Business Planning: Keeping it All on Track Offshore and at Home

Great interview posted at Guy Kawasaki’s How to Change the World blog.  Guy interviewed Tim Berry, President of Palo Alto Software, creator of Business Plan Pro, and the blogger behind Planning, Startups, Stories.  The interview was a great reminder that the business plan is not just a formality in business, but a tool used to push our critical thinking in terms of how we are going to accomplish what we are setting out to do.   It’s not something you do at the beginning and leave alone.  Consistent revision for established businesses is just as important. 

The entire interview, including many of the posts from Berry’s blog, are worth reading.  I’ve noted a few key points from the interview that struck me and offer my humble observations as they relate to manufacturing products offshore and business in general:

• Planning isn’t about the document; it’s about controlling your destiny,
  running your business better, setting goals and tracking progress, and
  keeping your eyes on the horizon while not tripping over potholes in
  front of you.

AU:  I often witness, when we begin stretching a business’ or startup’s operations offshore, many companies get tripped up by the unforeseen challenges.  That’s because things come up that we’ve never even needed to think about when we do business in the States.  It’s key to keep the overall goal in mind, and realize that the path to get there will probably not follow as clearly as was envisioned beforehand.  Take it from Gary Erickson, it’s an adventure.      

• First, a plan should set priorities with the understanding that you
  can’t do everything. After all the buzzwords and analysis, strategy is
  focus. What can you do better than anyone else? What’s your core
  competence?

AU:  Strategy is often something that becomes sidelined when a company begins looking at all the details of getting their product manufactured offshore and shipped here.  There are a lot of details to account for.  Generally, it’s natural for us to want everything.  We want the lowest cost with the highest quality with the speediest delivery.  Chances are–you aren’t going to get all three.  There are always tradeoffs.  So decide what you need to support your overall strategy (e.g. lowest cost, most durable product, or quickest turnaround), and focus on getting that. 

• What’s most important with this order of execution (the order in which we go about constructing the plan) is to understand
  that it will never be sequential. In whichever order you do it, you
  will always be doubling back. I’ve done it in every conceivable order,
  but I’ve never done a plan from step one to step N. Fleshing out the
  second step will almost always bring up reasons to revise what you did
  in the first step, and the third step will make you rethink the first
  two.

AU:  How I wish when I finished something relating to the planning behind my company, I never had to return to it.  Given that I learn something new everyday, some things that I did yesterday are important enough that I go back and apply my new knowledge and rework them so that they help me more tomorrow.    

• The worst (mistake in a business plan) by far is focusing on the plan instead of planning. This
  generates the idea that you create a plan as a document, and the
  related misunderstanding that the plan is for somebody else. You don’t
  postpone life while you’re developing a plan; you’re always developing
  the plan. In the meantime, “Get going.” Here are some other common
  mistakes:

• Blue-sky blurry: lots of strategic thinking without any hard facts.
  Planning requires specifics: dates, deadlines, responsibility
  assignments.
• Trying to do everything. I use the rule of displacement: everything you do rules out something else.
• Thinking that being the lowest price option is important. It
  isn’t. The price and volume thing they talk about in economics classes
  is for 200-year-old lumps of coal, not your business. Use price as a
  statement of quality. Leave the low-price strategies for Walmart and
  Costco.

AU: It’s hard to balance the "get going" with the "let me stop and critically think about how I can plan and execute this in the manner to most effectively achieve our goals".  It’s not an "either/or"–it’s a "get going" and "step back and think critically".  You may not balance it perfectly–but a valid attempt will get you much farther than none at all.  Planning for both will help.