Designing Business Plan at Functional, Operational, & Offerings Level

“Business Planning Practitioners Group is not enough for execution!” announced Julia in a message she sent through my mobile app. I was not surprised. I wanted to know more details before making any comment. The group communicated within themselves and Julia got back to me. “We have a surprise for you! We want to meet you at my office. The Municipality has agreed to give its Conference Hall as a venue for our upcoming meeting.” Now, this was a real surprise for me. I asked Julia, “How come the Municipality has taken such an initiative?” Julia said, “Credit goes to you!” I was surprised again. Julia explained, “After our earlier discussion about identifying objectives, team, and funding, I volunteered to lead the Business Planning activity of the Municipality. After I identified the objectives, designed the team, and identified funding requirement, the management had the next question – How to do this mammoth task? I said, let me get back to you after discussing it with Sachin. They said why don’t you call him here and we will involve our operational team for the Business Plan. I told the management that I am part of the Group that is learning Business Planning together. If I am calling Sachin, I will have to call the other Group members also. The management agreed. So we are having the next Group meeting in my office!” This was a real surprise for me! I never thought a Government will be so interested in Business Planning.  

The Business Planning Practitioners Group gathered at the Municipality’s office. The Municipality building had a heritage look. Then I was delighted to find the building completely modern from inside. The Group had already gathered. The Municipality had arranged for snacks before the meeting. They had also arranged couple of volunteers from the Municipality Departments who were scouting for experts in technology, manufacturing, etc. Efficiently, they signed up a couple of the Group members for upcoming projects. I was impressed by this renewed culture of Municipality.

Each of the Group members had smartly got along their key operational team members for this meeting. I could now sense how serious the Group members were towards the Business Plan.

As always, ever enthusiastic Sam who had got his cofounder with him asked, “How can I recruit functional experts in domains like Sales, Marketing, Project Management and Finance?” I replied, “Sam, you are an experienced professional, you must have recruited many people in the past. Why do you have this query?” Sam said, “Sachin, yes, I’ve recruited people in the past. But at that time I was working with a large company with a world class brand name. Now, nobody knows the name of my company. All those who had said earlier that they will join my company whenever I will start one, have vanished. When I am trying to recruit, I either get a complete fresher with no experience at all or bare minimum experienced ones looking for a stepping stone kind of opportunity before they jump on to a bigger brand name.” I said, “Sam, you will have to find a balance between experienced ones and freshers.” Sam replied, “So which functions we should focus on?” I said, “Before we dive into details, I just want to give an overview of the Functional, Operational and Offerings level.”

The Business Plan will remain only on paper if you don’t integrate it with the functions in your organization.

The typical functions are:

1.  Analytics

2.  Finance

3.  Human Resources

4.  Information Technology

5.  Learning & Development

6.  Manufacturing

7.  Operations

8.  Project Management

9.  Quality Control

10.Sales & Marketing

11.Sourcing

12.Strategy

Integrating the Business Plan at an Operational level also is important. The Functional view is a kind of top level view compared to Operational view, which is at lower level.

Operational level is kept separate from Functional level to understand the in-depth nature of the work to be done for effective Business Plan execution.

Your offerings are the vehicles of your output. If we do not integrate the Business Plan with your offerings, we are not making any difference. Offerings are your Products and Services.

Offerings are engines of your growth.

If you have a wrong offering, your train of Business Plan can derail.

Now let’s get into the details for each of the Group members.

Entrepreneur

Functional

For achieving Sam’s Business Plan Objectives – ‘Getting customers quickly’, ‘Developing team work’, and ‘Raising funds’ – you will need to focus on the following Functions:

1.  Sales & Marketing

2.  Project Management

3.  Finance

Finally, Sam got the opportunity to ask a question and he just jumped on it. Sam asked, “Sachin, why you are mentioning only these three functions? Don’t you think all the functions of the company are going to get affected?” I was expecting this question. I answered, “Sam, you are absolutely right. All the functions are going to get affected with the Business Plan. What I want all of you to note is that we have to ‘focus’ on specific functions. These focus functions are identified based on the Objective of your Business Plan.”

Sales & Marketing is going to play an important function since it will fulfill the objective of getting customers quickly. Project Management function is indirectly going to serve the objective of developing team work.

Operational

The Operational focus areas for Sam will be:

1.  Research & Sales

2.  Communication disciplines

3.  Approach         

Research and sales are combined because they are going to feed information to each other. By Research, I mean product and market research. During the initial phase, you are going to work in parallel on product features and customer demands.

With more communication mediums, we get a feeling that the communication becomes really smooth.

In reality, with increased mediums of communication, communication becomes complex.

For this, you need communication discipline. What I mean by discipline is when to use which medium and what to say and how to respond. If you have just received a complaint email from a customer and she is very angry, how will you respond to her? If you take the route of replying to her email with detailed explanation, that may not work. I will suggest that you pick up the phone and talk to the customer. In writing, we become so much analytical, whereas on phone, we can listen to her tone of voice, ask few questions, etc. If you do this via email, it will take few email interactions whereas on phone, you can solve the issue quickly. Even if you don’t find the solution, at least you have demonstrated your intent of mutually finding the solution.

Now remember that each industry behaves differently while using communication. 

I have added the element of ‘Approach’ in the Operational aspect taking into consideration objective of raising funds. Funding needs a unique approach based on your industry, products & services, funding period, funding amount, etc. 

Offerings

At, the Offerings level the aspects you should take care of are,

1.  Make it easy to understand

2.  Quality

3.  Revenue optimization

To meet the objective of getting customers quickly, you have to make your offering easy to understand. Many companies make a mistake of making there offering complex. A Travel & Tourism company offering off-beat destinations did not mention the names of off-beat destinations themselves. They just mentioned broader locations on their website but not specific locations. Remember, we have to make it easy for a customer to understand. If we make it complex, we lose a chance. Once we have lost an opportunity, it costs us a lot.

Although there is no need to explicitly talk about quality, businesses still continue not to standardize and adhere to quality.

You will find ample examples around you. In Products, sometimes quality issues are obvious to spot, whereas in Services, they may not be that obvious. Although you are a start-up, none of your customers would like you to compromise your offerings.

Earning obvious revenue is never enough. A classic example is when in a restaurant, they ask do you want extra cheese or added flavor in a coffee, etc. First time customers are not aware that extra cheese/flavor is going to cost you more money. New customers are almost cheated for their ignorance. But again, law remains on seller’s side since there is something called Caveat Emptor that states that ‘buyer be-aware.’ There are always legitimate ways of optimizing your revenue. Consider when small products are kept in the payment queue aisle at a mall. When you are offering a set of products that are complimentary to each other, you can optimize your revenue. Such companies usually come out with products like computer tune up or mobile battery optimizer, etc.

Midsized Company

Functional

For Tina, her company needs to focus on following functions:

1.  Strategy

2.  Information Technology

3.  Human Resource

Since scaling up is one of her company’s objectives, the Business Plan focus function will be Strategy. Scaling up as an objective sounds simple, though it is difficult to achieve.

Scaling up in terms of Revenue is only one of the attributes. You can also scale up in terms of Profit.

For any attribute of your choice, you need change in Strategy since it guides the company’s behavior.

For achieving objective of Digitization across the organization, Information Technology is the backbone. Tina’s company will need to identify where all it can digitize cost-effectively. I am mentioning cost-effectively since sometimes digitization efforts are not cost-effective. Cost-effectiveness can be measured for short term and long term. Automating your lead generation and relevant processes through Customer Relationship Management application may not be cost-effective in the short term but will probably be cost-effective in the long term.

To achieve the Objective of developing learning culture, you will basically need to change people, and the function which needs to own this change is Human Resources. I have specifically used the word learning and not training.

I feel that training is kind of compulsion while learning is learner driven.    

Operational

Operational focal points are sometimes cross functional. That’s the reason they are separately mentioned.

In reality, all departmentalization will dissolve because the customers do not care for your business plan; they want a product that works, a service that serves!

Here are the Operational focus parameters for Tina’s company:

1.  Front & back end

2.  Phases

3.  Need analysis    

Scaling up only revenue, people, and profitability will not be enough. You need to think about front end – which customers can see, like a ‘front desk’ in a hotel. You also need to think about back end, which customers may not able to see, like a ‘back office.’ For Tina’s company, back end will be manufacturing processes, raw material, supplier coordination, worker relations, and so on. Front end will be client relations, public relations, community relations, etc.

All of Tina’s company’s efforts for achieving objectives will be driven in phases.

Scaling up happens in phases.

The company will first need to gear up for scaling internally, and then it can achieve the effects of scaling up externally, and vice versa. You will always find it difficult to decide whether to scale up internally or externally first. Whatever is your choice, you may later find that it was the wrong decision. Sometimes you will find that, surprisingly, you had taken right decision.

I have mentioned Need analysis as a parameter at Operational level as the realities that were present at Business Plan designing level are now different at Operational level. Price of important raw materials may have increased substantially now, hence you need to conduct need analysis. Identify if you can replace the raw material with comparatively cheaper variety. Explore if clients are ready to pay for price increase, etc.

Offerings

Offerings will define the impact of your Business Plan for an outsider. Based on change in offerings of a competitor, you can identify that they have initiated change in Business Plan.

1.  Premium

2.  Optimum performance

3.  Defect free

As mentioned earlier, scaling does not limit itself to revenue or headcount; scaling can also mean increase in profitability. One way to increase your profitability is by making your product premium. This is not as simple as it sounds. Just because you have priced your product at premium level does not mean customers will buy your products.

You will have to provide a reason for customers to feel that your product is premium.

You can add on a special service, you can improve the quality of your product, you can provide world class service, and so on. 

With digitization, you can optimize performance. In manufacturing, you can digitize supply chain, manufacturing, etc. and can optimize your performance. Customer support can also be digitized and will help in optimizing the performance.

I have observed that one of the early benefits of developing a learning culture is defect-free products and services.

Defects can occur due to a number of reasons. Human error is one of the common problems. When people become learning-focused, they tend to be more responsible. The more responsible you feel, the more attention you will pay on your work. Increased attention on-the-job reduces defects in the products and services you provide. 

Multi-National Company (MNC)

For Jenny, Business Planning will be more complex due to locations in multiple countries. In each country, they have different tax laws, culture, currency, etc. Implementing the Business Plan in such an environment is a complex job.

Functional

For functional focus, Jenny has to find a balance between different options. The functional focus areas for Jenny’s company can be:

1.  Sourcing

2.  Optimizing Systems

3.  Strategy

Sourcing raw material and talent at the right price, quantity and quality will mean a lot to this multi-national conglomerate.

Optimizing Systems will assist in optimizing operations on such a large scale. By optimizing systems, I mean the physical and digital functions of the company.

Such companies typically will have a separate team looking after Strategy. This helps a lot since managing scale, Strategy direction, and execution. 

Operational     

Operational focus for the Multi-National Company will test the philosophies of the Company.

1.  Cost analysis

2.  System analysis

3.  Strategy

By Cost analysis I do not mean cost reduction. Cost reduction focuses on reducing the cost, whereas cost analysis focuses on analyzing the cost structure. Cost structure is a collection of cost components. Cost components involve components like raw material/talent, processing costs, delivery costs, etc. Through cost analysis, identify where to reduce and where to optimize cost.

System Analysis is not only IT System. By System Analysis, I mean ‘Business System.’

You will find that in large organizations, employees use System as a ‘way-out’ and as a ‘way-in.’

By way-out, I mean they will tell you that something cannot be done because the ‘System’ will not allow it. If the willingness to get the thing done is high, they will ask the top management to modify the system. A leading multi-national company once had paid half of the invoice amount by mistake. When I asked what happened, they blamed it on their Enterprise Resource Planning (ERP) System! I couldn’t believe that. The mistake could have been identified by any literate person. But do you know who the culprit was? The System!

Although it may sound simple, growing is difficult for a large organization.

New products, new services, new geographies are examples of engines of growth. Now, let’s see how these engines can work as offerings.

Offerings

Offerings are the bouquet of products and services that you offer. Offerings is a mega-engine of growth or de-growth or no-growth!

Jenny’s company needs to focus on the following aspects of the offerings. Remember that the moment you change your objectives, you will have to tweak your offerings.

1.  Better pricing

2.  Better quality

3.  Revenue development

Price and cost impact each other. The moment your cost changes, you may need to change your price. Sometimes you have to change price to respond to competition and with due consideration of cost. What I mean by better pricing is that in some cases when we are offering premium product/service, we do not price it at premium price. You will also find that when our product/service is not necessarily premium, we still price it as premium. What we need to understand is that the customer knows about alternative products available, their pricing, etc. If you are honest in your pricing, customers will appreciate that.

Quality is a relative term. By better pricing, I mean can you take quality of your offering to the next level? To better the quality, you may change packaging, change raw materials, offer more services, etc.

I am saying revenue development and not just revenue growth.

Revenue development is revenue growth in the right direction.

Government

For Julia, making things work at Municipal Corporation is a great change because of varied stakeholders.

Functional

Functions drive the organization towards achievement of the objective.

1.  Traffic expertise

2.  Garbage recycling expertise

3.  Information Technology

Functional focus areas for the Municipal Corporation are quite straightforward. Expertise in traffic, garbage and information system management are essential.

Operational     

At Operational level, the Municipality will have to focus on:

1.  Identifying core problems

2.  Identifying alternatives

3.  Improvement areas & solutions available

The core of any problem if identified and solved can make things simpler.

Consider a traffic problem. If the Municipality works with Transport Office and makes Driving License process stringent, this can start spreading the message of the tough role that the Traffic Management System needs to project. If this is the core problem, you want find that solution implementation will become simpler for generations to come.

From environment friendly practices, we had diverted ourselves to environment unfriendly practices.

We used to carry a cloth bag for shopping earlier. Then with introduction of extremely cheap plastic, we started getting complimentary plastic bags almost everywhere. Now we are understanding importance of not using bad quality plastic. Shops have started charging for plastic bags since now they have to provide only good quality bags.

The Municipality will need to identify areas of process improvements, and then identify the solutions available. Through lot of self-help technologies, routine transactions can be automated. Consider payment of Property Tax. There is an opportunity to address complex processes also like Project Management. 

Offerings

1.  Reduced risk

2.  Responsible living

3.  Quick turnaround

The Municipality will be reducing the risk through effective traffic management. Once the citizens understand the need to play an active role in solving the garbage problem, they will start living responsibly. With technology, we can initiate quick turnaround.

NGO

Sid was eager to hear what solution I had to offer to his situation. I asked Sid, “Now you know the process of addressing Business Planning at Functional, Operational, and Offerings level. Can you identify what steps your institution should take?” Sid replied, “Yes, I have already noted some points and need your opinion on that.” I was delighted to hear that. Sid continued -

Functional

Objectives identified for the organization are focus, effective collaboration, and funding. At functional level, the focus areas will be:

1.  Analysis

2.  Team work

3.  Knowledge of funding channels

The organization can develop Focus based on the analysis of its situation.

We will need to conduct analysis required to achieve Focus. With effective team work, the organization can achieve effective collaboration. Knowledge of funding channels will help the organization in effectively planning its funding sources. 

Operational     

Operational parameters to focus on are:

1.  Scanning

2.  Identifying collaboration route

3.  Estimation & approach

Scanning will help the organization for identifying alternatives. Collaboration routes are options for the organization to achieve its Focus results. The organization may decide to partner with a local Government or a Sponsor or another NGO. Funding will always call for right estimation and approach. 

Offerings

1.  Specific

2.  Efficient

3.  Economical

With specific offerings like eradicating Malaria in Asian Countries, it is easier to keep focus. Efficiency can be built through collaborating with right partners. By making Offerings economical, funds can be effectively managed.

Sid gave excellent inputs and I was happy that the discussion was useful to the group members.

This article is excerpt from upcoming book ‘Designing Effective Business Plan.’ The article was originally published in Sampada Magazine of MCCIA, February 2017 issue.

Author: Dr. Sachin Bhide, Founder & Strategy Consultant, Eha Management Consultancy sachinworking@gmail.com 9823038828

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Comment by Dr. Sachin Mohan Bhide on March 14, 2017 at 2:12pm

Thank you for the feedback Viraj Patil.

Comment by Viraj Patil on March 6, 2017 at 5:04pm

It was good to read this article. Thanks. I will try to implement to my business.

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