The business planning process offers decision makers a rare opportunity to step back and look at their organisation as a whole. It is a time to analyse the ecosystem in which it operates; connect the dots between mission and programmes; specify the resources that will be required to deliver those programmes; and establish the performance measures and governance that allow everyone to understand whether the desired results are being achieved. As a result, it encourages strategic thinking – not only while the plan is being created, but also thereafter, as implementation leads to new challenges and the need to make new decisions and trade-offs.
As an illustration, consider the experience of a mid-sized children charity. Over a six month period, the management team engaged with Aleron in a rigorous business planning process. They reviewed the services they offered and their support model against the emerging needs and priority in their area, and identified opportunities to improve their operations and prioritised key expansion areas. The result was a clear plan to guide their growth over a five year time horizon. Equally important, the management team found that the planning process changed the way they approached decision making. They now feel they know the right questions to ask when evaluating new opportunities, and have better insight into how to use data and research to inform their decisions.
Of course, each organisation must find the planning process that works for them and is centred on their particular needs or way of working. What is important is to have a rigorous planning process that ensures that organisations are able to transform their vision into actions. Over the years, we have collaborated with many voluntary organisations to develop business plans and found that the process typically includes four distinct components:
- What do we want to do, and why? Developing a concrete description of the impact that the organisation will hold to account for during a specified period of time (its intended impact), and the cause-and-effect logic explaining how its work will lead to that impact (its theory of change)
- How will we achieve it? Determining what specific actions and activities must take place to achieve the intended impact
- What will it cost and how much can we fund? Understanding the resources—financial, human, and organisational—needed to pursue these priorities and mapping out a plan to secure them
- How will we ensure successful realisation? Establishing the quantitative and qualitative milestones that make it possible to measure progress toward the intended impact as well as the performance management and governance model to support it
All of these steps have to be informed by an analysis of the external environment (e.g., market, beneficiaries, funders, commissioners, partners, competitors, policy and regulations) as well as an internal diagnostic of the organisation to identify challenges and opportunities. The figure below shows a simple framework which will help structure the process, tackle key topics, and set the business planning process in motion.
Drawing on client experience, we have developed a series of 4 perspectives aligned to these four components and designed to provide a thorough overview of how to approach the business planning process from start to finish. Although we chose to present them individually and sequentially, in practice they are quite tightly linked. As a result, the business planning process is rarely linear, but rather requires organisation leaders to circle back on critical decisions as new information emerges. It also requires significant energy and discipline from those involved, so we have developed a business planning template to help facilitate the process, which will be available to download from our website in the next part of the series.