By Robert W. Bradford, President/CEO

Strategic Planning Expert Robert Bradford

In strategy, you will inevitably find resistance to your plans.  This resistance is sometimes forceful, and other times something you can overcome with resources and effort.  An interesting question is how to deal with resistance.  Should you always push hard to overcome resistance to your strategic objectives (probably not) – or should you allow resistance to stop you every time the going gets hard (also probably not)? 

There are several key questions to ask yourself about the resistance you encounter to your strategic objectives.  First, what is the nature of the resistance?  Are you finding the objective difficult because of competition, the learning required, or the resources required?  Second, is the resistance something that is even possible to overcome?  Third – and very importantly – how important is the objective to your strategic success?  

Very often, the thing that separates great companies from OK companies is the willingness to do difficult things.  A great company will often (but not always) undertake to overcome obstacles that stand between it and true strategic differentiation.  OK companies allow themselves to be stopped by adversity. 

This does not mean that you must always persevere to be great.  Another hallmark of great companies is the ability to give up where it is appropriate.  Not too soon – but also not delayed where the end result will be a large consumption of resources with little or no forward strategic motion. 

What kind of organization is yours?  Do you show perseverance or are you stoppable?  And when you persevere, how do you assure that you are not spinning your wheels, attempting to overcome difficult resistance that will lead to little gain? 

Robert Bradford is President/CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.

Strategic Planning Expert

by M. Dana Baldwin, Senior Consultant

In my prior article (“Time to Start Planning for Growth – Step One: Analysis“), we discussed the lessons we should be learning from the major slowdown in business experienced during the recession, and how to analyze them so we would be positioned to plan to grow as business improves.

As indicated in the previous article, we tried to learn what our markets would be looking for as their business improves.  We studied the competition to learn how they were reacting to the slowdown in business during the recession.  We probed for weaknesses and looked to see where our competitors pulled back and possibly even lowered service levels.  We tried to anticipate what the market would be asking for as business improved in order to be positioned to better serve the market in the future. 

Now that it appears that the recession is ebbing, and growth is returning to the economy, what steps should our company be taking to establish strategies that will lead to improving our sales and our profits? 

First, we need to revisit our strategic planning.  In order to take the best advantage of our earlier work, we must review our market segments to obtain the best information on which we will base our strategies.  Especially important is the updating of our assumptions.  The efficacy of our work on assumptions will guide our future course and direction, so the importance of doing this well and thoroughly cannot be overemphasized.  Good work here will mean we likely will have appropriate strategies for our core market segments. 

Another key part of strategic planning is our focus on new opportunities.  Part of our work to establish our future course and direction will be started with our brainstorming of perceived opportunities.  At least some of these perceived opportunities should come from the analysis we did in our pre-planning efforts (discussed in the prior article).  These efforts should have resulted in our looking for what our customers and prospective customers will be seeking as they recover, and should be targeted at responding to their anticipated needs and preferences. 

Once we have established the products and services which our markets – both current customers and future prospects – will be seeking, we need to determine what our responses will be.  We need to assess each opportunity to determine how each one will address the future needs and preferences of our prospects, and how each one will fit into our future.  How does each relate to our capabilities and our strategic competency?  Is each opportunity a good fit with our course and direction?  Selecting those which fit our future direction and which utilize our strengths and competencies, and which meet the anticipated needs of our customers and prospects is a key to our future success. 

Next step is the actual execution of our strategies and our action plans.  Action plans are simply the step by step roadmap which will be used to accomplish our objectives.  A detailed action plan with responsibilities assigned and dates agreed upon is the key tool in accomplishing the objective.  Monthly update meetings are used to keep our action plans on time.  In the monthly update sessions, the action plan leaders report on progress, confirm schedules for the upcoming month and make any updates or changes needed to make the action plan effective.  Pulling all this together and getting our strategies and action plans executed effectively are keys to our profitability in the future. 

If you’ve been dragging your feet about doing SP because of the cost or uncertainty, ”bite the bullet, and get going”.  It’s ultimately about execution, but intelligent formulation of strategic direction is necessary first. And the time is now! 

M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. and can be reached at baldwin@cssp.com.

© Copyright 2010 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

Strategic Planning Expert Robert Bradford

By Robert W. Bradford, President/CEO

I’ve heard this comment from people who are very successful.  People who are running companies that – for the moment – are doing quite well.  And yet, this comment puzzles me, mightily.  It puzzles me because strategic planning is about doing the right thing in the right place at the right time.  What could be more important than that?

When someone says they don’t have time for strategic planning, they don’t really mean they don’t have time.  Everyone has the same 24 hours in a day, 7 days a week.  Some do strategic planning, while others spend their time on other activities.  What “I don’t have time for strategic planning” really means is “I haven’t made strategic planning a PRIORITY”.  This scares me some times – when I hear it from people running larger companies – and it saddens me at other times, when I think about what any company can become with better strategic planning.

In the course of my work, I’ve encountered lots of people who run great companies.  Lots of them wanted to work with me on strategy development – and I have heard the excuse “I don’t have time for strategic planning” from many of them.  Sadly, some of them really needed it, and went out of business a few years later, after “not having time” for strategy.  Some of them I have ended up working with and they have unanimously said “We wish we had found time for this years ago!”   There is no question that companies that do strategic planning well end up much farther down the path to success faster than those who try to just “muddle through”.

The truth is, developing a strategic plan often creates the feeling you have MORE time, not less.  This is because good strategic planning helps the whole team focus on the things that will truly drive your company forward, instead of tugging your organization in six different directions.  Also, a good strategic plan will help you find activities that you are spending time and money on right now that aren’t moving you forward – so you can stop doing things that are just a waste of time and money.  If you are familiar with Simplified Strategic Planning, you also know that the best process also pays very close attention to strategic issues that you do or do not have time for – and helps you to assure that highest priority is given to the issues most critical to your success.

So, what kind of company is yours?  Do you have time to assure you are doing the right thing in the right place at the right time?  Do you have time to build a dependable framework for growth and viability for your company?  Or are you waiting until you feel you have “enough time” to do it?  Take it from someone who has seen this come up a hundred times – there is no “right” time to do strategic planning.  Don’t make the mistake of waiting for the right time only to find your best opportunities have passed you by.  Schedule your next strategic planning meeting now!

Robert Bradford is President/CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.

By M. Dana Baldwin, Senior Consultant

By M. Dana Baldwin, Senior Consultant

By Robert W. Bradford, President/CEO

By Denise Harrison

Strategic Planning Expert

Boeing’s 787 Dreamliner has not hit its development milestones, causing Boeing to take a $2.5 billion charge against earnings.  What happened?  Key to Boeing’s past success has been its ability to achieve its “big hairy audacious goals or BHAGs” (from Built to Last by Jim Collins and Jerry Porras).  In the 1950s Boeing bet 25% of its net worth on developing the 707 jetliner competing directly with McDonald Douglas the premier manufacturer of commercial aircraft at the time.  The Dreamliner, the world’s most high tech passenger jet, is another big bet – but what went wrong with its strategy?

The 787 Dreamliner is not only a bet on a large new aircraft, but also a bet on the composite materials that are being used in the design and manufacture of this new jetliner.  In order to keep development costs low and please Wall St., Boeing decided to outsource not only the manufacturing of components but also the design.  This way, its contractors would be taking on some of the financial risk of the project.  While this may have spread the financial risk, it increased the execution risk. 

• Many of the contractors were used to building parts and systems to Boeing’s design specifications. But now responsible for the design, they found they did not have the quality assurance systems in place to ensure the quality of the design and to ensure that it would work with the other systems that would eventually become part of the jetliner.
• By taking on more financial risk many of the suppliers are facing financial challenges during this recent global economic downturn – some may even have to file for bankruptcy protection.
• In addition, the contractors did not have any experience getting FAA approvals: this requirement slowed the process down considerably.
• The number of sub-contractors increased the complexity of the project as parts and systems were being designed and manufactured by people speaking 28 different languages.

The coordination tasks were and still are daunting – leading to this $2.5 billion charge.  What should Boeing have done?  Before a company embarks on a large new project it should assess what unexpected outcomes might occur.  For example: 

• Does it make sense to spread the financial risk among so many companies – does this increase the execution risk? Should we go back to our model in the 1950s and take more of the financial risk ourselves and take the hit on Wall St.?
• How are we going to manage all of these contractors in all of these countries with the different languages and time zones?
• What issues will arise from outsourcing design? What skills do we have in-house that may not be present in our contractors? How can we help them in this area?

If Boeing had taken a step back and thoroughly assessed the risks they could have taken a number of steps: 

• They could have kept more of the design in-house.
• They could have provided better support for design in terms of quality assurance and FAA approval.
• They could have consolidated the number of companies to which they outsourced this program.
• They could have developed more advanced communication tools earlier. For example technology allows you to video conference and share designs so that there is clarity around the issues being discussed – simple emails often do not communicate the full complexity of a specific issue.

Lessons Learned

As your company ramps up a significant new development effort, take the time to assess the risks.  Take a look at threats – things that can impact you from the outside.  Look for ways you can prevent the threats or reduce exposure.  What are some early warning signs?  Set up contingency plans and hedge your risk if you can.  These are the traditional risk assessment and mitigation steps.  However, often these steps are not enough.

In addition – you must also look for ways you could avoid shooting yourself in the foot – as Boeing ended up doing. Boeing’s problems did not just come from the outside; they were a direct result of actions taken by Boeing.  Talk about the good ideas that you have, but also about the possible unexpected outcomes.  For example, it was a good idea to mitigate the financial risk, but the unexpected outcome was to increase the execution risk.  Identifying this upfront would have allowed Boeing to mitigate some of the execution risk or decide to keep more of the financial risk.

Denise Harrison is Vice President of the Center for Simplified Strategic Planning, Inc.  She can be reached at harrison@cssp.com.

by Denise A. Harrison, Vice President

Strategic Planning Expert

Smaller companies often feel dwarfed by the giants in their industry, especially during tough times.  Often industry giants are better at weathering economic downturns with their wide array of resources. But Arena Resources’ strategy not only allowed the company to survive this economic downturn, but turn in exceptional performance – better than the industry leaders.  Arena Resources, a small oil exploration and production company, has less than 2% of the revenue of the industry leaders (Shell, Exxon Mobil).  In addition, very few industries have had to endure greater fluctuations than the oil industry with oil price highs of $147 per barrel in July 2008 and lows of $30 per barrel in December, 2008.  How did Arena Resources make it onto the Fortune list of fastest growing companies (#8) in spite of this industry turbulence?

The Road Less Traveled

Arena Resources chose not to compete directly with the industry giants, instead it focused on oil production assets in the southwestern United States that were no longer attractive to the industry Goliaths.  The cost of drilling and producing oil in this region exceeded what was acceptable in the larger companies’ financial models; these companies prefer to concentrate their resources on exploration of large oil fields with large potential.  When Arena purchased land in this region (approximately 11,000 acres), the land produced 200 barrels of oil per day. Arena knew through its research and evolving technology, which through investment the land could be more productive.  Through Arena Resources’ focused efforts this land is now producing 6000 barrels per day.  The company does pay a high cost to produce a barrel of oil – almost $35 per barrel, so when oil prices decline significantly, profitability plummets; but when oil prices are over $60 per barrel the company makes a nice profit. Arena is betting that the price of oil will remain over $60 per barrel for the significant future.  The high cost of production and the relatively small output is not attractive to its behemoth competitors, so this strategy to take the road less traveled allowed Arena Resources to grow profitably without going head- to- head with the major industry players. 

What about Your Company’s Strategy?

Many companies decide to compete in markets that are attractive, even though larger competitors with greater resources are already firmly entrenched or aggressively pursing these markets.  Going head- to- head with industry giants often drains the resources of a smaller player with little forward progress in their market position.  Are you going after the attractive markets that set you in direct conflict with industry giants?  Are there niches that you could pursue that are not interesting to the larger companies? As you develop strategy your team should consider:

1.      Market segment attractiveness (including growth and profitability)

2.      Your competitive position in a market segment – what is the competition’s market share?  Are competitors already firmly entrenched?

a.       What other companies compete in this segment? In this case companies like Exxon and Shell focus their resources on exploration, looking for the big prizes.  Arena focuses on production, but the production increases that are attractive to Arena Resources are too small to concentrate on from a larger company’s perspective.

b.      What are the competencies required to compete this market? Do we have them?  Are there strategic competencies that give us significant differentiation? In Arena Resources’ case, its competency is secondary recovery from known oil and gas resources – little exploration risk but a requirement for execution excellence.  Their competency comes from their knowledge of the geology in the basin in which they work, combined with their technical skills in secondary recovery.

In order to compete and win, you must consider both market attractiveness and the competitive landscape of all of your market segments before you select the ones on which you will focus.  You will often find a segment that is smaller has less competition and will provide your company with significant growth and profitability.  In strategic planning, selecting the road less traveled may be a key ingredient to your company’s success.

Denise Harrison is Vice President of the Center for Simplified Strategic Planning, Inc.  She can be reached at harrison@cssp.com.

by: M Dana Baldwin, Senior Consultant, CSSP, Inc.

Strategic Planning Expert

In these uncertain times, it is very important to do things right, right?  Absolutely!  But doing things right is only good if you are doing the right things! What are some of the right things to do?

Make your company invaluable to your key customers.  Your company should be focusing on serving your core customers to the best of your ability, so they will continue to buy from you, even if those purchases are at a much lower level during these trying times.  But, are you really doing the right things to build your relationships with those key customers and clients that will keep them as customers when the economy finally does rebound and sales volumes really do increase.

One thing you should consider doing is working to become deeply integrated into your key customers’ operations.  For example, if you supply components to a manufacturing company, are you working with their purchasing group to optimize value for your customer?  If your customer does a lot of research and development for their product offerings, are you involved as a resource in the engineering and development areas of the company?

The purpose of these types of efforts is to become more important and more valuable to each customer.  By becoming better integrated into the fabric of those customers, when a customer has a need you can meet, your company will be the first one they think to ask for assistance with their problems.

Get rid of those things that are no longer necessary to the mission of your company.   Every company builds up things which are not necessary to the effectiveness of the core business during low volume times.  Those things that are outside the core business arena, or are no longer used and likely won’t be needed in the future, should be trimmed if doing so will help lower costs, provide more liquid assets (cash) in place of the unused items, or free up space which could be better utilized, either now or when business picks up in the future.

Look to the future.  Work hard at trying to predict where your markets will be headed once the economy starts to recover.  Look for niches where your expertise and your customers’ needs match, and brainstorm solutions to their problems. 

One approach is to develop new applications for existing products or services.  One company which sold lasers for measurement systems determined that there was a limited but potentially lucrative niche in applying laser measuring systems to parts of wind generator units.  While their original business segments are languishing, this new application is doing quite well.  The potential volume is modest, but for a smaller company, it is a lifeline.

Another stratagem is to work hard to anticipate how your company can better be a part of your customers’ futures.  Work to help them survive the slow times, and innovate so that you will be more valuable in the future.  Building these relationships, especially if you can do it while others are husbanding their resources, will very likely enhance your competitive position not only now, but when the economy improves. It should result in your expanded relationships becoming that much better, and closer, for both.

M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. and can be reached at baldwin@cssp.com.

by Denise A. Harrison, Vice President

This week we asked our readers to fill out a survey concerning current business conditions and their approach to these conditions.  A brief summary of the results: 

• 40% of survey participants expect revenue to decrease by 20% or more
• 20% expect revenue to increase by 20%
• 74% of survey participants cut administrative expenses
• 60% have had staff reductions
• 60% are streamlining their processes.
Click here to see the detailed results.