module: business planning

You need a business plan, a strategic plan and a growth plan whether you are an internal or external consultant. They do not have to be well-la id out or printed on glossy paper they are for your use and you should expect to revisit them periodically. They are exercises in you being clear about what it is you are doing, why, and where you want to be. These plans will follow from conceptualising, which we will cover first.

Conceptualising
There are three models/ideas that we will cover: the business idea, the hedgehog concept, and the excellence framework.

Business idea
This draws on the work of Kees van der Heijden (2005). The Business Idea comprises three elements: distinctive competencies competitive advantage value created
Distinctive Competencies Value Created

Business Idea
resources

that are linked with a fourth element: a reinforcing feedback loop where resources generated drive growth.

unique act ivit ies

results

distinctive competencies Distinctive competencies can be:

Competitive Advantage

institutional/personal knowledge (capability, know-how, values, knowledge) embedded processes (access, style, relationships, commit ment) reputation and trust (brand, size/presence, financial strength) lega l protection (patents, ownership, franchise/concession) activity specific assets (investments in infrastructure, economies of scale, first mover)

Distinctive Competencies take time to establish, and they need to be enhanced through the application of resources, otherwise they stagnate and shrink. My Distinctive Competencies are:

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module: business planning

competitive advantage The Distinctive Competencies lead to a set of unique activities, which give you a Competitive Advantage. This is essentially the answer to the question: Why can we do this thing better (i.e., different, cheaper) than someone else? In consulting your focus is on difference not price. Difference is of two types: generative (you produce unique offerings) relational (you have unique understanding, trust, communication, etc.)

Consultants usually create difference in the relational area, but with some elements of the generative area. A competitive advantage is a dynamic thing it lasts only until someone else develops a similar difference. My Competitive A dvantage is:

value created The activities that you undertake, and which led to your Competitive Advantage, lead to results, which in turn create value for the client/consumer. When this happens, resources flow to you, which allow you to maintain and enhance your Distinctive Competencies. My Business Idea is:
re sources

Distinctive Competen cies Value Create d

u nique activities

resu lts

Competitive Advantage

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module: business planning

Hedgehog
Closely a ligned with the Business Idea approach is the Hedgehog Concept of Collins (2001). Hedgehogs simplify a complex wor ld into a single organising idea, a basic principle or concept that unifies and guides everything (p. 91). This contrasted with foxes, who see the world in a ll its complexity and are scattered and diffused. The so what? of hedgehogs is the focus. Collins came up with the three circles of the hedgehog concept the three elements of this focus:

Hedgehog
what you are deepl y PASSIO NATE ABOUT

what you CAN BE BE ST IN THE WORLD at

what drives your E CONOMIC/ RESOURCE ENGINE

The hedgehog circles are not a plan or an idea, they are an understanding. best in the world What you can be best in the world at is not your core business or core competencies; it is a frank look at what you can do that makes you the best in the world. It is not a plan, strategy, etc. to be best, but an understanding of what you can be best at. The opposite of this is to also understand what you cannot be best at the things you should leave to others. I can be Best in the World at:

economic/resource engine This is an understanding of what key thing will deliver resources to you. This is not simply c lients or customers purchasing services or goods it is an understanding of what is the key denominator in the resource flow to you. That is, if you receive resources (fees or funding) per unit of x, what is the x that really matters? For a consultant, x may be engagements, or it may be clients. This model works equally for internal and external consultants both receive resources, but external consultants receive resources from multiple sources whereas internal consultants receive resources from one source. My Economic Engine is:

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module: business planning

passion Passion is the final element of the hedgehog concept, and perhaps the most relevant to being a successful consultant. Do things that you are passionate about. I am passionate about:

Excellence fram ework

The third, and final, model is the business excellence framework (Turner, 2002). This consists of identifying six key elements of your business: vision values mission strategy critical success factors core processes
Core values
wh ats impo rta nt to you

Excellence Framework
Vision
what you want to be

Strategy
th e game plan t o achieve it

Mission
why you e xist

vision This is a statement, in colourful, visionary or audacious terms of how you want to be seen by the world. It should be clear, simple and meaningful, and in the present tense: I am, We are. A vision is medium- to long-term somewhere from 3 to 10 years.

Critical su ccess factors

what you need t o be successful

Core processes
wh at you will do to achieve success

To help create your vision consider in five years time who your stakeholders are, how they perceive you, and how you are making money. Also, how you are special, how you compete, and what your major strengths are. Distil your vision from these answers. values What are the things you value in your working life and in your business? mission Mission statements are often grandiose, vague or non-specific. Your mission statement is a clear and concise statement of why you exist. It should have two parts: what you are going to do and why. Taking the second part first: the why is very simple. If you are an external consultant it is to make money; if you an internal consultant it is to return value to your organisation. The first part should be a simple statement of what you do there must be at least one verb in there! Can you guess this organisation from its mission statement? to improve the wellbeing of the Australian people by providing sound and timely advice to the Government.

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module: business planning

strategy This is a description of the set of activities that you are going to undertake in order to achieve your vision. There will be a c lose match between your strategy and your mission. critical success factors These are the things you need to focus on internally and externally in order to make things happen. The Balanced Scorecard (Kaplan & Norton, 1996; Niven, 2002) is a good framework. It comprises four perspectives: financial customer internal business processes learning and growth
Customer
t o ach ieve our v is ion how mus t w e look to o ur customers ?

Balanced Scorecard
MISSION

Financial
if we succee d, how w ill w e lo ok to our f ina ncial do nors ?

Under each, consider what the critical success factors are, and how you will know that they are being achieved, or not.

Internal business processes

to s atisfy our cus tomers , financial donor s, an d miss ion , w hat bu sines s process es mus t we excel at?

Learning & growth

to achieve our vision, how must ou r peop le learn, co mmun icate and work toget her ?

core processes Finally, think through what the core processes are that you will need to undertake in order to achieve your mission.

Planning
Out the outset we said you need three plans: a business plan, a strategic plan, and a growth plan. These should not be for ma l, fina lised documents they should be working documents that guide you and are revisited periodically as you grow and develop. About every six months is a rule of thumb and probably no less often than every year.

business plan
The business plan incorporates your Business Idea, your budget (see the Finances module) and your vision, mission and values. Banks will want to see a business plan if you want finance; clients may be interested in it (less the budget); but at its heart it is your plan

strategic plan
The strategic plan needs to articulate what your intermediate objectives are in achieving your mission, and the actions that will lead to those objective. It should include measures of both activity and outcomes.

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module: business planning

growth plan
In some ways your growth plan is incorporated in the Business Idea, since the feedback loop is the growth. However, you need to be explicit about what you will do that leads to growth how you will invest the resources to enhance your Distinctive Competencies. Note that here we are not talking about growth in the getting bigger sense but in the getting better sense. However, getting better often leads to getting bigger, and you may want to think through whether you want to get bigger, how that might be achieved and what it might mean for you and your business.

Notes:

Further reading
Colli ns, J. (2001). Good to great: Why some companies make the leap ... and others don't. London: Random House. Kaplan, R. S., & Nor ton, D. P. (1996). The balanced scorecard: Translating strategy into action. Boston, MA: Har var d Business School Pr ess. Kaplan, R. S., & Nor ton, D. P. (2004). Strategy maps: Converting intangible assets into tangible outcomes. Boston, MA: Har var d Business School Pr ess. Niven, P. R. (2002). Balanced scorecard step by step: M aximizing performance and maintaining results. New Yor k, NY: John Wiley & Sons. Tur ner , S. (2002). Tools for success: A manager's guide. London: McGr aw-Hill. van der Heijden, K. (2005). Scenarios: The art of strategic conversation (2nd ed.). Chichester : John Wiley & Sons.

Becoming a S uccesf ul Exter nal Consultant w orkshop 2007 N ovumAVI

4 September 2007