Posts Tagged ‘action’

Can Strategic Planning Pay Off?

Tuesday, November 18th, 2014

“The most fundamental weakness of most corporate plans today is that they do not lead to the major decisions that must be made currently to ensure the success of the enterprise in the future.”Key factors to make strategic planning pay off

It sounds like something I might have written in one of my blog posts because the point applies equally to owner-managed businesses.

But, regrettably, it wasn’t.

It’s from an article written by a 31-year-old, who then goes on to say:

“…..Nothing really new happens as a result of the plan, except that everyone gets a warm glow of security and satisfaction now that the uncertainty of the future has been contained……”

Does that sound familiar? The author goes on to say:

“……too many managements fail to…….recognize that the end product of strategic analysis should not be plans but current decisions.”

He then lists the reasons why decisions aren’t made:

• It’s risky – a bad decision could jeopardize the company.

• It’s difficult – “Strategic planning….deals with the most complex questions facing a company……synthesizing critical issues and strategic options to resolve those issues….is fundamentally a creative process. Many…..find it an elusive, uncomfortable task.”

• It requires leadership – making controversial decisions requires a willingness to be tough-minded.

• The value system works against it – owners often emphasize short-term results, which have little to do with long-term strategic success.

Next the author points out that “Many planning systems simply….produce forecasts of financial results, or statements of objectives”.

This is “….momentum” planning as opposed to dynamic planning that is attuned to the realities of external change……..

To deal with this, emphasis must be given to 3 things – evaluating the external environment; thorough evaluation of competitive strategies; and developing contingency plans.

Finally, the author provides 2 recommendations for motivating the people who can make or break a strategy. Involve those who will actually have to execute the strategy and adapt reward systems to recognize longer-term performance and the achievement of strategic goals.

So, which of today’s leading thinkers wrote the article? None of them did.

An up-and-coming member of the McKinsey team called Lou Gerstner (of IBM fame) wrote the article in 1973.

I like the article because it addresses all 4 of the Risks we believe growing companies face – having a Clear Growth Plan; linking it to Action; getting Buy In and holding people Accountable.

You can find the full article here.

 

If you enjoyed this post you’ll also enjoy Strategic Planning – 3 Things That Are Wrong With It

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

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Strategy Execution – How You Do What You Do

Tuesday, July 8th, 2014

Twice in a week.Business strategists echo what we've been telling our clients about strategy execution

That’s how often I’ve encountered credible, experienced business strategists echoing what we’ve been telling our clients.

First, it was the Wall Street Journal (WSJ), now it’s Roger Martin.

Both of them express their points of view in a way that’s different to the other and to us. In Martin’s case, it’s through the lens of his own approach to strategy execution.

Despite that, we’re all saying the same thing.

In my last post, I explained how the WSJ’s approach dovetailed with ours. Here’s how I think Roger Martin’s does.

Martin says that:

  • “…it is absolutely critical that each person in the organization knows what it means to take actions that are consistent with the intent of the strategy as asserted.”
  • To do that every person has to think about 4 things – the strategic intent of their managers/leaders; the key choices they make in their work; how to align those choices with those above them; and how they communicate the reason for their choices to their reports.

How does that align with our approach, which says that to execute its strategy successfully, a company has to avoid 4 Risks?

•  Since a strategy has been “asserted”, then Risk #1 – No Clear Growth Path – has been removed.

•  The title of Martin’s post is “Strategy Isn’t What You Say, Its What You Do” and he talks specifically about taking “action” in the quote above and on several other occasions. Risk #2 – No Link To Action – is dealt with.

•  Risk #3 – No Buy In – means that employees are not motivated by the strategy or engaged in its execution. To get buy in, we say the strategy, the initiatives required to execute it and the actions and goals which will turn the initiatives into results, must be linked directly to the goals of each department and individual employee in the company. The 4 things that Martin says every person has to think about cover precisely that.

•  Our fourth Risk – No Accountability – isn’t discussed in Martin’s post, but I’ve seen enough of his work to believe that he considers accountability as critical as we do.

Finally, in the interests of full disclosure, I should say that I think:

  • Roger Martin’s book “Playing To Win” is one of the most logical, easy to understand and practical approaches to strategy I’ve read.
  • The WSJ’s statement of the main requirements for successfully executing a strategy is nice, clear and succinct.

 

If you enjoyed this post you’ll also enjoy 5 Reasons Why I Love Execution

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

The Keys To Executing A Strategy And Getting Results

Tuesday, July 1st, 2014

I really liked a recent post in the Wall Street Journal (WSJ).The keys to executing a strategy and getting results

It said that the main requirements for successfully executing a strategy are:

  1. Clear goals for everyone in the organization, that support the overall strategy
  2. A way to regularly measure progress toward those goals
  3. Clear accountability for that progress.

That’s a very nice, clear, succinct way to put it.

I must admit that I was a little relieved when I saw their next sentence, which said that these 3 “are the basics”.

That clarification allows the discussion to continue, so that additional factors can be included. The authors themselves went on to say that good execution also requires facing reality and a strong culture of execution.

Those are 2 of the points made by Larry Bossidy and Ram Charan in “Execution”, one of the best books ever written on the subject.

On the other hand, I was pleased to see the 3 main requirements.

Why? Well, they correspond nicely with the 4 Risks I’ve talked about in recent posts. Here’s how.

Risk #1 – No Clear Growth Path:  The ‘overall strategy’, mentioned above, incorporates the path a company takes to grow to size in the future.

Risk #2 – No Link To Action:  A key step in linking a strategy to action is to develop clear goals. The best goals are specific, measurable, and attainable and have deadlines. They are also a result of prioritizing everything that has to be done so that limited resources can be allocated to get the best return.

Risk #3 – No Buy In:  Giving every employee clear goals, which support the overall strategy, is an important factor in getting buy in. Involving employees in developing those goals is another. A third is frequent, ongoing communication so that everyone understands how achieving their goals will help the organization achieve its goals.

Risk #4 – No Accountability:  A process for measuring progress toward goals and regular review meetings are the foundations for accountability. They enable the reasons for progress – or lack of it – to be assessed objectively. Those accountable can be recognized, paid bonuses, even promoted – or they may leave the company.

So I’m delighted that the main requirements for successfully executing a strategy, identified by the WSJ, are the same things we have been helping companies with for over 12 years.

 

If you enjoyed this post you’ll also enjoy 5 Traits Effective Business Owners Share

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Risks 3 and 4 to Growth – And How To Avoid Them

Tuesday, June 24th, 2014

During the last 12 years we’ve worked with well over 100 companies ranging in size from less than $1 million to over $300 million in annual revenues. They were

  • In a variety of industries, from manufacturing to software development.
  • All at different stages in their lives, for example in some, growth had stalled, while others were growing quickly – too quickly.Risks 3 and 4 to business growth and how to avoid them

In a recent post, I talked about the 4 things we’ve done for the ones that we know, with the gift of hindsight, achieved the results they wanted.

Was their success solely attributable to what we did for them?

I can’t prove that. But I can say this, ignore these 4 things and you will not get the results you want and your company will not achieve its potential.

Last week, I talked about 2 of them – having a clear growth path and linking it to action – in some detail. Here are the other two.

3.  Get Buy In

How often have we seen a team of committed people do the apparently impossible?

When people participate in the development of the growth path and understand the role they must play in making it a reality, they become fully engaged in achieving the company’s goals.

Some of the things which make that happen are:

  • The owner and management team get representatives from across the company involved in building a picture of what the company will look like in 3 years time.
  • The picture, and annual goals, is communicated throughout the company – repeatedly.
  • Departmental and individual goals are linked to the company goals.
  • Progress toward goals and targets is communicated and updated continuously.

4.  Accountability For Results

Moving a company or division along a growth path involves identifying and completing a number of initiatives, made up of specific, measurable steps or actions.

The individual who has overall responsibility for each initiative and those involved in completing the steps, must be held accountable for the success or failure of their efforts.

This is achieved by:

  • Using a process – it can be a simple Excel spreadsheet or a sophisticated, cloud-based execution management system – to track the progress of each step.
  • Holding regular, quarterly meetings to review progress and adjust plans and budgets where necessary.
  • Reflecting every individual’s performance in their compensation, promotion – or even their continued employment with the company.

So how can you tell how well your company or division is doing all 4 things? I’ll tell you more about that next time.

 

If you enjoyed this post you’ll also enjoy Sustainable Growth – How To Achieve It

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

2 Risks To Business Growth – And How To Avoid Them

Tuesday, June 17th, 2014

We’ve worked with well over 100 companies since we started ProfitPATH.2 of the 4 risks that affect business growth and how to avoid them

A couple of posts ago, I commented that we did some, or all, of the same 4 things for the companies that achieved the results they wanted.

Was their success solely attributable to what we did for them? I can’t prove that with certainty.

But I can say this,

  • Ignore these 4 things and you will not get the results you want and your company will not achieve its potential. (That’s why we call them the 4 Risks.)
  • On the other hand, if a company deals with all 4 regularly, it will improve its results.

Here are the first 2 and some tips on how to deal with them.

1.  Have A Clear Growth Path

Having a clear growth path means having a picture of what you want your company to look like in 3 years’ time.

The best pictures are rich in detail and sharp in focus. In this case:

  • Detail comes from the depth of analysis that goes into building the picture.
  • Focus is a result of the choices that are made about the initiatives required to get there.

Using other language, this is your Vision, your Mission and your Strategy.

Bear in mind that we update photos of things we love – children, pets – as they grow and change. The same applies to a company.

2.  Link It To Action

The 3-year picture is what you desire. Turning it into reality takes action which yields results.

The key is to break what has to be achieved in 3 years into 3 sets of annual goals. Figuring out what has to be done in 12-month bites provides the flexibility to adapt as you learn more than you knew when you started out.

However, this requires a process and the discipline to use it every fiscal year.

  • Where must we be in 12 months? Where are we now? What’s the gap? How do we close it?
  • Prioritizing the list of “to do’s”; allocating resources to the high leverage items; and putting action plans in place to complete them.

This process drives the annual financial budgets – not the other way around.

I’ll touch on the other 2 Risks next time. For now, ask yourself this: “Where do you want your business to be in 3 years’ time?”  And, “What do you think you have to do to get there?”

 

If you enjoyed this post you’ll also enjoy A Vision – Is It Worth Investing The Time?

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Strategy, Gambling and Uncertainty

Tuesday, January 22nd, 2013

The argument that strategy has become irrelevant and obsolete in our fast changing, unpredictable world is still, unbelievably, being promoted.

Beware of it. It’s just plain wrong.Strategy - a way to deal effectively with inevitable uncertainty

Business owners and management teams who buy into it limit their ability to grow and to make money. They’re playing with their own and their employees’ futures.

The people behind this “pop”, flavour-of-the-month thinking, are confused. They don’t understand either strategy development or execution.

Last week I read a great blog post which, I think, puts the case for strategy very succinctly and clearly. And while I’d like it to put an end to the “no strategy” lobby it almost certainly won’t.

In Placing Strategic Bets in the Face of Uncertainty, Roger Martin hits several key points:

•    Strategy isn’t about turning uncertainty into certainty. No one can do that because no one can accurately predict the future.

•    Strategy is about making the best possible, most informed choices that can be made now. Then responding quickly and with flexibility if those choices don’t pay off as hoped.

•    If a business owner and his/her team don’t develop and share a desired “future state” for the company how can progress toward it be tracked? And without that reference point, how will they know what matters and how to make sense of what actually happens?

•    Only by making assumptions about what has to happen in order for their desired state to be reached, can the team determine what has to be monitored – to see if the assumptions become reality.

•    In other words having a strategy is the only way to figure out what to pay attention to. And if you don’t know that, how will you be able to respond quickly to developments, which will prevent you achieving your aims?

•    Strategy is helpful (to say the least) in two ways.

o   First, the owner and her/his team are able to closely monitor their assumptions, see deviations quickly and take appropriate action immediately.

o   Second, they have a logical base or structure to which they can apply new data, updating their original thinking. This also allows a faster, better response than having to keep rethinking and recreating their approach.

Makes sense, doesn’t it?

Strategy isn’t a way to get rid of uncertainty. It’s a way of dealing effectively with inevitable uncertainty, by making and updating well-considered bets about the future.

I’m Not Alone………

Thursday, December 15th, 2011

It started last year.

It continued to bother me this year but I didn’t say anything to anyone. I couldn’t, I wasn’t sure how to put it.

Then I found out that someone else felt the same way. He has a much higher, more public profile than me. And he wasn’t afraid to speak out.

That tipped me over the edge.

Just as I took my first couple of tentative steps, I discovered there’s someone else, also with a higher profile than mine, who is talking about it too.

I feel so much better. So I’ll say it out loud……..

The words strategy and strategic are being overused and misused. And it’s wrong because it’s causing confusion and doing harm.

It first became clear to me………….

…..when I read Richard Rumelt’s book “Good Strategy: Bad Strategy, The Difference and Why It Matters”.  I believe 3 of Rumelt’s 4 major hallmarks of bad strategy involve misuse of the words strategy or strategic.

He describes “Fluff” as a superficial restatement of the obvious combined with a generous sprinkling of buzzwords.

Rumelt’s example of fluff is a major bank stating “Our fundamental strategy is one of customer-centric intermediation.” Intermediation, accepting deposits and lending them to others, is what all banks do. And this one’s processes didn’t make it any more customer friendly than its competitors. The statement is fluff not strategy.

Then there’s “Mistaking goals for strategy”. For example he talks about a document labeled “Our Key Strategies” which was no more than a list of goals with no reference to a key strength the company could leverage to achieve the goals.

The third one is “Bad strategic objectives”. Rumelt talks about “dog’s dinner objectives”, a list of things to do with the label strategies or objectives, where 1 of the “to do’s” is to create a strategic plan. There are also “blue sky objectives”, which are simply a restatement of the desired state of affairs.

And now there’s someone else……………….

…..who is making a similar point. This week Harvard Business Review published a blog post by Joan Magretta called “5 Common Strategy Mistakes”. I think 3 of them also involve confusing strategy with something else.
First is confusing marketing with strategy. Doing that, she argues, means overlooking the point that a strategy not only requires a value proposition, it also requires a unique configuration of (companywide) activities that best delivers the value.

Next is confusing competitive advantage with what you’re good at. Companies often look inward, see a strength – and overestimate it. But to form the basis for a strategy a strength has to be something the company does better than its rivals. And that judgment can only be made by the market.

Finally there’s thinking that growth or reaching a revenue goal is a strategy. Sound familiar? Mistaking goals for strategy is on Rumelt’s list too. It’s not the goal (e.g., reach $50 million in revenue), nor is it a specific action (e.g., launch a new product, enter a new market, make acquisitions). Strategy is the set of integrated choices that define how you will achieve the goal; the actions are the path you take to execute or realize the strategy.

Now that I feel better, that I’m not alone…………

…..I’m going to continue speaking about it.

Because it will only get better if we get it into the open, get people, business owners, talking about it.

We have to stop overusing and misusing strategy and strategic. It’s causing confusion and doing harm to the most important part of a company – its business strategy.

By the way, you can see my first couple of tentative steps here and here

So Tell Me, What Is Strategy?

Thursday, November 17th, 2011

Look anywhere and you’ll see tweets, posts and articles containing the word strategy. Marketing strategy, social media strategy, sales strategy, financial strategy, meeting strategy – in fact every kind of strategy you can think of.

Strategy – and strategic – are becoming greatly over used words. And in some cases they’re being imbued with mystique and complexity in order to create a need for “expertise”.

Why should we care? I can think of 2 reasons.

1. Strategy should be simple.

A strategy shouldn’t be an ethereal concept or a complex by design – in fact quite the opposite. Look at the Wikipedia definition – “a plan of action designed to achieve a particular goal.”

What could be more straightforward? A strategy has 2 parts. Part 1 – designing the plan and part 2 – translating it into action which achieves a specific goal.

It sounds simple – but the mystique and complexity can start with the words and phrases that are used to describe the design part of business strategy. I’m thinking of environmental scans, key competencies, scenario planning, strategic options etc.

To be fair there are some companies and clients with whom it is essential to use these buzz words in order to be considered credible.

But for everyone else – particularly for companies which haven’t worked with consultants before – the strategy design process should be kept clear and simple.

Another thing I’ve never been comfortable with is the point of view that a strategy must be perfect, a thing of great beauty. Making things of great beauty is the job of artists and plastic surgeons. Business people need to be pragmatic.

Anyway, many strategies which were judged imperfect or impossible – e.g. Steve Job’s strategy for Apple in 1987 and Herb Kelleher or Richard Branson’s entry to the airline industry – resulted in great successes.

And if a strategy isn’t made to work, to deliver results, what does it matter how nice it looks or sounds – which brings me to the second reason we should care.

2. The focus should be on the translating into action, achieving the goal part.

Research has shown, fairly consistently, that the majority (around 70% by some estimates) of strategies aren’t implemented or they fail.

Assuming that at least some of them were practical and simple, and yet still were never turned into action, what chance do complex strategies stand?

And here’s something that has always struck me as ironic.

Some of the reasons for designing a new strategy or changing/adapting an existing one are outside the control of the business owner and his/her team – e.g. competitive action, changes in the industry.

But all aspects of translating a strategy into action are totally under their control.

Makes you think, doesn’t it?

3. Final thoughts.

A business strategy is the means by which owners achieve their vision for their company. To do that it can’t be shrouded in mystique or only be a thing of ethereal beauty. And it can’t be complicated.

A good strategy informs all parts of the company about what they must do and how they must work together. It translates into the specific actions that must be completed to achieve clear goals which lead to the realization of the vision.

It turns the vision into results.

And don’t forget – a weak strategy implemented strongly will always beat a strong strategy implemented weakly.

 If you enjoyed this you’ll also enjoy 3 Things Which Shape A Good Strategy and 6 Tips For Getting Better Results in 2011 and Why You Want A Consultant With Hands-On Experience

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