How to Build a One-Year
Operational Plan That
Improves Performance
I
n this chapter you move from the strategic view to the opera-
tional applications. Here you separate the strategic from the tac-
tical, the global from the specific, and the long term from the short
term. This is where most management energy is focused for execu-
tion.
The 1-Page Strategic Plan generally spells out where you intend
to take the organization while the operational plan defines how
you plan to make the trip. Yet getting to a practical application of a
211
CHAPTER
8
business plan seems to always get lost in the planning process.
Earlier you defined the goals, objectives, and tasks necessary to give
you three levels of definitions. Now let’s examine your business
plan up close by defining what must happen next year. This is
called the operational plan (see Figure 8-1). The content for the
plan is developed during the initial planning conference. All the
information for the operational plan can be extracted from the
original planning process. This is mostly true for the other plans as
well. The real task becomes putting the information into the right
portion of the 5-Page Business Plan. In lay language, we call this
“getting it in the right bucket.”
Seven Steps to a Successful Business Plan
212
Figure 8-1. The operational plan sets the direction into motion. It is how
you plan to work the next year.
The operational plan usually extends out one year (see Figure

a. Current
b. Historical
2. Analysis of competition
3. Analysis of market share
4. Analysis of mission
a. Implied tasks
b. Mission capability
5. Analysis of existing resources
6. Analysis of your business’s drivers—excluding, at this
time, your primary operational focus (i.e., single focus)
7. Analysis of existing structure
8. Analysis of reference information
a. Customer satisfaction survey
b. Employee satisfaction survey
c. Others as identified
Analysis of Company Performance
As part of the planning model you must conduct self-evaluations.
This means taking a hard look at your last year’s performance and
a second look at your overall performance from a historical view.
Usually there is no shortage of charts and graphs depicting how
well you did financially for the past year. The analysis usually
Seven Steps to a Successful Business Plan
214
includes one or more previous years, depending on the size print
and complexity of the chart. It always includes actual performance
against projected performance. Usually these are just numbers
drills.
To be truly effective you need to have some lessons learned.
You need to know why the numbers went up or down. Thought
must be given to why spikes occurred in your performance. A poor

ward, so I advocate the backPlanning approach. This future orien-
tation removes the inherent limitations placed on the thinking
process. Once team members decide where they want to go, they
can test the validity of their decision with the situational analysis
to determine the plausibility and practicality of the plan.
If you are dead set on starting your planning process with a
competitive analysis flavor, think about these two points. First, the
more time you spend in competition the less time you have to
accomplish your own goals. Second, why do you care about the
competition, anyway? If you are accomplishing your goals, which
you freely set, why should you have more than a passing interest in
the competition? You need a healthy respect for your competitors
and should honor them as legitimate players in the market, but
don’t overdo it.
What I’ve observed is that competitive strategy actually should
be called competitive obsession. Management consultants have led
us astray in this area by building large, complex schemas for strate-
gic thinking and planning based on intricate formulas for compet-
itiveness. This approach appeals to the macho tendencies often
found in the upper levels of management. You don’t need a lot of
competitiveness except toward one thing—your vision and its asso-
ciated strategic goals.
Analysis of Market and Market Share
What is your market and who is your customer? Don’t tell me
everyone! Someone once asked Willie Sutton, the famous American
bank robber, why he robbed banks. His answer was very insightful.
“Because that’s where they keep the money.” A danger is to not
know where the money is kept. Are you guilty of selling or servic-
ing every customer with no real knowledge if it is a profitable sale
or not? When was the last time you did a careful screening of your

not be fully understood and appreciated?
3. What resources are going to be implicated when the
hidden tasks are brought to execution?
4. Have we coordinated those implied tasks among the
management team?
5. Are we fully committed to the range of tasks?
How to Build a One-Year Operational Plan
217
Another reason to revisit the mission statement is to confirm
your mission capability. That is defined as your ability to carry out
the requirements. In the plan that means you must be able to hit
the targets you are setting for the first year. Not only is mission
capability a planning issue, it has leadership implications as well.
Too often managers set targets, objectives, or goals that are beyond
the capabilities of the management team. Test your reality by ask-
ing several hard questions. Start with the following six about your
team and their ability to fulfill the mission:
1. Does my team have the management maturity to com-
plete the mission?
2. Do they have the wisdom, experience, and judgment to be
successful?
3. Are they willing to commit the time, energy, and effort to
accomplish the mission?
4. Can they complete the mission or operational tasks being
set within the time frames being established?
5. Are we giving the team the right tools and equipment to
get the job done?
6. Will they have enough information to properly do their
job in the spirit in which intended?
Analysis of Resources

4. Facilities
a. Do we have adequate facilities to get the work done?
b. Are conditions in the offices, plants, or facilities
conducive to effective work?
5. Tools and equipment
a. Do we have the right items on hand to properly
do the job?
b. Can we afford any upgrades or replacements required?
c. How soon will we be able to get the tools and
equipment needed?
How to Build a One-Year Operational Plan
219
6. Technology
a. Will our existing technology be able to keep pace with
the action plan?
b. Can we afford to leapfrog technology?
c. What will be the implications of working with
outdated technology if our competitor is state-of-
the-art?
7. Relationships
a. Do we have the right partnerships, alliances, and
outsource partners for the mission?
b. How difficult will it be to put a relationship in place
to meet mission deadlines?
c. Are there old relationships that must be renegotiated
or dropped?
8. Intellectual capital
a. Do I have people with the willingness to share
experiences for a synergistic effect?
b. Do we have a formal database of lessons learned

facilitate the employee component of our business, or is it
a punitive document?
2. Am I solving my customers’ problems? Have I looked at
what is at the center of my operational focus—customers
or things?
Plans
1. Are we operating in a planned way, or are we living from
day to day? Is the span of time for our plan long enough,
or have we been too limiting in time?
2. Are we disciplined about how we do business? Do we have
accountability measures in place to make sure the plan is
followed? Do the rewards and compensations match the
desired results of the plan?
Processes
1. Are we operationally efficient? Do we have a plan for con-
trolling overhead?
How to Build a One-Year Operational Plan
221
2. Do we pay attention to our business process? Are we
upgrading our ways of doing business or just continuing
to do business the same old way?
3. What is our level of heat loss? Do we know how much
money is draining out the bottom through inefficient
processes? What is our plan to fix the loss?
Products, Goods, and Services
1. Are we single-product focused with no alternatives? What
would be the implications of additional products? Have
we let go of obsolete but emotional lines of goods?
2. Where do we make our money? Is our attention and focus
in the right place?

immediate implementation of the plan?
b. Have you communicated your expectations of respon-
sibility for execution of the plan?
c. Have you defined the accountability and how it will be
exercised in the first year of the plan?
3. Hard infrastructure
a. Are the physical facilities set up to support the mission?
b. Do you have the right equipment spotted at the right
locations?
Analysis of Reference Information
There is a wealth of information available to you for a situational
analysis. You may have a customer satisfaction survey that provides
details on a range of vital items. Use this information to cross-check
your goals and supporting tasks. The key questions to ask are as fol-
lows:
■ Are we satisfied with the current customer satisfaction rat-
ing? If not, what must we change?
■ Does the plan allow for improving the customer relation-
ship?
How to Build a One-Year Operational Plan
223
■ How does the customer fit into the total picture of the
plan?
You may use an employee satisfaction survey to determine the
culture temperature of your workforce. The data may or may not be
translated into a goal. In all cases the purpose of gathering reference
information is so you can apply it to the development of action
items to close identified gaps. For your situational analysis you
should know the answers to these questions:
■ What is the employee feedback telling us in relationship

year. Apply realism to the target based on the previous description
of the situational analysis. Repeat the process until targets are set
for the remainder of the objectives.
Avoid the twin dangers of setting the targets too high or too
low. The first danger of shooting too high comes from the inherent
enthusiasm found when planning. It is easy to sign up for more
than you can do based on the adrenaline high from the process. To
avoid this danger, apply the situational analysis measures and make
a determination.
Setting targets too low is equally a danger because not enough
will be accomplished to put you on the correct climb for your
strategic goals. Frequently a low target is set for the first year then
repeated the second and third years to produce a hockey stick per-
formance figure (see Figure 8-3). The management rationale is to
stay relatively flat for several years to get systems in place or ramp
up the activity. This may or may not be valid. I’ve worked with sev-
eral CEOs who will not allow a flat model of any type. Their think-
ing is that a hockey stick model permits continued mediocre per-
formance rather than demanding improved performance from the
plan. Interestingly, each CEO has been able to get the company to
rise to the occasion and make the numbers over sustained periods
of time.
How to Build a One-Year Operational Plan
225
Set Quarterly Performance Measurements
Waiting a full year to see how well you are performing against your
annual targets is not good business. You need interim measure-
ments. These are usually done on a quarterly basis. Business is based
on quarterly measurements, so there is a need to be consistent
across quarters. It is common to rely on one single quarter to pull

you create a master task list and translate them to processes. Cut
out all extraneous tasks and stick to the few things that must be
done for mission accomplishment. Each task must have assigned
times and responsibilities. Who will do the task by when? A com-
mon document found in planning and useful to the implementa-
tion of the plan is an action plan. This is nothing more than a con-
trol sheet to list the particulars of all the tasks. The action plan can
be as simple or complex as you like. The intention of the document
is to be able to see all the actions and related information in one
place.
Define Tactics
Review the list of tactics you developed in conjunction with the
strategies. Make sure they are reasonable in view of a one-year time
How to Build a One-Year Operational Plan
227
frame. Remember, tactics require resources and you will need to
make allowances for those requirements.
Coordinate the Operational Plan
You will need to be specific in your operational plan as to who must
coordinate with whom. Sadly, managers cannot be left to their own
initiatives for coordination. Spell it out. Make them cross organiza-
tional boundaries and climb out of their stovepipes to coordinate a
task. Hold them accountable as a team for a result. This will force
people to work together.
Summarize the Short-Term Plan With a Concept
of Operation
A technique used to create operational alignment is to present the
total concept of what you will be doing but in a thumbnail format.
Write a short paragraph defining how you will be approaching the
first year. Be as specific as necessary with strategic business units

of a big bite of heat loss.
But heat loss is not recovered just from outsourcing $3 billion
of IT services to Computer Sciences over seven years. Millions of
dollars a year are found in the combined little losses. This is called
the death of a thousand cuts—an old knife fighter’s metaphor.
Examples of these small cuts are plentiful in the business world
around us. Here are nine of them:
1. Telephone tag with someone who left a message, “Please
call me.”
2. Merchandise returned with no information or return
authorization.
3. Lateness to meetings accepted as part of the cultural
norm.
4. Receipt of 283 e-mail messages in three days, of which
only eight were important.
5. Money spent to complete a project and the materials, pro-
grams, or products are never used.
How to Build a One-Year Operational Plan
229
6. Annual strategic planning conferences that are never com-
pleted at the employee level.
7. Training seminars that are not connected to the business
plan that become an education, skill, or knowledge short-
fall.
8. Seminar participants who are not held accountable by
management for integrating and implementing training.
9. Participants leaving conferences and seminars early.
Seven Steps to a Successful Business Plan
230
Figure 8-4. It does little good to develop more business while your profits

ered at the yard to prepare the trucks for the following day. I casu-
ally asked the drivers, “Well, did we make any money today?” The
answer: “We must have because we sure pumped a lot of propane.”
Yes, but did we pump it to the right accounts in the right amounts
How to Build a One-Year Operational Plan
231
should have been one question. A second question should have
been, did we do it in an efficient manner? The answer to the sec-
ond question would have probably been no. One of the greatest
challenges facing the vice president of operations was to get drivers
to adjust to efficient routing by the computer instead of door-to-
door sequential deliveries. It seems logical to a driver with years of
experience to catch the next house down the street. Yet when the
operations staff ran cost data to demonstrate the compared effi-
ciencies of the two models, the drivers still disbelieved.
Heat loss takes on many forms. These forms cause the organi-
zation to function at less than maximum performance levels. It can
be overt or it can be subtle. The loss of organizational effectiveness
can be small or large. In all cases, taking out wasted motion is
important to your story because it improves the bottom-line prof-
its. To find these central pools of loss, look closely at two areas:
1. Islands of power (where power in many forms is being
used in an unproductive fashion)
2. White space (places in your organization where the lack
of assigned responsibility and accountability are creating
losses)
Islands of Power: When Control Is Lopsided
Islands of power occur when someone or some group has a need to
control another to the level where a disproportional ratio of power
exists. This can be in information, money, or other resources (see

for diamonds. South Africa is not the only country in the world to
produce diamonds. Russia has a huge quantity of large, gem-grade
stones available and is giving the monopoly a difficult time.
Canada is rich in potential diamond sites with one mine in pro-
duction and a number of potential sites ready for development.
Both Winspear Diamonds, Inc. and Darnley Bay Resources Ltd. are
Canadian diamond forces to be dealt with. Arkansas has a report-
edly large diamond site, yet it was immediately placed within a
national park shortly after the find was made.
Information also can be used as a power source. For centuries
people have known that to control knowledge is to control the pop-
ulation. Dictators like to keep people uninformed. By controlling
the information that people receive through the media the truth
can be distorted to an advantage.
Remember when only a few people had all the knowledge of
hardware and how software controlled computers? These chosen
few lived on their own floor of the building where it was cold
enough to hang meat. They wore white coats and talked in a funny
language that us neophytes couldn’t understand. Any simple
request for computer support was answered with a lengthy expla-
nation of why you didn’t want that, it couldn’t be done, or it would
Seven Steps to a Successful Business Plan
234
take a minimum of six months to program. The antidote for this
behavior was the invention of the personal computer.
White Space: When No One Is Held Accountable
What islands of power eventually lead to is a breakup of the integri-
ty of the organization’s operating processes. As communications
shut down, political warfare rages, and mission-essential energy is
deflected, the gulf between and among the staff functions widens.