Mabp14 emison eprint

By

THoMaS W. eMiSoN

Strategicbusiness plan

WHY is it soinExpLICaBLY

HaRD toimplement a Strategic

business plan?

Copyright © 2014 by the Construction FinancialManagement Association. All rights reserved. Thisarticle first appeared in CFMA Building Profits.Reprinted with permission.

March/April 2014 CFMA Building Profits 13

Like many companies, your strategic business planning pro-cess is likely flawed and may be creating resistance to change instead of a corporate longing for it. One of the main reasons most companies fail to implement a strategic plan is because they’re going about the process all wrong. So, poor plan imple-mentation isn’t the problem. It’s the result of the problem – or problems, to be more precise.

Also, leaders aren’t leading their companies. They may be leading their projects and the acquisition of them, but not their organizations overall. They’re stuck working in their companies, not on them. Because of this, strategic business plan execution suffers.

So, in this article, we’ll explore what I call the “Great and Forgotten Phase” (sounds like something from The History Channel, doesn’t it?). This phase of strategic planning is often overlooked by executives, but is performed quite well in companies with a healthy strategic business planning pro-cess. And I tell you, this oversight is a big problem out there. Communication practices in this industry are horrendous.

We’ll also explore the other major barrier to strategic plan implementation: Industry CEOs and Presidents preoccupied with working in their businesses instead of on them. It’s as if the top dogs are project-oriented and very few companies are being proactively led by true top executives. And, those few that are, are being led by financial types whose expertise is not in strategic marketing, sales, organizational development, leadership expansion culture, and process innovation. (But, they sure can squeeze another dime out of their equipment utilization...)

Strategic Planning

For years, I have known that many contractors struggle with plan implementation while others prosper. In preparation for this article, I felt compelled to do some level of field research.

At CFMA’s 2013 Annual Conference & Exhibition in San Diego, CA, I asked about two dozen CFMA general members: Do you, or do you not, succeed at implementing the strategic initiatives you articulate in your strategic business plan?

My theory held that one-third would not have a strategic business plan. Another third, I predicted, would respond honestly “No, we don’t, but we had a planning event,” which also turned out to be spot on. These members’ frustration with their own corporate inability to implement strategic initia-tives is an ongoing disappointment for them. The other third replied yes – they do implement, and in fact they implement nearly everything they set out to accomplish in their strategic business plans. Rock stars.

This distribution has improved over the years. When I would ask this question of CFMs 20 years ago, about 80% had no plan (and therefore no implementation), while only about 20% had some semblance of implementation (usually less than stellar). So, according to my informal polls, the construc-tion industry is becoming more sophisticated in its strategic planning practices.

Process or event?

Whatever the cause, one thing remains constant: A large population of construction executives are 1) under the mis-guided impression that strategic business planning is an event, not a process, or 2) not planning at all. This population thinks strategic business planning is something that you go to (usu-ally as a group), which you then walk away from – literally and figuratively. So, all across our nation, top construction leaders do not plan at all; or they meet to dream big, jot it down on paper, and call it done.

Of course in reality, nothing is done. It was just a meeting; an event. The net result is a written plan. Perhaps an all-employee meeting is held, perhaps not. Perhaps the website is updated, perhaps not. More than likely, 90 days later, the planning team members have forgotten their so-called plan and returned to work as usual.

So, if healthy strategic business planning is a process, not an event, then what is that process and why am I talking about phases? Here’s where it gets complicated, because there are a lot of processes, countless methods, and lots of intelligent lit-erature – from the old and proven to some new and truly inge-nious insight. Some of what I’ve read and researched is well grounded in academic theory. Some of it is more practical and

March/April 2014 CFMA Building Profits

It seems like an easy enough proposition initially, until a combination of factors converge to make implementation

about as likely as a hole in one. But not always.

As it turns out, some organizations are

SiNKiNG a LoT oF HoLes iN oNe!

comes from professional consultancies – from thought leaders to field workers. In reading dozens of books; in keeping cur-rent with various business advisors and consultancies; and in talking with peer groups as well as one-on-one with CEOs of construction companies of all types, sizes, and locations, I can tell you: Strategic planning is a process, not an event.

The Great & Forgotten Phase

While the individual consultants, methods, and approaches might vary, I’ve made an important discovery: a common flow exists to the strategic planning process. While the sequence of the phases and the activities in each may differ, there are five broad phases (see Exhibit 1 on the next page):

1) Strategic Situation Assessment

2) Strategic Market Analysis and Customer Insight

3) Strategic Mission, Vision, and Planning

4) Communication, Mobilization, and Action Planning (typically overlooked)

5) Implementation, Evaluation, and Improvement

It’s the gross oversimplification of a healthy strategic busi-ness planning process as an event that results in many con-tractors overlooking the Great and Forgotten Phase Four: Communication, Mobilization, and Action Planning. You com-plete all of the work in Phases One, Two, and Three, overlook Four (oops), and hop straight to Five.

Huh?

The setback occurs when you jump from the planning retreat experiences straight to implementation. You never excite (or even agitate) the rest of your company and other stakeholders (e.g., your bonding company, bank, suppliers, and even cus-tomers) about your new, well-researched and well-articulated strategic business plan.

Like a golfer anxious to play 18 holes, you raced from your car, through the pro shop, out to the first tee, and whack – sculled it right into the water beside the tee box. You’re now hitting three. No preparation. No time to think about why you love golf. No thought given to loosening up to perhaps prevent an injury. No moment to envision your success that day; consider the wind, time of day, recent weather, how crowded the course may be, or how you feel; and perhaps practice 10-20 putts.

And, worse yet, because golf is a social sport, you allowed no interval to greet your pals, catch up on life for a moment, mobilize your foursome, or decide who’s teeing off first. Sort of rude and reckless, wasn’t it?

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In more than 20 years and more than 190 strategic business planning processes, almost all of them in the construction industry, I have been brought in to “fix” a number of planning processes and leadership teams gone awry. Here are some of the ills I’ve observed:

• An ill-conceived plan – just crummy ideas.

• A purely financial plan, or purely marketing plan – too narrow in scope.

• A plan driven by one person’s opinions – the “loudest voice” syndrome.

• Poor leadership and communication of the strategic planning process by top executive.

• Failure of the team to really think – just going through some pre-set process without any real strategic innovation swirling about.

• An inability to be honest about the organization – multiple and often ugly elephants left standing in the planning retreat rooms.

• A lack of talent to execute – right plan, but the wrong team.

• A failure to organize around the plan – failure to reorganize the construction company to create the capacity to implement the plan initiatives.

• Not enough communication about the plan – underestimated by a factor of 10.

• Unclear expectations upfront on the entire strategic business planning process.

• Market or regulatory changes that were impossible to foresee.

• Leadership and management team loses cour-age during the change process (yes, great strategic business planning is a form of change management).

sTrategic

pLAnNinG

Faux Pas

That is precisely what construction companies do when they overlook Phase Four of the process, and it too is reckless and inconsiderate.

What the Great contractors Do

Interestingly, the most successful construction organizations do not overlook this fourth phase. Instead, they slow down at the very time most contractors speed up. They collect them-selves, concentrate on their audience, their image, and the role the strategic plan is going to play in their success going forward.

They establish a plan for their plan. Instead of awkward and rushed communiqués to employees about the new direction, they slow down and introduce the plan to a small group first; they ask for insight from employees. Then, they work out the bugs, arrive at some creative and compelling messaging about the direction, and bam – roll it out.

These contractors are great mobilizers, great communicators, great action planners, and they view the entire strategic busi-ness planning process as a progression. As a result of their focus on this phase, they achieve more success with strategic business planning than their peers of equal size and makeup.

So, what do the really great contractors do in Phase Four (roughly speaking again, since the phases of which I speak are broad steps)?

Communicate

First, they invest considerable time on creative communi-cation methods to engage their audiences toward the new direction.

In effect, they develop an internal marketing communication plan for their strategic business plan. They’ve got a great stra-tegic plan and direction ready to implement, but only a small group of leaders even know about it. So, they develop a plan to embed “the plan” into their organization quickly and fully. They have a plan so it spreads fast – sort of like a positive virus.

Because their overall direction is known (and agreed to) by only a small group, perhaps 5-10 leaders, Best in Class con-tractors grow this population to 200. They engage their entire collection of employees and other stakeholders with a cre-ative, clear, and concise version of the strategic business plan.

Since most construction executives do not know much about corporate communications, many hire an agency or commu-nication firm to help. Smart. I’ve done some inventive things

lately, such as whiteboard hand-drawn videos, all-company production/meetings, and even hired theater troops to put on a play about the strategic business plan direction. Employees do not forget moments like those. Ever.

Author’s Note: Last year, Eide Bailly’s CEO commissioned a team to write and produce a short, low-budget, inventive movie about our new strategic business plan. And I’ll tell you, it beats a binder, a brochure, and a PDF out on our intranet. When it aired, it floored our partners, principals, and employees in the best possible ways. Creative, simple, and authentic.

Great contractors stop and think about what would be the most creative yet fitting marketing communication plan for their strategic business plan. Maybe it’s time to throw some-thing at your employees that will wake ’em up, strategically.

Mobilize

Great contractors that have a strong focus on Phase Four also mobilize their strategic business plan just like a jobsite. They think in advance of how they want the strategic plan to gain traction, then assemble their teams.

Inevitably, most good strategic business plans identify a hand-ful of initiatives (usually 3-5) to pursue in the first year to help achieve the company’s mission and vision. Let’s say there’s:

PHASE ONEStrategic Situation

Assessment

PHASE FIVEImplementation, Evaluation,

and Improvement

PHASE TWOStrategic Market Analysis

and Customer Insight

PHASE FOURCommunication, Mobilization,

and Action Planning

PHASE THREEStrategic Mission, Vision,

and Planning

EXHIBIT 1Common Phases of a Successful Strategic Business Planning Process

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eXhiBit 1 common phases

of a successful strategic business planning process

Strategicbusiness plan

WHY is it soinExpLICaBLY

HaRD toimplement a Strategic

business plan?

• one initiative in marketing, sales, preconstruction, estimating, and client experience management;

• one in operations effectiveness, efficiency, safety, fleet, and equipment utilization;

• one in people, culture, leadership development, organizational communication, and HR; and

• one in financial communication, dashboard development, and goals to achieve.

So, the great construction companies organize their teams in these areas and empower them with a leader, a goal (or multiple goals) to achieve in their first year together working as a team, and tool kits for tracking and communicating their activities and results.

Also, great construction company leaders weave strategic busi-ness plan initiatives into the company and opt out of minor tactics, nonessential meetings, and the “stuff” that’s no longer valuable – they do not bolt on these initiatives to their com-pany. They make sure their employees understand that they aren’t being asked to do more work, but rather smarter work.

Initiative team members are asked to agree to stop doing, delegate, reshape, or outsource 3-4 daily or weekly activities they currently perform. Going through this process will help you realize the astonishing number of things your middle managers and employees do every day that is just rework, unnecessary, or plain old sloth.

Action Plans

Great contractors also implement well because they produce a set of well-written and communicated action plans.

Like any overall, large-scale endeavor, the best performers break it down. This is akin to the great golfers who develop a mental course management plan before they take their first tee shot. They know in advance where they wish for each shot to be placed, for all 18 holes, and they have back up strategies for when those plans go afoul.

It’s not much different construction companies that are great at Phase Four. In the past 10 years, there’s been a proliferation of action-planning tools – some on paper, some electronic tool kits on DVD, and some online. Exhibit 2 shows how one com-pany broke down a vision for 2016 into an action plan for 2014.

These action plans enable great contractors to track the progress of their priorities and also to reward leaders and team members who are making positive contributions to the company (i.e., working on, not just in the company).

You will probably grossly underestimate the amount of com-munication, mobilization, and action planning that must take place in your organization in order to implement your strate-gic business plan. To put it more bluntly: If you do not com-municate your company’s strategic plan internally, mobilize teams of people, and help them with action planning, then there won’t be much to implement.

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STAG

ES/TA

SKS

Q1 2014• Deploy task

force forcompliance

• Set template for employeejob descriptions

• Task force starts research process

• Start facility analysis

Q2 2014• Perform

employee questioner andstart edit process

• Consult with apeer companythat has completed thisprocess

• Complete complianceprocesses

Q3 2014• Deploy

compliance processes

• Finalize employee job descriptions

• Start mapping processes

• Set up schedules• Have a rough

draft of a facility analysis

Q4 2014• Review 2014

and �nalize• Set up plans for

map processingto be rolled out

TARGETDeploy a three-person task

force that does the research. De�ne compliance and the

responsibility of each department to stay compliant.

And then execute.

SPONSOR: • TBD

LEADER: • TBD

MEMBERS: • TBD • TBD • TBDRESOURCE: • TBD

TEAM/RESOURCES

EXHIBIT 1Common Phases of a Successful Strategic Business Planning Process

eXhiBit 22014 Game Plan: Operations

Bottom line goal for the year: Have a compliance process implemented, job descriptions applied, and process mapping near completion.

Identify Operations Team/Resources:

SPONSOR: Top executive who is ultimately accountable LEADER: Field lieutenant who is responsible for running the program (i.e., day-to-day activities)

MEMBERS: Staff who are engaged, excited, accountable, appropriate, and relevant to carry out specific tasks

Let’s move on to the other ill I mentioned at the beginning of this article: The tendency for leaders – even CEOs – to work too much in their business and not on it. Or, to put a more positive light on it: The ability some leaders have to work on what’s important, not just urgent.

Successfully Make the Shift to On vs. In

As some of you may know, I am a competitive swimmer in U.S. Masters Swimming. As an athlete, I am working in. Our coach? He’s working on.

Okay, that was a bit glib. But, really, it’s about that basic. In my 20 years of industry experience, I’ve found it’s the top CEOs who act like coaches – not players – who are working on their companies – not in them – and whose companies experi-ence success (e.g., revenue growth, balance sheet strength, employee morale, project partner satisfaction, etc.).

As the CFM, you and the other top leaders in all areas of the company have an extraordinary opportunity that only comes along about every three years or so during strategic business planning (or five if your company develops and implements the now rare five-year strategic business plan).

That opportunity?

Utilize the process (e.g., five phases per Exhibit 1, or three steps, or eight modes, etc.) as a mechanism to reduce your day-to-day role in the operations of your company and move up a step as a leader. You see, the old and obsolete definition of strategic business planning was:

“The development of a plan(s), usually by a top executive, leadership team, or board, to compete or perform better.” (That’s actually a quote from my many conference and work-shop presentations prior to 2000.)

But today, post Great Recession strategic planning is:

“The research, development, communication, and implementa-tion of a plan to perform both better and differently; to build a culture of strategic thinkers.” (That is also a quote from me at a recent speech to CFMA’s Kansas City and Idaho Chapters).

That new definition implies that your objective as a leader is to build a team of strategic thinkers to reduce dependence on top leaders for day-to-day decisions. Thus, it is the strategic business plan itself that is the ultimate leadership succession planning instrument.

If what you want your top leaders to have is the luxury to work on the company, not be entangled in it, you need some sort of organized process of getting a large team of others (from top leaders right down to the foremen, operators, assistant PMs, and others) to work on the implementation of the strategic business plan.

This will enable the top leaders to do what top leaders do in most high performing businesses: Look to the future, be an ambassador in the markets you serve, have adequate time to consider major strategic decisions (e.g., M&As), help truly orient and onboard your new leaders and others to perpetuate (or adjust) the corporate culture, coach and advise up-and- comers, and manage corporate risk (of which there is plenty).

This “in” to “on” transition has been incredible to watch over the years. I’ve seen top leaders have more time to improve old business methods and create a more professional organization for their employees, improve gross project margins, rebrand their company, and even just spend more time out on their jobsites.

Summary

In closing, I am reminded of the importance of patience. In any new corporate endeavor, such as strategic business plan-ning, I highly recommend you and your top leaders remain patient with each other and your team(s) as you and they work through the predictable and normal stages of teamwork as shown in Exhibit 3.1

March/April 2014 CFMA Building Profits

Strategicbusiness plan

WHY is it soinExpLICaBLY

HaRD toimplement a Strategic

business plan?

EXHIBIT 3As leaders let go – no matter how perfect the strategic

business plan and its implementation – it will not always be pretty.

3 2

4 1

Note: This model is generally attributed to Mr. Bruce W. Tuckman, 1984.

NORMING STORMING

FORMINGPERFORMING

eXhiBit 3as leaders let go – no matter how perfect the strategic

business plan and its implementation – it will not always be pretty

This patience will provide time for the art and science of stra-tegic business planning to migrate from an event, to a process, to a discipline, and finally to a prized corporate competency in your company. It will also allow your teams time to succeed, fail, struggle, and eventually triumph with the implementation of your strategic business plan initiatives.

Then, and only then, will the “in vs. on” transition occur to enable and excite the leaders and managers in your company to add the greatest possible value to the business: themselves. n

Endnote

1. Bruce W. Tuckman is generally considered to be the creator of the very

famous “Forming, Storming, Norming, and Performing” model in 1984

and later added a fifth stage. For our purposes, we will conclude with

reference to just the four.

THOMAS W. EMISON is a Construction Industry Consulting Director at Eide Bailly, LLP in Minneapolis, MN. Tom has more than 21 years’ experience working with construction companies in the areas of strategic busi-ness planning, marketing, and operations improvement.

A member of CFMA’s Twin Cities Chapter, Tom also serves on CFMA’s national Finance Committee. He is a longtime author for CFMA Building Profits and presenter at CFMA’s Annual Conference & Exhibition and CFMA chapters across the U.S. He is also an active member of AGC’s National Marketing Committee.

Phone: 612-253-6510 E-Mail: [email protected] Website: www.eidebailly.com

CFMA Building Profits March/April 2014

Strategicbusiness plan

WHY is it soinExpLICaBLY

HaRD toimplement a Strategic

business plan?