Transcript Document

Linking Your Business Strategy to
Your Technology Strategy
Smart man learns from his mistakes
Wise man learns from smart man’s mistakes
Chinese proverb
Webinar
Survey
 What specifically do you want to learn today?
 What are three key components in a good technology strategy?
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Objectives for this Hour
 Communicate proven growth disciplines
 Define how to build a good business strategy
 Identify how to link the technology strategy to the business strategy
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An Introduction to Growth Strategy Partners
Value Proposition: We can help you grow your business faster and more
efficiently than you can on your own.
Our Definition of Growth
 Revenues
 Profit
 Talent
Our Differentiators
 Growth research based consulting firm
 Has unique and proprietary diagnostic and rapid implementation tools
 Accomplished Consultants
 Partners with clients to develop long term, sustainable growth
 Selected by Inc. magazine to be their growth strategy consulting practice
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Research Drives Our Approach
What winners do, and how they do it
Ten Years of Proprietary
Research with over 500
CEOs of America’s
Fastest Growing Private
Companies
Other “growth” lists
3
Growth
Disciplines
Over 25 sources
Experiences of Growth Strategy Partners’ Consultants
who have been highly successful CEOs and business
executives
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Three Growth Disciplines
Right People In the
Right Seats
Right Seats
1. Functional
2. Level
Right People
1. Skills
2. Knowledge
3. Behaviors
4. Results
Implementing Right
Practices
1. Effective Growth
Planning Process
2. Advanced Customer
Management
3. Robust Processes
4. Differentiated Products
and Services
5. Strong Core Values
Ability to Execute
1. Limited Initiatives
2. Aligned Resources
3. Linked Incentives
4. Culture of Discipline
“Over 80% of most companies are not effectively implementing the Three
Growth Disciplines. Those who do are growing faster and more efficiently.”
Christopher DiCenso
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Developing An Effective Strategy
Strategies Fail to Deliver Due To Failures In Planning
“Recent research published in the Harvard Business Review suggests that organizations on
average deliver only 60% of what their strategies promise. More than one-third of these
companies achieved less than 50%. …Companies are delivering only about two-thirds of their
potential due to failures in planning and execution... “
CFO.com
Strategies Fail To Deliver Due To Poor Articulation
“Surveys show that 70% to 90% of organizations fail to successfully execute their strategies. In
most cases, the failure is one of execution, not of the strategy itself. Our own research traces
this failure to two causes. The first is that since there is no generally accepted way to describe a
strategy, organizations are attempting to execute something that isn’t even articulated.”
Balanced Scorecard Collaborative
Companies With An Effective And Articulated Strategy Grow
“66% of fast growth companies have a strategic plan.…These companies are 40% larger
and 45% more productive than comparison companies.”
PricewaterhouseCoopers
Are you failing to plan or planning to fail?
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What Are the Keys to a Good Strategy?
 Understanding of a company’s core competence/method of
competition
 Product leader, Customer intimacy, Operational excellence
 Understanding of operational strategy
 Catalog orders
 Large line item orders
 Custom orders
 Small line item orders
 High volume
 Mix
 Low volume
 Clearly defining and communicated objectives, tactics and activities
 Financial, customer, process, people
 Customer groups, markets, geographies, products, services
 Owners of objectives
 Leadership team
 Incentives linked to objective
 PROCESS to react to and implement strategic decisions
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Method of Competition Definitions
“Be Great at One and Good at the Other Two”
(based on customer perspective)
Product Leadership
 Definition: Continuously introduce innovative products and services. Goal of
obsoleting their own products or services (before the competition does).
 Examples: Intel, Gillette, BMW, J&J
Customer Intimacy
 Definition: Providing unique and tailored products and services to specific
segments of the market. Views lifetime value of customer experience.
 Examples: Nordstrom, Disney World, USAA*, Charles Schwab
Operational Excellence
 Definition: Price and convenience leader. Strategic approach to the production
and delivery of products and services. Always seeking ways to reduce
inefficiencies and optimize cross function and organizational processes.
 Examples: Amazon, Dell, Wal-Mart
* also mastered operational excellence
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Method of Competition Prioritized
Where Should You Focus Your Strategies and Resources For Growth?
Current Winning
Priority Weighting Score
Score
Score
Gap
Weighted
Gap
Product Leadership
3
9%
39
48
9
5%
Customer Intimacy
2
26%
58
73
15
25%
Operational Excellence
1
65%
75
92
17
70%
Weighted gap = winning score – current score x weight
Sum of weighted gap
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Linking MOC to Strategy to Technology
How Compete
Product
Leadership
Strategy
Product/Service Profile
• Customers
• Markets
• Geography
• Custom
Customer
Intimacy
• Catalog
• Fast follower
• Early adopter
• Centralized
• Disruptive techy
Operational
Excellence
• M&A vs internal growth
• Transaction volume
•
high / low
Tools/Techy
• Product/service dev.
• Customer feedback
• Techy platforms dev.
• CE
• DFMA
• PDM
• CAE
• Customer intimacy
• Order processing
• Customer service
• CRM
• SFA
Supply chain
• Order entry
• Order build
• Order delivery
• ERP
• ASP
• WMS
• Order Type
•
Large orders
•
Small orders
•
Mixed
• Product Type
•
Custom
•
Catalog
•
Mixed
• Core competencies
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Key Processes
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Sample Strategy Map and Balanced
Scorecard
Strategy Map
METHOD OF
COMPETITION
Operational Excellence
Priority
1
Weighting
66%
Customer Intimacy
2
26%
Balanced Scorecard
Product Leadership
3
9%
Increase Net
Income at 25%
CAGR
FINANCIAL
To financially sustain
our mission, what
must we focus on?
Keep overhead growth
below 15% /yr
Increase Contribution
Margin 20% / yr
CUSTOMER
To achieve our vision,
how should we appear
to our customers?
OBJECTIVE
(Cumulative Annual Growth Rate)
25% Net Income increase
OWNER
20% Contribution Margin increase
Bill
Less than 15% overhead increase
Be competitively priced
Frank
MEASURE
25% per year
Contribution Margin
20% per year
Sean
OH growth rate
under 15%
Frank
Question on Customer Survey
Average score of 4.5 on this
question
Provide good quality work
Frank
Tom
Question on customer survey
Average score of 4.5 on this
question
Question on customer survey
Average score of 4.5 on this
question
Improve the selling and estimating
process
Improve the selling and
estimating processes
Improve the delivery
process
Improve marketing
and lead generation
focus
Create and implement customer survey
BUDGET
$
-
$
-
$
-
Dave
Restart rating card follow up program
Create and implement manager Quality
Training
Create and implement Practical Training
program
$
-
$
1,000
$
10,000
2,000
Reduce time needed by 15%
Training of Miscrosoft Programs
Implementation of Dave's automated
program by all managers
$
Time to complete an estimate
$
2,000
Core process mapping process
$
7,500
PROCESS
To satisfy our
customers, which
operational processes
must we excel at?
INITIATIVES
Redesign rating card
Be easy to do business with
Provide good quality
work
TARGETS
Net income
Be competitively
priced
Be easy to do
business with
Action Plan
Improve the delivery process
Bill
CM productivity
Define at mapping process
Improve marketing and lead
generation focus
Bob
% increase in # of leads
18% increase in leads and 18% Addition of lead generation to Team Player
increase in leads over $200K
Plan;
$
-
Creation of cross-selling grid
$
-
Create and implement a defined Sales
Process
$
1,000
$
3,000
$
2,500
LEARNING
How wil we sustain
our ability to
change and
improve?
Improve selling
skills
Drive the Values
through the business
Improve selling skills
Success Ratio (Won
Chuck Deals/Won Deals + Lost Deals) 40% Success Ratio
Drive the Values through the
business
Steve
Improve trade and
job mgmt skills
Improve trade and job mgmt skills
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Bill
% that are living the Values
Managers & up - 95% by 8/20/04
Rest of org. - 50% by 08/20/04 Develop and conduct Values survey
Managers & up - 50% by
11/31/04 Rest of org. - 35% by Implement "Ever-Present Reminders" of
11/31/04
Values
Bonus hours earned/Total
hours worked
20% of hours are bonus hours
% that can name the Values
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Manager Training program
Time tracking, reporting and measurement
process
11
Dashboard Performance View
Are Our Customers Happy?
10,000
8,000
6,000
4,000
2,000
12,000
$ Thousands
Are We Growing Revenues?
Revenue $ Thousands
$ Thousands
Are We Building Our Backlog?
12,000
$11,681,250 budget
10,000
8,000
6,000
20
15
10
4,000
5
0
-2,000
Jan.
Feb.
Mar.
Apr.
2,000
May
Jan.
0
TPM Backlog
Jan.
Feb.
Mar.
Apr.
Feb.
TPM
Budget TPM
12,000
10,000
1,200
1,400
1,000
800
1,200
1,000
800
8,000
600
6,000
400
600
4,000
200
400
2,000
0
200
Jan.
Mar.
Contracted
Wherego
Apr.
Stretch
$ Thousands
20
15
10
5
May
Gross Profit
Budget Gross Profit
Cumm Budget Gross Profit
Cumm Gross Profit
-200
-300
-400
-500
-600
2%
Feb.
Mar.
Apr.
May
Retention Rate
$ Thousands
15
10
(5)
Jan.
TPM Revenue/Salesperson (FTE) 4.75
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Oct
Feb.
TPM Revenue/FTE
Mar.
Apr.
Gross Profit /FTE
Mar.
Apr.
Nov
Dec
May
Budget Fade for 2005
How Happy Are Our People?
May
Sept
General Conditions
Overall Project Profitability(GP)
Are We Growing More Efficiently?
5
Apr.
Feb.
Fade
20
-
Mar.
Aug
-4%
Jan.
Cumm. NI (Operating Income)
50
Jul
Design Build
0%
Cumm Budget NI (Operating Income)
100
Jun
-2%
Budgeted Annualized Interviews
150
May
Design
4%
Budget NI (Operating Income)
200
Apr.
6%
NI (Operating Income)
250
Mar.
Planning
8%
How are the Sales People Doing?
Feb.
Feb.
How are our Projects Doing?
Annalized
Apr. Interviews
May
300
Jan.
-
300
200
100
0
-100
Jan.
Budgeted Annualized Proposals
Apr.
Are We Growing Profits?
25
Mar.
Mar.
Jan.
Lead track
30
0
Annalized
Jan.
Proposals
Feb.
Feb.
May
Is Our Pipeline Growing?
Count
Revenue Forecast by Function
1,600
$ Thousands
$ Thousands
$ Thousands
14,000
May
Gross Profit /FTE
Cumm. TPM
1,400
-
$ Thousands
Cumm Budget TPM
Are Our Gross Margins Growing?
Risk Adjusted Revenue Forecast
16,000
Feb.
Apr.
TPM Revenue/FTE
TPM Contracted Backlog External Budget
Jan.
Mar.
May
Change in TPM Backlog
May
101%
100%
99%
98%
97%
96%
95%
94%
93%
Jan.
Feb.
Mar.
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Apr.
Retention Rate
Operating Income/FTE
12
May
Growth Disciplines Scorecard
GROWTH
NON PERFORMING
BEGINNER
INDUSTRY AVERAGE
ADVANCED
EXPERT
PRACTICE
Effective
Strategy
Design and
Execution
No strategic objectives or
resemblance of goals. No
formal budgeting
CEO driven objectives, mostly
undocumented, with little input
from team. Some financial
metrics summarized. Informal
yearly review process.
Budgeting exists.
Strategic objectives defined,
semi-effective annual review
process, Objectives partially
linked to rewards. Team
involved in planning. Summary
metrics reviewed.
Strategic objectives set by
team with bi-annual review
and adjustment process.
Objectives linked to
incentives of top layer. Key
metrics published.
Strategic objectives set and
reviewed/adjusted quarterly.
Over 80% of objectives
completed yearly. Incentives
linked to objectives 2 layers
down. KPIs in dashboard
format.
Advanced
Customer
Management
Target customers and value
proposition not clearly
defined. Selling everything to
everyone.
Target customers defined.
Weak value proposition.
Customer rationalization not
clearly defined. No specific
customer channels. Customer
profitability not well defined.
Some custom solutions to
targeted customers. Customer
segments managed. Some
rationalization. Some
customer feedback
mechanisms. Top customer
and product profitability.
Targeting and managing
customer segments with
custom solutions. Customer
and product profitability
managed well. Some direct
customer feedback. Unique
customer channels defined.
Custom solutions developed for
targeted customers. Value
proposition defined and known
by customers. Customer
profitability managed very well.
Great customer feedback
processes. Very discrete
customer channels.
Robust
Processes
Core processes not defined.
Have not improved any
processes in over 1 year.
Core processes understood yet
not defined or measured.
Some process mapping.
Improved a process or two in
last year (focused effort).
Core processes defined,
documented (flowcharted) and
measured. Some continuous
improvement efforts.
Processes are semi-effective
or efficient.
Core processes defined,
documented, measured.
Tools such as kaizen, six
sigma or reengineering
have been specifically
applied. Continuous
improvement efforts
defined.
Core processes very effective
and efficient. Good
measurements. Process
improvement tools instituted
(six sigma, etc). Technology
applied to core processes.
Core processes reviewed
yearly for robustness.
Innovative
Products &
Services
Products or services not
differentiated. Value
proposition not effectively
defined.
Product & service value
proposition understood yet not
clearly communicated.
Profitability known yet not
managed effectively. Weak
product development process.
Products & Services
differentiated with unique
value proposition. Profitability
managed. Some
rationalization exists. Product
development process exists.
Clear product/service
differentiation and value
proposition. Profitability
managed well. Robust
product development
process. Pipeline of new
product ideas exists
Superior products & services.
Strong product development
process. Maximization of
product & service profitability.
Technology leveraged. Steady
stream of new products being
introduced.
Strong Core
Values
Core values not defined.
Little interest from leadership
Core values are communicated
but not consistently. Not
defined or documented.
Core values documented
defined, and communicated by
leadership. Partial
communication by employees.
Partially “living” values.
Core values defined,
documented and
communicated by
employees. “Living” some
of the values.
Majority of employees can
recite values and believe
company is living them. Strong
self-eject mechanism.
Right Seats
with Right
People
Roles and responsibilities
undefined. No organizational
structure. No performance
reviews. High turnover.
Difficulty finding talent to fill
openings
Organizational design driven by
existing talent availability. Ad
hoc talent selection. Poorly
defined roles and
responsibilities. Ad hoc
performance reviews. Difficulty
competing for key talent
Organizational design
influenced by strategy. Formal
talent selection. Job
descriptions. Formal
performance reviews
measured against specific
goals. Competes for key talent
Organizational design and
talent aligned with strategy.
Formal performance
management system. Ad
hoc leadership development
programs. Employer of
choice for key positions
Continuous process for
identifying, recruiting and
developing high performance
leaders. Active robust
succession planning. Talent
bank. Employer of choice for all
positions
Focus on a few initiatives,
with objectives, milestones
and resources allocated.
Incentives informally
influenced by performance.
Informal review of process.
Focus on a few initiatives, each
with objectives, milestones and
allocated resources. Incentives
linked to performance, process
of review and change, culture
of discipline
With no plans and no
Ability to
priorities, daily requirements
Execute
are not always achieved. No
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Partners
performance standards. No
performance incentives.
Focus on a long list of daily to
Focus on a many initiatives,
dos. Few incentives. None
most with objectives and
linked to performance. No
milestones but resources are
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tracking or discipline.
not allocated. Incentives not
linked to performance. Limited
tracking and discipline
Thank You!!
For more information, please contact:
Marcia Nita Doron
Altico Advisors
508-485-5588 x107
[email protected]
“Do what you can, with what you have, where you are.”
Theodore Roosevelt
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