Setting goals is one of the most important activities in running your business. The reality however is that a lot of companies, especially smaller companies, don’t do it.
The new year is just a few weeks old, and most of our New Year resolutions have already gone by the wayside. The vast majority of those resolutions did not last and had no impact. I Googled; “why New Year’s resolutions fail?” From the thousands of search results,
I picked the answers below:
you are lacking motivation
or commitment
you are a master of procrastination
you are picking too big of a challenge or changing the goalpost constantly
you don’t believe in yourself
What is interesting is that these apply for goal setting at a company as well as for personal life.
Picking your goals
Your planning horizon is important. If you navigate well for the short-term, but have no long-term objective, you might end up in a place and wonder how and why you got there. In reverse, if you are focused only on the long-range plan, you might be set up perfectly for the future, but your business fails because you did not master the challenges right in front of you.
Long-term
Where do you want the business in 5-10 years? Where do you want to be in 5-10 years? These goals include expansion and growth plans, exit plans or generation change.
Medium-term
What are you planning for the next 2-5 years? What new markets do want to enter? What new product categories do you what to develop? Do you want to move into new facilities? Do you need major technology or software upgrades?
Short-term
Are there important positions to be filled? Do you need to adjust the cost structure? Do you need to increase/decrease capacity? What bottlenecks do you need to address?
Look at your entire business
It is important that you look at all departments of your company. In my work, I focus on operational improvements, however, in order to achieve overall excellency all departments and all aspects, such as sales and marketing, manufacturing and distribution, finance and administration need to be reviewed and all improvements need to be aligned to the overall objectives and with each other.
You need to deep-dive into all departments, but for this article, we will concentrate
on operations.
Figure 1 depicts seven categories you can use to evaluate an operation. These categories are listed below and allow us to question your operations performance in more depth. It helps determine your current situation and allows new objectives to be established.
1. Strategy
Corporate Objectives
Product Range and Services
Market Positioning
2. Product
Product Variation Management
Product Data Model
Rule-based Construction
Construction Standards
Platform strategy
Design
3. Organization
Lean Manufacturing
Production System/Model
Processes
Organizational Structure
Supply Chain
4. Technology
Process Engineering
Automation Technology
Preventive Maintenance
Tooling
Infrastructure
Facility Management
5. Data Integration
Product Planning & Control
ERP|MES Integration
Synchronized Production
Information Flow
Machine/System Integration
Interfaces
CAD|ERP Configurator
Customer Order
Product & Demand Planning
6. Logistics
On-time delivery (Quantity –
Time – Quality)
Intelligent Material Supply
Suitable Technology Concepts
Separating Value-adding
from Logistics
Internal Logistics
Rework Organization
7. Human resources
Leadership
Methods & Problem-Solving Skills
Qualification | Skills Development
Flexibility
Motivation
A similar detailed list should be made for sales and marketing as well as for finance and administration.
By going through this exercise, you are most likely creating a long list of potential improvement projects, which may take you years to complete. Stay realistic and reduce the list according to importance, potential impact, and available resources. If the list is too long, the effect is most likely that nothing gets done. It is important to right size the list to be a challenge, but not overwhelming.
The next step is to bring all these ideas into a workable format.
The system of a One-Page Plan works well for this. You start from the top. The president’s list contains the high-level items. For example, “increase Sales by X per cent”
and “increase profit by Y per cent”.
The sales manager picks up the sales goal and divides it into multiple projects, for example adding a certain number of new dealers, developing new markets (i.e. export), adding new products (adding closets to the kitchen cabinets) and so on.
The operations manager does not have sales on his/her list. But the increased volume or the new products are required to be produced. So, the operations manager’s One-Page Plan has the matching details to achieve the sales goals.
The profit objective is an indirect result of the achieved price and the actual cost structure. So, the sales manager’s objective is to achieve certain prices/gross margins and the operations manager’s objective (as well as the finance manager’s) is to maintain or minimize the cost structure accordingly.
The engineering manager is required to set the objectives to create the plant /production capabilities to produce the volume according to the sales forecast, within the cost targets.
The production manager’s plan will focus on the his/her portion of the plan.
Each objective will have a basic action plan on how to achieve it and should reasonably quantify the expected results.
This planning process needs to go down the chain of command and establish the objective for the entire staff.
By adding up all the details at the frontline, you should achieve, or better, overachieve, the president’s original plan.
Once the plan is set, it becomes the management tool and control tool to monitor progress and re-adjust objectives if necessary. This One-Page Plan can be an intricate part of the weekly/monthly management meetings. The individuals can report their progress (or lack of), their challenges, but also the viability
of the original goal. By compiling the progress feedback up the chain of command, it becomes very clear if the company is on course to achieve the plan, or if additional resources need to be activated
to catch up.
How complex you make this planning and controlling process is up to you. My suggestion is always to start small and simple and add complexity only if needed.
The reason for the One-Page Plan is to:
Communicate the overall
company objectives
Detail the individual’s part of
the overall plan
Create a tool to measure progress
Create a tool for accountability
The secret to success is not how creative you are in finding improvement potentials. The real secret ingredient is your ability to implement and sustain incremental changes.
To go back to my original Google search, here are tips to make your New Year’s Resolution work:
Write down your goals
Break a large goal into smaller achievable parts
Track your progress daily
Make it public
Create routines that support your goals
Be accountable
These also apply to your business plan.
When do you start?
Do not wait for the next New Year! It takes time to get started, you will require a few re-starts and adjustments. The major challenge is your ability to set yourself an objective and then focus on the completion.
It is a fact that if you make yourself an actual list at the beginning of a day or week of what needs to be completed, and try to focus and follow that list, you will be more productive than if you just work hard and address the issues as they arise. You need to start with yourself and get comfortable, before you can include others in this process.
Who can do this?
Even though this article is tailored more for the owner-operator of small/medium woodworking companies, it applies in principal to anyone in the organization – on any level. Any level: worker, lead hand, supervisor or manager has
to deal with more work every
day than they can usually get done. Everyone can become
more productive by adding a few ounces of planning.
