The Short Answer

What Is Operational Planning?

Textbook Definition

Operational planning is the process of translating mid-range strategic objectives into short-cycle targets, resources, and decision rights for the units responsible for daily execution.

In Plain English

It is breaking your six-month goal into a target for this month and a few things to get done today. In good operational planning, your team proposes the month and the day, you agree on them together, and you keep your own attention on the bigger rungs above.

Why It Matters

Why Do Good Plans Fall Apart Between the Year and the Day?

An owner writes a strong five-year picture, sensible three-year targets, and a one-year number. Then planning stops, because this month and today seem too small to write down. Without them, the team reacts to whatever arrives at the counter, and the owner spends hours on the work he likes best. Everyone is busy. They are just not climbing toward the same place.

The answer is monthly and daily objectives with a clear split. The team owns the bottom rungs: this month and today. The owner holds six months and up, and checks each week that the month still points at the year.

Signs you have this problem:

  • Your yearly target is written down, but this month's is not.
  • Customer promises slip past their dates and nobody tracks why.
  • You spend most of your hours on the work you enjoy, not the work that pays.
  • Your staff could not tell you what the business is trying to reach this month.
  • You write the daily list yourself, and the team waits for it.
  • If you were away for a week, nobody would know which way to steer.
A one-year number with no month under it is a hope. The month is where the year is actually decided.

What It Looks Like

What It Looks Like When Nobody Writes the Month

From the Fabled Forest · Chapter 7

Alton the Ant ran a repair shop with his assistant Pippa. His long-range ladder was careful and complete, down to 480 coins a month by midsummer. But the back of the sheet was blank, and Alton was spending his morning drawing a 300 coin lathe on the back wall in chalk. Up front, Pippa's waiting shelf was overflowing and her promised dates kept slipping.

Pippa had the numbers. The shop took in 440 coins a month and kept 184. Counter repairs kept far more per hour than Alton's custom builds, yet six of every ten hours he worked went to the builds. Doctor Owl drew a line across the ladder under six months. Above it was Alton's job. Below it, the month and the day, was Pippa's to propose, with the target, resources, and decision limits agreed together.

Pippa wrote a month of sixty counter repairs, one custom build at a new price of 100 coins, four maintenance rounds, and no lathe this year. That reached 480 in and 252 kept. She wrote three lines a day on a slate. By month's end she had shipped fifty-eight repairs, noted why she missed by two, and the shelf had room again. The lathe stayed on the wall as a drawing.

Alton's story is Chapter 7 of Strategy for Small Businesses, Book 6 of Dr. Paul's Fabled Forest Business School Series.

The Fix

How to Do Operational Planning in 4 Steps

The owner sets the direction. The people closest to the work set the pace. Here is how to split it.

  1. Work backward from your six-month objective.

    Turn it into a target for this month with a number in it. Progress is rarely even, so set a month you can really hit. If the six-month rung is not written yet, start with short-term business goals.

  2. Ask the person doing the work to propose the month.

    Have them draft the monthly target and a three-line list for today. Then agree on three things together: the target, the money and hours they have, and which decisions they make alone and which come to you. Pippa's rule was simple: any build over 150 coins or any new tool goes to Alton first.

  3. Check in for ten minutes once a week.

    Your job is not to rewrite the list. It is to confirm this month is still aimed at the six-month objective. For a fuller look at turning plans into weekly work, see how to execute a plan.

  4. Write down what happened at month's end.

    Record the result and the reason, especially when you miss. Pippa's two clocks taught her to plan more time for clocks. That note makes next month's target better, and keeps everyone pointed the same way, which is the heart of strategic alignment.

Dr. Paul's Insight

The most common mistake Dr. Paul sees is an owner who keeps rewriting the month and the day. Once you write the daily list, your team stops writing it and waits for you. The people at the counter usually know more about this week than the owner does, so their numbers tend to be more realistic. Handing them the bottom rungs frees the owner to think about next year.

Worked example: Pippa's month, before and after Before: 40 repairs at 5 coins = 200 in, 120 kept 2 custom builds at 80 coins = 160 in, 24 kept 4 maintenance rounds at 20 coins = 80 in, 40 kept Total before: 440 in, 184 kept After: 60 repairs at 5 coins = 300 in, 180 kept 1 custom build at 100 coins = 100 in, 32 kept 4 maintenance rounds = 80 in, 40 kept Total after: 480 in, 252 kept, which meets the six-month rung Illustration from the book. Sixty repairs a month works out to about three a day on the daily slate.

Watch

Watch: What Goes in an Operations Plan

Two videos from Dr. Paul. One walks through what belongs in an operations plan, and a shorter tip explains how operations strategy fits inside a business plan.

What's in an Operations Plan

Dr. Paul Borosky, DBA, MBA. (10:09)

Business Plan Writer's Tip #63 for St. Louis, MO.: Operations Strategy in a Business Plan

Dr. Paul Borosky, DBA, MBA. (3:44)

From the Book

Read a Passage From Chapter 7

Chapter 7 · Operational Planning

A Lathe on the Wall, a List on the Counter: An Ant’s Month and Day

“Three hundred coins,” he said. “For custom builds. Which keep twelve coins each.”

“At the old price,” said Pippa.

He was silent a moment. “What would the new price be?”

“A hundred. For one build. So it covers what it costs, and keeps something.” Pippa had already worked it out. “Sixty repairs, three hundred in, a hundred and eighty kept. One build at a hundred, thirty-two kept. The four rounds, eighty and forty.” She added it. “Four hundred and eighty in. Two hundred and fifty-two kept.”

Read what Alton writes under his lathe drawing in Strategy for Small Businesses, Book 6 of Dr. Paul's Fabled Forest Business School Series.

Get the Book on Amazon →

FAQ

Operational Planning Questions Owners Ask

What is the difference between operational planning and strategic planning?
Strategic planning sets where the business is going over the next one to five years. Operational planning turns that into this month's target and today's short list. The owner leads the first, and the team leads the second.
Should the owner or the team set monthly targets?
The team should propose them, because they know the daily work best. The owner signs off on the number, the budget, and who decides what, then checks weekly that the month points at the year.
How long should a daily list be?
Short. Three lines is plenty for a small team. A daily list that runs long usually means the month was not broken down clearly enough.
What if we miss the monthly target?
Write down the result and why. A small miss with a clear reason is useful. It makes next month's plan more accurate, which is what operational planning is for.

Keep Going

Related Foundations

Operational planning is where the ladder meets the workday. These pages cover the rungs around it. New to a term on this page? Every one is in the strategy glossary.

How to Set Short-Term Business Goals

The one-year and six-month rungs the month climbs toward.

How to Write an Action Plan

Steps with a name, a date, and a cost for each line.

What Is Functional Strategy?

Plans for operations, sales, and finance that serve the objectives.

How to Review Your Business Strategy

Compare what happened to what you planned, on a schedule.
← Back to the GuideAll 20 Strategy Foundations

Written by Dr. Paul Borosky, DBA, MBA, business consultant and author of Dr. Paul's Fabled Forest Business School Series. Want help setting monthly targets your team can own? See growth plan and consulting options.

This page is for general educational purposes only. It is not legal, financial, or other professional advice. Dollar figures are illustrations. The Fabled Forest and its characters are fictional. For decisions about your own business, consult a qualified professional.