THE DYNAMIC BUSINESS PLANNING MODEL

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Dr. John Psarouthakis, Executive Editor, www.BusinessThinker.com and former founder and CEO of JPIndustries, Inc., a Fortune 500 industrial group.

 

For CV details go to:
https://www.linkedin.com/in/johnpsarouthakis/

A Dynamic Business Planning Model is a model of organization effectiveness based on both the classical goal approach and open systems theory ideas pioneered by researchers at the University of Michigan’s Institute for Social Research, including Robert Katz, Robert Kahn, and Basil Georgopoulos. See reference book at the end of this article.

Borrowing from the classical goal approach, for-profit firms depend upon financial viability to survive.

A financially viable company can pay its bills when they are due and operates at a profit.

Simple enough. But achieving financial viability is much more complicated than merely determining objectives for profit and production of goods and then setting out to achieve those goals. This Model defines the issues you must manage to assure financial viability, including market strategy, work flow, resource acquisition, human relations, resource allocation, public relations, and technical mastery. Successful corporate strategy must tackle each of these issues.

Each issue raises key questions about how you run your company:

  1. Market strategy: What is your market niche–who are you selling to and why are your customers buying?
  2. Work flow: How do you assure the best flow of work? First, how should you divide work among everyone in your firm –and, once divided — how can you assure that everyone’s activities fit smoothly together?
  3. Resource acquisition: How do you acquire the resources you need–money, people, supplies, information–to begin and/or continue to operate your business?
  4. Human relations: How can you maintain adequate human relations–esprit de corps, employee motivation–so employees can really contribute? What values do you share with employees?
  5. Resource allocation: As you acquire the resources you need, how can you best make use of them? How should you spend your money, assign your staff, or otherwise allocate raw materials, information, equipment, and supplies?
  6.  Public relations: Who else outside your firm can shut you down –or help you out? What groups or individuals should yoube paying attention to other than your customers and suppliers.
  7. Technical mastery: How do you maintain the highest productivity and quality? Do you have the needed technical know-ho
  8. Financial viability: Can you pay your bills when they come due, are your assets growing and do you operate at a profit?Though critical to the firm’s survival, financial viability is fundamentally different from these other seven issues in one respect: it cannot be managed directly. How well you manage the first seven issues determines how much cash you have, how profitable you become, how quickly your assets grow and how long your company survives.

Reference book:
“Dynamic Management of Growth Firms”
Lorraine Uhlaner-Hendrickson and John Psarouthakis
The University of Michigan Press

PDF format copies are available for purchase.
contact drjohn@businessthinker.com

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