So far in our series of posts aimed at helping, in a practical way, your business become more purpose-driven we've covered the following:
Creating (or reinvigorating) your business purpose and who to involve in that process;
Linking purpose to your business vision; and
How to ensure your strategy planning activities and outcomes are focused on purpose.
The clear message we hope you have in your mind by now is that purpose should be firmly at the core of your business. It should be the driving force behind, and the validation for, what you do every day and over the longer term.
In this post, we'll cover your business planning and touch briefly on creating Key Performance Indicators (KPIs) with your employees.
Business plan in context
The term "business plan" can mean a couple of different things.
First, it can be a document created to attract funding from investors or lenders. This type of plan will typically be highly detailed. Rightly so...anyone who's either going to invest in or lend money to your business needs to know as much as possible about what you do, why you do it, how you do it, the competitive landscape, and a whole range of other factors.
Second, and our focus in this post, is the business plan as a "live" piece of work that is ongoing and designed to give focus to the day-to-day activity in your business.
It's in this context that your business purpose is a critical tool in embedding purpose.
We believe that for maximum "bang for buck" your business plan need only be a couple of pages long.
If you'd like a two-page business/action planning template, drop us an email and we'll send you a copy.
Creating your business and action plans "on purpose"
Many businesses use the balanced scorecard as a framework within which to create business plans and associated actions. It focuses on the key drivers in most businesses - employees, clients, operations and financials - so it can work well.
But a great framework won't do all the work for you.
The trap many businesses fall into with the balanced scorecard is to go straight to the financials quadrant to set a bunch of targets - revenue/revenue growth, expenses/expense reduction and profit being the usual suspects.
Those who know GrowthCatalyst well won't be surprised to hear this: it's fine to have financial targets...in fact pretty much every business should have them. But financials are generally an outcome of everything else that happens in your business.
For example, if you start the business planning process with an objective to increase profit by say 10% in the year ahead, you run the risk that this becomes the sole focus. And even, by default, your business purpose.
The danger here is that you'll start creating objectives and action plans across the three other quadrants of the scorecard - employees, clients and operations - with an emphasis on increasing profit...not to serve your business purpose and achieve your vision.
And what's wrong with that?
With a 10% increase in profit as the main focus of your business you'll inevitably start thinking about "doing more with less".
This ultimately means fewer (probably disengaged) employees doing more, chasing after more clients who may or may not meet your ideal profile (which itself adversely impacts profitability) and under-investing in technologies and other means of improving operations.
All that may sit quite well with your business purpose. But we doubt it.
In practice, your business plan should be a shorter-term road map guiding your business toward achieving its longer-term aspirations - its purpose - in line with the strategy you believe is appropriate.
So, if you choose to employ the balanced scorecard framework, for every initiative in its four quadrants you must answer a simple question: does this initiative contribute to your broader business purpose? If the answer is no, then you need to consider whether it should be in the plan at all.
The challenge will be this: constantly questioning your plans will most likely feel a little unproductive at first.
Stick with it though, because you're not alone. A recent EY study found that while 90% of executives they polled understood the importance of purpose, only 46% used purpose to drive business planning. That probably reflects the difficulty of aligning business plans to purpose.
What makes business planning so important to purpose?
Your business plan is the part of the overall planning process that's most visible to, and has the most impact on, employees across your business. So, if you want them more focused on purpose, this is the place to build that focus.
We've seen many business plans that are basically a long list of things to do that become the responsibility of employees to complete and report on. Without a clear sense of why that responsibility falls on them, people will see a list of tasks and their role becomes "just a job".
And that's always limiting engagement and productivity.
As well as being an important driver of employee engagement, an "on purpose" business plan will give you clarity around how to best target, engage and acquire clients who meet your ideal profile. In turn, that facilitates a targeted service proposition that provides clients value on a basis other than price.
On the operations front, if you're like most businesses, you won't have unlimited resources at your disposal. Creating a business plan "on purpose" adds clarity to decisions about where to allocate the resources you do have for maximum impact. It removes most of the ambiguity that can often surround such decisions.
Get those three balanced scorecard quadrants - people, clients and operations - right, and the financials will follow.
A word on KPIs
There's no doubt that employees of purpose-driven businesses are more highly engaged and productive than those in other businesses.
This comes not just from articulating a purpose but demonstrating a commitment to it across the business. A high-impact part of this is ensuring KPIs for all employees truly reflect purpose. As we suggested earlier in this post, a laundry list of things to do and results to achieve with no actual link to purpose will result in disengaged employees producing sub-optimal results for your business.
Here are some KPI-related tips:
Involve employees in truly negotiating KPIs (noting and emphasising the word "truly"). Rather than presenting KPIs as a pre-determined outcome of business planning over which your employees have little control, give them a degree of ownership by allowing them to negotiate on the terms of their KPIs. Also, make sure there's a discussion on how each KPI is related to business purpose;
Better yet, involve employees (or a representative number of them) in the business planning process itself (the best ideas, by the way, are often hidden in plain sight). This will give them insights as to where their role and KPIs fit in the overall plans for the business - a great way to engage employees;
Focus KPIs on outcomes rather than inputs. For example, your business may encourage professional development activities for employees. Rather than measure success in terms of how many of your employees take on such activities, relevant KPIs should instead be about how those activities relate to an individual's development needs and the purpose-driven requirements of the business;
Allow employees to set one or more of their KPIs covering to their specific areas of interest as they relate to the business purpose. While these might not be explicitly related to their "day job" it's a real opportunity for employees to take personal responsibility for their engagement and commitment to purpose.
Let's be honest...negotiating and agreeing on purpose-driven KPIs with employees is the toughest challenge in embedding purpose in your business. It's also, though, the step with the most potential to make a substantial contribution to the success (or otherwise) of your efforts. So shortcuts here should be avoided.
That's a lot of information
So, don't be shy...give us a call or drop us an email if you'd like more information or help with embedding purpose in your business.
In the meantime, stay tuned for the next instalment of our "how to" series aimed at helping you become more purpose-driven in your business. It'll be published soon
How purpose-driven is your business right now?
If you're keen for immediate feedback on how sustainable your business growth might be over the longer term, please follow the link to our "Strength of Business Purpose Health Check".
It'll take only a few minutes to complete, and you'll get your results instantly.
Is purpose your "business North Star"?
Does purpose drive your business plans and KPIs?
How clear are you, your clients and your employees on your business purpose?
The advisers at GrowthCatalyst can help you create and embed purpose and put you on the road to long-term, sustainable and profitable business growth.
Contact us to arrange a face-to-face or virtual conversation.
Alternatively, you can book a time for an initial discussion here.
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