The Execution Tune-up Getting from Vision to Execution Bill Pinkerton February 19,2015 70% - 90% of companies fail to execute their strategies Larry Bossidy Execution 1
Why? Their Process Isn t Working Consistently missed target dates Same issues keep being resurrected meeting after meeting Disengaged leadership team Lack of enthusiasm Solutions being offered that have no relationship to your goals Key employees can t tell you what the company s top priorities/goals are (maybe even some on leadership team) Leadership meetings are stale with little or no strategic or tactical ideas or learnings High-performing Companies Building a visionary company requires 1% vision and 99% alignment Jim Collins 2
Alignment CEO Vision Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion. Jack Welch 3
Our Agenda Today The 3 Barriers to Profitable Growth The Rockefeller Habits for Executive Teams The Execution Roadmap getting your strategic plan onto one page so you can execute it There are VERY Predictable Barriers to a Company s Profitable Growth 4
Barriers to Growth 31 million U.S. companies file business tax returns 96% have fewer than 10 employees 17,000 2,500 1.24 million 125,000 96% $1 million 10 FTEs $10 million 50-75 FTEs $50 million 200-400 FTEs $500 million 1,000 + FTEs Predictable Barriers to Growth Leadership Delegation Infrastructure Business Focus 5
Leadership 17,000 2,500 1.24 million 125,000 96% $1 million 10 FTEs No processes Chaos $10 million 50-75 FTEs Delegation Titles $50 million 200-400 FTEs Grow middle management $500 million 1,000 + FTEs Org Structure Delegation So why is it so tough? 6
Delegation is Critical to Growth Pinpoint Feedback Measure (Risk Tolerance?) Delegation Pinpoint Feedback Measure (Risk Tolerance?) Recognition Great leaders delegate results, not tasks 7
What is one thing you are doing today that you should delegate to someone else? CEO Driven Set Direction Right People Right Resources Remove Obstacles 8
Barriers to Growth 1.24 million Infrastructure 125,000 17,000 2,500 96% $1 million 10 FTEs Office Systems $10 million 50-75 FTEs Functional Systems $50 million 200-400 FTEs Integrated Systems/ ERP $500 million 1,000 + FTEs Multi- Business Unit Systems Barriers to Growth 1.24 million Business Focus 125,000 17,000 2,500 96% $1 million 10 FTEs Revenue/ Customers $10 million 50-75 FTEs Cash Flow $50 million 200-400 FTEs Gross Margin $500 million 1,000 + FTEs Predictable Profitability 9
So What do you Do? The good news is that there are some simple, practical habits that will help you overcome these barriers Rockefeller Habits for Executive Teams Priorities Top 3 to 5 Rhythm - Executive Team Meetings Data Driven - Metrics Titan, Ron Chernow Biography of John D. Rockefeller Mastering the Rockefeller Habits, Verne Harnish 10
Habit #1 - Priorities Priorities have to start at the company level Top 3 to 5 focus areas (max) and know what is #1 For 3 years, next year and next quarter For Company / Department / Individual levels Rockefeller Habits for Executive Teams Priorities Top 3 to 5 Rhythm - Executive Team Meetings Data Driven - Metrics 11
Habit #2 Meeting Rhythm Annual executive team off-site 2 days Quarterly executive team meeting 1 day Monthly executive team meeting - ½ day Weekly executive team meeting/call 1-1½ hours This structured rhythm utilizes only 5%-10% of an executive team s total annual time! Rhythm is about Frequency Activity Time Activity Time Increase the frequency and you will naturally increase the results 12
Meeting Agendas Daily Huddle (10 15 minutes) What s up with customers, suppliers and/or employees? Is anyone stuck and who can help them? Weekly Meeting (60 90 minutes) Good news check-in Top 3 short-term priorities Customer and employee hassles Work on a quarterly Priorities Commitments/cascading messages Wrap one sentence close Monthly Meeting (half-day) Good news check-in Smart & critical numbers Update on each quarterly Priority by owner Team course corrections on Priorities if appropriate Work on a quarterly Priority Commitments/cascading messages Wrap one sentence close Commitments and Cascading Messages: What decisions did we reach during today s meeting? Who needs to know about those decisions? Who will communicate those decisions, how and by when? Quarterly Meeting (full day) Good news check-in Review previous quarter Priorities, metrics and lessons learned Revisit one year initiatives for open items Compile hot issues for coming quarter Prioritize top 3 to 5 Priorities with accountabilities and metrics Teamwork on any strategic topics Commitments/cascading messages Wrap one sentence close Annual Meeting (two days) Good news check-in Review previous quarter Priorities, metrics and lessons learned Review previous year initiatives and metrics Compile successes over past year Revisit/set long-term strategic items SWOT review Set 3 year thrusts Set 1 year initiatives Compile hot issues for 1 st quarter Prioritize top 3 to 5 Priorities with accountabilities and metrics Commitments/cascading messages Wrap one sentence close The Annual Meeting (2 Days) Good news check-in for each attendee Review previous quarter Priorities and Metrics Review previous year Initiatives and Metrics Successes over past year Long-term strategic thought: Strategic Anchors Hedgehog Value Proposition SWOT review Define 3-year Priorities Set 1-year Priorities and Metrics 1 st quarter Priority #1 and Top 3 5 with metrics and accountabilities Active brainstorming on strategic topics Commitments and Cascading Message (Who? How? What? When?) Wrap one phrase close from each attendee 26 13
The Quarterly Meeting (Full Day) Good news check-in for each attendee Review previous quarter Priorities and Metrics Revisit one year metrics and Priorities Hot issues for upcoming quarter Set #1 and Top 3 5 for upcoming quarter Active brainstorming on strategic topics Commitments and Cascading Message (Who? How? What? When?) Wrap one phrase close from each attendee Rockefeller Habits for Executive Teams Priorities Top 3 to 5 Rhythm - Executive Team Meetings Data Driven - Metrics 14
Habit #3 Data Driven Standard Corporate Numbers Financial and operational numbers / ratios Rear-view look and final when you see them Smart Numbers Typically 1-2 in any organization Leading indicators what is around the corner? Critical Numbers 1 or 2 numbers targeted to a critical weakness Targeted for a short period of time (e.g., quarter) Rockefeller Habits for Executive Teams Priorities Top 3 to 5 Rhythm - Executive Team Meetings Data Driven - Metrics Titan, Ron Chernow Biography of John D. Rockefeller Mastering the Rockefeller Habits, Verne Harnish 15
Getting from Vision to Execution So how does a company first create a vision and then more importantly, translate it into execution and results? The Execution Roadmap It all starts with a vision and then a specific plan and process to execute that vision The best way to execute a strategic plan is 90 days at a time 16
The Execution Roadmap The Execution Roadmap 17
Purpose An organization s reason for being - Answers the question Why do we exist? Lasts the life of the leader / founder(s) A star on the horizon (forever pursued, never reached) Internal use To get at purpose, ask Why five times Why Does Your Company Exist? To provide Associations with outsourced management services Why? Because Associations need it Why? To meet member s needs in a more cost effective, stable and professional manner Why? To provide a greater ROI to each member Why? To improve the Association s member retention, stability and growth 18
Purpose Examples 3M: To solve unsolved problems innovatively Mary Kay: To give unlimited opportunity to women Merck: To preserve and improve human life Wal-Mart: To give ordinary folk the chance to buy the same things as rich people Disney: To make people happy Jim Collins Hedgehog 19
Hedgehog Concept What kind of work, customers, business are we really passionate about? What can we be best in the world at (and what is our world )? What drives our economic engine (profit / X)? CAN BE BEST IN WORLD ECONOMIC ENGINE PASSIONATE Hedgehog is a great filter to test new opportunities against to assure a company remains focused on key areas 20
Hedgehog Example Walgreens The best, most convenient drugstores with higher profit per customer visit than competitors Test all initiatives against customer convenience 94% of stores on a corner 2 floor plans In-store medical services and inoculations Vision Level BHAG It s clear and compelling It serves as a unifying focal point of effort At least 10 years out (10-30 years) Requires thinking beyond current capabilities Also, beyond current environmental trends, forces, and conditions Gulp factor; audacious but not braggadocios Has to reinforce core values, purpose and business fundamentals 21
Vision Level BHAG Needs a clear finish line (People like to shoot for finish lines) A catalyst that can drive emotions It engages people and grabs them in the gut People get it right away It generates team spirit The center or sweet spot of your Hedgehog Big Hairy Audacious Goals 22
Core Values 3 to 5 at most One word plus a single sentence definition Small set of essential and enduring tenets They already exist They don t change in response to market conditions Should be evident to all We would hold onto our Core Values even in the toughest economic times The Value of Values Guidelines to behavior Decision-making framework Hiring 23
Values Hiring Matrix High Values Alignment Low Low Experience & Skills High The Value of Values Guidelines to behavior Decision-making framework Hiring Annual performance appraisal 24
The Significant Question Knowing what I know today, would I hire every one of my direct reports tomorrow for the same job? Strategic Anchors Those conscious things a company does that, when combined, create its secret sauce or magic formula 25
Southwest Airlines-Strategic Anchors On-time Shorts 1 Plane-type Open Seating No Frills Humor Customer Quick Turn- Service around No Travel Employee- Agents focused Low Fares Southwest Airlines-Strategic Anchors On-time Shorts 1 Plane-type Open Seating No Frills Humor Customer Quick Turn- Service around No Travel Employee- Agents focused Low Fares 26
So how can I use this process with my Board? Executive Director Challenges Voluntary Short Term Time Commitment Tactical vs Strategic Accountability Control 27
Governance Definition(s) From: the way that a city, company, etc., is controlled by the people who run it. Merriam-Webster Dictionary To: Making collective decisions about important issues, including the purpose of collective action, strategies for achieving purpose, and oversight and accountability mechanisms. Hughes, Owen. (2010) Does Governance Exist? High Functioning Boards: Zero in on strategic rather than operational issues Devote 75-80% of time to strategic issues Ensure smart time management Employ processes that promote fair, thoughtful interaction and a clear understanding of issues Associations NOW: Balanced Conflict, Better Decisions, Mark Engle 28
High Performing Boards 2X more likely to invest substantive time on strategy 99% had Strategic Plan developed jointly with staff Set performance goals for themselves 2X as likely to engage in board self-assessment ½ as likely that Board meetings didn t make quorum Employ processes and tools Associations NOW- Feb 2014, Beth Gazley The Execution Roadmap Board Version 29
The Execution Roadmap Board Version 59 Board Benefits Simple, clear and consistent process Encourages buy in thru discussion and debate = clearer goals = sounder decisions/policies Emphasis on strategic vs tactical thinking Time and agenda management Structure gives Executive Director more control Galvanizes the Board Around the Vision 30
So where should a company start? 61 CEO Driven Set Direction Right People Right Resources Remove Obstacles 31
Getting from Vision to Execution So how does a company first create a vision and then more importantly, translate it into execution and results? Summary The 3 Barriers to Profitable Growth The Rockefeller Habits for Executive Teams The Execution Roadmap getting your strategic plan onto one page so you can execute it 32
Even Our Best Intentions.! 65 Companies don t fail for lack of vision. They fail because they cannot translate their vision into execution. 33
Contact Information Bill Pinkerton 248.515.8081 bill@2vgroup.com www.2vgroup.com/amci 34