Center for Simplified Strategic Planning

Author: Denise Harrison

  • Coming In Out of the Rain

    By Denise Harrison, Executive Vice President and COO

    Strategic Planning Expert
    Strategic Planning Expert

    Note: The following article was first published in 2007 but is still relevant today.

    What? How could a low cost company in India have trouble with low cost competition from China? Welcome to global competition. Over the last year several articles in Course and Direction addressed dealing with low cost competition. Several readers commented, “Nice theory, but how about some real-life examples?” Recently, Fast Company published an article entitled “Monsoon Marketing” which illustrated an excellent example of both what to do and what not to do when facing low cost competition.

    Stag Umbrellas (“out in the rain”)

    Ebrahim, Currin, & Sons produced umbrellas under the Stag name for almost 150 years. After over a century of market dominance low cost competitors entered the market and Stag found its market share dropping significantly. The company’s response was typical: Lower prices! Unfortunately lower prices lead to lower profits which lead to internal cost cutting which lead to lower quality. Sound familiar?

    Reassessment

    Stag took a step back and realized that this strategy was a recipe for failure and it was time for a change. What did they do?

    1. Returned to their roots – back to producing a quality product for a higher price.

    The red ink on the bottom line turned back to black – now it was time for more investment – investment in innovation. First they needed some market analysis – what would work? Over the years the size of the middle class had grown significantly. In addition, the disposable income available to this group had increased. The middle class now purchased cell phones and had access to a wider variety of brand name food and beverages. How could Stag leverage this change?

    1. Stag chose to team up with product providers (cell phone manufacturers, beverage manufacturers, etc.) to use umbrellas with product logos to increase brand awareness.
    2. In addition, the formerly homogenous market segment of umbrellas buyers had segmented itself into niches that responded to a variety of changing market trends. Much the way cell phones went from a functional device to a fashionable item with assorted features and Swatch made watches a fashion item rather than simply a time piece, Stag turned the umbrella into a fashion item – yes, more colors than just black.
    3. Stag also used technology advances in the miniaturization of electronics in combination with emerging market preferences and increased the feature functionality of umbrellas. For example:
      • Umbrellas with built in flashlights for travelers on secluded roads
      • Umbrellas with music
      • Umbrellas with alarms to fend off robbers.

    Stag changed its strategy from trying to beat low cost competitors at their own game to one that both capitalized on the quality of their product and used market analysis to identify emerging market trends to develop products targeted to specific niches. This strategy enabled Stag to “come in out of the rain” and regain its eroded market share.

    1. “Monsoon Marketing,” Fast Company, by Anupam Muker, April 2007.

    Interested in more ways to improve your strategic planning process?  Download a complimentary copy of our Strategic Planning Tune-up book by clicking on Tune-up.

    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 2014 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

     

  • When Is It Strategic to Say No to New Business? When can higher volume lead to lower long-term profitability?

    By Denise Harrison, Executive Vice President & COO

    Strategic Planning Expert
    Strategic Planning Expert

    As a company looks for additional growth, its strategic planning team needs to remember that not all growth is good growth. When searching for growth, a team can be lured by the siren song of a big customer or a high growth segment. However, the team might find the new opportunity is being sung in a different key from the music that is producing the company’s current success. How can you prevent the dissonance?

    High volume and revenue activities have to harmonize with your strategic competencies and company values to be worthy of consideration. Some examples of high growth opportunities:

    1. High growth government spending on the Iraqi Conflict
    2. Wal-Mart as a customer

    The Iraqi Conflict
    Some government contractors pursued opportunities in Iraq when they saw significant funding siphoned off from their existing government contracts to fund the war effort. An evaluation of threats and possible mitigation tactics is imperative before jumping into such a high-risk, but potentially lucrative area. The threats assessment includes protecting against and dealing with kidnapped or deceased employees and the stomach to handle these events if they, in fact, occur. It also requires evaluating the culture and environment, where accomplishing objectives may include methods of doing business not acceptable in the US. Preventing corruption and unsavory business practices must be evaluated upfront and evaluated on a continuous basis as new and evolving situations unfold. In addition, the contracts may be lucrative now, but what happens when the funds dry up? In pursuing this opportunity, did you lose focus on your existing business? Will you be able to utilize the capabilities developed in Iraq to generate business elsewhere? Or will this be a one-shot deal that gave the company a short-term revenue hit which then forced significant retrenchment after the funding stopped?

    Saying No to Wal-Mart
    Many executives have followed the beaten path to Wal-Mart headquarters in hopes of generating more volume only to find themselves in a downward spiral of lower prices, lower profitability driving lower quality and losing the brand image that enabled their market leadership position. In the article The Man Who Said No To Wal-Mart, (Fast Company, January/February 2006) Jim Wier, CEO of Snapper™, told Wal-Mart that his company would no longer sell Snapper™ lawnmowers to Wal-Mart. Wier knew that Wal-Mart’s pressure on Snapper™ to lower prices would eventually lower the quality of the product. Additionally, Wier knew that Wal-Mart would not be able to sell the differentiated features or be able to service the mowers in the manner that Snapper™ desired. He feared that the brand’s image would be tarnished and their profitability would suffer. “We’re not obsessed with volume,” says Wier, “We’re obsessed with having differentiated, high end/high quality products.” Wier knew that his customers were people who enjoyed cutting their lawns and were not looking for a cheaper product, but these lawn connoisseurs were looking for a better product and willing to pay for it.

    Bottom Line
    Growth for growth’s sake may cause long-term damage to a company’s overall health. Make sure the opportunities and customers you pursue are consistent.

    Interested in more ways to improve your strategic planning process?  Download a complimentary copy of our Strategic Planning Tune-up book by clicking on Tune-up.

    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 2014 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

  • Customer relationships: What does this concept have to do with strategy?

    By Denise Harrison, Executive Vice President and COO

    Strategic Planning Expert
    Strategic Planning Expert

    Frustrated by losing a bid, one CEO called up his peer at the procuring company and asked, “What could we have done better?”

    The two firms had a long history of working together, and the CEO wanted to know what had gone wrong. The CEO at the procuring firm knew that the bidding process had changed: the procuring company had decided to turn it over to one if its “high potential” managers to develop a team to select the vendor.  The procuring company CEO asked the 28 year-old team leader how the team had selected the winning vendor.  The team leader said both companies were well-qualified to do the job, but the differentiating factor was that the winning company had communicated to him via text message every day.  The team felt that the winning company would be better at keeping the company informed concerning the progress of the project.  When the procuring company CEO communicated this to the bidding company’s CEO, the bidding company realized that they had missed an important factor in the bidding process.  What had the losing company done?  Requested face-to-face meetings.  While they were waiting for a returned phone call and an appointment, their competitor was staying in touch and following up with the information required via text message.  The face-to-face meetings had been successful in the past – but no one thought about how the new decision maker and his team might be different.

    This anecdote was relayed to a group of fellow CEOs and other CEOs chimed in with their stories. One recounted how a new purchasing agent had specifically requested to be contacted only via email.  If everything is electronic, how do you build a relationship? Still, efforts for in-person meetings were rejected and the requests were a source of annoyance for the purchasing agent.   Another CEO was troubled that his company’s differentiator was building customer relationships – were they going to be able to continue to differentiate the company this way?  All agreed that the meaning of customer relationships has changed over the years.

     

    This transition has occurred over time – our quest for efficiency and our ability to communicate quickly has resulted in shrinking the number and length of in-person contacts.

    How is this strategic?

    One important way of gaining market share is to develop a better understanding of your customers’ needs and preferences and changing your practices and styles to meet emerging needs and preferences, faster than your competition.  To assume that your customers’ communication preferences do not change can cause you to lose customers, as demonstrated by our first CEO who had just lost a bid.  While his relationship with the other company’s CEO allowed him to understand why his company lost the bid, it did not change the decision.  Losing business because you do not understand the importance of speed and brevity over a “high touch” technique can be fatal if it is not assessed early. Embracing your customers’ communication preference will allow you to stay in the game.  CEOs and other executive officers often do not embrace new technologies or processes because these are not tools that were available when they learned the business – these are not the tools that made them successful.  It is important for senior management to work to understand and use the new tools so that they are able to leverage the advantages and not get left in the dust using an hour glass when watches and smart phones are available.  They must be sure they do not provide roadblocks to progress.  In addition, younger employees should be alert to the communication preferences in their interaction with others – they may find that some customers and co-workers prefer face-to-face meetings and believe that texting is for informal communication – not for business use.

    Understanding the importance of communications preferences and the ability to utilize new communication technology is important to how your company is perceived by your customers and potential employees. Any company that is not able to adapt risks being painted as a dinosaur in the eyes of new up and comers, both internally and externally.

    Recently I observed how one CEO, who was not comfortable with today’s technology, sent out a memo stating that all emails had to be reviewed by a senior officer before being sent to a client.  Needless to say, this slowed communication to customers.  In the past this company had differentiated itself with its unique technical solutions to client problems – however, their lack of adoption of email and text capabilities caused them to be perceived as a dinosaur by the people using their services.  What seemed on the surface to be a simple communications problem caused this company to lose their perceived comparative differential advantage in their clients’ eyes.  All the work building elegant technical solutions could not keep them from being viewed as technically less advanced due to a seemingly small tactic – an inability to effectively use email and text messaging.

    Summary

    How we communicate with clients is changing.  These changing techniques will change the way we build relationships with clients.  It is important to know when a text is best, when an email and when a phone call or in-person visit is required.  Being sensitive to your client’s preferences will allow you to build the relationship you want, but possibly just not in the way you have done it in the past.

    Interested in more ways to improve your strategic planning process?  Download a complimentary copy of our Strategic Planning Tune-up book by clicking on Tune-up.

    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 2014 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

  • Know When to Hold ’em and When to Fold ’em – Knowing when to get out of a core business is key to being successful in the future.

    By Denise Harrison,  Executive Vice President and COO

    Strategic Planning Expert
    Strategic Planning Expert

    Sony, the leading consumer electronics company in the 20th century, is not having success in the 21st century – many of its core businesses are hemorrhaging cash.  Recently the company has taken steps to right the ship:

    • Cutting jobs in the PC business and putting it up for sale
    • Cutting jobs in the TV business and separating it out – potentially putting it up for sale
    • Separating the video game and cell phone businesses

    As noted by the CEO, Kazuo Hirai, Sony is looking to rekindle the spirit credited with spawning cool gadgets in the past. (WSJ, February 7, 2014)  Sony lost focus on what made it a success – innovation in the consumer electronics space.  Instead, it held on to old technologies and old businesses that had become commodities.  And by focusing on low cost production rather than innovation, it lost its competitive edge.

    Key Takeaway:

    One of the hardest decisions to make in developing a strategic plan, is knowing when to fold a core business.   When looking at a mature segment of your business, consider the following questions:

    • Has this business become a commodity business where purchasers are only looking for low price?  This means there is little price differentiation resulting from additional features and/or additional service.
    • Does your company still have a competitive advantage in this business?  (For example: Blackberry evaluating its skill set after the iPhone was introduced; can they still compete in the cell phone market?)
    • Will you get higher return by investing in other areas – specifically areas in where your competitive advantage is better defined?

    Making the transition away from a formerly attractive core business to new areas for growth is a difficult one.  Still many companies have faced this dilemma and made the transition to a new core. (DuPont is a good example.)  Will Sony be able to make this transition?  The jury is still out.

    Interested in more ways to improve your strategic planning process?  Download a complementary version of our Strategic Planning Tune-up book by clicking on Tune-up.

    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 2014 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

  • Are you frustrated by the lack of results in your strategic planning efforts?

    We are interested in your thoughts: Why doesn’t your strategic planning process work? – please take our confidential survey by clicking on: https://www.surveymonkey.com/s/9RHF6PS

    Many CEOs would like to make their strategic planning process more effective – what areas would you like to enhance?

    • Are you frustrated by the laundry lists without priorities?
    • How do you decide what new opportunities to pursue?
    • Does your strategy look like your competitor’s?

    By answering this confidential survey you will help us understand where strategic planning processes do not achieve the desired results. We will publish the survey results and our solutions for the problems that are mentioned in the survey.

    Questions: contact Denise Harrison at Harrison@cssp.com

  • Strategy: Turning Trash into Treasure

    By Denise Harrison, Executive Vice President and COO

    Discussions concerning waste disposal and environmental impact are showing up more frequently during strategic plan development. With disposal costs and environmental regulations increasing, companies are finding creative ways to deal with their waste. Here is one example.

    Cheese Brine

    Cheese production in Wisconsin is big business; – in fact one quarter of the cheese produced in the US comes from Wisconsin. Cheese brine, a byproduct of the production process, and its disposal costs cheese producers thousands of dollars of each year. But what if they could find something productive to do with the brine?

    Solution
    Combine the cheese brine with the rock salt used for keeping roads from icing up. What are the benefits of this combination?

    • The cheese brine activates the salt to make it more effective in colder temperatures enhancing road safety
    • The cheese brine/rock salt combination helps keep the salt on the road – it is estimated that a third of the salt bounces off the road during the spreading process
    • It reduces disposal costs for cheese producers
    • It reduces road salting costs for the municipality using the cheese brine/rock salt mixture.

    The downside: – well, it is a bit smelly.

    Take-away:
    As environmental concerns and waste disposal costs increase, look for creative ways to use your waste. There may be a new product idea hiding in your trash.

    To learn more ideas for tuning up your strategic planning process please click on: http://www.cssp.com/strategytips  to download our complimentary strategy tune-up book.

    If you have questions about how to re-invigorate your strategic planning process please email me at harrison@cssp.com .

  • Understand What Differentiates your Company in the Market

     

    Strategic Planning Expert
    Strategic Planning Expert

    What differentiates your company in the market?  What sets you apart in your customers’ eyes?  What do your potential customers think? These competitive differences may be good – but they may not be good.  Would it be good if your customers think your company is difficult to do business with? Would you know? What if your customers think that your product has the best quality, but is also the most expensive – should you target potential customers who are only looking for the cheapest price?

    Recently, I spoke with a number of marketing executives and they emphasized the importance of customer and market surveys to better understand what differentiates your company in the market place.  Often these surveys are eye openers and provide good input for strategic thinking; for example:

    1. Understanding the positive attributes will help you target the segments and customers that truly appreciate what it is that differentiates your company.  It keeps you from wasting time with customers who do not particularly care about certain features or benefits that you provide.
    2. Understanding the negative factors will help you target what changes need to be made so that your company can gain market share.
    3. What if your customers do not see any differentiators?  Then you need to decide if this is because you do not emphasize your competitive advantage or if you really do not have a competitive advantage.  This dilemma often occurs when a market leader lives off of its reputation, rather than continuing to innovate and further differentiate its products and services.

    Some examples:

    If your company is perceived to be the high quality and high value producer, you should not be spending time with customers that are shopping for the lowest price.  While this may seem like it limits your market, it really focuses your sales efforts on the customers that value the characteristics that you bring to the market.

    If you find that there are negative perceptions, it is time to do some soul searching.  Do the negatives come from a small unattractive segment of the market?  Or are these attributes that need to be fixed in order to achieve significant market penetration?  One company did a survey and found that they were perceived to be arrogant in the market place.  What was behind this remark?  When they asked, they found they were difficult to do business with – customers found it hard to work with the company on special promotions and on tailoring the marketing mix to reach the specific end users that were important to a particular customer.  The actual reason for the lack of responsiveness had nothing to do with arrogance, but rather resource allocation – with only one marketing person the company was unable to respond to the number of marketing requests that it received and was thus perceived to be unresponsive.  By hiring more marketing resources and focusing specific resources on specific customers, the company was able to change its negative differentiator into a positive characteristic.

    What should you be doing?

    1.  Do some market research to better understand what differentiates your company in the market – yes, from the customer’s or potential customer’s point of view?
    2. Once you know the positive attributes, look for market segments and customers that value the attributes that differentiate your company in the market place.
    3. If you have attributes that do not show up in your survey – is this because they are not valued?  Or is it because the customers do not understand the value that you truly provide?  Think of ways that you can communicate the true value of your offering.
    4. If you have some negative differentiators (e.g. difficult to do business with), look at ways you can change the negative impressions.

    Market research is a key input to better market understanding.  Assess whether or not it is time to do a third party survey to better understand what your market thinks differentiates you in the market.  Then use the information in your strategic planning process to help focus the team in the areas that require focus, either from a positive or negative aspect of the research.

     

    For a better understanding of how you can use your market research to help your team focus on the high potential areas of your market, you might be interested in signing up for our Strategic Planning Tune-Up book.  To download, please click on Tune-up.

    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 2013 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

  • Execution: Can You See the Path?

    Denise Harrison; EVP & COO
    Recently I was discussing action plan progress (or lack of progress) with the action plan team. I asked the team what are the milestones for next month? What do we need to be doing in order to achieve our objective? It surprised me that the team could not identify the next steps to achieve a key milestone in the action plan. Once we clarified the steps the team was able to start working on the specifics and understood why the deadlines were important for each step in achieving the next key milestone.

    During your monitoring action plan review it is essential that the key steps are laid out for the next month or two months. However, it is more important that the team members responsible for the steps understand why the steps and the timing of the steps are critical to achieve the overall action plan objective or achieve a key milestone within a plan.

    Take the time in your monitoring meetings to ensure that you have the clear path defined for each action plan for the next month’s activity. If you have a clear understanding of what needs to be done and why it needs to be done your will find your team will be able to execute more efficiently.

    Learn more from our webinar on execution, please click on Execution.  Questions about execution or strategic planning? Please contact Denise Harrison at harrison@cssp.com.

  • Social Media and Strategic Planning

    By Denise Harrison, EVP and COO

    Some companies are using social media to position themselves as thought leaders in their industry; others are using it to provide information and better customer service. Other companies are perplexed at how social media can help them. There are many examples of how to use the various forms of social media, but recently I ran across a video by Wm. W. Meyer on how to clean a drive slide. While you may not be interested in how to clean a drive slide, the video provides a good example of how you can use social media, in this case YouTube, to bring your product manual instructions to life.

    As you develop your strategic plan your team should be looking at ways to use social media to:
    • Raise your visibility by becoming seen as a thought leader in your industry
    • Enhance your customer service by providing videos of how to fix or maintain your products
    • Find candidates to fill open positions
    • Find suppliers

    Some of the social media channels may seem foreign to many folks who grew up when the fax machine was a new invention and PCs had not yet been invented. Your team needs to evaluate how these communication channels can reach your customers and potential customers.  Remember for some of your customers  social media channels are the normal course of interaction. I will cover other thoughts regarding social media and strategic planning in future posts.

    I know many of you are successful at using social media. I would love to see your examples – please respond to this blog to show how you are using social media.

    Comments and questions? Please contact me at harrison@cssp.com.

  • Close the Gap between Planning and Execution – Monitoring Checklist Keeps Execution on Track

    Denise Harrison
    Strategic Planning Expert

    By Denise Harrison, Executive Vice President and COO

    Are you achieving your strategy or are you slipping?  How can you keep your team on track?  Monitoring is one of the key aspects of successful execution.  Here is a monitoring checklist – if you can accomplish these items you are well on your way to successful execution:

    1. Meet monthly to discuss progress on key strategic initiatives.
    2. Team leaders should have action plans updated before the meeting.
    3. Ensure that all members of the strategic planning team are present.
      1. Discuss last month’s achievements
      2. Discuss and schedule what is planned for the coming month
    4. Resolve shortfalls in progress and roadblocks.
      1. Solve the problem (rather than assess blame)
      2. Determine what it will take to get plan back on track and reallocate resources to achieve your desired results and timeframe
    5. Discuss any changes to business conditions – does this require a change in strategy/strategic initiative?  If so, discuss what course corrections are necessary.
      1. Stop/change any strategic initiatives that are no longer deemed important to achieving the strategy.
    6. Review new opportunities
      1. Assess if they need to go on the list by replacing an initiative already on the list
      2. If they are not more important than what has already been selected, then save for the next strategy planning cycle
    7. Walk out of the meeting with a clear picture of what will be accomplished before the next meeting.

    If you are able to achieve all of the items on the checklist, you will achieve your strategic objectives faster by executing more efficiently.

    Potential pitfalls?

    Here are some pitfalls that I have observed over the years:

    1. Meetings that are held sporadically or infrequently – this makes it harder to get action plans back on track.
    2. Blame rather than problem solving – leaders fix problems rather than point fingers.
    3. Review by exception rather than review of each plan – it is important that each strategic initiative has visibility as a reminder of its importance to achieving the strategy.
    4. Adding strategic initiatives without taking any away.  This results in dilution of resources and often lowers margins and slows execution.
    5. Declaring victory before objective is achieved – yes, it is wonderful to release a new product, but it is better if the new product achieves its revenue and margin goals.

    Avoiding these pitfalls by following the checklist will keep your plan on track. Would you like to learn more about executing your strategic plan?  Please listen to our webinar: Strategic Execution: Path to Profitability by clicking on Strategic Execution.

    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 2013 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

  • Manufacturing Companies Gain Flexibility through 3-D Printing

    Old News
    The ability to take a CAD drawing and create a physical prototype using 3-D printing was breakthrough technology 20 years ago. Now most design engineers use this capability to speed the new product development process quickly moving from concept models to functional prototypes into production.

    New News
    While visiting Stratasys, a leader in the 3-D printing industry, I found that the 3-D printing technology has expanded beyond its traditional prototyping application onto the manufacturing floor. Manufacturing companies are using 3-D printers to produce manufacturing tools (jigs, fixtures, patterns) to aid in the manufacturing process. 3-D printing technology allows production teams to quickly design and create manufacturing tools as they ramp up production for new products or streamline their production lines. In addition, if the tools are damaged they can be replaced easily and quickly without having to go outside to have the tool replaced.

    Strategic Lessons:

    1. Production efficiency: If you are a manufacturing company – assess whether or not you can use the technology that resides with your design engineers to gain efficiencies in your manufacturing process. Using 3-D printing technology to produce your jigs and fixtures may speed up your change-over.

    2. Growth: Significant growth was achieved by identifying new applications for 3-D printing technology. As you look at the products and services your company offers; does your team use its strategic planning process to identify new applications to generate future growth?

    If you have questions about any aspect of this blog post please contact: Denise Harrison; harrison@cssp.com

  • Differentiate Your Company – Don’t Poke the 800 lb. Gorilla in the Eye!

    Visiting Brazil I came across an example of how a company can create a competitive advantage by focusing on a relatively unattractive market niche.

    Embraer is now the third largest aircraft manufacturer in the world – much of its success results from its decision not to poke the 800 lb. gorilla (gorillas – Boeing, Airbus) in the eye. Embraer decided to focus on smaller commuter jets for short hops. This segment of the business was relatively small until worldwide deregulation caused this market to boom.

    Is your strategy pitting you against 800 lb. gorillas – or are you differentiating? How you answer this questions will be key to how profitable you are.

    Questions about how to differentiate your company? Please contact Denise Harrison at .