Communicating Strategy - A Case Study of TDIndustries
TD Industries is a full-service mechanical contractor. The firm provides a range of services centered on heating, ventilating, and air conditioning in new construction, remodeling, maintenance, and repair. It employs about 1000 people, mostly in Texas. Over the years, TD has delivered good business results and provided a good place to work for its employees or TDPartners. TD has been among the 100 Best Companies in America (as listed by Fortune magazine) for many years and it won the Texas Quality Award (Texas' version of the Malcolm Baldridge Award) recently.
In 1997, TD initiated formal strategic planning, using the Simplified Strategic Planning process. In many respects, the results of that strategic planning process validated the basic direction that the firm had been pursuing. However, the process also identified both a meaningful new opportunity and some activities that were not the highest and best use of resources. There were inefficient parallel efforts in multiple divisions, one business unit served customers unlike all other business units, and the firm used enough different trade names that some customers were confused.
TD had developed nine divisions over time that operated with considerable independence. They were defined largely by the people who ran them. Originally, they had distinct capabilities and served different customers. However, over time, they had developed some overlapping capabilities that let several divisions serve the same customers, though under different trade names.
The company decided to make changes in both how it approached the market and how it was organized internally. The firm would, going forward, focus on six distinct sets of customers or market segments. It would change its internal organization to reflect these six market segments by developing a business unit around each one. This change led to merging what had been two independent divisions. Two activities that did not fit with the six market segments were to be sold. Internal groups that served multiple market segments or business units were to be called internal Valued Added Suppliers.
As the last step of the strategic planning process, TDs management team discussed how to communicate the new strategy to ensure that sound planning led to effective implementation. Their discussion led to decisions to do the following:
- Develop a short, written document that summarized the firms new course and direction and the process they had used to determine it.
- Develop a complementary presentation (in PowerPoint®)
- Devote substantial management time to talking the talk so that all TDPartners as well as suppliers and customers would understand the new strategies.
- Commit to walking the walk at the senior management level to maintain focus on the new strategies and to reinforce the message clearly, consistently, and repeatedly.
The first two items - the document and the PowerPoint® presentation - are the results of the first five steps in the featured article. They lead to having communications pieces (concepts and materials) themselves. Then, the latter items - talking the talk and walking the walk - are the communication and reinforcement of steps six through eight in the featured article.
To ensure that the communication process went as well as possible and that they had anticipated any possible problems, three TD executives developed an Action Plan for communicating the strategies. It called for spending about a month developing the communications pieces, getting them published, rehearsing their presentations, making arrangements for meeting space, and coordinating travel among multiple TD locales so that all TDPartners would receive their first news of changes almost simultaneously.
The principles that led to this document and the clarity of its messages provide useful examples for any organization that is shifting its course and direction and must engage the hearts and minds of its people in support of the new course and direction. Not every firm has the need or the resources to publish a document like this one to get effective communication and alignment, but the basic approach to content and consistency is the same whether the audience can be counted on both hands or numbers in the thousands.
TD's publication presents several distinct messages:
- Why Now? In this portion, TD addresses why, despite their continuing success, they needed to do strategic planning at all, much less consider making major changes.
- Our Goal. Here TDs management presents the firms long-term intended future results. It covers growth, share value, profitability, turnover, and employee satisfaction. It was derived from Goals, which is page 6.2 of the Simplified Strategic Planning process.
- What did we Discover? This section presents the two major causes of directional changes at TD. The company identified a unique way to combine its services for certain types of customers and it concluded that its multiple trade names were confusing its customers.
- The Power of One. The solution to both the problem and the opportunity were the same: take a company-wide approach to services offered and identity in the market. This solution is signified in the slogan under which TD rolled out its new strategy: The Power of One.
- A New Focus on the Marketplace. This material presents TDs six market segments, the type of work TD would perform in each segment and the geographic scope of each.
- Difficult Decisions Impact Single Family and East Texas Groups. Here is a hard one - the decision to exit certain business areas. This decision affected numerous, long-serving people. The message is that these groups do not fit with TDs future focus. It also explains that TD intends that both groups end up being owned by entities for which their activities are core business. Should TD ever have to divest in the future, TDPartners can and will look back on whether the people affected by these difficult decisions were victims or were given the opportunity for a better future in someone elses core business than on TDs periphery.
- Strategic Organizational Alignment. This page presents TDs new organization structure by market segment, geography, internal valued added suppliers, leaders of each element, as well as, reporting lines to the three executives leading the whole company.
- Life Cycle Solutions. In strategic planning, TD identified that its various divisions served many of the same customers at different stages in a buildings life. Life Cycle Solutions is the name that TD developed to capture the potential for serving those customers with a consistent approach across many activities. Since the firms business units had been operating independently, it had been unaware of many opportunities of this kind.
- Q&A. Two of the strategic planning groups decisions stood out as sound, but not obvious to those who did not take part in the analysis and decision-making. The reasoning behind them got particular emphasis in this section of the communication document. TDs management wanted everyone to know the why behind these decisions to encourage acceptance and good implementation.
The PowerPoint® presentation had the same themes and messages presented in a different format. The document and the PowerPoint® presentation, coupled with top management's shared understanding of the decisions they had made and why they made them, equipped the management team to convey their messages.
The communications process touched every TDPartner. The top executives in the company made a presentation to about 50 managers one evening, met with the groups being divested the following day, and then met with every group of employees over the next two days, using all of the major airports in Texas in the process. In addition, TD met with all major customers and many others to explain what was changing, why, and how it would affect them.
These steps completed the first phase: sending out the message. Ongoing reinforcement is a continuing effort and responsibility of all managers in the company.
The early returns are positive. At the time of this writing (March 1999), TD is enjoying record sales, profits, and employee satisfaction. The firm has moved up from fifth to second on Fortune magazines list of the 100 best places to work in America. And, the operations that TD decided to divest are in the hands of people for whom those operations are core business.
Great strategy without clear communication to those who have to implement it typically fails. The lesson from TDIndustries experience: determine the message and then communicate, communicate, communicate.