entrepreneurshipresource center

The Resource Center has all the info you'll need From content to user feedback, the resource center has the information you need for every level of the entrepreneurial process.

Planning and Alignment: Six Essential Processes for Growth

Jana Matthews, Founder and CEO, Boulder Quantum Ventures

Many entrepreneurs are reluctant to develop processes, thinking the organization won't make it unless they stay in charge and make all the decisions. But the truth is, without policies and procedures, growth becomes much harder to achieve. If you want to grow, you have to stop doing everything yourself. To ensure your team makes consistent decisions, you need to develop policies and procedures that describe how and why your company does things in a certain way. Policies and procedures are an effective way to keep your company aligned and focused, and to reinforce your values.

One entrepreneur who managed to grow his company made this comment:

Your infrastructure needs to be designed to support growth. You should view it as a whole system, rather than as individual parts. There are three fundamental sets of processes that build a growth-oriented infrastructure: (1) processes for managing and leading people, (2) processes for management and control, and (3) processes for planning and alignment – the focus of this article. (For more information about all three areas and their interaction, consult Building the Awesome Organization, the book that I co-authored with Katherine Catlin.) The following points are a top-level checklist that you can use to gauge whether your infrastructure includes all the essential Planning and Alignment processes necessary to support growth.

Planning and Alignment: Six Essential Processes

Good processes improve communication and productivity. Here's what one entrepreneur told me:

Process: Planning

Everyone needs to have a clear understanding of the company's mission, vision, and core values, as well as its market position and opportunity. This understanding should drive all functional and cross-functional planning, including planning for sales, marketing, product development, operations, hiring, and people development. The company needs to establish an annual cycle for planning and needs to schedule annual, quarterly, monthly, and weekly meetings during which the top team develops, tracks, evaluates, and refines the company's written plan. The planning process should require input from all areas as the plan is developed and tracked. In addition, it should include well-defined mechanisms for communicating the plan throughout the organization and getting feedback from all areas.

Each department and cross-functional team needs a defined process for developing its own plan and needs to make sure that its plan is aligned with and supports the overall company plan. In addition, you need to develop good departmental and cross-functional communications processes so everyone on the team can participate in problem solving and is informed about progress toward goals.

Process: Market and Customer Information

Staying close to the customer and having effective information-gathering processes helps your company build strong customer relationships, stay focused on innovation, deliver products and services that satisfy existing customers, and attract new customers. Your processes should enable everyone in the organization to understand who the customer is and what they need the most. Make use of market intelligence data to track competitive trends in your target customer's industry. Encourage your employees to identify customers' problems and provide solutions even before customers articulate their needs. Develop a process for compiling and disseminating customer and market information, and provide ways for everyone in the organization to review, analyze, and learn from competitive trends data. Always review your decisions and plans from the perspective of current and future customers, and make adjustments as needed.

Process: Communication

In order to make good decisions and do their best work, employees need clear and accurate information. Develop a company-wide communications plan to ensure that information moves quickly up, down, and across the organization. Make members of the top team responsible for implementing and overseeing this plan. Use regular meetings, special meetings, e-mails, voice mails, memos, and written or electronic newsletters to provide open and honest information about business realities, issues, changes, successes, and new goals. All these will help keep your employees aligned with the plan and focused on the company's goals.

Process: Continuous Innovation and Improvement

Everyone in the company is responsible for making incremental improvements as well as searching for breakthrough innovations. Put processes in place to get people focused on exploring new ideas and solutions, improving what they are now doing, simplifying the hand-off of ideas from one group to another, measuring and keeping score, and learning from experience. Assign "innovation teams" to focus on specific opportunities for the future, anticipate changes and new requirements for growth, and recommend ways to re-invent the company's strategies or operations. Charter "improvement teams" to evaluate and find ways to improve the efficiency and effectiveness of current processes, products, or market activities. These cross-functional teams will need to operate with input from both internal and external sources and should be held accountable for delivering defined proposals and/or results.

Process: Measurement

Determine performance standards and track key performance indicators that signal how your company is performing. At a minimum, you need to measure and track (1) financial health, (2) customer satisfaction, and (3) employee satisfaction. Develop standards against which to measure performance on these variables, and then regularly track performance using these indicators. Highly successful companies measure everything they can, develop benchmarks, note variances, and check into the reasons for those variances.

Measuring performance against a baseline gives you an opportunity to spot and reward high performance. For example, you need to know the ratio of sales calls required to land a contract or number of months, on average, it requires to develop a lead into a paying customer. If you don't know this, you won't be able to developing staffing plans, know how many salespersons you need to hire, or how to make reasonable cash flow projections. So when you see that your salespeople are able to land a contract in half the time, or convert a lead to a contract in four months rather than six, that's cause to celebrate, and to learn. Have your best salespeople share what they've learned so that everyone else can use that knowledge to improve the sales cycle time. If you don't measure, you won't know how well you are doing, or when employees are turning in exceptional performances, or how fast you'll run out of cash.

For help with financial benchmarking, check out the Kauffman Business EKG tool at www.businessekg.com and the Lowe Foundation's Fintel at edwardlowe.org. Both will provide a comprehensive assessment of your company's financial "vital signs".

Regardless of what tools you use, identify key ratios and numbers that you can track against a baseline or benchmark. Like signals on your car's dashboard, they will help you know whether your organization's engine is running smoothly and taking you where you want to go. If a red light comes on, if performance is over or under the standard, pay attention, check into the reason for the deviation, and make adjustments as needed.

Process: Policy Development and Implementation

Most employees want to do a good job when they come to work. You only need to give them a few parameters, make sure you don't create roadblocks, and let them do their work. Policies should provide a few critical guidelines that are proactive, positive, designed to support the culture, and help people run the business efficiently and effectively. Typically, you will need fewer policies if your employees match your values and culture, and are performing well.

Think carefully about how to write your employee handbook and policy manual. Describe the behavior you want, rather than the rules that govern that behavior. Start with the mission and values and indicate how each policy will help people contribute to them. Make sure the handbook is clearly written, useful, and easily accessible; develop it into a tool that employees enjoy using. And then hold employees accountable.

All of these processes contribute to an infrastructure built for growth. As one of the entrepreneurs mentioned in my new book, Lessons from the Edge, the best results come from a combination of good processes:

"One of the lessons I've learned is that we need to have a company manual and an operations manual. You have to have things written down. We have also developed some systems to track goals and assess productivity. I don't like too much administration, but there are certain policies, procedures and forms that you need to manage your company."

comments powered by Disqus

Search the Resource Center

Stay Connected

Email Newsletter Signup

Want to get connected? Sign up to receive regular news, polls and updates from The Kauffman Foundation.

Email Newsletters

Want to be up-to-date with the latest news and updates from Entrepreneurship.org? To subscribe, just give us your email address below; you'll choose which e-newsletters you'd like to receive on the next screen.