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What is Strategy? Why Strategic Plans Fail. How to Improve your Outcome.
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Strategic PlanningCreates Value
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Agenda
• What is strategy?• How does it create value?• Why does it fail?• What are the critical components? • What are some good tools to use?• How can I improve our outcome?
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Strategy: What is it?
“An integrated overarching externally oriented concept of how the business will achieve its objectives.”
— Donald Hambrick/James Fredrickson
“Performing different activities from rivals’ or performing similar activities in different ways.”
— Michael Porter
“Unique and sustainable ways by which organizations create value.”— Robert Norton/David Kaplan
“How you spend your money.”— Anonymous
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The Enterprise Model (Proprietary)
BusinessProcesses
Human Capital
Knowledge/Information
Management
Organizational
Structure
Goals and Measures
Culture and Leadership
Strategy
Business Capabilities
The Market Environment
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Strategy: What it isn’t!
• A process • A SWOT analysis• A budget• Operating enhancements• Too generic..it IS a fingerprint
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Strategic Plans Create Value
• Gives purposeful direction • Identifies competitive advantage• Helps make choices in limited resource
environment• Resolves specific issues• Aligns company and business partners • Saves time: sets clear priorities and
identifies decision criteria
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Why Strategic Plans Fail
• Lack of execution. Why?– No real commitment or comfort– Not founded on good market knowledge– Not well communicated– Lack well defined objectives, accountabilities– Do not know how to change
• Focus on process, not content• Organization resources not aligned
• Too many sacred cows
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What you do?
Who you serve?
How you deliver?
How you are different?
How you transition?
How do you obtain your return?
Strategic Choices
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“Hedgehog Concept” from Good to Great by Jim Collins
What you can be best at
Whatdrives your economic
engine
What you are
passionate about
Strategic Excellence
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Competitive Map
• Determine how we perform on critical dimensions when evaluated through our customer’s eyes on key dimensions
• Graphically chart current and ideal positions on key benefits sought by customers
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Southwest Airlines Competitive Map
High other airlines
Southwest Airlinescar Low
SpeedFriendlyHub Connections
Seating Choice
LoungesMealsPrice Frequency
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Competitive Map (Proprietary)
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Value Proposition Statement
• What are the benefits that are delivered to your customer?
• How is your business differentiated and defined through your customer’s eyes?
• What are the key areas you need to deliver across the organization?
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Customer Value Proposition:Southwest Airline Example
Target Customer: Travelers on short haul routes, primarily families, willing to trade convenience for on-time, fun travel at a lower price
Benefits:1. When I fly on Southwest it takes less total travel time door-
to-door
2. When I interact with Southwest people they are more fun and sincere than what I experience on other airlines
3. When I fly Southwest I am willing to give up assigned seats and meals for a better value
Price: 25-30% below standard business rates
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Other Tools
• Communication Plan
• Dashboard Measures
• Strategic Sequencing
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Our Dashboard
Revenue
PROFIT
External Internal
Ext. Int.
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Strategic Sequencing: the building blocks of our strategy
0-18 mos. 18-36 mos. 36 mos.+
Fix BrokenProduct Lines
Add NewBusiness Lines Add New Product
Categories
• Invest in high-potential product lines
• Divest low-performing product lines
• Begin research on new products
• Introduce one new product per year that is related to core
• Begin development/ testing of new business
• Add new business that markets to same consumers, but is different adjacent category
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Improving Your Outcome
• Involve the right people• Tailor the process to work for your culture• Start with good information; look outside-in• Be clear about what you do well; develop
unique strategy that leverages strengths• Prioritize: What you don’t do is important• Strategy needs to enable your profit drivers• Communicate!• Do it!
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Every 5 years
Annual
Every 3 to 5 years
Ongoing
SCANCompetitorsCustomersCapabilities
What We Do Who We Serve
How We Deliver
How We’re Better
Mission
Vision
High Level Strategic Questions
How To Make Money
Every 5 years
Organizational Alignment
Resource Allocation Annual Initiatives
Strategy & Goals
Strategic Planning Process (Proprietary)
