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Entrepreneurial Planning


Joan Price


An E-Plan advocate, NESB retools its long-term focus.

For those willing to trust their entrepreneurial instincts, there is a planning method that dispenses with the usual preliminaries.

Gone are the traditional trappings of strategic planning's typical analyses: internal assessments of an institution's strengths and weaknesses, and external studies of marketplace forces and economic trends.

These time-consuming analyses can be eliminated, according to one consultant, because such studies don't reveal much new information to top managers.

'Senior managers know it in their bones,' says Thomas A. FitzGerald, the consultant who is responsible for developing the entrepreneurial-planning concept. He maintains that research and analysis is an ongoing, everyday function of management.

Entrepreneurial planning, E-planning for short, is based on the notion that the people involved in the planning process know what their strengths and weaknesses are and where they stand in the marketplace.

Consequently, only 10% to 20% of an E-plan is spent on assessing the current situation and describing the business vision. The other 80% to 90% of the plan is devoted to action steps, according to FitzGeraid, whose management consulting firm is based in Lake Forest, IL.

In contrast, about 50% of a traditional strategic plan is devoted to environmental analyses, FitzGeraid says. Another 30% goes to the mission statement and goals. FitzGeraid maintains that only 20% of a strategic plan typically is devoted to actions.

Thus, E-planning emphasizes immediate movement into the future. It's a quick-start method that focuses on action. Most important, it's working for at least one institution that had the key prerequisite for successful E-planning: the desire to change.

Considering a faster course...

New England Savings Bank, New London, Conn., had been a typical mutual savings bank. But when the institution converted to stock ownership in August 1986, it was ripe for dramatic changes in the way it did business.

'We want to be able to turn the company around on a dime if events dictate that's necessary," says Robin Honiss, president of NESB Corporation, the holding company for New England Savings.

That's where E-planning entered the picture. The bank's desire to change rapidly called for an immediate plan of action.


New England Savings has a long, healthy history. Its roots go back to two savings banks, Deep River and New London, which were founded in 1852 and 1827 respectively.

In more recent times, the bank had settled into a comfortable pattern of existence, with a strong position in its community

'Things proceeded along in a relatively orderly and safe way,' Honiss explains.

But the bank wasn't very the marketplace nor was it very sophisticated in areas like asset/liability management, Honiss says.

'We really weren't growing at a very rapid pace.'

Planning, too, had been unsophisticated. 'Obviously, we were trying to get our bottom line to improve every year,' says Ernest C. Burnham, a long time board member who now serves on the holding company's board, but "we didn't really have [a formal plan] in the past.'

The decision to convert from a mutual to a stock charter was the impetus the bank needed to alter its slow moving course. At that time, the management of New England Savings Bank recognized that a new kind of planning was in order.

"The traditional strategic planning a bit cumbersome," Honiss asserts. 'You tend to wind up with a big, thick document that sits on a shelf and nobody looks at it. -

In contrast, Honiss says an E-plan is much more usable. "What you've got is a living, breathing document that lives on your LAN or in your computer.

Planning a business vision...

With stockholders to consider, New England Savings Bank had a new set of concerns. William R. Attridge, the bank's president, says the planning process began with a simple question: -Okay, where do you want to be?'

The answers to this question turned into the business vision of the entrepreneurial plan.

The next question, Attridge says, was: "What are the steps you need to take to get there?' The responses, first at the executive level and then at area manager levels, formed the action steps of the E-plan.


The process began at New England Savings Bank from the top down.

Part of the entrepreneurial-planning concept rests on active participation from the chief executive. According to FitzGerald, the CEO should take the 'first crack' at defining the business vision.

'It creates a very focused management top-to-bottom where everyone is going in the same direction,' says Honiss.

The business vision describes where the institution wants to be three years out. The time frame covered by the plan is limited by design.

'If you plan for five years, a certain amount of 'blue sky' comes in,"

FitzGerald Explains. Blue Sky covers the things that would be nice to accomplish someday but that which managers don't really intend to do, he adds.

In addition to being confined to a limited time span, the business vision is described simply and succinctly.

"It's written in terms that a new teller could be talked through in half an hour,' FitzGerald says (see outline on page 77).


After the initial draft of the vision is penned by the CEO, other senior managers make additions and revisions.

In New England Savings Bank's case, the three-year business vision included the following among its quantifiable goals:

  • A 20% growth per year.
  • An increase in asset size from $578 million to $2 billion in three years.
  • A return-on-assets ratio within the top 20% of savings banks in Connecticut.

A new emphasis on retail banking with a more aggressive management philosophy also was a key element of the plan. This meant a transition from an operations-oriented culture to a sales-oriented culture, according to Honiss.

Plotting action steps...

The business vision receives approval at many levels - from the planning team that worked on it, the board, and all management and staff.

At New England Savings, the board of directors was involved early in the planning process. FitzGerald met with each board member individually 'so we could speak freely on what we thought,' says Burnham, one of the directors.

After the business vision was settled, the executive-level plan was created. This was the first phase of the action steps. Next, these broad actions were 'exploded' into a detailed series of steps, or management plan, by individual managers, FitzGerald explains.


At the executive level, the plan was fairly generic, according to David Krug, senior vice president and director of retail banking. Both Krug's own position and the division he oversees were restructured as a result of the new market orientation at New England Savings.

An example of an executive-level step in the plan is: 'Develop and implement compensation programs including commissions that directly reward performance.'

Krug explains, 'Then, it was up to the manager to create those programs and get those approved by senior management.'

In the retail banking division, a management plan was developed for each of New England's 14 branches.

Year one of the plan set a goal for total deposits. In that year, transaction deposits were broken out with their own goals, according to Krug. ATM goals were in terms of numbers of new cards issued per month, whilea cross-selling goal between checking and


The opening business vision of an E-plan defines management's goals for a two or three-year period. At right, a hypothetical E-plan shows the succinct manner in which desired results are described. The vision purposefully is kept short; the action steps that follow in the second part of the plan elaborate on how the goals will be accomplished,


savings accounts was established, Individual action steps include efforts like calling all customers facing CD renewals, Krug explains. These serve as detailed directions for reaching the higher level goals

Tallying up successes...

One of the benefits of entrepreneurial planning is that the action steps are specific, including deadlines and designation of the person responsible. Thus, monitoring the progress on the plan is relatively straightforward.

At New England Savings, the plan is monitored at the individual manager

level by senior management committees and by the boards of the bank and the holding company. The fact that the plan is on a LAN makes it easy to update on a continual basis. In addition, FitzGerald offers a software program to use with the plan.

This adaptability fits well with Honiss' desire to change quickly, if necessary, to take advantage of the marketplace, he says.


The first year of the plan was 1987, so year-one results of New England

Savings' progress on its goals are in. Relative to its goal of 20% growth per year, in 1987 the institution achieved 30% growth over 1986,

Honiss says. The 30% figure also was holding steady in the first quarter of 1988.

By that time, assets had reached $897 million. On June 29, the acquisition of OmniBank of Connecticut was finalized - a move that pushed New England's asset size to approximately $1.2 billion. Thus, the three-year asset goal of $2 billion is well within reach.

As to its return on assets, New England ranked in the top 13% of its peers, Honiss reports. Its ROA ranking was figured within two groups: other public savings banks in New England with assets over $500 million and all savings banks in Connecticut.

New England's ROA history looks like this: in 1983,.54%; in 1984,.44%; in 1985, 1. 11 %; in 1986, 1.58 %; in 1987, 1. 36 %. The surge in 1986 was due to the bank's conversion to stock and a tremendous year in securities gains, Honiss says.


All along the way, the E-plan is monitored and measured much more finely than the goal achievements listed above might convey.

In the retail banking division, for instance, Krug says, 'We're constantly looking at whether we're successful.' As a result of monitoring the plan,

Krug adapts programs to meet new needs and solve problems that arise Krug calls the plan 'dynamic' and .alive'; Honiss terms it 'an evolutionary plan.'

The process by which the plan changes and evolves includes a number of reviews. The original board of directors, an ungainly 24 members, was split when the holding company was formed, Burnham says. The smaller, more manageable boards review the E-plan twice a year.

In addition, a new internal structure includes two key management committees, Honiss explains. The asset and liability management committee - a group of senior managers meets weekly to discuss all financial strategic issues that affect the bank, he says.

'If we see the economic environment is changing, we're able to respond quickly,' Honiss asserts.

The management committee also meets weekly to review all non-financial

issues. These two committees parallel one of the primary elements of New England Savings'business vision - the separation of the operational aspects of the bank from the sales and marketing side.

In addition to review by the boards and management committees, quarterly reviews are conducted with department and division heads, according to Attridge.

The new sales emphasis at the bank has rippled through every level of staff. Consequently, the business vision has a direct impact even at the branch level.

Branch managers are now selected for sales ability, aggressiveness and people skills, Krug says. And operational duties that used to be the branch manager's responsibility have been assigned to a newly created position the branch operations coordinator, Krug explains.


The entrepreneurial planning process has changed the way New England Savings Bank operates. Problems, although management cites few, have arisen.

"Anytime you institute a plan where you measure performance, the people who are good performers welcome it," Attridge says. 'Those that are concerned about how they measure up to their peers are going to have fears.

'It instilled a degree of competition that may not have been in the branch system before, but I think it's a healthy competition."

Honiss says the only drawback to the process is that 'focusing on action steps gets you to say 'never mind' about the environment out there.' The E-plan tends to skip over assessing an institution's strengths and weaknesses and its competition, he continues.

'It's not that you ignore all that, but you get right where you're going,' Honiss says. 'In an environment where time is just incredibly precious,' Honiss has decided that's more important.