WOTS-UP Doc?
What does your annual doctor’s visit and your company’s annual planning process have in common?
Originally Published November 1, 2019 By: Howard Feldenkris, President Feldenkris CFO Services, LLC
have a Physical Examination on an annual basis. The role of Doctor, conducting the examination, is to assess the current state of the systems in your body, and determine if you have a current medical problem, or the potential for a medical issue in the future. The examination process includes a series of questions, blood-work, and of course as we get older, more intrusive (and less pleasant) diagnostic procedures. The end-result of the annual physical exam is typically an action plan to address current issues, and strategies to improve the outcome of future medical issues. The end-result is to make you a heathier person in the short run, and to live longer with a better quality of life in the long- run.
Much like your personal annual physical examination, I have found that businesses can also benefit greatly from an annual examination in much the same way. The annual examination for your Company is called a WOTS-UP analysis (or SWOT analysis). WOTS-UP stands for Weaknesses, Opportunities, Threats and Strengths Underlying Planning. Strengths and Weaknesses are items that are internal to the company, while Opportunities and Threats are external to the company. The WOTS-UP process requires a thorough internal assessment of your leadership team, as well as an external assessment of your markets and competition. From these internal and external assessments, you will be able to build a list of current Strengths, Weaknesses, Opportunities and Threats, that will influence your business over the next 12 to 36 months. Once you have made an honest and thorough assessment of these items, the team can build strategies that:
Build on strengths
Eliminate weaknesses
Take advantage of opportunities
Avoid threats
In my years in the CFO chair, I have really come to enjoy the annual WOTS-UP process. The process starts with a polling of the Leadership Team for what they believe to be the company’s Strengths, Weaknesses, Opportunities and Threats. I always like to have the Leadership Team members get the insights of their managers and direct reports to supplement their own thoughts. Leadership team members are encouraged to weigh in on both their functional area of the company, as well as any other areas of the company where they may be able to generate actionable and meaningful items. Your leadership team likely has members that have experience in different roles, in different companies, and in different industries. It is important to get their thoughts into the mix.
Your sales and marketing team can perform the assessment of your markets and competition. Industry publications, and perhaps an industry consultant can also be used to supplement your internal knowledge. In the Metal Fabrication industry for example, there is a trade association that provides an annual publication of financial metrics, as well as a list of the top 40 companies in the industry.
Please note that the WOTS-UP sessions to discuss the thoughts and findings of the team members, can be uncomfortable and chaotic. Another member of the Leadership Team, including the company President, may not agree or take exception to a particular perceived weakness. However, in order for the company to filter the WOTS-UP items into the most relevant items currently impacting the company, there must be an environment of open and honest communication. After all, it is in everyone’s best interest that the team generate an actionable list of items to develop strategies and action Items to make the business stronger in the coming years. As the individual who brought the planning process to several companies, I would normally act as the facilitator of the meeting to keep the agenda on track and the communication open. Often times a consultant or Board Member may assume the facilitator role.
Despite the discomfort that may occur during the initial WOTS-UP session or sessions, I have found this planning exercise to be an excellent team building experience, with managers grateful for the opportunity to participate at a strategic versus a tactical level. Consensus on items for focus in the coming years Annual Operating Plan, also become much clearer to the Leadership Team. These focus items provide for action, accountability, and improved communication during annual, quarterly and monthly goal setting and management meetings.
Here is an example of a Weakness with subsequent strategy development and action planning.
Weakness: Poor record of execution on new product launches (damaged customer relationships and led to excess start-up costs).
Strategy Development: Designate a dedicated team of resources (Product Launch Team) to own the new Product Launch responsibility for all parts released to the factory floor, for PPAP production, and customer approval.
Action Plans:
Define the responsibilities of the New Product Launch Team and Launch Team Leader.
Identify New Product Launch Team leader (or recruit from outside the organization if internal resource does not exist) and team members.
Develop PPAP launch metrics and reporting cadence and requirements.
Management Responsibility and completion date: Planning, March 31, 2020
The WOTS-UP exercise is an excellent tool to kick off your company’s annual planning process. It provides an excellent framework to identify problems and build consensus on areas of focus for the coming years Annual Operating Plan (aka budget). Strategies are then developed to improve on the current ailments that are dragging down the earnings and performance of the business. Action plans to implement strategies, provide for Leadership Team accountability, improved goal setting, and improved communication throughout the year.
Best wishes to you and your company for good health in the coming year!