Focusing on what’s important makes it easier to capture opportunities.
H. Kit Miyamoto, Ph.D., S.E., in Johannesburg, South Africa
Business planning is something like life planning. It is so critical but people often spend more time planning vacations than they do on life planning. Planning lets you focus on what is important. When opportunities knock on the door, it is easier and faster to capture them since you have a plan. This plan should consist of five things:
The “why” (Mission) — Something inspirational and authentic. Ours is, “Make the world a better, safer place.” This is something we use to decide everyday pursuits and actions. I’ve noticed that many businesses miss this most critical component — the inspirational reason to exist. Without it, how can we live and have satisfaction?
What do we want to do? (Vision) — Again, inspirational and tells others what the organization looks like in the near future. One of our goals calls for being a 1,000-person company in five years to better impact the societies we serve.
How to get there (Strategies) — Many people often confuse this with actions. Consider this as the main methods to accomplish your goals and vision. For example, in our human resources strategy section, we state that “we focus on people’s strengths and passions to define job responsibilities rather than using cookie-cutter job descriptions.”
What should we do now? (Action plan) — This is the most important one, but it often fails here. Details matter. This lays out details of what, by whom, by when to execute strategies.
How much? (Budget) — We need to know how much money is needed to execute the action plan and generate profit.
A business plan works like magic when it is laid out right and gets real buy-in from the people involved. Our company had a setback a couple years ago. Growth was there, but profitability was compromised by large losses by some offices. We set up a plan to reverse this.
We restructured our organization to focus on people’s strengths and made a significant investment in marketing, business development, and production efficiency. No layoffs; we even gave all staff raises even though we showed a loss. We did that to show our confidence in our plan and our people. It was a bit of risk taking, but I felt this action united everyone under a common goal.
After one year, all offices are coming back really strong. October was one of our strongest months, with 22 percent profit companywide. This trend appears to continue for the foreseeable future because backlog is at an historic high.
Some have asked me about a compensation plan based on revenue generation or sales. I feel it would create a culture of no collaboration in a service industry like ours. It requires many human contacts to win projects. It also requires all three cycles — marketing, business development, and production — to generate profit. When everyone works as one, then fun and profitability start. Compensation based on individual revenue generation or formula will not work in the long run. Research tells us that human nature and team work dynamics are much more complex than formulas. Also, this strategy doesn’t quite fit into our stated strategy in our business plan. It’s as simple as that.
Our business diversification strategy included expanding international offices. This often requires significant investment, but this approach always has brought us stability when the economy was down.
The New Zealand office’s profitability strengthened our balance sheet when U.S. offices were down. The Haiti office carried the whole company when the Great Recession hit in early 2010. We doubled the size while everyone else was cutting back heavily at that time. Our approach provides stability in our company and for our employees’ families in the long run.
While most of what’s happened in 2018 was expected under our business plan, totally unexpected results or incidents also occur for both good and bad. It is not about being lucky or unlucky. The question is how we can take advantage of these opportunities and setbacks, just like our previous setbacks drove us to reorganize and tap into the strength of people and to diversify even further. It’s not opportunities alone that push you forward.
Business planning is like drawing on a blank canvas. When you start to draw, you know what you want the picture to look like, but it may end up different based on inspirations along the way. Just like life.
H. Kit Miyamoto, Ph.D., S.E., is the CEO and a structural engineer for Miyamoto International (http://miyamotointernational.com), a California seismic safety commissioner, and president of the technical nonprofit Miyamoto Global Disaster Relief. He specializes in high-performance earthquake engineering and disaster mitigation, response, and reconstruction.