Innovative Strategy for Future Focused Business

Transcription

1 Innovative Strategy for Future Focused Business Date: October 27, 2017 Prepared by: Steve Coughran Copyright Coltivar Group, LLC. Not to be distributed or copied without written consent. This presentation or any portion thereof may not be reproduced without the express written consent of Coltivar Group, LLC.

2 Presenter Steve Coughran is the Founding Director of Strategy at the Coltivar Group, where he helps construction industry clients to make strategic, financial, and value-added improvements in performance while realizing their most important goals. He created the Strategic Financial Leadership (SFL) program under the Coltivar Institute, and he teaches an undergraduate version of the program at the University of Denver s Business School. Steve is a national speaker, published author, and expert to companies on corporate strategy, strategic finance, customer experience, and innovation. He holds degrees in accounting and finance, and earned his MBA at the Fuqua School of Business at Duke University where he studied international business and strategy in Asia, Europe, and South America. Steve Coughran Founding Director, Coltivar Group

3 To successfully compete in a data-driven economy, companies must first: 01. Apply the right strategy approach 02. Make strategic decisions that capture value 03. Lead with an agile operating model

4 1 What is strategy and why do we need it? Photo by Ant Rozetsky

5 Strategy is an antidote to competition Perform different activities Creating and capturing value Perform activities differently Where to compete Advantage From Industry Structure & Position Profit Advantages From Unique Resources & Capabilities How to compete Revenue - Costs Price X Volume Fixed X Variable

6 The components of strategy 6

7 Our industry is fiercely competitive and struggles with labor shortages, increased complexity, and low profitability 1.6 million new skilled workers will be needed between now and 2022 Profit margins for many construction firms have declined on average by approximately 5% since 2007 Source: Forbes Magazine, % of skilled workers are 55 years and up 29% of skilled workers are between the ages of % CAGR in Net Income- Last 5 years +7.18% CAGR in Revenue-Last 5 years Source: Workforce Under Construction, 2013

8 Companies are trying to solve new problems with old strategies, and customers are losing patience Projects typically take: What Companies Do How Customers Respond After 1 bad experience: 20% 80% 39% 17% Longer to complete Over budget Decrease spending Stop spending altogether

9 Why do so many get it wrong? Photo by Kuan Fang

10 Be The Best or Be Unique? Mission, Vision, Values Statements Top 5 Terms Used Among ENR Top Companies 1. Integrity 2. Safety 3. Value 4. Excellence 5. Best

11 Should you strive to be the best?

12 Implications of vying to be the best Competitive Convergence Higher Cost Structure Race to the Bottom

13 Insights from Coltivar Institute research Strategy Implementation 42% Leadership time spent on strategic activities 19% Monthly strategy reviews 12% 58% 81% 88% Successful Not Successful More than 30% Less than 30% Yes No

14 Companies are trying to win by using generic, one-size fits all approaches The History of Strategy Number of salient strategic frameworks Strategic Framework SWOT Forces c s, 7s 1982 Six Sigma 1986 Year Introduced

15 Competitive Advantage Competitive advantage can no longer be sustained- it must be constantly reinvented Capitalize on opportunity & profits Capitalize on opportunity & profits Traditional strategy: sustain competitive advantage Period of strategic change Adaptive strategy: seize competitive advantages through agility Source: Coltivar Group, LLC Company Lifecycle

16 As capital abounds, companies must focus on developing knowledge assets to enable successful strategic execution

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18 Comparison on strategy approaches for the construction industry Old Approach Innovative Approach Vision Internal, top down External, shared Values Company centric Customer centric Goal Be the best Be unique Strategy Approach Traditional Collaborative, adaptive Strategy Be big Be agile Leadership culture Independent Interdependent Planning cycle Long, typically 1-3 years Short, monthly Position Manage relationships Build relationships Goals Performance related Learning related

19 Innovative strategy requires a build-measure-learn mentality Company value as is Firm Value Optimization 1 Performance Gap Strategy implementation 5 2 Potential value with improvements Process Enablement Coltivar Strategic Finance Framework Strategic Gap Organizational structure and work coordination 4 Coltivar Group, LLC Business Architecture 3 Strategic enhancement

20 2 How can we make strategic decisions that drive value? Photo by Arif Wahid

21 Source: HBR, Linear Thinking in a Nonlinear World Business is built upon thousands and thousands of decisions Which upgrade is better? A. Replacing a 10 MPG vehicle with a 20 MPG vehicle B. Replacing a 20 MPG vehicle with a 50 MPG vehicle

22 The implications of linear thinking More Gallons Saved Gallons used Gallons used 500 Less Gallons used Lower MPG Higher MPG Source: HBR, Linear Thinking in a Nonlinear World

23 The implications of linear thinking Speeding A. Going from 40 MPH to 65 MPH will save 6 minutes per 10 miles B. Going from 65 MPH to 90 MPH will save 2.5 minutes per 10 miles

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25 Increasingly professionals are mired in detail and complexity while neglecting value creation activities The highest performing organizations focus on effectiveness over efficiency

26 Focus on delivering & capturing value

27 Leaders must shift their focus to the key value drivers Revenue growth Cash flow Return on invested capital Value Cost of capital

28 And leverage these drivers to power sustainable, profitable growth Return on Capital Revenue Growth Price Premium Cost/Capital Efficiency Sources of Growth Brand Innovative business model New markets through new products Customer experience Quality Innovative products Customer capture Economies of scale Agility Scalability Unique resources Convince existing customers to buy more of a product Attract new customers to market Capture market share in existing market Mergers & acquisitions Market focus & position Product promotion & pricing

29 Reduce complexity to reserve resources for value creating activities

30 3 How can we adopt a new business model? Photo by Aaron Barnaby

31 An agile operating model is built on speed to value Operating Model Governance Structure Strategy Work coordination Execution Capabilities Technology

32 Business models that develop analytical tools and skills provide clear benefits Competency Analysis Insight Agility Predictive Influence Impact Technology Data Capture Automation Analytics Visualization

33 Think big, start small, and act quickly Photo by: Filip Mroz

34 To Considerations effectively implement these strategies, companies must retool the talent pool Strategy: Is your company using the right approach? Is it contributing to an exceptional customer experience? Capabilities: Does your team have the strategic, financial, and analytical skills to execute your strategy? Execution: Does your company have a disciplined process for strategy execution? Analytics: Are you using analytics as a competitive lever? Operating Model: Do you have an agile operating model that will your company to remain viable?

35 Photo by: Henrique Felix Crossing Niagara Falls

36 Related Coltivar Institute Resources: Related Coltivar Institute Resources: Want more? Getting Strategy Right: Understand the approaches to strategy design and how to boost firm value. Revolutionizing the Customer Journey: Explore how companies can differentiate through a customer experience strategy. In Pursuit of the Why, Don t Forget About the How: Understand the steps to successfully implementing organizational strategy. Decoding Your Strategic DNA: Evaluate the building blocks of strategy and how they can strengthen your competitive advantage. Strengthening Strategic Advantage: Design a strategy that incorporates fundamental decisions to capture greater value. Connect on LinkedIn Steve Coughran Coltivar Group scoughran@coltivar.com Strategic + Financial Expertise Strategy design & implementation support Financial management Change management Corporate workshops Keynote speaking Strategic Financial Leadership academy