Late last year a company came to us in significant distress for organizational planning. Recently acquired, they had been given a daunting mandate by their new parent: to double their business within five years.
The company provides critical benchmarking data about the energy industry, and its clients include many of the world’s biggest energy companies. They offer a suite of services, from proprietary intel to consulting.
Under ordinary circumstances, doubling your revenue would be an extremely aggressive goal. Recent circumstances, however, can hardly be described as ordinary, especially within the energy sector.
Covid-related demand dips and supply shocks resulted in one of the most volatile years on record for the industry. Add to this increasing governmental—and even automaker—pressure to phase out fossil fuels, had the makings of a daunting, uphill battle.
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The Need for Organizational Planning
This was just background context, though. If the company was functioning optimally, there’s a good chance they’d still have the confidence to tackle their mandate head-on, even in the face of so many challenges. But they weren’t functioning optimally, not even adequately.
“We’re really struggling. We’re trying to grow, but nothing really happens,” they explained, exasperated. The biggest problem, we found, was that each of their services was being deployed totally independently with no thought given to its effect on the larger company or on the clients they serve.
As a result, every time they tried to grow A and B, C or D got starved. Every unit was drawing from the same finite pool of resources.
Simply put, they had no integrated plan. Or at least, no tactical plan that would take them where they needed to go.
- There was no clear governance structure that articulated, from front to back, exactly what was expected of everyone, and why.
- They had no consistent criteria to frame decision trade-offs and choose between them.
- And they had competing ideas about which market choices they should be made to gain a competitive advantage.
Given how quickly their market was changing (see above), this was a recipe for failure.
Setting Goals for an Organizational Plan the Right Way
Integrated planning involves taking the broadest portfolio view of your enterprise. It means being deliberate in how you act. It means breaking down the role of each revenue stream of your business and understanding exactly how it should function, in advance.
It’s proactive, not reactive, to offer a common (though valuable and in this management planning example appropriate) cliché.
In my experience, the best-integrated planning incorporates three core business disciplines—human resources, strategy, and financial planning—into a single broad process. As one discipline adjusts, the others respond in kind, and in a way that maintains equilibrium no matter how the company’s market is evolving.
Call-out/Tip
Here are three helpful tips to consider as you’re creating an integrated plan:
Types of Plans for Organizing Challenges
Organizations that need help with planning tend to come to us for two reasons. The first is that their leaders and staff aren’t strategically aligned. They simply don’t agree on how the company will position itself to win in the market.
In the second case, maybe everyone’s in agreement directionally on an abstract level, but that’s it. They have not made specific competitive choices or set clear priorities sufficient to enable them to allocate their:
- Physical
- Financial
- Human or
- Intellectual property resources
to their optimal advantage.
These situations typically tell me two things:
- There’s a crisis of governance. Leaders may be doing fine, even great, off on their own, but no one is coordinating their efforts so that they’re working for the greater good of the company, not just themselves. This is not sustainable and when examined, you’ll find that the company isn’t doing all that well.
- The senior team hasn’t developed a realistic, well-informed business plan. They don’t really know how they’re going to win in their market, even if they claim everyone is aligned with a certain vision statement.
Importance of Integrated Planning
When we think about “integrated planning,” it’s useful to envision a set of holistic exercises. There’s a process to it, but it’s not a strategic planning template. It starts with what we call “strategic alignment or choice making.”
This involves getting a leadership team together to set clear goals and aspirations for the business. You can get there by asking a set of questions such as:
- What are our goals and aspirations for the business(es)? [goals and aspirations]
- In which markers will we compete? [strategic choices]
- How will we position ourselves to win? [generate value]
The answers will help you make clear choices about the optimal configuration of, and degree of integration with, your business portfolio. It will also lead you to a deeper set of revealing questions, like:
- What essential capabilities must we build to win? [capabilities]
- What effective relationships need to exist across the organization? [optimization]
- What kind of behaviors do we need from leaders? [behaviors]
Many of the organizations we get involved with have tackled some of these questions, but not all of them. They haven’t come up with answers that are actionable.
Some more takeaways from this management planning example: |
Configurate, Don’t Exacerbate
From our talks with the company and investigation into their processes (helped along by the question sets above), it became clear that they weren’t set up to drive growth, much less double their business in half a decade.
To help them, our first step was to confirm alignment among the executives to their strategy, then to identify the requirements or specs for a new organization design with the capacity to deliver the outcomes they aspire to.
As part of this reconfiguration, we created a new governing structure that regularly brings together the executives of the organization who now own a well-defined strategic and operational planning process. They are now organized into business units with clear ownership for the profit and loss performance globally.
This strategic planning goals and objectives template obviously won’t apply to every company. As I said, the integrated planning process is holistic and fluid and should adapt to each company’s needs.
In many cases, though, the underperformance was driven by zero-sum fights over resources often indicates a configuration problem. The main goal is to revise governance in a way that makes decision-making and accountability clear.
It’s still early days, but the energy company is showing new and improved signs of life. As of this writing, they are on target for meeting their long-term goals in 2021. On the heels of a pandemic and an increasingly constrained industry atmosphere, that’s the kind of integrated organizational planning that really gets you excited.