Center for Simplified Strategic Planning

Category: Strategic Planning

  • What Kind of Leader Are You?

    by M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert

    What is your leadership style?  It may be very difficult to put such an all-encompassing subject into a few words, but let’s have a go at it.  What are the factors that determine your leadership style? 

    One of the first likely will be your vision: Where do you want to take your company?  Are you deeply involved in developing your strategic plan?  Do you encourage others to not just participate in the development of your strategies, but to be pro-active in suggesting different approaches, different strategies, and different perceived opportunities to expand, modify, change or re-direct the aims of the company?  Or do you tend to dominate discussions, forcing others to the same channel you are in, and squashing any different opinions?   

    Another is: how do you lead your people to accomplish your mission/vision? Are you one who tries to inspire others to excel?  Do you challenge people to do something different or better than they have been doing?  Do you lead by example rather than by dictate? 

    Yet another is: how do you treat your people?  Do you offer real encouragement and appropriate praise when it is due?  Do you give people enough room to make mistakes, learn from them and turn them into successes?  Or do you second-guess them, keeping them in their place so they won’t challenge you? 

    How do others perceive your leadership?  Do you take credit for others’ accomplishments, or do you give credit where credit is due?  Will people come to you for advice, or do they fear doing so will leave an impression they are not capable of doing their jobs? 

    Certainly there are more and different characteristics we could explore, but the questions above do help us focus on some of the keys to interpersonal relationships, which can build up the performance of your team or can tear it down, depending on how you actually are perceived by your people. 

    A good leader will work hard to set a good example.  This could mean you are one who comes in early and leaves late.  You clearly inform your staff about your strategic plan and how their work affects the overall success of that plan. You set a good standard when you encourage people to take ownership of their work, to take pride in what they do, and when you give out meaningful praise in a timely manner which is relevant to the job actually done.  You give credit where credit is due, fully supporting those who make good contributions to the company and team. 

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

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

  • Strategic Planning Horizon: How far out should you plan?

    By Robert W. Bradford, President/CEO 

    Strategic Planning Expert Robert Bradford

    To determine your strategic planning horizon, you need to have some sense of how clearly you can see the future environment in which your organization will be operating.  There are three critical elements to consider here:

    1.      How much information is available in our environment?

    2.      How quickly does the environment change?

    3.      How well do we gather and understand information about the future of our environment?

    The first question – how much information is available – usually varies with two factors:  the size of your industry, and the amount of government regulation involved in what you do.  The bigger the market – and the more regulation – the more likely it is that there will be good data available for your planning, and some of that data will be well-researched forward-looking data.

    The second question is trickier.  In general, strategic environments may change rapidly due to technology and regulation, but other forces, such as economics, may cause your strategic environment to mutate even more quickly than you thought possible.  As a rule, the more your activities are predicated on technology or a specific economic relationship, the more likely it is that change will affect your strategy quickly and unpredictably.

    The third question revolves around how you approach information about the future.  If you can, and do, spend a good deal of time and money researching where your environment is heading, you can have some confidence in the information used in your planning – at least to the time horizon that your research can adequately address.  If you do not, but you have very good forecast data available to you from, for example, a trade association, you also can have greater confidence in a longer-term plan.

    If you feel you can see trends unfolding pretty well five years into the future, it would not be unreasonable to do your strategic planning with a five-year horizon.  However, if the future gets very murky just a few months out, you should consider a different approach.  There are three workable approaches to strategic planning in a highly uncertain environment:

    1.      Use a very short planning cycle – revising your plan every 3 months, 6 months or 1 year.

    2.      Have shorter strategic planning meetings quarterly, and constantly update and revise your strategies.

    3.      In situations where there is high uncertainly about a possibly catastrophic outcome (ie. Health care reform in the medical insurance industry), create scenarios of the 2-3 most likely outcomes and plan around each.

    Obviously, how you approach planning in a highly uncertain environment depends quite a bit on the resources you have at your disposal.  A 100 person organization cannot afford to spend as much time and money on planning as a 10,000 person organization, so you will want to assess your ability to use any of the three approaches listed above. 

    If you have questions about these, and would like an expert opinion on which approach would work best for your unique situation, please contact me at rbradford@cssp.com. 

    Robert Bradford is President/CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.

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

  • How To Provide High Value In Competitive Industries

    By M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert

    Providing superior value through a formal strategic planning process to determine what your targeted customers want is a key to success.  Good strategic planning not only identifies the targeted customer wants, but also permits a company to select their targeted customers (their niche) from the spectrum of customers in the total market.  Some companies get this concept and become ongoing winners.  Examples of this include Apple and Singapore Airlines.  Apple has been analyzed in depth, so let’s look at Singapore Air.

    In a recent survey, Singapore Airlines was named World’s Best Airline by Conde’ Nast.  The remarkable thing about this is that Singapore has won this award 21 of the 22 times it has been awarded.  How has Singapore been able to consistently provide such excellent service and maintain a good level of profitability for so many years?  How have they developed the capability to provide excellent value for so long? 

    Singapore Airlines operates one of the youngest fleets in the world.  Newer airplanes have a number of benefits for both operators and for customers.  Because the planes are newer, they are usually more reliable, having fewer breakdowns than older planes.  Because the planes are newer, they will likely  be more efficient to operate than older ones.  And because the planes are newer, customers will have up-to-date amenities and comforts, thus having a more enhanced travel experience. 

    Singapore also invests heavily in training their staff in all aspects of operating the airline.  The people of Singapore Air are trained to deliver excellent service in the cabin, on the ground and in the terminal.   Singapore actually has one of the lowest costs of operations of any airline, with a cost below 7.5 cents per seat mile, which is actually below many of the so-called budget airlines.  What is interesting is that Singapore actually staffs each flight with more than competing airlines.  They provide superior service on every flight.  Among frequent fliers, the reputation of Singapore Air is outstanding! 

    One more factor: Singapore runs the entire operation with a very small corporate staff.  Their administration costs are among the very lowest in the industry.  This helps the profitability of the airline as well.

    What is the point we are making here?  Simply put, in order to compete and compete well in an extremely competitive marketplace, a company must provide service and value at an appropriate price.  People will pay for results which reach their expectations.  This is true at every level of service and value.  For poor or minimal service, people expect to pay only a modest amount, so the perceived value is commensurate with the price paid.  For more exceptional service, with the perceived higher value, a company may realize a higher price and/or become the supplier of choice.  On occasion, one will encounter a company like Singapore Airlines that provides exceptional service and exceptional value, all at a competitive price.   

    How is this to be accomplished?  By focusing its efforts on those parts of the business which add value, and minimizing or eliminating those parts of the operation which do not add value or for which customers won’t pay, a company can be seen as exceptional.  This may be done across the spectrum of price and features, in commodity markets and specialty markets.  Excellence and attention to what really matters to the people who purchase your service or products are some of the keystones of a successful strategy.  As you develop your strategic plan be sure that you identify what differentiates you in the market in your customers’ eyes.  If you need assistance in developing your strategic plan to deliver high value to your targeted customers, please contact CSSP, Inc.

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

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

  • Strategy Bits

    By Denise Harrison, Executive Vice President & COO

    Strategic Planning Expert

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

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

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

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

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

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

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

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

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

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

    Please send us your own Strategy Bits!

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

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

  • Honest Tea Teaches Coke A Lesson

    By Denise Harrison, EVP

    Strategic Planning Expert

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

    What Went Right

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

    What Went Wrong

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

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

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

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

    Lessons Learned

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

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

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

  • How Has The “Great Recession” Impacted Your Company?

    By M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert

    When the economy goes through the tough times it has recently, a number of things start to change both inside and outside your company.  First, review your strategic plan, to account for the changing business conditions.  As a part of this, you look around to see what can be trimmed without harming your service levels and your products.  Next you look to see what technologies can replace your current processes and people, and if it is affordable at a time when you are tightening your belt and not spending money unless there is excellent justification for doing so. 

    You make every effort to do more with less, as is everyone else.  Maybe you do less promotion, go to fewer trade exhibitions and shows, cut your advertising budget, send one person on a sales call when in the past you might have sent two. 

    But what effects will these changes have on your culture and processes going forward, once the recession is behind us, and the economy is more robust? 

    Will you continue to be thrifty, as you are now with the recession so close behind us?  Will your prior habits take over again, or will you continue your closely controlled ways?  Good questions, and only you and your people can answer them for your company. 

    Are there some longer term effects which may remain with you for the foreseeable future?  For example, one possible effect of your tightened control on expenditures may have had both short term benefits and longer term impacts which may or may not be favorable to your company. 

    The short term benefits are usually pretty obvious: Better utilization of cash, more people contributing to the effectiveness of your company by working additional hours, taking on additional responsibilities, doing more with less, etc. 

    But at what price for the long term?  How have your company’s relationships with customers been changed?  Has this been for the better, or is there a negative impact possible if you do not go back to more personal contact?  How has technology impacted these relationships?  Are your customers willing to accept less personal contact during the slow times, but expecting to increase that type of contact when things improve?  

    Do your customers like the effects of technology, or are they merely putting up with it during the slow times because they know everyone is keeping a tight rein on expenses?  What will be the longer term use of technology that will help your relationships with your customers?  

    Inevitably, some will do just fine with the new levels of contact, less personal and remote.  Others will want to resume the more intimate, personal service that they enjoyed prior to the recession, and will resent not getting it if you do not respond to their needs as they were used to having them met. 

    Your challenge is to determine what each customer needs and to meet those needs.  And, don’t expect them to tell you without your probing to find out.  If you don’t change to fulfill their expectations, they may drift away, and you may suffer because of your insensitivity to their preferred mode of communication.  We suggest you work with your people to help them determine the best way to communicate with each individual contact so you meet their needs and preferences for communication, both formal and informal, so you nurture the relationships.  Your business will be healthier for it, and so will your customers’ businesses. 

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

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

  • Mistakes Happened – But Did You Learn From Them?

    By Denise Harrison, Executive Vice President and COO

    Strategic Planning Expert

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

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

    Lessons Learned: a Process

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

    Option A

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

    Option B

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

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

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

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

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

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

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

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

  • Final Steps: Follow-through and Monitoring

    By M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert

    Strategic Planning is a process, not an event.  It consists of a series of analyses and decisions which end up with an actionable strategic plan.  Coming out of the strategies are a series of actions which need to be carried out, either now or later. In an earlier article, we discussed Time to Start Planning for Growth – Step One: Analysis, and in a second article we asked, “Will We Be Ready to Take Advantage of the Improving Economy As It Arrives?”

    In the first article, we discussed most of the overall process of getting your company ready for the improving business climate now slowly arriving in the USA.  We analyzed the current situation, reviewing what our customers really want and need.  We reviewed what we are good at doing and what our competition does well.

    In the second article, we reviewed the actual process of developing a strategic plan, from incorporating our analyses to determining our strategies.  Based on those strategies, we selected a group of objectives to pursue.  Many of these will be handled and completed in the normal course of business.  These are the responsibility of the various functions within the company, such as sales, personnel (HR), accounting, manufacturing and/or service, etc., which have the responsibility to take the actions and complete them as part of their overall jobs.

    Then there are the selected objectives.  We define these as tasks which will not be completed in the normal course of business without being assigned to a team responsible for completing the task.  They are very important to enable the company to carry out its mission and strategies.  All these objectives are specific, time-related, and necessary to move the company in the direction the strategic planning team has determined will be the course and direction for the company for the next three to five years.

    Once these objectives have been selected, they are assigned to a team for the purpose of writing an action plan to complete the task.  An action plan is simply a verbal road map which is designed to accomplish the objective in a timely manner, with specific steps to complete the task decided upon, responsibility for completing each step assigned and a reasonable estimate of the actual time needed for each step made, in order to develop a time-line for completion of the objective.

    After accepting the action plan, the strategic planning team will schedule the individual steps of each action plan, in order of priority, so your team will concentrate on the most important objectives first.

    Monitoring is key to the success of your action plans.  Every month, your team must hold a short meeting to update each action plan and to schedule the day(s) on which the action steps which must be completed during the upcoming month will occur.  Here, the people who will do that action step compare calendars and agree upon dates to address that step.

    Execution is the key to completing an action plan, and monitoring of the action plan helps assure that the process will be followed and completed in a timely manner.  If your company is having difficulty making regular progress toward completing your action plans, we can help you with the monitoring process.  Contact us at: www.cssp.com and click on “Consulting” to select a consultant and send an email.

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

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

  • Integrating Your Big Initiatives With Strategic Planning

    Far too often, companies put off their strategic planning – or even fall completely off the wagon – because of major strategic initiatives.  It might be an acquisition, a system upgrade, a relocation or a marketing initiative, but whatever the project is, it is so big that the management team feels there is “no time for planning”.

    Sadly, these initiatives often can drag the organization far off course.  This could mean that some strategic discussions which would be most useful before and during such a major effort as these are not held.  The potential pitfall here is that the core business could go awry, or that other major projects could be slighted.  The problem, of course, is that sometimes we do have good opportunities that require a great deal of our time and money – and that strategic planning is rarely seen as one of the most urgent uses of time or money.  This means that, in order to assure we have resources to complete a big project, it’s easy to see skipping the strategic planning cycle as a practical shortcut to alleviating our resource issues.

    Here are some important questions to ask before – and during – a big initiative that uses so much time

    Strategic Planning Expert

    and money that it seems like a good idea to skip strategic planning:

    1. How can we assure we don’t get off track with our strategy while pursuing this project?
    2. How will we address threats and opportunities that arise during this initiative?
    3. Is it appropriate to put so much time and money into a project that it curtails other activity in the company?
    4. Can we do strategic planning with fewer resources?
    5. Are we “betting the farm” on this initiative by putting other worthwhile projects on hold?

    For many companies we’ve worked with, the four to seven days we spend in a strategic planning cycle are a pittance compared to the dollars and hours that are dedicated to special projects.  Indeed, the action plan review process itself often provides a vital checkpoint for the larger project while assuring that other vital projects also stay on track.  With proper forethought, we can pursue large initiatives and keep the normal planning cycles going.  For others, it requires some careful picking and choosing to determine which parts of the planning process we will do this year.  At the very least, you should consider having a day to evaluate strategic issues and current objectives and a half day to plan resource use and schedule action plans.

    We’ve seen too many cases of organizations that leave the planning track for good fail several years down the road, because they lost the discipline of strategic planning with an objective, experienced professional.  Good, routine strategic planning – even in a skeletal form – will help you avoid making the mistakes that lead to these disasters.  If you are considering a major project – or even in the middle of one – We hope you will make sure you consider this issue seriously and contact us if we may assist you in your strategic planning.

    Robert Bradford is President/CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.

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

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

    By Denise Harrison, EVP  

    Try, Try Again 

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

    • Hire local talent and give them decision making power

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

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

    • Select the right venture partners

    o       Partnering with state owned companies smoothed the path for expansion 

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

    Success through Focus 

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

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

    What does this mean for you? 

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

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

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

  • Strategy Analysis 2: Maintain Strategy

    by M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert

    In an earlier article, we discussed the Expand strategy – Growing our selected market segment much faster than the overall segment is growing.  Because we will be grabbing a competitor’s share, it is an aggressive strategy, often involving considerable expense and time of key people.

    In this article, we will explore the characteristics of a Maintain strategy.  The book definition is to grow our market segment about as fast as the entire market is growing.  To many people, this appears to be a passive strategy.  This may be partly because they misinterpret the word Maintain to mean “keep the same volume”.  Maintain means “protect your current percentage market share” against competitors who want to Expand at your expense.  That’s not easy.  In reality, the Maintain strategy can also be one which requires a large investment and possibly an extensive amount of time for key personnel. 

    One example of a Maintain strategy is found in the “Cola Wars.”  Remember the blind taste tests?  Fundamentally, the cola market is made up of products from Coca Cola, Pepsi, Diet Rite, Fanta and other regional bottlers and store brands.  A large percentage of people who drink colas drink either Pepsi or Coke.  The rest of cola drinkers drink the regional colas or are strictly price buyers, purchasing whatever is low in price when they go shopping. 

    How do Coke and Pepsi market their products?  Generally, one can state that they are aggressive in marketing their colas.  They use a lot of in-store promotions, coupons, sales and extensive advertising and marketing investments to assure that they keep their core drinkers.  Both companies spend a lot of promotion money to keep their names in front of potential buyers.  One example is the Coca Cola 400, a NASCAR race held at the Atlanta Motor Speedway near Atlanta (Coca Cola’s headquarters).  A different approach is Pepsi’s Super Bowl ads – a recent Super Bowl had six different ads shown. 

    They each realize that many people form a lasting allegiance to their preferred cola.  Most people who like Coke strongly prefer Coke, and most people who prefer Pepsi strongly prefer Pepsi.  Few Coke drinkers will knowingly drink Pepsi, although many will drink it on occasion when Coke is not available, and, in all likelihood, the reverse is probably true.  But, whenever their preferred cola is available they will order it. 

    So why are Coke and Pepsi involved in marketing wars?  Our understanding is that Coke and Pepsi generally have two major objectives for their investments in promotions, advertising and marketing expenditures: First, they want to maintain their core product drinkers.  Second, they want to attract new cola drinkers to their product, so they may, at a minimum, keep their market share.  Of course they would like to grow their share, but keeping their share will still result in modest but real growth in volume of sales. 

    What are the lessons we can determine from this analysis?  A Maintain strategy is seldom a passive strategy.  Like the Cola Wars, it can be very expensive due to the high levels of spending on promotions, advertising campaigns, sales and coupons.  For you, it might mean having to invest in major changes to counter a competitor’s major move to capture some of your share. 

    As long as your goals are clearly stated, with rational approaches to the tactics taken, a Maintain strategy will make good sense for a number of your market segments.  Just don’t expect to accomplish it by going on “cruise-control”.  What doesn’t make good sense is to plan an Expand strategy in all of your segments. Very few companies have the resources to afford that.  If you are having trouble deciding on your strategies for some or all of your market segments, the Center for Simplified Strategic Planning stands ready to help you with your strategic planning.

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

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

  • Is Success Your Worst Enemy?

    by M. Dana Baldwin, Senior Consultant

    Strategic Planning Expert

    In the 80s, families, teens, many of us used to go to Blockbuster Video to select movies for our entertainment.  The business model was simple: go to the store, wander the aisles, select one or more videos to bring home, watch the videos and bring them back to the store within 3 days or so to avoid the late return fee. 

    A significant source of revenue for Blockbuster was the fee for returning videos late.  If a customer returned a video late, the total cost for the rental could well double or triple. In 2000, Blockbuster reaped nearly $800 million in late fees alone.  This was nearly 16% of operating revenue.  By 2009, this number had dropped to $134 million, or about 3% of revenue. 

    But in the market place, things were changing.  In 1999, a new startup appeared on Blockbuster’s horizon.  An upstart company, Netflix, started taking orders over the phone or on the internet for DVDs and mailing the DVDs to the customer.  They changed the terms of competition, too, by allowing the customer to keep the DVD as long as they wished.  The cost for this, instead of the late fee, was covered by charging a flat monthly fee for the service.  Blockbuster tried dropping the late fee a few years ago, but for Blockbuster this meant that some of the more popular videos stayed out longer, thus impacting their rental revenue. 

    When other strategies didn’t work, Blockbuster entered the rental of videos by mail segment to try to compete directly with Netflix.  What this accomplished was to lower the average contribution per rental to under $2.80 per disc, about a dollar below their prior level.  

    Even then, the management of Blockbuster considered Netflix to be only a sub-segment of the market.  By 2002 Netflix had gathered enough market share and volume, to go through an IPO and yet Blockbuster still dismissed it as a “niche service”. 

    More recently, video rental services, including Netflix, have moved to downloading movies directly to DVRs in the home.  This makes delivery of a movie essentially instantaneous, saving a trip to the video store or waiting for the mail to arrive.   Not only did this service allow people to rent a movie on impulse, but it further cut the heart out of the Blockbuster model. 

    Blockbuster’s innovative business model helped generate the growth of home video viewing and helped sell VCRs and, later, DVD players.  It also helped generate billions in revenue for Hollywood.  But, its success led to its own failure.  Blockbuster was hugely successful early on, with over 9100 stores.  Because it was so dominant for so long, it missed the changes in the market.  When the changes became so obvious, that they could not be ignored, Blockbuster still pooh-poohed the evolution and moved too late to accept the changes. 

    The obvious lesson here is that Blockbuster could not or would not accept that their market was changing.  Their assumptions about the direction of their markets contained the fundamental error of assuming that the direction they were going would continue forever because they were good at it and dominated the market place for most of their 25 year history.  They refused to accept the facts that their market was evolving and changing, and kept their model intact – in effect, keeping their heads in the sand. 

    There are 4 types of assumption errors: Missing, Wishful thinking, Excessive Conviction and Naïve Projection.  My “assumption” is that Blockbuster was primarily guilty of missing an assumption and wishful thinking, helped by their need to satisfy their parent at the time, Viacom, who likely acquired them as a Cash Cow. 

    How does a company avoid making this type of assumption error in its strategic planning?  All assumptions are subject to errors because they are only educated guesses, not facts, and must be regularly reviewed for accuracy and how well they fit the current conditions in the market.  In addition, a reality check that asks, “What could go wrong with the results of your assumption,” should be performed.  If you need help in making and reviewing your assumptions, as a part of your strategic planning, please contact the Center for Simplified Strategic Planning, Inc. at www.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 2010 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.