From the CEO of a little 241 billion dollar company… Look, what is strategy but resource allocation? When you strip away all the noise, that’s what it comes down to. Strategy means making clear-cut choices about how to compete. You cannot be everything to everybody, no matter what the size your business or how deep its pockets…You have to figure out what to say NO to. Jeffrey Immelt
The Four – I’s • Ignorance • Inflexibility • Indifference • Inconsistency
How to avoid the Four I’s• Aggressive external market focus.• Aggressive customer focus.• Keep the “Main Things” the main things.• Bullish on knowledge sharing and learning.• Passion and commitment at all levels.• Foster a healthy paranoia.• Revel in change.
Breakthrough StrategiesGE: 1- 2 or F.S.C.Intel: memory to processorsMicrosoft: installed baseApple: chaos to elegance????
BTO JIT Inventory turnsLogistics vs. Technology VOC Dell
The Toyota Way• Challenging Vision – We form a long-term vision, meeting challenges with courage and creativity to realize our dreams.• Kaizen – We improve our business operations continuously, always driving for innovation and evolution.• Genchi Genbutsu – We go to the source to find the facts to make correct decisions, build consensus, and achieve our goals at our best speed.• Respect, Challenge and Help your People and Suppliers – We respect others, make every effort to understand each other, take responsibility and do our best to build mutual trust.• Teamwork – We stimulate personal and professional growth, share the opportunities of development, and maximize individual and team performance.
Educated Guess FocusResource Allocation Bold not Risky What NOT to do
What strategy is not…• More, better, faster is not a strategy.• Effectiveness and efficiency are necessary… but not sufficient.• Superb execution of fundamental business processes… is expected.• Being extremely good at what you are supposed to be good at… gets you no extra credit at all.
What Business Planning is Not !• Business planning does not attempt to make future decisions.• Business planning is not forecasting.• Business planning is not an attempt to blueprint the future.• Business planning is not necessarily the preparation of massive plans and reports.• Business planning is not an effort to replace good management judgment.
Why Planning Pays OffAsks & answers questions of importance.Simulates the future.Forces the setting of objectives.Gives a framework for decisions.Develops performance measurements.Improves communications.
It is all about finding the patterns Vision - Mission - Values
Common Problems• Putting It Off• Idea inflation• Diluted priorities• Vague goals• No execution plan!!!
Review of the plan?• Twice yearly Strategic Planning Retreat – 1 to 2 days• Monthly “quick check” meetings 2 – 3 hours• Weekly Senior team alignment review – 1 hour or less• Carry plan to every strategic meeting
RISK is simply an element ofeffective strategy
Is it realistic?What are the REAL numbers?What would I have to change / do?What is the “Ripple Effect”?Is this a long-term or short-term idea?Who else should I talk to?Can this idea be improved ?What is the timing for implementation?What will happen if I am wrong?
LOW I HIGH I HIGH P HIGH P Take a Take A Chance PassProbability Take Delegate Your LOW P Time LOW P LOW I HIGH I Impact
Anyone who tells you they enjoy change… should seekimmediate professional help.
Emotional Response to Perceived Negative ChangeActive Anger Acceptance Bargaining Emotional Response Stability Denial Immobilization Testing DepressionPassive Time
Managing Positive Responses to ChangePESSIMISM Informed Hopeful Pessimism Realism Checking Informed Out Optimism Uninformed Optimism Completion TIME
Process Build the case for change Institutionalize Create a strong new sense of approaches urgency The eight major steps ofPlan for andcreate short- the change process Form a powerful guiding term wins coalition Create a clear Empower vision for others to act successful change Relentlessly communicate the vision
Four antidotes to change resistance1. Bring people face-to-face with the external pressures to change.2. Engage change “zealots.”3. Manage feelings & emotions.4. Support the change with new tools, systems and training.
Nine Elements of Organizational Health Direction Leadership Culture Coordination Accountability Capabilities & Control Customer Motivation Innovation FocusFrom: Beyond Performance by Keller and Price 3
Patrick Lencioni “Once organizational health (culture) is properly understoodand placed in the right context, itwill surpass all other disciplines in business as the greatestopportunity for improvement and competitive advantage. Really!”
The number one factor in increasing the level of highly satisfied and engaged CUSTOMERS in your business is…The level of highly satisfied and engaged EMPLOYEES in your business.
What do engaged employees look like?1. They give more discretionary effort.2. They consistently exceed expectations.3. They take more responsibility and initiative.4. They receive better customer service ratings.5. They offer more ideas for improvement.6. They promote and model teamwork. 1- 107. They volunteer more for extra assignments.8. They anticipate and adapt better to change.9. They persist at difficult work over time.10. They speak well of the organization.
Key Drivers of Customer Satisfaction and Loyalty Financial Performance CR= 104.12% increase in profits Global study: Tolerate 16 countries Quality P&S & Nothing 529 companies Customer Relationship 15,589 respondents Less CR= .404 Employee CR=.277 Satisfaction CR=.275 CR=.249 CR=.334 CR=.280 Empowerment Coaching High Standards CR=.285 CR=.371 CR=.365 CR=.191 CR=.247 Long-term Enthusiasm, Training & Fair Orientation Commitment, Development Compensation RespectFrom: Practice What You Preach by Maister
How do you find these people?In addition to ALL ofthe normal avenues…
YOU have to be the key to talent in your organization• Do you have a list of 20 wildly talented people you have lunch with every 60 days?• Are you the very first person that all of your associates call if they meet someone of towering competence?• Do you hang out with cool people and go to places where talent is abundant?• Do you have your sights set on another dozen super talented people you’d like to poach from your competitors or other industries?• Are you reading, studying and learning everything you can about best practices and benchmarking for finding and developing talent?• Do you treat talent acquisition, development and maintenance as THE most important aspect of your job?
Remember:• Talent Rules!!!!• You need to FIND talent• You need to GROW talent• You need to BE talent
Organizational Culture…• The values and behaviors that contribute to the unique social and psychological environment of an organization.
Zappos Sales in 1998 = 0 Sales in 2008 = 1.2 Billion Looking back, a big reason we hit our goal early was that we decided to invest our time, money and resources into three key areas: customer service (which would build our brand and drive word-of- mouth), culture (which would lead to the formation of our core values), and employee training and development (which would eventually lead to the creation of our Pipeline Team). Even today, our core belief is that our Brand, our Culture and our Pipeline are the only competitive advantages we will have in the long run. Everything else can and will be copied.
Key attributes of winning cultures • High aspirations and a desire to win • Extreme customer focus • A “think like owners” attitude • Bias to action • Individuals who team • Passion and energy 1 - 10Bain & Company 5
Twice weekly surveys for five years of 2,000+ senior managers and executives at:• IBM • Fidelity• GE • Motorola• Morgan Stanley • Ikon• Merck • American Express• 3M • Progressive• Microsoft • Bank of America• CIGNA • AT&T• Heineken • SAP• MasterCard • Borders
Keys to effective management… • Communicate clearly • Force the hard decisions • Focus on results 1 - 10 • Remain flexible to change • Prove your value to the customer • Force collaboration • Rigorous but not ruthless • Build very high levels of TRUSTFrom: Think Big – Act Small by Jennings
HIGH Affection TRUSTConcern Distrust Respect LOW LOW HIGH Competence 3
The 4 must You Cs of Trust ConsistentlyCommunicate that you are Competentand you Care
“I am good atwhat I do… and I do it because Icare about you.”
To create a highly accountable culture…• Communicate clearly and relentlessly.• Set agreed-upon and highly specific metrics.• Focus on results – not personalities.• Force collaboration – teamwork is mandatory not optional.• Question all activities that don’t contribute to the company’s overall strategic goals.• Make sure that everyone in the organization – from top to bottom – focuses on accountability.
Sun Tzu on Business Execution• Solid strategy is essential to business success.• However, good strategic principles mean nothing if you don’timplement them.• Thorough preparation is essential to execution.• Simplicity is the foundation of execution. Thus you should focus yourbusiness on a few simple ideas.• Align all activity with your core business goals. Eliminate everythingelse.• People drive execution. Hire, train, retain and motivate the best.• The business landscape is always changing, so to succeed you mustbe flexible.• Craft a simple message, and make sure everyone in the organizationgets it – but also listen to everyone, so you know what’s going on.• Being good isn’t enough. Build “towering strengths.”
TEC / Vistage / EO / YPO = 2,000 CEOs 1. Lack of a well-communicated vision and strategy for growth. 2. Lack of courageous communication. 3. Tolerating mediocrity. 4. Lack of accountability and disciplined execution.
1. There is a real void of clear,direct and understandablecommunication about thedirection of the organization.This results in people doingwhat they want to do, notwhat they need to do andbreeds a climate of not caringabout the customers/clientsor their colleagues.
2. Dysfunctional behavior is accepted orignored and worse yet, colleagues,management reward it.
Expectations x 33. There is no definition of what isacceptable and what is unacceptableperformance
4. Management does not promote andconfirm that accountability is a keyprinciple within the company.
5. Good people mayleave because offrustration that theiremployer is ignoring theissue and is notproactive in seeking andimplementing asolution to change theenvironment.
Where are we going + how will we behave on the way? Vision + Values Praise + Celebration Focus and Reward / Differentiation Strategy Eliminate Mediocrity Punish “No”Measure / Track 9 Steps for Communicate Adjust / Stakeholders + Transparency Innovate Ensuring Commitment guiding collation Renewal Effective Execution Vision + Values Training + Strategy time / money / Support Alignment Plans supplies / people Goals / Objectives Tactics / Actions Communication Systems Procedures / Protocols Clear / consistent / relentless Repeatable Process
Fundamental Customer Expectations• Reliability: The ability to provide what was promised, on time, dependably and accurately. (Honesty)• Assurance: The knowledge and courtesy of employees, and their ability to convey trust and confidence. (Competence)• Empathy: The degree of caring and individual attention provided to customers. (Concern)• Responsiveness: The willingness to help customers and provide prompt service. (Attitude)• Tangibles: The physical facilities, equipment, and appearance of the personnel. (Professionalism)
The Five Levels of Customer Service I don’t really care Why try harder Good enough is good enough That’s niceHoly #@%& – you guys are awesome!!!!!
1. Extreme Customer FocusThey listen to, understand, and respond (often in unique and creative ways) to the evolving needs and constantly shifting expectations of their customers. Own the VOC
2. Shared Customer Service Credo They establish a clear vision of what superior service is, communicate that vision to employees at all levels, and ensure that service quality is personally and positively important to everyone in the organization.
3. MOT: Process = Repeatable success• They create systems, processes and protocols to ensure that service delivery is flawless… without stifling the creativity and initiative of their employees. 11
4. Clear Standards + Accountability They establish concrete standards of service quality and regularly measure themselves against thosestandards, guarding against the “acceptable error” mindset byestablishing as their goal 100% customer satisfaction performance.
5. Customer Focused Employees They hire the best people, train them carefully and extensively so they have the knowledge and skills to achieve the service standards, then empower them to work on behalf of the customers to build very high levels of TRUST 12
6. Reward and Celebrate Success… They recognize and reward service accomplishments, sometimes individually, sometimes as a group effort, in particular celebrating the success of employees who go “one step beyond” for their customers.Deal decisively with mediocrity 12
• Create a customer-focused Vision• Flood the organization with VOC• Become an expert on delivering superior customer service• Turn your employees into customer service champions• Destroy any barriers to superior service performance• Measure, measure, measure• Walk the talk 13
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