business plan control systems

How to Monitor & Control Your Business Plan

• Small Business
• Business Planning & Strategy
• Business Plans
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The Advantages of Single Business Strategy

How can a company keep its strategic plan dynamic, what are the benefits of preparing a business plan.

• Business Planning & Analysis
• What Does "Abridged" Mean on a Business Plan?

A business plan is a comprehensive document that outlines key elements of how you operate your business. The plan typically includes an assessment of your market and your competition, your operating budget breakdown, and your short and long-term business goals. While many business owners write a marketing plan to obtain business loans, the plan can be a useful tool for monitoring and controlling ongoing operations.

Create Plan Review Dates

Business plans should be reviewed on a regular basis, especially if a business is expanding quickly, experiencing cash flow problems, adding new products or services or reaching into new markets. Align your review dates with the short-term and long-term goals outlined in the original business plan and conduct a comparative analysis. Depending on your business, this could be a monthly, quarterly or annual review.

Develop a Tracking System

If your business plan contains measurable goals, develop a tracking system to assess where you stand regularly. For example, if the plan calls for earning a certain amount of revenue per month, track revenue on a daily or weekly budget to monitor and control the process. This approach allows you to tweak the system if your numbers are far off the mark. Monitor key elements frequently. Key elements of the business plan include research on your market and competition as well as revenue projections. Each of these elements is subject to rapid change, and you should remain aware of where you stand with regard to these issues.

Coordinate Business and Marketing Plans

Business and marketing plans overlap in several ways, so reviewing both documents simultaneously on a regular basis helps you monitor and control the goals and measurements of each plan. If an element of one plan changes dramatically, evaluate the impact it has on the other plan. For example, if your marketing plan calls for you to launch a major media campaign, but your business plan’s revenue projections are weak, revise each to stay on track.

Make Changes When Necessary

A business plan is not an unchangeable document. Consider it a fluid plan that can be tweaked and updated as your business changes and grows. Don’t cling to elements of your plan that are outdated or no longer useful. For example, if part of your five-year plan includes moving to a larger facility, but you find after five years that your small facility works just fine, revise and update the business plan. Continually revise your plan so that you are always looking ahead in one, three and five-year increments, basing future projections on past performance.

• U.S. Small Business Administration: How to Write a Business Plan
• U.S. Small Business Administration: Essential Elements of a Good Business Plan
• U.S. Small Business Administration: Making Your Business Plan Work for You

Lisa McQuerrey has been a business writer since 1987. In 1994, she launched a full-service marketing and communications firm. McQuerrey's work has garnered awards from the U.S. Small Business Administration, the International Association of Business Communicators and the Associated Press. She is also the author of several nonfiction trade publications, and, in 2012, had her first young-adult novel published by Glass Page Books.

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Business Planning and Control System (BPCS)

• 1 Definition and Explanation
• 4 Components
• 5 Importance

Definition and Explanation

The Business Planning and Control System (BPCS) is an enterprise resource planning (ERP) software package that helps organizations manage their business operations. BPCS was originally developed by System Software Associates (SSA) in the 1980s and was widely used by companies in the manufacturing and distribution industries. The software is designed to integrate various business functions, including manufacturing, finance, inventory management, and sales and distribution, into a single system.

The purpose of BPCS is to help organizations manage their business operations more effectively by providing a centralized system for managing various business functions. BPCS allows organizations to automate many of their business processes, including accounting, production planning, and inventory management, which can help increase efficiency and reduce costs.

The role of BPCS is to help organizations manage their business operations by providing a centralized system for managing various business functions. BPCS integrates various business functions, including manufacturing, finance, inventory management, and sales and distribution, into a single system, providing organizations with greater visibility into their operations.

The components of BPCS include:

• Manufacturing - BPCS includes functionality for managing various aspects of the manufacturing process, including production planning, shop floor control, and quality control.
• Finance - BPCS includes functionality for managing accounting and financial operations, including accounts payable, accounts receivable, and general ledger.
• Inventory management - BPCS includes functionality for managing inventory levels and tracking inventory movements.
• Sales and distribution - BPCS includes functionality for managing the sales process, including order entry, order fulfillment, and shipping.

BPCS is important because it helps organizations manage their business operations more effectively by providing a centralized system for managing various business functions. BPCS can help organizations increase efficiency, reduce costs, and improve decision-making by providing greater visibility into their operations.

BPCS was originally developed by System Software Associates (SSA) in the 1980s and was widely used by companies in the manufacturing and distribution industries. The software was later acquired by several other companies, including Infor, which still offers a version of BPCS as part of its ERP software suite.

The benefits of BPCS include:

• Centralized system for managing various business functions
• Automation of many business processes, including accounting, production planning, and inventory management
• Greater visibility into business operations
• Increased efficiency and reduced costs

Pros and Cons

• Can help organizations increase efficiency and reduce costs
• Provides a centralized system for managing various business functions
• Can improve decision-making by providing greater visibility into business operations
• Can automate many business processes, reducing the need for manual intervention
• Can be expensive to implement and maintain
• May require significant changes to existing business processes
• Can be complex and difficult to customize to specific business needs
• May require significant training for users
• Enterprise Resource Planning (ERP)
• Manufacturing Resource Planning (MRP II)
• Supply Chain Management (SCM)
• Business Process Management (BPM)
• Material Requirements Planning (MRP)
• Integrated Business Systems

Strategic Control: Types | Examples | Systems

Strategic control is a term used in management and business strategy. It refers to the process by which an organization tracks and monitors its strategy as it is being implemented, detecting any problems or potential issues as early as possible and taking corrective action.

Strategic control involves several steps, including:

• Setting strategic objectives:  These are the goals the organization wants to achieve through its strategy. These objectives should be SMART – Specific, Measurable, Achievable, Relevant, and Time-bound.
• Implementing the strategy:  Once the objectives are set, the organization implements its strategy.
• Monitoring performance:  The organization tracks its progress toward its strategic objectives. This may involve collecting data on key performance indicators (KPIs), such as sales, customer satisfaction, market share, etc.
• Comparing actual performance with objectives:  The organization assesses whether it is on track to achieve its strategic objectives. The organization must understand why these exist if discrepancies exist between the actual performance and the objectives.
• Taking corrective action:  If the organization is not on track to achieve its objectives, it may need to adjust its strategy or implementation. This could involve changing the strategy, revising the objectives, or altering how it is implemented.

Strategic control is a crucial part of strategic management because it helps ensure that an organization’s strategy is effective and moving toward its goals. It’s a continuous, dynamic process that requires regular review and adjustment to respond to changes in the external environment or internal conditions.

Strategic Alliance: Meaning, Types & Examples

Types of strategic control with their examples

Strategic control types typically fall into four main categories:

Premise Control:  

Premise control is one type of strategic control that focuses on the assumptions or premises upon which a strategic plan is based. These assumptions could be about external and internal factors such as market trends, consumer behavior, competition, political environment, legal regulations, technological advancements, etc.

Premise control aims to systematically and continuously check whether these assumptions are still valid and relevant. If the premises have changed, the strategy may need to be adjusted, as decisions based on outdated or incorrect premises can lead to strategic failure.

Let’s take an example:

Consider a company that has developed a strategic plan based on the premise that there will be steady economic growth in its key markets over the next five years. The company’s product development, marketing, and expansion strategies are based on this assumption.

Premise control, in this case, would involve regularly monitoring economic indicators such as GDP growth, employment rates, inflation, and other relevant metrics in those key markets. If the economy starts to decline or grow more slowly than anticipated, the company would need to reassess its strategies. They might need to delay expansion plans, adjust their product development timeline, or modify their marketing strategies to respond to the changing economic conditions.

Thus, premise control acts as an early warning system, allowing companies to recognize changing circumstances and adjust their strategies proactively. This allows for more agile decision-making and helps prevent major strategic missteps.

Implementation Control:  

Implementation control is a type of strategic control that focuses on executing the strategic plan. It is used to ensure that the activities are leading to the desired strategic outcomes and to detect any problems or deviations as early as possible. This control can provide timely information about the progress and identify when a strategy is not turning out as expected.

Implementation control involves three main steps:

• Setting Milestones:  At the beginning of the strategy implementation, management sets key milestones or targets the organization aims to reach within specific periods. These milestones serve as markers to indicate whether the strategy is on track.
• Monitoring Performance:  As the strategy is implemented, management tracks the organization’s performance against the set milestones. This could involve monitoring key performance indicators (KPIs), such as sales, market share, customer satisfaction, etc.
• Taking Corrective Action:  If the organization is not meeting its milestones or if there are discrepancies between actual performance and the plan, management needs to identify the reasons and take corrective action. This could involve adjusting the strategy or how it’s being implemented.

An example of implementation control might be a software company with a strategy to develop and launch a new software product within a year. They would set milestones for different stages of the software development process, such as design, coding, testing, and launch. Regular check-ins would be done to monitor progress, and corrective action would be taken if there were delays or issues.

Overall, implementation control helps ensure that strategies are carried out as planned and that any issues are detected and addressed promptly.

Strategic Decision-Making Process & Examples

Strategic Surveillance:

Strategic surveillance is a type of strategic control that involves broad-based and general monitoring of events inside and outside the organization. The purpose is to uncover events or trends that were unexpected, and that might impact the strategy of the organization.

Strategic surveillance is not focused on any specific area but’s designed to detect unexpected events that could affect the organization’s strategy. This could include changes in the political or regulatory environment, new technological advancements, changes in consumer behavior, market conditions shifts, or competitors’ moves.

For instance, suppose a company is in the tech industry. The strategic surveillance process in this company would likely involve keeping a close eye on new technological advancements and competitive actions. If a major competitor releases a ground-breaking new product, the company, through its strategic surveillance, would detect this and then could reassess its product development strategies in response.

Another example could be a company that operates in multiple countries. Strategic surveillance for this company might involve monitoring political news and events in those countries. If a major political event could affect the business climate, the company could adjust its strategy as needed.

The main advantage of strategic surveillance is that it allows organizations to remain adaptable and flexible, capable of responding to changes in their environment as they occur. It is, however, more reactive in nature compared to premise control or implementation control, which are more proactive and systematic.

Special Alert Control:

Special alert control is a form of strategic control designed to deal with immediate and drastic changes in an organization’s internal or external environment. It is an intense and rapid form of control that gets activated by unexpected and significant events that can substantially impact the organization’s performance or survival.

These events could include a wide range of situations such as sudden changes in the economy, unexpected actions by competitors, regulatory changes, major shifts in consumer behavior, natural disasters, political instability, or significant internal events like a major product failure, labor strike, or a substantial drop in sales.

When a special alert situation occurs, the normal routine of strategic control is suspended, and an intense, focused analysis of the situation is carried out. This often involves a cross-functional team of senior executives who gather to assess the situation, its potential impact on the organization, and the appropriate response.

For example, if a company in the pharmaceutical industry faces a sudden new regulatory rule affecting one of its key products, a special alert control would be triggered. The company would then immediately assemble a team to assess the impact of the new regulation, and based on their analysis, they would decide whether to adjust the production process, modify the product, or even discontinue it.

Special alert control allows an organization to respond quickly and effectively to sudden, unexpected situations, helping it navigate through crises and protect its strategic interests. It underscores the importance of agility and adaptability in today’s fast-paced and unpredictable business environment.

All of these types of strategic control play an important role in ensuring that an organization’s strategy is effectively implemented and that it achieves its objectives. They enable the organization to respond quickly and effectively to changes in its environment or internal conditions and help ensure that the strategy remains aligned with its overall goals.

Strategic Business Unit in Strategic Management with Example

Strategic Control Systems

Strategic control systems are management tools used to track an organization’s progress toward its strategic goals, identify any issues or problems, and take corrective action if needed. These systems can take many forms and may involve various tools and techniques. Here are some examples:

• Balanced Scorecard:  Developed by Robert Kaplan and David Norton, the balanced scorecard is a performance measurement framework that adds strategic non-financial performance measures to traditional financial metrics. It provides a balanced view of an organization’s performance by considering four perspectives: financial, customer, internal process, and learning & growth.
• Strategy Maps:  Strategy maps visually represent an organization’s strategic objectives and the relationships between them. They can help an organization ensure that all its activities are aligned with its strategy and that it is moving toward its goals.
• Key Performance Indicators (KPIs):  These are specific metrics an organization uses to track its progress toward its strategic objectives. They may include financial metrics like sales or profit margins and non-financial metrics like customer satisfaction or employee turnover.
• Management Information Systems (MIS):  These systems provide managers with the information they need to make informed decisions. This can include data on sales, customer behavior, market trends, etc.
• Benchmarking:  This involves comparing an organization’s performance with similar organizations or best practices in the industry. Benchmarking can help identify areas where the organization is underperforming and needs to improve.
• Budgeting and Financial Systems:  These systems help monitor financial performance and allocate resources in line with strategic objectives.
• Risk Management Systems:  These systems help identify, assess, and manage potential risks that could interfere with the organization’s strategic objectives.
• Project Management Systems:  When strategies are implemented through specific projects, project management systems help ensure these projects are completed on time, within budget, and achieve the desired results.

All these systems and tools are part of strategic control systems, providing a mechanism for monitoring and adjusting an organization’s strategy as necessary. They ensure alignment between the strategic objectives and the operational activities.

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What Are the Control Systems of a Business?

by John Landers

Published on 26 Sep 2017

Business control systems consist of procedures and processes, which help an organization achieve its mission and objectives. Controls define how employees should conduct themselves and perform job duties. After business owners and managers implement standards, they must track and monitor performance. Systems require ongoing modifications and adjustments to help reach targets.

Document Control

Most businesses have controls that assure standardized documents, such as guides, specifications, work instructions or policies and procedures. Document control procedures usually include a master list of documents. All documents must receive approval before use. The approval process may include naming the document, assigning a control number and a date. Typically, documents must undergo approval before use, identified with dates and given control and revision numbers. Revisions must also receive authorization. Some control procedures may also include a method of distribution and assign responsibilities for updating documents.

The marketing function develops a plan and establishes marketing objectives. Typically, the schemes include controls to measure, monitor and regulate marketing campaigns and related activities. Targets or performance objectives cover a wide variety of standards, such as sales volume, market share and profits. Management employs a range of reports to track progress and make comparisons, including variance analysis or expenses-to-sales analysis. Sale control mechanisms include budgets, sale quotas, credit criteria and sales force automation.

Financial Controls

Companies use financial reports, such as income statements, balance sheets and cash flow statements, to form the core of financial control systems. Balance sheets help business owners and managers determine the financial strength -- business liabilities and assets -- at a specific point. This report can help owners determine if a firm has the resources to grow or survive during economic downturns. Income statements, or profit and loss statements, track revenues and costs over a particular duration. Managers can review itemized expenses to identify items out of line with the budget, or increase the budget as warranted. Cash flow statements provide a business with projections of revenue and costs for each month over, at minimum, a 12-month period. This statement helps keep a business on track to meet it income targets

Human Resources

The human resource aspect of businesses must focus on systems for hiring, training and recruiting staff. Controls also extend to the development and management of existing employees. Businesses require techniques for assessing employees' skills, and assuring the business has staff with the necessary skills and abilities to move the organization toward its objectives. HR must also put in place workplace rules and policies that keep the business in compliance with union contracts, safety regulations and labor laws.

Quality Control

Business must have quality control, or QC, procedures in place to review and check the quality of materials, products or service. The QC procedures depend on the function. For example, the manufacturing process may require controls at specific phases, such as pre-production, during production and the finished product. The manager will need to determine what quality assurance methods to use. Business owners may use statistical techniques to ascertain the quality of raw material on arrival to the plant, or may perform visual inspections of finished products.

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Control Plan in Lean Six Sigma. Key Elements and Strategies

March 19th, 2024

Quality control is a critical aspect of any manufacturing or service delivery process, and a well-designed control plan serves as a powerful tool to achieve this objective.

It is a proactive approach to identifying and addressing potential sources of variation that could impact the quality of the final output.

Quick Overview

• A control plan is a comprehensive document that outlines the methods, procedures, and processes for ensuring quality control during product manufacturing or service delivery.
• It serves as a roadmap for identifying, monitoring, and controlling potential sources of variation that could impact product or service quality.
• Control plans are essential tools in quality management systems, helping organizations comply with industry standards and customer requirements.
• They are widely used in various industries, including automotive, aerospace, medical devices, and general manufacturing.
• Control plans integrate with other quality management tools and methodologies, such as Advanced Product Quality Planning (APQP), Production Part Approval Process (PPAP), and Failure Mode and Effects Analysis (FMEA).
• Developing, implementing, and maintaining effective control plans requires cross-functional collaboration, comprehensive documentation, and continuous improvement efforts.

More about Control Plan in Lean Six Sigma

The primary purpose of a control plan is to ensure that all quality requirements are met consistently, whether they are internal organizational standards, industry regulations, or customer-specific specifications. 

By establishing a structured framework for quality control, control plans help organizations minimize defects, reduce waste , and improve overall efficiency and profitability.

Control plans are widely adopted across various industries, including automotive, aerospace, medical devices, and general manufacturing. 

They are often a mandatory requirement for companies seeking certification or compliance with quality management standards, such as ISO 9001 , or industry-specific standards like IATF 16949 for the automotive sector.

What is a Control Plan?

A control plan is a comprehensive document that outlines the specific methods, procedures, and processes for monitoring and controlling product or service quality throughout the entire production or delivery cycle.

A control plan defines the methods used to ensure that all process inputs and outputs remain within acceptable limits.

Purpose and Benefits of a Control Plan

The primary purpose of a control plan is to prevent defects and minimize variation in manufacturing processes. It acts as a communication tool to ensure everyone involved understands the controls needed to ensure quality. 

Key benefits include:

• Identifying critical product/process characteristics to control
• Documenting process controls and quality checks 
• Enabling consistent execution of quality processes
• Facilitating continuous improvement efforts
• Demonstrating compliance with quality standards/requirements
• Reducing costs associated with poor quality

A robust control plan helps an organization produce products that consistently meet customer requirements. It provides a structured approach to quality planning and control across the entire product lifecycle.

Control Plan Requirements

A control plan is a critical document in quality management systems, and it is essential to ensure that it meets the necessary industry standards and regulations, as well as any customer-specific requirements.

Industry Standards and Regulations (ISO, IATF, etc.)

Various industries have established standards and regulations that govern the development and implementation of control plans. 

These standards provide a framework and guidelines to ensure consistency, quality, and compliance across different organizations and products.

One of the most widely recognized standards for control plans is ISO 9001, which outlines the requirements for quality management systems. 

Control plans play a crucial role in meeting the requirements of ISO 9001, such as monitoring and measuring processes, product conformity, and continuous improvement.

In the automotive industry, the International Automotive Task Force (IATF) has developed the IATF 16949 standard, which is a sector-specific interpretation of ISO 9001. 

This standard includes specific requirements for control plans, including their development, implementation, and maintenance throughout the product lifecycle.

Other industries, such as aerospace, medical devices, and electronics, may have specific standards and regulations that control plans must adhere to. 

For example, the AS9100 standard is widely used in the aerospace industry, while the ISO 13485 standard governs quality management systems for medical devices.

Customer-specific Requirements

In addition to industry standards and regulations, control plans must also meet any customer-specific requirements. 

These requirements may be more stringent or include additional controls or specifications unique to a particular customer or product.

Customer-specific requirements can stem from various sources, such as contractual agreements, design specifications, or special product characteristics. 

These requirements are typically communicated through documents like purchase orders, engineering drawings, or customer-specific quality manuals.

Organizations must carefully review and understand these customer-specific requirements during the control plan development process. 

Please meet these requirements to avoid product non-conformities, customer dissatisfaction, and potential legal or financial consequences.

To ensure compliance with customer-specific requirements, organizations often involve their customers or representatives in the control plan review and approval process. 

This collaboration helps to identify and address any specific needs or concerns early on, preventing potential issues down the line.

By adhering to both industry standards and regulations, as well as customer-specific requirements, organizations can develop robust control plans that support quality management systems, ensure product conformity, and foster customer satisfaction.

Components of a Control Plan

A comprehensive control plan consists of several key components that work together to ensure product and process quality. 

These components include:

Process Controls

Process controls define the methods, activities, and criteria used to monitor and control manufacturing or service delivery processes. 

Examples include machine setup instructions, operating parameters, preventive maintenance schedules, and in-process inspections. 

The control plan specifies which process characteristics are critical and how they will be controlled.

Product Controls  

Product controls focus on evaluating the final product or service against specifications and requirements. 

This includes incoming material inspections, first-piece inspections, product audits, and final inspections before shipment or delivery. 

Detailed inspection criteria, sample sizes, and acceptance criteria are outlined.

Methods and Measurement Techniques

The control plan prescribes the specific methods, instruments, and techniques to be used for monitoring processes and inspecting products. 

This covers areas like measurement system analysis , gage repeatability and reproducibility studies, and statistical process control techniques. 

Proper methods ensure accurate, consistent, and capable data collection.

Sampling Plans

Most control plans utilize sampling plans rather than 100% inspection, especially for high-volume production. 

Sampling plans define the sampling approach (e.g. random, stratified), sample frequency, and sample sizes for different inspections and tests. 

Sampling risks are analyzed during development.

Reaction Plans

Reaction plans detail the specific actions to be taken when nonconformities or deviations from requirements are detected. 

This may include containment, correction, root cause analysis , and recurrence prevention activities. 

Escalation criteria and responsibilities are established based on the severity of the issue.

By comprehensively addressing these components, a control plan provides a robust framework for achieving quality objectives through prevention and continuous monitoring rather than just detection. 

The specific elements are customized based on the product, process, and business requirements. 

Developing a Control Plan

Cross-functional team involvement.

Creating an effective control plan requires input and collaboration from various cross-functional teams within an organization. 

This ensures that all relevant aspects of the product or process are considered and addressed. 

Key stakeholders typically involved in developing a control plan include:

• Quality engineers/managers
• Process engineers 
• Manufacturing engineers
• Design engineers
• Suppliers/sub-contractors
• Customer representatives (for customer-specific requirements)

Having a cross-functional team brings together diverse expertise and perspectives, leading to a more robust and comprehensive control plan. 

It also promotes buy-in and ownership across different departments involved in executing the plan.

Inputs (FMEA, Flow diagrams, Lessons learned)

Control plans don’t start from scratch but leverage existing information and documentation. 

Common inputs utilized in developing a control plan include:

Failure Mode and Effects Analysis (FMEA) : Identifies potential failures, their effects, and current controls. This helps determine additional controls needed.

Process Flow Diagrams : Provide a visual representation of the process steps, enabling the identification of critical characteristics and control points.

Lessons Learned : Previous experience from similar products/processes, including issues faced and effective countermeasures taken, can inform the new control plan.

Voice of the Customer : Customer requirements, specifications, and expectations guide which characteristics need stringent controls.

Capability Studies : Data on process performance and capability helps set appropriate control methods and sampling plans.

Utilizing these inputs ensures the control plan addresses known risks, integrates best practices, and aligns with customer and organizational requirements.

Control Plan Lifecycle (Prototype, Pre-launch, Production)  

A control plan is a living document that evolves through different stages of a product’s lifecycle:

Prototype Phase : An initial draft is created during design/prototyping to identify potential issues early and plan for controls. This is revised as the design matures.

Pre-launch Phase : The control plan is updated with manufacturing process details, supplier controls, and pre-production trial runs. It undergoes rigorous review before sign-off.  

Production Phase : Once manufacturing launches, the control plan guides the day-to-day execution of process controls and reactions to non-conformances. It is periodically reviewed and updated based on data, audits, and changes.

The level of detail and specificity increases as the product moves from concept to mass production. 

Having a robust control plan in place before launch is critical to ensuring quality and minimizing disruptions. 

Implementing and Managing Control Plans

Training and awareness.

Proper training and awareness are crucial for the successful implementation and management of control plans. 

All personnel involved in the process, from operators to quality inspectors and managers, must understand the purpose, requirements, and components of the control plan. 

Regular training sessions should be conducted to ensure that everyone is up-to-date with the latest revisions and changes to the control plan.

Awareness campaigns can also be beneficial in promoting the importance of control plans and their role in maintaining product quality and process control. 

Posters, newsletters, and other communication channels can be used to reinforce the significance of control plans and encourage adherence to the established procedures.

Documentation and Record-keeping

Comprehensive documentation and record-keeping are essential for maintaining control plan integrity and ensuring compliance with industry standards and customer requirements. 

The control plan itself should be a well-documented and controlled document, with clear revision history and approval processes.

In addition, all data and records generated during the implementation and execution of the control plan should be accurately documented and maintained. 

This includes inspection records, test results, non-conformance reports, corrective and preventive actions, and any other relevant information. 

Proper record-keeping not only supports auditing and continuous improvement efforts but also serves as evidence of compliance with regulatory requirements.

Auditing and Continuous Improvement

Regular auditing of control plans is necessary to ensure their effectiveness and identify areas for improvement. 

Internal audits should be conducted periodically to assess compliance with the control plan and verify that the defined processes and controls are being followed correctly.

External audits by customers or third-party certification bodies may also be required, depending on the industry and specific requirements. 

These audits provide an independent assessment of the control plan’s effectiveness and can identify potential gaps or non-conformities that need to be addressed.

Continuous improvement is an integral part of control plan management. 

Based on the findings from audits, process data analysis, and feedback from stakeholders, control plans should be regularly reviewed and updated to reflect changes in processes, product designs, or customer requirements. 

This iterative approach ensures that control plans remain relevant and effective in maintaining product quality and process control.

Software Tools and Automation for Control Plan

Software tools and automation can greatly facilitate the implementation and management of control plans. 

Quality management software solutions can streamline the creation, revision, and distribution of control plans, ensuring that the latest version is always accessible to relevant personnel.

Automated data collection and analysis tools can be integrated with control plans, enabling real-time monitoring of process parameters and product characteristics. 

This not only improves the efficiency of data collection and analysis but also provides timely alerts and notifications when deviations or non-conformances are detected, allowing for prompt corrective actions.

Additionally, software tools can aid in the documentation and record-keeping processes, ensuring that all relevant data and information are centralized and easily accessible for auditing and reporting purposes.

By leveraging software tools and automation, organizations can enhance the effectiveness and efficiency of their control plan implementation and management, leading to improved product quality, process control, and overall operational excellence .

Control Plans in Different Industries

Control plans are critical tools for ensuring product and process quality across various industries. 

While the core principles and components remain the same, the specific requirements and focus areas may vary depending on the industry and its unique challenges.

The automotive industry has stringent quality standards and regulations, such as IATF 16949, and customer-specific requirements from original equipment manufacturers (OEMs). 

Control plans in this sector are essential for managing the complex supply chain, ensuring compliance with safety and regulatory requirements, and maintaining consistent quality across high-volume production runs. 

Automotive control plans often place significant emphasis on process capability studies, measurement system analysis, and statistical process control (SPC) to monitor and control critical characteristics.

Aerospace and Defense

In the aerospace and defense industries, control plans play a crucial role in managing the risks associated with mission-critical applications and ensuring compliance with rigorous safety and quality standards, such as AS9100 and NADCAP. 

Control plans in these sectors typically focus on stringent documentation requirements, traceability, and rigorous inspection and testing procedures. 

They also address the unique challenges of low-volume, high-mix production environments and the need for effective configuration management and change control processes.

Medical Devices

The medical device industry is heavily regulated, with strict quality requirements imposed by regulatory bodies like the FDA and international standards such as ISO 13485. 

Control plans in this sector are essential for ensuring patient safety, product efficacy, and compliance with regulatory requirements. 

They often emphasize risk management, design controls, validation activities, and comprehensive documentation to demonstrate traceability and adherence to quality system regulations.

General Manufacturing

While control plans are widely adopted across various manufacturing sectors, their specific focus and level of detail may vary depending on the industry, product complexity, and associated risks. 

In general manufacturing environments, control plans help organizations establish consistent quality practices, identify and mitigate potential risks, and promote continuous improvement. 

They typically cover aspects such as process monitoring, inspection and testing, supplier management, and corrective and preventive actions.

Regardless of the industry, effective control plans require cross-functional collaboration, clear communication, and a commitment to continuous improvement . 

By tailoring control plans to the specific needs and challenges of each sector, organizations can enhance their ability to deliver high-quality products and services while maintaining compliance with relevant standards and regulations.

Best Practices and Common Pitfalls for Control Plan

Alignment with apqp and ppap.

A control plan is closely linked with the Advanced Product Quality Planning (APQP) and Production Part Approval Process (PPAP) methodologies. 

APQP provides a structured approach for defining and establishing the steps necessary to ensure product quality, while PPAP is the process of obtaining approval from customers for a design before full production.

Aligning the control plan with APQP and PPAP is considered a best practice as it ensures that the control plan is developed in conjunction with these critical quality planning processes. 

This alignment helps to identify and address potential issues early on, reducing the risk of quality problems and ensuring that the control plan is comprehensive and effective.

Effective Review and Revision Process

Control plans are not static documents; they should be regularly reviewed and revised to ensure that they remain relevant and effective. 

An effective review and revision process is essential for maintaining the accuracy and effectiveness of the control plan.

Best practices for Review and Revision Include:

• Establishing a regular review schedule (e.g., annually or when there are significant process or product changes).
• Involving cross-functional teams, including representatives from production, quality, engineering, and other relevant departments.
• Incorporating feedback from internal audits, customer complaints, and other quality data sources.
• Documenting all changes and revisions, including the rationale and approval process.
• Providing training and communication to ensure that all relevant personnel are aware of and understand the changes.

Common Challenges and Solutions

Implementing and maintaining an effective control plan can present several challenges. 

Some common challenges and potential solutions include:

Lack of Buy-in or Support from Management and Employees

• Solution: Provide training and education to emphasize the importance of control plans and their role in ensuring product quality and customer satisfaction.
• Involve cross-functional teams in the development and implementation process to foster ownership and commitment.

Difficulty in Maintaining Accurate and Up-to-date Documentation

• Solution: Implement a robust document control system and establish clear responsibilities for updating and maintaining control plan documentation.
• Leverage software tools and automation to streamline documentation processes.

Insufficient Resources or Expertise

• Solution: Allocate adequate resources (e.g., personnel, time, and budget) for control plan development, implementation, and maintenance.
• Provide training and development opportunities to build internal expertise.
• Consider outsourcing or seeking external support if necessary.

Resistance to Change or Complacency

• Solution: Continuously communicate the importance of control plans and the benefits of continuous improvement.
• Celebrate successes and share best practices to encourage adoption and engagement.
• Identify and address root causes of resistance through training, coaching, and process improvements.

By addressing these common challenges proactively, organizations can increase the likelihood of successful control plan implementation and reap the benefits of improved quality, reduced costs, and enhanced customer satisfaction.

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Levers of Control: What They Are & How They Impact Your Strategy

• 09 Jan 2024

Control is pivotal to ensuring alignment between business objectives and outcomes and fostering a culture of strategy execution .

Because of this, many companies implement rigorous oversight measures, such as performance metrics and regular progress reviews. They also have robust systems of checks and balances, known as levers of control.

If you struggle to implement strategic initiatives, you’re not alone. Here’s a breakdown of levers of control and how they can impact strategy execution.

Access your free e-book today.

What Are Levers of Control?

Levers of control enable you to manage tension, guide strategy execution, and achieve business goals and objectives . The four levers are:

• Belief systems
• Boundary systems
• Diagnostic systems
• Interactive control systems

According to Harvard Business School Professor Robert Simons, who teaches the online course Strategy Execution , the four Ps of strategy drive the levers:

• Strategy as perspective: Provides overarching direction that helps guide and inspire pride in employees
• Strategy as position: Creates a value proposition that attracts customers and differentiates products and services from competitors’
• Strategy as plans: Focuses on key initiatives through formal systems that set strategic goals, determine action plans, and measure progress
• Strategy as patterns of action: Detects changes in the competitive environment and adapts quickly through continuous learning

Here’s an overview of each lever so you can consider all four during strategy implementation.

Belief Systems

Belief systems are sets of organizational definitions you communicate and reinforce to provide direction to employees. They commonly take the form of credos, mission statements, and core values that define your organization’s purpose and impart what employees should do and how to act.

Belief systems are central to strategy as perspective , which considers your organization’s larger mission and purpose to inspire employee pride.

“It's a lens by which everyone in the business looks for new opportunities and understands how to conduct themselves,” Simons says in Strategy Execution .

Employees who support your strategic initiatives will likely search for ways to support your strategy’s execution. Belief systems provide clarity for them and help unleash their desire to contribute.

Boundary Systems

While belief systems often produce positive results, employees can behave badly—for example, by manipulating financial records or cutting corners in quality assurance—to achieve company goals.

Highly standardized processes can help safeguard from unethical behavior. Simons encourages taking a different approach, though, if your organization is in a constant state of change.

That approach involves using boundary systems —negatively phrased statements that tell employees what behaviors are forbidden. Rather than relying on positive messaging, like belief systems, this lever of control describes what not to do.

According to Strategy Execution , boundary systems can comprise:

• Business conduct boundaries: Documents like codes of conduct that outline unethical behaviors.
• Strategic boundaries: Opportunities you shouldn’t pursue because they don’t align with your strategy.

Strategic boundaries, in particular, control strategy as position . By identifying risks you should avoid, your employees can better understand how to create customer value.

Whereas belief systems focus on overarching principles that guide employee behavior, boundaries refine what to prioritize—giving your business a clear strategic direction.

“Businesses without a clear strategic position may lapse into trying to please everyone, and thus, please no one,” Simons says in Strategy Execution .

Related: A Beginner’s Guide to Value-Based Strategy

Diagnostic Control Systems

Even when employees understand your organization’s mission and the limits of their support in strategic initiatives, you still need to monitor their efforts to ensure your strategy execution runs smoothly.

You can accomplish that using the third level of control: diagnostic control systems —formal information systems that help monitor organizational outcomes.

Examples of diagnostic control systems include:

• Performance scorecards
• Project monitoring systems
• Human resources systems

“It allows managers to put key activities on autopilot,” Simons says in Strategy Execution .

For example, consider a call center’s monitoring efforts. Instead of combing through data, it could use automation to track metrics like the number of calls and customer satisfaction scores to identify areas for improvement, provide targeted training, and allocate resources more effectively.

It's crucial to strike a balance between monitoring and suppressing when designing such systems because they control strategy as plans —meaning they directly influence what action plan best supports your strategic initiatives.

“You must not only spend time negotiating and setting goals,” Simons says in Strategy Execution , “you must also design measures for these goals and then align performance incentives.”

Interactive Control Systems

Strategy execution often requires going on the defensive to avoid risk. However, the fourth lever of control allows you to do the opposite and mitigate risk through interactive control systems .

“Interactive control systems are the formal systems managers use to personally involve themselves in the decision activities of subordinates,” Simons says in Strategy Execution . “Decision activities that relate to and impact strategic uncertainties.”

For example, financial services firm JP Morgan implements interactive control systems that leverage AI for fraud detection and risk mitigation . Through real-time monitoring tools, its employees can detect and investigate suspicious patterns or anomalies in transactions. Those employees can then use their expertise to better inform automated technologies of how to enhance risk detection—making their company more effective at safeguarding against potential threats.

Employees shouldn’t be involved in all decision-making activities. To pinpoint which control systems would benefit from your team’s involvement, you must identify strategic uncertainties.

“Strategic uncertainties dictate which control systems you and your organization focus attention on, the types of information from those systems that will prove most relevant, and the nature of the debate and dialogue in which you want your entire organization to engage,” Simons says in Strategy Execution .

With a refined list of uncertainties requiring internal support, you can shape strategy as patterns of action and empower employees to assist in monitoring industry changes.

How Levers of Control Impact Strategy Execution

All four levers of control are vital to strategy execution.

Successful businesses search for ways to strike a balance between innovation and control. Consider Apple and Netflix. While both are highly profitable because of their innovative products and services, they suffer from constant pressure to do the next big thing .

When companies feel that pressure, so do their employees, which can lead to poor decision-making, unethical behavior, and illegal practices.

Implementing too many internal controls isn’t the answer. While many companies fear bad behavior’s legal ramifications, they still want to remain competitive in their industries.

“I think a lot of firms are trying to achieve this balance,” HBS Professor Eugene Soltes says in Strategy Execution . “Young, nimble startup firms tend to maybe not have enough controls. And some very large organizations potentially have too many.”

Employees are foundational to that balance, which is why using control systems interactively is essential in strategy implementation.

“If you devote your time and attention to asking questions about certain projects or systems, about specific customer data and initiatives, and if you pull your employees into frequent conversations about them, you can bet your company’s strategic uncertainties will be keeping them awake at night, too,” Simons says in Strategy Execution .

In doing so, you can create a top-down culture of strategy execution wherein employees monitor changes in the competitive environment and focus on mitigating ways your strategy can fail .

“You need to push people out of their comfort zone,” Simons says, “forcing them to take risks and move the needle for the business. To make that happen, you must drive the top-down questioning.”

Take Control of Your Strategy Execution

Controlling your strategy doesn’t have to require external help. With the right frameworks, tools, and employee support, you can successfully guide its execution.

“I want to emphasize that you don't need to hire a fancy consulting firm to implement your ideas,” Simons says in Strategy Execution . “All you need is the knowledge and discipline to apply these common-sense ideas to your own organization.”

By enrolling in an online course, like Strategy Execution , you can help ensure your organization strikes a balance between innovation and control.

Want to learn more about levers of control? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to take the first step toward successfully executing your business strategy.

About the Author

Guide: Control Plan

Author: Daniel Croft

Daniel Croft is an experienced continuous improvement manager with a Lean Six Sigma Black Belt and a Bachelor's degree in Business Management. With more than ten years of experience applying his skills across various industries, Daniel specializes in optimizing processes and improving efficiency. His approach combines practical experience with a deep understanding of business fundamentals to drive meaningful change.

In business it is not uncommon for processes and outputs from processes to be out of control and need action to be taken to address them. This is where Control Plans become extremely useful. Control plans have been developed to support lean Six Sigma process and quality management systems in measuring critical-to-quality (CTQ) measures of processes and their outputs to ensure they remain in control with regular data collection and clear actions to be taken to address issues if they arise. 

Control plans are mostly popularized and used within the manufacturing sector. However, they can be useful for a range of processes that output variables that can be measured and controlled.

What is a Control Plan?

A Control Plan in its basic form is a document that outlines the process, steps and actions needed to manage, control, and ensure the quality of a process or product. Developed from the principles of Lean Six Sigma, the tool is used to many industries, such as manufacturing, logistics, automotive, and aerospace.

Control plans may vary slightly from business to business as teams and management tweak them to suit local business needs. However, the Control Plan typically consists of elements such as process input variables, output variables, control points (limits), what measurements are to be taken, and actions to be taken if a deviation occurs. 

Below you can see a good example of how a control plan may look. You can also download this control plan from our template section.

A control plan is usually a tool you will use towards the end of an improvement project, such as in the Control phase of the DMAIC methodology, and continues to serve as a “living document,” which means it is continually reviewed and updated as the process evolves or new data becomes available.

How to Create a Control Plan

Creating a Control Plan is an important process that involves several steps. The guide below will clearly explain each step to guide you through creating a robust and effective Control Plan.

Step 1: Identify the Process

The first step in creating a control plan is to identify a process that you are looking to control. This should be a process that is critical to the quality of your product or service and would have a significant impact on customer satisfaction or operational efficiency if it were to go wrong. Therefore, lend them to a key candidate of a process to control 

It is important to have a clear understanding of the flow of the process, including the inputs and outputs and all the steps involved. It can be useful to use a tool such as a flowchart to map out the process to ensure you fully understand all the elements and variables of the process. 

Step 2: List CTQs (Critical to Quality Characteristics)

Once the process has been identified, the next step in the process is to identify the CTQ characteristics. These are the key attributes or features of the product or service that need to be controlled to ensure quality. The best way to identify what the CTQs are is to understand the customer requirements, such as product specifications.

For example, let’s say a business manufactures brake pads, and the CTQ is the thickness tolerance of the brake pads; this might be ±0.5mm.

Step 3: Select Measurement Methods

Once you have listed all the CTQs that you want to control, decide how you will measure these characteristics. The method that you decide on should be accurate, reliable, and repeatable and follow the principles of Attribute Agreement Analysis (AAA). The measurement method should consider what tools, instruments, or techniques will be used. Additionally, it is important to define the frequency with which the measurement is taken and what the acceptable limits or tolerances are for each CTQ.

Step 4: Determine Control Methods

Now that you know what CTQs you want to control and the methods used to measure them you need to determine the methods of control. Control methods are the strategies, tools or techniques used to ensure that the process stays within the defined limits or customer spec limits.  Popular tools and techniques used to control processes and variables include Statistical Process Control (SPC) charts, Mistake Proofing (Poka Yoke) or Standard Operating Procedures (SOP) / Standard Work Instructions (SWI), which control method you use will depend on the type of process and CTQ identified.

Step 5: Develop Action Plans

If in the event a process or variable goes out of control it is important to take action to address and correct the process and bring it back under control. To do this action plans should be developed as part of the control plan. These action plans define what steps need to be taken to bring the process back within its acceptable limits. 

Like any good action plan it needs make it clear what action needs to be taken and who is responsible for taking that action. 

Step 6: Train the Team

Now that you have developed a control plan its important to ensure that in the event it is needed, it is used. Therefore, you should clearly communicate what the CTQs are, what the operators need to do to measure the process and clarify what actions need to be taken by whom if a process goes out of control. 

Training is key to the success of the control plan being followed.

Step 7: Implement and Monitor

Now that you have developed and trained out the plan, the next step is to officially implement it. This involves putting all the required measures and controls into place. If special tools like calipers or software’s are needed to take measurements, ensure they have what they need. The process then needs to be continuously monitored to ensure the process remains within the stated control limits. Data should then be analyzed at regular intervals to detect and trends or deviations in the process outputs.

Step 8: Review and Update

Finally Step 8, it is important to remember that the control plan is a living document that should be reviewed and updated regularly as the process or CTQs change. Regular reviews will ensure the Control Plan remains effective and relevant. 

By following this process you should be able to develop a robust Control Plan that will help you control your process and ensure quality and drive continuous improvement of the process.

Implementing a Control Plan is beneficial for controlling the quality and performance of processes and preventing defects or quality issues. From identifying the process to training your team, each step is geared towards ensuring that your business operations are as seamless as possible. The goal is not just to maintain current performance levels but to set the stage for continuous improvement.

As we’ve outlined in this guide, creating and implementing a Control Plan is a detailed process involving multiple steps, each is important and builds on the previous step. You should also remember, a Control Plan is a living document must be regularly monitored and updated to its sustain success.

• Westgard, J.O., 2003. Internal quality control: planning and implementation strategies.   Annals of clinical biochemistry ,  40 (6), pp.593-611.
• Mehrasa, M., Pouresmaeil, E., Jørgensen, B.N. and Catalão, J.P., 2015. A control plan for the stable operation of microgrids during grid-connected and islanded modes.   Electric Power Systems Research ,  129 , pp.10-22.

Q: What is a control plan?

A: A control plan is a documented framework that outlines the methods, procedures, and actions necessary to maintain process control and ensure consistent and acceptable outcomes. It helps identify critical control points, measurement methods, control limits, and corrective actions to monitor and manage process performance effectively.

Q: Why is a control plan important?

A: A control plan is important because it helps organizations maintain process stability, minimize process variations, and ensure consistent product or service quality. It provides a systematic approach to monitor, control, and improve processes, leading to reduced defects, improved customer satisfaction, and increased operational efficiency.

Q: How does a control plan fit into the DMAIC methodology?

A: A control plan is a key component of the Control phase in the DMAIC (Define, Measure, Analyze, Improve, Control) methodology. In this phase, the control plan is developed to sustain the improvements made during the earlier phases. It helps ensure that the process remains in control, deviations are promptly addressed, and continuous improvement efforts are sustained.

Q: What are critical control points?

A: Critical control points are specific stages or activities within a process where variations can significantly impact the quality or outcome. These points need to be closely monitored and controlled to prevent defects or deviations from the desired target. Examples include temperature control, pressure control, or specific steps in a manufacturing process.

Q: How are control limits determined?

A: Control limits are determined based on historical data, customer specifications, or statistical analysis. Historical data provides insights into the process performance, while customer specifications define the acceptable range for product quality. Statistical techniques, such as process capability analysis, can help determine control limits based on the process’s inherent variation and the desired level of performance.

Q: What is the role of corrective actions in a control plan?

A: Corrective actions are specified in a control plan to address deviations from control limits or target values. These actions provide a systematic approach to identify and resolve the root causes of variations, ensuring that the process is brought back into control. Corrective actions may involve adjusting process parameters, modifying procedures, retraining employees, or conducting equipment maintenance, among other steps.

Q: Who is responsible for implementing a control plan?

A: Responsibility for implementing a control plan typically falls on the process owner or a designated team responsible for process management and improvement. These individuals or teams are accountable for monitoring the process, collecting data, analyzing it for deviations, and implementing corrective actions when necessary.

Q: How often should a control plan be reviewed and updated?

A: A control plan should be reviewed and updated regularly to ensure its effectiveness and alignment with changing process requirements. It is recommended to review the control plan during regular process performance reviews or when significant changes occur in the process or customer requirements. This helps to adapt the control plan to evolving conditions and continuously improve its efficacy.

Daniel Croft

Hi im Daniel continuous improvement manager with a Black Belt in Lean Six Sigma and over 10 years of real-world experience across a range sectors, I have a passion for optimizing processes and creating a culture of efficiency. I wanted to create Learn Lean Siigma to be a platform dedicated to Lean Six Sigma and process improvement insights and provide all the guides, tools, techniques and templates I looked for in one place as someone new to the world of Lean Six Sigma and Continuous improvement.

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Chapter 9: Executing Strategy through Organizational Design

Creating Organizational Control Systems

Learning Objectives

• Understand the three types of control systems.
• Know the strengths and weaknesses of common management fads.

In addition to creating an appropriate organizational structure, effectively executing strategy depends on the skillful use of organizational control systems. Executives create strategies to try to achieve their organization’s vision, mission, and goals. Organizational control systems   allow executives to track how well the organization is performing, identify areas of concern, and then take action to address the concerns. Three basic types of control systems are available to executives: (1) output control, (2) behavioural control, and (3) clan control. Different organizations emphasize different types of control, but most organizations use a mix of all three types.

Output Control

Output control   focuses on measurable results within an organization. Examples from the business world include the number of hits a website receives per day, the number of microwave ovens an assembly line produces per week, and the number of vehicles a car salesperson sells per month ( Figure 9.16 “Output Controls” ). In each of these cases, executives must decide what level of performance is acceptable, communicate expectations to the relevant employees, track whether performance meets expectations, and then make any needed changes. In an ironic example, a group of post office workers in Pensacola, Florida, were once disappointed to learn that their paychecks had been lost—by the U.S. Postal Service! The corrective action was simple: they started receiving their pay via direct deposit rather than through the mail.

Many times the stakes are much higher. In early 2011, Delta Air Lines was forced to face some facts as part of its use of output control. Data gathered by the federal government revealed that only 77.4 percent of Delta’s flights had arrived on time during 2010. This performance led Delta to rank dead last among the major U.S. airlines and fifteenth out of eighteen total carriers (Yamanouchi, 2011). In response, Delta took important corrective steps. In particular, the airline added to its ability to service airplanes and provided more customer service training for its employees. Because some delays are inevitable, Delta also announced plans to staff a Twitter account called Delta Assist around the clock to help passengers whose flights are delayed. These changes and others paid off. For the second quarter of 2011, Delta enjoyed a $198 million profit, despite having to absorb a $1 billion increase in its fuel costs due to rising prices (Yamanouchi, 2011).

Output control also plays a big part in the university experience. For example, test scores and grade point averages are good examples of output measures. If you perform badly on a test, you might take corrective action by studying harder or by studying in a group for the next test. At colleges and universities, students may be put on academic probation when their grades or grade point average drops below a certain level. If their performance does not improve, they may be removed from their major and even suspended from further studies. On the positive side, output measures can trigger rewards too. A very high grade point average can lead to placement on the dean’s list and graduating with honors.

Arthur Erickson, noted Canadian architect, graduated from University of British Columbia and was commissioned to design the Museum of Anthropology there, which opened in 1976. It was inspired by the post-and-beam architecture of northern Northwest Coast First Nations people.

Behavioural Control

While output control focuses on results, behavioural control  focuses on controlling the actions that ultimately lead to results. In particular, various rules and procedures are used to standardize or to dictate behaviour ( Figure 9.18 “Behavioural Controls” ). In most states, for example, signs are posted in restaurant bathrooms reminding employees that they must wash their hands before returning to work. The dress codes that are enforced within many organizations are another example of behavioural control. To try to prevent employee theft, many firms have a rule that requires checks to be signed by two people. Some employers may prefer non-smoking employees, as cigarette breaks can take as much as 40 minutes out of a workday, plus higher absenteeism and associated health costs for smokers.

Output control also plays a significant role in the university experience. An illustrative (although perhaps unpleasant) example is penalizing students for not attending class. Professors grade attendance to dictate students’ behaviour; specifically, to force students to attend class. Meanwhile, if you were to suggest that a rule should be created to force professors to update their lectures at least once every five years, we would not disagree with you.

Outside the classroom, behavioural control is a major factor within university and college athletic programs. The Canadian Collegiate Athletic Association (CCAA) governs college athletics using a set of rules, policies, and procedures. CCAA members, all players, and coaches are expected to follow the standard guidelines and principles of the CCAA Code of Ethics, and failure to comply will result in disciplinary action. Some degree of behavioural control is needed within virtually all organizations.

Creating an effective reward structure is key to effectively managing behaviour because people tend to focus their efforts on the rewarded behaviours. Problems can arise when people are rewarded for behaviours that seem positive on the surface but that can actually undermine organizational goals under some circumstances. For example, restaurant servers are highly motivated to serve their tables quickly because doing so can increase their tips. But if a server devotes all his or her attention to providing fast service, other tasks that are vital to running a restaurant, such as communicating effectively with managers, host staff, chefs, and other servers, may suffer. Managers need to be aware of such trade-offs and strive to align rewards with behaviours. For example, wait staff who consistently behave as team players could be assigned to the most desirable and lucrative shifts, such as nights and weekends.

Clan Control

Instead of measuring results (as in outcome control) or dictating behaviour (as in behavioural control), clan control  is an informal type of control. Specifically, clan control relies on shared traditions, expectations, values, and norms to lead people to work toward the good of their organization ( Figure 9.20 “Clan Controls” ). Clan control is often used heavily in settings where creativity is vital, such as many high-tech businesses. In these companies, output is tough to dictate, and many rules are not appropriate. The creativity of a research scientist would be likely to be stifled, for example, if he or she were given a quota of patents that must be met each year (output control) or if a strict dress code were enforced (behavioural control).

Google is a firm that relies on clan control to be successful. Employees are permitted to spend 20 percent of their work week on their own innovative projects. The company offers an ‘‘ideas mailing list’’ for employees to submit new ideas and to comment on others’ ideas. Google executives routinely make themselves available two to three times per week for employees to visit with them to present their ideas. These informal meetings have generated a number of innovations, including personalized home pages and Google News, which might otherwise have never been adopted.

Some executives look to clan control to improve the performance of struggling organizations. In 2014, Rogers Communications CEO Guy Laurence formally unveiled his plan to revitalize growth at the country’s largest communications firm. The strategy, dubbed “Rogers 3.0,” aimed to improve the customer experience and use the company’s assets—which include everything from magazines to the Toronto Blue Jays—together in a more effective way. Laurence explained the issues he believed the company struggles with, and how his plan will address them. The reorganization is aimed at focusing on better customer service by bringing together all of the elements of customer experience—10,400 staff—into a single unit reporting to him. In plans to improve customer service to business and enterprise customers, Rogers has split out consumers from enterprise users, believing there’s a growth story in enterprise. Finally, Laurence said that Rogers’ stable of sports, broadcast, and publishing properties would differentiate the company from its telecom peers and commented, “I believe content is the most important part of our mix” (Castaldo, 2014).

Clan control is also important in many Canadian cities. Vancouver has the steam clock and Wreck Beach; Toronto has the CN Tower and the Blue Jays; Edmonton has the Oilers and West Edmonton Mall. These attractions are sources of pride to residents and desired places to visit for tourists; they help people feel like they belong to something special.

It is worth noting that control systems, once embedded in an organization, become very difficult to change. Control systems emerged within an organization, not by accident, but in response to the firm’s need to monitor employees’ work to encourage high performance. Changing results metrics is an invitation for gaming the data with employees finding innovative ways to ensure that the data shows they are performing at the expected level, while behaviour and clan culture are notoriously difficult to change, often taking a decade or more to truly change. New senior executives often tweak control systems in an effort to improve performance. However, the time required to actually implement such changes often exceeds the executive’s tenure with the firm—thus the phrase, latest (management) fad .

Management Fads: Out of Control?

Don’t chase the latest management fads. The situation dictates which approach best accomplishes the team’s mission. – Colin Powell, former U.S. Secretary of State

The emergence and disappearance of fads appears to be a predictable aspect of modern society. A fad arises when some element of popular culture becomes enthusiastically embraced by a group of people. Over the past few decades, for example, fashion fads have included leisure suits (1970s), “Members Only” jackets (1980s), Doc Martens shoes (1990s), and Crocs (2000s). Ironically, the reason a fad arises is also usually the cause of its demise. The uniqueness (or even outrageousness) of a fashion, toy, or hairstyle creates “buzz” and publicity but also ensures that its appeal is only temporary (Ketchen & Short, 2011).

Fads also seem to be a predictable aspect of the business world ( Figure 9.22 “Managing Management Fads” ). As with cultural fads, many provocative business ideas go through a life cycle of creating buzz, captivating a group of enthusiastic adherents, and then giving way to the next fad. Bookstore shelves offer a seemingly endless supply of popular management books whose premises range from the intriguing to the absurd. Within the topic of leadership, for example, various books promise to reveal the “leadership secrets” of an eclectic array of famous individuals such as Jesus Christ, Hillary Clinton, Attila the Hun, and Santa Claus.

Beyond the striking similarities between cultural and business fads, there are also important differences. Most cultural fads are harmless, and they rarely create any long-term problems for those that embrace them. In contrast, embracing business fads could lead executives to make bad decisions. As the quote from Colin Powell suggests, relying on sound business practices is much more likely to help executives to execute their organization’s strategy than are generic words of wisdom from Old St. Nick.

Many management fads have been closely tied to organizational control systems. For example, one of the best-known fads was an attempt to use output control to improve performance. Management by objectives (MBO)  is a process wherein managers and employees work together to create goals. These goals guide employees’ behaviours and serve as the benchmarks for assessing their performance. Following the presentation of MBO in Peter Drucker’s 1954 book The Practice of Management , many executives embraced the process as a cure-all for organizational problems and challenges as if previous management had not been concerned with their objectives!

Like many fads, however, MBO became a good idea run amok. Companies that attempted to create an objective for every aspect of employees’ activities eventually discovered that this was unrealistic. The creation of explicit goals can conflict with activities involving tacit knowledge about the organization. Intangible notions such as “providing excellent customer service,” “treating people right,” and “going the extra mile” are central to many organizations’ success, but these notions are difficult if not impossible to quantify. Thus, in some cases, getting employees to embrace certain values and other aspects of clan control is more effective than MBO.

Quality circles were a second fad that built on the notion of behavioural control. Quality circles began in Japan in the 1960s and were first introduced in the United States in 1972. A quality circle   is a formal group of employees that meets regularly to brainstorm solutions to organizational problems. As the name “quality circle” suggests, identifying behaviours that would improve the quality of products and the operations management processes that create the products was the formal charge of many quality circles.

While the quality circle fad depicted quality as the key driver of productivity, it quickly became apparent that this perspective was too narrow. Instead, quality is just one of four critical dimensions of the production process; speed, cost, and flexibility are also vital. Maximizing any one of these four dimensions often results in a product that simply cannot satisfy customers’ needs. Many products with perfect quality, for example, would be created too slowly and at too great a cost to compete in the market effectively. Thus trade-offs among quality, speed, cost, and flexibility are inevitable.

Improving clan control was the aim of sensitivity-training groups (or T-groups)  that were used in many organizations in the 1960s. This fad involved gatherings of approximately eight to fifteen people openly discussing their emotions, feelings, beliefs, and biases about workplace issues. In stark contrast to the rigid nature of MBO, the T-group involved free-flowing conversations led by a facilitator. These discussions were thought to lead individuals to greater understanding of themselves and others. The anticipated results were more enlightened workers and a greater spirit of teamwork.

Research on social psychology has found that groups are often far crueler than individuals. Unfortunately, this meant that the candid nature of T-group discussions could easily degenerate into accusations and humiliation. Eventually, the T-group fad gave way to recognition that creating potentially hurtful situations has no place within an organization. Hints of the softer side of T-groups can still be observed in modern team-building fads, however. Perhaps the best known is the “trust game,” which claims to build trust between employees by having individuals fall backward and depend on their coworkers to catch them.

Improving clan control was the basis for the fascination with organizational culture  that was all the rage in the 1980s. This fad was fueled by a best-selling 1982 book titled In Search of Excellence: Lessons from America’s Best-Run Companies . Authors Tom Peters and Robert Waterman studied companies that they viewed as stellar performers and distilled eight similarities that were shared across the companies. Most of the similarities, including staying “close to the customer” and “productivity through people,” arose from powerful corporate cultures. The book quickly became an international sensation; more than three million copies were sold in the first four years after its publication.

Soon it became clear that organizational culture’s importance was being exaggerated. Before long, both the popular press and academic research revealed that many of Peters and Waterman’s “excellent” companies quickly had fallen on hard times. Basic themes such as customer service and valuing one’s company are quite useful, but these clan control elements often cannot take the place of holding employees accountable for their performance.

The history of fads allows us to make certain predictions about today’s hot ideas, such as empowerment, “good to great,” and viral marketing. Executives who distill and act on basic lessons from these fads are likely to enjoy performance improvements. Empowerment, for example, builds on important research findings regarding employees—many workers have important insights to offer to their firms, and these workers become more engaged in their jobs when executives take their insights seriously. Relying too heavily on a fad, however, seldom turns out well.

Just as executives in the 1980s could not treat In Search of Excellence as a recipe for success, today’s executives should avoid treating James Collins’s 2001 best-selling book Good to Great: Why Some Companies Make the Leap…and Others Don’t as a detailed blueprint for running their companies. Overall, executives should understand that management fads usually contain a core truth that can help organizations improve but that a balance of output, behavioural , and clan control is needed within most organizations. As legendary author Jack Kerouac noted, “Great things are not accomplished by those who yield to trends and fads and popular opinion.”

Key Takeaways

• Organizational control systems are a vital aspect of executing strategy because they track performance and identify adjustments that need to be made. Output controls involve measurable results. Behavioural controls involve regulating activities rather than outcomes. Clan control relies on a set of shared values, expectations, traditions, and norms. Over time, a series of fads intended to improve organizational control processes have emerged. Although these fads tend to be seen as cure-alls initially, executives eventually realize that an array of sound business practices is needed to create effective organizational controls.
• What type of control do you think works most effectively with you and why?
• What are some common business practices that you predict will be considered fads in the future?
• How could you integrate each type of control intro a college classroom to maximize student learning?

Adams, S.  (2013, June 5).  Every Smoker Costs An Employer $6,000 A Year. Really? Forbes .  Retrieved from:  http://www.forbes.com/sites/susanadams/2013/06/05/every-smoker-costs-an-employer-6000-a-year-really/

Castaldo, J.  (2014, May 23).  Rogers CEO Guy Laurence says sweeping restructuring is aimed at improving customer service.   Canadian Business.  Retrieved from http://www.canadianbusiness.com/companies-and-industries/guy-laurence-rogers-3/

Ketchen, D. J., & Short, J. C. (2011). Separating fads from facts: Lessons from “the good, the fad, and the ugly.”  Business Horizons ,  54 , 17–22.

UBC Alumni Affairs.  (2009, Fall).  From Hugs to Hazing: A History of Student Orientation . Retrieved from http://www.alumni.ubc.ca/trekmagazine/25-fall2009/hazing.php

Wikipedia Organization.  (2014).  Museum of Anthropology at UBC .   Retrieved from http://en.wikipedia.org/wiki/Museum_of_Anthropology_at_UBC

Image description

Figure 9.16 image description: Output Controls

Outcome controls assess measurable production and other tangible results. Often output controls emphasize “bottom-line” performance. We illustrate some outcome controls found in organizations below.

• Because real estate agents are paid a percentage of the selling price when a house sells, the number of dollars generated in houses sold is an important metric. Many realty offices have designations like “five million dollar club”to recognize very productive realtors.
• Grade point averages provide a tangible means to compare students for employers and graduate schools.
• In the movie Elf, the main character Buddy leaves Santa’s workshop when the number of Etch-A-Sketch toys he produces is nearly nine hundred units lower than the standard pace.
• To earn tenure in a research-focused business schools, a professor’s output generally must include publishing numerous high-quality articles in reputable scholarly journals.
• Within restaurants, servers can increase a key output—amount of tips received—by providing customers with fast, friendly, and high-quality service.

Return to Figure 9.16

Figure 9.18 image description: Behavioural Controls

Behavioural controls dictate the actions Of individuals. Such controls Often emphasize rules and procedures. We illustrate some behavioural controls found in organizations below.

• No shoes, no shirt, no paycheck. Many food service companies have strict attire requirements to ensure employees are in compliance with the rules of the company and the local health department.
• Casual Fridays provide a welcome break in offices that enforce strict dress codes.
• Many businesses require that checks are signed by two people. This prevents a dishonest employee from embezzling money.
• Grading attendance is a behavioural control designed to force students to show up for class. This can be very helpful because research shows that attendance is positively related to grades. Unfortunately, however, there are no behavioural controls that force professors’ lectures to be interesting.
• Need a puff? In Ontario, British Columbia, and many other provinces, legislation prohibits smoking in any enclosed public place or enclosed workplace, including restaurants, bars, and work vehicles. Some provinces prohibit designated smoking rooms (DSRs) in any enclosed public place or enclosed workplace. The Federal Government also has passed the Non-smokers’ Health Act.

Return to Figure 9.18

Figure 9.20 image description: Clan Controls

Rather than measuring results (as in outcome control) or dictating behaviour (as in behavioural control), clan control relies on shared traditions, expectations, values, and norms to lead people to work toward the good of their organization. Some Of the most interesting and unusual examples of clan control are found on college campuses. Below we illustrate a few striking examples that help build school spirit and loyalty at the University of British Columbia.

• During “Frosh Week,” UBC around 1920, freshmen were subjected to various combinations of paint, dye, grease, foodstuffs, blindfolds, dunking, electric shocks, shaving, and messy or uncomfortable obstacle courses before being marched through the streets of Vancouver by older students beating pans and reciting Varsity chants and yells.
• In keeping with their well-earned reputation for rowdy intransigence in the 1950s, some UBC engineering students did their best to paint themselves as the “bad boys” on campus with spitting contests, homage to a symbolic Lady Godiva, sorties by goon squads during Frosh Week, and such childish pranks as stealing toilet seats or other campus fixtures.
• By the 1980s, some student pranks and stunts were losing their appeal. Although beer drinking contests and the occasional tanking still occurred each autumn, freshman hazing had effectively been discredited and discontinued; and instead of the near-riots of earlier years, inter-faculty rivalry found less damaging outlets, such as the symbolic vandalism of the new concrete “E” block placed on Main Mall.

Return to Figure 9.20

Figure 9.22 image description: Managing Management Fads

The emergence and disappearance of fads appears to be a predictable aspect of modern society. A fad arises when some element of culture—such as a fashion, a toy, or a hairstyle—becomes enthusiastically embraced by a group of people. Fads also seem to be a predictable aspect of the business world. Below we illustrate several fads that executives have latched onto in an effort to improve their organizations ‘ control systems.

• Management by objectives – A supervisor and an employee create a series of goals that provide structure and motivation for the employee. A huge set of studies shows that setting challenging but attainable goals leads to good performance, but not every aspect of work can be captured by a goal.
• Sensitivity training – Free-flowing group discussions are used to lead individuals toward greater understanding of themselves and others. Because a “mob mentality” can take over a group, sensitivity training too often degenerates into hostility and humiliation.
• Quality circles – Volunteer employee groups are developed to brainstorm new methods or processes to improve quality. Quality is important, but managers face trade-offs among quality, cost, flexibility, and speed. A singular obsession with quality sacrifices too much along other dimensions.
• Strong culture – Fueled by 1 982’s In Search of Excellence and fascination with Japanese management systems, having a strong culture became viewed as crucial to organizational success. Within a few years, many of the “excellent” companies highlighted in the book had fallen on hard times. However, firms such as WestJet continue to gain competitive advantage through their strong cultures.

Return to Figure 9.22

Media Attributions

• Figure 9.16: Attribution information for all included images is in the chapter conclusion.
• UBC Museum of Anthropology Building1 © Tim Gillin is licensed under a CC BY (Attribution) license
• Figure 9.18: Attribution information for all included images is in the chapter conclusion.
• Manhattan New York City 2009 PD 20091130 209 © Sterilgutassistentin is licensed under a CC BY-SA (Attribution ShareAlike) license
• Figure 9.20: Attribution information for all included images is in the chapter conclusion.
• noogler © Tduk Alex Lozupone is licensed under a CC BY-SA (Attribution ShareAlike) license
• Figure 9.22: Attribution information for all included images is in the chapter conclusion.
• Kickball © James is licensed under a CC BY (Attribution) license

Allow executives to track how well the organization is performing, identify areas of concern, and then take action to address the concerns.

A focus on measurable results within an organization.

A focus on specifying the actions that ultimately lead to results.

Relying on shared traditions, expectations, values, and norms to lead people to work toward the good of their organization.

A process wherein managers and employees work together to create goals.

A formal group of employees that meet regularly to brainstorm solutions to organizational problems.

Groups of people that meet to discuss emotions, feelings, beliefs, and biases about workplace issues to gain greater understanding of themselves and others.

Values and norms embraced by an organization that determine how people interact with other organizational members as well as external stakeholders.

Mastering Strategic Management - 1st Canadian Edition Copyright © 2014 by Janice Edwards is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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• 5 Best Business Plan Software and Tools in 2023 for Your Small Business

Data as of 3 /13/23 . Offers and availability may vary by location and are subject to change.

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

A business plan can do a lot for your business. It can help you secure investors or other funding. It can give your company direction. It can keep your finances healthy. But, if we’re being honest, it can also be a pain to write.

Luckily, you don’t have to start from scratch or go it alone. Business plan software and services can help you craft a professional business plan, like our top choice LivePlan , which provides templates, guidance, and more.

You’ve got quite a few choices for business plan help, so we’re here to help you narrow things down. Let’s talk about the best business plan tools out there.

• LivePlan : Best overall
• BizPlanBuilder : Most user-friendly
• Wise Business Plans : Best professional service
• Business Sorter : Best for internal plans
• GoSmallBiz.com : Most extra features
• Honorable mentions

Business plan software 101

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LivePlan: Best overall business plan software

Data as of 3 /13/23 . Offers and availability may vary by location and are subject to change. *With annual billing

LivePlan has been our favorite business plan software for a while now, despite the stiff competition.

There’s a lot to like about LivePlan. It has pretty much all the features you could want from your business plan software. LivePlan gives you step-by-step instructions for writing your plan, helps you create financial reports, lets you compare your business’s actual financials to your plan’s goals, and much more. And if you ever need inspiration, it includes hundreds of sample business plans that can guide your writing.

LivePlan software pricing

But the best part? You get all that (and more) at a very competitive price. (You can choose from annual, six-month, or monthly billing.) While LivePlan isn’t quite the cheapest business plan builder out there, it’s not too far off either. And if comes with a 60-day money back guarantee. So there’s no risk in trying LivePlan out for yourself.

With a great balance of features and cost, LivePlan offers the best business plan solution for most businesses.

BizPlanBuilder: Most user-friendly

Need something easy to use? BizPlanBuilder fits the bill.

BizPlanBuilder doesn’t have a flashy, modern user interface―but it does have a very clear, intuitive one. You’ll be able to see your plan’s overall structure at a glance, so you can quickly navigate from your title page to your market trend section to that paragraph on your core values. And as you write, you’ll use a text editor that looks a whole lot like the word processing programs you’re already familiar with.

BizPlanBuilder software pricing

Data effective 3/13/23. At publishing time, amounts, rates, and requirements are current but are subject to change. Offers may not be available in all areas.

BizPlanBuilder also offers lots of helpful guidance for actually writing your plan. It gives you pre-written text, in which you just have to fill in relevant details. It offers explanations for what information you need to include in each section of your plan and way. It even gives you helpful tips from experts, so you’ll have all the information you need to plan like a pro.

So if you want planning software with almost no learning curve, you’ll like BizPlanBuilder.

Wise Business Plans: Best professional service

• Custom quote

Unlike all the other companies on this list, Wise Business Plans doesn’t offer software. Instead, it offers professional business plan writing services―meaning someone does all the hard work for you.

Now, you might think that sounds expensive―and you’re probably right (you have to request a custom quote for your plan). But there’s a lot to be said for expertise, and Wise Business Plans has plenty of that. Your business plan will get written by an experienced writer (with an MBA, no less). They’ll get information from you, do their own research, and then write your plan. You get one free revision, and you can always pay for more.  

Wise Business Plans service pricing

Your end result will be a polished, entirely original business plan. (You can even get printed copies.) And best of all, you won’t have to spend your precious time working on the plan yourself. Wise Business Plans takes care of all the hard parts, and makes your business look good while doing it. Sounds like a service worth paying for, right?

Put simply, if you want the most professional business plan possible, we recommend using Wise Business Plans’s writing service.

Business Sorter: Best for internal plans

Many businesses need plans to show to people outside the company (to get financing, for example). But what if you just need a plan for internal use? In that case, we suggest Business Sorter.

Business Sorter uses a unique card-based method to help you craft the perfect business plan. (You can watch a demo video to see how it works.) You’ll plan some of the usual things, like finances and marketing. But Business Sorter also lets you make plans for specific teams and team members. It also emphasizes more internal matters, like operations, that might get overlooked in a business plan for outsiders.

Business Sorter software pricing

After you’ve made your business plan, Business Sorter also helps you stay accountable to it. You can create tasks, give them deadlines, and assign them to team members―giving you basic project management tools to make sure your business plans become business actions. (Oh, and did we mention that Business Sorter has the lowest starting prices of any software on this list?)

It all adds up to a business plan software that works great for internal planning.

GoSmallBiz: Most extra features

Want to get way more than just business planning software? Then you probably want GoSmallBiz.

See, GoSmallBiz offers business plan software as part of its service―but it’s just one part of a much bigger whole. You also get everything from discounts on legal services to a website builder to a CRM (customer relationship manager) to business document templates. And more. In other words, you get just about everything you need to get your startup off the ground.

GoSmallBiz software pricing

Don’t worry though―you still get all the business planning help you need. GoSmallBiz gives you business plan templates, step-by-step instructions, and the ability to create financial projections. And if you get stuck, GoSmallBiz will put you in touch with experts who can offer advice.

If you want business planning and much, much more, give GoSmallBiz a try.

• PlanGuru : Best financial forecasting
• EnLoop : Cheapest tool for startups

We recommend the software above for most business planning needs. Some businesses, though, might be interested in these more specialized planning software.

Honorable mention software pricing

PlanGuru: Best financial forecasting features

PlanGuru is pretty pricey compared to our other picks, but you might find its forecasting features worth paying for. It has more forecasting methods than other software (over 20) plus it lets you forecast up to 10 years.

EnLoop: Cheapest tool for startups

EnLoop doesn’t have our favorite features or interface, but it does have really, really low pricing plus a seven-day free trial. It's the most affordable software for startup business planning and still provides all the essential features like financial analysis, team collaboration, charting, and more.

Data as of 3 /13/23 . Offers and availability may vary by location and are subject to change. * With annual billing

Several of our previous favorite planning software, including BusinessPlanPro and StratPad, seem to have gone out of business.

A business plan is a written, living document that tells the story of your business and what you plan to do with it. It serves as the source of truth for you—the business owner—as well as potential partners, employees, and investors, but it also serves as a roadmap of what you want your business to be.

Why you need a business plan

While some small-business owners don’t see the point of creating a formal business plan, it can have some concrete benefits for your business. For example, one 2016 study found that business owners with written plans are more successful than those that don’t. 1

Still too vague? Then let’s get specific.

If you ever seek business funding (from, say, banks, angel investors , or venture capitalists ), you’ll have to prove that your business deserves the money you want. A formal business plan―complete with financial data and projections―gives you a professional document you can use to make your case. (In fact, most potential investors will expect you to have a business plan ready.)

Even if you’re not seeking funding right now, a business plan can help your business. A formal plan can guide your business’s direction and decision making. It can keep your business accountable (by, for example, seeing if your business meets the financial projections you included). And a formal plan offers a great way to make sure your team stays on the same page.

What to include in your business plan

Not all business plans are created equal. To make a really useful business plan, you’ll want to include a number of elements:

• Basic information about your business
• Your products/services
• Market and industry analysis
• What makes your business competitive
• Strategies and upcoming plans
• Your team (and your team’s background)
• Current financial status
• Financial and market projections
• Executive summary

Of course, you can include more or fewer elements―whatever makes sense for your business. Just make sure your business plan is comprehensive (but not overwhelming).

How business plan software can help

With so many elements to include, business plan creation can take a while. Business plan software tries to speed things up.

Most business plan software will include prompts for each section. In some cases, you can just fill in your business’s specific information, and the software will write the text for you. In other cases, the software will give you specific guidance and examples, helping you write the text yourself.

Plus, business plan software can help you stay organized. You’ll usually get intuitive menus that let you quickly flip through sections. So rather than endlessly scrolling through a long document in a word processor, you can quickly find your way around your plan. Some software even lets you drag and drop sections to reorganize your plan.

Sounds way easier than just staring at a blank page and trying to start from scratch, right?

Choosing business plan software

To find the right business plan builder for your business, you’ll want to compare features. For example, would you rather write your own text, getting prompts and advice from your software? Or would you rather go with a fill-in-the-blank method?

Likewise, think about the elements you need. If your plan will have a heavy focus on finances, you’ll want to choose business plan software with robust financial projection features. If you care more about market and competitor analysis, look for software that can help with that research.

You may also want to find business plan software that integrates with your business accounting software . Some plan builders will import data from Xero, QuickBooks, etc. to quickly generate your financial data and projections.

And of course, you’ll want to compare prices. After all, you always want to end up with software that fits your business budget.

The right business plan software can make your life easier. With LivePlan ’s wide breadth of features and online learning tools, you can’t go wrong. Plus, BizPlanBuilder 's one-time pricing makes it easy to invest while Business Sorter has a low starting cost. And if you're business is looking to grow, GoSmallBiz and Wise Business Plans will scale with you.

But of course, different companies have different needs. So shop around until you find the software that’s best for you and your business.

Now that you've got a business plan, take a look at our checklist for starting a small business.  It can help you make sure you have everything else you need to get your startup off to a good start!

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• 7 Steps to Build a Successful Project Management Sales Plan
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• 4 Cost Management Techniques for Small Businesses

Creating a business plan can take anywhere from a couple hours to several weeks. Your timeline will depend on things like the elements you choose to include, whether you use software or hire a writing service, and how much research goes into your plan.

That said, much of the business plan software out there brags that it can help you create a fairly detailed plan in a few hours. So if you’re going the software route, that can help you set your expectations.

If you want to get the most out of your business plan, you should update it on a regular basis―at least annually. That way, you can continually refer to it to inform your company’s strategies and direction.  

At the very least, you should update your business plan before you start looking for a new round of funding (whether that’s with investors or lenders).

Thanks to business plan software, you can easily write your own business plan rather than pay someone to do it for you. And in most cases, software will cost you less than a professional business plan service.

There are some times you might want to go with a service though. If time is tight, you might find that it’s worth the cost of a service. Or if you’ve got big investor meetings on the horizon, you might want the expertise and polish that a professional service can offer.

Ultimately, you’ll have to decide for yourself whether business plan software or a business plan service will work better for your company.

Methodology

We ranked business plan software and tools based on features, pricing and plans, and connections to project management and other services. The value of each plan and service, along with what it offers, was a big consideration in our rankings, and we looked to see if what was offered was useful to small businesses or just extra. The final thing we looked at was the ease of use of the software to see if it's too complex for small businesses.

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Sources 1. Harvard Business Review, “ Research: Writing a Business Plan Makes Your Startup More Likely to Succeed .” Accessed March 13, 2023.

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Imagine a symphony orchestra where each musician plays their own tune without listening to others. The result would be chaotic and dissonant, right? Similarly, in the business world, when decision-making happens in silos and planning processes are disconnected, it’s like having a group of individuals playing their own instruments without any coordination. The harmony is lost, and the organization becomes inefficient, misses opportunities, and struggles to keep up with the fast-paced market.

Integrated Business Planning (IBP) addresses these challenges by providing a comprehensive framework that integrates strategic, operational and financial planning, analysis, and reporting to drive better business outcomes.   A retail company experiences a sudden surge in online sales due to a viral social media campaign. Integrated planning incorporates supply chain planning, demand planning, and demand forecasts so the company can quickly assess the impact on inventory levels, supply chain logistics, production plans, and customer service capacity. By having real-time data at their fingertips, decision-makers can adjust their strategies, allocate resources accordingly, and capitalize on the unexpected spike in demand, ensuring customer satisfaction while maximizing revenue.   This blog explores the significance of IBP in today’s modern business landscape and highlights its key benefits and implementation considerations.

Integrated Business Planning (IBP) is a holistic approach that integrates strategic planning, operational planning, and financial planning within an organization. IBP brings together various functions, including sales, marketing, finance, supply chain, human resources, IT and beyond to collaborate across business units and make informed decisions that drive overall business success. The term ‘IBP’ was introduced by the management consulting firm Oliver Wight to describe an evolved version of the sales and operations planning (S&OP process) they originally developed in the early 1980s.

1. Strategic planning

Integrated Business Planning starts with strategic planning. The management team defines the organization’s long-term goals and objectives. This includes analyzing market trends, competitive forces, and customer demands to identify opportunities and threats. Strategic planning sets the direction for the entire organization and establishes the foundation for subsequent planning roadmap.

2. Operational planning

Operational planning focuses on translating strategic goals into actionable plans at the operational level. This involves breaking down the strategic objectives into specific targets and initiatives that different departments and functions need to execute.

For example, the sales department might develop a plan to enter new markets or launch new products, while the supply chain department focuses on inventory optimization and ensuring efficient logistics. The key is to align operational plans with the broader strategic objectives to ensure consistency and coherence throughout the organization.

3. Financial planning

Financial planning ensures that the organization’s strategic and operational plans are financially viable. It involves developing detailed financial projections, including revenue forecasts, expense budgets, and cash flow forecasts. By integrating financial planning with strategic and operational planning, organizations can evaluate financial profitability, identify potential gaps or risks, and make necessary adjustments to achieve financial targets.

 4. Cross-functional collaboration

A fundamental aspect of IBP is the collaboration and involvement of various functions and departments within the organization. Rather than working in isolation, departments such as sales, marketing, finance, supply chain, human resources, and IT come together to share information, align objectives, and make coordinated decisions.

5. Data integration and analytics

IBP relies on the integration of data from different sources and systems. This may involve consolidating data from enterprise resource planning (ERP) systems, customer relationship management (CRM) systems, supply chain management systems, and other relevant sources. Advanced analytics and business intelligence tools are utilized to analyze and interpret the data, uncovering insights and trends that drive informed decision-making.

6. Continuous monitoring and performance management

The Integrated Business Planning process requires continuous monitoring of performance against plans and targets. Key performance indicators (KPIs) are established to measure progress and enable proactive management. Regular performance reviews and reporting enable organizations to identify deviations, take corrective actions, and continuously improve their planning processes.

By integrating strategic, operational, and financial planning organizations can unlock the full potential of IBP and drive business success and achieve their goals.

Enhanced decision-making

IBP facilitates data-driven decision-making by providing real-time insights into various aspects of the business. By bringing together data from various departments, organizations can develop a holistic view of their operations, enabling them to make better-informed decisions.

Improved alignment

By aligning strategic objectives with operational plans and financial goals, IBP ensures that every department and employee is working towards a common vision. This alignment fosters synergy and drives cross-functional collaboration.

Agility and responsiveness

In the rapidly changing business landscape, agility is crucial. IBP allows organizations to quickly adapt to market shifts, demand fluctuations, and emerging opportunities. By continuously monitoring and adjusting plans, businesses can remain responsive and seize competitive advantages.

Optimal resource allocation

Integrated Business Planning enables organizations to optimize resource allocation across different functions. It helps identify bottlenecks, allocate resources effectively, and prioritize initiatives that yield the highest returns, leading to improved efficiency and cost savings.

Risk management

IBP facilitates proactive risk management by considering various scenarios and identifying potential risks and opportunities. By analyzing data and conducting what-if analyses, companies can develop contingency plans and mitigate risks before they materialize.

Implementing an effective IBP process requires careful planning and execution that may require substantial effort and a change of management, but the rewards are well worth it. Here are some essential strategic steps to consider:

1. Executive sponsorship

Establish leadership buy-in; gain support from top-level executives who understand the value of Integrated Business Planning and can drive the necessary organizational changes. Leadership commitment, led by CFO, is crucial for successful implementation.

2. Continuous improvement

Continuously monitor and adjust; implement mechanisms to monitor performance against plans and targets. Regularly review key performance indicators (KPIs), conduct performance analysis, and generate timely reports and dashboards. Identify deviations, take corrective actions, and continuously improve the planning processes based on feedback and insights.

3. Integration of people and technology

To foster cross-functional collaboration, the organization must identify key stakeholders, break down silos, and encourage open communication among departments. Creating a collaborative culture that values information sharing and collective decision-making is essential.

Simultaneously, implementing a robust data integration system, encompassing ERP, CRM, and supply chain management systems, ensures seamless data flow and real-time updates. User-friendly interfaces, data governance, and training provide the necessary technological support. Combining these efforts cultivates an environment of collaboration and data-driven decision-making, boosting operational efficiency and competitiveness.

4. Technology

Implement advanced analytics and business intelligence solutions to streamline and automate the planning process and assist decision-making capabilities. These solutions provide comprehensive functionality, data integration capabilities, scenario planning and modeling, and real-time reporting.

From a tech perspective, organizations need advanced software solutions and systems that facilitate seamless data integration and collaboration to support IBP. Here are some key components that contribute to the success of integrated business planning:

1. Corporate performance management

A platform that serves as the backbone of integrated business planning by integrating data from different departments and functions. It enables a centralized repository of information and provides real-time visibility into the entire business.

2. Business intelligence (BI) tools

Business intelligence tools play a vital role in analyzing and visualizing integrated data from multiple sources. These tools provide comprehensive insights into key metrics and help identify trends, patterns, and opportunities. By leveraging BI tools, decision-makers can quickly evaluate financial performance, make data-driven business decisions and increase forecast accuracy.

3. Collaborative planning and forecasting solutions

Collaborative planning and forecasting solutions enable cross-functional teams to work together in creating and refining plans. These planning solutions facilitate real-time collaboration, allowing stakeholders to contribute their expertise and insights. With end-to-end visibility, organizations can ensure that plans are comprehensive, accurate, and aligned with business strategy.

4. Data integration and automation

To ensure seamless data integration, organizations need to invest in data integration and automation tools. These tools enable the extraction, transformation, and loading (ETL) of data from various sources. Automation streamlines data processes reduces manual effort and minimizes the risk of errors or data discrepancies.

5. Cloud-based solutions

Cloud computing offers scalability, flexibility, and accessibility, making it an ideal choice for integrated business planning. Cloud-based solutions provide a centralized platform where teams can access data, collaborate, and make real-time updates from anywhere, at any time. The cloud also offers data security, disaster recovery, and cost efficiencies compared to on-premises infrastructure.

6. Data governance and security

As organizations integrate data from multiple sources, maintaining data governance and security becomes crucial. Establishing data governance policies and ensuring compliance with data protection regulations are vital steps in maintaining data integrity and safeguarding sensitive information. Implementing robust data security measures, such as encryption and access controls, helps protect against data breaches and unauthorized access.

IBM Planning Analytics  is a highly scalable and flexible solution for Integrated Business Planning. It supports and strengthens the five pillars discussed above, empowering organizations to achieve their strategic goals and make better data-driven decisions. With its AI- infused advanced analytics and modeling capabilities, IBM Planning Analytics allows organizations to integrate strategic, operational, and financial planning seamlessly. The solution enables cross-functional collaboration by providing a centralized platform where teams from various departments can collaborate, share insights, and align their plans. IBM Planning Analytics also offers powerful data integration capabilities, allowing organizations to consolidate data from multiple sources and systems, providing a holistic view of the business. The solutions’s robust embedded AI predictive analytics uses internal and external data and machine learning to provide accurate demand forecasts. IBM Planning Analytics supports continuous monitoring and performance management by providing real-time reporting, dashboards, and key performance indicators (KPIs) that enable organizations to track progress and take proactive actions.  As the business landscape continues to evolve, embracing Integrated Business Planning is no longer an option but a necessity for organizations. To succeed in this dynamic environment, businesses need an integrated approach to planning that brings all the departments and data together, creating a symphony of collaboration and coordination.

Learn more about IBM Planning Analytics

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• Financial controls for a small business
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• Managing a Business

Growing your business will require establishing a solid foundation of internal controls including accounting, auditing, purchasing and damage control planning. This session will give you an overview of what you need to prepare for.

• Your Accountant's Role

Checklist of Internal Controls

• Accounting Controls
• Growth Requires More Disciplined Controls
• Mission of Internal Controls
• Financial Reporting by Profit Centers
• Frequency of Reporting Financial Statements
• Frequency of Cash Flow Projections
• Monitoring Your Leverage
• How to Buy Checklist
• Damage Control Plans
• Top 10 Do's and Don'ts

As you grow, your cash flow will become more complex. This will surely be the case if your expansion includes creation of debt to fund your growth. Most business failures occur because the cash flow fails to cover debt created in acquisitions or other expansion costs.

Cash flow control is a simple method of projecting your future needs for cash. It is an income statement covering future periods of time that has been changed to show only cash: cash coming in and cash going out and what your balance of cash is at the end of designated periods of time.

In cash flow control, for each future intervals of time, make conservative estimates for your future sources of cash (IN) and future expenditures (OUT). Use low, conservative figures for IN items and use high estimates for OUT items. For the initial period, start with the cash you now have. To this you add IN items and subtract the OUT items, which results in the cash at end of the month. The cash at the end of month becomes the starting cash for the next month.

Your cash flow projections will furnish the information on how much debt you can safely take on. You may want to establish a guideline ratio to establish a margin of safety between your cash flow and your debt service. For example, limiting your outstanding debt service so as to maintain cash flow that is three or more times the debt service. To estimate a reasonable ratio for your particular business, your public competitors are a good place to look for industry norms.

Any time you were to run out of cash, you would have a potentially disastrous problem. So the number one safeguard in building your business is: never run out of cash. By having information of potential negative balances in advance, say six months, you have six months to make cash flow adjustments in sales, collections, expenses or financing to correct future negative balances.

The following simplified cash flow control spreadsheet shows that ending cash for this first period becomes the starting cash for the second period. The ending cash for the second period becomes the starting cash for the third period, and so on. The projection will also be a useful tool in arranging financing and demonstrate to your banker that you are sensitive to the importance of safeguarding liquidity as you grow your company.

Your Accountant's Role Internal controls are the safeguards to ensure all the information represented on your financial statements is accurate. Your internal accountant working with your CPA will be the key overseers in managing all internal controls.

• Separation of income and expense functions. For example, have different people handle accounts payable and accounts receivable.
• Separate authorization, custody, and record keeping roles. Your CPA can make recommendations that are appropriate for your business.
• Have bank statements mailed to a separate (or home) address of a managing authority or yourself. Malfeasance occurs frequently with banking transactions. Bank statements and checks cashed can be independently reviewed.
• Do not delegate signing of checks.
• Establish maximum limits of purchasing authority.
• Require all payments be supported by invoices.
• Require bids on all purchases over a stated limit.
• Inventory controls: Inventory, similar to cash, can disappear very rapidly through carelessness or employee dishonesty. Require authorization for who can sign for goods and services and who controls the release of goods and services out the door after the processing has been completed. Separation of incoming and outgoing duties is recommended.
• Rapid delivery firms such as UPS or FedEx and just-in-time assembly systems are great tools to use to minimize your inventories. The cash you free up can be put to uses that are more productive.
• Verify that insurance policies are in force and premium payments are current. View our  Business Risk and Insurance session of the Starting a Business course for more information.
• Internet technology (IT) security management in place or outsourced. Your IT consultant or manager should write out the IT policies.
• Edit log for website changes and updates. If your business deals with e-commerce, you need to establish a log procedure for control of who and how edits to your website are to be made. All changes or edits to the site should be made through a designated employee. Your computer technology consultant can show you how to administer this tool.

You will probably need more financing as you grow and your lenders will require a closer scrutiny of your financial statements. There are several levels of how audits are performed by your CPA. Starting with the most rigid and expensive one:

• An audited financial statement is one prepared by a CPA who certifies that the financial statements met requirements of GAAP (Generally Accepted Accounting Principles) which covers a wide range of procedures. An audited statement is required of publicly owned firms. So if you are planning a future initial public offering it is a good idea to start publishing audited statements at least two years before your intended IPO date. Some banks will require audited statements.
• A reviewed statement is the next down from audited statement and less costly as the auditor does less examining than the audited statements. Some banks will approve a reviewed statement of small and intermediate-sized companies.
• The second step down from an audited statement is a compiled statement prepared by a CPA. But the CPA can not provide assurance that the statements are according to GAAP standards.
• Internally prepared statements are prepared by the company and may or may not follow GAAP nor be prepared by a CPA. Any growing business should maintain a higher level of accounting scrutiny than relying on internally generated financial information.

Growth Requires More Disciplined Controls As you grow, your accounting and internal control systems must keep pace to insure that the higher levels of income you generate are not wasted or siphoned off by various forms of dishonesty. Take a moment to think about anyone you know of that has suffered a loss due to embezzlement or poor internal controls. Was the loss severe? How could it have been avoided?

So it becomes increasingly important for both your internal accounting management and your auditor to be adequately qualified and experienced in implementing firewalls against various forms of embezzlement, shrinkage and other criminal activities.

Mission of Internal Controls To accomplish appropriate controls, consider:

• Developing systems to maintain efficiencies and honesty on both the supply-side and the marketing side of your business.
• Supplied side risks include ordering procedures, incoming and outgoing inventory controls and accounts payable accounting.
• Marketing-side risks include shrinkage (stealing by your customers and/or employees) accounts receivable mismanagement and sales not being rung up at the cash register.
• Work with both your internal accounting manager and CPA to upgrade financial controls as needed. If you have uncommon risks beyond ones your accountants can install and administer, you might consider getting an assessment from a loss control consultant.

Financial Reporting by Profit Centers Your expansion should provide that your overall financial statements are broken down by individual profit centers within the company. As discussed under the section covering delegating authority, this practice will identify areas of strengths and weaknesses and also provide the basis for profit sharing incentives for key managers. Learn more about key elements of successful incentive plans. This is from our Growing a Business course , the Expanding and Handling Problems session.

Frequency of Reporting Financial Statements Individual profit center income statements (P&L's) should be reported on a very frequent basis, with a minimum of monthly reporting. Here's why:

• To disclose problems or losses early, before they become big and unmanageable. The early detection of losses should not only accelerate remedies but also be followed up by promptly shutting down an operation that proves to have incurable flaws so that a financial leak does not turn into a flow of losses.
• Profit sharing incentives work best when they are paid in frequent intervals. In some food operations, P&L's are pulled and incentive checks written on a weekly basis.

Frequency of Cash Flow Projections As referred to earlier in this session, the cash needs of a growing business will add more uncertainty to future liquidity and therefore must be closely monitored. Predicting future liquidity should be updated very frequently such as quarterly.

Monitoring Your Leverage Financial leverage is the use of borrowed money to supplement the cash you invest in growing your business. The general objective is to borrow money to buy an asset with a higher return than the cost (the interest) on the debt. While the purpose is to maximize your earnings, the cost is running the risk of maximizing losses.

Firms that are highly leveraged run the risk in bad times that their income may not be sufficient to make payment on their debt or even the risk of bankruptcy. The financial crisis of 2007 - 2009 was blamed largely on excessive leverage. Here are three ways you can monitor and thereby minimize your level of risk on an ongoing basis:

• Work with your CPA to establish a maximum financial leverage ratio, also referred to as debt-to-equity ratio.
• Work with your CPA to establish a minimum level debt-to-cash flow ratio. Cash flow is the cash you generate after eliminating non-cash expenses from your income.
• Borrow for a longer term than you need. If you can repay in three years ask for five years. Be sure to include the provision permitting acceleration of your repayments.

As you grow in earnings and cash flow, your leverage should become less and less for two reasons:

• Over time you will be growing your retained earnings and will have more cash to invest, lessening the need for borrowing.
• The greater your net worth becomes, the less leverage risks you should be taking. This follows the Warren Buffett maxim: "you only need to get rich once."

If your accounts aren't in perfect shape, now is a great time to make sure they're well-organized. A good piece of accounting software can make this a lot easier. The two examples are Quickbooks  and  Sage 50  (formally Peachtree).

Here is a checklist on purchasing to incorporate in your internal controls.

• Never place an order without knowing the price and the terms.
• Purchase orders must be in writing.
• Have complete specifications.
• Buy subject to your contingencies.
• Have backup sources.
• Be loyal to good suppliers.
• Have promises and extras verified in writing.
• Get price protection.
• Try to award to the lowest bidder.
• Don't hesitate to repeatedly contact suppliers to expedite needed merchandise. "The squeaky wheels get the grease."
• Communicate complaints quickly and respectfully
• Use internal controls for ordering and receiving.
• Count and inspect everything as received.
• Use an inventory control system.
• Ask for and take term discounts.
• Pay on time.
• Pay only after verification.
• Watch your cash flow.
• Consider suppliers as a source of financing.

Ships at sea have no fire department to call for help. So damage control plans and training are important for survival. As a business owner you also need to be prepared for unexpected adversities. We recommend the following contingency plans be practiced and ongoing training provided:

• Contingency plans for adverse cash flow. This could include back-up banking resources, or multiple sources rather than one. Always keep in mind that this event could happen and seek out your other resources to fund periods of need.
• Insurance protection in place. It is foolish for an owner to look to saving money by not providing adequate insurance for all appropriate casualty events. It's not a good idea to "bet the company" that adversities will not happen.
• Determine if there are any special industry-related risks that apply to your business. Here are two examples:

THE TOP 10 DO'S

• Adjust and readjust your cash flow projections.
• Work with your CPA to upgrade financial controls.
• Pay on time, but only after verification.
• Consider higher audit levels.
• Implement an "edit log" for website changes and updates.

THE TOP 10 DON'TS

• Run out of cash...ever.
• Discount the importance of hiring an accountant and a CPA.
• Overlook suppliers as sources of financing.
• Disregard contingency planning.
• Have same person handling payables and receivables.
• Place an order without written price and terms.
• Delegate signing of checks.
• Assume that shipments are complete and in perfect condition.
• Neglect to ask for and use term discounts.
• Think that hand-shake agreements are best when buying.

If you are currently writing or have developed a business plan, consider taking a moment now to include any information about your business related to this session. MOBI’s free Business Plan Template and other worksheets, checklists, and templates are available for you to download. Just visit the list of MOBI Resource Documents on the Resources & Tools page of our website.

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Hanna Kwisda

Consultant with focus on Business Process Management and Governance, Risk & Compliance

Business Process Controls: Streamline Your Operations In 6 Easy Steps

Internal Controls (ICS)

Learn the true value of business process controls and how to easily anchor them into your processes

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Why business process controls are considered an integral part of processes

Business process controls as part of an internal control system (ics), how to implement business process controls in 6 easy steps, the process documentation as the basis for business process controls.

Introduction

Ensuring smooth process flows is a difficult undertaking for process owners. Especially because process steps are often not executed according to set instructions. This is where business process controls can be a great remedy and help you ensure efficient process execution.

Discover in this blog post the added value that business process controls could bring, how they relate to an Internal Control System, and learn about the 6 steps you can take to successfully integrate them into your process landscape.

As a process owner, you are responsible for  a whole variety of  tasks. These range from planning and managing,  to  the continuous optimization of business processes within your  organization . Your main interest is therefore to ensure that your defined processes  work as specified.

In practice, however, this is often more difficult  than it seems . Especially when it comes to ensuring smooth process flows, you are confronted with a number of challenges. These, as you may know, are typically tied to the deviations in operational execution of the individual process steps, i.e. the activities that are carried out by the employees. And this is exactly where business process controls come into play.

Business process controls are detailed tasks that help you to realize your processes effectively and efficiently. They guarantee that the performance or condition is always maintained at the same level. And as a process owner you can highly benefit from them in the following areas:

• meeting compliance requirements
• mitigating process risks
• saving time and costs
• keeping the set process quality standards
• achieving your process goals efficiently

In the next few paragraphs, we’ll share with you what it takes to successfully implement business process controls in your processes and how to realize their true potential. But before we go into this in more detail,  we’d like to  take a brief look at the internal control system (ICS) and explain why ICS is also of fundamental importance for you as a process owner.

As a process owner, the term “internal control system” is probably not part of your daily vocabulary. So, you may have little or no awareness of it in the context of your environment. However, what you also may not know is how great of an advantage an ICS can be to you as a process owner.

In principle, these are simply internal (business process) controls that ensure the achievement of your defined goals and compliance with external requirements. In the following sections, when we go into the 6 steps in more detail, we’ll guide you through the introduction of an internal control system – that you can easily use for your individual process requirements.

To ensure that the introduction of business process controls is successful and that they unfold their true benefit, we recommend that you follow the 6 steps shown in the figure below.

These will not only support you in the initial implementation of your process controls, but also help you review your existing control landscape.

Step 1: Identify relevant processes

Every company has a substantial number of processes. Thus, the probability’s also quite high that there’s a need for improvement in one or the other process.  But , it’s important that you don’t go and optimize all of your processes at the same time, rather  start  with individual business  processes first . Focus is the key term here!

First, identify and prioritize particularly important business processes. Start with your core and support processes, for example from IT or  accounting departments . Indicators for processes with an urgent need for business process controls include the  following:

• complexity of processes
• number of process executions,
• number of registered loss events or
• number of complaints received

Step 2: Identify and evaluate process risks

Once you’ve identified processes that require improvement, the next step is to determine and assess potential risks within your processes. This is because only the identification of risk sources and risk drivers enables the planning of control steps at the appropriate point.

So after you’ve detected potential process risks, you move on to assessing them. Evaluate your risks according to their probability of occurrence and expected impact at periodic intervals. In doing so, make sure to adapt the assessment process to your specific business requirements.

Step 3: Define and anchor business process controls in your processes

Once the basic groundwork consisting of the first two steps is done, you can now fully concentrate on anchoring your business process controls.

Remember – business process controls are detailed tasks that support proper process execution, mitigation of discovered risks or even their prevention in the first place.

To do so, first define the control steps within your process models (see the graphic above). The description of the business process control includes, among other things, the type of control, frequency, responsibilities, technical resources used, and applicable documents.

When it comes to the frequency and intensity of the control, it’s important to emphasize that this should be adapted to the requirements of individual process. On one hand, this allows the risk to be limited as far as possible and, on the other, prevents the process from becoming cumbersome due to too many control measures.

To ensure effective process execution, we also recommend having the execution of business process controls confirmed at periodic intervals. This can be done, for example, in the form of protocols, e-mails or as confirmation in a system. In this way, you can track and also prove the correct execution of your business process controls at any time. This is particularly useful for audits by internal revision or external certification authorities.

Step 4: Test business process controls and identify control gaps

In addition to the specification of business process controls, it’s also essential that you regularly test them for appropriateness and effectiveness. As part of the so-called control tests, you analyse whether the control evidence has been provided in the period under review and whether you have achieved your defined process objectives. This enables you to quickly uncover control gaps and identify potentials for improvement. You should also document the results of the control tests and any other considerations.

Step 5: Optimize business processes, risks and business process controls

If you’ve discovered room for improvement, for example through control tests or with regards to your risks, you can optimize your processes with the help of concrete measures. Measures are characterized foremost by their project character and differ significantly from controls in this respect. In most cases, measures are planned, implemented and completed once. At this point, we recommend involving both the affected persons and the audit in the optimization process.

Step 6: Leverage reports and dashboards

Use reports and dashboards for your specific requirements. In addition to increased transparency, you also benefit from a holistic view of upcoming tasks for all roles involved in the process.

The basis for the introduction of business process controls is, of course, detailed process documentation. This starts at the process landscape level and usually ends with a detailed description of all work steps at the operational level.

Therefore, if you have not yet created any process documentation yet, we strongly recommend starting with that as a very first step. You can read all important information on this topic in our business process documentation  guide.

A business process management  software, like the renowned BPM suite   ADONIS ,  can provide great support in this endeavor. Advantages range from simple and standardized documentation of processes, process clarity and transparency, to the increase in quality that comes with it. For these reasons and more, companies increasingly turn to BPM software for their manifold added-benefits.

So, if you’ve already documented your processes with tool support, your first big milestone is covered. This makes it all the easier to build on this foundation and implement your business process controls using an ICS software. Just kick off with step 1 directly (Identify relevant business processes) and make sure your processes operate seamlessly.

As you can see, business process controls (i.e., an internal control system) are an incredibly helpful asset for process owners. They support you in achieving your process goals, adhering to compliance requirements, managing process risks and accelerating your business processes. Further advantages include easy sourcing of recommendations for improvement, as well as the integrated view of processes, risks, controls, measures and much more.

In our  free poster  you will find a compact overview of the 6 steps and all essential information at a glance. What’s more, we’ve included some of our key  tips  and  best practices  to help you get even more out of your processes!

Of course, if you’d like to discuss your individual use case, one of our process experts will gladly answer all your questions. Simply fill out our contact form below and we will get back to you shortly!

Accelerate processes, manage risks, meet compliance requirements and achieve process goals in 6 simple steps

Let’s talk about your use case, get the industry proven compliance tool., more on the topic.

Advantages and Disadvantages of an Internal Control System

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What Are Internal Controls?

Understanding internal controls, importance of internal controls.

• Preventative vs. Detective
• Limitations

The Bottom Line

• Business Essentials

Internal Controls: Definition, Types, and Importance

Internal controls are accounting and auditing processes used in a company's finance department that ensure the integrity of financial reporting and regulatory compliance.

Internal controls help companies to comply with laws and regulations and prevent fraud. They can also help improve operational efficiency by ensuring that budgets are adhered to, policies are followed, capital shortages are identified, and accurate reports are generated for leadership.

Key Takeaways

• Internal controls are the mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.
• Internal controls aid companies in complying with laws and regulations, and preventing employees from stealing assets or committing fraud.
• They can also help improve operational efficiency by improving the accuracy and timeliness of financial reporting.
• Internal audits play a critical role in a company’s internal controls and corporate governance.
• The Sarbanes-Oxley Act of 2002 made managers legally responsible for the accuracy of their companies' financial statements.

http://www.investopedia.com/terms/i/internalcontrols.asp

Internal controls have become a key business function for every U.S. company since the accounting scandals of the early 2000s. In the wake of such corporate misconduct, the Sarbanes-Oxley Act of 2002 was enacted to protect investors from fraudulent accounting activities and to improve the accuracy and reliability of corporate disclosures.

This had a profound effect on corporate governance. The legislation made managers responsible for financial reporting and creating an audit trail. Managers found guilty of not properly establishing and managing internal controls face serious criminal penalties.

The auditor’s opinion that accompanies financial statements is based on an audit of the procedures and records used to produce them. As part of an audit, external auditors will test a company’s accounting processes and internal controls and provide an opinion as to their effectiveness.

Internal audits evaluate a company’s internal controls, including its corporate governance and accounting processes. These internal controls can ensure compliance with laws and regulations as well as accurate and timely financial reporting and data collection. They help to maintain operational efficiency by identifying problems and correcting lapses before they are discovered in an external audit.

Internal audits play a critical role in a company’s operations and corporate governance since the Sarbanes-Oxley Act of 2002 made managers legally responsible for the accuracy of its financial statements.

No two systems of internal controls are identical, but many core philosophies regarding financial integrity and accounting practices have become standard management practices. While they can be expensive, properly implemented internal controls can help streamline operations and increase operational efficiency, in addition to preventing fraud.

The U.S. Congress passed the Sarbanes-Oxley Act of 2002 to protect investors from the possibility of fraudulent accounting activities by corporations. The Act mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud.

Components of Internal Controls

A company's internal controls system should include the following components:

• Control environment : A control environment establishes for all employees the importance of integrity and a commitment to revealing and rooting out improprieties, including fraud. A board of directors and management create this environment and lead by example. Management must put into place the internal systems and personnel to facilitate the goals of internal controls.
• Risk assessment:  A company must regularly assess and identify the potential for, or existence of, risk or loss. Based on the findings of such assessments, added focus and levels of control might be implemented to ensure the containment of risk or to watch for risk in related areas.
• Monitor:  A company must monitor its system of internal controls for ongoing viability. Doing so can ensure, whether through system updates, adding employees, or necessary employee training, the continued ability of internal controls to function as needed.
• Information/Communication:  Solid information and consistent communication are important on two fronts. First, clarity of purpose and roles can set the stage for successful internal controls. Second, facilitating the understanding of and commitment to steps to take can help employees do their job most effectively.
• Control activities:  These pertain to the processes, policies, and other courses of action that maintain the integrity of internal controls and regulatory compliance. They involve preventative and detective activities.
• Compliance with laws and regulations : An organization's financial activities must adhere to all relevant laws, regulations, and standards. This involves keeping up-to-date with changes in financial regulations and implementing measures to ensure compliance.
• Separation of duties : Distributing responsibilities among different people reduces the risk of error or inappropriate actions. This includes separating authorization, custody, and record-keeping roles to prevent fraud and errors.
• Physical controls : A business must implement security measures to protect its assets, including cash, inventory, and equipment. This could involve secure storage facilities, access controls, and surveillance systems.

Preventative vs. Detective Controls

Internal controls are typically comprised of control activities such as authorization, documentation, reconciliation, security, and the separation of duties. They are broadly divided into preventative and detective activities.

Preventative control activities aim to deter errors or fraud from happening in the first place and include thorough documentation and authorization practices. Separation of duties, a key part of this process, ensures that no single individual is in a position to authorize, record, and be in the custody of a financial transaction and the resulting asset. Authorization of invoices and verification of expenses are internal controls.

In addition, preventative internal controls include limiting physical access to equipment, inventory, cash, and other assets.

Detective controls are backup procedures designed to catch items or events the first line of defense has missed. Here, the most important activity is reconciliation, which is used to compare data sets. Corrective action is taken upon finding material differences. Other detective controls include external audits from accounting firms and internal audits of assets such as inventory.

Limitations of Internal Controls

Regardless of the policies and procedures established by an organization, internal controls can only provide reasonable assurance that a company's financial information is correct.

The effectiveness of internal controls can be limited by human judgment. For example, a business may give high-level personnel the ability to override internal controls for operational efficiency reasons.

What's more, internal controls can be circumvented through collusion, where employees whose work activities are normally separated by internal controls, work together in secret to conceal fraud or other misconduct.

Auditing techniques and control methods from England migrated to the United States during the Industrial Revolution. In the 20th century, auditors' reporting practices and testing methods were standardized.

Why Are Internal Controls Important?

Internal controls are the mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud. Besides complying with laws and regulations and preventing employees from stealing assets or committing fraud, internal controls can help improve operational efficiency by improving the accuracy and timeliness of financial reporting.

The Sarbanes-Oxley Act of 2002, enacted in the wake of the accounting scandals in the early 2000s, seeks to protect investors from fraudulent accounting activities and improve the accuracy and reliability of corporate disclosures.

What Are the 2 Types of Internal Controls?

Internal controls are broadly divided into preventative and detective activities. Preventative control activities aim to deter errors or fraud from happening in the first place and include thorough documentation and authorization practices. Detective controls are backup procedures that are designed to catch items or events that have been missed by the first line of defense. 

What Are Some Preventative Internal Controls?

Separation of duties, a key part of the preventative internal control process, ensures that no single individual is in a position to authorize, record, and be in the custody of a financial transaction and the resulting asset. Authorization of invoices, verification of expenses, and limiting physical access to equipment, inventory, cash, and other assets are examples of preventative internal controls.

What Are Detective Internal Controls?

Detective internal controls attempt to find problems within a company's processes once they have occurred. They may be employed in accordance with many different goals, such as quality control, fraud prevention, and legal compliance. Here, the most important activity is reconciliation, which compares data sets. Other detective controls include internal and external audits.

Internal controls are vital to ensuring the integrity of companies' operations and the trustworthiness of the financial information they report. The Sarbanes-Oxley Act of 2002 spurred internal controls in the aftermath of such scandals as those involving Enron and WorldCom to protect investors from corporate accounting fraud.

The success of internal controls can be limited by personnel who cut control activity corners for the sake of operational efficiency and by those employees who work together to conceal fraud.

Congress.gov. " H.R.3763 - Sarbanes-Oxley Act of 2002 ," Sec. 906.

Govinfo. " Sarbanes-Oxley Act of 2002 ," Page 1.

The University of Mississippi. Office of Internal Audit. " The Audit Perspective ," Page 2.

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The 3 Types of Business Controls

If you've ever been tempted to hold tightly on to the control within your company and just "do it yourself", here are the 3 types of internal controls to help you intelligently let go of control and safely grow your company..

One of the most common questions I get asked by audiences when I'm giving a keynote address to a business owner group is how to balance the need to hand off decision-making responsibility to your team as you grow, with the reality that many times they will make poorer choices and obvious mistakes that you wouldn't have made if you'd just kept control of the decision in the first place.

It's almost enough to make you want to pull back on the authority and just "do it yourself."

If you've ever felt that temptation, here is a new way of seeing the situation that has helped many of our business coaching clients scale many times larger while at the same time protecting the business and making it more resilient.

At the heart of the solution are business "controls".

Controls are a subset of business systems which specifically help protect your company from careless, costly, or uninformed decisions or behaviors.

When you build a business versus a job, you want your team to have the authority to get tasks done without running everything past you. You want them to take the initiative and have the discretion to make decisions and get valuable work done without you being the limiting factor that slows the business down.

At the same time, you want to ensure that the business is protected--that the right things are getting done, at the right time, and hence producing the right results. Your business must be confident that resources are focused on what matters most, and that simple mistakes that can and should easily be avoided are.

For example, you might formalize how you give team members levels of decision-making authority that aligns with their experience and the degree of consequence if they decide poorly.

Or you might institute weekly reporting of key indicators that help your team monitor performance and trends and proactively respond to changes in your business.

Or you might introduce a key checklist that your operations team follows to make sure they don't miss a simple step in the process.

These are all examples of business controls and we'll give you more, but for now, the bottom line is this: The more you build your business for control, the more you are trapped inside your business.

The 3 Types of Controls: Visual, Procedural, and Embedded

There are essentially three kinds of controls:

1. Visual controls. These include checklists, dash boards, scorecards, budgets, etc. They let you SEE that the right things are happening, of if not, they raise a flag that lets you make sure to focus on fixing the situation.

2. Procedural controls. These include things like having 2 unrelated parties internally check/be involved in the flow of money. Your standard review process for all new hires. Your standardized sales concessions you empower your sales team to use.

Procedural controls establish a known pathway to a consistently secure result.

3. Embedded controls. These are the controls that work without someone having to remember to do something out-of-the-way to use them. These include things like your standardized contracts, automated data backups, and intentionally designed financial controls that work automatically in the background to protect your business from poor decisions or behavior.

The Bottom Line

Remember, the more you do for your business, the more your business requires you to keep doing.

If you make a key decision today, you'll likely need to be there to make that same decision later.

If you find yourself checking on your team's work, with no plan in place to help develop them and your business to be self-sufficient, you'll likely always be needed to check up on your team's work.

If you want to scale your business and get your life back, you've got to find ways to get your team producing more. And business controls (along with solid systems) are one of the key ways you intelligently broaden the base upon which your company is being built.

For more on building systems, including a free tool kit with 21 in-depth video trainings to help you scale your business and get your life back, click here .

A refreshed look at leadership from the desk of CEO and chief content officer Stephanie Mehta

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The Ultimate Guide to Access Control Systems for Businesses

Introduction

In today’s rapidly evolving business landscape, security is of paramount importance. As businesses strive to protect their assets, data, and employees, implementing robust access control systems has become a necessity. This ultimate guide will provide you with a comprehensive understanding of access control systems for businesses, empowering you to make informed decisions and safeguard your organization effectively.

Understanding Business Access Control Systems

What are access control systems.

Access control systems are security mechanisms designed to regulate entry and control access to physical premises. They provide businesses with the ability to manage who enters their facilities, ensuring that only authorized individuals are granted access.

Types of Access Control Systems

There are various types of access control systems available, each with its own unique features and advantages. Common options include keycard systems, biometric systems (such as fingerprint or facial recognition), and keypad systems. Understanding the different types will help you choose the most suitable solution for your business needs.

Benefits of Access Control System Features

Enhanced security and theft prevention.

One of the primary benefits of access control systems is their ability to enhance security and prevent unauthorized access. By implementing these systems, you can create barriers that deter potential intruders, reducing the risk of theft, vandalism, and other security incidents.

Improved Operational Efficiency

Access control systems streamline entry processes, eliminating the need for traditional lock and key systems. Automated access management saves time and resources, enabling employees and authorized personnel to move freely within designated areas without compromising security.

Accountability and Audit Trails

Access control systems generate detailed audit trails, providing valuable insights into who accessed certain areas and when. These audit trails enhance accountability and facilitate investigations in the event of security breaches or incidents.

Scalability and Flexibility

Access control systems can scale with your business, accommodating growth and evolving security requirements. Whether you expand your premises or need to modify access permissions, these systems offer the flexibility to adapt to changing needs.

Implementing Access Control Systems

Assessing business security needs.

Before diving into the implementation phase, it is crucial to assess your business’s unique security needs. Conduct a thorough evaluation of your premises, taking into account factors such as size, layout, and the nature of your operations. Identify the areas that require restricted access, such as server rooms, executive offices, or storage facilities containing sensitive information or valuable assets.

Additionally, consider the different levels of access required by various individuals or departments within your organization. This assessment will help you determine the appropriate type of access control system and the level of security measures needed to safeguard your business effectively.

Planning and Designing Access Control Systems

Proper planning and design are essential for a successful access control system implementation. Evaluate the layout of your premises, identify critical entry points, and determine the most suitable system components and technologies to meet your security objectives.

Installation and Integration

Once the planning phase is complete, it’s time to install and integrate the access control system. Engage professionals with expertise in system installation to ensure proper configuration, wiring, and integration with existing security infrastructure.

User Training and Access Management

To maximize the benefits of access control systems, it is important to provide comprehensive user training. Educate employees on how to use the system, understand access permissions, and adhere to security protocols. Implement effective access management practices to maintain data integrity and prevent unauthorized access.

Best Practices for Business Access Control Systems

Regular System Maintenance and Updates

Regular maintenance and updates are crucial for the optimal performance of access control systems. Develop a maintenance schedule to inspect hardware, test software functionality, and ensure that the system remains up-to-date with the latest security patches and features.

Access Control Policies and Procedures

Establish clear access control policies that outline the rules and guidelines for system usage. Clearly define roles and responsibilities, access levels, and procedures for granting or revoking access. Regularly review and update these policies to align with changing business needs and security requirements.

Monitoring and Incident Response

Implement a robust monitoring system to track access activities, detect anomalies, and respond promptly to security incidents. Combine access control with video surveillance and alarm systems to enhance overall security measures. Develop an incident response plan to effectively handle potential breaches or emergencies.

Access control systems play a vital role in protecting businesses from security threats and ensuring the safety of employees, assets, and sensitive information. By understanding the types, benefits, implementation process, and best practices associated with access control systems, you are better equipped to make informed decisions that align with your business’s unique security requirements. Embrace the power of access control systems and empower your organization with enhanced security and streamlined operations.

Businesses face security risks and operational inefficiencies due to evolving threats and outdated technology.

Net Scaling Solutions offers comprehensive security and digital system solutions to address these challenges, ensuring business safety and operational efficiency in the digital age.

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Questions about the safety of Tesla’s ‘Full Self-Driving’ system are growing

FILE - Drivers guide 2024 a Tesla Model 3 sedan and Model X utility vehicle, rear, along a test track at the Electrify Expo in The Yards on July 14, 2024, in north Denver. (AP Photo/David Zalubowski, File)

FILE - Tesla CEO Elon Musk speaks at the “Cyber Rodeo” grand opening celebration for the new Tesla Giga Texas manufacturing facility in Austin, Texas, on April 7, 2022. (Jay Janner /Austin American-Statesman via AP, File)

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DETROIT (AP) — Three times in the past four months, William Stein, a technology analyst at Truist Securities, has taken Elon Musk up on his invitation to try the latest versions of Tesla’s vaunted “Full Self-Driving” system.

A Tesla equipped with the technology, the company says, can travel from point to point with little human intervention. Yet each time Stein drove one of the cars, he said, the vehicle made unsafe or illegal maneuvers. His most recent test-drive earlier this month, Stein said, left his 16-year-old son, who accompanied him, “terrified.”

Stein’s experiences, along with a Seattle-area Tesla crash involving Full Self-Driving that killed a motorcyclist in April, have drawn the attention of federal regulators. They have already been investigating Tesla’s automated driving systems for more than two years because of dozens of crashes that raised safety concerns.

The problems have led people who monitor autonomous vehicles to become more skeptical that Tesla’s automated system will ever be able to operate safely on a widespread scale. Stein says he doubts Tesla is even close to deploying a fleet of autonomous robotaxis by next year as Musk has predicted it will.

The latest incidents come at a pivotal time for Tesla. Musk has told investors it’s possible that Full Self-Driving will be able to operate more safely than human drivers by the end of this year, if not next year.

And in less than two months, the company is scheduled to unveil a vehicle built expressly to be a robotaxi. For Tesla to put robotaxis on the road, Musk has said the company will show regulators that the system can drive more safely than humans. Under federal rules, the Teslas would have to meet national standards for vehicle safety.

Musk has released data showing miles driven per crash, but only for Tesla’s less-sophisticated Autopilot system. Safety experts say the data is invalid because it counts only serious crashes with air bag deployment and doesn’t show how often human drivers had to take over to avoid a collision.

Full Self-Driving is being used on public roads by roughly 500,000 Tesla owners — slightly more than one in five Teslas in use today. Most of them paid $8,000 or more for the optional system.

The company has cautioned that cars equipped with the system cannot actually drive themselves and that motorists must be ready at all times to intervene if necessary. Tesla also says it tracks each driver’s behavior and will suspend their ability to use Full Self-Driving if they don’t properly monitor the system. Recently, the company began calling the system “Full Self-Driving” (Supervised).

Musk, who has acknowledged that his past predictions for the use of autonomous driving proved too optimistic, in 2019 promised a fleet of autonomous vehicles by the end of 2020 . Five years later, many who follow the technology say they doubt it can work across the U.S. as promised.

“It’s not even close, and it’s not going to be next year,” said Michael Brooks, executive director of the Center for Auto Safety.

The car that Stein drove was a Tesla Model 3, which he picked up at a Tesla showroom in Westchester County, north of New York City. The car, Tesla’s lowest-price vehicle, was equipped with the latest Full Self-Driving software. Musk says the software now uses artificial intelligence to help control steering and pedals.

During his ride, Stein said, the Tesla felt smooth and more human-like than past versions did. But in a trip of less than 10 miles, he said the car made a left turn from a through lane while running a red light.

“That was stunning,” Stein said.

He said he didn’t take control of the car because there was little traffic and, at the time, the maneuver didn’t seem dangerous. Later, though, the car drove down the middle of a parkway, straddling two lanes that carry traffic in the same direction. This time, Stein said, he intervened.

The latest version of Full Self-Driving, Stein wrote to investors, does not “solve autonomy” as Musk has predicted. Nor does it “appear to approach robotaxi capabilities.” During two earlier test drives he took, in April and July, Stein said Tesla vehicles also surprised him with unsafe moves.

Tesla has not responded to messages seeking a comment.

Stein said that while he thinks Tesla will eventually make money off its driving technology, he doesn’t foresee a robotaxi with no driver and a passenger in the back seat in the near future. He predicted it will be significantly delayed or limited in where it can travel.

There’s often a significant gap, Stein pointed out, between what Musk says and what is likely to happen.

To be sure, many Tesla fans have posted videos on social media showing their cars driving themselves without humans taking control. Videos, of course, don’t show how the system performs over time. Others have posted videos showing dangerous behavior.

Alain Kornhauser, who heads autonomous vehicle studies at Princeton University, said he drove a Tesla borrowed from a friend for two weeks and found that it consistently spotted pedestrians and detected other drivers.

Yet while it performs well most of the time, Kornhauser said he had to take control when the Tesla has made moves that scared him. He warns that Full Self-Driving isn’t ready to be left without human supervision in all locations.

“This thing,” he said, “is not at a point where it can go anywhere.”

Kornhauser said he does think the system could work autonomously in smaller areas of a city where detailed maps help guide the vehicles. He wonders why Musk doesn’t start by offering rides on a smaller scale.

“People could really use the mobility that this could provide,” he said.

For years, experts have warned that Tesla’s system of cameras and computers isn’t always able to spot objects and determine what they are. Cameras can’t always see in bad weather and darkness. Most other autonomous robotaxi companies, such as Alphabet Inc.'s Waymo and General Motors’ Cruise, combine cameras with radar and laser sensors.

“If you can’t see the world correctly, you can’t plan and move and actuate to the world correctly,” said Missy Cummings, a professor of engineering and computing at George Mason University. “Cars can’t do it with vision only,” she said.

Even those with laser and radar, Cummings said, can’t always drive reliably yet, raising safety questions about Waymo and Cruise. (Representatives for Waymo and Cruise declined to comment.)

Phil Koopman, a professor at Carnegie Mellon University who studies autonomous vehicle safety, said it will be many years before autonomous vehicles that operate solely on artificial intelligence will be able to handle all real-world situations.

“Machine learning has no common sense and learns narrowly from a huge number of examples,” Koopman said. “If the computer driver gets into a situation it has not been taught about, it is prone to crashing.”

Last April in Snohomish County, Washington, near Seattle, a Tesla using Full Self-Driving hit and killed a motorcyclist, authorities said. The Tesla driver, who has not yet been charged, told authorities that he was using Full Self-Driving while looking at his phone when the car rear-ended the motorcyclist. The motorcyclist was pronounced dead at the scene, authorities reported.

The agency said it’s evaluating information on the fatal crash from Tesla and law enforcement officials. It also says it’s aware of Stein’s experience with Full Self-Driving.

NHTSA also noted that it’s investigating whether a Tesla recall earlier this year, which was intended to bolster its automated vehicle driver monitoring system , actually succeeded. It also pushed Tesla to recall Full Self-Driving in 2023 because, in “certain rare circumstances,” the agency said, it can disobey some traffic laws, raising the risk of a crash. (The agency declined to say if it has finished evaluating whether the recall accomplished its mission.)

As Tesla electric vehicle sales have faltered for the past several months despite price cuts, Musk has told investors that they should view the company more as a robotics and artificial intelligence business than a car company. Yet Tesla has been working on Full Self-Driving since at least 2015.

“I recommend anyone who doesn’t believe that Tesla will solve vehicle autonomy should not hold Tesla stock,” he said during an earnings conference call last month.

Stein told investors, though, they should determine for themselves whether Full Self-Driving, Tesla’s artificial intelligence project “with the most history, that’s generating current revenue, and is being used in the real world already, actually works.”

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10.5 Creating Organizational Control Systems

In addition to creating an appropriate organizational structure, effectively executing strategy depends on the skillful use of organizational control systems. Executives create strategies trying to achieve their organization’s vision, mission, and goals. Organizational control systems allow executives to track how well the organization is performing, identify areas of concern, and then take action to address the concerns. Three basic types of control systems are available to executives: (1) output control, (2) behavioral control, and (3) clan control. Different organizations emphasize different types of control, but most organizations use a mix of all three types.

Output Control

Stephen Covey said “start with the end in mind.” Output control is one way decision makers put this into practice. Output control focuses on measurable results within an organization. Examples from the business world include the number of hits a website receives per day, the number of microwave ovens an assembly line produces per week, and the number of vehicles a car salesman sells per month (Table 10.5). In each of these cases, executives must decide what level of performance is acceptable, communicate expectations to the relevant employees, track whether performance meets expectations, and then make any needed changes. In an ironic example, a group of post office workers in Pensacola, Florida, were once disappointed to learn that their paychecks had been lost—by the US Postal Service. The corrective action was simple: they started receiving their pay via direct deposit rather than through the mail.

Many times the stakes are much higher. Delta Airlines was forced to face some facts as part of its use of output control. Data gathered by the federal government revealed that only 77.4% of Delta’s flights had arrived on time during the year. This performance led Delta to rank dead last among the major US airlines and fifteenth out of 18 total carriers (Yamanouchi, 2011a). In response, Delta took important corrective steps. In particular, the airline added to its ability to service airplanes and provided more customer service training for its employees. These changes and others paid off. For the second quarter of the following year, Delta enjoyed a $198 million profit, despite having to absorb a $1 billion increase in its fuel costs due to rising prices (Yamanouchi, 2011b).

Outcome controls assess measurable production and other tangible results. Often output controls emphasize “bottom-line” performance. We illustrate some outcome controls found in organizations below.

Output control also plays a big part in the college experience. For example, test scores and grade point averages are good examples of output measures. If you perform badly on a test, a student might take corrective action by studying harder or by studying in a group for the next test. At most colleges and universities, a student is put on academic probation when his grade point average drops below a certain level. If the student’s performance does not improve, he may be removed from his major and even dismissed. On the positive side, output measures can trigger rewards too. A very high grade point average can lead to placement on the dean’s list and graduating with honors.

The balanced scorecard discussed in an earlier chapter is an output measure used by firms to track their progress toward achieving performance goals and strategies. Sometimes an output measure may have unintended consequences and produce the opposite impact desired. For example, if the sales team in a firm is rewarded based only on individual sales totals, sales people may not cooperate, collaborate, or help each other. They may even attempt to sabotage each other in their quest to achieve first place in sales for the period. Organizations must take care in how employees and managers are incentivized.

Behavioral Control

Behavioral controls dictate the actions of individuals. Such controls often emphasize rules and procedures. Some behavioral controls found in organizations are illustrated below.

While output control focuses on results, behavioral control focuses on controlling the actions that ultimately lead to results. In particular, various rules and procedures are used to standardize or to dictate behavior (Table 10.6). In most states, for example, signs are posted in restaurant bathrooms reminding employees that they must wash their hands before returning to work. To try to prevent employee theft, many firms require direct deposit for paychecks. And as an extreme example, some automobile factories and meat processing plants dictate to workers how many minutes they can spend in restrooms during their work shift.

Behavioral control also plays a significant role in the college experience. An illustrative (although perhaps unpleasant) example is penalizing students for not attending class. Instructors grade attendance to control students’ behavior; specifically, to motivate students to attend class. Meanwhile, student’s exert some control over an instructor’s future behavior through their student evaluation measures at the end of the semester. .

Outside the classroom, behavioral control is a major factor within college athletic programs. The National Collegiate Athletic Association (NCAA) governs college athletics using an enormous set of rules, policies, and procedures. The NCAA’s rule book on behavior is so complex that virtually all coaches violate its rules at one time or another. Critics suggest that the behavioral controls instituted by the NCAA have reached an absurd level. Despite this example, some degree of behavioral control is needed within virtually all organizations to ensure a productive work environment for all employees.

While a firm may have many mechanisms within its behavioral control system, the priority given to a particular set of control mechanisms can be influenced by the external environment. The Supreme Court ruling (June 2020) on LGBTQ workplace protections coupled with parallel outrage regarding social justice issues facing Black, Indigenous, and other People of Color (BIPOC) have an impact on firm decision-making. As a result, firms have been focused to pay more addition to making public statements on racial injustice while making changes to the existing (or absent) practices ensuring enforcement of anti-discrimination and equity policies. These changes may result in new prioritization within organizational behavior control systems. For example, in 2020 NASCAR banned the presence of the Confederate flag at its race venues following national demonstrations against white supremacy.

Creating an effective reward structure is key to effectively managing behavior because people tend to focus their efforts on the rewarded behaviors. Problems can arise when people are rewarded for behaviors that seem positive on the surface but that can actually undermine organizational goals under some circumstances. For example, restaurant servers are highly motivated to serve their tables quickly because doing so can increase their tips. But if a server devotes all his or her attention to providing fast service, other tasks that are vital to running a restaurant, such as communicating effectively with managers, host staff, chefs, and other servers, may suffer. Managers need to be aware of such trade-offs and strive to align rewards with behaviors. For example, waitstaff who consistently behave as team players could be assigned to the most desirable and lucrative shifts, such as nights and weekends.

Clan Control

Rather than measuring results (as in outcome control) or dictating behavior (as in behavioral control), clan control relies on shared traditions, expectations, values, and norms to lead people to work toward the good of their organization. Some of the most interesting and unusual examples of clan control are found on college campuses. Below we illustrate a few striking examples that help build school spirit and loyalty.

Instead of measuring results (as in outcome control) or dictating behavior (as in behavioral control), clan control is an informal type of control. Specifically, clan control relies on shared traditions, expectations, values, and norms to lead people to work toward the good of their organization (Table 10.7). Clan control is often used heavily in settings where creativity is vital, such as many high-tech businesses. In these companies, output is tough to dictate, and many rules are not appropriate. The creativity of a research scientist would be likely to be stifled, for example, if she were given a quota of patents that she must meet each year (output control) or if a strict dress code were enforced (behavioral control).

Google is a firm that relies on clan control to be successful. Employees are permitted to spend 20% of their workweek on their own innovative projects. The company offers an ‘‘ideas mailing list’’ for employees to submit new ideas and to comment on others’ ideas. Google executives routinely make themselves available two to three times per week for employees to visit with them to present their ideas. These informal meetings have generated a number of innovations, including personalized home pages and Google News, which might otherwise have never been adopted. Another illustration is when NASCAR banned the Confederate flag, all the race car drivers and crews walked the racetrack at Talladega, Alabama, in a powerful support of the ban.

Some executives look to clan control to improve the performance of struggling organizations. In Florida, officials became fed up with complaints about surly clerks within the state’s driver’s license offices. The solution was to look for help with training employees from two companies that are well-known for friendly, engaged employees and excellent customer service. The first was The Walt Disney Company, which offers world-famous hospitality at its Orlando theme parks. The second was regional supermarket chain Publix, a firm whose motto stressed that “shopping is a pleasure” in its stores. The goal of the training was to build the sort of positive team spirit Disney and Publix enjoy. The state’s highway safety director summarized the need for clan control when noting that “we’ve just got to change a little culture out there” (Bousquet, 2005).

Clan control is also important on many college campuses. Philanthropic and social organizations such as clubs, fraternities, and sororities often revolve around shared values and team spirit. More broadly, many campuses have treasured traditions that bind alumni together across generations. Purdue University, for example, proudly owns the world’s largest drum. The drum is beaten loudly before home football games to fire up the crowd. After athletic victories, Auburn University students throw rolls of toilet paper into campus oak trees. At Virginia Tech, their spirit of service as modeled in their motto “That I May Serve” leads them to hold the largest Relay for Life fundraising event on a university campus year after year. These examples and thousands of others spread across the country’s colleges and universities help students feel like they belong to something special.

Management Fads: Out of Control?

The emergence and disappearance of fads appears to be a predictable aspect of modern society. A fad arises when some element of culture—such as fashion, a toy, or a hairstyle—becomes enthusiastically embraced by a group of people. Fads also seem to be a predictable aspect of the business world. Below we illustrate several fads that executives have latched onto in an effort to improve their organizations’ control systems.

Don’t chase the latest management fads. The situation dictates which approach best accomplishes the team’s mission. -Colin Powell

The emergence and disappearance of fads appears to be a predictable aspect of modern society. A fad arises when some element of popular culture becomes enthusiastically embraced by a group of people. Over the past few decades, for example, fashion fads have included leisure suits (1970s), “Members Only” jackets (1980s), platform shoes (1990s), Crocs (2000s), and torn jeans (2010s). Ironically, the reason a fad arises is also usually the cause of its demise. The uniqueness (or even outrageousness) of a fashion, toy, or hairstyle creates “buzz” and publicity but also ensures that its appeal is only temporary (Ketchen & Short, 2011).

Fads also seem to be a predictable aspect of the business world (Table 10.8 “Managing Management Fads”). As with cultural fads, many provocative business ideas go through a life cycle of creating buzz, captivating a group of enthusiastic adherents, and then giving way to the next fad. Bookstore shelves offer a seemingly endless supply of popular management books whose premises range from the intriguing to the absurd. Within the topic of leadership, for example, various books promise to reveal the “leadership secrets” of an eclectic array of famous individuals such as Jesus Christ, Hillary Clinton, Attila the Hun, and Santa Claus.

Beyond the striking similarities between cultural and business fads, there are also important differences. Most cultural fads are harmless, and they rarely create any long-term problems for those that embrace them. In contrast, embracing business fads could lead executives to make bad decisions. As our quote from Colin Powell suggests, relying on sound business practices is much more likely to help executives to execute their organization’s strategy than are generic words of wisdom from Old St. Nick.

Many management fads have been closely tied to organizational control systems. For example, one of the best-known fads was an attempt to use output control to improve performance. Management by Objectives (MBO) is a process wherein managers and employees work together to create goals. These goals guide employees’ behaviors and serve as the benchmarks for assessing their performance. Following the presentation of MBO in Peter Drucker’s 1954 book The Practice of Management , many executives embraced the process as a cure-all for organizational problems and challenges.

Like many fads, however, MBO became a good idea run amok. Companies that attempted to create an objective for every aspect of employees’ activities eventually discovered that this was unrealistic. The creation of explicit goals can conflict with activities involving tacit knowledge about the organization. Intangible notions such as “providing excellent customer service,” “treating people right,” and “going the extra mile” are central to many organizations’ success, but these notions are difficult if not impossible to quantify. Thus, in some cases, getting employees to embrace certain values and other aspects of clan control is more effective than MBO.

Quality circles were a second fad that built on the notion of behavioral control. Quality circles began in Japan in the 1960s and were first introduced in the United States in 1972. A quality circle is a formal group of employees that meets regularly to brainstorm solutions to organizational problems. As the name “quality circle” suggests, identifying behaviors that would improve the quality of products and the operations management processes that create the products was the formal charge of many quality circles.

While the quality circle fad depicted quality as the key driver of productivity, it quickly became apparent that this perspective was too narrow. Instead, quality is just one of four critical dimensions of the production process; speed, cost, and flexibility are also vital. Maximizing any one of these four dimensions often results in a product that simply cannot satisfy customers’ needs. Many products with perfect quality, for example, would be created too slowly and at too great a cost to compete in the market effectively. Thus trade-offs among quality, speed, cost, and flexibility are inevitable.

Improving clan control was the aim of sensitivity-training groups (or T-groups) that were used in many organizations in the 1960s. This fad involved gatherings of approximately eight to fifteen white people openly discussing their emotions, feelings, beliefs, and biases about workplace issues. In stark contrast to the rigid nature of MBO, the T-group involved free-flowing conversations led by a facilitator. These discussions were thought to lead individuals to greater understanding of themselves and others. The anticipated results were more enlightened workers and a greater spirit of teamwork.

Research on social psychology has found that groups are often far crueler than individuals. Unfortunately, this meant that the candid nature of T-group discussions could easily degenerate into accusations and humiliation. Eventually, the T-group fad gave way to recognition that creating potentially hurtful situations has no place within an organization. Hints of the softer side of T-groups can still be observed in modern team-building fads, however. Perhaps the best known is the “trust game,” which claims to build trust between employees by having individuals fall backward and depend on their coworkers to catch them.

Improving clan control was the basis for the fascination with organizational culture that was all the rage in the 1980s. This fad was fueled by a best-selling 1982 book titled In Search of Excellence: Lessons from America’s Best-Run Companies . Authors Tom Peters and Robert Waterman studied companies that they viewed as stellar performers and distilled eight similarities that were shared across the companies. Most of the similarities, including staying “close to the customer” and “productivity through people,” arose from powerful corporate cultures. The book quickly became an international sensation; more than three million copies were sold in the first four years after its publication.

Soon it became clear that organizational culture’s importance was being exaggerated. Before long, both the popular press and academic research revealed that many of Peters and Waterman’s “excellent” companies quickly had fallen on hard times. Basic themes such as customer service and valuing one’s company are quite useful, but these clan control elements often cannot take the place of holding employees accountable for their performance.

The history of fads allows us to make certain predictions about today’s hot ideas, such as empowerment, “good to great,” and viral marketing. Executives who distill and act on basic lessons from these fads are likely to enjoy performance improvements. Empowerment, for example, builds on important research findings regarding employees—many workers have important insights to offer to their firms, and these workers become more engaged in their jobs when executives take their insights seriously. Relying too heavily on a fad, however, seldom turns out well.

Just as executives in the 1980s could not treat In Search of Excellence as a recipe for success, today’s executives should avoid treating James Collins’s 2001 best-selling book Good to Great: Why Some Companies Make the Leap…and Others Don’t as a detailed blueprint for running their companies. Overall, executives should understand that management fads usually contain a core truth that can help organizations improve but that a balance of output, behavioral, and clan control is needed within most organizations. As legendary author Jack Kerouac noted, “Great things are not accomplished by those who yield to trends and fads and popular opinion.”

Key Takeaway

• Organizational control systems are a vital aspect of executing strategy because they track performance and identify adjustments that need to be made. Output controls involve measurable results. Behavioral controls involve regulating activities rather than outcomes. Clan control relies on a set of shared values, expectations, traditions, and norms. Over time, a series of fads intended to improve organizational control processes have emerged. Although these fads tend to be seen as cure-alls initially, executives eventually realize that an array of sound business practices is needed to create effective organizational controls.
• What type of control do you think works most effectively with you and why?
• What are some common business practices that you predict will be considered fads in the future?
• How could you integrate each type of control into a college classroom to maximize student learning?

Bousquet, S. (2005, September 23). For surly license clerks. a pound of charm. St Petersburg Times .

Ketchen, D. J., & Short, J. C. (2011). Separating fads from facts: Lessons from “the good, the fad, and the ugly.” Business Horizons, 54 , 17–22.

Yamanouchi, K. (2011a, February 10). Delta ranks near bottom in on-time performance. Atlanta-Journal Constitution . https://www.ajc.com/business/delta-ranks-near-bottom-time-performance/PbZFT87JuyiSXkNxotBrfN .

Yamanouchi, K. (2011b, July 27). Delta has $198 million profit, says 2,000 took buyouts. Atlanta-Journal Constitution . https://www.ajc.com/business/delta-has-198-million-profit-says-000-took-buyouts/mqaPWvYuo5nflnAOCcXBUJ .

Image Credits

Figure 10.15: Flood, Kyle. “David Letterman Communication and Media Building, Dedication Ceremony.” Public Domain. Retrieved from https://commons.wikimedia.org/wiki/File:David_Letterman_building.jpg .

Figure 10.16: Sterilgutassistentin. “Employees must wash hands before returning to work.”  CC BY-SA 3.0 .  Retr ieved from https://en.wikipedia.org/wiki/File:Manhattan_New_York_City_2009_PD_20091130_209.JPG .

Figure 10.17: Lozupone, Alex. “Photo of someone wearing a Google NOOGLER hat.” CC BY-SA 3.0 . Retrieved from https://en.wikipedia.org/wiki/File:Noogler.png .

Figure 10.18: Joe Mabel (2015). “Waiting to play kickballat Gas Works Park, Seattle, Washington, U.S.” CC BY-SA 3.0 . Retrieved from: https://commons.wikimedia.org/wiki/Category:Kickball#/media/File:Waiting_to_play_kickball_at_Gas_Works_Park_01.jpg .

Focuses on measurable results within an organization

Focuses on controlling the actions of individuals through rules and procedures

Relies on shared traditions, expectations, values, and norms to lead people to work toward the good of their organization

Strategic Management Copyright © 2020 by Reed Kennedy is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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US Navy supercarrier gets drone command center that will operate $136 million 'Stingray' drones

• The US Navy has installed a new drone control center on the USS George H.W. Bush aircraft carrier.
• The command center will operate MQ-25 "Stingray" drones.
• Drones are becoming increasingly important in modern warfare.

The US Navy has installed a new drone command center on board the USS George H.W. Bush (CVN 77) aircraft carrier, Naval Air Systems Command (NAVAIR) said in a press release .

The Unmanned Air Warfare Center (UAWC) will operate MQ-25 "Stingray" drones — $136 million unmanned aircraft systems that will be used to refuel fighter jets such as the F/A-18 Super Hornet, the EA-18G Growler, and the F-35C in the air, extending the Navy's strike range.

Capt. Daniel Fucito, the program manager for the Unmanned Carrier Aviation Program, said the control center "lays the foundation for how the U.S. Navy will operate and control unmanned aircraft, and perhaps other unmanned vehicles."

"These systems will initially support the MQ-25 but also future unmanned systems such as Collaborative Combat Aircraft that comprise the Air Wing of the Future," he added.

The UAWC's operational networks will undergo at-sea testing early next year.

The Boeing-made MQ-25 drone is set to hit Initial Operational Capability in 2026.

Related stories

The drone, which is 51 feet long and has a range of around 580 miles, will be "the world's first operational, carrier-based unmanned aircraft," according to NAVAIR.

It comes amid a wider push by the Department of Defense to upgrade the US's drone capabilities.

Drones have become an increasingly core part of modern warfare, with the Russia-Ukraine war in particular putting the unmanned systems under the spotlight.

The US Navy has also been embroiled in a drone battle with the Houthi rebels over the Red Sea.

The Yemeni group began attacking shipping with drones and missiles in the region in October in a show of support for the Palestinian militant group Hamas in its conflict with Israel.

Bryan Clark, a former Navy submariner and a senior fellow at the Hudson Institute previously told the Associated Press that the US Navy was facing "the most sustained combat" it has seen since World War II as it battled the group's attacks.

Watch: The true cost of America's war machines

• Main content

Thorough Risk Control Implementation Plan for Optimal Risk Management

Table of contents:.

Risk control implementation is pivotal in safeguarding an organization's assets and operations. A well-structured risk control implementation plan identifies, analyzes, and mitigates potential threats, ensuring business continuity and resilience.

Risk control implementation involves several critical stages: Identify, Analyze, Action, Monitor, and Control. 

The process starts with identifying potential risks and analyzing their likely impact. Actions are then taken to mitigate these risks, continuously monitored for any changes, and controlled to minimize their effect on the organization. This cyclical approach ensures ongoing vigilance and adaptation to new emerging risks.

A thorough risk control implementation plan encompasses seven detailed steps:

• Derive Objectives : Establish clear goals for risk control implementation.
• Risk Registry : Document potential risks in a comprehensive risk register.
• Risk Analysis : Assess and analyze the likelihood and impact of identified risks.
• Risk Mitigation Plan : Develop and implement strategies to mitigate identified risks.
• Risk Monitoring : Continuously monitor risks and the effectiveness of control measures.
• Backup Plan : Prepare contingency plans for potential risk scenarios.
• Commercialization : Ensure the risk management process supports business operations and growth.

This structured approach ensures that all potential risks are identified, assessed, and addressed systematically, helping organizations proactively prepare for and respond to risks.

Implementing a risk control implementation plan offers numerous benefits:

• Boosting Results : Enhances organizational outcomes by mitigating risks before they become significant.
• Proactive Management : Helps companies anticipate potential problems and address them proactively.
• Continuous Evaluation : Provides a framework for ongoing assessment of projects to ensure they remain on track.

These benefits highlight the importance of a robust risk management plan in achieving organizational success.

Risk control implementation faces several challenges:

• Process/Cost Inefficiency : Inefficient risk management practices can increase costs and reduce effectiveness.
• Outdated Technology : Underinvestment in technology hampers the ability to manage and mitigate risks effectively.
• Risk Assessment Difficulties : Transforming data into actionable information for risk assessment can be challenging.

Addressing these challenges is crucial for improving risk management capabilities and making informed decisions.

https://www2.deloitte.com/us/en/pages/advisory/articles/what-does-an-optimal-risk-management-operating-model-look-like.html  

Effective risk control implementation requires robust governance and control frameworks. Key elements include:

• Governance Frameworks : Establishing clear governance structures to oversee risk management activities.
• Control Evaluation : Regularly evaluating the effectiveness of control measures.
• Issue Management : Managing risks and issues holistically to ensure comprehensive risk mitigation.
• Comprehensive Reporting : Aggregating risk and compliance metrics for informed decision-making.

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By understanding and addressing these elements, organizations can create a sustainable risk management environment that supports their long-term goals.

In 2023, ransomware incidents accounted for 17% of security breaches, with the average cost of an attack rising to $4.54 million. Furthermore, 66% of organizations reported ransomware targeting, with average ransom payouts increasing to $1,542,333.

Significant global supply chain disruptions over the past decade, such as the COVID-19 pandemic, the US-China trade war, and the Russia-Ukraine conflict, have emphasized the need for robust risk management strategies.

Worldwide spending on information security and risk management products and services is projected to grow by 14.3% in 2024, reaching over $215 billion. This trend underscores the increasing emphasis on mitigating various business risks, including cyber threats and operational disruptions.

In this article, DATAFOREST aims to demystify the process of executing risk control measures within your organization. Whether you're a mid-sized enterprise or a large corporation, apprehending the critical components of risk control implementation is vital for mitigating perils and seizing possibilities in a rapidly changing terrain.

Essence of Risk and Its Types

Risk control implementation is fundamental to safeguarding businesses from potential harm or loss. Risk control implementation addresses uncertainties that may impede organizational goals in a business context. Various types of risk control implementation are essential to understand:

• Financial Risk: Risk control implementation plans must address fluctuations in financial markets, currency exchange rates, interest rates, and creditworthiness. Effective risk control implementation ensures liquidity, profitability, and economic health.
• Operational Risk: Risk control implementation tackles risks from internal processes, systems, human errors, and external events like supply chain disruptions, technology failures, and regulatory issues. These risks can disrupt operations and productivity.
• Strategic Risk: By enforcing risk control, corporations can manage risks from market dynamics changes, competitive pressures, technological advances, and geopolitical uncertainties. This is vital for maintaining long-term business objectives and market positioning.
• Compliance Risk: Implementing risk control includes adhering to laws, regulations, industry standards, and ethical practices. Failing this, businesses face legal penalties, reputational damage, and loss of stakeholder trust.
• Reputational Risk: Risk control helps mitigate risks from negative public perception, customer dissatisfaction, product recalls, or ethical lapses. Effective management of these risks preserves brand image and customer loyalty.

Comprehending these risk types through robust risk control implementation helps the corps to handle potential threats and seize growth opportunities proactively. Enhance risk control with tailored data science services to effectively analyze and mitigate financial, operational, and strategic risks.

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Business risk breakdown.

Risk control implementation begins with a comprehensive business risk analysis. This structured approach includes identifying, assessing, and prioritizing risks based on their potential impact and likelihood of occurrence. Key steps in risk control implementation include:

• Risk Identification: Systematic risk control implementation identifies potential risks across financial, operational, strategic, compliance, and reputational domains. Engaging stakeholders and using risk assessment frameworks provides a comprehensive risk view.
• Risk Assessment: Assessing the severity and probability of identified risks is crucial in risk control implementation. Tools like risk matrices, scenario analysis, and historical data analysis help gauge the potential impact on business objectives.
• Risk Prioritization: Effective risk control implementation prioritizes risks based on their significance. This includes potential financial loss, regulatory implications, strategic importance, and reputational impact, allowing efficient resource allocation and mitigation focus.
• Risk Mitigation: Developing strategies for risk control implementation involves internal controls, diversifying risk exposure, insurance, and contingency plans to address identified risks effectively.
• Monitoring and Review: Continuous monitoring and reviewing ensure that risk control implementation remains aligned with evolving business conditions and emerging risks. Regular risk assessments, performance metrics, and internal audits facilitate ongoing improvement.

Leverage data integration services to streamline your risk assessment process, ensuring comprehensive and accurate risk analysis. A proactive approach to risk control implementation enables organizations to anticipate challenges, leverage opportunities, and navigate uncertainties confidently, fostering sustainable growth and resilience.

Identification of Harmful Threats and Opportunities

Discerning between dangerous threats and promising opportunities is crucial for effective risk control implementation. This section delves into identifying threats and opportunities, informing decision-making, and proactive risk management.

• Market Volatility: Fluctuations in market conditions, consumer preferences, and industry trends pose significant threats. Effective risk control implementation involves monitoring economic indicators, competitor activities, and customer behavior to anticipate disruptions and adjust strategies.
• Cybersecurity Risks: As digital reliance grows, so do cybersecurity threats. Risk control implementation requires comprehensive IT infrastructure assessments, data security protocols, and vulnerability analyses to mitigate breaches and cyberattacks.
• Supply Chain Disruptions: Global interconnected supply chains are vulnerable to natural disasters, geopolitical tensions, and supplier failures. Risk control implementation maps supply networks assesses supplier reliability, and develops contingency plans to maintain business continuity.
• Regulatory Changes: Constantly evolving regulatory landscapes require businesses to stay informed about new laws, policies, and compliance requirements. Implementing risk control ensures adherence to regulations, mitigating legal exposure.

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Risk Control Implementation Plan

A well-structured risk control implementation plan is integral to effective risk management. This plan outlines the steps, activities, and responsibilities required to mitigate identified risks, ensuring business continuity and resilience.

• Defining Risk Control Measures: Establish clear risk control measures tailored to the identified risks. This includes internal controls, policies, procedures, and contingency plans to minimize potential losses and disruptions.
• Allocating Resources: Effective risk control implementation allocates resources strategically to address high-priority risks. This involves budgeting for risk mitigation activities, assigning responsibilities, and ensuring the availability of necessary tools and technologies.
• Training and Awareness: Educating staff on risk control implementation is crucial. Training programs should cover risk identification, assessment, and mitigation strategies, fostering a risk-aware culture within the organization.
• Regular Reporting: Implementing regular reporting mechanisms ensures that risk control measures are monitored and reviewed continuously. Dashboards, performance metrics, and ad-hoc reporting facilitate transparency and accountability in risk management.
• Integrating GRC Functions: An integrated Governance, Risk, and Compliance (GRC) framework enhances risk control implementation. This approach aligns risk management with overall business strategies, ensuring cohesive and effective risk control measures.

Monitoring and Reviewing Risk Control Effectiveness

Ongoing monitoring and review are vital components of risk control implementation. This process ensures that risk control measures remain adequate and relevant in changing business environments and emerging risks.

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• Performance Metrics: Establishing key performance indicators (KPIs) to measure the effectiveness of risk control measures. These metrics provide insights into the success of risk mitigation strategies and highlight areas for improvement.
• Regular Audits: Conducting audits of risk control measures to evaluate their effectiveness and compliance with established standards. Audits help identify gaps and recommend corrective actions to enhance risk management practices.
• Stakeholder Engagement: Engaging stakeholders in the monitoring and reviewing ensures a comprehensive understanding of risk control implementation. Stakeholder feedback helps refine risk control measures and align them with organizational objectives.
• Continuous Improvement: Embracing a culture of constant improvement in risk control implementation. Regularly updating risk control measures based on lessons learned, emerging risks, and industry best practices ensures ongoing effectiveness and resilience.

By maintaining a robust monitoring and review process, organizations can adapt to new challenges, optimize risk control measures, and achieve sustained success in risk management. Enhance your monitoring and auditing capabilities with DevOps to ensure continuous improvement and compliance. By following these principles, companies can enhance risk management practices, ensuring long-term growth and resilience.

Essential Stages in Implementing Risk Control

Implementing risk control within an organization is a multifaceted process involving several crucial stages. This section explores the critical stages in risk control implementation, from risk assessment to early risk management, ensuring comprehensive risk mitigation strategies are effectively integrated into business operations.

Risk Assessment

Risk assessment serves as the foundation for effective risk control implementation. This stage involves identifying, analyzing, and prioritizing potential risks impacting the organization's objectives. Key steps in risk assessment include:

• Identification of Risks: Systematically identifying potential risks across all dimensions of the organization, including financial, operational, strategic, compliance, and reputational domains. This helps companies identify areas where risk might be affected, forming the basis of risk control implementation.
• Risk Analysis involves evaluating the severity and likelihood of each identified risk through quantitative and qualitative analysis. This process includes analyzing the potential impact, probability of occurrence, and velocity of change using tools like risk matrices and Gantt charts.
• Risk Prioritization: Prioritizing risks based on their significance and potential impact on business objectives enables enterprises to distribute resources effectively and concentrate on mitigating high-priority risks, which is necessary for any risk control implementation procedure.

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Outcome of Risk Control Methods

Once risks are identified and prioritized, the next stage involves developing control methods to mitigate or eliminate the identified risks. This stage encompasses the following steps:

• Risk Mitigation Strategies: Designing proactive measures to address identified risks effectively. This includes implementing internal controls, diversifying risk exposure, purchasing insurance coverage, and developing contingency plans.
• Control Mechanisms: Establish control mechanisms to monitor and enforce risk control measures and ensure compliance with established policies and procedures. This involves creating dashboards for regular reporting and tracking the effectiveness of control measures.
• Continual Improvement: Fostering a culture of continual improvement by regularly reviewing and updating risk control methods. This ensures adaptation to changing business conditions and emerging risks, maintaining the effectiveness of the risk control implementation.

Business intelligence will give a clear picture for feature selection.

Performance of control principles.

With risk control methods in place, the next stage involves implementing control principles across the organization. This stage includes:

• Clear Communication: Disseminating risk control objectives, policies, and procedures to all stakeholders within the organization. This ensures understanding and alignment with risk management goals, supporting the integrated GRC (Governance, Risk, and Compliance) functions.
• Training and Education: Providing practicum and education to workers on risk control measures. This equips them with the knowledge and skills to identify, assess, and mitigate risks in their respective roles, reinforcing the risk management culture.
• Integration into Business Processes: Integrating risk control principles into day-to-day business processes and decision-making activities. Embedding risk management into the organizational culture ensures adherence to risk control implementation strategies.

Early Risk Assessment and Management

Implementing early risk assessment and management practices enables organizations to proactively catch and address potential risks before they escalate into significant issues. This stage involves:

• Continuous Monitoring: Implement mechanisms for monitoring risk indicators and early warning signs. This enables prompt detection and response to emerging risks, which is crucial for maintaining business continuity.
• Scenario Planning: Conducting scenario planning exercises to anticipate and prepare for potential future risks and uncertainties. This enhances organizational resilience and agility, supporting the risk control implementation plan.
• Stakeholder Engagement: Contending with internal and external stakeholders to gather insights, feedback, and perspectives on emerging risks and mitigation strategies. This fosters collaboration and shared responsibility for risk management, strengthening the overall risk control implementation framework.

Executing risk control measures via these critical stages can enhance organizations' ability to identify, assess, and mitigate risks. This safeguards their assets, reputation, and long-term sustainability, guaranteeing exhaustive and proactive risk management.

Best Practices and Successful Examples of Risk Control Implementation

Adopting best practices and drawing insights from successful risk management examples are essential for enhancing risk control implementation. This section explores case studies, innovative approaches, and critical metrics for evaluating the effectiveness of risk control implementation strategies.

Case Studies on Risk Control Implementation in Large Corporations

Examining real-world examples of risk control implementation provides valuable insights into practical strategies and methodologies. Here are a few notable case studies:

• Healthcare Industry—Johns Hopkins Medicine: Johns Hopkins Medicine has implemented a robust risk control implementation plan focused on patient safety and clinical risk management. They utilize predictive analytics and machine learning algorithms to anticipate patient outcomes and optimize resource allocation. By continuously monitoring patient data, they can identify potential risks early and implement corrective measures, significantly reducing clinical errors and improving patient care.
• Financial Services—JPMorgan Chase: JPMorgan Chase has employed a comprehensive risk control implementation plan to enhance cybersecurity. They have integrated advanced threat detection systems and conduct regular vulnerability assessments to protect against cyber threats. This proactive approach to risk control implementation has allowed them to safeguard sensitive financial data, ensuring the security of their client's information and maintaining trust in their services.
• Manufacturing—General Motors: General Motors (GM) has implemented risk control measures to address supply chain risks. They use predictive maintenance systems and IoT sensors to monitor equipment health in real-time, preventing unexpected downtime. Besides, GM has diversified its supplier base and established contingency plans to manage supply chain disruptions, ensuring continuous production and minimizing operational risks.

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Examples of innovative approaches to risk control implementation in various industries.

• Healthcare: Hospitals and healthcare systems are adopting predictive analytics and machine learning algorithms as part of their risk control implementation to anticipate patient outcomes, optimize resource allocation, and mitigate clinical risks. For example, Cleveland Clinic uses data analytics to predict patient deterioration and allocate resources accordingly, enhancing patient safety and care quality.
• Finance: Financial institutions like Bank of America are leveraging blockchain technology as part of their risk control implementation to enhance transparency, security, and transaction efficiency. This reduces fraud and operational risks associated with traditional banking systems, providing a more secure financial environment for their clients.
• Manufacturing: Companies like Siemens are implementing predictive maintenance systems and IoT sensors to monitor the health of real-time equipment. This risk control implementation minimizes downtime and mitigates production risks by allowing timely maintenance and preventing equipment failures.
• Retail: Retailers like Walmart utilize data analytics and AI-powered algorithms to forecast consumer demand, optimize inventory management, and mitigate risks associated with overstocking or stockouts. This approach to risk control implementation ensures efficient inventory management and enhances customer satisfaction.

Evaluating the Effectiveness of Risk Control Implementation: Key Metrics for Success

• Risk Exposure Reduction: Measure the organization's overall risk exposure reduction by quantitatively assessing identified risks and their potential impact on business objectives. Effective risk control implementation should demonstrate a tangible decrease in risk levels.
• Incident Response Time: Evaluate the organization's ability to promptly detect and respond to risk events. Successful risk control implementation minimizes the time between risk occurrence and mitigation action, ensuring swift resolution of issues.
• Cost of Risk Management: Assess the cost-effectiveness of risk control strategies by comparing the expenses incurred in implementing risk management measures with the potential savings from risk avoidance or mitigation. Efficient risk control implementation should deliver a profitable cost-benefit ratio.
• Stakeholder Satisfaction: Solicit feedback from internal and external stakeholders to gauge their satisfaction with the organization's risk management practices. Effective risk control implementation should include transparent communication, responsiveness, and stakeholder engagement, leading to higher satisfaction.

By assuming best practices, pulling inspiration from successful examples, and leveraging innovative approaches, corps can enhance their risk control capabilities, mitigate threats, and capitalize on sustainable growth and success opportunities.

Final Thoughts on Risk Control Implementation by DATAFOREST

Innovation is at the forefront of effective risk control implementation, empowering businesses to navigate uncertainties with agility and foresight. As we conclude our exploration of risk control implementation, it's evident that embracing innovation is essential for mitigating threats, capitalizing on opportunities, and ensuring long-term resilience. This section summarizes the significance of innovation in risk control implementation and offers final recommendations for implementing a robust risk control system.

Summarising Innovation Control over Business Risks

Innovation has become synonymous with effective risk control implementation, revolutionizing traditional approaches and enabling organizations to manage uncertainties proactively. By harnessing technological advancements, data analytics, and strategic insights, businesses can identify emerging risks, develop agile mitigation strategies, and enhance decision-making processes.

Innovation empowers organizations to adapt to evolving threats, capitalize on market opportunities, and maintain a competitive edge in today's dynamic business environment. Risk control implementation plans, including risk management and measures, are integral to this adaptive approach.

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Final guidance for implementing a risk control system.

Based on our insights and best practices, the following recommendations are offered for organizations seeking to implement a robust risk control implementation plan:

• Embrace a Culture of Innovation : Foster a culture of innovation within the organization, encouraging creativity, experimentation, and continuous improvement in risk control implementation practices.
• Invest in Technology : Leverage advanced technologies such as artificial intelligence, machine learning, and predictive analytics to enhance risk assessment, monitoring, and mitigation capabilities. These technologies are crucial in the risk control implementation process.
• Prioritize Data-Driven Decision Making : Utilize data analytics and risk intelligence tools to gather actionable insights, identify trends, and make informed decisions to mitigate risks effectively. Data-driven approaches are vital for effective risk control implementation.
• Promote Cross-Functional Collaboration : Break down silos within the organization and promote collaboration among different departments and stakeholders to ensure a holistic approach to risk management. Cross-functional collaboration is essential for comprehensive risk control implementation.
• Provide Comprehensive Training : Offer comprehensive training and awareness programs to employees at all levels, empowering them to recognize, assess, and respond to risks in their respective roles. Training is a critical component of successful risk control implementation.
• Establish Clear Governance Structure : Define clear roles, responsibilities, and accountability mechanisms within the organization's risk management framework to ensure effective oversight and governance. A clear governance structure supports efficient risk control implementation.
• Regularly Review and Update : Conduct regular reviews and assessments of the risk control system to adapt to changing business conditions, emerging risks, and regulatory requirements. Ongoing evaluation and updates are crucial to maintaining an effective risk control implementation plan.

By implementing these recommendations, organizations can establish a robust risk control implementation system that mitigates threats and fosters innovation, resilience, and sustainable growth. In an era of uncertainty and disruption, embracing innovation in risk control implementation is a strategic imperative and a catalyst for success in the dynamic business landscape.

Ready to upgrade your risk control implementation to new heights? At DATAFOREST, we specialize in providing cutting-edge solutions tailored to your unique business needs. Our team of experts leverages advanced technologies, data analytics, and innovative strategies to ensure your organization stays ahead of potential risks and thrives in an ever-changing environment.

Don't wait for uncertainty to strike—act now and secure your business's future with our comprehensive risk control implementation services. Visit DATAFOREST services to learn more, and contact us today. 

What is risk control implementation?

Risk control implementation involves strategically addressing and mitigating potential risks within an organization, project, or system. This critical process includes identifying vulnerabilities, assessing threats, and implementing measures to reduce the likelihood or impact of these risks. Effective risk control implementation helps organizations achieve their objectives by proactively safeguarding against adverse events. An integral part of risk management, this process ensures continuous monitoring and adaptation to new risks, enhancing the overall stability and resilience of the organization.

How do we implement controls in risk management?

Implementing controls in risk management involves a structured approach. First, identify potential risks and vulnerabilities within the organization’s processes, systems, and environment. Then, design and implement appropriate control measures, including preventive, detective, or corrective actions. Regularly monitoring and evaluating these controls are essential to ensure their effectiveness and adapt to evolving risks. Organizations can systematically address and mitigate risks by integrating a risk control implementation plan into the risk management framework, ensuring continuous improvement and business continuity.

What are effective risk control strategies?

Effective risk control strategies include diversification and stop-loss orders. Diversification spreads investments across different assets or industries, minimizing the impact of any single loss. Stop-loss orders automatically sell a security at a predetermined price, limiting potential losses. Thorough research and analysis also play a crucial role in risk control implementation, helping companies identify and assess risks and develop strategies to manage them effectively. Organizations can create a robust risk management plan that addresses current and emerging risks by employing these techniques.

What are the basic types of implementation control?

Basic implementation control types encompass process, output, and feedback controls. Process controls ensure activities are carried out according to plan, maintaining specified parameters. Output controls focus on the results, assessing if they align with the intended objectives. Feedback controls gather performance information to make necessary adjustments to the implementation strategy. These controls are vital to a risk control implementation plan, helping organizations monitor and refine their risk management efforts for optimal effectiveness.

What is the implementation process?

The implementation process refers to the series of steps taken to implement a plan or idea. This involves translating concepts into tangible actions through careful planning, resource allocation, and execution. Effective risk control implementation in this process ensures that every step is designed to mitigate potential risks, maintain operational continuity, and achieve desired outcomes. Clear communication, coordination, and adaptability are essential to overcoming challenges and ensuring the successful implementation of risk management strategies within an organization.

Dmytro Tkalych

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