Planning: key to managing change and mitigating uncertainty

The slowing growth of the world economy this year, coupled with rapid change in consumer markets and technologies are increasingly challenging conventional airport models.

Brexit in the UK is a clear example that both shareholders and management need to assess how best to position their airport businesses to manage change and mitigate uncertainty.

Although no one can predict the future, a strategic plan (and a long-term business plan) provides an opportunity for management and shareholders to take a holistic view of the business, its market, its customers, its challenges and its opportunities.

It provides a platform for setting strategic priorities and ensuring continuous performance improvement, while in periods of uncertainty it can become a roadmap for risk management action.

Purpose and applications

Strategic planning provides a roadmap for the business within 3 to 5 years.

The actions and procedures are detailed and then the pertinent changes are made in the organization to reach the established objectives in a specific way. Above all, it must be said that it is a dynamic document in which it is necessary to monitor progress at least once a year.

A regularly updated strategic plan can help an airport:

• Monitor market trends
• Understand the consequences
• Analyze interdependencies
• Prepare alternative business strategies
• Design the organization to optimize “known” facts or factors and react to “unknown” ones.

It is important to examine the strategy and organisation on a regular basis for the management of the airport business, but it is even more relevant in periods of uncertainty or change.

In an uncertain environment, analysing the market and defining strategies and initiatives to help achieve long-term strategic objectives can serve to ensure that the business focuses on the right priorities and avoid being diverted by short-term challenges.

We can also use strategic planning to introduce a more commercial and business-focused culture during or after a new acquisition. During the bidding process, priority is given to forecasting traffic, cost, revenue and investment to determine the valuation.

However, this needs to be transformed into a coherent business strategy and organisational plan. Whenever possible, during these processes it is advisable to spend time thinking more strategically about the organization, as this can help develop a more coherent business plan and investment proposal.

After the acquisition, preparing a new vision and a new strategic plan offers the opportunity to lay the groundwork for improved performance. Instead of imposing a plan, it is more effective to work with management to prepare a new strategic vision, mission and objectives.

This modus operandi will ensure that management supports subsequent strategies and action plans, something that has been shown to lead to a more effective outcome. In many cases, this will result in a different business plan than the one put forward during the bidding process, although, of course, what is important is that it does not weaken the return on expected investments.

Key Elements

The strategic planning process involves the analysis of some key factors whose answer could be derived from the following key questions:

• What is our vision for the future?
• What specific actions do we need to achieve our vision?
• What are our critical success factors?
• How are our results compared to competitors and leading operators?
• What metrics can we use to measure our progress?

These questions take us to the next key steps:

• Transforming business strategies into specific initiatives.
• Align the organization and its structure with the strategy.
• Create a culture in which all employees focus their daily activities on achieving the goals and objectives of the organization.
• Continuously review and, where necessary, modify the strategy to increase opportunities to achieve the organization’s vision.

Generating improvements

Experience suggests that the most effective strategic planning processes use a results-oriented approach. The main success factors are:

• Well-defined Output – An approach based on a pre-defined series of intermediate and final products keeps the focus, helps manage expectations, and removes possible doubts as the process progresses.
• Decision making in the hands of a few – to maintain focus it is preferable for the process to be led by senior managers. The analysis process needs shareholder input, but should not lead to a consensus-based process.
• Controlled stakeholder input – the process must include stakeholder input that allows important information to be provided and contributes to the viability of the plan.
• A focused timeline – a timeline that is defined and focused on time can help prioritize and ensure discipline and continuity.

Developing a strategic plan doesn’t have to be a complicated or expensive exercise, or take up too much time. Using external entities to support work sessions and the analysis process adds value to the process, but it is important that shareholders and management dedicate time to it and direct the content.

Grandiloquent plans made by hundreds of consultants without the participation of management will end up accumulating dust, when precisely the success of a strategic plan is measured in terms of its usefulness and its comprehension by all the company’s employees. Therefore, strategic priorities and proposed actions must be clearly communicated to the entire business.