Introduction   |   Critical Issues Analysis Tool  |   Strategic Planning Tool    |
The BMIA Strategic Plan   |   Presentation

2.0 Introduction

The Integrated Business Planning toolkit provides the tools and techniques necessary for the Association for Progressive Communications members to prepare their strategic plans.

For the purposes of objectivity, we encourage you to use an outside facilitator when first developing your plan. Recognizing that will not always be possible, an annotated strategic plan development tool is included.

This Integrated Business Planning Toolkit includes four items:

1. An overview of the Integrated Planning Process;
2. A Critical Issues Analysis tool;
3. A Strategic Planning tool; and,
4. A Sample Strategic Plan.

The strategic plan is the starting point for your organization’s planning process. It dictates a quantitative approach – objectives and supporting action plans – to the output of the plan that provides the link to the annual operating plan and budget.

The operating plan and budget focus very specifically on how the organization will carry out the strategic plan. Typically designed for a one-year period, the operating plan defines how you will conduct your business based on the action plans.

Results management provides the planning team an ongoing mechanism for monitoring implementation and results against the strategic plan, operating plan, and budget.

In preparing this toolkit, we are aware that a number of the APC members have already been through the strategic planning process and would like to move on to operational planning. Regardless of your current situation, Critical Issues Analysis is a good place to start since it can be used to develop a strategic plan from scratch or to validate an existing one.

2.1 The Critical Issues Analysis Tool

This tool will help you and your planning team identify and focus on the critical issues facing your organization. Based on your critical issues, you will be able to develop explicit statements of realistic objectives and workable plans for their achievement. This is a process that will result in organization-wide buy-in, and thus increase the probability that objectives will lead to the most productive and desirable results. A Critical Issues Analysis form can be downloaded from the downloads page.

Issues analysis is an assessment of the external and internal environmental factors that are likely to have the greatest impact on the future of your organization. External factors include market segments, technology, competition, industry structure, and strategic opportunities and threats. Internal factors include financial resources, products and/or services, internal capabilities, and strategic strengths and limitations. Issues analysis is not an in-depth analysis of organizational functions such as marketing, services delivery, or finance. Rather, it is a broad-based analysis of those critical issues that affect the total organization. As such, it forms a large portion of the data base for the strategic planning process.

During the analytical process, the following questions should be kept in mind:

1. Is the analysis bringing to the surface the truly critical issues facing the organization?
2. Is the selection of issues based on sufficient information and judgment?
3. Are these issues being thoroughly analyzed and discussed in terms of their root causes?
4. Is the analysis producing conclusions about these root causes?
5. Are these major conclusions clearly defensible both inside and outside the organization?

It is relatively easy to identify as many as twenty or thirty issues that need to be addressed by the organization. Critical issue analysis reduces the issues to the critical few issues that will make the greatest contribution to your organization’s future. This is done early in the process in order to avoid the possibility of your team being inundated by extraneous information and analysis. It also helps your team focus attention on the areas that require in-depth analysis and ensures that there are no significant gaps between your strategic desires and operational requirements.

A critical issue is usually a complex situation, event, or trend that is likely to affect your organization’s performance. Although there are many important factors or trends that might influence your organization’s overall performance, there are usually only a few truly critical issues that will make a difference to its long-term success. Typical critical issues might include such things as product lines that have that have substantial long-term profit potential, major changes likely to take place in the market, or significant competitors’ strengths or weaknesses that might be exploited. For example, anticipation of the difficulties IBM would have with the introduction of the PC jr. in 1984 enabled COMPAQ Computer to gain a substantial competitive advantage.

Critical issues analysis:

• Establishes an information base from which realistic objectives and action plans can be developed;
• Ensures continuing focus on resolving the critical few issues throughout the planning process;
• Integrates the long-term strategic needs of the organization with short-term operating requirements; and,
• Provides understanding and agreement among the members of the planning team on the major issues facing the organization.

The key is to follow a process that ensures a comprehensive analysis is undertaken with the active involvement of your managers and the core planning team. This analysis should be carried out in a systematic manner that allows for both in-depth analysis and sufficient dialogue among team members.

The best starting point is to bring to the surface critical issues that presently reside in the minds of your planning team members. This initial free-flowing approach creates a climate that is open and encouraging, and that relies as much on intuition and judgment as it does on facts and figures. Everyone on the team is able to contribute to the analysis process. This prevents the analysis from turning in to a fill-in-the-blanks forms-driven exercise.

Factors that might identify critical issues include:

• Size of gap between past/present performance and future required performance. For example: "Your connectivity user base monthly growth chart shows an increase of 5 percent. However, future requirements indicate a need to attain a level of 14 to 20 percent in ISP accounts sales." This needed improvement may be of such magnitude that it represents a critical issue for the organization.
• Impact on profitability and/or growth. Another guideline for determining a critical issue is to focus on those areas that have an impact of 25 percent or more on future profit/growth. For example: A potential technological development may render an entire product line obsolete, resulting in a substantial sales decline.
• Special requirements for accomplishing the organization’s mission. For example: What are the important accomplishments needed to fulfill the mission? What barriers stand in the way of these accomplishments?

A major advantage of using an issues-oriented approach to strategic planning is that people will see the relevance between the planning process and the types of issues they are facing. Furthermore, this approach minimizes the amount of analysis required. By concentrating on the issues, analysis is primarily limited to information that helps your managers understand and address their critical business problems.

There are four primary steps in conducting an issues analysis:

1. Identify issues;

2. Prioritize issues;

3. Analyze issues; and,

4. Summarize issues.

As a team, develop a comprehensive list of those issues likely to have significant impact on or contribute to operational performance in the near future. Consider the following questions:

• What are the most critical issues facing your organization, what might be their impact?
• What issues are likely to have greatest effect on profitability or short-term results?
• What issues are likely to have greatest effect on long-term success of your organization?
• What changes have taken or will take place affecting your organization’s performance in the coming year?
• What cross-functional problems or opportunities are likely to have impact on your organization’s performance?
• What are major impediments to performing your mission?
• What budget, funding, and/or revenue impacts are likely to affect your organization’s performance in the future?

Issues may be drawn from a number of sources: conceptual and long-term issues from the strategic plan, specific and short-term issues from the previous operational plan, and current operational issues from actual performance.

For example:

Thoughts and ideas should be expressed in complete sentences so that they provide a clear and articulate definition of the issues. Once all potential issues are identified, they need to be clarified and modified to ensure the entire team understands them. Issues that are externally focused may need to be restated in terms of their internal implications.

The following table compares inadequate and informative definitions of issues:

Issues should be described in terms that have total organization significance. For example, "need for improved margins" could be stated in terms of its dollar or percent effect on margin requirements or in terms of the core product lines affected.

When a relatively large number of issues are identified, it may be useful to group those that are related in order to reduce overlap and to aid in the prioritization step. For example, declining margins, competitive price pressures, and increased raw material costs might be addressed as a single issue, such as "need for improved margins." The intent is to reduce the number of issues to a manageable size—no more than ten to fifteen. Often the elements of the issues that are consolidated form the basis for addressing and solving the grouped issues.

The next step is for the team to agree upon the most important operational issues – those that are likely to have the greatest impact on the total organization – prioritize them, and reduce them to a manageable number. Experience indicates that a limited number of truly critical issues stand a higher chance of receiving the attention necessary to ensure effective resolution. Issues that do not make the final list may be delegated to a particular department, retained for periodic review and appropriate action in the future, or eliminated.

Once agreement has been reached on the most important issues, team members need to develop supporting information necessary to clearly understand the nature and scope of each critical issue. In doing so, the following questions should be addressed.

-  What is the real issue? Does the issue need to be restated?

-  What data/information is available (or needed) to resolve the issue?

-  What appear to be the factors causing this to be an issue for the organization?

-  What types of results are needed in this area?

Using the information generated during issue analysis, specific conclusions and alternative courses of action required to resolve the issues should be documented for consideration.

Client population has been declining at an annual rate of "X" percent for the past three years and is being projected at the same rate of decline for the next three years.

Additional uses for service capacity need to be established or the cost of maintaining that capacity needs to be reduced.

1. Find new sources of potential clients
2. Develop new services for current clients
3. Subcontract to other, similar organizations
4. Retrain current service personnel or other duties
5. Downgrade or terminate selected personnel
6. Close/consolidate selected activities

Note: In a variation of the above example, an operational issue relating to declining client population might have been attributed to market share encroachment by a particular competitor leading to these finding:

A substantial portion of market share loss has been to competitor "X" and needs to be regained or abdicated.

1. Improve customer research
2. Upgrade production line/service capability
3. Provide sales incentives
4. Drop the product line.

With the desired results, conclusions, and alternative strategies in hand, it is time to establish objectives.

When looking at the resources required and likelihood of success, the preferred objective will become clear—remember you must separate what you desire from what is possible. For example, regarding conclusion 2, above, you may like to upgrade your service capability in some quantitative way (response time, for example), but you may not have the resources to do this in a competitive manner. Hence, Drop the product line by December 200X may be a better objective. The appropriate objective, once selected needs a specific action plan. The action plan will describe specific tasks to be accomplished, time schedules, assignments of responsibilities, and resource requirements.