Pareto’s Principle

In business, there’s something known as Pareto’s Principle. Pareto’s Principle says that 80 percent of a company’s profits come from 20 percent of its products. Pareto’s Law was developed in the late 1880’s by Italian economist Vilfredo Pareto. Originally, Pareto observed that 80 percent of the land in Italy was owned by 20 percent of the population. Later, he observed that 80 percent of the peas in his garden were produced by 20 percent of the peapods. Thus Pareto’s Law – a principle that extends beyond business sales and productivity – was born. In business, although you will always have less successful and more successful products, you can try to focus your efforts so that you don’t have 80 percent of your products only yielding 20 percent of your sales.

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What Is Strategic Planning

When we travel, we usually have a clear destination in mind. We know what mode of transport we want to use, how long it will take to get there, who is travelling with us and what route we are going to take. This is because we have spent a good amount of time beforehand planning our trip.

You would not simply turn up at an airport with no luggage or booked ticket and expect to end up at your ideal destination (although some more adventurous people might argue that is the best way to travel). Instead, you would have to waste time with last minute paperwork, have limited options, and you might end up going to a less desirable place, or you might even have to go home and start all over again.

The same can be said of planning a business or organization. If there is no clear plan, the owners or managers will have no way of knowing what outcome they want to achieve or how to get there. Successful organizations use strategic planning to map out the best way to achieve their desired outcome.

A strategic plan is a document created specifically for an organization, which clearly states the organization’s core values, mission statement and objectives. It covers the available resources such as staff, supplies and technology, and it states how these are to be used for the advancement of the overall business. It is a valuable tool that can be used to measure progress at any stage and to determine when all the objectives have been met. Strategic planning is the process used to create a strategic plan.

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Fundamentals of an action plan

The process of action planning (also called operational planning) consists basically of directing the daily activities of an organization or project. It involves scheduling the things that need to be accomplished, when they need to be accomplished, who will accomplish them, and what resources or inputs will be required to accomplish them.

I’ve met a lot of small-business owners, many of whom were impressively intelligent and had a very creative mind but who unfortunately were not getting past the wishing phase with a lot of their projects, otherwise great projects because they got stuck in their mind. Some were my clients and I couldn’t help notice how they liked to talk and dream for many and many hours about what they would want to achieve, but when I asked for details and specific things there was a big hole there to be filled. Most of them never filled it. Why? Because they kept doing the same unproductive things over and over and they kept on hanging on to the same bad habits that were getting them nowhere.

“A good financial plan is a road map that shows us exactly how the choices we make today will affect our future.” (Alexa Von Tobel)

It was and I admit it still is very surprising for me that so many businesspeople don’t see the advantages of setting clearly measurable goals. Some stop at defining their objectives, offering much to less importance to also defining the resources, time and capital they would need to put in to make those objectives attainable. It also may come as a surprise for many that in order to make your dreams real, you don’t necessarily need to be the biggest brain on the planet, nor the most gifted person alive. You can do it without the touch of a genius. But you most certainly can’t do it without willpower and focus, and firstly, without a realistic action plan.

I’ve been asked several times even recently about the difference between an action plan and a business plan so I’m using this opportunity here to clear things out for others out there who might have the same question: if you have an action plan which you are using to help you obtain funding, or to convince potential partners, buyers, clients to get involved into your business or project in some way, then you technically have a business plan.

All the essential features we mentioned and which should be part of any action plan (what must be accomplished (objectives); the specific stages that must be followed to achieve this objective; timelines/schedules for when each step must take place and how long it is likely to take; designation of the person responsible for keeping track of how the tasks are completed; a specification of the necessary resources) are again invoked when planning activities step-by-step. This is extremely important if we want to make the plan really applicable, to get down and practical with it – it’s only this way that you will be able to successfully implement the steps necessary to reach your objectives.

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What is a strategic planning process?

It is a process that is mainly characterized by systematic development and implementation of plans to achieve goals or purposes. This kind of planning is used in military affairs and military activities. As it relates to business, the strategic planning process is often used to provide overall direction to a company in different kinds of strategies such as financial strategies, strategies for developing human and organizational resources. This kind of strategic planning is really important for organizations, given that the course to follow for the same is defined in its aims and objectives.

The strategic planning process can be defined as the art of formulating and evaluating cross-functional decisions that will enable the organization to achieve its goals. The strategy is the determination of long-term goals and choosing the necessary resources to satisfy them. Do not confuse objectives with strategies. The strategies are those approaches that are essential to fulfill our mission. While the objectives are the steps to achieve in order to meet that strategy and are always reaching. Proper planning should always be clear to know what is involved and where it aims to reach goals.

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New Book – Key Questions in Strategic Planning

Strategic planning is a key business tool for any company that wants to stay in control of its own future. But what exactly is meant by the term “strategic planning”? Isn’t all planning strategic? That is just one of the many questions about strategic planning that this book seeks to answer. The text begins by offering a commonly accepted definition of strategic planning and goes on to devote a chapter each to six big questions you should be able to answer if you are trying to develop a good, working strategic plan. In the process of discussing how you might answer those questions, we’ll talk about a variety of established strategic planning tools as well as some assorted tips and advice. By the end, you should have a pretty darn good idea how to formulate a solid strategic plan.

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5 Principles of Action Planning

Bryan Radtke, Vice President of Business Innovations at Rockfish, dedicated an entire blog to describing the five principles he’s been applying in making the most of every action planning and which can, in my opinion, improve anyone’s strategy for success:

1. Ensure your work plan enhances the work of those around you: This seems like a pretty obvious one, but sometimes Mr. Obvious is absent from our everyday thinking. When you develop your work plan, first list all the work you would like to do or you think you should do. On the second pass, put an X next to the work that directly affects your management’s priorities or your direct reports work plan. Chances are there are several items without Xs. Everything you do should enable or enhance the work of those connected to you. If not, drop it. (more…)

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New Book: Why Strategic Plans Fail

Careful strategic planning is paramount for organizations seeking to establish themselves in our dynamic economy. Still, even the best thought-out strategic plan will falter if employee buy-in is not supported and a thoroughly considered implementation process is not put into effect. This book casts light on these dark corners of entrepreneurship and share with you the kind of knowledge that can save you a lot of time and frustration. But most importantly, it can save you from failing in your venture.

A thoroughly prepared strategic plan is vital for reaching objectives and goals; any business depends on careful planning to be successful. Regrettably though, many individuals, groups and organizations, fall short when it comes to executing their plans. The outcome can be wasted time, cash and various missed opportunities. If a strategic plan is to be successfully implemented, one must count for a number of interrelated factors. We will address the most crucial of these in the following chapters of this book. Creative awareness of the pitfalls of strategic planning will help to circumvent organizational failure.

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Improve Your Strategic Planning Skills

Strategy and Strategic Planning is probably the most significant thing all history’s winners, today’s leaderships and successful people have in common. When it comes to saving, whether it’s time, money or even lives, nothing beats a good strategy. The best way to improve the quality of your life and business is to learn to develop good strategies. If you are ready to make that step, this book will be of great help throughout the process.

It offers a realistic guide to taking an inspirational outlook and making it work in your daily life but also in your most ambitious business venture. The approach used is one that goes straight for the core of the inefficiency, making you realize what causes a lack of progress and teaches how to think in a way that helps you always find the best move or plan of action to overcome all the challenges you encounter.

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