We define strategy as a portfolio of linked and evolving initiatives that together enhance long-term performance and marketplace value
Strategic planning is simply an organized method for guiding an organization from where it is to where it wants to be. We can call it alternative futures or apply other terms in vogue but, done properly, it all comes down to moving an organization forward into emerging opportunities. By definition, strategy is from the Greek word strateg(os) , meaning the “art of the general.” National Football League. Teams look forward three – seven years or more Determine competitive environment Develop strategic plan and strategy to counter threats and take advantage of opportunities Acquire quarterback who can execute the team strategy and build the team around him Modify by drafting and trading players to develop team “chemistry”, acquire players to fill gaps and release players with redundant skills The strategic plan provides the resourses to allows players and coaches to develop operational plans for the season and tactical plans for individual games and plays.
Strategy and operational disconnects A disjointed decision making process creates excessive costs and restricts an organization’s ability to identify, much less capitalize on, hidden or emerging opportunities. Non-integrated systems and inadequate planning and analysis capabilities force managers to make decisions without understanding the complete picture. In place of information, management is forced to use well-educated guesses and assumptions. And results from assumption-based activities can be devastating as each manager makes different assumptions.
To increase the impact of the strategic planning process, company executives and planning managers must identify and accurately quantify the economic impact of strategic alternatives. Each potential strategic measure or action must consider market, process and financial dynamics, and how these dynamics impact the organization as a whole. This is the Strategic Planning System goal.
Economic Trends: The macro economic environment analysis will identify trends such as changes in personal disposable income, interest rates, inflation and unemployment rates Political Trends: The macro political environment analysis will identify changes in the position politicians take on issues. A current example is a shift towards greener policies in the developed world. Technological Trends: The macro technological environment analysis will identify changes in the application of technology. A current example is a shift towards online transactions and in some areas a shift away from online transactions. Legal Trends: The macro legal environment analysis is closely linked to the political environment (politicians tend to make the laws), but also includes trends in court decisions – such as liability compensation. Social/Cultural Trends: The macro social/cultural environment analysis will identify trends in societies beliefs, behaviours, values and norms. Such as the number of part time workers, attitudes towards global warming, make up of the family structure. Demographic Trends: The macro demographic analysis will identify trends in population growth at relevant ages for your industry (There maybe zero population growth in general but high growth in the number of people over 65), the population location
The Bargaining Power of Your Customers When analyzing the power of your customers you are really determining who needs who the most. This is driven, in part, by the number of prospective customers compared to the number of suppliers (suppliers are your competitors). A strong or powerful customer can play you off against your competitors. Your strong customers may ask for higher quality or improved service at the same price or simply, for a lower price. Where a less strong customer may simply try to bluff you. In general The greater the number of customers the less commercial power they each have The greater the number of competitors you have the greater your customers negotiating power However, other factors such as the significance of the customer to you or their ability to switch to your competitors also plays a part in determining who has the power. To learn more about the bargaining power of your customers including the top 11 things to consider during your analysis, click here , you will also find out how to apply each to your industry and you will learn from the many examples provided. (Use your browser back button to return to this page) The Threat of New Entrants to Your Industry A new entrant to your industry is a brand new competitor or maybe a new brand from on old competitor. A new competitor to your industry may erode some of your customer base, your challenge is to determine if it is likely that a new competitor will come along and try to steal your customers away. New competitors are restricted by up front capital costs, access to technology or requirements to obtain licenses then your market position is likely to be protected. However, if there are no barriers to entry your position could be weakened. Tip : Sometimes a new competitor in your area is a good thing. For example if you own a craft shop and four more craft shops open near you, the collective scale of the five craft shops may attract significantly more people to the area resulting in growth of your business. You need to determine if a new entrant is a good or a bad thing for your business. Find out more about the threat of new entrants Click here your how to guide and free analysis template! The Bargaining Power of Your Suppliers The bargaining power of your suppliers is like the bargaining power of customers only in reverse, you are now the customer, where before you were the supplier. How dependant on your business is your supplier, or are you dependant on your supplier? How much power does your suppliers have? Can they raise prices or reduce service without the fear of losing your business? In general terms the fewer suppliers that you have to choose from the less power you have to negotiate. Other factors such as the cost to switch suppliers also plays a part in determine who has the power. You will find that a supplier with a unique product that contributes to the uniqueness of your product has a lot of negotiating power, unless they too are dependant on you. Note: The more powerful the suppliers to an industry, the less profitable the industry tends to be. Learn how to complete an analysis of the power of suppliers to your industry, click here for your detailed how to guide and free analysis template! The Threat of Substitute Products or Services A substitute product is a product that replaces the need for your product altogether. One example, Timber is the main component of house frames. However, more and more steel frames are being produced. From a timber mills perspective, steel is a substitute for timber in house frames. Are your customers likely to find an alternative product or service to use instead of your product or service? Will substitute products or services erode your profits? To find out more about the threat of substitute products and services to your industry click here for your how to guide and free template! Rivalry Amongst Existing Firms In many industries most marketing is aimed at maintaining market share, especially when looking at fast moving consumer goods. The industry becomes stable and changes in market share tend to be slow. However, are any of your competitors thinking about growing their business? If so will you loose business? Will they steal your customers away? Some of the tactics that your competitors may use to compete for market position are Reduced prices or increased price competition Increased advertising Differentiating based on customer service or, many other techniques
BASED ON THE ENVIRONMENTAL AND INDUSTRY SCANS PLUS THE SWOT ANALYSIS CAPTURES THE CURRENT CORPORATE STATE AND DEVELOPS A FORWARD LOOKING PLANNING SCENARIO.
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Strategic Transformation System (STS) Xaxax Analytics, LLC, 2131 West Republic Road, PMB 183, Springfield, MO 65807-0183 www.xaxax.org Presents the
STS Value Proposition SEASON CHANGING Strategy Not "game changing" but
Strategic planning yields a competitive advantage
STS optimizes strategic planning Identifies emerging “next after next” opportunities Aligns resources to capture those opportunities Not the business model or operations plan Does not deal with today’s issues Looks across the planning horizon 3 to 7 years
Business to Vision Vision to Mission Mission to Strategic Plan Strategic Plan to Objectives Objectives to Performance Measures Performance Measures to Resources Success is tracked through Quarterly Performance Reviews Linking / Mapping are Critical
Key STS Components Mutual Assessment Vision and Mission Environmental Scan Survey and SWOT Analysis Gap-Closing Strategy Strategic Plan Roll-out Employee Buy-in Quarterly Performance Review Sustainment and Evolution Business of the Business
The problem is . . . Even the most detailed strategic plans often have misalignments and disconnects among Strategy Objectives & Performance Measures Resources Operations
<ul><li>Review the legacy </li></ul><ul><li>strategy and its </li></ul><ul><li>relationship to: </li></ul><ul><li>Vision </li></ul><ul><li>Mission </li></ul><ul><li>Organizational </li></ul><ul><li>structure </li></ul><ul><li>Operational plans </li></ul><ul><li>Key business </li></ul><ul><li>processes </li></ul><ul><li>Resource allocation </li></ul><ul><li>Work plan </li></ul><ul><li>objectives </li></ul><ul><li>Skills </li></ul><ul><li>Performance </li></ul><ul><li>appraisal </li></ul><ul><li>objectives </li></ul>Brief leadership On findings. Make GO/NO GO decision. If GO, establish leadership commitment and resources. REQUIREMENTS ANALYSIS Mutual Assessment
STRATEGIC TRANSFORMATION SYSTEM LAUNCH Leadership introduces Xaxax Analytics (XA) consultants and affirms full support for the process. XA principal briefs client leadership, senior management, and staff regarding the Strategic Transformation System.
XAXAX consultants must fully understand the “ AS IS” position of the organization and the rationale. FIRST ORDER OF BUSINESS
“ VISION” Presentation & Discussion “ MISSION” Presentation & Discussion “ To be” – the WHAT statement that clearly establishes the objective state we will achieve in X (three – seven) year planning horizon. Generates questions leading to the Mission Statement, not answers. Achieving the Vision – the HOW of closing the gap between the “ to be” Vision and the “ as is” legacy strategy. With management, develop environmental scan and SWOT survey methodology. DEVELOP THE VISION AND MISSION
MACRO ENVIRONMENTAL SCAN ECONOMIC POLITICAL TECHNOLOGICAL STATUTORY SOCIAL/CULTURAL DEMOGRAPHIC ASSESS INDUSTRY IMPACT
DEGREE OF COMPETITIVE PRESSURE INDUSTRY ENVIRONMENTAL SCAN CUSTOMER BARGAINING POWER SUPPLIER BARGAINING POWER THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTE PRODUCTS INDUSTRY RIVALRY
Conduct and Review SWOT Survey and Make Recommendations Brief environmental scan and SWOT survey findings. Facilitate client ranking of results. Develop SWOT matrix. Management assigns working teams. Complete XA scan - Compare/Combine With Client Scan DESIGN AND CONDUCT SWOT ANALYSIS
SWOT- based Gap Analysis Gap - Closing Strategy Components <ul><li>PRESENT DRAFT: </li></ul><ul><ul><li>Goals </li></ul></ul><ul><ul><li>Objectives </li></ul></ul><ul><ul><li>Performance </li></ul></ul><ul><ul><li>measures </li></ul></ul><ul><ul><li>Timelines </li></ul></ul><ul><ul><li>Responsible </li></ul></ul><ul><ul><li>business units </li></ul></ul>COMPONENT DEVELOPMENT
Assemble Preliminary Strategic Plan Roll- Out Preliminary Strategic Plan to Leadership <ul><li>DISCUSS: </li></ul><ul><ul><li>Restructuring </li></ul></ul><ul><ul><li>Key business </li></ul></ul><ul><ul><li>processes </li></ul></ul><ul><ul><li>Resource </li></ul></ul><ul><ul><li>allocation </li></ul></ul><ul><ul><li>Work plans </li></ul></ul><ul><ul><li>Skills training </li></ul></ul><ul><ul><li>Performance </li></ul></ul><ul><ul><li>appraisals </li></ul></ul><ul><li>PRESENT DRAFT: </li></ul><ul><ul><li>Goals </li></ul></ul><ul><ul><li>Objectives </li></ul></ul><ul><ul><li>Performance </li></ul></ul><ul><ul><li>measures </li></ul></ul><ul><ul><li>Timelines </li></ul></ul>COMPONENT INTEGRATION
<ul><li>Client leadership introduces the approved strategic plan. </li></ul><ul><li>XA principal briefs the approved: </li></ul><ul><ul><li>Goals </li></ul></ul><ul><ul><li>Objectives </li></ul></ul><ul><ul><li>Performance </li></ul></ul><ul><ul><li>measures </li></ul></ul><ul><ul><li>Timelines </li></ul></ul><ul><ul><li>Responsible </li></ul></ul><ul><ul><li>business units </li></ul></ul><ul><li>Question and answer session. </li></ul><ul><li>Chain-Teaching to disseminate. </li></ul>Finalize Leadership Strategic Plan Strategic Plan Coaching for Managers/Staff ROLL-OUT TO MANAGEMENT AND STAFF
<ul><ul><li>Business unit </li></ul></ul><ul><ul><li>managers brief “state of play” to leadership and senior managers: </li></ul></ul><ul><ul><li>Goals </li></ul></ul><ul><ul><li>Objectives </li></ul></ul><ul><ul><li>Performance </li></ul></ul><ul><ul><li>measures </li></ul></ul><ul><ul><li>Timelines </li></ul></ul><ul><ul><li>Convey issues, successes, barriers, and challenges to leadership and management. </li></ul></ul>Documents issues, successes, and leader guidance. Review generates taskings to management and staff. It reveals systemic and individual problems and develops solutions lessons learned. Results to be briefed in the subsequent Quarterly Performance Review. QUARTERLY PERFORMANCE REVIEW Post-QPR Analysis
Leadership and management continue the process. Further XA consulting work contingent upon agreement with leadership. Subsequent XA work could include executive coaching, business process redesign, personnel appraisal objective design, or other implementing work. SUSTAINMENT AND FOLLOW-UP