Transcript Strategic Planning for the Closely

VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
STRATEGIC PLANNING
Strategy
Structure
Vision
Systems
Culture
Transforming Vision Into Action
© Vantage Associates, Inc.
VANTAGE
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An Introduction
to Strategic Planning
Top Management Defined
The task of thinking through the mission of the
business, that is, of asking the question "What is
our business and what should it be?" This leads
to the setting of objectives, the development of
strategies and plans, and the making of today's
decisions for tomorrow's results.
Peter Drucker
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Strategy Vs. Planning
Strategy = A coherent set of time-sequenced
actions aimed at gaining a sustainable
advantage over competition and
improving position with customers.
Planning =
The process of making decisions
concerning the systematic allocation
of resources.
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Strategic Planning
If you do what you have always done
you will get what you have always got
-- or less.
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Definition of Insanity
Insanity is doing the same thing
over and over again ...
each time expecting different results
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Strategic Planning


Planning is a tool for
managing the change
every organization must
undergo
Your planning process
should recognize the
key ingredients to
successfully manage
change
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Requirements for Successful
Change
COMMON
VISION
+
MANAGEMENT
COMMITMENT
+
1. You must have a common
Vision of what you are changing to
and why
2. Employees must see that
Management is committed to achieving
the Vision
SPECIFIC
ACTION STEPS
3. You must define the specific steps
you will take to reach the Vision
SUCCESSFUL
CHANGE
Only then can you manage change
successfully
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The Planning Process Should:




Manage change proactively
Improved trust and
communications
Effective allocation of
limited resources
Improved organizational
performance

Increase focus

Provide a catalyst for action
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Our Planning Philosophy

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
The only purpose of planning is to improve performance.
Planning is an evolutionary process that can be improved
with each planning cycle.
Planning is a continuous process, not an activity to be
completed in a month or two.
The real value in planning is in the process, not the document.
Uncertainty about the future is the reason for planning, not an
excuse for not planning.
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Characteristics of High-Performing
Organizations

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
Leadership
Common
understanding of
mission/purpose
Enthusiastic about
mission/purpose
Open communications up, down, and laterally

Teamwork

High morale


Commitment - sense of
urgency
Failure and success are
viewed as learning
experiences
High level of trust
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Strategic Planning

The strategic planning process can be
effectively used to:
– Generate information
– Identify issues
– Improve communications
– Reinforce culture; i.e., teamwork
– Identify possible crisis points
– Enhance decision making
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Planning is a Part of a Cycle
Board/Top
Mgmt
Input
PLANNING
Direction
Mgr/Employees
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Strategic Planning is a Function and Responsibility
of All Managers at All Levels of an Organization
TOP MANAGEMENT
MID- MANAGEMENT/
SUPERVISION
PRODUCTION/
ENTRY LEVEL
TACTICAL
STRATEGIC
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Three Basic Questions
A Strategic Plan answers
three basic questions about
the organization
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Strategic Planning Process
Three Basic Questions
PHASE I: Where Do We Want To Go?
PHASE II: Where We Are Now?
PHASE III: What We Must Do To Close The Gap?
LongTerm
View
Situation
Analysis
Strategy
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Components of a Strategic Plan



The “Three Questions”
are too difficult to
answer all at once
Planners break these
questions down into
small components
These individual
components add up to
answer the “Three
Questions”
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Overview of The
Strategic Planning Process
PHASE I: Where We Want To Go?
Vision
Mission
Values
Constituent
Groups
Goals
Objectives
(Short & Long
Term)
LongTerm
View
PHASE II: Where We Are Now?
Assumptions
Strengths
Weaknesses
Opportunities
Threats
Situation
Analysis
PHASE III: What We Must Do To Close The Gap?
Critical Issues
Key Decisions
and Strategies
Action
Plans
Strategic
Plan
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The Planning Pyramid
VISION
MISSION
VALUES
CONSTITUENTS
GOALS
ENVIRONMENTAL SCAN
ASSUMPTIONS
SITUATION ANALYSIS
STRENGTHS, WEAKNESSES, THREATS, & OPPORTUNITIES
OBJECTIVES (SHORT & LONG TERM)/STRATEGIES
CRITICAL ISSUES/KEY DECISIONS
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Evolution of Strategic Management
EFFECTIVENESS OF STRATEGIC
DECISION MAKING
WELL-DEFINED STRATEGIC
FRAMEWORK
MULTIYEAR BUDGETS
THOROUGH SITUATION
ANALYSIS AND
COMPETITIVE
ASSESSMENTS
GAP ANALYSIS
ANNUAL BUDGETS
"STATIC" ALLOCATION
OF RESOURCES
FUNCTIONAL FOCUS
FINANCIAL PLANNING
EVALUATION OF
STRATEGIC
ALTERNATIVES
PHASE 2
PHASE 3
FORECAST-BASED
EXTERNALLY ORIENTED
PLANNING
VALUE
SYSTEM
MEET BUDGET
PREDICT THE FUTURE
WIDESPREAD STRATEGIC
THINKING CAPABILITY
COHERENT REINFORCING
MANAGEMENT PROCESSES
"DYNAMIC"
ALLOCATION OF
RESOURCES
PHASE 1
STRATEGICALLY FOCUSED
ORGANIZATION
-
NEGOTIATIONS OF
OBJECTIVES
-
REVIEW OF PROGRESS
-
INCENTIVES
SUPPORTIVE VALUE SYSTEM
AND CLIMATE
PHASE 4
STRATEGIC MANAGEMENT
PLANNING
THINK STRATEGICALLY
CREATE THE FUTURE
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Strategic Analysis
Characteristics of Strategic
Decisions
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Multiple objectives

Difficulty of identifying
good alternatives

Intangibles
Risk and uncertainty
Several decision
makers

Value trade-offs

Risk attitude
Long-time horizons
Many interested
factions
Interdisciplinary
problems

Sequential nature of
decisions
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Three Generic Strategies
STRATEGIC ADVANTAGE
STRATEGIC TARGET
UNIQUENESS PERCEIVED
BY THE CUSTOMER
INDUSTRYWIDE
PARTICULAR
SEGMENT ONLY
DIFFERENTIATION
LOW COST POSITION
OVERALL
COST LEADERSHIP
F OCU S
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SALES VOLUME
Business Life Cycle
EMBRYONIC
GROWTH
MATURITY
DECLINE
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Industry Structure Analysis
THREAT OF NEW ENTRANTS
BARGAINING
POWER OF
SUPPLIERS
COMPETITORS
JOCKEYING FOR
POSITION
THREAT OF SUBSTITUTE
PRODUCTS OR SERVICES
BARGAINING
POWER OF
CUSTOMERS
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Threat of New Entrants

Economies of scale

Product differentiation

Capital requirements

Switching cost

Access to distribution

Non-scale cost advantages
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Power of Suppliers

Relative number of suppliers

Existence of potential substitutes

Importance of the industry to the supplier

Importance of the input to the industry

Differentiation or switching costs

Threat of forward integration
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Power of Customers

Relative size of customer purchases

Importance of the input to the customer

Differentiation or switching costs

Customer profitability or price sensitivity

Importance of quality

Customer information
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Threat of Substitutes

Price performance of alternatives

Technology innovations

Total product concept

Customer perceptions
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Competitive Rivalry

Numerous or equally balanced competitors

Slow industry growth

High fixed or storage costs

Lack of differentiation or switching costs

Capacity added in large increments

Diverse competitors

High strategic stakes

High exit barriers
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Components
of a Plan
The Planning Pyramid
VISION
MISSION
VALUES
CONSTITUENTS
GOALS
ENVIRONMENTAL SCAN
ASSUMPTIONS
SITUATION ANALYSIS
STRENGTHS, WEAKNESSES, THREATS, & OPPORTUNITIES
OBJECTIVES (SHORT & LONG TERM)/STRATEGIES
CRITICAL ISSUES/KEY DECISIONS
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Vision Statement
A Vision Statement is a statement of what the
organization would like to be in the future. A
vision is not a statement of who we are or
what we do, but of what we would like to
become.
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A Vision Statement Should:
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Inspire the management
team
Motivate employees
Focus the organization
Communicate the direction
of the organization
Challenge everyone to
perform at higher levels
Look beyond the
organizations current
limitations
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Vision (Examples)
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We will be one of the leading producers and
marketers of product X in the Southeast.
We will be recognized by our customers as a
company that provides superior customer
service.
We will exploit our advantage of vertical
integration to achieve the lowest cost
position and become the dominant supplier
in our industry.
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Mission or Purpose Statement
A Mission or Purpose Statement is a
statement of why the organization exist.
What need is it designed to satisfy?
Mission and Purpose are the same thing.
They are used interchangeably.
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A Mission Statement Should:
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Focus on the “now”
Define the product or
service provided
Recognize the target
market or customer
base
Begin to distinguish
your organization from
others
Recognize current
limitations
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Purpose (Examples)



To research, develop, and bring to market
products which enhance the leisure time of
our customers.
To develop economic alternatives to waste
disposal and recycling.
To provide to our customers the full range of
hardware and software products and
services in a way that maximizes long-term
profitability
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Values
An organization’s Values are the core beliefs
that drive the behaviors of everyone in the
organization?
Values describe the culture of the
organization. Values tell employees what it is
like to be a part of the organization.
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A List of Values Should:



Contain a list of five or
six core beliefs
Include the values you
already share as well as
other values you are
working to develop
Identify principals that
guide your personal
and professional life
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Values (Examples)

Excellence in customer service

Financial stability

Personal and business integrity

Professionalism

Teamwork

Trust

Mutual Respect
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Constituents
An organization’s Constituents are those
individuals or groups that can have a positive
or negative impact on your organization?
Constituents usually cannot dictate what you
do, but they can create problems when they
disagree with what you want to do.
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Constituents Should Include:

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
Groups internal or
external to the
organization
Groups that are directly
or indirectly involved
Groups that want you to
success or
Groups that want you to
fail
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Constituent Groups (Examples)

Stockholders

Employees

Competitors

Media

Professional/trade associations
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Goals
Goals are the things the organization is
trying to achieve over the long term.
Goals are developed to address specific
constituent groups and are enduring and
timeless.
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Goals Should:

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
Address each of the
constituent groups
already identified
Be unique for each
group or the groups can
be combined
Define what we are
willing to strive for with
that Constituent
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Goals (Examples)
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We will make sound investment decisions
such that we maximize the long-term return
to our stockholders.
We will create an environment which
challenges our employees and encourages
their development.
We will monitor and develop aggressive
responses to competitors’ moves.
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Goals (Examples)


We will develop a proactive approach to the
media such that it helps us communicate
with our customers.
We will participate in trade and professional
associations in an effort to shape the
structure of the industry.
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Assumptions
Assumptions are things that you think will
happen but over which you have no direct
control.
Assumptions are the collective view of the
future you are anticipating for your
organization.
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Assumptions Should:
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Reveal your expectations for
the economy, the industry,
the market or the need for
your product or service
Address important areas of
uncertainty even if they must
change later
Form a foundation for
decisions about
organization’s future
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Assumptions (Examples)
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The national economy will continue to grow
at 2% per year.
The local economy will grow faster than the
national economy.
Raw materials will be available at today’s
prices.
New and different types of competitors will
enter the market.
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Assumptions (Examples)

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
The technical skills required in the business
will be more difficult to find.
New technologies will create new production
methods.
The demand for quality will continue to
increase.
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Strengths and Weaknesses
Strengths and Weaknesses are things that
are internal to the organization over which
the organization has some control or
influence.
Strengths are things that are positive.
Weaknesses are things that are negative.
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Strengths and Weaknesses Should:
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
Be significant enough to
make a real difference in the
long-term success of the
organization
Be measured relative to
other similar or competitive
organizations
Be limited to those things
you would be willing to
invest in or try to improve
over time
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Strengths (Examples)


Customer service
Focus on specific
markets

Financial stability

Quality employees

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
Strong market share
Wide range of
products
Technical leadership
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Weaknesses (Examples)

Inexperience in sales

Depth of the management team

Systems and structures not keeping up with
growth

Poor internal communications

High employee turnover

High cost structure
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Opportunities and Threats
Opportunities and Threats are things that are
external to the organization over which the
organization has little or no control or
influence.
Opportunities are things that are positive.
Threats are things that are negative.
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Opportunities and Threats Should:



Address the economy,
the industry, the
marketplace, or the
social environment
Include things you
might want to take
advantage of or things
you will want to avoid
or manage around
Focus on those things
that matter
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Opportunities (Examples)

Rapid change of technology

Deregulation

New product applications

Changing customer tastes

Growing customer base

International markets
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Threats (Examples)

Increasing competition

Modifications to tort reform

Adverse federal initiatives

Increasing environmental concerns

Growing price sensitivity

Aging customer base
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Short and Long-Term Objectives
Objectives are things that are measurable
and achievable in a specific time frame.
Short-Term is usually one year or less.
Long-Term is usually three to five years.
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Objectives Should:

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
Always include a
number and a date by
which it will be
achieved
Usually include both a
long-term and a shortterm component
Focus on those areas of
the organization that
are truly measures of
success
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Objectives (Examples)

Revenues

Return on equity

Profits

Gross margin

Number of employees

Error rate

Volume of business
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Critical Issues
Critical Issues are things that stand in the
way of you achieving your objectives. They
are the barriers to achieving the success you
defined by your Objectives
If you have no Critical Issues, your
Objectives are set too low.
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Critical Issues Should:



Help the organization
focus its energy and
resources on the most
important areas
Be limited to the vital
few items that must be
addressed to achieve
your objectives
Be identified by
referring back to other
components of the plan
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Critical Issues (Examples)

Internal communication

Employee morale

Sales capabilities

Research and development

New markets
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Action Plans
Action Plans are the steps you will take to
resolve or eliminate the Critical Issues.
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Action Plans Should:



Identify the specific
actions to be taken
Identify the individual
responsible for seeing
that the actions are
accomplished
Include the time frame
or milestones for
completing the actions
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Action Plans (Examples)



Implement regular staff meetings beginning
first quarter, next year. Responsibility:
President
Develop task force to identify employee morale
issues and implement programs to improve
morale. Responsibility: VP, Human Resources
Identify potential sales seminars and select
one for implementation this year.
Responsibility: Director of Marketing
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Action Plans (Examples)


Establish a Research & Development
Department reporting directly to the President.
Hire a Director from outside by second quarter,
next year. Responsibility: VP, Engineering
Conduct a market opportunity analysis to be
completed by first quarter, next year.
Responsibility: Director of Marketing
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Strategic Plan
CONSTITUENT
GROUPS
VISION
•
•
•
•
____________________________
____________________________
____________________________
____________________________
WEAKNESSES
•
•
•
•
____________________________
____________________________
____________________________
____________________________
MISSION
GOALS
VALUES
•
•
•
•
____________________________
____________________________
____________________________
____________________________
•
•
•
•
____________________________
____________________________
____________________________
____________________________
OPPORTUNITIES
•
•
•
•
THREATS
STRENGTHS
•
•
•
•
____________________________
____________________________
____________________________
____________________________
____________________________
____________________________
____________________________
____________________________
•
•
•
•
____________________________
____________________________
____________________________
____________________________
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Strategic Plan
CRITICAL ISSUES/
ACTION PLANS
ASSUMPTIONS
•
•
•
•
____________________________
____________________________
____________________________
____________________________
OBJECTIVES
Short & Long Term
1 YR
•Obj1
•Obj2
•Obj3
•Obj4
5 YR
CRITICAL ISSUES/
ACTION PLANS (Con’t)
•ISSUE:
_______________________
•ISSUE:
_______________________
•ACTIONS:
• _____________________________
• _____________________________
• _____________________________
•ACTIONS:
• _____________________________
• _____________________________
• _____________________________
•RESPON:
_____________________
•TIMING: ______________________
•RESPON:
_____________________
•TIMING: ______________________
•ISSUE:
_______________________
•ISSUE:
_______________________
•ACTIONS:
• _____________________________
• _____________________________
• _____________________________
•ACTIONS:
• _____________________________
• _____________________________
• _____________________________
•RESPON:
_____________________
•TIMING: ______________________
•RESPON:
_____________________
•TIMING: ______________________
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Implementation
Strategic Planning Process
MISSION/PURPOSE
INTERNAL ANALYSIS
Define the Business
Identify the Market
Strengths
Weaknesses
EXTERNAL ANALYSIS
Opportunities
Threats
FORMULATE STRATEGY
Set Goals
Set Objectives
Identify Critical Issues
and Key Decisions
Define
Action Programs
Identify Responsibility &
Allocate Resources
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Strategic Planning Process
ANNOUNCE TO
ORGANIZATION
STRATEGIC PLANNING SESSIONS
WHERE WE WANT
TO GO
CONDUCT
RESEARCH
ANALYZE
RESEARCH
WHERE WE
ARE NOW
#1
#2
VISION
STRENGTHS
MISSION
WEAKNESSES
VALUES
WHAT WE MUST
DO TO CLOSE
THE GAP
#3
STATEMENT
OF
STRATEGY
OPPORTUNITIES
GOALS
THREATS
LONG-TERM
OBJECTIVES
ASSUMPTIONS
SHORT-TERM
OBJECTIVES
DISTINCTIVE
COMPETENCE
DOCUMENT
PLAN
CRITICAL
ISSUES
ACTION
PLANS
COMMUNICATE
PLAN
MONITOR
PLAN
FEEDBACK LOOP
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MANAGEMENT CONSULTANTS
Common Blunders in Business
Strategy

Making moves inappropriate to the position
Building productivity in the wrong way

Underdeveloping strong positions

Underdeveloping weak positions

Going down with the flagship

"Zigzagging"

Joining the other lemmings

Inappropriate turnaround efforts

VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
Factors Affecting Implementation

Perceived need


Quick results

Understood concept

Manageable tasks

Past experience

Identified sponsor


Endorsement of line
managers
Commitment of
resources
Clear benefits
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
Some Obstacles to Corporate
Planning

Difficult to predict future - i.e., competitive
moves; new technology

Internal resistance

Requires significant resources

Difficult exercise/hard work

Difficult to achieve common understanding

Requires management and supervisory
education
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
Strategy/Implementation Matrix
STRATEGY IS:
GOOD
INAPPROPRIATE
SUCCESS:
ROULETTE:
- ALL THAT CAN BE DONE TO ASSURE
-
SUCCESS HAS BEEN DONE..
GOOD EXECUTION CAN MITIGATE
POOR STRATEGY, FORCING
MANAGEMENT TO SUCCESS.
OR
- THE SAME GOOD EXECUTION CAN
HASTEN FAILURE.
POOR
IMPLEMENTATION IS:
APPROPRIATE
TROUBLE:
FAILURE:
- POOR EXECUTION HAMPERS GOOD
-
VERY HARD TO DIAGNOSE,
BECAUSE BAD STRATEGY IS
MASKED BY POOR EXECUTION.
-
EVEN HARDER TO FIX, BECAUSE
TWO THINGS ARE WRONG.
STRATEGY. MANAGEMENT MAY
NEVER BECOME AWARE OF
STRATEGIC SOUNDNESS BECAUSE
OF EXECUTION INADEQUACIES.
SOURCE: "THE MARKETING EDGE"
BY THOMAS BONOMA
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
Emphasis Changes Over Time
Vision, Mission,
Values, Goals
Critical Issues,
Action Plans
Year One
Year Three
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
Typical Planning Schedule
(January 1 Fiscal Year)
JUN
JUL AUG SEP
OCT NOV DEC JAN
FEB
MAR APR
MAY
• Collect information and
conduct preliminary analysis
• Identify Strategic Issues
• Conduct Strategic Planning
Session
• Document Output
• Communicate the Plan
• Develop Company Budgets
• Conduct Quarterly Reviews
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
FUNDAMENTALS OF
SALESMANSHIP
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
THE MYTHOLOGY OF SELLING

Salespeople are born, not made.

Good salespeople are good talkers.

The good salesperson can sell anything.

A good salesperson can sell to any prospect.

The good salesperson never takes no for an
answer.

Selling is a bag of tricks.

People don't want to buy.

The get-rich-quick illusion.
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
A GOOD SALESPERSON MUST HAVE
AT LEAST TWO BASIC QUALITIES

Empathy

Ego Drive
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
SALES PERFORMANCE
KNOWLEDGE
 Customer/Industry
 Product/Service
 Competition/Market
ATTITUDE
 Winner
 Confidence
 Action
SKILL
 Planning
 Presenting
 Closing
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
WHAT IS SELLING?

A PROFESSIONAL SALESPERSON:
– Knowledgeable
– Motivated to Serve
– Personal Code of Ethics
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
WHAT IS SELLING?

KNOWLEDGE REQUIRED:
– Product
– Competition
– Human Behavior
– Customers
– Buyer - Business, Company, Needs, Plans,
Problems, and Buying Motivation
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
JOB OF A SALESPERSON

Self-Management

Administration

Prospecting/Client Development

Selling
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
CHARACTERISTICS OF
PROFESSIONAL SALESPEOPLE

Capacity for hard work

Empathy

Competitive

Ability to live with rejection

Organized
Enthusiastic
CAN SELLING BE PRACTICED PROFESSIONALLY?

Integrity

VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
EFFECTIVE SELLING

Define the product

Define the market

Identify and evaluate the competition

Set objectives/develop a plan

Implement the plan

Evaluate results

Measure results/refine as required
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
HELPFUL PERSONALITY TRAITS
IN SELLING



Intelligence

Vocabulary
Social intelligence
and tact

Imagination

Determination

Self-management -
Dependability

Timing

Assertiveness

Self-confidence
Discipline

Responsibility
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS
NON-TRADITIONAL APPROACHES
THAT WILL WORK IN THE 90s





Salespeople must be in front of qualified
buyers when the buyer wants to buy.
More selling will occur in the “needs
analysis” phase of the sales cycle.
All products and services must be
differentiated in the mind of the buyer
Be customer driven
VANTAGE
ASSOCIATES, INC.
Remember the Four Fs: Be fast, friendly,
MANAGEMENT CONSULTANTS
TO BE A SUCCESSFUL SALESPERSON,
YOU NEED TO KNOW:




Your customer and his/her business
Your competitors and their products,
services, programs, strengths, and
weaknesses
Your trade allies and their products,
services, programs, strengths, and
weaknesses
EVALUATE AND TAKE ACTION!
Your company and its policies
VANTAGE
ASSOCIATES, INC.
MANAGEMENT CONSULTANTS