business model without a proven market.

Bob Norton is a serial entrepreneur with in-depth experience launching and growing companies in many industries as both a CEO and as a strategic and management consultant. A short list of his key achievements include: Mr. Norton has grown two companies from startup to over $100 million in sales and been a CEO since 1989. Speaker and author of four books on entrepreneurship and growing companies Creator of The CEO Boot Camp, AirTight Management and other advanced management and leadership training programs for CEOs, entrepreneurs and senior executives 27 years experience developing products and services and growing businesses of all sizes including startups, turnarounds and working in two multi-billion dollar enterprises (International Thomson Organization and Grumman (now Northrop Grumman). 20 years as CEO with four startup launches and four other startups in senior positions as Vice President, CTO, and Director of Software Development. Generated over $1+ billion in total shareholder value (while at these companies). Launched more than 50 products and services that generate over $1 billion in annual sales.

Many people make the mistake of going directly to writing the business plan without the preparation work required.

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The Difference Between Writing a Business Plan and a Strategic Planning Process
It is often misunderstood exactly what the difference between writing a business plan and developing a strategic plan really is. Many people may use these two terms somewhat interchangeably but they are not the same at all. In fact they are, and should be very different. In any complex project conceptual design must be done collaboratively BEFORE any writing begins. Writing a business plan before flushing out the strategy is not just dangerous but almost guarantees a sub-optimum plan will emerge. Once you start writing you, and/or your team, become mentally and emotionally invested in a specific vision and plan. This shuts down the creative process to explore, adjust your business model and improve. Thinking through ALL the conceptual options and tweaking your business model has more leverage than anything else you can do. You must ask a lot of What if questions that will help you explore key changes to increase results. The Strategic Planning Process is the most complex and important process in your organization. The result of a strategic planning process should be a complete vision that addresses all the strategic level elements of a vision. This include the strategies for product development (and ongoing innovation), marketing, sales, operations and finance. As you write a business Copyright AirTight Management plan you may add tactical details but these are often better left to the people who are implementing. The strategic plan should determine the what will be done and detail major objectives, usually no more than quarterly but often annually. The how these objectives will be accomplished is generally a more detailed process, often called the operational or business plan, which contains specifics and financial models. The writing of the business plan must not even start until the strategic planning process is complete. One reason for this is that the strategic plan is the long-term (3-5 years) foundation, while the business plan is more focused on the short term (1 year) specifics, all the while knowing it will be updated next year base on actual results and learning. In todays world things are changing much more rapidly, so it is a given that the plan must be revisited regularly. For most SMBs this means semiannually and for some even quarterly. You cannot really develop specifics on the one year operations plan without the context of the longer term plan. Of course the business plan will contain elements of the strategy. Think of the business plan as the documentation of specifics, while the strategic planning process is the process of exploring many conceptual options at the highest level without concerning yourself about any details of execution.

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The writing of a business plan should not even start until the strategic planning process is mostly complete because the strategic plan is the long-term (3-5 years) foundation, while the business plan is mostly about the short term (1 year) specifics. Of course the business plan can contain elements of the strategy. I would think of the business plan as the documentation, while the strategic planning process is the process of figuring out the actual plan at the highest levels.

writing the business plan is simply the final act of documenting the results from all these other necessary activities. The collective conclusions of these more granular processes are what guarantees a better plan. Attempting to write a detailed business plan before these strategic design steps are complete is bad planning. This would be like framing a house before the foundation is in place. It will result in lots of wasted time and effort and even confuse people. Each of these steps will flush out additional opportunities to improve and tune the business model. Lets look at just a few examples of small business model changes that created enormously successful businesses in already mature markets.

Key Elements of a Good Strategic Planning Process


A good strategic planning process is going to accomplish the following objectives to validate the business model and allow that plan to be written: 1. Product definition 2. Market research a. Definition of the target market and customer (buyer) b. Competitive intelligence 3. Risk analysis 4. Collaborative input from all senior managers representing all five key disciplines (sales, marketing, product development, operations and finance). 5. Total synergy and communications of the management team to understand areas outside their expertise (understanding) 6. Input and buy-in from other key employees (physiological ownership and pride of authorship that drives commitment)

These things are all activities that lead up to the writing of the business plan. In other words Copyright AirTight Management www.AirTightMgt.com (508) 381-8013 Page 6

Highly Successful Business Model Tweaks

enhanced by brainstorming and a group of people but must be focused to be productive. In addition to the above reasons for using this more elaborate process we must consider the dynamic markets and customers of today and the need for constant and never ending improvement (CANI or Kaizen). Decades ago this was an optional, though best practice, philosophy. Today it is necessary to survive.

Company/Product

Break Through Business Model Tweak


Replaced delivery with a large store retail format Guaranteed 30 minute delivery Next day delivery A phone with no buttons (all soft keys) Standardized, comprehensive and fast oil change with 17 point inspection The burger, fries and milkshake standardized and cheap Strong (expensive) coffee with focus on experience and service Self serve - Eliminate the sales person and cut the shoe prices in half

Staples Dominos Pizza Federal Express iPhone Jiffy Lube

Driving Differentiation by Probing the Options


Strategic planning requires that you test and validate as many assumptions about the business as possible. It requires free and innovative thinking. If your mind is focused on the writing it is not in its most creative mode. Even when a business is fairly predictable there will be many possible scenarios to think about to optimize results. Think of the list of variables that can be considered to improve a business model and make it a break out business. For example: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Price Target industry Target customer Psychographics Demographics Packaging Delivery methods Sales channels Sales process Hundreds of feature options Bundled services Bundled products Image Exclusivity

McDonalds

Starbucks

Payless Shoes

This list of one sentence, fairly minor business model tweaks made at least a $1 BILLION difference in each case. In fact this little tweak to the business model was the difference between a hugely success business and an alsoran one that goes nowhere. So ask yourself: Did these business model permutations come up while writing a business plan or in discussions with other about the concepts before that? I would bet that virtually all of these came up as a result of interactive, conceptual discussions. Some are so simple that no doubt the idea came from a single person BUT that idea was most likely generated in an interactive environment. The innovation process is Copyright AirTight Management

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15. Customization There are an almost unlimited number of permutations (remember factorials from high school?) when there are this many variables to adjust. Each change creates a slightly differentiated business and several can often create a very unique business. Differentiation drives all the things that create a strong business model including: 1. 2. 3. 4. 5. 6. 7. Pricing power (profit margins) Word-of-mouth Cost effective marketing High sales conversion ratio Repeat business Referral sales Distributors wanting to resell your offerings (because they are complimentary, not competitive.

my first major business launch because I did not know any better then. However, this is hugely inefficient because the level of effort required writing all that text, detail and other things mostly goes to waste through repetitive changes. More importantly though many possibilities are not properly explored when writing, that are explored when talking interactively and brainstorming. It is a simple fact that groups come up with better answers than any one individual.

Strategic Planning Process


Collaborative group process 3-7 years

Business Plan
Individuals writing independently Focus on year one with some extrapolation More about how you will do it Specifics Focus on how to accomplish key objectives Improving what has already been decided inside the box

When a business is young there are still many unknowns and opportunities to make small changes in the business model that can have a large impact on the value generated for the owners. Some people may use the business plan writing process as the iterative way to develop the plan. I know I personally did this in 1989 with

What you will do = LT objectives Concepts Open ended Brainstorming Looking outside the box

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The Macro Level Steps of a Good Strategic Planning Process


This model represents the macro level steps that should be taken in a good strategic planning process to design, or optimize, a business model. Lets review them individually. However, please note that each of these steps individual is complex and a 30 to 60 minute lecture in our CEO Boot Camps. Therefore this detail is beyond the scope of this document. 0. Defining the product is obviously defining the functionality and can potential have hundreds of variables. Whenever there are changes in the product it can, and usually does, impact the other steps in this broader process. 1. Vision (see later) 2. Market research requires collecting all the data on the market to help define the idea target customer. It also requires doing competitive intelligence and defining the messaging that this market will respond to. 3. Competitive landscape is mapping visually the relative positions of competitors to show (and get everyone to understand) the differentiation of your company 4. Skill Set Matrix is analyzing all the skills your need to be successful 1. Risk analysis requires looking at what can go wrong and the possible costs and reactions to those possibilities. This will often lead to a lower risk strategy and business model. The circular arrow indicates that these steps are iterative, or repeated until done.

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What is crucial to understand about this process is that each time you change something in one area it will have a ripple effect and change things in the other areas. Therefore you typically need to repeat the process several times, though it gets faster with each cycle. Tools that should be used in the Strategic Planning Process 1. 2. 3. 4. 5. 6. 7. 8. 9. Market research for data gathering (80% on Internet today) Competitive landscape mapping Competitive intelligence SWOT Analysis One-page Strategic plan document (available on request) Risk analysis tool or framework Brainstorming Mindstorming Messaging and branding framework

Yes this is all real work that will take many weeks to complete but the result is a plan that is solid with a team that understands it and can implement it better. Without a collaborative process the team will have both a lack of understanding and a lack of mental commitment, or ownership, in the plan. Updating the plan in subsequent years, or shorter cycles if there are major external changes, will be much easier and quicker with focus on specific areas that are at issue.

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The Vision Pie A Model to Flush out a Comprehensive Vision

Note: A separate whitepaper is available free at www.CLevelEnterprises.com with a complete description of a corporate vision which is in many ways a superset of the strategic plan. Many companies offer business planning software and templates but these are just the writing and do not help with the key issues that need to be flushed out by the entire management team. The templates the include also guarantee you are not properly differentiated, as your business hsould be like no other ideally. It is the strategic planning process that is valuable to get input from all team mebers and buy-in from them. It is just a simple fact of life that a group can almost always come up with a superior solution when compared to even the bet individual because the dynamic interaction will take that best individuals ideas and improve on them.

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If you throw your business plan in the trash after it was done 90% of the value is there in the heads of the team and that is what counts most. The process must be spread out over at least six to eight weeks and held in a very structured way. There are so many variables and issues that any single meeting can go off in many directions and never resolve anything. These many problems and discussion must be broken down into focused discussions with clear objectives.

Conclusion

So the strategic planning process is actually a set of processes but it is this breaking down into manageable steps that will the human mind to grasp the pieces. By breaking this very complex process down into steps we can involve more people, get better input and most importantly get people to understand and have ownership and pride in the resulting plan. The resulting rigor is guaranteed to create a superior strategic plan AND business plan. They will then sell the plan (since it is theirs) to their underlings and increase success.

Your Major Options to Proceed 1. Use this as a guide and try to do this well the first time. We do not recommend this for obvious reasons. When was the last time you did something well on the first try? Especially something so complex? 2. Buy our complete strategic planning kit with all the files, models and training you need for only $369 (you couldnt even data enter all this stuff, even if you knew it all, for this price folks!) This can work well if you have an experience management team with at least three members who have ten or more years experience in the key disciplines where the risks in your business exist. 3. Hire a professional Strategic Planner with many years experience to facilitate your process. This generally runs from $8,000 to $25,000.

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Our Three Blatent Commercial Offers For You


OPTION #1 - The Strategic Planning Kit For Small and Medium Size Businesses

AirTight Management Systems #1 - The Strategic Planning Process is the most critical process in your organization. Without doing strategic planning right nothing else can ever correct the issues a bad plan can create. To get the most out of your management team you need a tightly choreographed process that will allow maximum collaboration to leverage all the wisdom, experience and knowledge in your business. This AirTight Management System Implementation Kit provides not just the skills training and process tools but also all the files on CD you need: Sample strategic plans, blank templates, printable worksheets (Word files), and even agendas for the key meetings.

This kit includes the following items:

Audio training on developing your corporate vision further and the foundational principles of company growth and what must evolve as a company grows Strategic planning process outline and roadmap diagram with three Strategic Planning Manuals for your team The famous one page strategic plan. Step #1 of the three step strategic planning process Audio training on the strategic planning process itself Audio training on managing risk and driving innovation. Innovation always requires some risk taking so these must be done together. Two audio training CDs on strategic positioning and the tools to develop maximum differentiation, pricing power and competitive advantage. This is what they teach at Ivy League business schools, only customized for small and medium size businesses to be highly practical. One data CD with all the forms, worksheets and agenda items you need with PowerPoint templates, spreadsheets and sample plans and a license to use this with up to 100 person companies (additional license fee for larger companies).

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The business design tools CD from the CEO and Advanced Entrepreneurship Boot Camp (a $129 value) which includes models and worksheets for marketing, branding and optimizing/designing your business models. A professional strategic planning facilitator can cost from $10,000 to $25,000. With this kit you can get many of the same benefits at a fraction of the cost. You can create an optimum strategic plan and achieve superior results for your company using this kit and process.
Only: $369 Click here to purchase now

More Information

Includes 7 audio CDs plus the licensed DISC with all tools, models and samples

OPTION #2 - Attend our next Strategic Planning Workshop for $995 and get the above kit included free. This is a special offer only to those who mention this offer specifically at registration so we can bring the kit to the event.

OPTION #3 - Mr. Norton will also personally facilitate a strategic planning meeting for your team at a cost of $3,500 per full day. Two days with 4-6 weeks between is generally recommended but three days may be recommended for complex businesses. Facilitators normally cannot bring 20 years experience as a CEO to the process but Mr. Norton can participate as a team member and facilitator due to the experience. Most other work can be done over the phone and by email as the plan develops. Call (617) 571-7591 to discuss your needs.

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