Sue o'connor speaks on effective strategy execution

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How do you test your strategy to make sure your organisation is heading in the right direction?

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Sue o'connor speaks on effective strategy execution

  1. 1. Welcome to theAustralian Institute of Company DirectorsEffective Strategy ExecutionSpeakers:Graeme Sumner MAICDAndrew Trnacek MAICD, Strategy Partner, Operational Advisory, Grant ThorntonSue O’Connor FAICDTuesday 25 June 2013
  2. 2. The Role of Directors in StrategyGraeme Sumner MAICD“The board is responsible for providing input into and finalapproval of management’s development of corporate strategyand performance objectives”ASX CGC Corporate Governance Principles and Recommendations 2010
  3. 3. The Role of Directors in StrategyGraeme Sumner MAICD• There has been a trend over the past 2 decades for boardsto become further involved in strategy development…butwe still have some way to go• In practice the level of involvement a board has in strategydevelopment varies considerably and depends on a rangeof factors• Collaboration between the Chairman, Board and the CEOis essential in achieving the right balance
  4. 4. The Role of Directors in StrategyGraeme Sumner MAICDStrategy Plan Approve Implement MonitorBoard ✔ ✔Management ✔ ✔A Traditional ViewStrategy InfluenceProcessPlan Approve Implement MonitorBoard ✔ ✔ ✔Management ✔ ✔ ✔A Contemporary View
  5. 5. The Role of Directors in StrategyGraeme Sumner MAICDStrategicIntentBoard LedStrategicOptionsSharedStrategyImplementationManagement LedAn Advanced View
  6. 6. The Role of Directors in StrategyGraeme Sumner MAICDThe level of board involvement in strategy developmentvaries greatly and is influenced by many factors including• The preferences, skills and experience of boardmembers• The performance and experience of the CEO andmanagement• The complexity and dynamics of the business• The interpersonal dynamics between management andthe board
  7. 7. The Role of Directors in StrategyGraeme Sumner MAICDCollaboration between the Chairman and CEO is essential toget the best value from the process. This includes• Agreement on the best approach- tools used- people involved in the process- time allocation• Bridge any broader gaps in knowledge and experienceof board members
  8. 8. 8© Grant Thornton International. All rights reserved.10 timelessstrategy testsAndrew TrnacekPartner – Strategy &Operational Advisory25 June 2013
  9. 9. 9© Grant Thornton International. All rights reserved.The problem with strategy…our strategy will lead us to successOur strategy defines our differentiation…We have clear capabilities……that fully support our strategySource: Booz&Co%%%%
  10. 10. 10© Grant Thornton International. All rights reserved.10 tests: separating the wheat from the chaffHave you translated your strategy into an action plan?Is there conviction to act on your strategy?Is your strategy contaminated by bias?Does your strategy balance commitment and flexibility?Does your strategy embrace uncertainty?Does your strategy rest on privileged insights?Does your strategy put you ahead of the trends?Is your strategy granular about where to compete?Does your strategy tap a true source of advantage?Will your strategy beat the market?
  11. 11. 11© Grant Thornton International. All rights reserved.Will your strategybeat themarket?
  12. 12. 12© Grant Thornton International. All rights reserved.The 5 forces at playYouCompetitorsNew entrantsAlternativesSuppliers Customers
  13. 13. 13© Grant Thornton International. All rights reserved.Does your strategy tap atrue source of advantage?
  14. 14. 14© Grant Thornton International. All rights reserved.Positional and Capability AdvantagesPositional Advantages• Market DominanceCapability Advantages• Access to unique resources– Saudi Aramco• Innovation and R&D– Google• People (?)Source: The Australian
  15. 15. 15© Grant Thornton International. All rights reserved.Is your strategygranularabout whereto compete?
  16. 16. 16© Grant Thornton International. All rights reserved.Granularity can be service, customersegment and locationLegendFacilitiesFeeder organisationsCompetitionService:detailed toattributesLocation:Street corner
  17. 17. 17© Grant Thornton International. All rights reserved.Life satisfactionQuality expectationIndividualismPrice expectationAttractiveness to innovationPerceived progressivenessMaintain thestatus quoInnovationOld and familiar New and differentBasicneedsVisibleachievementSociallyawareA Fairer dealSomethingBetterRealconservatismYoungoptimismTraditionalfamily lifeConventionalfamily lifeLook atmeRoy Morgan Value Segments
  18. 18. 18© Grant Thornton International. All rights reserved.Does yourstrategy put youaheadof thetrends?
  19. 19. 19© Grant Thornton International. All rights reserved.Does yourstrategy rest onprivilegedinsights?
  20. 20. 20© Grant Thornton International. All rights reserved.Insight comes from many different sourcesWhence comes insight?• Board• Staff• Customers• Commissioned research– Internal data– External data• External experts orprovocateurs• Problem analysisTOPDOWNBOTTOMUP
  21. 21. 21© Grant Thornton International. All rights reserved.Does your strategyembrace uncertainty?
  22. 22. 22© Grant Thornton International. All rights reserved.Scenario Planning:forecasts are not predictions!Scenario planning is auseful tool fordiscussing possibilitiesin an uncertain futureSupplyDemandHighHighLowLowVocational EducationLand of the giantsNiche marketsBoom timesBread crumbs
  23. 23. 23© Grant Thornton International. All rights reserved.Does your strategy balancecommitment and flexibility?
  24. 24. 24© Grant Thornton International. All rights reserved.A few big decisionsTiming is criticalMany smaller decisionsFlexibility CommitmentThere is unavoidable tension betweenflexibility and commitment
  25. 25. 25© Grant Thornton International. All rights reserved.Is your strategycontaminatedby bias?
  26. 26. 26© Grant Thornton International. All rights reserved.Is thereconvictionto acton your strategy?
  27. 27. 27© Grant Thornton International. All rights reserved.Have you translated your strategyinto an action plan?
  28. 28. © 2011 Grant Thornton Australia Ltd | February 2012The RoadmapFinanceCustomer MarketInternalGrowth &DevelopmentSet next year’sbudgetRestructure Boardof Directors(Phase 1)ReintroduceRemunerationCommittee0 – 3 Months 3 – 6 Months 6 – 12 MonthsAppoint Sales teamCreate websiteIntroduce Salesteam into clientconversationPolish shop reviewOutsource internaloperations (e.g. IT)Find sub-contractorinstallation teamsIT reviewUpgrade & reviewemploymentcontractsUpdate &implementorganisational chartReview jobdescription in all 5areasAppoint SeniorLeadership TeamHR development &training forindividualsAppoint companymentorAppoint ExecutiveAssistant (EA) toManaging DirectorReviewManagementReporting (M1)Restructure Boardof Directors(Phase 2)ReviewShareholdingsEstablish clientsSales strategyProcurementstrategySponsorship &communityinvolvement effortEnvironmentalreviewSet next year’sbudgetUpdate businessplanCompany directortrainingReview/refreshmanualsStorage reviewReview IJF MaycoReview outsourcingcomponents forassemblyRisk review onproducts &suppliersConstructionstrategy(ECH ExpansionHealth & Aged Care)EstablishcompetitorsManufacturingoutsourcing – local(painting, etc)FF&E marketEstablishprocurementbased on product(e.g. China, India,Vietnam)Establish productcoreReview showroomlocation(with productlibrary included) 28StrategicDirection
  29. 29. 29© Grant Thornton International. All rights reserved.The results:65%(3 or fewer)25%(4 – 6)10%(7 – 10)
  30. 30. 30© Grant Thornton International. All rights reserved.Strategy• Takes time• Requires effort• Builds on capability• Needs commitment
  31. 31. Sue O’Connor FAICDChair, YMCA VictoriaDirector, Goulburn Valley WaterManaging Director, Balcombe ConsultingSue O’Connor
  32. 32. YMCA VICTORIA FAST FACTS
  33. 33. StrategicPriorities
  34. 34. Decision Making MatrixProcedure G416A-GApproved December 2012
  35. 35. “Innovation is about seeing the world notas it is but as it could be. Its aboutexploring opportunities or difficultquestions whose solutions can’t be foundin past experience or proven by data.”Roger Martin, The Design of Business, 2009
  36. 36. Innovation: Growing understanding
  37. 37. Analytical + Intuitive Thinking = Design ThinkingAnalyticalThinkingIntuitiveThinkingDesignThinkingPrevious HistoryData Driven50:50 MixFuture Looking“Gut Feel”Modified from R Martin, The Design of Business, 2009
  38. 38. The Challenge: Double plant capacity to cope with floods
  39. 39. Question is Known, solution is new and unknown• Small dedicated team with strong leader• Senior executive support• $40k seed funding©
  40. 40. Result: 300% in plant performance• $17m capital upgrade delayed by at least 5 years• Reduced operating costs by $75k/year• $150k capital cost
  41. 41. Innovation: Questions for Directors• Leadership – both board and executive• Design Thinking• People and capability• Innovation systems and process• Space & culture
  42. 42. Upcoming eventsLeaders Edge Luncheon with Mr Rod Sims,Chairman, Australian Competition and ConsumerCommissionMonday 29 July, Melbourne CBDHealthcare Breakfast: Building a better mentalhealth systemTuesday 13 August Melbourne CBDThe Essential Director Update: 13Thursday 17 October, Melbourne CBD

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