One thing successful mid-marketers all have in common is that they embrace best practice business management principles and implement key elements of the value chain through integrated business planning (IBP). But while mid-market organizations continue to drive record growth, many could still be selling themselves short by not fully taking advantage of IBP.
Integrated business planning extends the principles of sales and operations planning throughout the supply chain, customer portfolios, consumer demand and strategic planning, to deliver on seamless process. It involves aligning company plans every month to achieve the most effective and profitable outcome, according to consultancy Oliver Wight.
Some of the main challenges mid-marketers face is establishing disciplined financial planning and execution, sustaining growth, and attracting and retaining talent. OW said mid-market firms can use an IBP process that aligns strategy, portfolio, demand, supply and financials through a driven, monthly replanning process. “The result is a single operating plan over a 24+ month horizon, to which the senior executives hold themselves and their teams accountable for achieving,” the company said.
In their latest study, Oliver Wight noted that many companies postpone formal planning initiatives because executives feel there are “too many things going on.” Yet the consultancy equates such procrastination to continuously chopping wood and forgetting to sharpen the axe.
Not every organization is ripe for IBP, however. Oliver Wight uses a maturity model with 4 key phases of maturity that includes:
- Integration of business processes and technology
- Knowledge-based automation of processes
- Eliminating failure in processes, and
- Eliminating unplanned events
The firm said companies need to move along the proven path to the “Class A standard” of business excellence. “Your progression to fully integrated business planning is made through a series of 5 transitional steps, each of which will produce nothing less than a transformation in your organization,” said the consultancy.
Many organizations have to work more on basic strategic planning before they’re ready for IBP. James Cassel, co-founder and chairman of investment banking firm Cassel Salpeter, said many mid-markets fail to devote the necessary time, energy and resources to design an effective strategy. “Plans often sit on shelves garnering more attention from dust and mites than from company executives,” said Cassel.
He said mid-market executives should first identify the right management team members to participate in developing the plan. Executives should seek broadly-diversified teams that include members who may have previously worked for other companies. Directors should then consider where they want their business to be in the next 12 months, 24r months and 5 years. “Envision revenues, growth, employees, locations, [and] products and services offered. A good strategic plan should cover 5 years and be continuously reviewed and modified,” Cassel said.
Key elements of a strategic plan should generally include a bold vision, a mission, values, a SWOT analysis and goals. Finally, there should be key performance indicators to enable evaluation and adjustment of objectives. Cassel said creating the plan is only the first part of the battle and that “the real challenge is implementing it and keeping it updated.”