Simplifying strategy: The one-page business plan

“If you do not know where you are going, you will probably end up somewhere else,” are famous words of educator and hierarchiologist Lawrence J. Peter, formulator of the Peter Principal. In order to get the best results, every person, team and company needs to have a clear objective and a defined journey to get there.

For professional service firms, management can be more of a
challenge than for other organisations
for four reasons.

1. Professionals often have strong-willed personalities and are used to challenging whatever’s around them; this often includes the way that the firm is managed.

2. The structure of the organisation is often built around sharing certain advantages like having broad knowledge in specific areas, sharing costs and, most of the time, sharing profits. As a result, management is often more focused on what is happening internally than on the difference the firm can make in the market.

3. Management is often done by the professionals themselves, although managing an organisation is not their specific area of expertise.

4. The decision-making process within firms is often slow because too many professionals need to agree to the decisions, making it difficult to keep up with the rapidly changing and increasingly competitive environment.

However, professional firms need to be managed and to have both inspiration and guidance to get the best out of themselves, find synergy with their colleagues and get a sense of belonging in their working lives.

An excellent and proven way of providing this is the objectives, goals, strategies and measures (OGSM) methodology. It is a one-page business strategy that leads from vision to action in a few very clear and well-defined steps. OGSM is widely used by many Fortune 500 companies such as Procter& Gamble, CocaCola and Mars. Many other (professional) organisations also apply the methodology successfully. In this article, we elaborate on the OGSM methodology and put it in perspective with other popular management methodologies.

Application of OGSM

OGSM is a one-page business strategy. It is a streamlined model that helps organisations to first define their aspirations and ambitions and then translate those into clear actions.

A great advantage of the OGSM methodology is that it can cascade. This is the process through which the corporate OGSM is translated to divisions, departments and even people.
It is a strong way to ensure that everyone at every level knows the firm’s objective and strategic choices and contributes towards their achievement.

What follows is the ideal OGSM process.

1. Preparation

Good preparation is important for many tasks, and creating an OGSM is no exception. Before you start making it, it is important to:

• determine who will be participants in this process; and
• make, and agree upon, a thorough business analysis.

The participants

The success of any business plan is not only dependent on the content of the plan but also on the support it receives internally. It is therefore wise to choose the members of the OGSM meetings carefully and to think of a process to get commitment and buy-in from the majority of the organisation.

The business analysis

It is only when you clearly define the strengths and weaknesses of your business against those of the competition, as well as the opportunities and threats that you see in the market (a SWOT analysis), that you can make a good plan.

Agreement with the entire team on the top three factors in each area is crucial. So, avoid producing a long wish list but instead create one focused on the most important elements. Also, avoid having many more strengths than weaknesses and providing weaknesses that are a given or the result of others (and are therefore threats instead of weaknesses). Strong businesses with strong personalities often overlook their weaknesses, but that is not a sign of strength; in fact, it lowers their possibility of becoming great.

2. Making the OGSM

When making the OGSM, start with defining the objective and goals (what you want to achieve) and then determine the strategies and measures (how you are going to achieve your objective and thus your goals).

Objective

Your objective is the point on the
horizon where the firm wants to be
after a certain period of time. Most organisations choose a time period
of between one and three years.

Define what the desired market position will be at the end of the time period and/or the difference you want
to have made. In addition, define the chosen approach to reach it. This means that the main strategy will already be defined in the objective.

For example, one objective may be that ‘ABZ Law is the most successful law firm for the retail industry as a result of our agile and pragmatic approach to everything we do’. As you will have noticed, the objective is in words: no numbers allowed! It is a description of the desired end stage. It should be clear and inspiring so that people know where the firm is heading towards and feel inspired and empowered by it.

Making a strategic plan means making choices, so every qualitative element within the OGSM should be formulated as ‘what by how’. So, a good objective has a ‘what’ part, which is the first choice you make (in the above example, ‘ABZ Law is the most successful law firm for the retail industry’) and a ‘how’ part, which is the second choice you make (‘as a result of our agile and pragmatic approach to everything we do’).

A typical professional service firm has a clear objective: ‘more profit’. This might be called an objective, but it doesn’t give any direction (or inspiration) to individual behaviour. Managing an organisation with only these kinds of financial objectives
or statements (often combined with financial triggers) doesn’t lead to great workforces. The objective should give clear direction and, at the same time, leave enough room for individuals to tighten the objective towards their personal strengths and ambitions.

Goals

The goals are the quantitative translation of the objective. They reflect the objective in measurable, smart numbers. They are the coordinates on the point on the horizon that you described in the objective. So, agree internally on your ‘need to haves’ and ‘nice to haves’ and then set your goals on the former. And last, but not least, measure both the ‘what’ and the ‘how’ parts of your objective.

For example, with the objective of ABZ Law, the goals for measuring if it has become the most successful law firm for the retail industry could be a combination of turnover, profit market share and client recommendations. All goals should be specific, measurable, achievable, result-oriented and time-bound (SMART).

Strategies

After setting the point on the horizon by defining the objective and goals, the strategies are defined. These are the logical breakdown of the route that was chosen in the objective; they are your GPS towards your desired destination. And, since your whole plan needs to be on one page and you can’t have ten strategies, you will need to make choices regarding what your firm wants to do (and doesn’t want to do). This is very important; the majority of organisations do too many things and, as a result, nothing really makes a difference.

All strategies should be formulated according to the what-by-how principle, so that it is clear what you want to achieve with the strategy and how you are going to do it. It needs to be expressed in such a simple manner that any stakeholder will know what is meant.

Note that you should be making choices, not simply stating the obvious. ‘To be in Rome by hiking’ holds a choice on how you are going to proceed; ‘to be in Rome by travelling’ does not.

Measures

Finally, each strategy should have measures, which are divided into a dashboard and an action plan. The dashboard should hold the SMART indicators that tell you if the strategy is bringing you what you need. By keeping track of your dashboards, you can decide along the way if you need adjustments and, if so, which you need.

Do you need more or different actions or do you need to rethink the strategy altogether? Too many organisations make plans and then execute them without monitoring success and progress with a dashboard. This is like crossing a road after looking to the left and right, and then walking out with your eyes closed and hoping for the best.

The action plan for each strategy should define how, by whom and when a strategy is implemented in practice. In the highest level OGSM, these are the top projects for the management board.

Other management tools

Introducing a (new) management methodology into an organisation is not a small decision. Therefore, we now compare the OGSM methodology with two other management methodologies that are often used: the balanced scorecard (BSC) and the business model canvas (BMC).

Balanced scorecard

The BSC is a strategy performance management tool that is used to keep track of the execution of activities and to monitor the consequences arising from these actions. It translates the organisation’s vision and strategy into SMART goals and links them to individual targets. Next to this it contains a planning process (see Figure 2).

The critical characteristics that define
a balanced scorecard are:

• its focus on the strategic agenda of the organisation concerned;
• the selection of a small number of data items to monitor; and
• a mix of financial and non-financial data items.

Business model canvas

The BMC is a strategic management tool that consists of a visual chart with elements describing an organisation’s business model (see Figure 3). The BMC consists of building blocks that describe how a company believes it can be successful:

• its customers;
• its relationships with customers;
• its value proposition;
• its activities;
• its means;
• its partners; and
• the way it earns money.

It helps organisations to align their activities by illustrating potential trade-offs and creating definitions for management.

Comparing methodologies

OGSM, BSC and BMC are all strategic management tools, but with different
aims and ways of functioning within
an organisation.

The BSC is more of a tracking tool than a management methodology. It translates vision and strategy into clear measures, but does not set the point on the horizon. Therefore, it also lacks the inspiration of a well-built OGSM (because you only manage through key performance indicators).

Also, often in BSCs, there are no specific (monthly or quarterly) timings included, so it is difficult to measure progress (as you can with the dashboards within the OGSM).

In addition, the BSC lacks a hierarchy for the different elements, unlike the OGSM. It treats everything as evenly important, but that is not the right way
to approach strategy. Finally, since numbers are the focus, management of the BSC is often assigned to the controller or information officer instead
of line managers.

Meanwhile, the BMC is more of a tool for setting the business model. It is a great tool to agree on the kind of business you are in and how and where in the process you can earn your money. But, it has a greater focus on content than on strategic routes to achieving the preferred status. Also, it does not provide measures to track progress and, because it lacks numbers, it creates room for assumptions. In fact, the BMC, combined with a thorough SWOT analysis, can be used as an excellent preparation for creating the OGSM.

So, when comparing OGSM with BSC and BMC, the latter is a completely different tool which could be used as a good preparation for your business plan when you need to re-emphasis or rethink your business model. OGSM provides a clear business plan on how to achieve your ambitions, including your point on the horizon within X years, your strategic choices on how to get there, the precise measures to follow progress over time and the key actions needed. As OGSM includes a tracking function, a BSC or other tracking tool is not needed anymore.

Four simple steps

OGSM is a one-page business plan that takes organisations from good to great in four simple steps, providing clear direction and inspiration. Since it can cascade easily in an organisation, each individual knows what his contribution
is in achieving the organisation’s objective. And, during the journey, the OGSM can be reviewed and adapted
as necessary.

The managing partner at a large law firm in the Netherlands said: “OGSM opened our eyes. It is an excellent way to determine where you want to be with the company and how you get there. I am sure that the increased success we have as a company since the introduction and cascading of the OGSM methodology is not a coincidence. It is because we made clear choices forced by the OGSM method we used.”

Once you employ this powerful transformative tool, you’ll wonder
how you ever managed without it.

Ellen Leenhouts and Marc Van Eck are partners at Business Openers and authors of The 1 Page Business Strategy (businessopeners.nl/eng)