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Week 3 Video Lecture 1: Organizational Planning

Strategic & Operational Planning

Strategy “is an organization’s plan to use its core competencies (what it’s great at) to achieve competitive advantage as is consistent with its mission and goals.” How can it create value within the market? An effective strategy focuses on long-term goals that enable the organization to be successful in the external environment.

Strategic Planning/ Strategic Plan is an external focus on the environment. It is answering the question: “how do we stay competitive?” So the plan is long term, it’s more general, so it’s at the organizational level, and it’s providing direction.

1. It can be done at a corporate level so you’re asking what industry and/or businesses are we in or should we be in?

2. It can be done at a business level so how should particular business units compete? Sometimes it can even be done at a department level.

Also, as a part of organizational planning/organizational design, you need organizational planning.

Operational Planning An internal focus on company and reflects the strategic plan and goals. Operational planning takes the strategic plan and focuses internally on the company. So how do we put the strategic plan into action?

· It too can be done at an organizational level, looking at corporate and business plans, but again looking internally at the operations.

· It can be done at a department level so this would be more functional level planning or divisional level planning.

· It should then trickle down to each individual employee level.

Strategic Planning Process = the efforts that are used to guide what an organization does, why, and for whom. So you go through this plan to develop your strategic and operational plans.

In any organization you have enduring components – the mission, the vision, the values. And you also have the organization’s core competencies or competitive advantage. This is what makes it great and differentiates it and makes it unique. This is why customers come to the organization.

Then you have long-term strategic pieces like strategic goals or directions. Some even call them pillars. Don’t get caught up in the words, just make sure the organization has all the necessary components. Organization typically sets 4-6 strategic goals and each one of the goals has a set of strategies, usually about 2-4 strategies per goal. The goals might be 3 year goals that provide direction, what the organization wants to do, how it wants to change and the strategies are generally how they’re going to go about these strategic goals.

Then these goals are pushed down to an operation level with more focused annual goals and objectives. You may have some yearly tactics and finally down to employee goals and plans.

Strategic Planning

The general steps of the planning process.

1. Planning to Plan – sit down with leaders and identify the steps, timeline, and stakeholders who will be involved in the process. Strategic planning involves those at the top but you should also be gathering information from all stakeholders. Even though it’s more top-down, there are some bottom-up approaches that you can use. And as you move forward and push the plan through the organization, you get more individuals involved. With any organization and strategic plan, there has to be a clear mission statement or purpose for the organization.

2. Mission Statement = purpose of the organization; tells how, when, and for whom. It should be clear, concise, compelling/memorable. A primary concern should be placed on whether the organization and members and leaders understand why they exist and have a common language for it. The we worry about a statement. Mission statements can be short or long, but each phrase should be meaningful and reflect who the company is as an organization. At the same time, the organization should be thinking about and codifying their values. They can do a values audit.

3. Values Audit = also called a philosophy of operation. Value are the beliefs that guide the behavior and operations of the organization and those who work for the organization. Values statements can be long or short. They may reference various stakeholders like partners, customers, stores, neighborhood, shareholders, etc. Other organizations will have different types of value statements – they may just list a set of values, or they may list a set of values and then define them.

4. Identify Vision= ideal future state of the organization. Sometimes organizations mix up the mission and the vision statements. The vision should be imaginable, desirable, feasible, focused & flexible in case the environment changes. Larger organizations will have a long term vision and they may not even define when they would like to accomplish that vision. Organizations can establish a future state that is a little more attainable, yet still stretches them.

5. Conduct SWOT analysis – an organization is first identifying its internal strengths and weaknesses. This is a current state or situational analysis. It also should look externally at opportunities and threats that are out in the environment that are or will impact it or other organizations within or outside its industry. One of the questions that an organization can ask is where is the overlap and connection between its internal strengths and weaknesses and the external opportunities and threat? This leads an organization to a GAP analysis.

6. Conduct GAP analysis – bridging gap between mission and vision. Where do they want to be? What is their vision? Where are they now (their current state- their strengths and weaknesses? How are they going to bridge this gap?) This is where the strategic goals and plans help bridge the gap. So the organization then forms a set of strategic goals or objectives. (Goals, objectives, pillars)

7. Formulate Strategic Goal/Objectives to help bridge the gap (goals, directions, pillars, objectives)

a. Usually establish 4-6 three years goals so that it is manageable for the organization and provides focus.

b. G&O’s should motivate employees by encouraging workers to strive toward obtaining those goals.

c. As terminology, goals and objectives are sometimes used interchangeably. Organization needs to decide which terms it wants to use and how it wants to define those.

d. Objectives must be verifiable, specific, actionable actions that the organization wants to take at an operational level.

8. Then, the organization needs to make sure that it has measures in place to make sure it is achieving those objectives and goals.

9. Most importantly, the organization needs to create Operational Plans and implement those plans.

10. Implement the Plans – this is where the rubber hits the road. There is nothing more important than executing those plans. We don’t want to just sit around and have some lofty visionary discussions around what the organization could do. We want to put those into action.

11. Never forget to Evaluate Strategies and continue to Scan Environment. Make sure the steering committee for the strategic planning is meeting and monitoring progress at least quarterly and that they’re doing a more extensive progress report on an annual basis. A lot of time we also have committees around the goals or objectives and we are trying to push this all the way down to employees. The employees should be able to connect their goals with the operational and strategic goals of the organization and its mission.

In terms of measuring and tracking success, one approach is the Balance Scorecard. It was developed years ago by professors Kaplan and Norton of the Harvard Business School. It includes current indicators and future indicators of an organization’s performance against strategic goals. They identified performance metrics in four areas.

1. Finance

2. Customer

3. Processes

4. Learning and Growing

Their recommendation is that when an organization is doing planning and measuring success that they make sure they are measuring in the above four areas. This approach can be used with clients, but it should be customized to fit with what’s important to them. So, there will be a different set of metrics depending on the type of organization. (physicians vs university departments, for example.)

Whatever planning process is uses and whatever are the components of the organization’s strategic plan, it is important that the strategic is aligned with the environment, both the industry environment as well as the larger macro environment. And with the other organizational design components like structure, culture, the person strategy, reward system, etc.