Category: Strategic Planning

Strategic planning has been done many different ways.  Some work, and others don’t.   I’ve heard people talk about planning processes that are deeply detailed and months long, and I’ve heard of planning processes that are done in a couple of hours with post-it notes and tinker toys.  My own take on strategic planning is based on experience drawn from working with hundreds of companies over the years, and I’ve paid particular attention to three outcomes from strategic planning:

-What was the effect on the PROFITS of the company?

-What was the effect on the SALES of the company?

-How much of what was committed was EXECUTED?

Based on the experiences of those who fared best in these three areas, here are a few key things you NEED in your strategic planning:

1. Data+
2. Assumptions
3. Direction
4. Commitment
5. Execution

You can do anything you want, but without the five items above, you will end up with either a bad plan or a bad outcome.  With the five items above, very little that you add can greatly improve the plan quality or the effectiveness of execution.

Let’s examine each of these separately:

1. Data +

Far too often, I’ve seen companies try to strategize based upon opinions, feelings and presumptions.  There is simply no substitute for data – but strategically useful data is hard to find (and often expensive).  Anything you can do to improve your repository of strategically useful data is likely to pay back in your planning process.

2. Assumptions

While we desperately attempt to avoid assumptions in our daily lives, temporary estimates about the future are completely inevitable in strategic planning.  The key to making assumptions and using them well is to do so consciously, and remember that they are subject to revision in the future.

3. Direction

Direction is the heart of strategy – in my definition, strategic planning is the planning of a direction that will focus the organization’s resources to the best possible effect.  Almost no one skips this.

4. Commitment

There are two downsides to commitment.  One is that commitment creates accountability – which is only a downside when you want to avoid it.  The second is that commitments that aren’t backed up with resources and execution damage the credibility of the plan and the management team.  The simple solution to this problem is to fix it with good, resource-based execution planning, but the tedium of that process can prevent companies from doing so.

5. Execution

The Achilles heel of the entire strategic planning process, execution must be planned fairly meticulously with ample resources allocated to the expected efforts.  Any execution which is going to be strategically useful will require a significant amount of time and/or money, or else its strategic utility will be short-lived.  Because many strategists shy away from anything that some might call micro-management, I often observe poor execution planning in companies that are doing strategic planning without professional help.

I’d strongly recommend you take a look at your current strategic planning process.  Are all five of these areas covered?  If so – congratulations, you’re much more likely to get good results from your planning than most companies.  If your strategic management is missing any of these items, you might want to take a closer look at Simplified Strategic Planning, a battle-tested methodology that assures you will cover the critical pieces with an appropriate investment of time.

To learn ways to take your strategic planning to the next level please listen to our webinar:  Why my strategic planning isn’t working.

A Fundamental Element of Strategic Planning

By Dana Baldwin, Senior Consultant

Listing of a company’s strengths and weaknesses is a normal part of any attempt at strategic planning for virtually all companies.  Why do we perform these analyses, and what do we expect to learn by doing them? To be sure the company is headed in the right direction, a competent, thoughtful review and updating of your strengths and weaknesses is a fundamental element of good strategic planning.  We will publish a series of articles with elements of analysis of strengths and weaknesses explored in each article.  This is the second article in the series.

Think about the relationship between strengths and weaknesses. Almost all strengths have off-setting weaknesses of some kind. By correcting the weakness, we may lessen the strength or eliminate it altogether.

For example, Shaquille O’Neal has one of the most powerful bodies ever to play the game of basketball. He is a mountain of a man, 7′- 2″ tall, weighing about 340 pounds, with tremendous muscle mass. His game is pure power. He has little finesse, which is not a criticism. His weakness, however, is his relative lack of speed. If he were to try to defend against a guard playing 25 feet from the basket, the guard would likely be able to dribble the ball around Shaq and drive to the basket easily. If Shaq wanted to increase his quickness and speed – overcome his apparent weakness – he would have to slim down, probably to less than 250 pounds. While he would likely be much quicker afoot, what strengths he currently has would be lost in the process? At 250 pounds, he would be easily pushed around by other, now heavier, stronger centers. In short, he would lose the strengths that make him one of the premier players in the world by correcting a perceived weakness. The conclusion from this is that your team must be very careful to differentiate between weaknesses which must be corrected, and those which are the natural off-shoots of the strengths on which you are building your business.

To learn ways to take your strategic planning to the next level please listen to our webinar:  Why my strategic planning isn’t working.

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

© Copyright 2015 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

A Fundamental Element of Strategic Planning

By Dana Baldwin, Senior Consultant

Listing of a company’s strengths and weaknesses are a normal part of any attempt at strategic planning for virtually all companies.  Why do we perform these analyses, and what do we expect to learn by doing them? To be sure the company is headed in the right direction, a competent, thoughtful review and updating of your strengths and weaknesses is a fundamental element of good strategic planning.  We are publishing a series of articles with elements of analysis of strengths and weaknesses explored in each article.  This is the first one.

We must be sure we are actually doing the analysis of our strengths and weaknesses properly. Some teams just get together and throw a bunch of ideas on the page or flip chart, then go on to their next exercise. Little additional thought is given to the importance or impact of strengths and weaknesses and the reasons for defining them and analyzing them.

To set the stage for analysis of strengths and weaknesses, the team should first discuss why the team is looking for them, what is being looked for, and what will be done with the results when they have completed their work.

Simply put, your strengths are those things that your company does well which help you perform your jobs, deliver value to your customers and/or give you an advantage over your competition. They are some of the cornerstones you use to build your business and to build and maintain competitive advantages in the market place.

Why should your team determine your weaknesses? Most people answer that the team needs to correct weaknesses in order to remain competitive and effective. The real reason your team should determine what your weaknesses are is to get them out in the open, with everyone in basic agreement that these are actually weaknesses, so the team can determine what to do about each one, if anything.

Why wouldn’t your team want to address and correct each weakness? There are other considerations which must be taken into account.

Recognize that we can’t possibly be good at everything. For example: Look at WalMart and Tiffany. WalMart appeals to value buyers looking for basic goods.  What are WalMart’s strengths? Supply chain management and low prices on high volume products. What are Tiffany’s strengths? Upscale fine jewelry at high prices, individualized service and appeal to the highest economic groups.

What would happen to WalMart if they tried to appeal to Tiffany’s customers? And, what would happen to Tiffany if they attempted to appeal to WalMart’s customers? In both cases, they could likely lose focus, change the business model to the point where they could well lose their major customer base and suffer in the process. Each company focuses its efforts to maximize results in its own core business, and does not get distracted into areas where it may have limited appeal and expertise. This example helps to show that we need to choose those characteristics (strengths) which help us build our business most effectively and address only those critical weaknesses which truly interfere with or prevent us from being successful.

To learn ways to take your strategic planning to the next level please listen to our webinar:  Why my strategic planning isn’t working.

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

© Copyright 2015 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

By Tom Ambler, Senior Consultant

Note: This article was previously published in Course and Direction in January 2006

View Commodity Industries in a Global Way
Commodity industries that are highly capital intensive, have cyclic markets and high transportation costs are particularly susceptible to price fluctuations caused by unexpected supply/demand imbalances. This price variability makes investment in additional capacity very dicey. The long-term result is product substitution and periods of over-building capacity once companies overcome their uncertainty about the duration of shortages, thus beginning another cycle of supply/demand imbalance.

A good example of this situation involves the cement industry, which historically has been an industry where plant capacity was localized to the market due to very high freight costs and general availability of raw materials. The simultaneously high demand in the Sunbelt and high demand in China has caused a significant shortage of cement. The results are 20% increases in pricing and significant stretch-outs in the construction schedules. The cement companies are not likely to remedy this shortage very quickly.

Strategy Tip: If your industry is cyclical and capital intensive, make sure you understand the global economic situation – not just the local situation. You may need econometric models describing the long-term relationships that drive demand as the basis for capacity expansion. You should also be aware that your industry may be ripe for consolidation among suppliers in order to make it a more attractive investment.

Making a Healthy Culture a Priority
Getting tangled in your own web of unethical practices has become almost epidemic. It appears to know no industry boundaries and often involves multiple players in a company, either in cahoots or acting independently within the same unhealthy culture.

An example of this is reported in the Wall Street Journal 9/8/03. Ahold, an international food marketing giant, has come under the gun of financial scrutiny as a result of improper accounting for vendor rebates by executives of one of its large U.S. divisions, U.S. Foodservice. This scandal forced a restatement of earnings amounting to close to $1 Billion, which has thrown the spotlight on the company’s heavy debt. Reducing this debt will require the unraveling of much of Ahold internationally, with massive spin-offs and radical changes in its future course.

Strategy Tip: A culture that places huge emphasis on short-term performance and global market share, without adequate concern for integrity at every level and in every circumstance, becomes a festering sore in an organization. It has the potential to become a burning fuse just waiting to set off a bomb with financial and human devastation many times greater than the cost of fixing the culture in the first place. A company that loses sight of its values is one that loses its value.

For information on how to take your strategic planning to the next level, please listen to our webinar: Why Isn’t My Strategic Planning Working?

© Copyright 2015 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

Tom Ambler is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at ambler@cssp.com

By Denise Harrison, Senior Consultant

What would you do if you were faced with potential bankruptcy, with a product line that is over half a century old?  Product line extension? Expansion into new lines of business? Sell the company?  LEGO was facing this dilemma in 2001.  While the first step was to return profitability to the core by streamlining the business; this was not enough to position LEGO to succeed in the future.  Did the company need to better understand retail distribution?  No, it was a better understanding of how children play that really turned the company around.  How do children really play with the bricks?  What do they like doing?  What is missing?  Learning the answers to these questions allowed LEGO to surpass Mattel in size, even though Mattel has a much wider range of products.  The answers to the following questions helped LEGO reconnect with its user base and their parents:

• Is the way that children play different in North America, Europe and Asia? By understanding the cultural differences, LEGO was better able to position itself to meeting the requirements of these different end markets.  Now Asia is one of its fastest growing markets.
• Do girls play differently and use LEGOS differently than boys? Tapping into the female market was another key to LEGO growth. LEGO Friends became a play theme that was more interesting to girls.  But do girls like to build? Yes, building is one of the key attributes of this play theme’s success.
• What about adults? Do they use LEGO blocks?  Apparently yes, who said LEGOs are just for kids?  The popularity of LEGO Architecture is one of the success stories in the adult segment.

Historically, LEGO was primarily focused on boys 5-11; but by better understanding this segment and how play occurs, they were able to introduce a number of new products and product themes.  And when the team truly understood what little girls were looking for and then expanded applications to adults the company really took off.

What is next for LEGO?

Over the last few decades, video games and the overall digital experience have grown to be powerful disrupters to the traditional toy and game market, and now, LEGO must truly understand how the LEGO brand fits with the digital experience.  It is currently working with ways to build structures, take a picture of the structure and have it become part of a digital game.  This tailors the video game experience to the individual user as the user adds unique structure to the video experience.  How LEGO integrates the building experience with the digital experience will be the next challenge the company will face.

What does this mean for me?

As you develop your strategy, it is important that you truly understand your end users and how they use the products and services that you provide.  Understanding the environment and what really works and what does not work will enable you to develop a broader and deeper understanding of the application and what you can do to make it easier, better, faster, more intuitive for the user.  In addition, understanding how segments that are not currently targeted could use the product is another avenue for growth.  Are there unmet needs in your market because no one has thought through how different users might use your product?  How often do you go to trade shows in unrelated markets to come up with thoughts of new applications for your product?  What about new trends?  Do you face a disruptive trend similar to LEGO facing video games as an alternative for how your customers will spend their money?  Do you hide your head in the sand, or look for ways to integrate the new product or service into the experience for which your customers are looking?

Bottom-line 

Understanding your users and future users and the user experience will be important to your long term success.  Get out and spend time with customers while they are using your products and keep an open mind.  This knowledge will add to the information that you will have to make good strategic decisions.

Interested in learning how to integrate information into your strategic planning process to come up with better results?  Please call or email me, Denise Harrison at 910-763-5194 or harrison@cssp.com.

For more information about how to enhance your team’s strategic planning process please listen to our webinar: Why My Strategic Planning Is Not Working?

Denise Harrison is a senior consultant for the Center for Simplified Strategic Planning, Inc. She can be reached at  harrison@cssp.com.

© Copyright 2015 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

In two prior articles we discussed the key differences between strategic planning for somewhat larger companies and the smaller companies we are concentrating on here and listed the first four tips we have developed for making Simplified Strategic Planning easier for smaller companies. In this article, we will list the remaining four tips.

1. Push yourself — and your team — to keep the strategies as focused as possible. A two million dollar company CAN play in a billion dollar market, but it’s much more likely to succeed in a ten million dollar market. Always ask the question ”Can we realistically expect to dominate this market in five years?”.
2. Don’t have too many objectives — smaller companies will be well served to have 3-5 objectives. If you finish these, you can always start to work on the next set of objectives earlier.
3. Pay close attention to implementation — because there aren’t excess resources which can be dedicated to strategic activity, routine functions will always demand a higher proportion of your team’s time. You will need to be very careful about allocating time to action plans, and must be highly disciplined about having monthly monitoring of action plan progress to keep the ball rolling.
4. Outsource as much as you are comfortable with in the process itself. It’s hard enough to learn how to be the best at the things your company does, so consider outsourcing at least some of the planning process and possibly the market research to people who do those things professionally.

Remember, strategic planning should be viewed as a routine part of your year, rather than a separate event, so make sure the process fits into your normal business cycle with a minimum of hassle. If you use these tips, you should complete the process described in our seminars in a reasonable amount of time and get tremendous benefit.

To learn ways to take your strategic planning to the next level please listen to our webinar:  Why my strategic planning isn’t working.

Robert W. Bradford, President & CEO

In the prior article we discussed the key differences between strategic planning for somewhat larger companies and the smaller companies we are concentrating on here. In this article, we list three of the eight tips we have developed for making Simplified Strategic Planning easier.

1. Keep the team small — while 6-8 people is ideal for a 100 person company, 3-5 is likely to be better for smaller companies. Make sure your team represents the three points of the Tension Triangle – markets, finance and operations. Also, of course, make sure the CEO (or in some cases, owner) is fully involved in the process.
2. Don’t have too many market segments — we routinely work with 5-10 segments in most client companies, but 3-5 is a good number in smaller companies. Remember, while you lose some ability to focus on specific customer behaviors, fewer segments also means less time is necessary for the planning process. A benefit of reducing the number of segments you use is that you may end up forcing yourself to focus more.
3. Skip some of the less critical parts of the process in order to focus on the most critical issues. While this can be dangerous, you might consider not doing the following exercises in a smaller company: Supplier Market Assessment (1.3), Significant Regulations (1.6), Other Assumptions (4.3), How Can We Shoot Ourselves in the Foot? (5.3), and Mission Statement (6.1). You can also save time by combining Measures of Success (2.3) with Goals (6.2), and limiting the number of Strategic Issues (5.2) you examine.
4. Understand you will have next year to tackle another set of issues — It’s a good idea to do a great job understanding and dealing with a limited number of strategic issues each year. Some of the most successful smaller companies I know have a ”theme” for each year – one year it might be sales, the next year it might be quality, margins, or employee development.

We will discuss the remaining four important tips for smaller companies in the next article of this series.

To learn ways to take your strategic planning to the next level please listen to our webinar:  Why my strategic planning isn’t working.

By Robert W. Bradford, President and CEO of Center for Simplified Strategic Planning

We get questions about how to adapt our Simplified Strategic Planning model to smaller companies. The model was initially developed for companies with 50-500 employees, but has been used with great success in much smaller companies as well as Fortune 500 companies. This being said, there are a few tips we can offer which will make the process work much more effectively in the company with fewer than 50 employees (or one with a very limited management staff).

There are several key differences between doing strategic planning in a business with 10 employees and one with 100 employees. First, the team will likely be smaller, and include people with greater front line responsibility. The sales manager might be the only salesperson, and the operations manager probably does a significant part of the operations. Even the CEO in such an organization is likely to have a big chunk of time required for routine sales, operations, and financial functions. It’s also quite likely that there is no distinction between sales and marketing in the smaller company, and that some overhead functions, like IT, finance and HR, are largely or completely outsourced.

The second key difference is that the smaller company obviously has fewer resources to invest strategically, in terms of both time and money. This limits the strategic options available, which is a negative, but also makes the necessity of focus easier to understand, a real positive.

The third important difference is the availability of resources for the planning process itself. While it might be a good choice, it is a significantly more difficult investment for a small company to invest a few days of management time and thousands of dollars in any process.

We will discuss the important tips for smaller companies in the next articles of this series.

To learn ways to take your strategic planning to the next level please listen to our webinar:  Why my strategic planning isn’t working.

Thomas E. Ambler, Senior Consultant, CSSP, Inc.

Recruiting disciplined people requires a well-tuned filtering process that determines if there is a fit of the candidate’s skill sets and passions with the job requirements of the organization and determines whether the candidate is self-disciplined. We can take a cue as to how to do this from the recruiting process used by the football program of an academically elite Division 3 university with needs for self-disciplined candidates. Their process attempts to determine through hard and soft measurements what candidates have attempted and accomplished in their previous academic and athletic careers.  However, it goes even deeper by looking at less obvious things like the load and difficulty of the courses they took and other activities they pursued, and their success.

We can use an analogous approach by looking for evidence and language that strongly suggest that the candidate practices the Seven Habits of Highly Effective People codified by Stephen Covey, particularly the following:

• Be proactive
• Begin with the end in mind
• Put first things first
• Sharpen the Saw.

Once the person is recruited, we need to complete the job of building discipline, manifested in both thought and action, through our leadership and with our systems. This requires that we devote almost fanatical attention to modeling discipline, setting clear expectations, reviewing performance, assigning developmental jobs and rewarding disciplined behavior and contributions to a whole culture of discipline.

We can promote the application of the Hedgehog Concept personally and help lift their skills and passions to a whole new level. A culture of discipline with all key people on the Hedgehog Concept bandwagon has tremendous transformational power.

For more information on how to take your strategic planning to the next level please listen to our webinar: Why Isn’t My Strategic Planning Working?

© Copyright 2015 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

Tom Ambler is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at ambler@cssp.com

Thomas E. Ambler, Senior Consultant, CSSP, Inc.

In his outstanding book about great organizations, Good To Great, Jim Collins concludes, “Sustained great results depend upon building a culture full of self-disciplined people who take disciplined action, fanatically consistent with the three circles.” (The three circles for an organization are (1) what it can be best in the world at, (2) what its people are already deeply passionate about and (3) what drives its economic engine. Focusing on the intersection of these three circles he calls the Hedgehog Concept.) He further states, “A culture of discipline is not just about action. It is about getting disciplined people…who engage in disciplined thought and…who then take disciplined action.”

First, let’s define what is meant by “discipline.”

• The dictionary defines “discipline” as exhibiting “training, especially of the mind or character,” “a trained condition of order and obedience” and “the training effect of experience, misfortune etc.”
• Discipline comes primarily from within and it is “grooved”.
• Typically finish things they start.
• Capable of facing and dealing with brutal facts, even about themselves.
• Willing to adhere to the organization’s systems for getting work done.
• Having a passion for doing certain types of work or advancing certain purposes.
• Possessing unique skill sets.

We want our organization to be “full of self-disciplined people.” Most important is the CEO, who exhibits not only self-discipline, but also models and practices the other attributes of Collin’s “Level 5 Executive” (see Chapter 2 in Collin’s book). We also need to recruit and/or raise a host of other disciplined adults.  We will address this in a future article.

For more information on how to take your strategic planning to the next level please listen to our webinar: Why Isn’t My Strategic Planning Working?

© Copyright 2015 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

Tom Ambler is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at ambler@cssp.com

By Denise Harrison, Senior Consultant

How can we better deal with uncertainty when we develop our strategic plan?  Many strategic planning teams struggle with this issue.  While it is important to understand what you know as facts and what your assumptions for the future are, I have found that some good scenario planning helps a team prepare for a wider range of possibilities that might occur in the future.  By looking at different scenarios, the team can assess what will work in each scenario and then select the approach that will benefit the company in the most likely scenario, but still balance that approach by not closing out options that will work if another scenario unfolds.

Generating different scenarios

Some teams generate a probable scenario and then move to generate an upside and downside.  For example, the probable scenario is that we achieve 10% growth and the upside is 12.5% and downside in 8%.  While this works, I find that high performing teams that discuss actual events/trends and then develop scenarios corresponding to possible outcomes is a better way of generating scenarios.  Some examples of trends and events include:

1. Product launch is delayed by 12 months.
2. Oil prices plummet and stay down longer than our probable scenario (this could be good or bad depending on what your company does and who your customers are).
3. Acquisition has unexpected fall-out and customers leave and go to competitors.
4. Customers’ preferences change faster than we anticipate (Blackberry).

You should have your team members come up with ideas for different scenarios.  Generate what these environments will look like out 5-10 years.  Ask the question: What will we need to do to be successful if this is the competitive landscape?  You will notice before you start working, that several of the outcomes will have similar results.  Select scenarios that will generate different actions.

Once you have generated different “success” strategies, then evaluate which scenario is most probable, and then look to see what you can do to accommodate other “success” strategies so that you maintain your flexibility moving forward.   While you may not be able to keep all options open, you may be able to keep some avenues open until time passes and you have a better view of what the future has in store for your company.

Another benefit of this exercise is it allows the team to think more broadly and be more aware of the external factors that impact your business.  This will help the team deal with the changes that will inevitably happen during the planning horizon.  As you start to see movement that makes another scenario unfold, bring the team back together and recast your strategy.  If you anticipate this movement faster than your competition, it will help position your company to gain market share or weather an industry downturn better than your competitors.

If you are interested in discussing more about how to generate scenarios that will enhance your team’s flexibility, please give me a call at: 910-763-5194 or email me at harrison@cssp.com.  For more information about how to enhance your team’s strategic planning process please listen to our webinar: Why My Strategic Planning Is Not Working?

Denise Harrison is a senior consultant for the Center for Simplified Strategic Planning, Inc. She can be reached at  harrison@cssp.com.

© Copyright 2015 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.