Center for Simplified Strategic Planning

Author: Dana Baldwin

  • Here We Go Again – The End of Strategic Planning is Forecast – Again

    By M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert
    Strategic Planning Expert

    In a recent issue of The Wall Street Journal, an article forecasts the end of Strategic Planning – again.  In the article, the efficacy of strategic planning is questioned in some depth.  Instead of utilizing strategic planning properly, the article suggests that flexibility and responsiveness will be enhanced by reacting to the market place because of the fast moving nature of today’s market place. 

    In reality, if a company follows the Simplified Strategic Planning process that we have espoused for nearly 30 years, the company actually enhances the flexibility and responsiveness that the article implies can only be achieved with these “new” processes. 

    Let’s examine the elements of strategic planning to be sure we fully understand the implications of the process.  First: In order to start effectively, a company must know where it currently is positioned in the market place.  We will examine our markets – customers and products/services they buy.  We will analyze our competition to see where they are strong and where they are weak.  We will look at the technologies involved in making or providing our products and services, those involved in the internal processes within our company, like IT, and where applicable, the technologies utilized in our actual products or services themselves.  We will look into our suppliers, both people and materials or services which we buy.  We will analyze the effects of the parts of the economy which affect our business and we will determine what role regulations, both governmental and industry-approved, play in our business.  All of this is done looking at today’s situation and at the recent history of the company in order to have a good understanding of where we are starting our planning from. 

    We will look inside the company to be sure we have strong financial reporting systems and processes, and we will seek to track the metrics of our performance.  The goal of this tracking of metrics is to help us determine trends in the areas of finance, customers, internal measures, and innovation and learning.  We will also look at our strengths and weaknesses to learn what we should emphasize and what we should avoid or change.  Finally, we will determine our Strategic Competency – our sustainable competitive advantage — to verify what we must do to build our business (rework) most effectively.  Having done all this, we will understand where we stand in our markets relative to what customers want and need, and relative to our competition.  We will understand how we compete and the basis for that competitive advantage we will seek to exploit. 

    Only after establishing where we are and our strengths, can we begin to develop strategies to effectively compete.  By skipping this first part of a good strategic planning process, a company could well miss what the true basis for competing effectively is – for that particular company – and could misconstrue what strategies will be effective in the markets they are competing in.  Without going through the basics, which really do not take all that much time, considering the good that can arise from doing them, the choices the company may make could lead them astray, and could make them less competitive or, even worse, headed in the wrong direction.  There is no substitute for pursuing an effective strategic planning process which will lead to good strategies for penetrating and exploiting the market places in which you are competing.  The process does not have to be lengthy, it can be done quickly enough to be responsive to the changes that are happening in our rapidly evolving markets, and once done, can be revised very quickly should the need arise.

    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. 

  • IS YOUR PRICING STRATEGY RIGHT?

    By M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert
    Strategic Planning Expert

    Pricing can be very tricky in times like the ones we are going through currently.  Too high a price and you can lose considerable volume, customer loyalty and market share.  Too low a price could lead to diminished profits, commoditization of the brand or product/service and lower long term prospects.  The key is to strategically determine the pricing band, which is best for your product/service in light of current conditions.

    To do this, you need to determine where your products and services are positioned in your market places.  Each one of your offerings needs to be analyzed in terms of where it is located on a spectrum from pure specialty to pure commodity. 

    We define a pure specialty product as one, which is priced to take advantage of the uniqueness of the product or service.  Key characteristics of a specialty product or service include:

    • Unique “product” or “packaging” – “packaging” equals services wrapped around the product/service offered
    • Market perceives clear superiority of the product or service provided
    • Sales result from having the right product at the right price
    • Strong margins/profits on each individual sale
    • Value-based pricing – taking advantage of what the market and competition will allow to maximize profitability
    • Exceed customer requirements – providing the extra services which add perceived value
    • High level of customer support – to keep the perception of value valid

    By comparison, a commodity product or service has very different characteristics.  They include:

    • Little differentiation between products/services offered by all competitors
    • Substitutability – One company’s offering is little different from another
    • Sales result from low price
    • Weak margins/profits due to tight margins
    • Competitive pricing in order to gain market share
    • Meet customer requirements – no added services can be afforded
    • Order taking – because there is no budget for added services

    Almost all products and services have some of each characteristic – commodity and specialty.  The challenge is to determine the behavior of the specific product or service in each market in which it competes.  You need to determine where each offering is located on the spectrum between pure commodity and pure specialty.  You also need to determine what the overall characteristics of each market segment are, to see where you are competing.  For example, are you providing a specialty product in a mostly commodity market?  Entirely feasible to do, but you must know this or your pricing could be hurting your profitability by being too low. 

    An example of this is windshield washer fluid (appropriate for this time of year).  This is basically a commodity market, with the majority of sales of the blue fluid centered in a narrow band within a few cents of each other.  There is a specialty part of this market, however.  Some people buy the green version, which contains more alcohol and more soap, allowing better functioning at lower temperatures and with the ability to clean the windshield better.  The price of the green fluid is considerably higher, due to the higher performance and specifications.  This green fluid is a specialty item in a mostly commodity market.  If the vendors of the green fluid were to price their product at or near the price of the blue fluid, they would be leaving money on the table.

    By properly understanding the positioning of their product, the makers of the green windshield washer fluid can keep their profitability higher and keep their perceived value high to command the higher price. 

    Some additional thoughts: 

    Pricing policy is one of the most strategic issues that a company can deal with-both for the short term and the long term.  It is tied to market strategy (expand, maintain etc.)  e.g., do we need to buy our way into a market?  Do we need to do some pre-emptive price-cutting to make a market a competitor is eyeing less attractive? 

    In custom manufacturing, cost-plus std. margins can be the kiss of death.  You either over-price and lose the business or leave money on the table and get the business. 

    Competitive intelligence needs to feed into pricing as well. 

    You may want to take a look at Tom Ambler’s 2-part article “Mining Your Unexploited Value”.  It offers a process to address the pricing issue.

    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

  • Is your New Product Development Process Complete?

    By M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert
    Strategic Planning Expert

    How is your total new product development process performing for your company?  There are a number of elements to consider before answering this question. Elements of the analysis should likely include: Market Intelligence sufficiently equipped to provide well-documented and well-thought-out analyses of potential new products and markets; Development capabilities sufficient to actually develop the new products specified by the market intelligence at the appropriate level of costs, including marketing, selling and distribution costs; production capabilities appropriate to make the products developed; marketing and sales abilities to promote and sell the products; distribution/logistics with the capacities to stock and deliver the products as needed.

    First: How well does your market intelligence report on the real needs and preferences of your customers, current and/or targeted?  Effective market intelligence is a necessary element to an effective product development process.  By properly analyzing your customers’ wants and requirements, what your competition is offering and what your company is capable of delivering, market intelligence should help your company focus its product development process on those projects which show the best possibilities for success in the future.  Financial analyses which include the costs of development, manufacturing costs, logistics and distribution costs, selling and marketing costs should be detailed, along with an assessment of appropriate pricing should be completed early in the process with a goal of pursuing those projects with the highest likelihood of success as well as another goal of eliminating those projects which probably won’t reach your profit and sales volume goals. 

    Second: Does your new product development (NPD) group possess the tools and knowledge needed to develop the products recommended by marketing?  Do they have time to devote to these new products, or are they already committed to other development projects?  Do you maintain and regularly update your NPD priority list to be sure that your assets are employed in their highest and best use?  At the same time, are you allowing your NPD group to jump from project to project or are they focusing on projects within their capabilities and pursuing them to completion? 

    Third: In your NPD process, do you involve production in the development process to be sure that any new product developed can actually be produced on the production equipment your company has?  If your company does not have the capability to manufacture, do you have the outside resources available to provide the productive capacity needed to bring the product to market?  At the same time, do you have the internal ability to effectively work with and monitor the external production of your products to assure timely delivery and appropriate quality and adherence to standards you require? 

    Fourth: Do marketing and sales have the capability to promote and sell the products developed?  Do they have the contacts and channels needed to actually bring the product to those who will be buying the newly developed product?  Does marketing have the talent and capacity to promote the new product effectively?  Does sales have the necessary abilities to sell the product to potential users? 

    Fifth: Once the product is sold, does distribution/logistics have the ability and capacity to deliver the products as needed?  If you can’t get the product to the buyers, it can’t be successful.  Do you have the distribution network necessary for getting the product to market?  

    While this is not an exhaustive checklist, it does point at key elements in any new product development process, which should be included in the overall analysis of whether to proceed or not with a specific project. 

    Digging Deeper:  The author recommends referring to Elements of Innovation, a collection of articles by Center for Simplified Strategic Planning consultants (available through www.cssp.com).  See specifically the diagram on page 71 – also found in the article “Innovative Measures” in the Article Archives of www.cssp.com

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

    © Copyright 2009 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution

  • What is the Difference Between a Business Plan and a Strategic Plan?

    Strategic Planning Expert
    Strategic Planning Expert

    By M. Dana Baldwin, Senior Consultant

    We often get questions asking what the difference is between a Business Plan and a Strategic Plan.  The first difference is there is a significant difference in intent.  A Strategic Plan is focused on improving a company’s performance, exploiting opportunities and building market share.  A Business Plan is most often used at the beginning of a company’s existence to define the initial goals and objectives of the company, its structure and processes, products and services, financial resources, staffing/talent needs and all of the basics which go into forming a company and getting it functioning.

    Elements of this plan usually include:

    1.      What products and services the company will offer to the marketplace.

    2.      What types of customers the company will target

    3.      What skills and capabilities the company will need to compete effectively and where the company will obtain those skills and capabilities

    4.      Determining trends in the marketplace, and the characteristics of the market segments the company will initially pursue

    5.      Developing how you will sell into the market segments you are intending to pursue.  What demographics will you target?  What are their buying behaviors?  How will competition likely react to your company entering these markets?

    6.      What will your costs be in each of the parts of the company?  How will you fund them during the start up phase?  What are your first and second year projections for revenues and expenses?  How will you make a profit?

    Usually a business plan is an overall guide to setting up your business, although some will use it as a more detailed one year plan based on the Strategic Plan. Often there is considerable overlap between the two plans inasmuch as they will often cover similar ground.  Generally, however, we envision a business plan as the blueprint for setting up your company and getting it started, and a strategic plan as the ongoing game plan to continually improve market share, volume and profitability.

    The intent of a strategic plan is to develop a much more targeted vision of where you want to take your business in the future and how you will accomplish your strategies, goals and objectives, once the business is established and ongoing.  Strategic planning is the 30,000 foot view of where we take the company.  In your strategic planning, your focus turns more toward looking at the current situation, analyzing what your strengths and weaknesses are, determining how best to build on your strengths and avoid being trapped by your weaknesses. 

    You will look for your strategic competency, which we define as a sustainable competitive advantage built on the skills, processes and knowledge contained within your company.

    By building on your strategic competency, making it better and even more effective as a sustainable competitive advantage, you will improve the opportunities to excel as a company, gaining market share and profitability.

    All of the elements of strategic planning, starting with your current situation, working through the analyses of your company, your markets, competition, opportunities and finding out where you may have gaps between your current performance and where you should be in the future, lead to the development of logical, attainable (yet ambitious) strategies which will head you toward winning a higher market share and better profits.

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

    © Copyright 2009 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution

  • Are You Promoting Your People Wisely?

    by M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert
    Strategic Planning Expert

    How many tales are told about people who are very good at a particular job within a company, who are promoted beyond that position and then fail?  There must be many examples of this phenomenon that are told time and time again.  There is even a descriptor: The Peter Principle, for people who are good at one job and fail miserably at the next higher level.

    As a part of Strategic Planning, the job of each senior manager should be to determine one or more potential successors for his/her position.  My older son worked in a company in which no one could be promoted until he/she had groomed an acceptable successor to the point where the successor could take over the job of the superior and do it effectively.  How many companies require this?  Is this a philosophy your company should consider adopting?  Inevitably, there are pros and cons to each different approach.

    Why do people fail after being promoted?  After all, common sense tells us that if someone is capable in one position, they could have the attributes necessary to succeed at the next step in the progression.  Unfortunately, there appears to be the possibility of little correlation between the actual skills and knowledge required in the new position and those realistically present in the successful person in the lower slot.  How often does your company inventory the capabilities required for each position and then try to match the best possible candidates based on that assessment?  A formalized approach to succession planning/promotions should be an important part of the management of your staff.

    What can one do about this?  The process must start at the highest levels of the company – in the executive suite, and should cascade down through the company to whatever level is deemed appropriate by the company.  Sometimes this will encompass only senior management and one or two levels below.  In other circumstances, depending on the nature of the business, this approach could delve deep into the company, extending even to people with highly technical skills and knowledge.  Your company should decide how deep to go during the process of building your strategic plan, and should review progress on a regular and repetitive basis.

    How does a company go about setting up an effective program to help improve the likelihood that when a person is promoted, the individual will be successful?  After the determination is made that your company is going to change the way succession planning is conducted, the company needs to start at the basics. 

    First action item is to conduct an assessment of the skills and knowledge actually required by each of the key positions.  These assessments should be in depth, so that there is good understanding of the attributes the company is seeking when a candidate is to be considered for promotion.  General agreement on the list of attributes should be reached by the appropriate people in the organization.

    Second action item is to assess the strengths and weaknesses of each candidate for promotion.  Your goal here is to understand what each person knows and where that person may need some mentoring, added experience or education, in order to be considered qualified for the new position.  This often is included in the career path development for each individual. 

    Once the standards are set, and the individual has met them, he/she is ready for promotion, with the expectation that there will be a better fit for the new job’s requirements, and that the individual will have a much better chance of succeeding, instead of being promoted beyond their capabilities.  This is one instance where everyone wins, because the process tries to assure that people are ready to be moved up, with some assurance that they will succeed.

    As a footnote to this article, please visit our website, www.cssp.com, and select our Archives section.  See Tom Ambler’s article, “Building and Sustaining Intellectual Assets,” which provides a process for stewardship of Skills, Processes and Knowledge.  These are often the fundamental building blocks for determining what the requirements for each specific job are, and provide the basis for assessing the qualifications of each candidate for higher positions.

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

    © Copyright 2009 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution

  • IS YOUR COMPANY TAKING ADVANTAGE OF THE SLOW ECONOMY?

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

    Strategic Planning Expert
    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.

    © Copyright 2009 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution
     
     
     
     
     

     

  • Internal Communications for Effective Strategic Implementation

    Strategic Planning Expert
    Strategic Planning Expert

    by M. Dana Baldwin

    One oft-forgotten practice which should be considered even more important during this turbulent time is communications within your company. As you might consider once you reflect on the situation within your company, people are concerned about their futures, the future of the company and generally how things are going.

    There are a number of elements which you should include in your planning for your internal communications:

    First: To whom are you addressing your communication? When you want to get a message across to parts or all of your company personnel, you should determine which group you are addressing, so your communication is couched in terms that are meaningful and relevant to that specific group. Generally, one doesn’t speak to engineers the same way that one addresses accounting or purchasing people. This is not because they are not all capable of absorbing your message, but rather because you want to make it as easy for them to get the points you are trying to deliver in the most effective manner for them to understand and remember.

    Second: After determining how you should address each group to get the best from the interaction, you need to be very specific about the message you are trying to communicate. You need to be clear, unambiguous and direct. Do not hint at what you are trying to say, bring it out loud and clear. Be specific and don’t ramble. Don’t make excuses and don’t apologize for laying out the facts and their impacts on the company. It is important for everyone hearing your message to believe that you are being open and forthright. If they can’t trust you to be honest with them, they won’t accept the validity of your message.

    Third: Be sure to take time to build your message carefully. It is imperative that you say what you need to say, and that you are very clear in what you are planning to do. Think about what the impact of your words will be on your audience. Don’t scare them if there is little reason to do so. But don’t pull your punches either. Be sure you have a clear understanding of not only what you will say, but how you will say it, as both parts of the message will be read by your audience, and if your body language and actual words are not consistent with your intent, they will perceive this, and will not trust your communication.

    Fourth: Make your message one which they will remember. As stated above, clarity and consistency are vital. Be clear, be memorable to the extent appropriate to the message, and the audience will respond as well as can be expected under the circumstances. In order to get your point across, follow the old rule about speeches: Tell them what you are going to tell them. Tell them. Tell them what you have told them. Do all of this in terms that your audience will respond to and will remember.

    Fifth: The final point to make here is that once you make a commitment to your audience, you must live up to it. If circumstances change in such a way to prevent your being able to follow through as you originally committed, you need to bring the group back together, explain what has happened that prevents your meeting your commitment, and explain to the group what the new direction is, and why it is appropriate for you to change direction.

    With consistent, appropriate communications, and good follow-through, your team will appreciate your efforts to communicate effectively, and you should get better buy-in to your aims and goals, and better understanding of the reasons you have for the actions you have selected.

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

  • Retaining Your Customers

    Strategic Planning Expert
    Strategic Planning Expert

    These are difficult times for many companies. For some this may be an understatement, for others not so much of one. Stepping back and looking at your business from the outside, are there things you should consider concentrating on and/or doing better to keep those customers you have? Chances are that there are a number of things you could do to improve your communications with and relationships with your current customers.

    Even if many of your customers are not able to buy as much as they were buying a year or two ago, with their business shrinking to some degree, it is worthwhile to make every reasonable effort to keep these customers as happy as you can with what you offer, be it product or service based (or both).

    There are three simple reasons for this effort to be made. First: You need to make every sale you can to keep your own business viable during this slowdown period. Second: You should aim to retain as much of their business as you possibly can so when the turnaround comes, you have built on your relationship with each customer to the best possible extent. The goal here is to be the source for each customer’s needs when business returns to higher volumes. Third: Current customers are usually less expensive to keep than new customers are to find, develop and cultivate into regular customers.

    How can we do this in an environment where everyone is looking to cut costs, reduce staffing and/or minimize inventory investment in order to survive these difficult times?

    Read More (case study included)

  • Strategic Planning: To Do or Not To Do – That is the Question

     

    Strategic Planning Expert
    Strategic Planning Expert

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

    With the slowing of business, lower sales, fewer orders, lower profits, the question arises: What can we cut or postpone so we can make it through these tough times?

    Too often, the opposite question is not asked: What should we not cut, so we can make it through these tough times? We suggest that strategic planning definitely be one of those activities that you not cut.

    The reasons for continuing to plan are multiple. First thing to do is to be looking ahead to see where the problems lie. You need to use your experience and perspective to peer into the future, so you will be prepared for any of the possible scenarios which may play out.

    You should be building on the possible scenarios so you will be prepared if things get even worse. What actions should your company be taking to lower costs, to conserve cash, to increase profitability as much as possible given the conditions? And, you should be looking ahead enough to start planning for the recovery. What does the company need to do to be ready when the economy starts to improve? How can we be ready for the turnaround when it comes? What do we need to do now so we can take advantage in the marketplace as things improve?

    All of these considerations should be a part of your ongoing strategic planning. You should be looking at both the downside and the upside scenarios to be ready for what lies ahead. Without a formal strategic plan, you well could be caught unready for whatever lies ahead, and that could have serious consequences for the company in the future. A well-thought-through strategic plan is vital to future successes, and saving a few dollars now by not doing strategic planning may cost you many times that investment in the future, whether the economy and business slow further or turn around and start back up.

  • Succession Planning – When It’s Urgent and How to Prevent Pitfalls

    Succession Planning - Urgency and Pitfalls
    Succession Planning – Urgency and Pitfalls

    In this third article of a series, we are going to look at Succession Planning – It’s urgency and pitfalls.

    Our first two articles covered the key features of Succession Planning – how to do it, etc.  In Article 1, we covered the following questions.  What is succession planning?  What positions in your organization should be included?  When should we do succession planning?  How much time should we spend on succession planning?  How do you select candidates for higher positions?  What is the purpose of succession planning?

    And in Article 2 we discussed the following issues.  What kinds of things make formal succession planning urgent?  Does the position require a mentor?  How to choose a mentor.  How long will the development of a candidate take?  Can there be more than one candidate for a given position?

    Furthermore, what kinds of things make succession planning urgent?

    We briefly touched on this question in our first article. To expand on what we listed, we should look at additional factors which can influence the process and the need. While there are normal activities which require people to be ready and able to move up, other factors may require people to step in quickly. When economic activity changes, you may need to make staffing changes. When your sales increase, you may need to fill openings urgently – hopefully with someone already on deck. If sales slow considerably, you may need to trim staff, combine positions and change responsibilities. This may entail needing a different set of skills that may not be available in the current staff. Technological changes in your production process or products/services may also create openings for new talent or skills.

    How does succession planning fit with strategic planning? 

    In your strategic planning, you may determine your organization has an opportunity in a market area outside your current markets. Therefore, your strategic planning should include analysis of both personnel, capital investment and other resources needed to enter this new area. Ideally, because of your succession planning, you have already developed someone who fits this new area perfectly. You may, however, need to add staff with different skills and knowledge that your current staff doesn’t have.

    Similarly, if you decide to exit a market segment, your strategic planning should include planning for placement of that segment’s current staff. Are there valuable people in this part of the business who can be repurposed and retained? Even if they do not have all the requisite skills for other segments, good people may have a positive future in the company. In addition to their knowledge of the company, you can re-educate them to do similar or analogous jobs. They can contribute long term.  Finally, keeping them can also have a positive impact on other parts of the company.

    What are common pitfalls of succession planning?

    • Over-promising.  When you select people to be candidates for higher positions, you run the risk of them failing during training. The best approach is to notify them they are being considered for promotion, but make it clear it is not guaranteed. Actual promotion will depend on their performance. Also, let them know that you may be considering others for the same position, so results will matter.
    • Poor mentoring.   It is important that whoever is the mentor of a candidate is selected for their knowledge and ability to guide. Grooming a candidate is an important part of helping assure the future of the organization. Failure to be an effective mentor hurts both the candidate and the company. Mentors must have good people skills and communication ability. They must be able to challenge and guide the candidate at the same time. No one should ever be forced to be a mentor.

    What if the boss doesn’t want to do succession planning?

    • This is a tough thing to overcome. The question is “why doesn’t the boss want to do succession planning?” If only his/her position is the problem, you should probably deal with that outside of the strategic planning done with your team and limit succession planning within strategic planning to other positions. Most bosses want to plan for the future of the organization for obvious reasons. This means doing strategic planning that includes succession planning. People are the true key to success of any organization. Overcoming the boss’s reluctance to do succession planning may be a strategic issue that gets resolved over time.  It is not one that should be shoved under the rug.  Without planning for the future of those who will be operating the company, there may be no future.

    Do you have a succession plan?  Is it a part of your strategic planning?  Have you planned for urgent situations and ways to prevent pitfalls?  If you’re like most people, you’d benefit from having an experienced professional lead you through the strategic planning process, so you can focus on the content of your strategies.  If you’d like to explore how you could do this, please contact me at baldwin@cssp.com or 616-575-3193. Center for Simplified Strategic Planning professionals have successfully conducted thousands of strategic planning meetings, and have a great understanding of how to best use your planning time.  Consider holding a one-day workshop on Simplified Strategic Planning in the next few months to improve your results.

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    Author Dana Baldwin
    Author Dana Baldwin

    Dana Baldwin is Senior Strategist with the Center for Simplified Strategic Planning, Inc.  He can be reached by email at baldwin@cssp.com.

    © Copyright 2020 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission 

  • Succession Planning – What Do You Need to Do to Stay Strong?

    Succession Planning and competencies
    Succession Planning and competencies

    Succession planning and competencies – mentoring and family requirements.

    In the first article of this series, we looked at a number of questions which should be addressed by Senior Management. When implementing succession planning, answers to those questions establish a good foundation upon which to base our work. 

    Questions from the first article.

    What is succession planning? What positions in your organization should be included? When should we do succession planning? How much time should we spend on succession planning? How do you select candidates for higher positions?

    This article will cover more questions.

    What is the purpose of succession planning? It is to assure an ongoing flow of capable, experienced and well-grounded replacements for key positions throughout our company.

    What kinds of things make formal succession planning urgent? 

    Is Senior Management nearing retirement age? Is there unusual turnover in key positions? What is the average age of key personnel? Is it creeping upward? Are there already good candidates for those key positions? Are there openings for people with critical knowledge or backgrounds? Do younger people need to be groomed for higher levels of responsibility?

    If your organization has any of these situations, you need a process that will provide key replacements. What will they need to learn to do higher level jobs? How will they gain the experience to perform well at higher levels?

    Does the position require a mentor to acquire competencies?   

    Often, the answer is “yes.”  Succession planning is a key activity for assuring the growth of competencies in your organization.  Mentoring is challenging for both the mentor and the mentee. The mentor has to be judicious in the process of educating and challenging the mentee. Guiding without spoon-feeding should be the mentor’s mantra. Learning to make good choices, based on facts and needs is always key. The purpose of mentoring is to help the candidate develop the hard and soft skills and judgment needed to perform the job well.

    How to choose a mentor.

    A mentor should have both professional and technical knowledge appropriate for the candidate’s needs. This is not an easy task. The mentor may or may not be the individual who has the position currently. There should be a good rapport between mentor and mentee, but not so close that it jeopardizes objectivity. The mentor should have a good grasp of what is required of the mentee and the new position. 

    How long does it take?

    There is no reasonable answer to this beyond, “Whatever it takes to become proficient.” Much of this depends on the experience, knowledge and capabilities of the individual candidate. Two different people will likely have different needs in order to become capable of doing the same job. That is no surprise, but something that emphasizes that succession planning is a hands-on undertaking. It will involve personalized assessment followed by training with varied experiences and development of different skills, depending on the background of the individual candidate.

    Establish the competencies needed for each job.

    A formal process for planning for succession of key personnel requires that you analyze each key position thoroughly. This is to establish the competencies a replacement needs to do the job. This may include education, hands-on experience, knowledge of other departments, technical skills, personal skills, etc. Job descriptions are helpful here, but may not include all the qualifications needed to allow effective performance. Every job is different in its requirements, so care must be taken when selecting the standards for that job. This is not the place for a cookie cutter job description. Be sure to recognize that often the most important success factors involve the soft skills.

    Establish specific requirements for family members.

    A candidate must earn a specific position.  This is especially true for family members. They should be held to the same high standard as anyone else. In a closely held company, family members should strongly consider working for a different company for a minimum of five years. The rationale is to have them have experiences and relationships where they do not have family presence and influence. They have to be able to stand on their own accomplishments and performance.

    Family members should commit to joining the company by a certain age.

    They also should have to commit to joining the family company by a certain age. A number of family companies have decided that family members must commit to the company by age 35. This gives the individual enough time to get the experience they need.  It also gives them time to decide whether joining the family company is the right thing to do. However, once they have turned down the opportunity to come with the family company, they should forfeit the right forever. The reason for this is to be sure the individual is totally invested in the success of the organization. What is not wanted is to have them think they will be getting a sinecure.

    Family members should totally commit to doing the work and striving to make the company successful with full effort.

    This article is the second in a series. More input in the next article. If you need guidance in setting up your succession planning as a part of your strategic planning, please let me know how I may help you. baldwin@cssp.com or 616-575-3193.

    Do you have a succession plan?  Is it a part of your strategic planning?  Have you considered the connection between Succession Planning and competencies in your organization?  If you’re like most people, you’d benefit from having an experienced professional lead you through the strategic planning process, so you can focus on the content of your strategies.  If you’d like to explore how you could do this, please contact me at baldwin@cssp.com or 616-575-3193. Center for Simplified Strategic Planning professionals have successfully conducted thousands of strategic planning meetings, and have a great understanding of how to best use your planning time.  Consider holding a one-day workshop on Simplified Strategic Planning in the next few months to improve your results.

    In-house Workshop

    Author Dana Baldwin
    Author Dana Baldwin

    Dana Baldwin is Senior Strategist with the Center for Simplified Strategic Planning, Inc.  He can be reached by email at baldwin@cssp.com.

    © Copyright 2020 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission 

  • Succession Planning – What, Why, When and How?

    Succession Planning and Strategic Planning
    Succession Planning and Strategic Planning

    Although our principal thrust in Strategic Planning is how to better compete in our market segments, we also need to include succession planning.  Succession planning is key to your overall planning, because it helps assure you will have appropriate staffing in the future. Without people with the education, experience and training, you could have problems competing effectively.

    What is succession planning?

    Good succession planning should be a part of your overall strategic plan. It is aimed at providing the ability of the organization to function smoothly and consistently over time. Elements of succession planning include education, hands-on experience and exposure to other disciplines in the company. Ideally, you will plan before you need to replace an experienced staff member. Therefore, by planning ahead you have time to select the best candidate and to train them in their future role.

    What positions should you include in your succession planning?

    What positions should you include in your preparation for the potential move to a key position? The answer to this can vary quite a bit, depending on the specific needs of your company. Obviously, much of the concentration on succession is aimed at the executive and managerial levels. But in many operations, there are people in many different levels of the company whose position is key. As a part of succession planning, you should carefully analyze your current and future needs.  Include key technical people and sales people in this planning.  Be sure that in your company, you include all the key positions to assure effective continuity and ability to grow.

    When should we do succession planning? 

    Development of your succession plan should be a part of your annual strategic planning process. SP is aimed primarily at enhancing your ability to compete well in your markets. But your ability to continue supplying the products and services you provide is also key. Critical positions involved in delivering to your markets can be the difference between success and failure. One of the areas in SP includes the challenges of developing your human resources.  With this in mind, succession planning should become one of your significant competencies.  The actual succession mentoring and guidance as an output of your planning go on virtually all the time.

    How much time should I spend on succession planning? 

    If this is your first-time doing succession planning, expect to have extensive discussions about the subject. First, you need to lay out the reasons for doing this planning. Second, discuss which positions are key to the ongoing success of the organization.  As far as that goes, consider the overall philosophy of the company with regard to developing your people. This subject could rise to the level of a strategic issue because of its importance to your future success. Third, take enough time to explain and discuss why this is important to the entire company. Understanding the need for succession planning will help your team develop the right perspective when discussing the issue. Remember, however, that this discussion only sets the table for doing the actual succession plan.

    Break the overall task into smaller, more focused groups.

    Your executive team should analyze the future needs for all of your C-level staff. This could mean they examine the managerial level requirements as well, as some could be candidates for promotion. Managers should analyze key positions that report to them and pick those which are critical to company performance. Technical department managers need to select their key positions for inclusion in the analyses.

    Determine what qualifications each key position needs.

    Qualifications could include education, experience, product or service knowledge, interpersonal skills, communications skills and any company specific knowledge the position needs. Next, managers need to develop or verify job descriptions, if they already have them. They should include all the elements above to the extent that they are appropriate for their jobs. Its important that they don’t take this lightly as it could determine the future viability of the organization.

    How do you select candidates for higher positions? 

    Obviously, this is not an easy task. In some ways, it is very much like a process to consider a regular promotion.  The difference is that you are not promoting anyone at this time. You are considering the possibility that some people may become qualified for the higher position  when it becomes available. Here is where things get interesting. You may select one person to be considered for succession or more than one. At the onset, it must be clear that no promises are being made at the time. To help prepare them for the future, they need additional knowledge, experience and skills. You will judge each person on merit. Because each person will likely have different strengths and weaknesses, their development programs may well be different.  Furthermore, they will each have different needs which should be addressed.

    When an opening is available, you will consider each candidate.

    You will evaluate each candidate based on their cumulative experiences and skills. Ideally, you should assign a mentor to work with and guide each candidate. Often, candidates who go through this process are considered for more than one position as they improve their capabilities and knowledge.

    This article is the first of a short series on Succession Planning. Please stay tuned for the next one in a few weeks.

    Do you have a succession plan?  Is it a part of your strategic planning?  If you’re like most people, you’d benefit from having an experienced professional lead you through the strategic planning process, so you can focus on the content of your strategies.  If you’d like to explore how you could do this, please contact me at baldwin@cssp.com or 616-575-3193. Center for Simplified Strategic Planning professionals have successfully conducted thousands of strategic planning meetings, and have a great understanding of how to best use your planning time.  Consider holding a one-day workshop on Simplified Strategic Planning in the next few months to improve your results.

    In-house Workshop

    Author Dana Baldwin
    Author Dana Baldwin

    Dana Baldwin is Senior Strategist with the Center for Simplified Strategic Planning, Inc.  He can be reached by email at baldwin@cssp.com.

    © Copyright 2020 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission