WAUPACA COUNTY DEPARTMENT HEAD MANAGEMENT TEAM MEETING (1/31/12) STRATEGIC-OPERATIONAL PLAN DIAGRAM: BRIEF DEFINITION OF TERMS
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1 WAUPACA COUNTY DEPARTMENT HEAD MANAGEMENT TEAM MEETING (1/31/12) STRATEGIC-OPERATIONAL PLAN DIAGRAM: BRIEF DEFINITION OF TERMS Operational Plan: An effective operational plan and planning process is like a set of reins in the hands of a skilled chariot driver that empowers the horses to reach optimum performance with clear and firm guidance toward the desired end result. Imagine Charlton Heston in Ben Hur without a set of reins. A company without an operational plan is like a chariot driver without reins. He knows the strategic direction (which is defined in the strategic plan) but has no way to get there. Operational planning defines what an organization intends to accomplish, when it will be accomplished by, who is responsible, how it will be done, and the resources (money and ) needed to accomplish it. Operational planning involves everyone in the company because everyone will have a role to play in implementing it. Strategic planning engages primarily upper management. Operational planning requires short-term, specific thinking that focuses on implementation and results. The timeframe covers one year and is completed on an annual basis, typically toward the end of the year and directly before the budgeting process. Strategic Plan: Strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide an organization, what it does, and the direction in which it is headed Strategic planning requires visionary, conceptual thinking that focuses on setting organizational direction. The timeframe covers 3 5 years. It can be adjusted within the timeframe, and typically is developed at the beginning of the fiscal year absent the passions of the budget process. A strategic plan addresses four primary questions: 1) Where are we now?; 2) How did we get here?; 3) Where do we want to go?; and 4) How do we get there?. a. Pre-planning, Existing Conditions Analysis, and Mandate Consideration Pre-planning is the preparation step in strategic planning that is usually conducted with one or several leaders of the organization. Clarification of the project and primary needs, as well as, specific stakeholders, dates, and timelines are a few of the items covered in the pre-planning phase. 1
2 Existing conditions analysis helps the organization take a pulse of where they are and how they got to their current destination. It can be very limited, such as, an executive presentation or cursory discussion amongst stakeholders, or it could involve in depth analysis. Mandate consideration involves developing an understanding of what the organization is mandated to do. This is NOT an analysis of which department, division, unit, etc. is mandated. Instead, it is an analysis that addresses what the department, division, unit, etc. must do if they do exist. A distinction is made between formal mandates, which are recorded in law and policy, and informal mandates (i.e., expectations), which are roles and responsibilities that clients expect to be performed. b. Mission, Vision, and Values An organizational mission succinctly defines what the organization does (i.e., purpose), why it does this, and who it does it for (i.e., customers). Sometimes the mission also notes the name of the organization. Although succinct, a mission is different from a tag line, which is used primarily for external marketing purposes. The organizational vision defines tomorrow s reality today. It is a clear description of what the organization should look like, act like, and feel like after it successfully accomplishes its mission on a consistent basis over the long term. The vision statement may range from a slogan to a more detailed verbal sketch to a comprehensive description of the future state of multiple aspects of the organization. It is always future oriented, ambitious, and inspirational. Values are core principles, basic rules, or fundamental behaviors that are critical to the success of the organization. While mission represents what you do and vision represents the end destination, values describe the behavior you exhibit along the way. c. SWOT Strengths are internal resources or capabilities that help an organization accomplish its mandates and mission while adhering to its values (e.g., professional staff, adequate resources, leadership) Weaknesses are internal deficiencies in resources and capabilities that hinder an organization s ability to accomplish its mandate or mission (e.g., lack of effective communication, absence of a clear vision or mission, flawed organizational structure). Opportunities are outside factors that can affect the organization in a favorable way (e.g., new funding, political support for a project, changes in outdated mandates or systems that impact you). 2
3 Threats are outside factors that can affect the organization in a negative way (e.g., loss of state funding, increased service demand, anti-government political movement). d. Priority Strategic Issues A strategic issue is a fundamental challenge affecting an organization s mandates, mission, product and service mix, clients, costs, management, etc. It can be a single SWOT or a combination of multiple SWOT that help frame the overall issue. An organization likely has many issues. A strategic planning process typically identifies 3 5 critical, high leverage priority issues that are framed as questions to be addressed. e. Strategic Initiatives A set of policies, actions, or decisions implemented to address a strategic issue. There are typically 3 5 strategy initiatives for each strategic issue. f. What? The action steps a company takes throughout the year. The goal of an operational plan is not to identify every action. It is not practical and to do so would be counterproductive due to the diseconomies of scale involved in attempting to plan out everything. Instead, they focus on the action steps that are critical to mission, vision, and value success. There are four sources for action steps: a) operational objectives from the strategic initiatives identified in the strategic plan; b) operational objectives from the key performance areas; c) standards of performance; and, d) a crisis. f1. Operational Objectives from Strategic Initiatives A strategic plan contains 3 5 critical issues phrased as questions. Each question is planned to be addressed by 3 5 strategic initiatives. Operational objectives operationalize strategic initiatives by making them SMART (specific, measurable, achievable, relevant, time-bound). f2. Operational Objectives from Key Results Areas A key results area is essential to effective performance and achievement of mission, vision, and values on a perennial or almost perennial basis. They are not typically issue based (but can be) and thus, do not frequently change. In short, they are mission critical, but rarely issues. Examples, include productivity, development, organizational image, customer relations, quality control, and market penetration. There are 3 5 operational objectives (that are SMART see f1) based on key results areas in annual operational plan. 3
4 Most are worked on by many and often all departments within an organization. Crossdepartment effort is typically required. f3. Standards of Performance A standard of performance represents a level of achievement to be reached and maintained on an ongoing basis that needs to be monitored but does not currently require a written action plan. Written action plans are reserved for f1 and f2 because continual focus on them is required. Examples include: profit levels, bonding policy, and safety records. f4. Crisis Induced A crisis might give rise to immediate objectives and subsequent actions that must be accomplished and implemented, respectively. g. Who? The individual/s and/or department/s responsible for implementing the action steps and, thus achieving the operational objectives. h. When? The specific timeframe within which the action steps will be implemented and operational objectives will be accomplished. i. How? The specific action steps necessary to accomplish the operational objective. j. Resources? The funding and any needed to implement the action steps. 4
5 Example A Weakness: Profit margins are decreasing despite increased sales. Strategic Issue: How do we increase profit margins considering sales are already increasing? Strategic Initiative: Increase productivity (i.e., increase amount of output per unit of input). Operational Objective from Strategic Initiative: To increase productivity from 120 to 130 widgets per hour by December 31, 2012, at an implementation cost not to. HOW WHEN WHO (accountability) RESOURCES Action Steps Start Complete Primary Others $ People Complete detailed study of operations, identifying specific areas of potential improvement. 4/1/2012 8/31/2012 Dave Heidi Reduce out-of-stock material levels of critical materials from 10% to 5%. 4/1/2012 6/31/2012 Heidi Kay Sheri Increase production volume by 10% 4/1/2012 9/31/2012 Mary Dept. Heads Reduce equipment maintenance down time 6/1/ /31/2012 Clyde Ian Reduce scrap levels from 4% to 2% 7/1/ /31/2012 Leighton Roger Maint. Staff Plough the snow on time so workers aren t late 10/1/ /31/2012 Dean Hwy. Staff Eliminate the least productive 10% of staff and rehire 6/1/ /31/2012 Mandy Pers. Cmte 5
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