The following is an extract from ‘Productivity Knowhow’
- A good corporate plan is a punchy summary of where an organisation aims to be in five years’ time and, broadly, how it is to get there
- Essentially, the plan should define the organisation’s ‘business model’ – how it will be better than its rivals and harder to copy – how it will make money
- Glen Moreno, Chairman of Pearson and a director of Man Group and Fidelity, said: “A corporate plan is the reallocation of scarce capital resources towards the best opportunities for growth in earnings and returns”
- Author, Stephen Covey, said: “Plans are the knowledge about what to do and why – others then have to provide the how to do and employee motivation for want to do“
- According to Peter Drucker, the corporate plan should provide answers to: “If we were not in this business, would we be going into it now?”
- Jack Welch, when CEO of GE, said an organisation’s strategy should define the ultimate aim of: “How it intends to win in business:
- It’s actually very straightforward
- It’s an approximate course of action that you frequently revisit and redefine according to shifting market conditions
- It’s about funding the big ‘aha’, setting a broad direction, putting the right people behind it and then executing with an unyielding emphasis on continual improvement
- It’s resource allocation, given you cannot be everything to everybody, whatever your size”
- Good plans are thus not long-winded glossies but short statements of broad aims and how they are to be achieved – not prescriptive in every detail – and they deliberately leave tactics to others
- They’re the written equivalent of the inspirational briefings that General George Patton or Vice Admiral Horatio Nelson gave to their commanders before battle – their commanders didn’t need, or want, any more
- However, many managers think their corporate plans are a waste of time and effort – an annual ritual conducted by a few senior managers whilst those who have to implement them never know much about them – and, once written, even their authors tend to ignore them
- The current situation was best summarised when Roger Smith, Chairman of General Motors, said: “We got these great plans together – then we put them on the shelf and marched off to do what we would be doing anyway – it took us a little while to realise that wasn’t getting us anywhere”