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Linking Your Business Strategy to Your Technology Strategy
Smart man learns from his mistakesWise man learns from smart man’s mistakes
Chinese proverb
Webinar
© Growth Strategy Partners www.GrowthStrategyPartners.com 2
Survey
What specifically do you want to learn today? What are three key components in a good technology strategy?
© Growth Strategy Partners www.GrowthStrategyPartners.com 3
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
© Growth Strategy Partners www.GrowthStrategyPartners.com 4
An Introduction to Growth Strategy Partners
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
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
© Growth Strategy Partners www.GrowthStrategyPartners.com 5
Research Drives Our Approach
What winners do, and how they do it
Experiences of Growth Strategy Partners’ Consultants who have been highly successful CEOs and business executives
3 3 Growth Growth DisciplinesDisciplines
Other “growth” lists
Ten Years of Proprietary Research with over 500 CEOs of America’s Fastest Growing Private Companies
Over 25 sources
© Growth Strategy Partners www.GrowthStrategyPartners.com 6
Right Seats1. Functional2. Level
Right People1. Skills2. Knowledge3. Behaviors4. Results
1. Limited Initiatives2. Aligned Resources3. Linked Incentives4. Culture of Discipline
Right People In the Right People In the Right SeatsRight Seats Ability to ExecuteAbility to Execute
1. Effective Growth Planning Process2. Advanced Customer
Management3. Robust Processes4. Differentiated Products
and Services5. Strong Core Values
Implementing RightImplementing RightPracticesPractices
Three Growth DisciplinesThree Growth Disciplines
“Over 80% of most companies are not effectively implementing the Three Growth Disciplines. Those who do are growing faster and more efficiently.”
Christopher DiCenso
© Growth Strategy Partners www.GrowthStrategyPartners.com 7
Developing An Effective Strategy
“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
“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
Strategies Fail to Deliver Due To Failures In Planning
Strategies Fail To Deliver Due To Poor Articulation
Are you failing to plan or planning to fail?
“66% of fast growth companies have a strategic plan.…These companies are 40% larger and 45% more productive than comparison companies.”
PricewaterhouseCoopers
Companies With An Effective And Articulated Strategy Grow
© Growth Strategy Partners www.GrowthStrategyPartners.com 8
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 Custom orders High volume 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
Large line item orders Small line item orders Mix
© Growth Strategy Partners www.GrowthStrategyPartners.com 9
Method of Competition Definitions
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
“Be Great at One and Good at the Other Two” (based on customer perspective)
© Growth Strategy Partners www.GrowthStrategyPartners.com 10
Method of Competition Prioritized
Priority WeightingCurrent Score
Winning 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%
Where Should You Focus Your Strategies and Resources For Growth?
Weighted gap = winning score – current score x weight
Sum of weighted gap
© Growth Strategy Partners www.GrowthStrategyPartners.com 11
How Compete
ProductLeadership
CustomerIntimacy
OperationalExcellence
• Product/service dev.• Customer feedback• Techy platforms dev.
• Customer intimacy• Order processing• Customer service
Supply chain• Order entry• Order build• Order delivery
• ERP• ASP• WMS
• CRM• SFA
• CE• DFMA• PDM• CAE
• Transaction volume
• high / low
• Order Type
• Large orders
• Small orders
• Mixed
• Product Type
• Custom
• Catalog
• Mixed
• Customers
• Markets
• Geography
• Custom
• Catalog
• Fast follower
• Early adopter
• Centralized
• Disruptive techy
• M&A vs internal growth
• Core competencies
Linking MOC to Strategy to Technology
Strategy Product/Service Profile Key Processes Tools/Techy
© Growth Strategy Partners www.GrowthStrategyPartners.com 12
Strategy MapMETHOD OF COMPETITION Operational Excellence Customer Intimacy Product Leadership
Priority 1 2 3Weighting 66% 26% 9% OBJECTIVE OWNER MEASURE TARGETS INITIATIVES BUDGET
(Cumulative Annual Growth Rate)FINANCIAL 25% Net Income increase Frank Net income 25% per year -$
20% Contribution Margin increase Bill Contribution Margin 20% per year
Less than 15% overhead increase Sean OH growth rate under 15% -$
CUSTOMER Be competitively priced Frank Question on Customer SurveyAverage score of 4.5 on this question Create and implement customer survey -$
Redesign rating card
Be easy to do business with Frank Question on customer surveyAverage score of 4.5 on this question Restart rating card follow up program -$
Provide good quality work Tom Question on customer surveyAverage score of 4.5 on this question
Create and implement manager Quality Training 1,000$ Create and implement Practical Training program 10,000$
PROCESS Training of Miscrosoft Programs 2,000$ Improve the selling and estimating process Dave Time to complete an estimate Reduce time needed by 15%
Implementation of Dave's automated program by all managers 2,000$
Improve the delivery process Bill CM productivity Define at mapping process Core process mapping process 7,500$
Improve marketing and lead generation focus Bob % increase in # of leads
18% increase in leads and 18% increase in leads over $200K
Addition of lead generation to Team Player Plan; -$
Creation of cross-selling grid -$
LEARNING
Improve selling skills ChuckSuccess Ratio (Won Deals/Won Deals + Lost Deals) 40% Success Ratio
Create and implement a defined Sales Process 1,000$
Drive the Values through the business Steve % that can name the Values
Managers & up - 95% by 8/20/04 Rest of org. - 50% by 08/20/04 Develop and conduct Values survey 3,000$
% that are living the Values
Managers & up - 50% by 11/31/04 Rest of org. - 35% by 11/31/04
Implement "Ever-Present Reminders" of Values
Improve trade and job mgmt skills BillBonus hours earned/Total hours worked 20% of hours are bonus hours Manager Training program 2,500$
Time tracking, reporting and measurement process
Balanced Scorecard Action Plan
Increase Net Income at 25%
CAGR
Keep overhead growth below 15% /yr
Be competitively priced
Be easy to do business with
Improve the selling and estimating processes
Improve marketing and lead generation
focus
Improve the delivery process
Improve selling skills
Improve trade and job mgmt skills
Drive the Values through the business
To achieve our vision, how should we appear to our customers?
To satisfy our customers, which operational processes must we excel at?
How wil we sustain our ability to change and improve?
To financially sustain our mission, what must we focus on?
Increase Contribution Margin 20% / yr
Provide good quality work
Sample Strategy Map and Balanced Scorecard
© Growth Strategy Partners www.GrowthStrategyPartners.com 13
Dashboard Performance ViewAre We Building Our Backlog?
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
Jan. Feb. Mar. Apr. May
$ T
ho
usan
ds
TPM Backlog
Change in TPM Backlog
TPM Contracted Backlog External Budget
Are We Growing Revenues?
0
2,000
4,000
6,000
8,000
10,000
12,000
Jan. Feb. Mar. Apr. May
Reven
ue $
Th
ou
san
ds
TPM Budget TPM Cumm Budget TPM Cumm. TPM
$11,681,250 budget
How are our Projects Doing?
-4%
-2%
0%
2%
4%
6%
8%
Jan. Feb. Mar. Apr. May
Fade Overall Project Profitability(GP) Budget Fade for 2005
How Happy Are Our People?
93%94%95%96%97%98%99%
100%101%
Jan. Feb. Mar. Apr. MayR
ete
nti
on
Rate
Retention Rate
Are We Growing More Efficiently?
(5)
-
5
10
15
20
Jan. Feb. Mar. Apr. May
$ T
ho
usan
ds
TPM Revenue/FTE Gross Profit /FTE Operating Income/FTE
Is Our Pipeline Growing?
0
5
10
15
20
25
30
Jan. Feb. Mar. Apr. May
Co
un
t
Annalized Proposals Annalized Interviews
Budgeted Annualized Proposals Budgeted Annualized Interviews
How are the Sales People Doing?
-
50
100
150
200
250
300
Jan. Feb. Mar. Apr. May
$ T
ho
us
an
ds
TPM Revenue/Salesperson (FTE) 4.75
Are We Growing Profits?
-600
-500
-400
-300
-200
-100
0
100
200
300
Jan. Feb. Mar. Apr. May
$ T
ho
usan
ds
NI (Operating Income) Budget NI (Operating Income)
Cumm Budget NI (Operating Income) Cumm. NI (Operating Income)
Are Our Gross Margins Growing?
0
200
400
600
800
1,000
1,200
1,400
Jan. Feb. Mar. Apr. May
$ T
ho
usan
ds
Gross Profit Budget Gross Profit
Cumm Budget Gross Profit Cumm Gross Profit
Risk Adjusted Revenue Forecast
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Jan. Feb. Mar. Apr. May
$ T
ho
us
an
ds
Contracted Wherego Stretch Lead track
Revenue Forecast by Function
-
200
400
600
800
1,000
1,200
1,400
1,600
Jan. Feb. Mar. Apr. May Jun Jul Aug Sept Oct Nov Dec
$ T
ho
us
an
ds
Planning Design Design Build General Conditions
Are Our Customers Happy?
-
5
10
15
20
Jan. Feb. Mar. Apr. May
$ T
ho
us
an
ds
TPM Revenue/FTE Gross Profit /FTE
© Growth Strategy Partners www.GrowthStrategyPartners.com
Growth Disciplines ScorecardGROWTH
PRACTICE
NON PERFORMING BEGINNER INDUSTRY AVERAGE ADVANCED EXPERT
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
Ability to Execute
With no plans and no priorities, daily requirements are not always achieved. No performance standards. No performance incentives.
Focus on a long list of daily to dos. Few incentives. None linked to performance. No tracking or discipline.
Focus on a many initiatives, most with objectives and milestones but resources are not allocated. Incentives not linked to performance. Limited tracking and discipline
Focus on a few initiatives, with objectives, milestones and resources allocated. Incentives informally influenced by performance. Informal review of process. Developing culture of discipline
Focus on a few initiatives, each with objectives, milestones and allocated resources. Incentives linked to performance, process of review and change, culture of discipline
© Growth Strategy Partners www.GrowthStrategyPartners.com 15
Thank You!!
For more information, please contact:Marcia Nita Doron
Altico Advisors508-485-5588 x107
“Do what you can, with what you have, where you are.”Theodore Roosevelt