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Your business plan might look different from a bird's-eye view

It might seem obvious – do a business plan, tie-in your budget and press ‘go’ for business success. But it’s less straightforward than you would think.

Diederik Jordaan, MD, Gen2 Group.
Diederik Jordaan, MD, Gen2 Group.

All businesses have pretty much the same goal: how can I grow my company better and achieve its business goals and objectives? In today’s rapidly-evolving world, businesses need to be agile and make decisions on the fly – and they need to manage their projects and budgets accordingly.

Diederik Jordaan, managing director of the Gen2 Group, says in the light of the new normal that businesses around the world are moving to, ensuring their strategic plan and budgets are aligned is even more key to ensuring business success. “If you look at how companies approach their business plan, they develop an overarching (strategic) plan of where they want to go and how they want to get there. Then they start allocating what they expect such a plan will cost. In other words, they draw up a budget. Often both the budget and strategic plan are supported by budgeting and strategic planning software, which operate independently and at a very detailed level.”

The challenges are twofold: strategy and budgeting need to be aligned, and the company needs to have a high-level overview of the whole picture.

“I want to know in real-time if my strategic plan or a portion of it and it’s underlying project plan isn’t on track. I want to drill down and see what part of which specific project is in trouble, and where it’s going wrong. This allows me to take remedial action immediately, instead of weeks or months later when a manual report crosses my desk,” says Jordaan.

Once projects are completed, the business needs to make sure the desired business outcomes have been met and measure the return on the investments made – whether in money, efficiency, customer satisfaction or other configurable measures.

This makes sense, right? Well the traditional approach to managing a business plan entails doing one of two things. You can start at detail level and then build up from there. The challenge here is that the company gets bogged down in the detail and this can affect management’s ability to strategise and lose their overall view of the business plan. “It’s key in bigger organisations to always have an overall view of what’s happening in the business,” says Jordaan.

The alternative approach is to work from the top down, but the downside of this strategy is that you don’t get input from employees on the company’s strategic objectives and could miss out on some new and innovative thinking around business strategy, not to mention that buy-in might be lacking if the entire team hasn’t had input into the business plan.

The ideal approach, according to Jordaan, is to deploy a solution that enables the company to manage its strategic plan from both ends. “A solution that offers the best of both worlds is a hybrid approach, where the business can get feedback from lower and middle management in terms of ideas on how to do business more efficiently, while retaining the overall view of strategic projects as the system filters information, to help management without getting bogged down in the detail.”

It’s key that the business use some form of a budgeting and strategic portfolio management product that has a symbiotic relationship in terms of being able to provide both a detailed perspective as well as a high-level overview when required. Generally, budgets and strategic plans contain a great deal of detail, but that high-level view is vital, says Jordaan. This is where strategic portfolio management comes into play. It brings together the information from the budgeting and strategic plans and gives the business a high-level perspective on the projects at hand, while enabling it to drill down into the detail should a potential issue be flagged. “Most of the time the business just needs to see a high level, rolled up version of the updated business (strategic) plan to ensure that everything is on track,” he explains, “and not the nitty-gritty details per project.”

He points out why it’s so important to have access to both a high-level view as well as a detailed view. “When you develop a strategic plan for the business, you plan at a high level, but you need access to a detailed level if you want to identify where a problem lies, and you can only see the source of that problem if you recorded the correct information in the first place.”

Of course, it’s also important to have measurement criteria that can track the progress of your projects while ensuring they align with your budgeted plan. Combining this with the high-level overview of your strategic project and budgeting plan means the business has a holistic view of what can be achieved, sometimes for the first time ever.

All too often organisations draw up strategic plans that are in no way related to their budgets. “We see this often in the public sector, and it’s one of the primary reasons for local councils failing to achieve their goals,” says Jordaan. “The strategic plan needs to realistically tie into the available budget – and they need to be able to measure against the plan to see if it correlates to the budget. Managing and controlling budgets is a big challenge for any company, regardless of size or sector. The budget must be tied into the business plan and strategic objectives for the company, both in public and private sector. The only way to do this is to have a single glass-pane view of strategic plans and projects. Which requires strategic portfolio management at a high-level.”

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