John.jeffcock@winmarkglobal.com @winmarkglobal
Strategic Planning - Meanings Strategy has many meanings From... Strategy is the great work of the organisation. In situations of life or death, it is the Tao of survival or extinction. Its study cannot be neglected What business strategy is all about is competitive advantage. The sole purpose of strategic planning is to enable a company to gain, as efficiently as possible, a sustainable edge over its competitors. Corporate strategy thus implies an attempt to alter a company s strength relative to its competitors in the most efficient way Kenichi Ohmae The mind of the strategist
Realising the Corporate Vision A definition of strategy Strategy is the direction and scope of an organisation over the long term: ideally, which matches its resources to its changing environment, and in particular its markets, customers or clients so as to meet stakeholders expectations.
A strategy should Be focused and yet enable individuals to make decisions freely to achieve the aim. Be competitive and provide a clear and sustainable point of differentiation. Be able to cater for and profit from market and environmental changes. Be innovative and encourage and energise individuals and the business. Organise and utilise resources to achieve their maximum impact. Strategic planning can be simple or.
Strategic Planning or complicated! Fortune 100 Companies 1970-2015 1970 1985 2000 2015 100% 69% 23% 17% 100% 28% 19% 100% 57% 100%
Key Steps In Strategy STRATEGIC ANALYSIS STRATEGIC CHOICE STRATEGIC IMPLEMENTATION
Environment Purpose Culture Capability STRATEGIC ANALYSIS Business Corporate International Innovation Acquisitions & Alliances STRATEGIC CHOICE STRATEGIC IMPLEMENTATION ATION Evaluating Organising Practice Changing Processes
Activity TOOLS: PESTEL 5 Forces STRATEGIC ANALYSIS TOOLS: Ansoff Strategic Choices Sources of Competitive Advantage Value Chain Analysis STRATEGIC CHOICE STRATEGIC IMPLEMENTATION ON TOOLS: McKinsey 7Ss Discipline PORTS and YOU
PEST PESTEL: Scanning The Environment Political Economic Social Technological Environmental Legal Government stability and likely changes Bureaucracy Corruption level Tax policy (rates and incentives) Freedom of press Regulation/de-regulation Trade control Import restrictions (quality and quantity) Tariffs Competition regulation Government involvement in trade unions and agreements Environmental law Education law Anti-trust law Discrimination law Copyright, patents/intellectual property law Consumer protection and e- commerce Employment law Health and safety law Data protection law Laws regulating environment pollution Growth rates Inflation rate Interest rates Exchange rates Unemployment trends Labour costs Stage of business cycle Credit availability Trade flows and patterns Level of consumers disposable income Monetary policies Fiscal policies Price fluctuations Stock market trends Weather Climate change Health consciousness Education level Attitudes toward imported goods and services Attitudes toward work, leisure, career and retirement Attitudes toward product quality and customer service Attitudes toward saving and investing Emphasis on safety Lifestyles Buying habits Religion and beliefs Attitudes toward green or ecological products Attitudes toward and support for renewable energy Population growth rate Immigration and emigration rates Age distribution and life expectancy rates Sex distribution Average disposable income level Social classes Family size and structure Minorities Basic infrastructure level Rate of technological change Spending on research & development Technology incentives Legislation regarding technology Technology level in your industry Communication infrastructure Access to newest technology Internet infrastructure and penetration Weather Climate change Laws regulating environment pollution Air and water pollution Recycling Waste management Attitudes toward green or ecological products Endangered species Attitudes toward and support for renewable energy Anti-trust law Discrimination law Copyright, patents/intellectual property law Consumer protection and e-commerce Employment law Health and safety law Data protection
Long - PESTEL - Activity Local National Political Economic Social Technological Environmenta l Legal Global Next 3 Months Next 6 Months Next 12 Months
Porter s 5 Competitive Forces 369 Potential Entrants Threat of new entrants Suppliers Bargaining power of suppliers INDUSTRY COMPETITORS Rivalry among Existing Firms Bargaining power of buyers Buyers Threat of substitute products or services Substitutes Source : Competitive Strategy: Michael E Porter
New Markets Existing Markets Strategy Choices Existing Products New Products Markets where business competes Market Penetration Product Development Differentiation Costs Source of Competitive Advantage Broad Narrow Cost Leadership Cost Focus Market Development Diversification Differentiatio n Leadership Differentiation Focus Ansoff: helps managers devise their product and growth strategies highlighting their risk implications and analysing growth opportunities. Porter: the optimum position for a company within an industry. Often, a determinant of a company s profitability is the attractiveness of the industry in which it operates.
Porter s Value Chain Support Activities Firm Infrastructure (e.g. Legal, Finance, Planning) Human Resource Management Technology Development Procurement Inbound Logistics Operations Manufacturing Outbound Logistics Marketing & Sales After-sale Service Primary Activities
Value Change Dynamics (Legal Sector) 14
McKinsey s 7 S s Uses Diagnose important variables in an organisation Diagnose relationship of variables Analyse hard and soft elements How do 7 elements interact Assess relationship, then act Strategy Structure Shared Vision Systems Hard variables Soft variables Staff Style Skills
First you need discipline Disciplined people Disciplined thought Disciplined actions 16
Culture of Discipline The Matrix of Creative Discipline High Hierarchical Organisation Great Organisation Low Bureaucratic Organisation Low Start-up Organisation High Ethic of Entrepreneurship 17
Partner (Lawyer) Buy-In 18
Wise Words Strategy is not just for top managers: the best companies are those where everybody lives the strategy to make up low cost or unique products or service
Why do we plan / imbed? Drift Deliberate and emergent strategies Unrealised strategy Deliberate strategy Realised strategy Emergent strategy Source: Five Ps for Strategy by Henry Mintzberg
Embedding through PORTS P Purpose O Objectives R Results & Accountability T Tasks & Responsibility S Schedule
PORTS in action Purpose Objectives Results Accountability Tasks Responsibilities Schedule Target with date XY Specific task EF Xx/xx/10 a. sub task GH Xx/xx/10 b. Priorities list GH Xx/xx/10 Purpose of business unit or function One of a number of objectives Target with date AB c. Time line / production EF Xx/xx/10 d. Allocate who does what EF Xx/xx/10 Target with date XY Permanent meeting agenda AB Xx/xx/10 Target with date CD a. Specific task EF Xx/xx/10 b. Specific task GH Xx/xx/10
What is a CxO?
How many Xs are there? C X O A Audit Administration D Digital Data I Information Investment B Brexit
Responsibility Shifting C HR O C M O C IS O C HR O The Chief HR Officer was temporarily made responsible for Information Security The Chief Marketing Officer took responsibility for the Employee Brand
How should the Board be made up? Support activity leads? Primary activity leads? Primary activity process leads? How many people and what % from which group?
Structural Problems Holes between silos Holes in language and perception Holes in knowledge of business areas Holes in resource (sick, transition etc) Potentially internal rivalry CXO CXO CXO CXO Direction Management Complexity
Practical Solutions CXOs working in each others functions CXOs shadowing each other CXOs being appointed as cover for each other CXOs presenting each other s work (board)
X C O C X O Officer O C X Chief C X Executive X www.winmarkglobal.com 1
The problem with appraisals! C X O CEO Focus Capital Creation Appraisal Focus Why did the CEO laugh at them?
As a manager moves into a leadership role, his or her network must reorient itself externally and toward the future. Hermania Ibarra Chaired Professor of Organisational Behaviour Insead (HBR, Jan 2007)
Your Career Your network The Power Players 0 years, if networked! Partner / Director 5 to15 years Senior Executive / Manager 0 to 5 years Your organisation Junior Executive / Analyst
The Glass Ceiling Your network O C X Your organisation
X C O Junior to Senior Exec Partner / Director Business Leaders Your Customers Directors / Partners (learning / career) Clients (income streams) The Owners Cub & Leading Performers Your Friends Essential Services (learning / leverage) Leading Peers (best practice know-how) Media Moguls & The Ministers Your Role Contemporary lighthouse (knowledge) Sector lighthouse (influence) Your brand
Who is in the O group? Power The Owners Club Source Money (old & new) Business (family & entrepreneurs) ROU Asset (rare or unique) Media Moguls People with Followers (social following of commenters) Stars or Anchors Controllers & Creatives Leading Performers The Chiefs (Role Power) Personal Talent & Brand ROU Access (rare or unique) The Ministers Political & Religious Class & Social Orders Influential Groups
Chief Executive, FTSE 100 Obviously the most effective measures of whether a senior executive is ready for promotion, are their current performance, their ability to create sustainable value and to build relationships at every level
Personal Exercise - Rank your business unit C World Class on the journey to World Class where does my business unit sit? World Class 1 to 10 Board do I have good relationships with the board and c-suite and appropriate influence? Integration how well does my business unit operate with other parts of the business? People do I have the best team in place performing excellently? Operations do I have excellent infratstructure and operations in place? ROI does my business unit offer an excellent return on investment (think private equity)? O Does they way I run my business unit: Yes or No Set an example to other parts of the business Make the whole business more valuable Make the business more competitive (do we out perform)
Good Test Questions Is this the best team I have ever led? Do our systems make even our average people excellent? Are the any opportunities to improve our systems? If a member of the team was suddenly away could we pick up on everything they do? Is our business / function seen as an internal gold standard and innovator?
Winmark & The C-Suite