Rule #1.  Have an effective plan.  Sounds simple doesn’t it?  Too many software businesses, though, build a plan, and then shelve it.  They don’t have an effective plan.  Too many others simply don’t have a plan.  Some business just have the plan they wrote for the investors, which is designed to make the investors comfortable parting with their money, and nothing else.

An effective business plan is a living document.  There’s a real art to building a plan, knowing when it needs to be followed, and when it needs to evolve.

Two rules of thumb help take the guesswork out of the planning cycle.

(1)   Build your plan for a three-year horizon.  In our business, one year isn’t long enough to accomplish anything useful from a business perspective, and five years is too far in the future to predict what will change.  So build a three-year plan, and chart out what each year will look like.

(2)   Even though it’s a three-year plan, rewrite it every 12 months.  Somewhere between 30% and 50% of your plan will have changed during that time.  Your annual business planning cycle needs to start 60 to 90 days before the end of your current fiscal year, and finish within 30 days of the start of the new fiscal.

The third rule of thumb about planning is to do it from the grassroots up.  A plan developed by the senior management team will only have the buy-in and understanding of the senior management team.  A plan developed by a broad swath of individuals across the corporation will be deeply understood and have widespread support.  So use as many people in the company as you need, and as the company can spare.  It pays to tap into the pool of talent that exists outside the senior management team.

You may also want to consider employing an outside consultant to assist with the planning process.  At Microsoft, we appointed one individual internally to perform this function.  At QNX we contracted with Deloitte and Touche to help us build a framework for the plan, and then Reid Eddison for some specific market analyses.  

The business plan begins with the senior management of the company deciding what the vision for the company is. It sounds hokey, but if you don’t have a vision then you better get one quick!  Vision is a long-term view of what constitutes success for your company.  Without this, the rest of your plan is worthless.  No, you aren’t doomed to fail.  It’s worse than that.  You are doomed to be one of the living dead, stumbling from one “opportunity” to the next, unsure of what the goal is, and ripe for your competition to squash you like a bug.

Vision statements come in many shapes and sizes.  Microsoft’s vision statement for most of the time that I was there was “A computer on every desktop”.  Simple, but very powerful.  It says that the company is about proliferating computers everywhere.  Microsoft doesn’t even make PC’s!  Gates and Ballmer, however, have the strong conviction that it’s software that drives the PC industry, and their vision statement says that very eloquently.

A more common form for a vision statement is one that makes a statement about what the company does, and how it will differentiate itself from it’s competitors.  At QNX, our vision statement was this: “To enable our customers with the products and services they need to bring to market innovative and competitive products with a higher degree of reliability than any of our competitors offer.” Whew!  That’s a mouthful.  But it says it all.  QNX is in the business of delivering embedded operating systems software and tools — software that’s a component of a larger whole product.  The company wants to serve its customers well, and have a reputation for product innovation and reliability.

Develop your plan in phases.  Collect information about the current state of the business and markets, and draw some conclusions.  How were your sales last year?  What’s your current financial condition?  What went well from last years plan, and what didn’t?  How is the market evolving? In your product category, where do you fit? Who are your competitors, and what are their key strategies? Operationally, where are the gaps in your business that you need fill?

Decide how you want to respond to those conclusions, and then create a set of objectives for the company. Then build functional plans, organization by organization, to map back to the corporate objectives.  You will need sections for your product roadmap, sales and marketing plans, and operational plans.   It’s that simple.  It has to be simple, too.  Build a plan with too many objectives, and you will fail.

Too many organizations fail at this point.  Operationalizing the plan takes over, and many companies don’t have the ability to do this.  The key is to make the implementation simple, understandable and measurable.  HR people have an acronym – SMART – which means Specific, Measurable, Achievable, Relevant, Trackable.  Keep those in mind as you build your plan.  How will your operational groups build their functional plans that track to the objectives you are setting out?  What determines success?

Building and launching the Windows 95 product was a key milestone for Microsoft in their vision of putting a PC on every desktop.  The objectives for the Windows 95 product were:

1)      Radically simplify the user experience.  We knew from watching Windows 3.1 users that one of the key barriers to purchasing a PC was that they were simply too hard to use.  We had to make the PC easier.

2)      Shift the install base from MS-DOS to Windows.  Windows 3.1, with it’s increased hardware requirements, and application compatibility issues, had stalled. We wanted customers to move to Windows because the revenue per PC was more than twice as much as MS-DOS alone.  How could we restart demand and get customers to move?  How could we kick-start the PC industry again?

3)      Move the industry to a single API – Win32 – rather than the Win16 API that existed on Windows 3.1, the Win32 API on Windows NT, and the Win32s compatibility API.  It was good for us to do this from a supportability point of view, and it was good for our industry partners.

4)      Make networking part of the general computing fabric.  We wanted every PC to be a networked PC.

That was it.  These four business objectives – because, although they appear to be technology objectives, they are business objectives – drove every activity around building, launching and selling Windows 95.  These are the Big Hairy Audacious Goals – the BHAGs.  How many key objectives does your business plan have?  How many of them are BHAGs?

For each of these corporate objectives, your functional groups will need to build plans with tactics that map back.  The acid test for any functional plan is whether or not the tactics map to the objectives.  If a specific tactic doesn’t map, then get it out.  Drum the remaining tactics into your team until they all understand them, until everyone knows them, and until everyone naturally applies the acid test to their own work.  Use whatever it takes.  David Cole, the development manager on Windows 95, had his 10 commandments – the 10 categories of work they were going to do to deliver the goods for Windows 95 customer
s.  His staff knew them by heart – Cole would stop them in the hallways and demand that they recite them!  Brad Chase, the Windows 95 Director of Marketing had his E! strategy – Educate, Excite, Engage.  Every plan we built mapped to these three components.

Once the functional plans are built, close the loop with a peer review of the plans.  Gather the management team, plus each of the teams that built the plans, together in a room and present your plans to each other.  Make sure that there aren’t obvious holes.  Make sure that each of the functional areas of the organization aren’t making assumptions and relying upon plans in other functional areas that may or may not be being built.  Allow the functional VP’s to make the case for controversial tactics to the rest of the management team.

Then communicate your plan broadly to the company – in email, a presentation from the CEO, and on the company intranet.  Make sure everyone understands what the corporations objectives are, and how each individual’s objectives map to those company objectives.

Executing the plan is the hardest part.  Once you have a plan, review it every quarter to make sure you’re tracking to those SMART objectives you defined.  Adjust, if required, and move on.

There’s an old scuba divers saying – “Plan your dive, dive your plan”.  Underwater, not having a dive plan can be fatal.  Having a dive plan, and then failing to follow it can be fatal.  In business, it’s the same.  Plan your business. Execute your plan.  Failing to plan is the same as planning to fail.

Need help building a business plan for your organization?  Drop me a mail –

During Alec’s time at Microsoft he was responsible for year over year business planning for the Windows, and Windows CE product lines, and the Universal Plug and Play technology. While at QNX Software, Alec led the process of building the corporate plan by engaging a cross-divisional / cross-functional group of individuals.