| |
|
Strategic Planning
Food
for Thought
Strategy
is the company's formula for winning.
The company's strategy specifies the goals
and objectives to be achieved as well
as the values and missions to be pursued;
it sets out the basic direction of the
company. The strategy specifically delineates
the products or services to be provided,
the markets to be served, and the value
to be offered to the customer. It also
specifies the sources of competitive advantage
and strives to provide superior value.
(Jay R. Galbraith)
An
ideal strategy tells the story of how
a company will offer substantial and unique
value to customers in a way that is difficult
for competitors to imitate. (Joel Shapiro)
Strategy
is about being different. It means deliberately
choosing a different set of activities
to deliver a unique mix of value. (Michael
Porter)
Strategy
is a set of key choices about customers,
value-added, differentiation, and performance
defining the shape and identity of the
enterprise. (Michael Hammer)
Strategy
is simply the management of change-the
intelligent adaptation to external circumstances
and the conscious creation of a desired
future. (Strategy & Leadership)
Strategy
is visioning what the future will look
like and then stretching the firm's skills
in order to position it to take advantage
of that future. (Gary Hamel)
Opportunities
for innovative strategies don't emerge
from sterile analysis & number crunching-they
emerge from novel experiences that can
create opportunities for novel insights.
(Gary Hamel)
The
administrator asks: What resources do
I control? What structure determines our
organisation's relationship to its market?
How can I minimize the impact of others
on my ability to perform? What opportunity
is appropriate? Conversely, the entrepreneur
asks: Where is the opportunity? How do
I capitalize on it? What resources do
I need? How do I gain control over them?
Who can help me achieve my goals? What
structure is best for taking advantage
of this opportunity? (Peter Drucker)
At
the end of the day, you bet on people,
not on strategies. (Lawrence Bossidy)
The
best strategies are laid to waste by poor
execution. (Joel Shapiro)
Holistic
Model of Strategic Planning & Execution
Definitions:
- Market
realities include competition, government
regulations, SOTA technology…
- Customer
Priorities include customer needs &
expectations, what customers value,
the buying criteria of your most important
customers…
- Core
Competencies refers to any technical
or business skills that contribute to
your competitive advantage-they can
be individual, team, or organisational
capabilities.
- Cultural
characteristics refer to those core
values that will most help your business
compete and win, e.g., speed, flexibility,
and risk taking might be great values
for a high tech firm, but would be an
unmitigated disaster for running a nuclear
power plant!
- Organisational
levers are the major HR and management
practices and systems that make an organisation
tick, e.g., recruiting, development,
performance measures, reward, organisational
structure, communication, and leadership
(see our essay: "Building High
Performance Organisations").
This
holistic model of strategic planning and
execution suggests that customer priorities
should be the foundation of strategic
planning and the final objectives of strategy
execution.
From
the perspective of strategic planning,
read the model clockwise. Market realities
and customer priorities determine the
strategy the firm chooses. The business
strategy, in turn, determines which core
competencies (technical skills) and organisational
culture are necessary. And finally, these
competencies & cultural characteristics
determine how the organisational levers
should be designed and deployed.
From
the perspective of executing strategy
(running your business), read the above
model counter-clockwise. You must develop
precisely those management practices that
create the competencies and culture that
enable you to execute the strategy that
responds to market realities and customer
needs and expectations. As you execute,
you will discover new opportunities not
identified in your plan-be open to new
opportunities!
Key Strategy
Questions
What
strategy do we need to achieve
our mission and vision?
- What
is our unique value proposition?
What unique value do we bring to the
marketplace? What do we do differently
& better than everyone else? What
are the primary sources of our competitive
advantage? Why do/should customers buy
from us rather than from our competitors?
How do we expect to compete and win;
how are we going to consistently outperform
our competitors; how are we going to
grow our company?
- What
are the barriers to entry in
our market? How difficult will it be
for others to copy our strategy? How
are we going to stay ahead of the game,
ahead of old, new, and future competitors?
What
is our business model; how does
this business work?
- What
is our revenue generation model,
i.e., how is this business going to
generate positive cash flow and turn
a profit? What are the key drivers of
financial success?
- What
is our traffic generation model,
i.e., how are we going to attract new
customers? How are we going to market
and sell our product or service?
- What
is our customer retention strategy?
How are we going to keep our customers
and increase share of pocket?
What
capabilities and culture do we
need to achieve our strategy?
- What
key skills and capabilities do
our vision, strategy, and competitive
advantage require? What individual,
team, and organisational capabilities
do we need, and what kind of culture
do we need to compete and win in our
chosen markets. How will we create a
long-term, sustainable competitive advantage?
- How
are we going to deploy our organisational
levers to best create and reinforce
our core capabilities and desired culture?
What
resources do we need to execute
our strategy?
- Human
resource needs: how many people
& what kinds of skills? What is
our plan for recruiting, developing,
and retaining this talent?
- Financial
resources: how much capital do we
need for setting-up and/or operating
the company? What combination of debt
and equity? How will we manage our cash
flow? And so on.
Typical
Strategy Errors
Instructions:
Which errors have you made in the past
or have you seen other people make in
the past (try to come up with examples)?
Which errors is your business currently
making or at most risk of making?
- Ignoring
What Customer's Value: Companies
typically provide customers with more
services than they want or need at prices
that often reflect neither the value
of those services to customers nor the
cost of providing them. (Anderson &
Narus)
- "Shotgun"
approach: Blast away and hope that
something hits the target (of course,
those using the shotgun approach rarely
know what/where the target is!).
- "Strategic
Jeopardy":
Offer a steady stream of answers before
getting the questions. I.e., developing
& implementing dozens of programs
& projects that-as stupendous as
they may be-are unrelated to market
realities, customer needs, and business
strategy. (Dave Ulrich)
- Benchmarking:
Companies & their consultants love
to brag about their creative, cutting
edge practices. If you can read, you
can discover many best practices of
leading companies. But just because
something is a best practice of a leading
company doesn't mean it's relevant to
your business & your customers.
Don't benchmark to do what they do;
benchmark to leap frog their best practices.
- "Deadly
Combinations":
Company X spends millions changing itself
into a team-based organisation, but
the compensation program continues to
reward individual achievement…
Aligning management systems and practices
with strategic objectives is a crucial
strategic imperative. (Becker, Huselid,
Pickus, and Spratt)
- SPOTS
(Strategic Plans on Top Shelf): Develop
a fancy strategy, put it in a nifty
binder, and then tuck it away neatly
& safely on some distant shelf-forever!
(Dave Ulrich)
- Not
Walking the Talk: We tell the employees
we value x, y, and z above all else,
but then spend our time, effort, and
money on a, b, & c-or do nothing
at all!
- No
Support: Sell the vision to employees
but don't help them understand how their
jobs contribute; don't help them learn
how to use the mission, vision, and
strategy to make better decisions; don't
spend any time making the vision relevant
and useful.
- Blinders:
So blinded by current strategy, culture,
systems, & practices, that we become
unable to identify new opportunities,
unable to see the world in new ways,
unable to listen to our employees &
customers, unable to hear the noise…
- Narrow
Position Focus: So blinded by a
narrow conception of the competitive
landscape that you forget to consider
secondary and tertiary competitors,
substitute products, alternative strategies…
- Arm-Chair
Strategies:
Developing strategies in a vacuum; crunching
numbers without knowing the business
or without talking to customers and
employees.
- Compaphobia:
Spending more time watching your competitors
than listening to your customers; more
time reacting to the moves of your competitors
than actively creating value for your
own customers.
- Unwillingness
to learn,
experiment, or take risks, and an unwillingness
to encourage others in the organisation
to learn, experiment, and take risks.
- Encouraging
insufficient participation &
empowerment; not looking for ideas from
everywhere & everyone; not asking
employees to help you improve the business.
Employee
Participation in Strategic Planning:
Key Reasons & Benefits:
- Casting
a broader net: Looking for ideas
from everywhere & everyone will
always yield more ideas than any one
person can generate. Remember, there
are many people in your organisation
talking to your customers, solving their
problems, and responding to their needs.
From time to time, you NEED to ask them
about your organisation's opportunities
and challenges.
- Employee
development:
Employees should be expected to-and
given the opportunity to-come up with
ideas to help the business win. Not
only does "practice make perfect,"
but this will enable you to identify
the employees with the best ideas and
give them additional opportunities to
develop their skills, participate in
important projects, and prepare for
future advancement.
- Buy-in
& commitment to strategy is
increased when participation is high.
- Quality
of work-life: Giving employees a
say in matters that affect them increases
job satisfaction and quality of work-life,
which in turn increases employee motivation,
employee retention, and customer satisfaction.
Caution:
do not over-promise and under-deliver.
For example, do not lead employees to
believe they can formulate the firm's
new strategy if in fact you simply want
their input before you make the call.
Let them know how the decision will be
made. They will respect your honesty and
will not have false expectations.
If we think the people not enlightened
enough to exercise their control
with a wholesome discretion, the
remedy is not to take it from them,
but to inform their discretion.
(Thomas Jefferson)
Any
company that's going to make it
in the 90s and beyond has got to
find a way to engage the mind of
every single employee. If you're
not thinking all the time about
making every person more valuable,
you don't have a chance. (Jack Welch)
The
ultimate challenge of leaders who
are senior managers is to develop
the next generation of leaders more
capable than themselves. (Dave Ulrich)
Resources
Articles:
- "The
Debunker Henry Mintzberg," Enroute
(December 1998).
- "Thought
Leader: Gary Hamel," Joel Kurtzman,
Strategy & Business, Issue 9 (Fourth
Quarter 1997).
- "Building
Your Company's Vision," James C.
Collins and Jerry I. Porras, Harvard Business
Review (September-October 1996): 65-77.
- "Strategy
as Revolution," Gary Hamel, Harvard
Business Review (July-August 1996)-an
award winning essay.
- "What
is Strategy," Michael Porter, Harvard
Business Review (November-December 1996)-an
award winning essay.
- "Value
Innovation: The Strategic Logic of High
Growth," Kim & Mauborgne, Harvard
Business Review (January-February 1997):
103-112.
- "The
Trillion Dollar Race to E," Charles
E. Lucier & Janet D. Torsilieri, Strategy
& Business, Issue 18 (First Quarter
2000): 6-14.
- "Building
a Strategy Focused Organisation,"
Robert S. Kaplan & David P. Norton,
Ivey Business Journal (May-June 2001):
12-19.
Books:
- Competing
for the Future, Hamel & Prahalad (Harvard
Business School Press 1994).
- Strategic
Safari: A Guided Tour through the Wilds
of Strategic Management, Mintzberg, Ahlstrad,
and Lampel (Free Press 1999)-one of the
best introductions to the breadth of the
topic.
- The
Service Profit Chain: How Leading Companies
Link Profit and Growth to Loyalty, Satisfaction,
and Value, Heskett, Sasser & Schlesinger
(Free Press 1997)
- Discipline
of Market Leaders, Treacy & Wiersema
(Addison Wesley 1997).
- Built
to Last, Collins & Porras (Harper
Business 1994)
- The
Living Company: Habits for Survival in
a Turbulent Business Environment, Arie
de Geus (Harvard Business School Press
1997).
Related
iLEAD Programs:
|
