Turbulent Times & Business Strategies

Posted on October 24, 2008
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Business Strategies For Turbulent Times
By Brice Alvord

Turbulent times require a firm anchor point from which to lead your organization. That anchor point must be an effective strategy that is properly communicated across the entire organization. A strategy is a broad statement of planned activities which, when effectively performed, will most effectively accomplish a given objective.

The Strategy of the Business (or other Enterprise)

The term “strategy” was adopted from the military. The “strategic plan” of an army is a broad plan to destroy the enemy’s ability to wage war. This may include the elimination of his factories, ports and transportation as well as his fighting forces. It is an all encompassing plan for accomplishing the mission of winning the war. The “strategic plans” of the divisions would support the broad plan of the army.

Before a business can plan how it will accomplish its mission, it must first define that mission, – the purpose for which it now exists.· Through similar reasoning each division and department has its own mission designed to support the parent organization.

Other strategies are then developed from the mission statement. These strategies identify opportunities that favor accomplishment of the mission…and how those opportunities will be approached.

The Strategic Plan

The Strategic Plan is the instrument through which everyone’s attention is focused on those opportunities; enabling the organizations strengths to be exploited while its weaknesses are neutralized. Thus, the first step in the preparation of a strategic plan is to define the mission of the organization – the purpose for which it was created (or now exists).·

While there may be many ways a mission statement could be written, the one presented here, is believed to be the simplest form that will satisfy all of the requirements· It is termed a Primary Objective and is described below.

As a Strategic Objective the Primary Objective takes a different form and serves a different purpose than other objectives typically found in most management processes· Because of its unique roll and the fact it is not quantified it could also be considered a “primary strategy.”· The term objective is used only because it is more commonly used by managers.

Primary Objectives

The Primary Objective is a statement of the mission which an individual, group, or company is organized to accomplish in terms of its essential work, its products, its markets, and its territorial interests.

Your Primary Objective is intended as a continuing guide to all who work under your direction…to this extent it is permissive. Also, to those above you, it provides assurance that efforts are being extended in the right direction…to this extent it is restrictive.

A Primary Objective should be prepared for the organization as a whole and for each division, department and position. While stated as the objective of the position it includes all the work for which the incumbent of that position is accountable…not just the work he (she) does personally.

While the Primary Objective can be changed at any time to reflect changes in the direction of the operation, it should not require change except where that direction has, indeed, been changed. Thus, the Primary Objective could conceivably stand for a period of several, or even many years.

Because it is designed to stand for a long period, its terms are not quantified. It is constructed around the following five Fundamental Obligations:

Survival Obligation – States the need for (Why?):
Essential Work Obligation – States the work to be performed (How?):
Principal Products Obligation – States that which is produced or acted upon (What?)Stated as a “product” or service

Principal Markets Obligation – States for whom the “products” or “services” are produced (Who?):

External markets (customers)
Internal markets (other dept’s)

Principal Territory Obligation – Defines the geographic area in which the work is performed or services offered (Where?)

Structure of the Primary Objective

Survival obligation: Survive, grow and be profitable.
The Survival Obligation specifies why work is to be done. For a profit oriented company, the Survival Obligation will normally declare recognition of the need for survival, growth and profitability.

For the company:In almost any profit oriented company, the Survival Obligation may be adequately expressed with these few words: “To survive, grow and be profitable.” The extent of the profits and the direction and rate of growth will be specified in other objectives that grow out of the Primary Objective.

For a department:The Survival Obligation for a department would be expressed differently· The objective of a department is not to survive, grow and be profitable on its own; hence, the survival obligation of the department might be expressed: “To contribute to the survival, growth and profit.”

Not-For-Profit organizations:In considering the survival obligation of a not-for-profit organization, it helps to view this as an entity that has length, width and breadth…all expressed in terms of survival, profit and growth.The not-for-profit organization would also have three components. One of the components is “survival.” Whatever other purposes this organization might have, it must first survive if it is to perform its assigned function. Thus, the word “survival” will normally be included in the survival obligation of the not-for-profit organization.

Secondly, the organization must remain financially sound. Whether its operating funds come from sales (as in a business) or from a budget allocation, the organization’s continued success, and therefore its survival, depends on getting its work accomplished within its allowable expenses· Thus, the survival obligation of the not-for profit organization will normally include a reference to remaining financially sound …instead of “profit”.Inasmuch as the not-for-profit organization was created to fill some defined need, the survival of this particular organization will depend on how effectively it serves this need. Thus, the third element should contain a reference to fulfilling these needs·

Typical statements of the three components which comprise a survival obligation are shown below:

Essential Work Obligation – The Essential Work Obligation states HOW the Primary Objective will be accomplished. As the word “work” implies activity, this obligation is always stated as a verb…in just one or two words. Yet, these few words should encompass the work done by all the people under the direction of a given manager (not just the work done personally by the manager).For the manager of a defined “line” department this obligation will reflect the Essential Work of the business as a whole, as in the example of “manufacture” and “sell”.For all other departments the Essential Work Obligation would be to advise and serve in the areas of its work specialty. These words apply for every staff manager.
Principal Products Obligation – The Principal Products Obligation defines that which is produced or acted upon by the organization…WHAT it is that the organization offers its markets. For example, the product of a steel mill would be steel. The products of an insurance company might be “policies” or “financial protection”.The products of a manufacturing plant would be the products produced by that plant; the products of a producing department in the plant would be those products that are supplied to the next unit in the production process. The products of a sales department would be orders or sales contracts.The products of a staff department are the services that the department supplies to other departments…i.e., “Human Resources”
Principal Markets Obligation – The Principal Markets Obligation specifies WHO will receive or benefit from the products or services offered. The “market” for a sales group would be its customers. For a production operation that fabricates parts, the “market” might be the “assembly” department; the “market” for maintenance services would be the departments served. One test to help identify the “market” for an internal service would be to determine who has the authority to accept or reject the work performed. The “market” for a staff group would be those departments or positions for which this group provides advice and/ or service as its normal responsibility.
Principal Territory Obligation – The Principal Territory Obligation states where work is to be performed. For the company as a whole, this statement would be broad enough to cover all activities at all locations. The same would be true of a division or a department. For a plant or factory, this obligation would identify those locations at which products were produced but also may specify those areas where field servicing is provided. For a sales group, this obligation might reflect the area in which customers are located or where salesmen travel . . . for a staff group, it would reflect the location of the departments served.

As we have seen, the Primary Objective may apply to a total entity or to a department or position within that entity. In either case the Primary Objective deals with three elements: survival, growth, and profit. Where the operation has been in existence for some time, the first step is to define the obligations as these exist now. One advantage of this is that a manager at any level can write his own obligations without having to wait for any other member of the organization to write his. Later, as others prepare their Basic Obligations, differences can be rectified.After the present obligations have been defined, the manager can then begin consideration of anticipated changes in each obligation. These may be in response to pressures beyond the manager’s control or they may be the result of his strategic choices for the future. In either case, the Basic Obligations provide a way to define the future of the business in a way that minimizes the impact of turbulent times.

Brice Alvord has over thirty years experience as an internal and external performance improvement consultant and business coach. Mr. Alvord has extensive experience in designing and developing performance based training programs that get results. He holds a BA in Sociology/Psychology from Central Washington University and an MBA degree from City University of Seattle. He is the author of over two dozen books on continuous improvement and training.

For more information, visit our website at: http://www.aleragroup.com

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