Center for Simplified Strategic Planning

Author: Denise Harrison

  • Strategy Bits

    By Denise Harrison, Executive Vice President & COO

    Strategic Planning Expert

    Customer Concentration and Market Segment Analysis
    Customer concentration is a key characteristic to consider when thinking about market segmentation, it is important to understand the number of potential customers but also what percentage of your business is made up of your top 3-5 customers. With a highly concentrated customer base your strategy is often dictated by the key customer needs and preferences. Your ability to gain or lose market share is often dictated by how fast you are able to meet the changes required by these top customers.

    For example, Fortune discussed how Wal-Mart set standards for their suppliers to implement RFID tracking technology on all of the products provided to Wal-Mart for sale. Even large companies like P&G are scrambling to meet these Wal-Mart requirements, Wal-Mart is over 15% of P&G’s business. Implementation of this technology will be a significant investment for P&G so it is important for the team to take this into account as they develop the P&G strategy plan and ensure that resources are allocated towards this project.

    Strategy Tip: As you develop your market segments, be cognizant of the number of potential customers and any concentration of your company’s business in a particular customer. If you find you have high concentration then you must make sure you understand the customer’s changing needs and preferences and be sure you take these into account as you develop your strategy. If your market does not have high concentration you will want to identify bellwether clients to ensure you are able to spot industry trends early.

    Innovation: Finding Innovation in Other Industries
    A recent Course and Direction article (Innovation: Where to Find It) discussed potential sources for innovative ideas. One thought was to look to other industries for innovative ideas that could be applied to your industry.

    An example appears in a WSJ article discussing how Allegheny General Hospital looked to the automotive industry for ideas. They took the concept: root cause analysis and applied it to the hospital’s intensive care unit. Once they identified the root cause of infections they were able to change procedures and lower the incidence of infections by 90% saving the hospital $500,000 per year (not to mention untold inconvenience and suffering by patients).

    Strategy Tip: Look around; good ideas abound in other industries. What is even better, these ideas have already been tested and streamlined. One word of caution: be sure to understand what adjustments need to be made for your industry before moving ahead.

    Market Feedback: Key to Identifying Growth Opportunities
    Key to market segment analysis is market feedback. The retail industry is particularly prone to changing market trends and the whims of consumer. Business Week reviewed Coach, a formerly stodgy manufacturer and retailer of handbags. In order to spruce up the image to add style and fun to the brand the CEO hired a new designer. The designer was an important piece of the revamp; however, each new style was piloted in specific retail stores to develop feedback. Changes were made based on the feedback before the product was launched. By first evaluating the success of new styles before a national launch and making course corrections where necessary Coach has been able to double its sales in a slow growth market. Who would have thought that shocking pink would be a fast selling item? This constant customer feedback (over 10,000 interviews/year) enabled Coach to gain significant market share and change its image in the market.

    Strategy Tip: Be sure that you get impartial feedback from your customers. This feedback is important to spotting changing trends before your competition.

    Your market is shrinking; can you find a new market for your product/service?
    International Visual Corporation manufactures and sells modular wall display panels to department stores. Department store consolidation started a decade ago and continues with no end in sight and this consolidation reduced International Visual’s client base significantly. The two partners who own the company were driving around wracking their brains for new ways to grow the company. One day (while driving) they came upon the idea of selling this paneling to homeowners for their garages so that they could attach cabinets, shelves and other units to organize garage storage. A success!!  The company has a significant new market segment using the products that they already knew how to produce.

    Strategy Tip: Selling an existing product/service to a new market — be creative! If this new market is viable, be sure that your team analyzes the distribution required and investigates any market requirements that would not be met by the existing product. Sometimes minor modifications are necessary to prevent a black eye when the product is launched into this new market.

    Please send us your own Strategy Bits!

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

    © Copyright 2011 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

  • Honest Tea Teaches Coke A Lesson

    By Denise Harrison, EVP

    Strategic Planning Expert

    Coca Cola, known for its marketing prowess, does not always get it right.  Yes, everyone knows about the Coke Classic/New Coke mistake, but what about its entry into the health conscious and environmental space?

    What Went Right

    Growth goals are often met by identifying new market trends and emerging market segments during the development of a strategic plan. Coke correctly identified an emerging segment in the beverage market: health conscious consumers, to whom high fructose corn syrup was an anathema. Coke decided the best way to enter the segment was through acquisition. Honest Tea, an organic tea, was already entrenched in this segment, which in addition to meeting the health conscious requirements, also appealed to the social responsibility and environmental preferences of this segment. It was a no-brainer that Honest Tea’s organic roots, when combined with Coke’s production and distribution infrastructure, would be a winning combination – but wait, what really happened?

    What Went Wrong

    Coke took a page out of its successful brand management book and applied its traditional marketing formula to Honest Tea’s brand and launched the brand nationally. This launch included:

    • National advertising campaign
    • Shelf placement at retail outlets
    • Deep discounts

    The result: a flop. The traditional approach, which had worked well with well-known brands that appealed to the mass market, did not necessarily work with niche brands. Rather, a grass roots, bottom-up approach was required. Honest Tea’s success had been built by in-store promotions and local marketing, which gave the brand an elite following that said, “We are not like everyone else – we require something special”.

    A guerilla marketing campaign called Honest Cities worked particularly well; Honest Tea set up displays with bottles of tea with a $1 collection barrel next to the pallets– purchase on the honor system. They promoted Earth Day by handing out reusable shopping bags with each purchase of Honest Tea. The brand built its presence first in a local market, then spread out to the region, and then moved to the next local market, then positioned itself to grow into the next region. In addition, the brand continued to focus on the health food chain channel – not a stronghold for the traditional Coke beverages.

    Lessons Learned

    • After you have achieved significant market penetration in your traditional markets, you often need to find emerging niches in order to meet your growth objectives
    • Assuming that the target audience for the niche business can be reached through the same “go to market” strategy that you use successfully with your traditional markets, may be a mistake
    • In order to truly understand an emerging market niche, you not only need to understand the product or service requirements, but also how to reach these niche customers.  You may be able to leverage some of your competencies but you may need to develop other competencies, to fully realize the market potential.

    As Coke moves forward, it expects to apply these lessons to revive some of its past healthy beverage launches, as well as to future niche product launches. These lessons will enable Coke to raise its batting average when launching niche products. Leveraging “lessons learned” is an important part of strategic planning – to read more about how to learn from your mistakes please click on:  Mistakes Happen: But Did You Learn from Them?

    Denise Harrison is Executive Vice President and COO of the Center for Simplified Strategic Planning, Inc. She can be reached at .

  • Mistakes Happened – But Did You Learn From Them?

    By Denise Harrison, Executive Vice President and COO

    Strategic Planning Expert

    Recently I worked with a company that had several missteps in executing their strategy – what went wrong?  This team has an excellent execution record; however, even with a history of past successes the team stumbled.  It was time to take a deep dive to see what could be learned from the recent missteps so we could raise the batting average in future years.

    Strategic Planning enables a senior management team to make better decisions – but even with a well thought out strategy things can go awry.  When things do not go as planned, it is important that you do not sweep the mistake under the rug, never to be discussed.  A process we call lessons learned is important to ensure that the team fully analyzes what happened and what can be done in the future to prevent future mistakes.

    Lessons Learned: a Process

    Analyzing lessons learned is not about assessing blame, but rather an in-depth analysis of how you can do better next time.  In addition to learning from what did not go as planned, it is important to understand what went right.  Here are two options for discussing lessons learned:

    Option A

    • What did we do well?
    • What can we do better next time?
    • What would we do differently if we were to do this again?
    • What should we have in place to prevent this from happening again?

    Option B

    • What did we do well?
    • What would we do differently next time?
    • How can we prevent this situation from occurring in the future?
    • How can we reduce our exposure?
    • What are the early warning signs that will allow us to take corrective action quickly?
    • What are our contingency plans?
    • What are our key take-aways?

    Notice in both options we started with what went well.  Often in the aftermath of a mistake, project teams tend to focus on what went wrong, without realizing that a lot of things actually went well.  By analyzing what went well, people tend to be less defensive when it comes time to assess what did not go as planned.   This often allows for a more honest assessment of the issues.

    In my example, the company did an excellent job of anticipating their customers’ future needs and developing breakthrough technology to meet these needs.  But what happened? Well, they were so excited about the solution; they discussed the projects with their customers. The problem was that the customers were so excited by the product concepts; they wanted the solutions right away.  And as a result, the products were introduced without proper testing and did not produce the desired results.  These results then gave the products a black eye in the marketplace.  How could they have prevented this from happening, and importantly, keep it from happening again?  What they learned was:

    • Keep the new product ideas confidential until they are ready for launch, or at-least, manage the customer’s expectations concerning the product launch
    • Develop a testing program – and stick to it.
    • Understand that after the test, there will be adjustments
    • After the adjustments, test again
    • Finally, when the product is ready – and only when it is ready, announce it to the marketplace

    In short, the lesson learned by the company was to hold back on announcing new product ideas until they are further along in the development cycle.  

    Each year, your team should reflect on the success of your objectives, as well as on any mistakes.  As you identify projects that did not go as planned, go through a lessons learned process so that your team will learn from both – what went right, and what could be done differently so that future projects don’t repeat the same mistakes.  Strategic planning is a journey, sometimes with some wrong turns, and sometimes with some dead-ends and/or detours. But if you learn as you go, you will have a higher success rate.

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

    © Copyright 2011 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

  • Lessons Learned: What Can We Learn From Yum Brands’ Success?

    By Denise Harrison, EVP  

    Try, Try Again 

    Yum Brands did not get it right at first, they had several aborted attempts; first in Hong Kong and then in Taiwan. But rather than simply giving up, they asked what would we do differently if we were to do this again?  Here are some of the answers to that question: 

    • Hire local talent and give them decision making power

    o       Knowledge of Mandarin was essential to opening up the supply chain in areas where many foreign businesses did not venture and it has been vital to Yum Brands’ expansion success.  

    o       Understanding the culture: knowledge of additional menu items that would entice the local population to accept the new fast food outlets.  For example, KFC added congee (rice with a variety of choices: pork, mushrooms, pickles) to the menu along with the traditional fried chicken products. 

    • Select the right venture partners

    o       Partnering with state owned companies smoothed the path for expansion 

    Having stubbed their toes in Hong Kong and Taiwan allowed for better analysis of what needed to be done as the team looked to enter China.  

    Success through Focus 

    Now Yum Brands has 40% market share and its profit is up 23% in China, but down 2% in the US for the third quarter of 2010.  But what will allow this success to continue? The answer is focus. 

    Yum Brands has several geographic segments including the US and China.  The US is a mature market for fast food and competition is fierce and margins are shrinking – often a characteristic of a mature market.  In contrast, China is a growing market; even with many competitors, an increasing percentage of the Chinese population will earn enough disposable income to be able to eat at fast food restaurants, so growth is assured.  A growing market with a 40% market share is clearly a market where an expand strategy is warranted.  But what about the US?  Should Yum Brands try to maintain its position (i.e., vigorously defend its market share) or should it contract – pruning itself of marginal restaurant chains?  Yum Brands has decided to sell its Long John Silver’s and A&W chains so that it can redeploy its resources into segments (e.g., China) that will reap greater rewards.  

    What does this mean for you? 

    • Entering new markets is difficult; don’t expect to always get it right the first time.  In any case, be sure that you learn from each attempt and institutionalize the knowledge – don’t sweep the failure under the rug.  Lessons learned are not about assessing blame, but rather about understanding what you could have done differently that would have made the effort more successful.
    • A company as large as Yum Brands must redeploy resources in order to achieve higher future returns – what does that mean for smaller companies?  With fewer resources at our disposal we must be even more focused in order to optimize our future results.  We must ensure that we make tough decisions in strategic planning to re-focus our efforts to those areas that will reap higher rewards.  Too often people do not want to contract in a market segment or withdraw from a market segment, and this diverts resources from more profitable activities.  A good strategic planning process enables the team to have discussions based on market attractiveness and competitive position in order to make these tough decisions.

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

    © Copyright 2011 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

  • Are You Really On Track? Mistakes Made in Execution

    By Denise Harrison, Vice President

    Strategic Planning Expert

    Is your team honest with itself when discussing progress of your action plans?  Or is your team convincing itself that things are really on-track when they aren’t even close?  Recently I have come across a number of cases where teams have given themselves high marks on achievement, but the real strategic objective has not been reached.  Here are four examples of how you might be negatively impacting your strategic results by accepting less than optimal progress.

    1. Redefining the objective
      Recently I observed a team celebrating the success of achieving one of their key strategic objectives.  The progress that had been made was significant: a new product launch. But did it really accomplish what we had set out in the original strategic objective?  The original project was to scope out the requirements of a particular market segment.  Significant regulatory changes had occurred during the year and these changes will impact this segment’s needs/preferences for the foreseeable future.  The product launch was a good thing for the business, but not the completion of the strategic objective – it totally missed doing primary research to understand the full impact of the regulatory changes.  In the short-term, the product launch would shore up revenues, but the team missed the long-term opportunity to help its customers navigate through the regulatory changes by providing unique solutions to the opportunities/issues that resulted from the change in regulations.  Don’t redefine your objectives so that you easily meet your targets using projects that are already in flight.  Be sure that your objectives are well defined going into the process and make sure that you continually check that the action plans are accomplishing what you actually set out to achieve with the strategic objective.
    2. Only look at exceptions during the monitoring process
      In order to speed up monitoring meetings, some teams choose to just look at the action plans that are not on schedule.  This allows the team to focus on the key projects that are not moving forward as planned and allows the team to have discussions concerning the impediments to progress and ways of overcoming these impediments.  However, this approach misses an important aspect of the monitoring process:  communication.  Communicating progress on action plans that are on-track keeps the whole team informed and updates the team regarding changes to the plan.  Sometimes project leaders keep the plan on-track even though there have been significant changes to the scope of the plan so that the plan does not fall under the scrutiny of the strategic management team.  This allows key strategic objectives to go off-track because the rest of the team is not alerted to the changes.  In addition, the communication of progress allows senior management team members to suggest enhancements that were not included in the original action plan.  So, don’t assume the purpose of the monitoring meeting is simply to keep the action plans on track, the communication of where we are on key strategic objectives is also important.  This allows the whole senior management team to stay engaged on projects where they do not have an active role.
    3. Defining “on-track” as being “on-track” with the things that you control
      Yes, this really happens…a team has a project that is significantly “off-track” due to events beyond its control and instead of simply identifying this, the team says it is “on-track” because the problems were not of the project team’s doing.  Beneficial? No!  When something is off-track, it is off-track – this is not an assessment of blame, but an acknowledgement of actual progress.  This accurate assessment is important for three reasons:

      1.  To communicate to those on the team that a key strategic objective is not going to be completed in a timely fashion.  This is important to know, as this is key to achieving our strategy.
      2. To allow the group to brainstorm on ways to overcome the impediments and perhaps come up with creative solutions to the problem(s).
      3. To allow the group to re-deploy resources, if, in fact, this strategic objective is really dead in the water.
    4. Declaring victory before the actual objective is reached
      Remember the infamous “Mission Accomplished” banner on the aircraft carrier? Do your objectives really state the desired objectives?  Do you declare victory when your product and/or service is launched?  Or when the acquisition is complete?  Or do you declare victory when you have reached the stated revenue/profit numbers that give you the ROI that justified the project in the first place?  If you declare victory before you have actually achieved the metrics defined as success, you are cheating yourself out of the full potential for the project, as resources can be redeployed to other projects before this strategic objective is really complete.  This causes a great deal of frustration within organizations, as a project’s potential is not achieved due to the loss of focus.

    Is it time to tune-up your monitoring process?  Is your team being honest about its progress?  The next time your team reviews its strategic objectives or key projects ask the following questions:

    1. Are we really achieving what we set out to achieve? Are we being honest with ourselves concerning the progress that is being made?
    2. If not, how can we fix it?
    3. Do we need to take some projects off the table to ensure we are making progress on the critical few?
    4. Do your objectives really focus on the desired result?
    5. Have we added projects without taking anything off the list?

    Take a look at your past progress and see if you are really being honest with yourself.  If not you can make significant progress by plugging the leaks in your monitoring process.  If you are not making the progress you want, or if you have fallen into the traps above, the Center for Simplified Strategic Planning can help you get back on track.  Contact us to help you regain your focus.

    For additional information on how to enhance your execution success please read: Everyone Knows Execution is Important – So Why Do We Fail to Execute?

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

  • “What if” Oil and Water Do Not Mix – Lessons from BP

    By Denise Harrison, Vice President

    Strategic Planning Expert

    Strategic planning and risk assessment – yes, you must look at what would happen if…If you fail to assess and mitigate risk during strategic planning you could end up with a BP-like disaster.  While the exact causes of the Macondo rig disaster are not yet known, it is nonetheless fair to ask: “Was this a Threat or did BP shoot themselves in the foot?” Well, probably both actually. 

    THREATS

    Threats are events that occur due to external forces outside of your control and which significantly impact your business.  Examples include recessions, hurricanes, the death of a key employee, and/or competitors merging (to name a few).  In BP’s case, the drilling team seemingly did not adequately prepare for the oil reservoir pressure exceeding the well’s engineered capacity, and the resulting blow-out. What should they have done to mitigate the risk? Here are five suggestions: your strategic planning should examine each and select the best mix. 

    Prevent

    BP first and foremost should have considered how they could prevent a blowout from happening:  this well was an exceptionally deep well, so engineering standards should have been set high.  Cutting costs or speeding up the timeframe for the well to come on line should have been weighed against the high-risk nature of a deep-water well.  High risk?  The depth of the well makes adjustments difficult because everything needs to be adjusted by remotely-controlled tools and vehicles in conditions where the significant water pressure adds complexity to any operation. 

    Reduce Exposure

    Plans should have been in place for a well blowout, as well as plans for evacuation and spill containment.  Evaluation:  all but eleven people were able to evacuate the drilling rig.  But the disaster far exceeded what happened on the rig platform.  The disaster on the surface was the first hint of the catastrophe that was happening beneath the surface.  As has become apparent, BP did not have adequate plans in place to mitigate the massive amounts of oil that began spewing from the well.  

    Early Warning

    Yes, there apparently were early warning signs – and these should have been signals to slow down the well completion process; not pour the mud and the cement until the pressure was understood, slowing down so that adjustments could be made that would insure the integrity of the well.  If early warning signs had been heeded and appropriate procedures been in place, the drilling team might have taken the time to truly assess what was really happening a mile beneath the water’s surface. 

    Contingency

    There are also questions with regard to the ill-fated blowout preventer: were all the checks done completely; were some shortcuts taken; were any and all changes to the design fully tested before the blow-out preventer was installed?  Was the effectiveness of redundancy exploited fully? 

    Hedge

    Typically, we look at ways to hedge when mitigating risk, but there are not necessarily ways to hedge every threat.  In this case, drilling could have been stopped and other wells could have provided oil.  Also, relief wells could have been drilled when the integrity of the well was suspect. 

    Had BP really examined their threats, they would have had better plans in place and might have prevented the disaster which will render the well useless and cost BP billions of dollars in funds for clean up.  It is important when developing threats that people understand what the implications of the threat could really look like – so scenario planning might be in order.    For instance, a threat could be a hurricane, but you might have different scenarios for a category 1 hurricane, a category 3 hurricane, and a category 5 hurricane.  I was working with one team which identified hurricanes as a threat and the team came up with mitigating strategies for category 1 and 3 hurricanes – however, they decided that mitigating the risk of a category 5 was not possible, so a contingency plan was developed:  Evacuate and take care of the people; lock down the production facility as suggested in the plans for a 1 and 3, but understand that the people’s safety came first.  In addition, they developed a clean-up plan for after the devastation of a category 5 hurricane.                        

    NOW, SHOOTING YOURSELF IN THE FOOT

    Shooting Yourself in the Foot involves a self-inflicted blunder. Apparently BP did not have robust plans to mitigate the risk of the well blowout Threat.   Besides having a poor risk mitigation strategy, they also shot themselves in the foot by having only a short-term mindset which prevented them from properly investing (both time and money) in this high-risk, deep water well.  This short-term focus caused them to spend less, increasing the risk and increasing the downside consequences of the higher risk. Not only will the well be shutdown for good and the upfront investment costs of designing and drilling the well lost, but the resulting environmental disaster will also require significant spending to clean up the mess they made.  Additionally, their reputation will be tarnished forever.  Short-term thinking did not only lower this well’s future returns; it obliterated all future returns from this well, as well as cutting into BP’s future earnings and market value. 

    Lessons Learned

    It is important during strategic planning to think about growth and about profitable growth, but don’t put blinders on and simply chase growth and profit. Taking the time and spending the money to mitigate risk and protecting yourself from downside exposure will save you money in the long-run.  It may well spell the difference between profitable growth and unmitigated disaster.  As you develop your strategic planning, spend time on risk assessment and mitigation of Threats posed by external forces.  In addition, be sure that you take some time and identify ways that you could Shoot Yourself in the Foot, and discuss options which you might pursue to avoid losing your toes.

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

  • Everyone Knows Execution is Important – So Why Do We Fail to Execute?

    Strategic Planning Expert

    By Denise Harrison, Vice President

    Execution of strategy: we know it is important, but why doesn’t it happen? Based on my experience working with over 100 companies on strategy development there are four key areas that lead to execution success.

    1. Focus on the few:
      1. Select a few – 8-10 key strategic objectives to accomplish in the next 12 – 18 months. No more than 10! Don’t fall into the trap of “We have to do this!” and end up with 12 to 15. It is better to work on a few rather than work on everything and get nothing completed. Four to six is even better, especially if the objectives are large.
      2. Once you have selected the key objectives, then develop action plans that are detailed roadmaps of how you will accomplish these objectives:
        1. What are the action steps (granular detail)?
        2. Who is involved with/responsible for each step?
        3. How much time will each step take?
        4. How much money will each step cost?
    2. Balance your resources:
      1. Now you know the amount of time and money for each objective, do you have enough resources? Do you have the right resources?
        1. Often the required financial resources are clarified in the budgeting process
        2. The human resource aspect is often lightly considered (if at all) and this is where many implementation plans go off-track.
          1. Understand that your people have day-to-day activities that help the business run in addition to the projects that will position the company for future growth; you have to balance these requirements so that both are accomplished.
          2. If you find that you do not have the resources to accomplish your action plans, evaluate how you can
            1. Delegate (both routine as well as project activities)
            2. Eliminate (routine and/or project)
            3. Reduce (routine and/or project)
            4. Postpone (project only – you can’t postpone routine activities; they just don’t happen)
          3. The operative word here is balance!
    3. Monitor your progress:
      1. Monthly have your action plan team leaders report on their progress to the strategic planning team
        1. Work with the team to relieve bottlenecks if projects are behind
        2. The strategic planning team should be able to help reduce bottlenecks – use this meeting as a solution-finding meeting rather than a way to assess blame. The team should be working together to move things forward.
      2. If new projects come up, then evaluate each project in the context of what has already been selected.
        1. If the new project is more important than one of the current key objectives, then add it, but be sure to take one away.
        2. Do not pile objectives on top of one another – sometimes we assume that we have hatched new resources during the year.
        3. Do not evaluate new projects in isolation – evaluate them in the context of the projects that are already on your plate. If the current projects need to stay on the list, save the new one for next year’s strategic planning.
    4. Communicate early and often
      1. Communicate the strategy and key objectives to all employees
        1. Make sure that communication is clear and concise
        2. Make sure the communication is two-way (see article: Lessons Learned in Aligning an Organization -Two Way Communication is Key)
          1. Give employees a way to react
          2. Have them prepare what their departments are going to do in support of the strategy and key objects – make sure the communication is two-way.
      2. Communicate frequently and update when changes occur.
      3. If everyone in the boat has his/her oar in the water and everyone is rowing in the same direction as the company, it will move forward quickly – outpacing the competition.

    Efficient strategic execution is paramount to outperforming your competition during this recovery phase of the economy.  If you accomplish these four steps you should achieve over 90% of your objectives within the timeframe selected.

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

  • Three Keys to Recovery Success:Re-focus Your Efforts to Outperform Your Competition

    By Denise Harrison, Vice President

    Strategic Planning Expert
    Strategic Planning Expert

    Recently I was talking to a company president – he was frustrated that a large project was off track.  What happened?  Well, during the recession, his team bid on a significant contract for a large company; the contract included requirements that were a stretch for his company.  Traditionally the team focused on small to mid-sized businesses, but during the recession they decided to bid on this contract in order to bring in additional revenue.  The result?  Resources were being pulled off other projects to meet these requirements, and unfortunately the large customer was not happy because the project was not progressing smoothly.  Even worse, the smaller traditional customers were unhappy because resources normally available to them were working on the large project.  Has the recession caused your company to take on business that is pulling you away from profitable business? 

    Re-focus Your Efforts 

    Yes, during a recession it is easy to look at any business as good business.  But often companies take on business that does not leverage their competencies and/or causes it to misallocate resources. This new business may cause resources to be spread too thinly, working on projects that may bring in revenue, but are not profitable, or, more critically, divert resources from core, profitable customers.  In order to emerge from the recession in a strong position, it is important that you take the following three steps: 

    1.      Re-assess what your company does well: “Know thyself”

    a.       Understand where your competencies are:  what are those skills, processes and knowledge that are most valuable to your customers?

    b.      Know what your company does do well, and what it does not do well, so you will concentrate on serving the customers who value what you do not only during the recession, but for the long term.

    2.      Identify market segments or customer groups that you currently serve – and focus on the ones who value what you do well: “Cherish thy core”

    a.       Do these segments/customers select your company because they value the things that you are good at doing? These are the customers that will be profitable.

    b.      Or are there some segments/customers that simply came to you during the recession when you were trying to get business – any business to shore up the top-line. Re-focus on the profitable segments.

    3.      Once you have identified the segments that value your competencies then look within the segment and identify who the winning customers will be during this recovery: “Know thy customers”

    a.       Customers who were doing well before the recession may not be the same ones who are doing well after the recession. 

               i.      Some customers within these segments are not positioned to grow during the recovery.  Many         have taken cuts that will not allow them to take advantage of the recovery. Others are still hurting financially.

               ii.      Industries may have changed and requirements for gaining market share may have altered – different companies make take the lead.  Look at how the landscape in the financial industry has changed – some market participants are gone – others merged with more successful companies. Identify who the winners will be during this recovery. 

    Often recessions cause you to de-focus your efforts.  As you develop your strategy for the recovery make sure your team re-focuses its efforts so that it is concentrating on leveraging the competencies that you have and that your customers value.   These will be the segments and customers that will allow your company to grow profitably during this recovery. This renewed focus will allow your team to outperform your less disciplined competitors who are still chasing business, as if all business is good business.

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

  • Success Sows the Seeds of Failure – Toyota’s Complacency Causes Reputation to Crash

    By Denise Harrison, Vice President

    Strategic Planning Expert
    Strategic Planning Expert

    Can success breed failure? This seems like an oxymoron doesn’t it? But world class companies continue to fall into this trap – Toyota is the latest example.  Toyota gained market share in the automotive market by focusing on quality – this was their strategic competency.  This single-minded concentration on quality built trust with consumers worldwide, wooing consumers away from other less conscientious manufacturers. But the recent recall of millions of Toyota vehicles over several model years shows how Toyota’s loss of focus on quality has severely damaged the trust that had been built up over decades.  The cost of the recall will be millions of dollars in the short-term, but the loss of future sales and its reputation is incalculable. 

    Toyota – Culture of Quality 

    How did Toyota institutionalize its quality culture?  One aspect of the “Toyota Way” is that newly hired engineers were mentored for 10 years to ensure that they are fully imbued with the values around which the culture is built. Another aspect of the quality culture was the concentration on analyzing consumer complaints and acting on the analysis quickly.  However, when Toyota set its goal to become the world’s largest automotive manufacturer, it lost sight of the key values that gave it its reputation in the first place.  In order to meet its growth targets Toyota had to hire many new engineers globally; however it did not have the senior engineers available to mentor the new team in the manner that it had in the past.  In addition, it no longer spent as much time analyzing consumer complaints – and in some cases it came up with low cost “fixes” (e.g. replacing floor mats in response to complaints of sticky accelerator pedals).  One final aspect of the decline was that Toyota did not share safety information worldwide, so problems that cropped up in Europe were not shared with the US.  Hence its “failure to connect the dots”, as stated by Akio Toyoda when commenting on the recent recall. 

    What Should We Learn? 

    Toyota’s early growth resulted from its relentless pursuit of quality – this was its strategic competency; however, it lost its way when growth took priority.  When you lose sight of your strategic competency, the very differentiator that gives you your competitive advantage, you will damage your reputation in the market. This reputation often takes decades to build.  So as you look to grow, make sure that the growth does not cause you to grow faster than you can grow your strategic competency. This means that you must have plans to ensure your intellectual capital (strategic competency) grows at the same pace as your sales growth.  This competency expansion is a critical consideration as you develop your strategy.

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

  • Help! My Market Doesn’t Need My Product Any More! How to Strategically Position Your Company for Success in the Face of Changing Market Preferences

    By Denise Harrison, Vice President

    Strategic Planning Expert
    Strategic Planning Expert

    “First, the bad news, the market for buggy-whips has disappeared; but the good news is, that we have cornered the market for 8-Track tape players.”

    Who makes the screens that go into electronic readers – you know the screens on Amazon’s KindleTM and Sony’s ReaderTM?  Prime View dominates this market; how did Prime View become the leader?  Is this a new company?  Well yes and no. Prime View was started by a Taiwanese paper company who saw that paper was being replaced by other media, in this case liquid crystal display (LCD) screens.  Prime View was born from this view of the future.[1]

    The Importance of Market Analysis

    The senior management team of the paper company correctly identified what the market really needed; the market did not need paper, the market needed something to display the written word.  Correctly identifying the true market need enabled the company to see electronic readers (e.g., KindleTM) as a substitute for using paper to publish books and other media.  Once this alternative technology was identified, the team developed a strategy to enter into the electronic reader market.  The electronic reader market is a very small segment of the overall LCD display market.  The larger segments of the LCD display market are dominated by large electronics companies, which are often competing on price.  Prime View selected the electronic reader market, a market that was still being driven by technological advances rather than lower cost.

    Once they identified the electronic reader market, they decided that it would be easier to buy/partner to obtain the technology required, rather than develop it in-house.  They acquired several companies including Philip Electronics, NV’s e-reader division who was providing screens for Sony’s ReaderTM.  They licensed E-Ink’s technology to further enhance the product and subsequently became Amazon’s e-screen supplier for the KindleTM product.  Finally, in order to control the technology the company purchased E-Ink.  Now they dominate the e-reader screen market, and all the key providers (Amazon, Barnes & Noble, and Sony) of e-readers use Prime View screens in their products.

    Keys to Success

    1. Truly understand what the market needs – this is not necessarily what the market is already buying from you.  If you correctly identify what the market really wants, you will be able to see indirect competition and substitutes on the horizon.  Prime View realized that the market did not need paper, but an alternative medium to display the written word.  They realized that LCD screens would be used in place of paper.
    2. Select a market where your company will be successful and develop a strategy to enter that new market.  Prime View selected the electronic reader market where technology was key to market differentiation, rather than lower cost.
    3. When entering a new market, make the “make/buy” decision early; can you grow the competencies needed to compete in this market in-house or is it faster and more cost-effective to buy a company with the required competencies?

    What is next for Prime View?

    Now that Prime View has the dominate position in this market, it cannot rest on its laurels.  The good news is that the market is growing quickly; the bad news is that this market growth has attracted many competitors.  How long will this market be technology driven? What does Prime View need to do in order to continue to be the market leader?  When will the transition come that will move this market from a specialty market to a commodity market where low cost defines the winner?  How does it go about looking for the next emerging segment in the LCD industry – a new segment where technology is driving success rather than low cost?  As the market- dominate player, you cannot kick back and enjoy success, you must plot the next move on the chess board so that you are positioned for success for years to come.

    [1] “Race Heats Up to Supply E-Reader Screens”, Wall Street Journal, December 29, 2009, p. B1.

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

  • Lessons Learned from Boeing’s Stumble:Risk assessment is Key to a Successful Strategy

    By Denise Harrison

    Strategic Planning Expert
    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.

  • Strategic Planning: When Good Goals Go Bad

    By Denise Harrison

    Strategic Planning Expert
    Strategic Planning Expert

    “As the housing market collapsed in late 2007, Moody’s Investor Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.”[1]

    Banks failing, real estate loans made to people who did not have the means to repay them, institutions using derivatives without fully understanding the risk – what happened?  Were executives just trying to meet their short-term goals?  Did these goals enable them to qualify for significant bonuses?  Did this achievement of short-term goals lead to long-term instability?

    Many of the financial institutions currently in distress did not pay heed to the warnings of a real estate bubble.  Instead many institutions developed plans to keep the top line growing in spite of the increasingly risky nature of the borrowers and the overvaluation of the underlying collateral.  Could this have been prevented?

    Well, hindsight is 20-20, but the lessons here are important and should be a part of your strategic planning process:

    • Evaluate external forces – (e.g. is there a bubble?)  Are your goals consistent with the external environment?  How are you positioned if the bubble bursts in 1 year? 2 years? 3 years? Are you making the naïve assumption that business will continue to grow? Do your goals explicitly take risk into consideration?
    • Are top line growth goals in line with long-term stability and profitability and perhaps survival?
    • Are you not investing in key projects in order to make the top line?
    • What will the consequences be if you do not invest?  Will it impact your long-term growth?
      • Will your phone system go down if you do not invest?
      • Will you have a safety issue if you do not continue with training?
      • Will you have inadequate staff for the upturn if you do not replace key positions now?
    • Are you taking on customers who are a time sink in order to make your top line?
    • Are you using the right metrics?  Are you measuring success from a customers’ viewpoint?  (If you are UPS should you measure package delivery or package receipt – i. e. did the addressee really get the package?)

    During economic turbulence, be sure you set realistic goals that do not jeopardize your company’s long-term viability.  Position your team and your company for the recovery by setting reasonable targets that are not solely focused on short-term results.

    [1] “How Moody’s Sold Ratings and Sold Out Investors”, Kevin G. Hall, McClatchy Newspaper, October, 2009.

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