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Strategic Planning Gateway Church 7 may 2013

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  • We used to be like a Professional Service Firm. Ala Lawyers/ Accountants. Smartboards. Boardrooms. Offices in NZ, Canada, USA
  • -33 degrees in Calgary
  • Moved to LA to set up office there. Much warmer!
  • Just about every company does some kind of strategic planning. Many of them do it at a "strategic planning retreat." That's why every consulting firm that does strategic planning gets calls every week asking if they can come out and facilitate a strategic planning retreat or planning session. When someone calls me out of the blue asking if I can facilitate their strategic planning retreat in a couple of weeks, I usually surprise them by saying, "No!". Then I qualify that by saying, yes I can help, but you need to do some serious homework first and it is probably going to take you at least a month. When you've done that, I'll talk with you about meeting to facilitate your planning process.The reason is simple. If you want to create a strategic plan that will set you up for future success in your industry, you have to do the analysis first. That takes time. Each of the analysis exercises you're going to work through will take you at least a week and probably more. The whole analysis process may take you more than a month, and needs to be rigorous and thorough or it won't equip you to create a winning strategy that produces results.
  • And we kick your ass to make sure you implement your strategic planQuarterly strategic plan updatesWeekly 1 hour meetingsHelp you implement execution modules into your businessUse Business execution software to track and drive progress
  • Along the way we created business execution software to measure resultsTransformed from a consulting firm that uses software to support consultingTo become a software firm that uses consulting to support the software
  • Now we are setting up in SFO
  • This is not theory. We are growth firm just like you. Want to dominate our category globally. Live what we teach
  • Back to Venice where I lived
  • Gold gym. Mecca of bodybuilding. Successful. Great missions statement (Core Purpose)
  • Unfortunately – good intentions amount to nothing without execution
  • Same in business. Business Execution is keySource – Prof Kaplan
  • [2] (Strategy & Leadership Journal, May/June 1999)
  • [3] (Renaissance Solutions Survey, 1996)
  • When 150,000 workers were asked to name the top priorities of their companies, only 15% could.  Even worse, only 6% knew what their own individual priorities were. Source; Stephen Covey and Bob Whitman in 2009 - Predictable Results in Unpredictable Times
  • I love the term, "Big, Hairy, Audacious Goals," coined by Jerry Porras and Jim Collins in their book, Built to Last. Porras and Collins abbreviate that to "BHAG" (produced "bee-hag"). They don't ever give us a narrow definition of a BHAG, but they give us many examples. Probably the best known is President John Kennedy's "man on the moon" goal.
  • If you really want to ignite the passion in your team, you need a goal that is scaryIt’s cant just be “ put one foot in front of the other”
  • You have to remember that things didn't look bright for the USA at the time. The Russians seemed to be beating the USA to every space milestone. Americans were worried and not very confident about how they would fare in the "space race." That's why many commentators thought the President was crazy when he suggested this BHAG to a Joint Session of Congress on May 26, 1961.  "I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. No single space project in this period will be more impressive to mankind, or more important for the long-range exploration of space; and none will be so difficult or expensive to accomplish." The goal was huge and, even more important, no one, including President Kennedy had any idea of all the things that had to be done for the country to reach it.
  • Setting a BHAG is like throwing your hat over a huge wall and then figuring out how you're going to get your hat back. So you begin this process by throwing your hat over the wall and you think, "I want to get my hat back. I need to figure out how to get over this wall and get it." Remember that it should be exciting, but it should be a little scary, too. If you are thinking to yourself, "Yes, well, if we do that, and we do that, and if we keep growing at X percent per annum and keep putting one foot in front of another we'll reach this point by year 2020," that's not a BHAG. A BHAG is not a linear path. A BHAG is something you should stare at and think, "How the heck are we going to do that?" You don't know how yet, but you like the sound of it, and you're going to figure out the how
  • Business goals are a lot like mountains. If you want to get to the top you need to plan and marshal your resources. You need to develop skills and habits and practice the basics of climbing diligently. The thing that separates great mountain climbers from the rest and great companies from the merely good is the mountains they choose to climb.
  • What can we be the best in the world at? Now that's the best in your world, however you define your world. Your world might be your suburb, it might be your town, it might be your state, it might be your country, it might be the whole world, or it might be the whole universe. It might be your industry or a small part of your industry. What are we passionate about? Passion defines your Core Purpose, which we'll refine later. Passion is what drives great companies because people want to work for something beyond the numbers. What drives our economic engine? What is your business model going to be? How will you make money? Where will you get your revenue and profits from in the future?
  • By now you have probably come up with a long list of things that describe what you want your business to become at some point far into the future and that's great. Some companies create walls full of words or a collage of pictures to describe their ideal future, and that's a great exercise too, but now I want to force you crystallize your dream into a clear concise statement, using what I call my "Twitter Rule", that is, if you can't communicate a concept within the length of a Twitter post, then it is too long.
  • Your Core Purpose and Core Values are important, but I have found that spending too much time on them too early in the process can lead to inefficiency and frustration. I'll introduce you to the key principles of Core Purpose and Core Values. Then you can have them in mind while you work on some key strategic decisions. That way you'll be prepared when we re-visit the principles later on in the book to define your Core Values and Core Purpose, and use them as a guide to improving your results.
  • Your Core Purpose and Core Values are important, but I have found that spending too much time on them too early in the process can lead to inefficiency and frustration. I'll introduce you to the key principles of Core Purpose and Core Values. Then you can have them in mind while you work on some key strategic decisions. That way you'll be prepared when we re-visit the principles later on in the book to define your Core Values and Core Purpose, and use them as a guide to improving your results
  • Here is where I start to disagree with Jim Collins. He says first who – then what. Get the right people on the bus, then figure out where you want to drive the bus. That certainly has not been true in our experience, or in the clients we work with.
  • We had 12 offices around the world like this. Plans for hundreds more. Teams of consultants
  • Ignoring the brutality of the era and the obvious masculine stereotype, I propose that the Viking Longship is a superior analogy for your business. Let’s begin with a bit of history (greatly simplified for the purposes of this illustration):The Vikings were Scandinavian explorers, warriors and merchants who raided, traded and plundered their way around Europe and Asia between the 8th to 11th centuries. They were the global superpower of their era. There is evidence to suggest they discovered North America long before Columbus arrived.The Viking Longships were fitted with oars along the length of the boat as well as a sail on a single mast. The sail enabled Longships to cover long distances at sea with minimal effort, then the oars were deployed when near the coast or when heading up a river.The Longships were built and owned by coastal Viking villages and conscripted by the Viking King to build a powerful naval force. Every village had to deliver one ship and crew of approximately 50 men. A key advantage was that every crew had strong tribal bonds and sense of loyalty and duty to each other.The Longship skipper used the sun and the stars and a primitive form of compass to navigate, and steered the Longship using a side mounted steering oar. Longships were not fitted with benches. When rowing, the crew sat on movable chests that contained their weapons and personal possessions. (Sounds a lot like a typical office workstation)Because ships had shallow draft hulls; they could sail in shallow waters, allowing them to invade far inland by paddling up rivers. Longships were also double-ended, allowing the ship to reverse direction quickly without having to turn around. Thus, the Vikings could perform highly efficient hit-and-run attacks on coastal settlements, in which they could beach the boat, conduct a raid, and then leave rapidly before a counter-offensive could be launched.Vision, Strategy and Business Execution – the Viking way.Firstly, the skipper creates the Vision to motivate their crew (colonize a country, get rich, prove yourself in battle etc). They keep talking about this vision to motivate their crew, especially during the tough times (sailing through scary storms, running low on supplies, injuries and setbacks in battle etc)Secondly they craft a Strategy to realize that vision; they secure the right resources to do the job, navigate the Longship to the target destination via the safest and most efficient route, and craft a battle plan for how they intend to attack the local population.Everyone in the crew is vital to the Execution of the Strategy. They perform many different roles during the sailing, rowing, and raiding components of each expedition. They must work together to achieve their goals and hold each other accountable for performance – there is no room on the boat for any slackers when rowing or when engaged in battle! They align their efforts by rowing, marching and fighting in cadence. The crew is never quite sure what challenges they will encounter on each expedition so they continually review and adapt the strategy to meet changing conditions. They get very clear on the 1 thing they need to focus on right now - every step of the way. Performance is rewarded by the fact that they all get a share of the plunder of each expedition.I will flesh out this analogy more sometime (I’m sure there is a book in here somewhere), but hopefully you are starting to get the picture.Sorry Jim, but I disagree with you on this one. I’d far rather be a Viking warrior than a passenger on your boring bus any day!
  • We all want to grow – but growth is not a strategy (not all want to grow e.g. Whissell)
  • We all want to improve quality. But quality improvement is not strategy
  • Efficiency is not a strategyBaxter in $22K robot used in manufacturing environments. It performs a variety of repetitive production tasks – all while safely and intelligently working next to people. How? Baxter exhibits behavior-based ‘common sense,’ capable of sensing and adapting to its task and its environment. It requires no complex programming or costly integration. And with its uniquely low price point, Baxter provides a compelling alternative to low-cost offshoring for manufacturers of all sizes.
  • Beat competitors
  • Growth is not a strategy. Quality is not a strategy. Efficiency is not a strategy. Being better than your competitors is not a strategy. What moves are the key players in your industry going to make? What moves do you need to make to address these issues? What moves do you need to make to position yourself for success in your industry in the future? THAT IS STRATEGY
  • This is the point where many companies suggest that we should look for cash cows to milk. That's a reference to the famous Boston Consulting Group (BCG) matrix that includes the box labeled "Cash Cow." A Cash Cow is a business that owns high market share in a slow-growing industry.  BCG recommends that you milk that Cash Cow to provide funds for other growing operations. I disagree. The Cash Cow theory looks great on paper but doesn't work out in most companies.  Even mature businesses are rarely stable for long, and they require constant investment of management time and money. Most important, they give you one more thing to pay attention to instead of your Core Activities and key Strategic Moves. That's a temptation, not a good strategy.
  • Leave no stone unturned. Industry analysisWe ask series of questions – disciplined thought process – perhaps a nasty “threat” slithers out from under the stoneWhat strategic moves do we need to make to address this issue?
  • Leave no stone unturned. Industry analysis.We ask series of questions – disciplined thought process – perhaps we uncover a jewel of an “opportunity”What strategic moves do we need to make to address this issue?
  • I like Porter's framework because it's a straightforward way of analyzing the competitive landscape of your industry. He defines an "industry" as "a group of firms producing products that are a close substitute for each other." So think of your industry in that broader sense. It's not only the companies who sell what you sell. It's also companies who sell products or services that can easily substitute for what you sell. Include the key players in your value chain – from suppliers all the way through to customers I confess that when I studied this at university, it all seemed very abstract and theoretical to me. It wasn't until I got out into the business world and began using the framework that I discovered how powerful it is. Companies that fail to perform this process regularly are those that fail to see industry trends changing and get caught out. Strategic planning should not be a meaningless exercise in goal setting. We need to thoroughly analyze our industries and plan a path to navigate the predicted trendsExamples of industries not responding effectively to Porter’s 5 forces analysis:The music industry not changing business model to deal with the threat of substitutes (MP3 downloads)The movie industry likewise impacted by downloads. Threat of substitutes (People not going to movies / not hiring DVD’s) – increased bargaining power of buyers (piracy / downloading for free)The newspaper / magazine industry not changing to deal with the threat of substitutes (internet) – and the bargaining power of buyers (Can get their content online from anywhere in the world)Consumer goods manufacturers not changing to deal with the threat of big box retailers (Wal-Mart / Tesco / Home Depot etc) – bargaining power of such large buyers now dictates pricing terms. Stores doing their own house label / store brands to cut out the manufacturers brands Failure of retailers to deal with the threat of online retailer substitutes (Amazon) & increased bargaining power of buyers (Can shop around to get best deal from anywhere in the world)
  • Increased global competition and commoditization is driving down prices in many industries. If you've got many competitors and they're offering similar products and services, you don't have much power. If your customers or your suppliers can't get a good deal from you they'll go somewhere else. You must be meaningfully different from your competition if you want to have power in your industry.
  • I will ask you questions about your industry as it exists right now. I will also ask you to forecast what your answers might be to these same questions three to five years into the future. Some people challenge me by saying that it is impossible to predict what will happen that far out and that planning that far into the future is a waste of time.  I always smile and share this quote from Jeff Bezos of Amazon.com, who as you know, competes in at the forefront of the rapidly changing tech industry.
  • With that story, companies quickly realize that planning at least three to five years out is probably a good idea after all. Besides, I'm going to introduce you to a process in this book that frees you from dependence on long term forecasts, by using a cycle of analysis, execution, and review to create great results.  When I'm working with a client, I give them these questions as a series of pre-work exercises. They go away and obtain the answers. Then I challenge their thinking and conclusions well before we get together for an actual strategic planning and decision making session
  • New entrants can easily enter your industry and weaken your position if it doesn't cost much in terms of time, money or skill to enter the industry. It's easier for them to enter if there are no incumbents with economies of scale. It's easier if there's little or no protection for key technologies or if they can bring significant cost advantages to the market. On the other hand, if barriers to entry are high, your competitive position is somewhat protected.
  • Clayton Christensen has showed how disruptive competitors often fly under the radar by starting in the low-cost, low-profit part of the industry. The only way to spot them is to take a break on a regular basis and update your industry analysis.
  • That's human nature at work. When we've been successful doing things one way, we resist changing to a different way. So we invest in what we "know" instead of what we need. We get stuck "improving what is" when we really should be "creating what will be". The only way to beat that is to ask and answer tough questions about your situation and what you should do next
  • Your power is affected by the ability of customers to find a different way of achieving a similar solution or outcome. Very often new technology opens new possibilities that can result in competition. The compact disc replaced vinyl records and online downloads replaced CDs. In each case, the technology provided a different way of delivering the same product, recorded music. That's one kind of substitution. The objective is to listen to music and the different technologies offer substitute ways to achieve it.  There's another type of substitution that's often harder to spot. It's the substitution of a product or service that's not in your industry to help a customer achieve the same goal as your product.
  • How much power do your suppliers have to dictate prices to you? That power is determined by how many suppliers there are, their size and strength, how unique they are, and how easy or costly it is for you to switch to another supplier. The fewer supplier choices you have and the more you need their help, the more powerful they are. And in some industries your suppliers or your supplies could be the skilled labor you need.
  • Are there customers like Walmart in your industry? If there are, then you understand the bargaining power of customers. Walmart requires suppliers to meet detailed specifications for every product. Those specifications can include the packaging, labeling, and shipping details.  In general, the more important any individual customer is to your business, the more bargaining power that customer has and the less you have. For your industry, the bargaining power of customers is determined by the number of vendors they have to choose from, how meaningfully different they perceive you to be, and the cost to them of switching from your products or services to those of your competitors.  Your customers also can possess power to the extent that they can influence other customers to buy from you or not. Let's do some disciplined analysis of how things are in your business.
  • United breaks guitarsIn 2008, musician Dave Carroll took a trip via United Airlines from his home in Halifax, Nova Scotia to Omaha, Nebraska. While sitting in the airplane at O'Hare airport in Chicago, Carroll and others saw baggage handlers throwing bags, including his guitar on the tarmac. Sure enough, when Carroll got to Omaha, he discovered that the neck of his $3500 guitar had been broken. He approached United workers in Omaha, but no one wanted to help. When he got back home and filed a claim, the airline denied it, saying he hadn't filed it within 24 hours. After trying several different ways to get satisfaction, Carroll wrote a song. He titled it "United Breaks Guitars" and put it up on YouTube.  The video was viewed several million times in the first month after it was posted. The mainstream media picked up the story. People cancelled reservations. The company's stock price dropped. One pundit claimed that the incident cost United enough to replace Carroll's guitar 51,000 times.  Granted that "United Breaks Guitars" is a particularly creative complaint about a very poorly handled incident, it still illustrates how single customers now have a way to share their pleasure or displeasure about your products and service. If you're in an industry where customers post ratings and comments about you and your competitors, you're most at risk.
  • More price conscious value shoppers
  • More price conscious value shoppers
  • That's good advice. If you pick a target and shoot at it, you're more likely to hit something important, something profitable for you. But that's when the advice from my shooting instructor kicks in. If you really want to be successful, you need to shoot at the bull's-eye in the center of that target.  Right now you may be thinking, "But, if I aim at one type of customer, won't I miss some of the people who would make really good customers?" The answer to that one is, "Yes, but." It's almost a paradox, but if you do a good job of target marketing, aiming at the center of the target, you're likely to attract more good customers, not less. That's the research-supported advice of Doug Hall.
  • This curve is usually called the Technology Adoption Lifecycle Curve, but it applies in many non-technology industries as well. Some customers like to buy things at the bleeding edge of new technology innovations, soon after they've been introduced. Others prefer to wait until the product goes mainstream. Still others don't buy until others are already moving on to the next big thing. Where do your target customers sit? There's no "right" answer. What you're after is the best description of your customers, because each section of the curve responds to a different marketing approach. You'll get the most from this exercise if you narrow your selection down to only one choice.
  • The following example is from a company called The Tile Warehouse in New Zealand. They named their ideal client "Rachel Browne" and describe her this way. The Tile Warehouse also did something that might work for you. They created a collage on the wall of their office that represents their target market customer. In this case they adorned one of their walls with a large composite picture of a person who represented "Rachel" and surrounded her with pictures of brands and images that tell the story of her lifestyle, the car she drives, the house she lives in, the clothing she wears, the jewelry she owns, the brands she prefers etc. The benefit of this, is that they can look at this collage every day, and ask themselves, "What would Rachel think of this?" whenever they are designing a new product or service offering, or crafting their marketing communications.
  • Operational Excellence is the Value Discipline you'll choose if your ideal target customer values low cost more than anything. If you're going to deliver low cost in any form, you must be ruthlessly efficient. Everything you do needs to serve that goal while you constantly streamline your process and drive out waste and cost. Walmart and Southwest Airlines are two of the best-known companies that have chosen Operational Excellence as a Value Discipline. For more than half a century, Walmart has constantly improved purchasing and logistics to assure that the lowest priced goods come in the door while they also fanatically improve internal operating efficiency.
  • Operational Excellence is the Value Discipline if your ideal target customer values low cost more than anything. If you're going to deliver low cost in any form, you must be ruthlessly efficient. Everything you do needs to serve that goal while you constantly streamline your process and drive out waste and cost.
  • This Value Discipline isn't just for huge companies. One of my clients, Los Angeles-based Pearl Paradise is an online retailer out to dominate the global market for pearl jewelry by offering prices that are as much as 80 percent below bricks and mortar retailers. In their own words, they want to offer "the best price for quality ratio in the industry." That means sharp buying and hyper-efficient operations, true Operational Excellence.
  • Apple in the Steve Jobs era is the best-known example of a Product Leadership company. On October 23, 2001 the company introduced the iPod line of MP3 players. In subsequent years, the iPhone and iPad have followed. Each of those products established a standard that everyone else aimed for.
  • Proctor and Gamble (P&G) is another company that's chosen Product Leadership. The company holds more than 30,000 patents and 60,000 trademarks. They even have a position for innovators called Master Marketing Inventor. Doug Hall held that title at P&G before he left to start his Eureka! Ranch. The P&G lesson is that you can't rest on your laurels. Around the beginning of the century, P&G evaluated its new product development and decided that it could do much better. The company had become very much a closed shop and only looked inside the company for new ideas. In fact, the joke was that the phrase "not invented here" was invented at P&G.The company responded by developing a program to bring in more ideas from outside and partner more with other companies. They called the program Connect and Develop (C+D). The idea is to connect with other companies and develop new products. At the same time, P&G worked to integrate their innovation process into the cadence of the business.
  • You're probably familiar with many of the top firms who choose this discipline. They're the ones that the business magazines and speakers tell those great customer service stories about. Think Nordstrom or Zappos or Ritz Carlton. Those companies have developed strong cultures that empower front line employees to make decisions that will delight the customer. I think Amazon is another Customer Intimacy example.
  • Here's how it works for one of my clients, Strategic Consulting Solutions. They provide accounting and compliance solutions for companies in the South Eastern USA who have won government contracts. Their primary Value Discipline is Customer Intimacy. Here's the way they say it. "We understand the complexities of government contracting and strive to help our clients find the support solutions to all of their contracting issues." They're good enough at the other disciplines. They have experts on compliance and government contract accounting, but they're not "thought leaders" in the field. They aren't the creators of state-of-the-art technology solutions. They leave that to others. They're an efficient company, but so is every other competitive compliance firm. They don't just sell solutions to a market. Instead, Strategic Consulting Solutions puts their time and money and effort into creating the perfect solution for each client.
  • Amazon offers a huge range of products. They started with books, of course, but you can purchase a wide selection of appliances, sports gear, computer equipment, music, movies, and even grocery items on Amazon. The company has developed technology to help you make better buying decisions. The technology is called "collaborative filtering." It's the way that Amazon lets you know what other people like you have purchased. It's part of making Amazon what Jeff Bezos calls "earth's most customer‑centric company." A few years ago, I experienced what that means beyond the technology.  I've always loved to read great business books and back when I lived in New Zealand I discovered that, even with shipping costs, I had wider selection and lower prices shopping online at Amazon than at any New Zealand bookseller. Back in the days before e-books I would place an order for about twenty books every three months and Amazon would send them to me in a box that would arrive within a week. Then, one day, I noticed that a shipment I had ordered two weeks before still had not arrived.  I contacted their customer support. The agent replied by email that, according to their records, the order had indeed been sent and was delivered to my address over a week ago. When we reviewed the shipping address, I realized that I was the problem.  Instead of selecting New Zealand on the delivery address online form, I had selected the next country in the drop down menu, the African country of Niger. I admitted my (costly) mistake and said I still wanted to purchase the books, and asked them to bill me again, and send the books again, but this time to the correct address. That's when Amazon blew me away. "Mr. Lynch," the agent wrote, "we will give you a full credit for the books you ordered and will send them again to your correct address." I had just been forgiven a mistake of seven hundred dollars! As you can imagine I've remained a loyal Amazon customer ever since.
  • It would be wonderful if you could be excellent at all three Value Disciplines. The problem is that trying to cover them all means that you're spending time and energy and money on things that don't matter the most to your ideal target customers. Instead, I want you to commit to becoming truly excellent at one Value Discipline and "good enough" at the other two. "Good enough" means that you match the industry standard in disciplines that are not your primary Value Discipline. Walmart obsesses about Operational Excellence but it's "good enough" on Product Leadership and Customer Intimacy. Apple pours its heart and soul into Product Leadership, and matches the competition on Operational Excellence and Customer Intimacy.
  • When I set my BHAG of becoming Mr. New Zealand in five years, I knew there were hard things I had to do. I had to follow a strict training and dietary regimen every day. Those were the right things to do so I could achieve my goal. To get the results you want, you have to do the right things. Everybody tells you that. What you don't hear often enough is that you also have to stop doing anything that isn't the best choice for getting the results you want. The biggest thing I had to give up was winning competitions. My strategy required that I abstain totally from competing from 1989 to 1992. I needed one long cycle of bulking up and dieting down, and that meant not competing at all for three years. That was very hard for me. Frankly, I liked competitions – feeling the thrill of victory and standing there on the stage, receiving the applause from the audience. I would have loved winning more trophies and working my way up the rankings, but I had to say no to that experience if I wanted to achieve my goal by the fastest, most efficient route possible. So I sat at the back of the bodybuilding shows every year, muttering under my breath and telling myself to be patient and that my time would come. Saying no to some things was just as important as saying yes to other things. Here are two more examples: Yes: Heavy weight trainingNo: Aerobic exercise and other sports like rugby, tennis, swimming, and hiking Yes: Plenty of rest and recovery, early to bed, and diet soda.No: Late nights, nightclubs, partying, or alcohol In other words, achieving my BHAG meant saying no to a lot of things I liked doing but which weren’t the fastest route to achieving my goal. In Business Execution for RESULTS, we call those necessary things "Core Activities" and those unnecessary things "Non-Core Activities." Strategy is making wise choices about what to do and what not to do so that you ensure your future success. The "not to do" part doesn't get discussed that much, but the top experts in creating a winning strategy think it's just as important. Here's Peter Drucker:
  • Industry leadership depends on your CORE Activities where you develop “special abilities” that create value for the customer. Things competitors cannot do - or find difficult to do as well as you do. NON-CORE Activities are where you demonstrate no "special ability" . Define your company's "front room”- i.e. your company strengths, the CORE activities that are most important things for you to do, the things which stir your passion and show off your excellence. Everything else is your “backroom” Only do what you do best, and eliminate or minimize your “backroom”
  • Where do activities belong? Inside your company's walls? Or outside its doors? Or part of a joint venture or strategic alliance? The answer isn't always obvious. Your aim is to enhance effectiveness - not to try to lower expenses. Outsourcing, properly executed, might even increase costs. Most look at outsourcing from the point of view of cutting costs, which is a delusion. What outsourcing does is greatly improve the quality of the people who still work for you. I believe you should outsource everything for which there is no career track that could lead into senior management. Peter Drucker
  • The question has to be asked, “If we did not do this already, would we go into it now?” If the answer is NO, the reaction must be “What do we do now?” Very often, the right answer is abandonment. The first step in growth - is not to decide where and how to grow; it is to decide what to abandon. A business must have a systematic policy to get rid of the outgrown, the obsolete, and the unproductive. When do you stop investing time and resources into activities that have achieved their purpose? When do you decide to pull the plug on those activities that never seem to quite achieve their original promise?
  • Leaders resist abandonment because it runs counter to what they have been judged on throughout their careers – which is to grow revenues and profits. How many resumes brag about projects they pulled the plug on? We are conditioned to want to fix and grow things. Unless something has been an outright failure, it can be difficult to convince leaders that activities they are involved in should be abandoned. Vested interests and egos tend to perpetuate the status quo. The ability to have a long-term strategic viewpoint defines true senior leadership. Effective leadership calls for continual pruning and weeding. Abandoning activities is not as sexy as acquiring them or building them up, but it’s just as important – and the most overlooked aspect of leadership.
  • The question has to be asked, “If we did not do this already, would we go into it now?” If the answer is NO, the reaction must be “What do we do now?” Very often, the right answer is abandonment. The first step in growth - is not to decide where and how to grow; it is to decide what to abandon. A business must have a systematic policy to get rid of the outgrown, the obsolete, and the unproductive. When do you stop investing time and resources into activities that have achieved their purpose? When do you decide to pull the plug on those activities that never seem to quite achieve their original promise?
  • Yesterday's star product may produce profits now, but it soon becomes a barrier to the introduction and success of tomorrow's breadwinner. One should, therefore, abandon yesterday's breadwinner before one really wants to, let alone before one has to. Of course innovation is risky. But defending yesterday is far more risky than making tomorrow.
  • Get the group to review the notes so farBrainstorm a list of “Actions” (moves)Prioritise the list down to the top 3 actions ranked in order(you should have taken no more than 3 hours to reach this point.)Time for lunch break (half hour)
  • I wanted to be a fighter pilot when I was a young boy growing up in New Zealand. That was my first BHAG. I joined the Air Training Corps as a cadet as soon as I was old enough. I learned to fly solo in a glider when I was in high school. I studied math and physics because I knew you needed that to be a fighter pilot, and, as soon as I was old enough, I applied to join the NZ Air Force. Here in the USA, you must be a college graduate to become a fighter pilot, but in New Zealand things were different, and I was able to apply at 17. After several weeks of exams and physical assessments, I found myself on the final short list of ten candidates being flown to an air force base in Auckland for the final, grueling three-day selection process. I was by far the fittest on the course. I found the written exams easy. I was well-prepared, and I knew my stuff. I began to think that I might make it. New Zealand has a tiny air force. That year, they only selected two people for pilot training. Unfortunately, I wasn't one of them. The examiners told me that I didn't have fast enough reactions to be a successful fighter pilot. That stung; I did not want to believe it. Unfortunately, that was reality. I was good at sports in school. I played in the top teams for tennis and softball in the summer and soccer in the winter. I thought my reactions were one of my strengths, and maybe they were in the context of playing those sports, but in the context of becoming a fighter pilot, my reactions were a weakness. Context is decisive. You need to know where you are heading before you can properly evaluate your strengths and weaknesses.It didn't matter how big my goal was or how much I wanted it or how hard I was willing to work. I simply didn't have the reactions that a fighter pilot must have. I could have become a navigator, but I realized that even though this was an opportunity, it was not my dream and I wasn't passionate about it. Now it's time for your version of my air force testing. It's time for you to determine if your goals and plans make sense in the real world, in light of an honest assessment of your capabilities and the current environment. We're going to use a tool that you've probably heard of and maybe even used. It's called SWOT.
  • At this point, many companies write a Strategic Project that ticks off all the letters of the SMART acronym, except for Achievable. They create expectations that would be fine if all they had to do was work on the project, but they don't. Neither do you. You've got a business to run. The idea is to balance optimism with realism. Remember that you still have to do everything that makes your business go. You have to make sales and fulfill contracts and collect money. You need to do human resources and regulatory paperwork and your taxes. None of that goes away. Not only that, there will be surprises, things you can't anticipate. "Stuff" happens! Fires will break out, and someone will have to spend time and effort fighting them. That's just the way it is in life and in business. I've found that it makes sense to set aside one half-day every week when you do nothing but work on your Strategic Projects. That doesn't sound like a lot, but it's realistic for most people in most companies as they try to balance strategic execution with running the business as usual. The trick is making sure you do something every week to make progress on what's important.
  • Transcript

    • 1. @RESULTSdotcom @StephenLynch
    • 2. 90% of those who join health and fitness clubswill stop going within the first 90 days.International Health Club Association
    • 3. 90% of strategies FAIL due to poor execution [1]
    • 4. Only 27% of employees have accessto their company strategic plan[2]
    • 5. Only 1 in 20employeesunderstands theircompany strategy [3]?
    • 6. Only 15% of employees knowtheir company’s top prioritiesOnly 6% know their ownindividual priorities [4]
    • 7. 92% of companies don’t measure KPIs [3]
    • 8. - A measurable goal with a deadline- Long timeframe- Clear, compelling and easy to grasp- Inspires all your people, not just the management team- Beyond current capabilities of the organization- Set in understanding, not bravado- Can outlive the involvement of the current leadersCharacteristics of a good BHAG©Note – a BHAG is not about being “as large as possible” – it’s about being “great”Define what greatness looks like for you - and how you will measure it
    • 9. it
    • 10. First we set our GoalThen we plan our Strategy -our climbing route & base camps along the way
    • 11. What could your company be the best in the world at?List your answers below:
    • 12. What is your company passionate about? (Core Purpose)List your answers below:
    • 13. How will you make money in the future?(your business model)List your answers below:
    • 14. Describe your company at a future date: (e.g. 2020)Question: Your decision:What will be your revenue?What will be your profit?Size and scope of your company operations?Number of offices?How many staff?
    • 15. What products and services will you be offering?List your answers below:
    • 16. What geographic locations will you be serving?List your answers below:
    • 17. Describe a typical work day at your future company?List your answers below:
    • 18. What other measures of success have you achieved?List your answers below:
    • 19. BHAG© – statementThe words, phrases, and vivid, detaileddescriptions of your ideal future visionwhich underpin your BHAG©Best in world at$$$$CustomersPurposePeople ProductsAchievementsServicesScopeCulture
    • 20. Typically expressed as a goal statement (supported by a vividdescription of what your company will be like when you achieve it)Sample BHAG statement:“The world’s #1 brand for house cleaning robots,(expression of category leadership)with annual sales of 15,000,000 units by 2020”(plus a tangible measure you can use totrack your progress toward your BHAG)Characteristics of a good BHAG©
    • 21. State your BHAG©State your BHAG© (in <140 characters)
    • 22. Where will you display your BHAG©so it is clearly visible to your people every day?List your answers below:
    • 23. BHAG©Core Values Core PurposeVision
    • 24. BHAG ©The compelling view you will see when you reach the top
    • 25. Core ValuesRules for team behavior, no matter what mountain you climb
    • 26. Core PurposeThe reason why you climb mountains at all
    • 27. OperationsHead ofCompanyMarketingSalesFinanceR&DTechnologyCustomerSatisfaction“First Who, then What.Get the right people on the bus, then set the direction”
    • 28. What is Strategy?
    • 29. Strategy = choosing the right actionsto ensure your future successExecution = implementing the right actions
    • 30. “Without Strategy, execution is aimless.Without Execution, strategy is useless”Morris Chang
    • 31. “Strategy is resource allocation.When you strip away all the noise,that’s what it comes down to.Strategy means making clear cutchoices about how to compete.You cannot be everythingto everybody.You have to figure outwhat to say NO to”Jeff Immelt
    • 32. “Many managers do notunderstand the importanceof having a clear strategy.Strategy is aboutmaking trade-offs.The essence of strategyis choosing what NOT to do.”Michael Porter
    • 33. “The difference betweensuccessful peopleand very successful peopleis that very successful peoplesay "no" to almost everything”Warren Buffett
    • 34. Dual Vision
    • 35. “Companies need to operatewith one eye focused onthe short-term, and one eyefocused on the long-term.Short-term is about projectsrelated to improvingthe current core business,and meeting the needsof today’s target customers.”Philip Kotler
    • 36. “Long-term is NOT aboutperformance improvement.It is about forgetting the pastand reshaping the businessto compete more effectivelyin the future.Often, this demands bold,disruptive strategic movesaway from the presentto reshape the companyfor future success.”Philip Kotler
    • 37. “The temptation of businessis always to feed yesterdayand to starve tomorrow”Peter Drucker
    • 38. Gary Hamel
    • 39. “You must be slow in deliberation and swift in execution”
    • 40. “All action must, to a certain extent,be planned in a mere twilight"Carl von Clausewitz
    • 41. “Everyone has a plan untilthey get punched in the mouth”Mike Tyson
    • 42. “You cant control the wavesbut you can learn to surf”Jon Kabat-Zinn
    • 43. “Every leader needs toclearly explain the top 3 thingsthe company is working on.If you cant,then youre not leading well”Jeffrey Immelt
    • 44. Industry Analysis
    • 45. “The questionsremain the same.It’s the answersthat keep changing”Albert Einstein
    • 46. Don’t know the answer to a question?You need to know!What will you do to find out?
    • 47. The 5 Forces that shape industriesRivalry betweenexisting competitors
    • 48. Who are your major COMPETITORS?(companies offering similar products / services)Now? Within the next 3-5 Years?
    • 49. How competitive will your industry become?(Industry life cycle: introduction > growth > maturity > decline / Industry growth rate / Industry profitability /Number of competitors / Market share / Capital requirements / Globalization / Commoditization / Costadvantages / Economies of scale / Friendly vs. Aggressive competition)Now? Within the next 3-5 Years?
    • 50. What strategic moves are your major COMPETITORSlikely to make?Now? Within the next 3-5 Years?
    • 51. What strategic moves do you need to maketo address COMPETITOR “threats” or “opportunities”?Now? Within the next 3-5 Years?
    • 52. "If everything you do needs to workon a 3 year time horizon, thenyoure competing against a lot ofpeople.But if youre willing to invest on a7 year time horizon, youre nowcompeting against a fraction ofthose people, because very fewcompanies are willing to do that.We cant realize our potential aspeople or as companies unless weplan for the long term."
    • 53. Threat ofNew Entrants
    • 54. "Firms are remarkably creative in defendingtheir entrenched technologies, which oftenreach unimaginable heights of elegance anddesign and technical performance only whentheir demise is clearly predictable.“James Utterback
    • 55. “Out there in some garage is an entrepreneur whosforging a bullet with your companys name on it.Youve got one option - shoot first” Gary Hamel
    • 56. How will NEW ENTRANTS influence your industry?(Industry barriers / Capital requirements / Learning requirements / Access to supplies / Access todistribution / Performance vs. incumbents / Perceived differentiation in customers’ mind / Loyaltyto incumbents / Switching costs / retaliation by incumbents / “Innovator’s dilemma”)Now? Within the next 3-5 Years?
    • 57. What strategic moves do you need to maketo address NEW ENTRANT “threats” or “opportunities”?Now? Within the next 3-5 Years?
    • 58. Threat of Substitutes
    • 59. SUBSTITUTE OFFERINGS influencing your industry?( Technology changes / Industry structure changes / Availability of substitutes / Performance ofsubstitutes / Perceived differentiation in customers’ mind / Switching costs / Customer desire toseek out alternative solutions to satisfy their need)Now? Within the next 3-5 Years?
    • 60. What strategic moves do you need to maketo address SUBSTITUTE “threats” or “opportunities”?Now? Within the next 3-5 Years?
    • 61. Bargaining Powerof Suppliers
    • 62. What do you need to pay forto run your business?
    • 63. Who (or what) are your major SUPPLIERS?Now? Within the next 3-5 Years?
    • 64. How will SUPPLIERS influence your industry?( Cost of supplies / Negotiating power / Access to alternative sources of supply / Switching costs /Forward integration – supplier becomes competitor)Now? Within the next 3-5 Years?
    • 65. What strategic moves are your SUPPLIERSlikely to make?Now? Within the next 3-5 Years?
    • 66. What strategic moves do you need to maketo address SUPPLIER “threats” or “opportunities”?Now? Within the next 3-5 Years?
    • 67. Bargaining Power of Customers
    • 68. Who (or what) are your major CUSTOMERS?Now? Within the next 3-5 Years?
    • 69. How will CUSTOMERS influence your industry?( Customer power to dictate prices or terms / Ability to influence other customers / Customer reviews /Perception of differentiation between vendors / Loyalty / Switching costs / Backward integration –customer becomes competitor)Now? Within the next 3-5 Years?
    • 70. What key moves are your CUSTOMERSlikely to make?Now? Within the next 3-5 Years?
    • 71. What strategic moves do you need to maketo address CUSTOMER “threats” or “opportunities”?Now? Within the next 3-5 Years?
    • 72. Political Factors
    • 73. POLITICAL factors influencing your industry?(Industry specific regulations / political spectrum left vs. right / political stability / laws / taxes /trade policy / wars / environmental issues / health / safety / consumer laws / employment laws)Now? Within the next 3-5 Years?
    • 74. What strategic moves do you need to maketo address POLITICAL “threats” or “opportunities”?Now? Within the next 3-5 Years?
    • 75. EconomicFactors
    • 76. ECONOMIC factors influencing your industry?( economic growth / interest rates / exchange rates / inflation / availability of credit / investor interest /changes in customer purchasing habits / use of debt and leverage vs. more frugal spending)Now? Within the next 3-5 Years?
    • 77. What strategic moves do you need to maketo address ECONOMIC “threats” or “opportunities”?Now? Within the next 3-5 Years?
    • 78. Social Factors
    • 79. SOCIAL factors influencing your industry?(demographic trends / career attitudes / health issues / environmental concerns / communication styles /social behaviors / online behaviors / media consumption / purchasing behaviors / cultural differences /generational differences / income equality / society’s evolving attitudes, values & beliefs)Now? Within the next 3-5 Years?
    • 80. What strategic moves do you need to maketo address SOCIAL “threats” or “opportunities”?Now? Within the next 3-5 Years?
    • 81. TechnologyFactors
    • 82. TECHNOLOGY factors influencing your industry?(New technologies / Rate of technology adoption / Impact of internet and mobile / Social media /New devices & interfaces / Jobs replaced by technology / Business models disrupted by technology)Now? Within the next 3-5 Years?
    • 83. What strategic moves do you need to maketo address TECHNOLOGY “threats” or “opportunities”?Now? Within the next 3-5 Years?
    • 84. Target Market
    • 85. Geographic Area
    • 86. “There is only 1winning strategy.Carefully definethe target market,and direct a superior offeringto that target market.”Philip Kotler
    • 87. Doug’s rule = “Delight the few to attract the many”Target market = “Who” your ideal customers areYour target market are the customers you seek todelight and excite the most with your offer
    • 88. The target market is the centerof your marketing “bulls eye”“Who” you have in mind when you design yourproduct / service - and your marketing communicationsIt does not necessarily mean they will make up themajority of your sales volume
    • 89. When you have a clear target market:Your product / service design has more clarity & focus(you know who you are building it for)Marketing communications are more effective(you know who you are talking to)Target customer perceives you as the expert at meetingtheir needs - “This company is talking to me”(experts can get charge more and earn higher margins)
    • 90. Seth Godin
    • 91. Seth Godin
    • 92. A product for everybody is a product for nobodyDon’t cater for the masses,cater to your ideal target customerFocus on your most profitable market segment,the one with the most growth potential,the one that is most influential.Design a product / service that is remarkable to them
    • 93. Who are your most profitable customers?Describe your most profitable customers Give an example
    • 94. Who are your most influential customers?Describe your most influential customers Give an example
    • 95. What type of customer has the most potential for growth?Now? Within the next 3-5 Years?
    • 96. Don’t know the answer to a question?You need to know!What will you do to find out?
    • 97. The ideal target customer COMPANY:Question: Your decision:Industry types?Revenue?(as narrow a bracket as possible)Number of staff?(as narrow a bracket as possible)Geographic locations?
    • 98. The ideal target customer PERSON (purchase decision maker):Question: Your decision:Male or Female ?(select one)Age?(within a 10 year age bracket or less)Marital / Relationship / Family status?(a description of their home life)Occupation?Income?(as narrow a bracket as possible)
    • 99. The ideal target customer PERSON (purchase decision maker):Question: Your decision:Geographic location?Lifestyle description?Core Values / Attitudes / Beliefs?Brand names they associate with?(car, clothing, jewelry, technology, shops, equipment, tools,sports goods, games etc)Heroes / Roles models?(who they aspire to be like)
    • 100. The ideal target customer PERSON (purchase decision maker):Question: Your decision:Media they consume?(TV, magazines, radio, newspapers, websites, aggregatorsetc – which ones?)Media they participate in?(social media, games – what brands? What platforms?)Who (or what) influences their purchasedecision?Rate of technology adoption? (see diagram)
    • 101. The ideal target customer PERSON (purchase decision maker):Question: Your decision:What is the typical buying process: from initialawareness → making the actual $ purchase?What does ideal customer typically purchase?Ideal customer value of purchase?Ideal customer frequency of purchase?Lifetime value of ideal customer?
    • 102. The ideal target customer PERSON (purchase decision maker):Question: Your decision:What DO they like about your industry?What DON’T they like about your industry?What DO they like about your company?What DON’T they like about your company?
    • 103. With regard to what your company provides:Question: Your decision:What is the customer trying to achieve?“jobs to be done” – what are they hiring yourproduct / service to do for them?What is the customer’s biggest problem?What is the customer’s biggest frustration?What is the customer’s greatest desire?How does your offering make them feel?
    • 104. She is 35-45 years oldShe is a very hard working motherShe is married to a hard working husband & they own their own businessThey have school age children, and the hubby is on the Board of TrusteesShe is a mother that would attend the school camps.She drives a SUV so she has room for everything including the dog.She plays tennis and he is into water sportsShe enjoys a nice wine with friends, and her friends would be just like herWhen they are building or renovating, they use the services of Interior Designers,to make sure it is all done properly, and it looks good when friends come around!Rachel Browne
    • 105. Describe in < 140 CharactersDescribe your ideal target market customer: (in <140 characters)Describe what your ideal customer really wants: (in <140 characters)
    • 106. Key Benefits you offer to meet the customer’s needs?Now? Within the next 3-5 Years?
    • 107. The way you interact with your target customer?Now? Within the next 3-5 Years?
    • 108. Core Competencies you need to meet the customer’s needs?(e.g. People, Skills, Technologies, Special Abilities)Now? Within the next 3-5 Years?
    • 109. Geographic AreaGeographic Area
    • 110. What geographies will you offer your products / services to?Now? Within the next 3-5 Years?
    • 111. Value DisciplineWhat game are we playing (to win)?
    • 112. Strategic FocusWhat do your targetcustomers value most?Value Discipline(Generic Strategy)Company examplesLow costConsistencySpeedNo hasslesOperational ExcellenceDell, Wal-Mart, FedEx,McDonalds,South West AirlinesState of the artProducts and Services Product LeadershipApple, Sony, Intel, Merck,Pfizer, Nike, 3MCustomized productsPersonalized solutions Customer IntimacyMcKinsey, Nordstrom, IBM,Ritz Carlton
    • 113. "Different customers buy different kinds of value.You cant hope to be the best in all dimensions,so choose your customers and narrow your value focus.Producing an unmatched level of a particular valuerequires a superior operating model,a machine dedicated to just that kind of value."
    • 114. What is your chosen Value Discipline (Generic Strategy)?Question: Your decision:What is your chosen Value Discipline?
    • 115. Core vs. Non Core Activities
    • 116. List all the activities you currently performNow?
    • 117. “Leaders must decide:What is our business?What should it be?What is not our business?What should it not be?”Peter Drucker
    • 118. “Strategy is resource allocation.When you strip away all the noise,that’s what it comes down to.Strategy means making clear cutchoices about how to compete.You cannot be everythingto everybody.You have to figure outwhat to say NO to”Jeff Immelt
    • 119. “Many managers do notunderstand the importanceof having a clear strategy.Strategy is aboutmaking trade-offs.The essence of strategyis choosing what NOT to do.”Michael Porter
    • 120. “The difference betweensuccessful peopleand very successful peopleis that very successful peoplesay "no" to almost everything”Warren Buffett
    • 121. “There is nothing so useless as doing efficientlythat which should not be done at all.” Peter Drucker
    • 122. CORE vs. CONTEXTCORE: Activities where you have “special abilities”that create a dramatic and meaningful point of differencein the mind of your target market customerCONTEXT: Any activity that does NOT differentiateyour company from the target customers viewpoint.(With these activities you aim to meet, but not exceed,the minimum acceptable standard to perform this activity)
    • 123. 3-5 Year Strategic Moves
    • 124. “Every leader needs toclearly explain the top 3 thingsthe company is working on.If you cant,then youre not leading well”Jeffrey Immelt
    • 125. On an annual basis thoroughly review and update your:Vision (BHAG© / Core Values / Core Purpose)Industry AnalysisTarget Market & Geographic AreaValue Discipline (Generic Strategy)Core vs. Non Core ActivitiesThen, using these workshops as the context…..Strategic Decision Time!
    • 126. List all the Strategic Moves you have identified so farNow? Within the next 3-5 Years?
    • 127. What are the top 3 strategic moves to position your firmfor industry success within the next 3-5 years?3-5 Year Strategic Move Person Accountable1.2.3.
    • 128. Make it obvious!
    • 129. “Our people” is not a strengthWhat is it about your people that makes your team strong?E.g. “Highly qualified people”“Marketing” is not a weaknessWhat is it about marketing that is weak currently?E.g. “Insufficient target customer leads”“Communication” is not a weaknessWhat is not being communicated?E.g. “Strategy not well understood”Be specific: Use 3-5 word phrases
    • 130. What are the key strengths / assets / competencies withinyour current business that you can leverage?Rank your Top 5 Strengths in order:
    • 131. What are the biggest weaknesses within your current businessthat could be fixed or improved in the next 12 months?Rank your Top 5 Weaknesses in order:
    • 132. What opportunities can you pursue over the next 12 months(aligned to your BHAG & 3-5 Year Strategic Moves)that will position your company for future success?Rank your Top 5 Opportunities in order:
    • 133. What external threats do you need to reduce(or closely monitor) to ensure they do not derail your plans?Rank your Top 5 Threats in order:
    • 134. Current Strategic Projects
    • 135. SpecificMeasurableAchievableRelevantTime boundSAMRT
    • 136. What are the top 3 Strategic Projectsyour company (or team) needs to execute this quarter?- Must address one or more issues described in your SWOT analysis (relevant)- Tangible end-point milestone (you know when to pop the cork)- Balance short-term business improvement initiatives (improving “what is”)vs. building long-term strategic capability for the future (creating “what will be”)Company Strategic Project DueDatePersonAccountable1.2.3.
    • 137. “However beautiful the strategy, youshould occasionally look at the results”
    • 138. @RESULTSdotcom @StephenLynch