Marketing, done well, is a vital cog in many companies’ strategies. Marketing performs many functions which are some of the keys to success over time. Good marketing helps pave the way for good sales. Effective marketing can be one of the leading factors in successful innovations and product or service enhancements.
Marketing can also be one of the first expenditures cut when times get tough. But the real question is: Is that the right strategy for your company? Let’s look at the benefits of keeping and even improving your marketing efforts versus the long term effects of lowering or even eliminating your marketing investments for a period of time.
The word investments is used deliberately, because there can be many long term benefits to properly funding and staffing an effective marketing department. First let’s define how we see marketing. Marketing has a long lead time view, not the short term approach of sales. Sales is concerned with this week’s or this month’s or this quarter’s orders. Marketing is concerned with building the company’s reputation in the market place. Marketing is usually tasked with building up the image and increasing the value and the recognition of the company and the brand, over time.
Marketing can be tasked with identifying and defining new products or services that fit the strategic competencies of the company. Marketing can also be charged with developing new markets for existing products or services. These new markets can be new territories, new channels or outlets, new industries which can use existing products or services, or even new applications for these same existing products or services.
All of the items listed above are consistent with, and integral to, the usual definition of marketing, marketing departments or staffs and the normal marketing function we have all seen as a part of many companies for years.
In the past, many considered marketing a necessary evil, or at least slightly superfluous to the actual running of the company. Today, however, marketing is often being challenged to go further, to contribute more directly to the company’s actual results. Well run marketing departments are more directly involved in the operation and in setting the direction of the company than ever before.
Marketing can contribute directly to the course and direction of the company, as a part of the strategic planning team. Marketing can assess where markets, customers and competitors may be heading in the future. Their input can have a major influence on strategies selected by the strategic planning team.
Marketing should be a part of any innovation efforts a company may have. The guidance of effective marketing should help the company minimize unproductive efforts in deciding what new products or services to pursue, and to help focus the limited resources, time, people and money, toward those innovations which will likely bring sales and profits to the company.
The analysis of the worth of an effective marketing group within a company should be based on all the factors above, culminating in an assessment of how profitable the company is based on how much marketing has contributed to the success of the company.
M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at: baldwin@cssp.com
By Denise Harrison, Executive Vice President & COO
Strategic Planning Expert
Reprinted from Course and Direction March 2007
Is strategic planning dead? Many so-called experts criticize the time spent on evaluating the core businesses and current competition as myopic. They point out that companies often miss emerging markets (mainframe to mini-computer to PC) or are blind-sided by new competition (Wal-Mart entering the retail grocery market). The Simplified Strategic Planning process covers both the evaluation of existing customers and competition and the assessment of future customers and competition. First, you need to know what is going on in the markets your currently serve, not only current and future needs and preferences of customers, but also competition. Next, you must also look at market shifts and make sure your company is positioned to take advantages of changing market conditions.
Industry Scenario/Winner’s Profile
In order to capture possible industry transformations the Simplified Strategic Planning process asks your team to generate a scenario of the industry looking at the broad planning horizon, both market-wise and time-wise. For example, if you were selling storage devices to the mainframe computer industry you would look at the whole computer industry for your industry scenario and at a point in time beyond the period for which you are planning. What are possible industry shifts?
Mainframe to mini computer to PC
Pagers to cell phones
Film to digital imaging
In addition, your team should ask: Who will our future customers be? Who will our future competitors be? Once this scenario is developed, then the team is asked to construct the winner’s profile, the key characteristics of the winning company given the industry scenario. Future importance and current performance is assessed for each characteristic. Gaps are identified and plans are developed so that the team is working on the items most critical to position your company to be the future winner.
Winning Customer Profile
What about customers? Can you identify the profile for winning customers using the same industry scenario? Yes! Simply take the industry scenario and identify the key future attributes for the winning customer. Then rate your customers and prospects against the winning customer profile. How does your customer base stack up?
Recently several companies employed this approach to focus their marketing and sales efforts. The results were outstanding:
Customer lists shrank: one list went from 200 customers to 30, with revenue and profit increasing
The targeted customers grew faster than the industry average, taking their suppliers along with them
Accounts receivable problems diminished — in one case to almost zero
Competitors often gained accounts, but gained the companies who were not positioned for changing industry conditions and soon developed financial issues. Accounts receivable and bad debts soared.
In strategic planning your company must position itself to compete effectively in changing market conditions. Developing an industry scenario looking out beyond the current planning scenario will enable your team to anticipate changing industry dynamics, new customers, and new competitors. In addition, this future vision helps your team develop the profile for the winning customer. Use these profiles to guide your priorities for future development and you will find your company on the path to future prosperity.
If you are interested in learning additional ways to invigorate your strategic planning process, please read a complimentary copy of our book: Strategy 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.
In over 1,600 strategic planning meetings, I have noticed that people have a tendency to approach their planning process from many different angles. One of the most interesting sets of angles revolves around the very common idea that we can hit our targets more accurately using the sequence “Ready, aim, fire”. This sequence originated with the drills for musket-armed infantry in the 18th century, and the basic sequence makes perfect sense – that is, we should ready before we aim and aim before we fire. There are other approaches that managers adopt, and some make more – or less – sense, depending upon the dynamics of the situation. These approaches can be summarized using a few, common, versions of this sequence.
Ready, aim, aim, aim, aim…
This sequence is unfortunately all too common. People who are likely to expend huge amounts of time and money on their planning often fall into this category, as do people who never really feel ready for their next big move. One of the common causes of this poor sequence is the idea that a plan must be perfect in order to work. Obviously, there is no such thing as a perfect plan, so the sequence itself is a trap brought on by a sense of perfectionism. The best counter to this sequence is to look for action in the short term supporting the strategy – if it doesn’t exist, it’s very likely someone is being too critical, and that criticism is going to hold the organization back.
Ready, fire, fire, fire…
The “machine gun” approach has some advantages. The biggest advantage is that it is very action-oriented, and may, with luck, lead to an effective strategy. The disadvantage is that the “fire” part of the sequence may use up resources to no effect without adequate measurement of results and reflection.
Ready, fire, aim.
While it sounds wrong, this approach actually matches the tactics of naval gunners for most of the past 200 years. The idea behind it is that one cannot accurately incorporate all variables into one’s aim, and so taking a shot to see where the shell hits is the simplest and best way to hit the target. Historically, this approach usually led to one shot that went too far, one that fell short, and the third shot hitting dead on – at which point the commander would order “fire for effect”. In a rapidly changing and dynamic environment, this sequence can work better, and faster, than “ready, aim, fire”. The key drawback is that you will often waste ammunition in the first two “ranging” shots. The key advantage is that the feedback of watching whether you hit or not is going to give you better information on your targeting than any amount of analysis.
Ready, aim, fire
If you have a single shot available to you, this approach – the classic – makes the most sense. Its application in the historical setting was in conditions where re-loading would leave you vulnerable to an enemy melee attack (such as a bayonet charge), and it makes sense in business situations where you will just get one shot. In strategy, it is better to avoid the “one-shot” situation if you can, but that’s not always possible, so this sequence is the one you should use if you find yourself forced into this kind of “do or die” position.
Which approach do you normally see in your business? Is it appropriate? A good evaluation of this seldom-examined cultural phenomenon is just one element of our Simplified Strategic Planning leadership. If you’d like to discuss how these concepts apply in your business, give us a call or attend one of our Simplified Strategic Planning workshops.
Are you frustrated with your strategic planning efforts? If so, please listen to our webinar: Why My Strategic Planning Isn’t Working by clicking here.
Does your company think that developing a strategic plan, printing it and distributing it to the appropriate population within your company actually completes the whole process? Or is it dedicated to actually carrying out the decisions the planning team made during the strategic planning process?
Many companies go through a reasonably diligent process to arrive at a potentially effective strategic plan. They involve key people who are in positions to know what is really happening in the company and in the market place. They make strong efforts to analyze what is really going on with their customer-markets and with their competitors. Assumptions about where each part of the company will be headed are made, with care taken to be as realistic as possible.
Strengths and weaknesses are analyzed, so the company may build on the strengths, and address any critical weaknesses which could affect the viability of the company in the future. Sustainable competitive advantages, which we call strategic competencies, are determined, and efforts scheduled to enhance these advantages to make the company even stronger in its chosen markets.
Strategic issues — those issues which can strategically affect the course and direction of the company — are chosen, prioritized and discussed in depth. After a quick reality check to avoid discoverable unintended consequences from the decisions just made, the team attacks its strategies.
In strategies, the team selects the appropriate course and direction for its core businesses, lists new opportunities to pursue and selects strategies to improve the strategic competencies, enhance corporate capabilities and develop the key personnel in the company. Targets for growth rates are selected at this time.
Here is where the problem of follow-through can arise. All too often, when a company has selected its strategies, they think they are finished with strategic planning. But, without effective follow-through and monitoring, only a small portion of the actions will actually be accomplished.
The planning team needs to establish Objectives: Specific, time-related and measurable projects which will not happen unless an action plan is established and followed. An action plan is simply a written road map of how to accomplish an objective, broken into controllable steps, with people assigned the responsibility of carrying out each step, time to do so, and a month by month schedule formally agreed upon.
As effective as the action plan process is, it is only one step in the follow up process. Regular monthly monitoring is required to make sure that each action plan is kept on schedule, and so each action plan can be \”tweaked\” to meet the ever-changing conditions on the real world. Failure to add monitoring to the strategic planning process will result in lack of progress and loss of confidence in the strategic planning process within the company, as well as possible lower sales and profits, potentially reduced viability of the company and loss of morale by those who have assumed ownership of the plan. Without effective monitoring, most companies will complete only about 20-30% of their action plans. With monitoring, the completion rate most often soars to well over 80% completion essentially on time, with good progress on the remaining Objectives.
Which way does your company complete its strategic planning?
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.
M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at: baldwin@cssp.com
Review by Denise Harrison, Executive Vice President & COO
Strategic Planning Expert
Playing to Winis A.G. Lafley’s book on how he determined strategy when he was at the helm of P&G from 2000 to 2009 – and interestingly enough, he is back at the helm of P&G.
While there is little new ground covered in this book, it is a good refresher of what senior management teams should be evaluating when they are determining strategy for their organization. In addition to providing a good refresher, his specific stories of how strategy was set for specific areas for P&G help remind us of what we should be doing with our own organizations.
First the basics:
First Lafley and his co-author Roger Martin set out five strategic questions to be answered:
What is our winning aspiration?
Where will we play?
How will we win?
What capabilities must we have in place to win?
What management systems are required to support our choices?
The authors suggest that these questions are not necessarily answered sequentially, but rather that the solution is an iterative process. In the Simplified Strategic Planning process we suggest similar questions – although the order is different. We suggest that where you decide to play is based on research which combined with the internal competencies of the organization helps you decide where you will play – at this point we suggest that the team evaluate its strategy. We agree that it is an iterative process rather than a straight line. But no matter where you start, these questions are important ones for your organization to be evaluating during your strategic planning process.
There are many stories of how P&G won by using these questions – but I found the story of where P&G decided not to play much more enlightening – yes, even a global giant like P&G may decide that they are better off partnering with an existing player, rather than going head-to-head with embedded competitors.
In this case, P&G developed “ForceFlex technology” that allowed plastic garbage bags to have a lot more stretch without breaking. This technology evolved from P&G’s knowledge of quilting technology used in its paper towels. Could or should they launch a new garbage bag line? It would compete against Glad (Clorox) and Hefty (Reynolds Holdings), two entrenched competitors. One would think that with P&G’s marketing and channel strength, this would be a no-brainer. But as they analyzed the competition and the costs that a head-to-head battle would incur, the team decided that it would be better to license the technology to one of the market leaders. They made the pitch to Clorox, and Clorox not only wanted to license the technology, but also wanted to have a partnership with P&G so that they would have access to existing and future P&G technology in this space. Both companies chose to move forward with the agreement – partnering on garbage bags, but competing in other categories.
P&G licensing its Force Flex technology to Clorox was an example of what Lafley and Martin call finding what a new “how to win” option looks like. They give many examples of how looking at different options and thinking through “what needs to happen in order for this to be a success?” for each potential option, allows a team to think through scenarios without assessing the probabilities. This gives a team a better choice of possible outcomes and stimulates creativity.
I found this book to be a good refresher with good examples of how P&G made difficult strategic decisions. It will stimulate your thinking as you embark on your next strategic planning cycle. Show more
If you are interested in learning additional ways to invigorate your strategic planning process, please read a complimentary copy of our book: Strategy 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.
Note: The following article was first published in 2008 but seems timely today.
Strategic Planning Expert Robert Bradford
It shouldn’t be a surprise to you that going green can be an extremely useful strategy in today’s markets. Without question, our strategic planning clients who have pursued environmental friendliness as a part of their strategies are reaping noticeable benefits. Indeed, in some areas — such as metal machining in the Midwest — we are already noticing that “green” markets are driving demand growth in otherwise depressed markets, where alternative fuels and wind power are showing real growth.
These benefits are most pronounced where companies began working on a “green” initiative years before any competitor. Interestingly, some of these initiatives started at a time when ideas like hybrid vehicles, alternative sources of energy, and green buildings were not yet clearly winners in the marketplace. Looking at how companies have fared with the rise of a major new customer preference can tell us a lot about how strategy works.
First, it’s clear that the strategy of catering to this customer preference has worked best when it is clearly visible. Prospective customers need trustworthy ways to distinguish your company from the crowd when assessing whether you are the best at meeting the new need. There are several ways to make your advantage (in this case, “green-ness”) visible: advertising, public relations, awards, certifications, alliances, “packaging” (not just boxes, but the way you present your products or services), and vendor relations, to name a few.
Advertising is obvious, but we need to be wary of wasting money on vague claims that develop little credibility with customers. The best “green” advertising has made specific, verifiable claims about distinctive environmental benefits derived from the purchase or use of a product or service. Public relations should be treated similarly, but don’t forget that proactive involvement in environmental activism can do a lot to build your credibility. This is an investment that is best made before you need credibility — not after.
Awards and certifications seem to be sprouting like mushrooms in a wide variety of industries. For example, in the construction industry, LEED certification is a way of showing that your building uses less energy and has less harmful impact on the environment that other building. Breadloaf Corporation in Middlebury, Vermont has taken steps to assure they have more LEED-trained architects and construction managers than their competitors, and they have successfully used this distinction to become one of the fastest-growing construction firms in Vermont.
Other ways to make your advantage visible will vary by industry. A good general rule, however, is to ask if your choices can make your strategic advantage more visible when you are, for example, designing products, choosing vendors, or designing your packaging.
The second way to assure you profit from a visible claim to an advantage like “green-ness” is to be able to back up the claim with reality. An excellent example of this was Toyota’s decision to back hybrid vehicles as a good short-term way to reduce automotive emissions. Millions of dollars in research and development money were poured into the hybrid concept years before anyone at Toyota — or anywhere else — knew for sure that there would be a payoff in the marketplace. Toyota’s strategy paid off because — rather than just pursuing the technology for its own sake — they carefully analyzed what factors would make it successful, including pricing, features, and impact on the experience of using the product. Today’s reality for Toyota is a growing fleet of reasonably priced vehicles with strong fuel economy and lower overall emissions — which translates into growing market share for the brand.
Backing up your claims is a serious issue in consumer products, largely because there are few regulations regarding what you can claim or how you can claim it. As a result, customers have become wary of false claims, and they won’t likely rely on a vague claim in their decision-making. One way around this issue is to use a sales or distribution channel as a proxy for a claim. A good example of this is the rise of “organic” grocery chains in North America in the past eight years. Many consumers will trust the purchasing processes of a chain like Whole Foods to screen out false claims for organic or sustainably-produced food. It’s possible that we will see more players in different distribution channels pumping up their purchasing processes to cater selectively to such focused markets.
Probably the most cost-effective way to back up environmental claims is to have a clear, visible, measurable difference in the way your products or services affect the environment. This can come from obvious differences in product design (such as in hybrid vehicles), or it can come from measurable differences (such as in energy efficient fluorescent light bulbs). Either way, if there is a way to measure the effect, you will be able to make much stronger claims than your competitors if you design your offering to create that measurability.
Third, the Toyota experience suggests another strategic concept that we have suspected for some time: starting early, while riskier, can deliver a more sustainable competitive advantage. I can remember hearing Toyota executives discussing hybrid vehicles at a conference of the Association for Manufacturing Technology in 2001 — long before “green” was a popular concept in marketing circles. While the money invested in hybrid technology might not have crippled Toyota, it was a very real and substantial investment made long before the market benefit of the “green” advantage was perceived to be a sure thing. This is important because the companies that waited until the “green-ness” was a sure thing are now playing catch-up with companies like Toyota that started down the path years before. Playing catch-up will hit you in three key areas: first, product technology will lag behind the leaders, second, your process technology will lag, and thirdly — perhaps most importantly — your image in the marketplace will not be associated with the new advantage.
It’s useful to note that Toyota did not abandon their profitable core product line when they decided to start down the hybrid path many years ago. They did, however, invest substantial money and key personnel in the initiative, and kept it on the burner for years before it generated a single dollar in profit.
A good example of “late start” competitive advantage can be seen in the electronics industry. At the 2008 Consumer Electronics Show, “green” products — those that, for example, consume less power — are being featured prominently. In fact, where the latest technologies have typically been touted at CES, this year, some of the biggest product announcements have essentially been last year’s products, made more energy-efficient. One common certification — “Energy Star” — indicates that a computer can be configured to consume less energy during periods of inactivity, and even turn itself off when left unused for a long period. While this designation has largely been the domain of laptops — where energy efficiency translates into highly valuable battery life — this year’s CES features a much larger number of desktop units sporting the “Energy Star” logo.
The electronics industry does show an example of how starting early can fail to produce results, too. Toshiba introduced a laptop made of polymers derived from corn in 2006 in Japan, and will be introducing this product in 2008 in the US. This is obviously an early start with a technology — and it is also obviously not taking the laptop market by storm. This is likely due to two issues, both of which should be considered when you are considering “green” technology advances. First, the reality of making a durable laptop case still requires some petrochemical based resins in the case, so it is not really biodegradable. Second, there is a strong disconnect between the environmental value — biodegradability — and the customer’s perception of value in the product. Clearly, we do dispose of old electronic devices, and this is a growing problem in waste management. Just as clearly, no one likes to buy an expensive gadget like a laptop thinking about throwing the device away. Technical issues aside, it’s highly unlikely that “green” disposal will motivate consumers to buy products that they prefer to think of as durable.
So here are the key learnings about how to use a new, emerging customer preference to gain market share:
Make it Visible
Make it Real
Make it First
Also, based on the Toshiba experience, be wary of using new advantages in ways that don’t fit well with customer perceptions and preferences, and — when you are first — be aware that the current technology may not deliver the benefit customers are really looking for.
There is no substitute for good, structured strategic planning in assessing and choosing the rising new customer preferences that you will serve. Many of tomorrow’s winning companies will succeed because they made great choices in their strategic planning in 2008. Will your company end up riding the wave of the “next big thing”? Doing the best job you possibly can at your strategic planning will dramatically improve your chances of leading — rather than following – your industry in the future.
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.
Why don’t some organizations do strategic planning? Great question, because a surprising number of companies do not actually put together a written plan of where they want to go. Why don’t they plan? There are a variety of reasons, and we will explore some of them.
Some feel planning is superfluous. Their perception is that the world changes too fast for planning to be effective, so they simply fly by the seat of their pants and try to do the best they can with what they have. The plain truth is that if they would do a decent job of developing strategies for their future course and direction, they would have a base from which to work when the world changes course. By having a sound starting point and knowing where they intended to take the company, any changes could be more easily discerned and they would have a sound basis for analysis to determine what, if anything, they would need to modify in their strategic plan to accommodate the new reality.
Others feel strategic planning is for big business only. This misconception arises from one of two sources: first, the feeling that they are too small to be able to influence their future, and, second, they often think they know enough about their business and their market place that planning isn’t needed. I would submit both of these thoughts are misguided. No business is too small to do some formal planning of where the business should be headed, because without a plan, it is too easily pushed around by both competitors and customers. Focus on what should be done can be lost by the constant barrage of input from outsiders (customers and competitors) with the result that, unless one is extremely careful and resolute, the course and direction of the company can be taken off the sweet spot into areas where the company is less strong and more vulnerable.
Some think strategic planning is too time-consuming. Anything worth doing is worth doing well, and planning the future of your organization is worth the investment of time and money to do it well. How many days last year did you devote to planning your family vacation? Some, of course, will say very few, as they went to a cottage or a familiar resort that really didn’t involve much need for planning. But for those who took a trip, either driving or flying, stayed at a series of hotels or resorts, went to a national park or a theme park, there often can be quite a few days spent planning the whole trip. Isn’t planning where your business should go be at least as important as planning a vacation? Yet many feel it takes too much time. A well-structured, methodical approach like our Simplified Strategic Planning gives great, actionable results and only requires about 5.6% of your time the first year and only about 3% per year after that. The quality of the plan and the execution of the objectives should pay you back many times the modest cost of doing the actual planning. If you are not doing a good job of strategic planning or if you don’t currently actually do strategic planning, go to our website: www.cssp.com to see what you can gain by implementing an effective planning process. If you want to explore strategic planning further, please consider attending our acclaimed seminar: Simplified Strategic Planning where you will learn the benefits and the processes of implementing a good strategic plan for your business. For more information, click here.
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.
M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at: baldwin@cssp.com
By Denise Harrison, Executive Vice President and COO
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?
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?
Stag chose to team up with product providers (cell phone manufacturers, beverage manufacturers, etc.) to use umbrellas with product logos to increase brand awareness.
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.
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.
This is my fifth post on bad strategic objectives. In my first post, I discussed a test to tell whether an objective you set for your organization is truly strategic. By now, I’ve also highlighted four common types of non-strategic objectives, the incremental objective , the accounting objective, the lead brick objective and the world peace objective. Today, we’ll take a look at one more very common type – the stretch objective.
We hear all kinds of people extolling the virtues of “stretch objectives” – people who tell us to “shoot for the moon, because even if you miss you’ll be among the stars”. In some cases, this advice can be truly useful. In most strategic planning situations, instead of ending up “among the stars”, you’re more likely to end up lost in space without any air.
Why is the stretch objective a problem in strategic planning? First, in strategic planning, we are explicitly creating a plan of what we will do in the future. The credibility of the plan itself is vital – and stretch objectives encourage us to depart the sensible world of the possible for the la-la land of the unlikely. Second, good strategy requires that we carefully match our intentions with our resources – and the stretch objective inclination pushes us to ignore the realism required for good resource planning. Finally, stretch objectives create a feeling that your planning and execution have failed even in cases where you have achieved quite a bit.
This is not to say that you shouldn’t consider audacious objectives – but rather that there is a place for audacity, but that objective-setting is not that place. Remember, your strategic objectives are the crucial link between your strategy and execution. One of the key transitions we need to make when shifting from strategy to execution is the transition from thinking of possibilities to thinking of realities. A good, audacious objective will connect possibilities with reality, and force your thinking into an action plan that delivers a substantial, but realistic result. By way of contrast, many stretch objectives will cause people responsible for execution to throw up their hands in despair and not even consider execution.
If you face the temptation – or the pressure – to include stretch objectives in your strategic planning, how do you handle it? A well-thought out, disciplined strategic planning process can be a vital tool in assuring your objectives are both strategic and realistic.
If setting good objectives is hampering your execution of your strategic plan, you might also want to consider re-thinking your strategic planning process. A great starting point to this would be to attend one of our popular Simplified Strategic Planning seminars. Click here for more information.
To improve the execution of your strategic plan, download an archived version of the webinar Strategy Execution: Path to Profitablity. Click here.
By Denise Harrison, Executive Vice President & COO
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:
High growth government spending on the Iraqi Conflict
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.
By Denise Harrison, Executive Vice President and COO
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.
How many times have you decided you needed to add to your staff, decided on the technical qualifications the job required and started looking for the person to fill those requirements? How many times have you hired someone who met all the technical requirements, but who did not really end up fitting in to the current team and their existing culture? What were the consequences of these hires on the atmosphere and levels of cooperation within the department or the company as a whole? How did that decision to bring that particular person on board affect those who were already there? What could be the long term impacts of making good or poor hiring decisions on the success of the company?
Best guess: Some hires were successful. They fit into the culture of the company, had attitudes which made them acceptable to the existing staff and generally had a positive overall impact on the company or department. On the other hand, what was the impact of those hires who were not successful as outlined above? What were the effects on productivity, morale and the general atmosphere in the department or whole company?
An unsuccessful hire can be defined as one in which the impact of the new person does something negative to the working environment, productivity, team work and/or atmosphere within a company. Often this can lead to an overall culture change inside a company with long lasting impacts on multiple groups of people within the company itself.
A logical conclusion may be reached that indicates that technical capabilities are not sufficient reason alone to hire someone, if that person could have a negative effect on the rest of the company, or even within a department. For example, one of our clients has taken a very different approach. Within the job definition is included a factor for attitude.
Attitude can be a significant contributor to the success or failure of a new hire. Does the applicant approach the hiring process with a positive, “can do” attitude, or is the applicant merely looking for a job? Does the applicant walk briskly into the room, or amble slowly with little apparent purpose? Does the applicant look the interviewer in the eye, or stare at the table or off to one side? In general, is the overall attitude a positive one, or a neutral or negative one?
If the job is principally a manual labor job, the emphasis on attitude can be a large part of the overall decision about hiring a particular individual. This one highly successful client has the approach of: “Hire for attitude, teach the skills” for most of their factory positions. Obviously, if the job requires certain highly technical skills, those have to be the first filters, but within the group that possesses those skills, attitude is often the deciding factor.
For office and staff positions, much the same approach is recommended. Be as specific as possible about the job related requirements that the new hire will have to be considered for the position. While the skills set out in the job description should be a necessary qualifier for those who are candidates for the position, attitude should influence the decision of whether to hire or not.
The impact of personal relationships within a company, depending on the size of the company or department, and the consequences of an unsuccessful hire are too important to be left to technical qualifications alone. One bad hire can seriously impact morale, effectiveness and even the culture within a department or company to the point that good people stop being productive and effective. Some may even go so far as to start looking for positions outside the company to get away from the disturbance that an unfortunate hire can generate.
The possibility that hiring this type of person may lead to additional hires with the same general attitude could lead to a cancer within the company. This “cancer” can spread, sapping strengths and lowering productivity while eroding internal culture and atmosphere to the point where good people leave. A poor decision in hiring can start a sequence of events that, if unchanged, could hurt the company severely over time.
Much of the company’s long term success hinges on the attitudes of those who are brought on board, how well they fit into the existing culture and how well they work with the existing staff. A good fit, coupled with a positive attitude, can help ensure the long term effectiveness of the staff and, as a result, may increase the likelihood for long term prosperity of the company.
If you want to learn how to keep your employees engaged and motivated once you hire them, please listen to our webinar. Click here.
M. Dana Baldwin is a Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at: baldwin@cssp.com
