4-planning
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Chapter 4
Planning
©2004 by Nelson, a division of Thomson Canada Limited
1
What Would You Do?
In early 2000 Air Canada controlled 90% of the domestic market By early 2001 Air Canada’s share of the market had dropped to 73% WestJet’s share had climbed to 14% WestJet had a significantly lower cost structure than Air Canada What would you do?
©2004 by Nelson, a division of Thomson Canada Limited
2
Learning Objectives: Planning After reading these next two sections, you should be able to: 1. discuss the costs and benefits of planning 2. describe how to make a plan that works ©2004 by Nelson, a division of Thomson Canada Limited
3
Costs and Benefits of Planning
Benefits of Planning
Planning Pitfalls
©2004 by Nelson, a division of Thomson Canada Limited
4
Benefits of Planning
Intensified Effort Persistence Direction Creation of Task Strategies
©2004 by Nelson, a division of Thomson Canada Limited
5
Planning Pitfalls
Impede change and slow or prevent adaptation Create a false sense of security Detachment of planners
©2004 by Nelson, a division of Thomson Canada Limited
6
How to Make a Plan That Works
Exhibit 4.1 ©2004 by Nelson, a division of Thomson Canada Limited
7
Setting Goals
Specific Measurable Attainable Realistic Timely
©2004 by Nelson, a division of Thomson Canada Limited
8
Goal Commitment The determination to achieve a goal. Increased by:
Setting goals participatively Making goals reasonable Making goals public Obtaining top management support
©2004 by Nelson, a division of Thomson Canada Limited
9
Developing an Effective Action Plan For accomplishing a goal an action plan lists:
Specific steps People Resources Time period
©2004 by Nelson, a division of Thomson Canada Limited
10
Tracking Progress
First method
Set proximal (i.e., short-term) goals Set distal (i.e., long-term or primary) goals
Second method
Gather and provide feedback Make adjustments in effort, direction, and strategies
©2004 by Nelson, a division of Thomson Canada Limited
11
Maintaining Flexibility
Options-based planning
keep options open through simultaneous investment invest more in promising options
Learning-based planning
plans need to be continually tested, changed and improved encourages frequent reassessment and revision of goals
©2004 by Nelson, a division of Thomson Canada Limited
12
Learning Objectives: Kinds of Plans After reading the next two sections, you should be able to: 3. discuss how companies can use plans at all management levels, from top to bottom 4. describe the different kinds of specialpurpose plans that companies use to plan for change, contingencies, and product development ©2004 by Nelson, a division of Thomson Canada Limited
13
Planning From Top to Bottom
Exhibit 4.3 ©2004 by Nelson, a division of Thomson Canada Limited
14
Planning From Top to Bottom
Exhibit 4.3 ©2004 by Nelson, a division of Thomson Canada Limited
15
Starting at the Top
Vision
statement of a company’s purpose brief, inspirational, clear, and consistent with company beliefs and values
Mission
flows from the vision specific, unifying goal that stretches and challenges the organization and has a timeframe
©2004 by Nelson, a division of Thomson Canada Limited
16
Planning Timeframes
Exhibit 4.4 ©2004 by Nelson, a division of Thomson Canada Limited
17
Setting Missions
Targeting
Common-enemy mission
vowing to defeat a corporate rival
Role-model mission
setting a clear, specific target
emulating a successful company
Internal-transformation mission
aiming to achieve dramatic change to remain competitive
©2004 by Nelson, a division of Thomson Canada Limited
18
Bending in the Middle
Tactical Plans
specify how a company will use resources, budgets, and people to accomplish goals
Management by Objectives
develop and carry out tactical plans four steps
discuss goals participatively select goals jointly develop tactical plans meet to review performance
©2004 by Nelson, a division of Thomson Canada Limited
19
What Really Works Management by Objectives (MBO) Based on:
goals participation Feedback
Companies that use MBO are likely to outproduce companies that do not use it!
©2004 by Nelson, a division of Thomson Canada Limited
20
Finishing at the Bottom Operational plans
day-to-day plans
Single-use plans
deal with unique, one-time-only events
Standing plans
plans for recurring events three types
Policies Procedures Rules and regulations
Budgets ©2004 by Nelson, a division of Thomson Canada Limited
21
Special-Purpose Plans
Planning for Change Planning for Contingencies Planning for Product Development
©2004 by Nelson, a division of Thomson Canada Limited
22
Planning for Change
Stretch goals
extremely ambitious goals that you don’t know how to reach
Benchmarking
identifying outstanding practices, processes, and standards in other companies adapting them to your company
©2004 by Nelson, a division of Thomson Canada Limited
23
Planning for Contingencies: Scenario Planning
Define the scope of the scenario Identify the major stakeholders Identify environmental trends Identify key uncertainties and outcomes
©2004 by Nelson, a division of Thomson Canada Limited
Using steps 1-4 create initial scenarios Check each scenario for consistency and plausibility of facts Create contingency plans from each scenario Develop measures to indicate when scenario events are occurring 24
Planning for Product Development Aggregate product plans: used to manage and monitor all new products indicate resources being used for each product indicate product’s place in company’s plans help avoid having too many products in development ©2004 by Nelson, a division of Thomson Canada Limited
25
Product-development Process Four factors:
cross-functional teams internal and external communication overlapping development phases frequent testing of product prototypes
©2004 by Nelson, a division of Thomson Canada Limited
26
What Really Happened?
Air Canada set specific goals Focused on cost structure Launched Tango and Zip Attempted to reduce labour costs Hit hard by SARS, Iraqi conflict and a weakening economy Sought bankruptcy protection in 2003
©2004 by Nelson, a division of Thomson Canada Limited
27
Planning
©2004 by Nelson, a division of Thomson Canada Limited
1
What Would You Do?
In early 2000 Air Canada controlled 90% of the domestic market By early 2001 Air Canada’s share of the market had dropped to 73% WestJet’s share had climbed to 14% WestJet had a significantly lower cost structure than Air Canada What would you do?
©2004 by Nelson, a division of Thomson Canada Limited
2
Learning Objectives: Planning After reading these next two sections, you should be able to: 1. discuss the costs and benefits of planning 2. describe how to make a plan that works ©2004 by Nelson, a division of Thomson Canada Limited
3
Costs and Benefits of Planning
Benefits of Planning
Planning Pitfalls
©2004 by Nelson, a division of Thomson Canada Limited
4
Benefits of Planning
Intensified Effort Persistence Direction Creation of Task Strategies
©2004 by Nelson, a division of Thomson Canada Limited
5
Planning Pitfalls
Impede change and slow or prevent adaptation Create a false sense of security Detachment of planners
©2004 by Nelson, a division of Thomson Canada Limited
6
How to Make a Plan That Works
Exhibit 4.1 ©2004 by Nelson, a division of Thomson Canada Limited
7
Setting Goals
Specific Measurable Attainable Realistic Timely
©2004 by Nelson, a division of Thomson Canada Limited
8
Goal Commitment The determination to achieve a goal. Increased by:
Setting goals participatively Making goals reasonable Making goals public Obtaining top management support
©2004 by Nelson, a division of Thomson Canada Limited
9
Developing an Effective Action Plan For accomplishing a goal an action plan lists:
Specific steps People Resources Time period
©2004 by Nelson, a division of Thomson Canada Limited
10
Tracking Progress
First method
Set proximal (i.e., short-term) goals Set distal (i.e., long-term or primary) goals
Second method
Gather and provide feedback Make adjustments in effort, direction, and strategies
©2004 by Nelson, a division of Thomson Canada Limited
11
Maintaining Flexibility
Options-based planning
keep options open through simultaneous investment invest more in promising options
Learning-based planning
plans need to be continually tested, changed and improved encourages frequent reassessment and revision of goals
©2004 by Nelson, a division of Thomson Canada Limited
12
Learning Objectives: Kinds of Plans After reading the next two sections, you should be able to: 3. discuss how companies can use plans at all management levels, from top to bottom 4. describe the different kinds of specialpurpose plans that companies use to plan for change, contingencies, and product development ©2004 by Nelson, a division of Thomson Canada Limited
13
Planning From Top to Bottom
Exhibit 4.3 ©2004 by Nelson, a division of Thomson Canada Limited
14
Planning From Top to Bottom
Exhibit 4.3 ©2004 by Nelson, a division of Thomson Canada Limited
15
Starting at the Top
Vision
statement of a company’s purpose brief, inspirational, clear, and consistent with company beliefs and values
Mission
flows from the vision specific, unifying goal that stretches and challenges the organization and has a timeframe
©2004 by Nelson, a division of Thomson Canada Limited
16
Planning Timeframes
Exhibit 4.4 ©2004 by Nelson, a division of Thomson Canada Limited
17
Setting Missions
Targeting
Common-enemy mission
vowing to defeat a corporate rival
Role-model mission
setting a clear, specific target
emulating a successful company
Internal-transformation mission
aiming to achieve dramatic change to remain competitive
©2004 by Nelson, a division of Thomson Canada Limited
18
Bending in the Middle
Tactical Plans
specify how a company will use resources, budgets, and people to accomplish goals
Management by Objectives
develop and carry out tactical plans four steps
discuss goals participatively select goals jointly develop tactical plans meet to review performance
©2004 by Nelson, a division of Thomson Canada Limited
19
What Really Works Management by Objectives (MBO) Based on:
goals participation Feedback
Companies that use MBO are likely to outproduce companies that do not use it!
©2004 by Nelson, a division of Thomson Canada Limited
20
Finishing at the Bottom Operational plans
day-to-day plans
Single-use plans
deal with unique, one-time-only events
Standing plans
plans for recurring events three types
Policies Procedures Rules and regulations
Budgets ©2004 by Nelson, a division of Thomson Canada Limited
21
Special-Purpose Plans
Planning for Change Planning for Contingencies Planning for Product Development
©2004 by Nelson, a division of Thomson Canada Limited
22
Planning for Change
Stretch goals
extremely ambitious goals that you don’t know how to reach
Benchmarking
identifying outstanding practices, processes, and standards in other companies adapting them to your company
©2004 by Nelson, a division of Thomson Canada Limited
23
Planning for Contingencies: Scenario Planning
Define the scope of the scenario Identify the major stakeholders Identify environmental trends Identify key uncertainties and outcomes
©2004 by Nelson, a division of Thomson Canada Limited
Using steps 1-4 create initial scenarios Check each scenario for consistency and plausibility of facts Create contingency plans from each scenario Develop measures to indicate when scenario events are occurring 24
Planning for Product Development Aggregate product plans: used to manage and monitor all new products indicate resources being used for each product indicate product’s place in company’s plans help avoid having too many products in development ©2004 by Nelson, a division of Thomson Canada Limited
25
Product-development Process Four factors:
cross-functional teams internal and external communication overlapping development phases frequent testing of product prototypes
©2004 by Nelson, a division of Thomson Canada Limited
26
What Really Happened?
Air Canada set specific goals Focused on cost structure Launched Tango and Zip Attempted to reduce labour costs Hit hard by SARS, Iraqi conflict and a weakening economy Sought bankruptcy protection in 2003
©2004 by Nelson, a division of Thomson Canada Limited
27
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