SII SIFMA Wharton 2014


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Strategic Thinking / Planning lecture from John Spence

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SII SIFMA Wharton 2014

  1. 1. SII 2014
  2. 2. Learning Objectives: • Address key elements of a business plan that align your firm’s critical objectives with those of your individual’s business unit’s objectives. • Discuss common mistakes in writing strategic business plans. • Identify guidelines on how often to review your strategy, adjust and change or be flexible. • Provide each participant with numerous tools, ideas and skills to apply when creating a detailed and realistic strategic business plan.
  3. 3. Do NOT freak out! • I have a ton to cover and I will go pretty fast. • Please take notes and ask questions. • I will gladly send you a copy my strategic planning workbook. • I am happy to answer any of your questions, offer advice and recommend books at any time. •
  4. 4. 90+ since 1994
  5. 5. For the past 21 years…
  6. 6. “Simplicity is the ultimate sophistication” Leonardo da Vinci
  7. 7. Five Foundations of Effective Strategic Thinking Business Acumen Personal Experience Pattern Recognition Strategic Insight Disciplined Execution
  8. 8. Most people think of: Rivalry Among Existing Competitors Threat of New Entrants Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers
  9. 9. Effective Strategy = Valued Differentiation x Execution
  10. 10. 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.
  11. 11. The Four – I’s • Ignorance • Inflexibility • Indifference • Inconsistency
  12. 12. 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.
  13. 13. 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… Jeffrey Immelt You have to figure out what to say NO to.
  14. 14. Strategy is INTERNAL as well as EXTERNAL
  15. 15. Breakthrough Strategies GE: 1- 2 or F.S.C. Intel: memory to processors Microsoft: installed base Apple: chaos to elegance Saturn: no haggling
  16. 16. Southwest 1 type of plane Point-to-point Fast turns Low fares / no frills Friendly staff
  17. 17. Dell BTO JIT Inventory turns Logistics vs. Technology VOC
  18. 18. 100,00 ELP No Frills Logistics
  19. 19. Southwest – Dell – Walmart What is the pattern? • Extreme Efficiency • Minimize Costs to as close to zero as possible – w/o negative impact • All focused on delivering specific customer value
  20. 20. Educated Guess Focus Resource Allocation Bold not Risky What NOT to do
  21. 21. What are some of the major external / global strategies your firm sets?
  22. 22. (T + C + ECF) x DE = Success
  23. 23. The Four Primary Practices: 1. A sharply focused, clearly communicated and well- understood strategy for growth. 2. Flawless operational execution that consistently delivers the value proposition. 3. A performance-oriented culture that does not tolerate mediocrity. 4. A fast, flexible, flat organization that reduces bureaucracy and simplifies work. From: What (really) Works by Joyce, Nohria, Roberson
  24. 24. The Secondary Management Practices: • Talent = find and keep the best people. • Key leaders show commitment and enthusiasm for the business. • Embrace strategic innovation. • Master the power of partnerships. From: What (really) Works by Joyce, Nohria, Roberson
  25. 25. Assessing the Strategic Situation Simplicity Complexity Certainty Uncertainty Knowing Forecasting Proactive Adaptive Strategic Planning Scenario Planning
  26. 26. 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.
  27. 27. Why Planning Pays Off Asks & answers questions of importance. Simulates the future. Forces the setting of objectives. Gives a framework for decisions. Develops performance measurements. Improves communications.
  28. 28. It is all about finding the patterns Vision - Mission - Values
  29. 29. Common Problems • Putting It Off • Idea inflation • Diluted priorities • Vague goals • No execution plan!!!
  30. 30. 10 – 15 %
  31. 31. What Inhibits Execution? National Survey of 4,000 Senior Executives 4. Inability to work together (21%) 3. Company culture (23%) 2. Economic climate (29%) 1. Holding onto the past / unwillingness to CHANGE (35%)
  32. 32. Vision + Values Strategy Commitment Alignment SystemsCommunication Support Adjust / Innovate Reward / Punish Where are we going + how will we behave on the way? Focus Differentiation “No” Stakeholders + guiding collation Vision + Values Strategy Plans Goals / Objectives Tactics / Actions Procedures / Protocols Repeatable ProcessClear / consistent / relentless Training + time / money / supplies / people Measure / Track Communicate Transparency Renewal Praise + Celebration and Eliminate Mediocrity 9 Steps for Ensuring Effective Execution
  33. 33. Accountability • 100% Clarity • Agreement • Tracking • Coaching • Reward / Punishment
  34. 34. Some thoughts on measurement Less is more Results not activity Easy / Hard Post and review Help not punishment
  35. 35. Scenario Planning Begin with the end in mind
  36. 36. RISK is simply an element of effective strategy
  37. 37. Quantitative & Qualitative
  38. 38. Take a Chance Take A Pass Delegate Take Your Time HIGH P LOW P LOW I HIGH I Probability Impact LOW P LOW I HIGH P HIGH I
  39. 39. Trigger Points
  40. 40. 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
  41. 41. Summary of Key Ideas • Major elements: thinking, planning, execution, review • Strategic thinking = study + experience + pattern recognition • Strategy = bold bets on resource allocation. • What you say “No” to is a big part of strategy. • Planning is a process. • Analysis is critical – but it is not strategy. • More, better, faster is not a strategy. • This is not blueprinting the future. • Keep it simple, focused and extremely well communicated. • A plan for execution MUST be part of the Strategic Plan. • Alignment + support + measurement + tracking + reward / punishment • Scenario planning = probability & impact / trigger points
  42. 42. If you have any questions at all please do not hesitate to send a note or call. My email address is: Please connect with me on LinkedIn Also, you might find value in the ideas I share in my blog. You can sign up for it at: Lastly, these slides and my full strategic planning workbook have already been uploaded to: