Transcript Title

The Five Key Elements of
The CEO TuneUp
II
Strategic
Planning
Jim Alampi
Delivered For: Vistage 9017
July2007
17, 2015
Date: July 19,
Presented by: Jim Alampi
Alampi & Associates, LLC
Great Companies
The 11 Great companies had a
5 times multiple in profit
performance and a 10 times
multiple in valuation
compared to the Good companies.
Good to Great, Jim Collins
7/17/2015
Our Agenda Today
• The 5 Key Elements of Strategic Planning
– Core Values
– Purpose
– Mission
– BHAG
– Hedgehog
• The One Page Translator – getting your strategic
plan onto one page so you can execute it
• Execution and Results
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High-performing Companies
Companies don’t fail for lack of vision.
They fail because they cannot
translate their vision into execution.
Vision without execution is
hallucination.
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High-performing Companies
“Great performance is about 1%
vision and 99% alignment”
Jim Collins
Built to Last
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One Page Translator™
How does a company translate its vision
into execution and results?
It all starts with a vision (core ideology)
and then a specific plan and process
to execute that vision
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One Page Translator™
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One Page Translator™
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Core Values
• Not as important what they are but that an
organization has them
• Small set of essential and enduring tenets
• Already exist and need to be discovered
• Do not change in response to market conditions
• Should be evident to all
“We would hold onto our Core Values even if
they became a competitive disadvantage”
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The Value of Core Values
•
•
•
•
Daily reinforcement of behavior
“Moments of Truth” *
Hiring process – interviewing
Performance management process
* Moments of Truth, Jan Carlzon, 1987
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The Hiring Matrix
Values
Alignment
H
L
H
Experience & Skills
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The Values Model
Aspirational
Core
Values
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Discovering Core Values
Jim Collins Martian exercise and model
• Identify candidates who Martians should observe
• Capture two or three key attributes from each
• Look for similarities and consolidate into five to six
• Sort into Core, PTP, Accidental & Aspirational values
• Divide up, write one sentence descriptions and agree
• Snicker-test all
• Reconvene, review and modify as required
• Rollout carefully and without splash
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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
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Why does your company exist?
“We provide automotive intelligence”
Why?
“Because the OEM’s need it”
Why?
“To select the best potential dealers”
Why?
“It increases the new dealer success rate”
Why?
“It improves their decision-making”
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R.L. Polk
Purpose: We help people make
better decisions.
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Purpose Examples
• 3M: To solve unsolved problems innovatively
• Cargill: To improve the standard of living around the
world
• 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
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Mission
• Should answer the questions:
 What Business are we in?
 What do we do every day to achieve our Purpose?
• Long-term time horizon
• Can drive a tag line or an “elevator pitch”
• External use
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“Elevator Statement”
We provide (product or service)
For (target customers)
Who (statement of need or opportunity)
The (product/service name or category)
That (statement of key benefit)
Unlike (primary competitive alternative)
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Jim Collins’ Hedgehog?
“The fox knows many things, but the hedgehog knows one big thing”
Isaiah Berlin
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Hedgehog
• 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)?
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Hedgehog
CAN BE
BEST IN
WORLD
PASSIONATE
ECONOMIC
ENGINE
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“Hedgehog is a great
filter to test new
opportunities against
to assure a company
remains focused on
key areas”
Hedgehog Examples
• Walgreens
– The best, most convenient drugstores with high profit per
customer visit.
• Wells Fargo
– Run a bank like a business with a focus on the Western United
States.
• Abbott
– The best company in the world at creating products that make
health care more cost effective.
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Hedgehog or Fox?
• Hedgehogs
– Simplify complex issues
– Focus on a single idea,
concept or vision
– Unify multiple visions and
guide actions
• Anything that does not relate to
the Hedgehog idea holds little
relevance
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• Foxes
– Pursue many ends at the
same time
– See the world in all its
complexity
– Are scattered and diffused,
moving on numerous levels
– Never integrate thinking into a
single overall concept or
unified vision
BHAG
• At least 10 years out (10-30 years)
• Has to reinforce core values, purpose and business
fundamentals
• Need a clear finish line
• A catalyst that can drive emotions
• Gulp factor; audacious but not braggadocios
• The center or “sweet spot” of your Hedgehog
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Four Types of BHAG’s
• Target BHAG – qualitative or quantitative
• Common enemy BHAG
• Role model BHAG
• Internal transformation BHAG
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BHAG Examples
• Become a $125 billion company by the year 2000
(Wal-Mart, 1990)
• Become the dominant player in commercial aircraft
and bring the world into the jet age (Boeing, 1950)
• Become the Harvard of the West (Stanford, 1940’s)
• Crush Adidas (Nike, 1960’s)
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Strategic Thinking Map
BHAG
10 – 15 Years
Hedgehog
3 – 10 Years
Thrusts
3 Years
Initiatives
1 Year
Rocks
90 Days
Vision
Core Values
Purpose
Mission
SWOT
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Leadership Habits Drive Execution
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Leadership Habits Drive Execution
The Rockefeller Habits
• Priorities - Top 5 and #1 of 5
• Rhythm – Executive team meetings
• Data Driven - Metrics
Titan, Ron Chernow
Biography of John D. Rockefeller
Mastering the Rockefeller Habits, Verne Harnish
7/17/2015
The Rockefeller Habits
1. Priorities - Top 5 and #1 of 5
2. Rhythm – Executive team meetings
3. Data Driven - Metrics
Titan, Ron Chernow
Biography of John D. Rockefeller
Mastering the Rockefeller Habits, Verne Harnish
7/17/2015
Habit #1 - Priorities
• Ivy Lee
• Top 5 focus areas (maximum)
• Issues where executive team focus will have greatest
impact for the company
• Know the Top #1
• For the Current Year and Quarter
• For Company / Department / Individual levels
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The 3 Rockefeller Habits
1. Priorities - Top 5 and #1 of 5
2. Rhythm – Executive team meetings
3. Data Driven - Metrics
Titan, Ron Chernow
Biography of John D. Rockefeller
Mastering the Rockefeller Habits, Verne Harnish
7/17/2015
Rhythm is all about Frequency
Activity
Time
Activity
Time
Increase the frequency and you will
naturally increase the results
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Habit #2 - Rhythm
• Annual executive team off-site – 2 days
• Quarterly executive team off-site – 1 day
• Monthly management meeting - ½ day
• Weekly executive team meeting/call – 60 - 90 min.
• Daily huddle or call – 15 minutes maximum
“This structured format utilizes less than 10%
of an executive team’s total time”
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The 3 Rockefeller Habits
1. Priorities - Top 5 and #1 of 5
2. Rhythm – Executive team meetings
3. Data Driven - Metrics
Titan, Ron Chernow
Biography of John D. Rockefeller
Mastering the Rockefeller Habits, Verne Harnish
7/17/2015
Habit #3 – Data Driven
• Standard Corporate Numbers
– Financial and operational numbers / ratios
– Rear-view look
• Smart Numbers
– Typically 3 in any organization
– Leading indicators around Business Drivers
• Critical Number
– 1 or 2 Numbers targeted to a Critical Weakness
– Targeted for a specific period of time (e.g., Quarter)
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The Right Measurements
• Graph it (actual against plan, etc.)
• Visual - get it up and around the organization
• Frequent - 6 data points to spot a trend
• Measure what’s important, not what’s easy
• Absolute numbers vs. %’s - choose which is appropriate
for the measurement
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Summary
• The 5 Key Elements of Strategic Planning
– Core Values
– Purpose
– Mission
– BHAG
– Hedgehog
• The One Page Translator – getting your strategic
plan onto one page so you can execute it
• Execution and Results
7/17/2015