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The Operations Plan

FastTrac, Kauffman Foundation

The role of an Operations Plan, when documented, is to unify a company in order to accomplish all the necessary tasks that must be done in the necessary order to achieve success. It is based on realistic, tangible, and achievable goals that must be reached if the company is to achieve its sales and profit objectives.

The Operations Plan—a section of the overall Business Plan—is primarily an action document. The chief executive officer (entrepreneur) uses the Operations Plan to coordinate the efforts of all phases of the enterprise toward achieving the goals of the business. As your company grows you will likely hire a manager of operations who will be responsible for providing daily oversight of the Operations Plan in action.

Each month, the Operations Plan is used to compare the monthly performance against the agreed-upon targets in order to answer the following questions:

  • How are we doing?
  • Who is meeting their projections?
  • Who is not?
  • Where are we having trouble? How bad is it?
  • Are we on target or exceeding expectations?

The plan should leave no room for doubt in the minds of the entrepreneur and the management team about what must be done each month of the year.

At the end of the fiscal period, the entrepreneur and management team's performance can be evaluated fairly and accurately against benchmarks that measure their performance. The Operations Plan provides that benchmark.

One word of caution: be sure that you build a plan that enhances rather than hampers performance at your company. As important as operations documentation can be to reaching your vision for growth, it is possible to slow growth with an Operations Plan that forces team members to spend too much time documenting and not enough time getting the work done. Find a balance in your Operations Plan. Be sure your systems and processes are clearly defined but leave room for the spontaneous and creative. Who knows? A new approach may find its way into next year's Operations Plan as a new "best practice."

K-Technologies founder Jeff Kryszak developed a user-friendly tool to measure progress-a type of scorecard that's both easy to produce and digest. "When we wrote our first plan we had thirty different performance measures, but that was too much to manage and didn't provide useful information to respond to," Kryszak explains. The new scorecard is simpler with about ten indicators, each color-coded for faster comprehension. Green indicates whether the category is on track, yellow means something is out of balance, and red signifies the area needs immediate attention.

As you think about the Operations Plan, your overall goals should be set first. Individual departments can then set their budgets based on those goals. Bringing the team together to establish these overall goals is a savvy leadership strategy. Team members need to feel a part of the process. After all, they are the ones who will make it happen.

A System from a System

Fast growth has sparked a systems mindset for Chuck Hall. "It seemed as though we were reinventing the wheel each time we started a project," says Hall, founder of Charles Hall Construction in Clarendon Hills, Illinois.

Yet Hall was cautious: "I've worked for other companies where systems were too rote, too documented—there was no room for innovation."

To balance consistency with creativity, Hall introduced a quality-control system patterned after the U.S. Army's After-Action Review. "Each project is seen as a single event in the eyes of the company," Hall explains.

During a project, which can take eight to 12 months to complete, Hall selects key events or milestones to gauge progress. When milestones are reached, the project team discusses both successes and mistakes and looks ahead. The meetings are chaired by a "client committee"—a team of key executives and personnel that focuses on issues from the client's perspective. Meeting client expectations is crucial because Hall relies on repeat business and referrals rather than maintaining a sales team.

By providing a forum to discuss what has gone well and what hasn't, the milestone meetings have an important byproduct: they shed light on best practices.

"There's been an improvement in documents that the entire team uses, which gives us better coordination up front. Our next big step is capturing the information in a database so people can reference it later and learn," says Hall. (Reprinted with permission from the Edward Lowe PeerSpectives™Report July 2002. Copyright 2002 Edward Lowe Foundation.)

© 2007 Ewing Marion Kauffman Foundation. All rights reserved.

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