Category: Strategic Planning

by M. Dana Baldwin, Senior Consultant

Are you meeting your customer where your customer is looking?  Customers are changing the way they look for goods and services.  Yes, the traditional way of selling still is important and necessary for most business to business companies, but it is not the only way to interact with your customers in today’s market places.

Think about how you and your family shop today.  People still go to traditional stores to shop and buy.  But many of today’s younger people will go to a store, see something they like, then go on line to see if they can find it at a lower price, either in another store or at an on-line merchant.

Are your customers doing the same thing when they have specific needs for their businesses?  Are they checking your catalogs or talking to your sales people, and then going to the internet to search for lower prices and better features and benefits?

What are you doing to address this problem, assuming, of course that it is a problem for your business?  Maybe the first thing to do is to check to see if this is actually a problem for your business that you don’t know about.  Have your customers started buying less from you recently?  Have you asked them about their sales to see if the difference is in their actual sales volume, or is it because they are buying somewhere else?  If it appears to be that they are buying somewhere else, is it because your product or service features have not kept up with the competition?  Or is it because your prices are too high, or your delivery too long and they have found other sources via the internet or on social media?

What can you do about this?  You need to adapt to today’s realities.  You need to do more research into what is actually happening in your market places.  You need to use social media to determine what your customers are posting, and find out what you can learn from their posts about your products and services, and what others are doing to meet your customers’ needs.

You can’t plan in a vacuum.  Become your own customer to see how you are treated and responded to when you contact your own company.  Call in to see about a part or to get a question asked.  See how you are treated when you become a nuisance.  When you have done this, document what happened and go over it with your key people including all your customer contact people.  Get their input and make whatever changes are necessary to assure a positive experience for your customers.

Have one or two of your (younger) customer contact people start monitoring your customers’ social media posts to see if you can gain insight into what they are doing, and what they are looking for.  Once you have sufficient information on what they are doing, find positive ways to engage them so you can win them back.

Monitor your competitors’ postings as well.  This can be a great source of data on what they are doing, and can give you great insight as to how to compete more effectively with them.  Don’t ignore these problems, or your business could gradually fade away.  Data mining, even in this simple way, is one of the keys to good strategic planning, and it may be the difference between life and death for your company.  In addition to understanding customers’ buying patterns you may want to dig deeper and understand what drives their loyalty – to read more, click on loyalty.

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

© Copyright 2012 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

I’ve come across references to a “new” strategic planning tool called the “business model canvas” in a few places recently.  As with other “new” tools, it does offer a different way to structure how you think about your business.  But how new is this tool, really?

The most common approach to the business model canvas is to segment your thinking about your business into a small number of topics – such as customer segmentation, channels, customer relationships, value proposition, key resources, key activities and key partnerships.  In some ways, this appears to match up to Porter’s Five Forces model, though it can – and will, in practice – ignore key environmental forces.  This limitation saves critical time in the process of assessing and communicating strategy, but may lead to critical errors in strategy formulation in industries where environmental forces are in tremendous flux, such as health care.

Customers vs. Channels

The basic business model canvas – correctly – places great emphasis on the flow of value to the customer.    Interestingly, channels are treated entirely separately from customer segmentation, despite the fact that the value proposition may be more advantageous to channels (fitting into a retail channel’s distribution strategy, for example) or to customers (offering a superior product or service regardless of how well it works for any channel).  Failure to assess these advantages holistically can be crippling.  A product which flows smoothly through a specific channel may have very low appeal to customers, and risks rapid displacement if other channel concepts become widespread.  Similarly, a product which has high customer appeal may still stagnate if the dominant channel architecture does not fit key attributes of the product.  In many industries – manufacturing or service – it is the holistic compromise embodied in your value proposition which really determines your success or failure at any given time, and separate assessment may create a blind spot around this phenomenon.

Strategic Competency; the Importance of Differentiation

I find the canvas approach to assessing “key resources” and “key activities” to be interesting.  In Simplified Strategic Planning, we began a practical application of Prahalad and Hamel’s concept of Strategic Competency, which has become a cornerstone of the most successful strategies of recent years.  In practice, using the canvas categories, you would likely find your strategic competency somewhere in one of these two boxes – but, unfortunately, other strategic assets might be mixed in with competency in “key resources” and the core competency may or may not be recognized as the focus of the most important “key activities”.   Still, many companies may find they can correctly identify strategic competency using this categorization, so it may be useful.  Indeed, it may be a useful tool for identifying strategic competency in a more thorough strategic planning process.  That being said, a thorough examination of strategic competency backed up by market data is a far better way to approach this critical part of the strategic planning process.  Most importantly, I would contend that the fact that most people have approached strategic competency incorrectly, and failed to adequately use the tool to build clear differentiation is the main reason why people like to back up to a more simplistic approach such as “critical resources” and “critical activities”.  There is no substitute for competency-based differentiation, and true differentiation of a focused competency is the single biggest factor in strategic success.

Adaptability to Changing Business Conditions

One of the main advantages that has been touted for the business model canvas is the ability to “pivot” your strategy and rapidly change the structure of your business to fit new strategic realities.  The very simple analysis of a few key strategy elements may indeed be useful for some companies in this area, although deployment and execution aren’t really a strong suit of this approach.  Certainly, a strong, objective, competency-based strategic plan can be a much more useful tool for rapid adaptation to environmental change, especially since the business model canvas can be used to dangerously skirt critical issues. Part of any strategic planning process should be a rigorous monitoring process which allows for course corrections when business conditions change.  Monitoring is key to the success of any strategic planning process (click here to learn more about monitoring).  At best, the business model canvas is a novel tool for business model innovation in industries where certain environmental variables (regulation and technology, for example) are more constant.  As a replacement for a simplified model of strategic planning and execution, it shows many shortcomings.

Have you used this tool in your business – or wondered how you might change your approach to innovation?  I’d be very interested in using simplified strategic planning as a tool to flesh out, test and execute the ideas you have generated – or want to generate.  Please let me know your experiences, both good and bad – it’s the best way we all can learn about tools that can aid the strategic planning process.

If you would like to discuss strategic choices around innovation please contact Robert Bradford at rbradford@cssp.com.

by Robert W. Bradford, President & CEO

Looking over action plans with a client this week, I was struck by a comment one of the team members made.  “Some of our action plans” he said, ” have delivered great results, and improvements to our top line and our bottom line…and some have just generated meetings and activities and no results.”  When we considered some of the objectives that had – and had not- delivered results, I noticed a couple of things.
1.  Specificity is key to getting results.
This is true of objectives – the more specific the result, the more likely the action plan is to produce a real result – and it is also true for the steps in action plans.  When doing an action step “Attend ABC trade show in November” is far easier to act on than “Research customers and competition in our new market”.  With objectives “Sell $5 million in product to the medical market” delivers results – and “Balance workload between our plants” just generates analysis.
2.  When you don’t know what to do, you can waste a lot of time not knowing it.
This makes writing action plans really hard sometimes.  When writing an action plan, you have to at least know enough about the objective to figure out what steps to take.  Many of us take the expedient – and frustratingly unproductive – step of having meetings to determine our next steps.  No matter how you disguise it, a plan to plan is going to end up wasting someone’s time.  If you don’t know what to do, or what all the steps will be, it’s perfectly OK to go outside your company for help.  In fact, it’s often the very best thing you can do.  You can rent this help with a consultant, or bring the capability in-house by hiring a new person from the outside, but you can often short-cut past years of trial and error just by getting someone who understands what you are trying to do from outside your company.  One caveat:  when looking outside your company for expertise, be sure you are getting expertise that will truly fit your need.  Hiring an expert to help you sell to the IT industry can be great, but if you hire someone with 10 years of commodity experience to work in your specialty company, don’t be surprised if most of that experience is counterproductive.
3.  Focused, dedicated resources make a bigger difference than all the meetings in the world.
Having someone split their time between strategic and non-strategic tasks is a difficult reality in the world of small to mid-sized companies.  Even in larger companies, this expedient is hard to avoid.  But when it comes to strategic objectives, it is far too easy for someone to postpone working on the new problems – ones we don’t know how to tackle – to make time for the old problems, which we do know how to tackle.  Over and over, I have seen this effect slow down and even stop action plans – and over and over, I have seen companies succeed when the objective is big enough to warrant a dedicated person who doesn’t have old, familiar problems to fall back on.
So what can you do to take advantage of these lessons?  First, make sure you press your team hard on coming up with specific, measurable results as objectives.  Second, take the time to figure out what needs to be done before writing the action plan.  This may require some time and money, but it will lead to much better execution down the road.  Third, don’t be afraid to bring in outside expertise – and dedicate it to your objective.  Finally, consider dedicating a person to the objective full-time.  Anything big enough to be one of your company’s top strategic objectives could well be big enough to warrant a full-time, experienced caretaker – and the part-time, inexperienced caretaker you had in mind might not drive the same results, even if that would be quicker and easier.

If you would like to discuss strategic choices around innovation please contact Robert Bradford at rbradford@cssp.com.

by M. Dana Baldwin, Senior Consultant

Good strategic planning should lead a company to growth, increasing profitability and growing market share over time.  But what happens when a company refuses or neglects to listen to and understand what is happening in the markets they serve?

There are many instances one may cite about companies that were successful for many years that relatively suddenly ran into serious problems.  IBM was very successful in supplying and maintaining mainframe computers, to the point they ignored for too long the changes in the market place.  Until Lou Gerstner restructured the company, they were declining rapidly in their performance because they didn’t listen to what was really happening in the market place.

Polaroid went through a similar set of problems.  RIM is suffering from not adopting the technologies of Apple. And, most recently, Kodak found itself floundering to the point where it had to file for Chapter 11 Bankruptcy Protection.

Why do great companies like those above fall into such difficult circumstances?  IBM did because it chose to listen primarily to those who had the most to lose if mainframes went away.  Because IBM didn’t look at the big picture, they nearly missed significant trends toward distributed processing.

Kodak is an even more troubling case.  Kodak was a significant leader in the development and implementation of digital cameras, yet they almost blindly hung on to their film manufacturing business to the detriment of the digital camera until the competition outstripped them and they became a lower tier competitor.

When a company, particularly an industry leader like Kodak, weds itself too tightly to its current technology, and ignores industry trends because it has been so successful with its approach for so many years, the rest of the market, which is apparently so open to innovation and developments outside the current technology, can and often will pass the old technology by, leaving constantly diminishing returns and market share for that company.  Unchallenged recipes for success can be the worst enemy of any company’s future.

What should be the lesson learned from the companies’ plights as shown above?

One should analyze how much risk one should take as seen from two different points of view.  First: If the company stays with its current technology, what risks does it run to future sales growth, technological leadership, return on investment, etc.?  Second: If the company invests in new technology, what should it expect in terms of future sales, competitive position, ROI, etc.?  Included in the analysis should be looking at the upside and downside of each alternative and comparing the alternatives to reach the optimal decision.

Will the changes to be made be incremental, or will they become radical in nature and effect?  What amount of risk can the company endure?  What are the risks of staying put versus those of investing in change?  What is the likelihood that the new technology will actually lead to the changes in sales, profitability and return on investment that the company is seeking?  What will be the impact on the market place and how will competitors react?

While the approach above certainly is not complete, using it as a starting point should help your company select an approach which will help maintain your competitive position. Effective strategic planning can help your company select those opportunities which should lead to increased leadership in the market place.  If strategic planning is not helping your company as you want it to, please contact me at: baldwin@cssp.com for planning leadership and guidance. For more information on how to position your company in the face of changing technical trends please read: Xerox Positions Itself to Succeed in the 21st Century: What You Need to Do to Ensure Your Company Does Not Become Obsolete.

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

© Copyright 2012 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

by Denise Harrison, Executive Vice President & COO

Action plans are the detailed road maps that turn your strategic plan into results.  Action plans support the key strategic objectives that your team selected as the most important projects to work on for the next 12 to 18 months.  If your action plans achieve the objectives, then you are moving towards achieving your strategy – if not, then you slow down the pace at which your team will achieve your strategy. Here are three avoidable action plan mistakes:

Mistake #3:  “We can’t develop the action plan until we make the decision as to which path we will be taking to achieve this objective.”

What?  No action plan?  Not acceptable! The first part of the action plan should identify the key criteria that will be used to make the decision regarding path selection.  After the criteria have been developed, you will identify the steps necessary to collect the data to make the decision and finally, you will determine the steps needed to present the information for the team to select the appropriate path.  Waiting until the decision is made slows the process and often does not allow time for the identification of criteria and the gathering of the data.

Another approach I often recommend is to develop multiple action plans, one for each path so that the steps, timeline and resources can be identified for each path.  This option works well with make/buy decisions.  By outlining the steps for the “make,” you can benchmark what a “buy” decision saves you in terms of time-to-market, probability of success and overall resources.  It may be worthwhile to go the “buy” route even if the cost is greater, but the probability of success is higher, and the speed to market is faster.

Mistake #2: Action plans are not detailed

Recently a team had an objective to install a new ERP system.  The action plan submitted had less than 10 steps and was to be completed in 4 months.  What happened?  Yes, you guessed it, a major train wreck.  By not forcing the action plan steps to get down to a granular level, the true resource requirements and timing were not identified.  Action plan steps need to be clearly defined – each step should be small enough that resources can be adequately identified: who, how much time, and how much money.  To prevent “high level” action plans, first ask your team leader to work with their Action Plan Team to make the plan detailed enough to guide development of the individual steps.  After the Action Plan Team develops a first draft, let the action plan sit for a week.  Then have the team members update the plan with any additional thoughts that have occurred during the week.  Finally, have the whole Strategic Planning Team review each action plan during your Implementation meeting.  This allows the senior team to ask detailed questions and make suggestions for enhancement.  Just because you want the action plan to move forward is no reason to shut off the discussion around detail, timing and cost.  To “protect” a project and make it seem less complex than it truly is only causes failure and often derails other action plans, as resources need to be reallocated throughout the year in order to fix the problems that are occurring in a poorly developed action plan.

Mistake #1:  We have to do this…..

“We have to do this….” is often heard when it comes time to select the 8-10 action plans that we want to accomplish in the next 12-18 months.  If the group buckles under, your list may grow to 15-20 plans.  Just because you would like to do 15-20 doesn’t mean that you should.  Most teams can digest 8-10, but often pull this number back when they have fewer resources or they are working on an action plan that will take significant resources to move things forward.  If you try to move too many action plans forward, you may not make significant progress on any, and the team may become demoralized because of constant resource conflict and slow progress.  Selecting the few, rather than the many, is one of the most difficult parts of strategic planning – but teams that are able to do this are more successful than the ones that consistently try to do too much. If you complete your plans quicker than anticipated, you can always add more.  Remember that the benefits of most actions plans don’t occur until they are completed.

In summary, the keys to successful action plan development:

3. Action plans need to be developed even if there are two or more courses of action – don’t wait for the decision, make the decision-making process part of the action plan.

2. Action plans need to be granular, clear road maps with detailed steps and detailed resource requirements.

1. Selecting a few action plans is better than trying for more and accomplishing less.  Part of strategic planning is making tough decisions – if you punt, you will not be as successful as if you make the hard decisions upfront.

Action plan discipline is one of the keys to the success in achieving your strategic plan, but it is only one piece of the puzzle.  In order to be successful you must integrate your action plans into your monitoring process.   To learn more about successful execution please read:  Everyone Knows Execution is Important – So Why Do We Fail to Execute?

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 2012 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

By M. Dana Baldwin,  Senior Consultant

Once you have completed your strategic planning for the upcoming year, how often should you go back and look at it to determine that the plan is still valid; heading you in the right direction and staying on the course you have chosen?

We suggest you revisit your plan and the assumptions you made while developing the strategic plan at least once a quarter, as well as revisiting the entire plan annually.  Why, you ask?  Very simply, your strategic plan is based on your knowledge of your business, your business conditions, or environment, and the assumptions you and your team have made about what will happen in that operating environment.

Look at each of the areas in which you made assumptions.  First, in each of your market segments you made specific assumptions about how attractive each segment would be in the upcoming years.  You made assumptions about any threats, which could make the overall segment shrink. You also made assumptions about the opportunities, which could foster segment growth.  Which of your assumptions is occurring and to what extent?  Is the overall segment growing or shrinking, and is it doing so at about the rate you thought would happen?  While this might be difficult to discern on a quarterly basis, if you are close in your assumptions to the actual rate of growth, then you likely will not need to make any changes to your strategies.  If it varies widely, or the direction of the market is opposite to that which you predicted, then you need to step back and re-analyze the situation and possibly modify your strategies for the planning horizon and/or objectives for this year.

Are there any big impacts which have occurred which could have an impact on your future direction?  For example: an aircraft components manufacturer might have been focusing on the commercial aircraft segments before September 11, 2001 but afterwards they changed their focus to military segments because commercial segments pulled out of their growth cycle.

In addition to changes to market segments quarterly reviews are where you evaluate any new opportunities that have bubbled up since your strategic planning meetings.  For instance, an acquisition has become viable – you evaluate it against the objectives that you have chosen and, if it has higher priority, you add it and take off another, lower priority objective. If it does not have a higher priority, you save it to re-evaluate it in the next strategic planning annual cycle.  During the quarterly reviews, you are reviewing the full strategy plan and this is where the items that were deemed “business as usual” or “normal course of business” are checked to make sure they haven’t fallen off the radar screen and are still progressing.  It is a chance to pull your team together to think strategically and pull back from the day-to-day.

You also made assumptions about what your significant competitors would be doing in each market segment.  How is reality playing out relative to the assumptions you made here?  Again, if your predictions are close, you may not need to change anything, but if they are not, this review is an opportunity to make a mid-course correction.

The team also made an assumption about the future average industry profitability in each market segment.  How is that assumption holding up?  Note that this does not mean your own company’s level of profitability, but the general direction of the industry as a whole in this segment.  Is this segment still an attractive place to be doing business?  Should you emphasize it more, or less, than originally intended in your strategic plan?

Finally, is there something on the horizon which might displace the products or services you are providing in a particular segment?  Are your products like the portable CD players at a time when new products like MP3 players are on the brink of introduction?

One of the outcomes of this monitoring and testing of assumptions could be the realization that you need to develop market information gathering approaches that allow you to better discern what is going on.

Having gone through your assumptions about your market segments, you need to decide what to do and when to do it.  If your assumptions are close to reality, you likely won’t want to change anything significantly.  On the other hand, if your assumptions are at wide variance with reality, you and your team should go back to ground zero and re-analyze every market segment to adjust your predictions to the latest reality.  Where you have made significant changes, you should review your strategic plan for each segment, possibly changing your strategy to reflect the changes that have occurred.  If those changes in strategy will affect your Objectives, and thus your action plans, you should modify each changed Objective and action plan to reflect the latest reality, recasting each to take advantage of your new assumptions.

If you are having difficulty in doing these steps, we can help you.  Please contact me at baldwin@cssp.com for guidance in your quarterly reviews.  For additional information on execution success please read: Everyone Knows Execution is Important – So Why Do We Fail to Execute?

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

© Copyright 2012 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

by M. Dana Baldwin

What does it take to be today’s winning competitor?  The winner must have a competitive advantage—right?  Real winners aren’t satisfied with a competitive advantage that may be just a flash in the pan, they want a sustainable, strategic advantage that will last.  We call a sustainable strategic advantage a strategic competency.  A competency is a combination of skills, processes and knowledge: the skills we possess as a company; the knowledge we possess as a company – the sum of the individual knowledge throughout the company; and the processes we use to take advantage of our skills and knowledge.  It is important to understand that competencies arise from the intellectual attributes of a company, not its physical attributes or locations.

If a competency is to be considered strategic, it must pass three tests.  First test is: Does the competency create significant value for our customers?  Second is: Does the competency truly differentiate us from our competitors?  Third is: Is the competency difficult to copy?  With each of the three tests, we grade the combination of skills, processes and knowledge as meeting a standard which is low, medium or high in its effect.

Does the competency create significant value for our customers?  If the competency does not create value for our customers, why would people or other companies buy what we have to offer?

Does the competency truly differentiate us from our competitors?  If the end result is that we are really differentiated, then customers will buy from us because we bring something very special to the market place, putting us ahead of our competitors because of the perceived value of our strategic competency.

Is the competency easily duplicated?  If it is, then the difficulty to copy will be low, and the test will not be met to the degree needed to define the competency as being strategic.  It is highly likely that, given sufficient time and both human and monetary capital, any strategic competency may be duplicated.

What burden, then, does this impose on the company that has attained a sustainable competitive advantage, a strategic competency?  As compared with physical assets, which over time deteriorate with usage, the more a strategic competency is used, the better it becomes.  It is somewhat like a golf swing.  If an ordinary golfer plays once or twice a week, he or she will likely play to a particular level, plus or minus a few strokes.  That level will depend on the physical attributes of the player, but probably won’t improve or degrade much as long as the player continues to play about the same amount of golf.

PGA players, on the other hand, practice hundreds of shots a day, when not actually playing in a tournament.  They have taken their game to a higher level of competency through practice and repetition, honing their skills to the highest possible level.  It is through the practice, repetition and constant honing of their play, that they have the skills, knowledge and processes to play at levels we ordinary players can only dream about.

Now, because there are a large number of players who, as professionals, have attained the high level of skill necessary to compete, this particular example would fail the third test of being difficult to copy for the most part. The main point here is that one must be objective in analyzing whether a particular combination of skills, processes and knowledge actually meets the extremely high standards of becoming a true sustainable competitive advantage.  If your company has such a strategic competency, you should have a real advantage in the market place, as long as you continually hone the skills, processes and knowledge which make up that competency.

If you are interested in learning more about strategic competencies please contact me at: baldwin@cssp.com

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

© Copyright 2012 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

by Denise Harrison, Executive Vice President and COO

by M. Dana Baldwin, Senior Consultant

By M. Dana Baldwin, Senior Consultant

by Denise Harrison,  Executive Vice President & COO