Tag Archives: strategic plan

BIV Boardroom Strategy: What does it really mean to think strategically?

MikeOne of the things CEOs ask consistently is how they can foster more strategic thinking in their organizations.

Simply saying “I want to see you thinking more strategically” isn’t direct or specific enough to help guide people in the right direction. Thinking strategically is essentially a way of being – a mindset, a way of looking at things and linking them together.

Here are eight things you can do to improve strategic thinking.

Understand value creation and differentiation. Leaders understand the business and industry they are in, but it’s more than that. You need to understand how the industry adds value to customers and how your business differentiates that value equation from your competitors.

Connect “me to we” to “they to us” (operations to strategy). As a leader you need to be able to understand the overall corporate direction and strategy in the context of your team and your own personal areas of responsibility. Think of it like this: the strategic moves we make today are setting up the operational successes we have in the future. So the better understanding you and your team have of the connection between corporate goals and the work they do day-to-day, the more likely they and you are to focus on longer-term priorities versus staying mired in operations and shiny objects.

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BIV Boardroom Strategy: how to executive corporate action plans effectively

The last step in the strategic planning process is often overlooked, and yet, it’s one of the most important: the action steps that will lead to the successful completion of your objectives.

But we need well-formed objectives before we can map out action steps.

Here are eight things we need to consider for solid action plans:

Ownership: one person must be responsible and accountable for tracing the progress toward each objective, keeping the team informed, ensuring timely action steps are occurring and adjusting the actions as reality teaches us what needs to shift.

Action steps: each objective needs to have a series of action steps that lay out a clear path throughout the year on how it can be achieved. If the objective is the “what,” then the action steps are the “hows.” It’s critical that the action steps are clear and actionable steps versus vague ideas or thoughts.

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BIV Boardroom Strategy: Presiding over a happy marriage of strategic plans and company budgets

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Budgeting or strategic planning, which one comes first? The challenge of building an effective budget ahead of the strategic plan for the next year is that in most cases you are relying on the previous year’s operational numbers to carry over into the coming year. What this leaves out is any strategic decisions including asset purchases, long-term research and development and other projects that may require upfront resources with a longer-term return on investment.

Here are three ways to tackle the challenge of aligning your budget with your strategic plan:

1) Prepare your draft operational budget and wait to finalize your numbers until after the strategic plan has been completed and you have a clear idea of the costs of the various strategic initiatives you and your team have decided on.

2) Hold your strategic planning session before you begin the budgeting process and use the results of your strategic plan to help determine the budget. The challenge here is that you could be making decisions in your strategic plan that turn out to be not financially feasible once you get into your budget process. This is far outweighed by the advantage of building a budget that is consistent with the strategic direction of the business and blends in the operational forecasting that occurred during your planning.

3) Institute a rolling budget approach: each month of the year forecast out 12 months in advance. In most fast-changing industries or organizations experiencing greater than normal growth, a rolling budget is more appropriate than an annual budget and can be implemented at any point by adding the 13th month onto your annual budget and updating the actual versus budget monthly or by adding a quarter to your annual budget and updating every quarter.

The quarterly update makes sense for companies that are using the best practice of reviewing, evaluating and revising their strategic plan on that same schedule. CFOs will appreciate this approach as it helps to align with the rolling cash-flow projections.

The goal of aligning your budget to your strategic plan and introducing a rolling budget is not to add complexity to your business.

Quite the contrary; the purpose is to inject as much reality into the decisions and actions you’re making today for the future.

Having a clear connection between your budget, cash flow and the strategic plan means leaders can make decisions around spending cash in the short term to promote success in the longer-term strategic plan.

When you dive into your budgeting process remember that a balance sheet and income statement can hide weak strategies. If revenue is for show, profit is the return on the risk and cash is oxygen.

Cash-flow statements that are as simple as possible and monitored religiously will help identify weaknesses and point you in the right direction around strategies that lead to positive cash-flow outcomes.

Turning back to the strategic plan, the key there is to ensure that the objectives and action plans have clear metrics, measurements and budgets in place for any new expenditures and investments that are outside of the operating budget.

These numbers can now be added into the budget or at the very least put in context against the overall operating budget.

Whatever methodology you choose, the take-home from this discussion is your strategic plan and budget should be designed to complement and support each other, not act as estranged relatives.

BIV Boardroom Strategy – Strategy and Budget Link – March 2011

BIV Boardroom Strategy: Your company’s strategic plan needs a solid framework

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A successful strategic plan design keeps two things in mind: focus driven by simplicity and clarity and engagement of the people who will be held accountable for the results.

The more complex the plan, the less likely anyone in your organization will read it or, even worse, take action from it.

Here is a framework and process for your strategic plan that will ensure you focus on what’s important, narrowing down the details to the critical pieces around which your team can rally. Using this framework with your team to build a plan will dramatically increase engagement and accountability.

Wildly Courageous Decision (WCD). As CEO, you are the chief dreamer, schemer and long-term thinker. Before engaging your team in a strategic planning experience, carve out some time from your schedule to dream 10 to 25 years ahead from today. What courageous direction can you passionately make a decision to take your organization in? Think of this as the North Star you are navigating toward: a simple statement that sets a long-term perspective that everyone can rally behind.

Mission. If your wildly courageous decision is the “what” then think of your mission as the “how”: what behaviours and actions over time will lead to your organization realizing its WCD?

Strengths, weakness, opportunities, threats and vulnerabilities. Have you, your team members, and their direct reports list out what your organization is truly strong at, weak at, where the market opportunities lie, what external forces can threaten your success and where you are vulnerable to inside and outside forces – your company’s Achilles Heal.

Rhinos, whinos, sacred cows and hidden agendas.Rhinos are the large, dirty, messy issues that are hiding under your boardroom table causing big distraction, wasted resources and energy, and yet everyone is pretending they’re not in the room. Whinos are the issues team members consistently whine about that never seem to get dealt with. Sacred cows are the core tenets in your business that you’re not willing to compromise on or change: they’re part of the secret sauce of your success. Hidden agendas are the plans that people are not disclosing, instead they’re secretly working on building alliances and putting significant energy into something that may or may not be right for your organization. (The Lexus ISF is a good example of a hidden agenda of an engineer at Lexus. It was built in secret in a remote warehouse behind the head office by a skunk-works team and unveiled to Toyota’s CEO after the final prototype was complete.)

Values and core purpose. What core values are forming the concrete foundation upon which your organization is built? These are the values driving key decisions made at a senior level within your business, not values you may aspire to. What is the core purpose for your company existing in the world? Why will the world be a better place as a result of your long-term success?

Objectives. Use the information you uncover in the sections above to craft a series of five to 10 key objectives that your organization will achieve over the next 12 months. The easiest way to know whether you have a well-framed objective is to ask, “How will we know when this objective is complete and would we throw a party to celebrate achieving it?” If the answer is unclear then you’re likely missing a deadline, a clear success measure or the objective is not specific, reasonable or challenging enough.

Owners. “The executive team” is not the answer to effective accountability for strategic objectives. Each objective should have an accountable champion who ensures that the executive team is kept up to speed on progress and the road blocks along the way.

Action steps. Many companies stop at the objective stage and the result is low clarity on the first move and subsequent steps. The result is a sandbagged plan. Create an action-step plan for each objective that answers the statement, “When these steps are complete, the objective will be successful.”

Communication. Without a communication plan that shares the strategic plan, the reality is the same as winking at someone in the dark: you know what you’re doing but they haven’t a clue. Decide as an executive team what consistent, concise and compelling messages you plan to share with the rest of the organization, including reporting on results throughout the year, and what mediums have the best chance of reaching the widest audience. Using the steps

we’ve walked through will provide a solid framework to build your strategic plan, ensure that year after year you have a consistent way of describing the path for your business and engage your team in executing the plan effectively.

As the Cheshire Cat said to Alice, “If you don’t know where you’re going, then any road will take you there.”

BIV Boardroom Strategy – Solid Strategic Plan – Jan 2011

BIV Boardroom Strategy: Contemplation and reflection are key to strategic corporate planning

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In preparing for your annual strategic planning session your role as CEO is to take some time to contemplate where your organization is today, what challenges and opportunities it is facing, where you see the future of the organization, and roughly what the path forward looks like. A key portion of your time should be spent in what can best be described as day dreaming: scheming and dreaming about the near-term and long term future of your business.

 Now that you have your thoughts in order, let’s think about your team. A great deal of time is usually wasted in strategic planning experiences in drawn-out group discussions simply due to inadequate preparation. By spending time preparing in advance of the session there is considerably more time available for clarification, discussion and active debate in the actual planning.

 Mindstorm. The key to leveraging the collective brainpower of your senior team during the planning experience is to have them mindstorm in advance. Mindstorming is similar to brainstorming except that it’s done on your own. Mindstorming helps reduce the effects of groupthink and allow the participants to truly clarify their own thoughts prior to the experience.

 Gain insight. Here is a list of insightful questions for you and each member of your team to consider before stepping into a strategic planning experience: What changes in competition, the industry, key customers, the market, or the economy have the biggest potential for harm to our organization? What is the likelihood that each will occur?  Considering this past year in general and our last strategic plan: What worked well? What needs improvement? What’s missing? What resources or situations are holding me back from being most effective in my role? What are the critical issues that we’re ignoring that are getting in the way of our success? What issues do we complain the most about in our organization that never seem to get fixed? What am I hoping to accomplish in the strategic planning that no one knows about? What does success look like for me in this business or organization this year? What are our organization’s biggest strengths, weaknesses opportunities, and threats (SWOT)? What will our business or organization will look like in 5-10 years?

 Engage your direct reports. In order to get an even wider and more robust view of the current situation have your team poll their direct reports for their answers to the questions above. This not only prepares your executive team for strategic planning, it also engages their teams in providing critical raw data to the experience, helps illuminate potential blind spots and missed opportunities, and reduces the “black box” effect that teams sometimes feel when their leaders return from strategic sessions.

 Choose one big question. After contemplating these questions, ask your team to help identify the right question overall: the strategic question your organization most needs to be asking at this time. One of the key success factors for strategic planning is identifying the right questions to ask so that strategic planning can be focused and relevant.

 Leverage collective brainpower. You may have noticed that as part of the prep work we have not yet requested people to come forward with solutions to the challenges they see the organization facing today. When executives leap directly to solutions instead of bringing a blend of meaningful raw data and questions, the result can be a discussion focused on comparing myopic solutions, skewed by each executive’s perspective within the organization. The value of bringing together the team in a strategic session is to leverage the collective brainpower in the room on a common set of agreed upon inputs, towards creative well thought out solutions and strategies.

 A thoughtful, consistent approach to your team preparing for a strategic planning experience, combined with quarterly reviews of the plan throughout the year, helps raise the level of accountability, connection to reality, and engagement in the overall strategic direction that you choose to take.

PDF of original column in BIV Nov 2010 

BIV Boardroom Strategy: Why your strategic plan is stale and what you can do about it

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If the last time you thought about your strategic plan you couldn’t immediately recall what was in it, couldn’t remember where the binder was, and then needed to dust the binder off once you found it…my guess is your strategic plan was stale.

 One of the core challenges to effective strategic planning is building in a frequent review process to ensure that your plan stays relevant, you are tracking progress and accountabilities, and there is a clear line of sight between the ongoing operations of the business and your long-term destination as an organization.

 Now the word frequent means different things at different stages of your business growth. In start-up mode the shear number of shiny objects you have to choose from means a monthly review of the plan is appropriate. In our discussion we’re going to focus on established companies and organizations that are well past the start-up phase, and as a result, quarterly follow-ups to the strategic plan are appropriate. 

About every three to four months changes in people, the economy, competitors, your market, the industry, customers, or technology will put pressure against your strategy to the point that your strategic plan no longer feels relevant and timely. At this point, most organizations will shelve the plan due to lack of relevance to the current situation and, inevitably, all of the hard work, energy, and enthusiasm that went into creating the annual plan falls short with 75% of the year still left to unfold.

 Bringing your team together to go through your strategic plan for a few hours on a quarterly basis is the surest way I know to revitalize your plan and maintain its relevance all year. Here is a four-step process to facilitating your own quarterly strategic planning follow-up session:

 Step 1 – Evaluation. Start your session by evaluating your plan using the following questions: What’s working well? What needs improvement? What’s missing from the plan? How have we been celebrating our success along the way? The answers to these four questions will provide an overarching view of the validity of your plan, where it needs to be changed, and what things need to be added that you didn’t know about when you first built the plan.

Step 2 – Review. For each of the three to seven core objectives you are focused on this year, ask the person responsible to walk the group through their action steps and to update the team on progress, delays, missed targets, unrealistic timelines, and finally, new actions. The rest of the team will provide insight, support, and feedback to help ensure that everyone understands the current status and how they can support their peer moving forward.

 Step 3 – Revise. If an objective needs to be removed or reprioritized or a new objective needs to be formed based on new data, this is the time to engage the team in discussion, frame the objective, choose an owner, and build an action plan with accountabilities and timelines. If you’re not sure whether or not your objectives are properly framed, here’s a quick test: if there’s no way to measure your objective so we can throw a party to celebrate completing it, it’s not an objective. The most common framework used to test an objective is SMART: is the objective Specific, Measureable, Attainable, Relevant, and Timely?

 Step 4 – Next Review. With the team together, now is the best time to select a date for the next quarterly review. It might seem strange to make this a step, yet in my experience without getting a date in the calendar now, the quarterly sessions can end up being semi-annual instead.

 Whenever I’m asked what the number one thing a CEO can do with their team to improve the quality of their annual strategic planning process my answer is always the same: review it more frequently and at a mininum, once a quarter.

PDF of original column in BIV Oct 2010 

BIV Boardroom Strategy: Uncovering your strategic plan’s hidden innovation.

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If you have done a strategic planning session in your organization then you’re familiar with SWOT analysis: uncovering the inherent strengths, weakness, opportunities and threats that form the basis for a situational analysis of where your company is at today both internally and externally.

In many cases the SWOT analysis is simply part of the raw data included in the pre-reading or pre-work for the session and usually ends up in the final document to disclose the background assumptions that underlie the plan.

Standard practice in strategic planning is to discuss the SWOT as part of the context setting for the strategic session, ensuring that everyone is working from the same set of base assumptions.

There is a less commonly known way to leverage this analysis to uncover hidden opportunities for innovation and growth that is grounded in reality instead of hubris: the TOWS matrix.

Originally designed by Heinz Weihrich, professor of management at the University of San Francisco, the TOWS matrix (also referred to as the SWOT matrix), is a simple and effective way to leverage your SWOT analysis as a tool for bridging the gap between your organization’s current state and the opportunities for growth and innovation that leverage your current environment.

Not unlike a SWOT analysis, the TOWS matrix looks at strengths, weaknesses, opportunities and threats, but takes it one step further to create four unique quadrants of analysis: strengths and opportunities, strengths and threats, weaknesses and opportunities and weaknesses and threats.

Here are the four quadrants of the TOWS matrix in detail.

Strengths and opportunities

The SO quadrant examines how we can use our strengths to take advantage of key op- portunities in the market today. If your company has significant experience with outsourcing production and low-cost foreign producers begin to enter your market- place you can move deeper into outsourcing to further re- duce your cost of goods sold.

Strengths and threats

The ST quadrant includes strategies that use our strengths to take advantage of the core threats that we’re facing from outside the company today – from market to industry, economic and competitive forces. If one of your strengths is customer relationships and you have identified a low barrier to entry into your industry, then one approach you can take is to look for opportunities to take your customer experience to a level that is difficult for a new competitor to replicate.

Weaknesses and opportunities

The WO quadrant contributes strategies that allow your company to work around a weakness to take advantage of an opportunity in the market- place. A company that sees the opportunity to use technology to step ahead of the competition but does not have the internal resources to pull it off might use the approach of collaborating with a supplier or technology partner that does have the in-house expertise.

Weaknesses and threats

In terms of strategic leverage, the WT quadrant is the least attractive of the four quadrants. When your or- ganization has a weakness that corresponds to a strong threat it can require drastic action to respond. The Tesla Motors/Toyota partnership is an excellent example of a strategy that leverages weaknesses and threats. Tesla’s weaknesses were a lack of mass production capability and volume price discounts from suppliers. Combine that weakness with the threat of the large automobile manu- facturers launching hybrids and all-electric vehicles like the Chevy Volt and Tesla was struggling to come up with a way to compete. The introduction of Toyota’s manufacturing expertise, volume pur- chasing, kaizen philosophy and quality standards level the playing field for Tesla.

The TOWS matrix looks at strengths, weaknesses, opportunities and threats, but takes it one step further.

To truly take advantage of the power of the TOWS matrix, the key is to carefully compare each of the multiple strengths and weaknesses to each of the opportunities and threats. An easy way to keep track of the matched pairs is to nickname each of the different data points with a number, for example, S1 versus O1 (the first strength we recognize as compared with the first opportunity we have uncovered), W2 versus O1, etc. This will ensure that you have looked at all the different strategic possibilities.

The value behind the TOWS matrix is that it takes a traditional SWOT and makes it actionable. By com- paring internal strengths and weaknesses with external threats and opportunities, you can create specific actions, grounded in reality, that turn challenges into opportunities.

If you would like to learn about more about the complete matrix, I have posted an in-depth article by Weihrich on my blog at www.mikedesjardins.com.

BIV Boardroom Strategy – TOWS Matrix – June 2010