Posts Tagged ‘mission’

ProfitPATH’s Top Ten Blogs – First Quarter 2015

Tuesday, April 7th, 2015

Lessons about successful business growth1.  3 Lessons About Successful Business Growth

Two books, published 19 years apart, yet saying similar things about a key aspect of successful business growth:
‘Built To Last’ was published in 1994. In it, Jim Collins analyzed 18 companies that he called visionary because they were the best in their industries – and had been that way for decades. Collins argued that the core values and enduring purpose of all 18 could be separated from their operating practices and business strategies. And that, while the former never changed, the latter changed constantly in response to a changing world.
In her book ‘The End Of Competitive Advantage’, published in 2013, Rita Gunther McGrath studied the performance of large, publicly-traded companies from 2000-2009. She found that only 10 of them grew their net income by at least 5% every year. All 10 had found ways to combine tremendous internal stability with tremendous external flexibility. McGrath argues that to win in volatile and uncertain times, companies must learn to exploit short-lived opportunities quickly and decisively. more

time for a change in the direction you are heading, focus on center of compass...2.  3 Times When You May Need To Change Your Strategy

Changes to a well thought-out, well-crafted strategy shouldn’t be driven simply because it’s been in place 1, 3 or 5 years. A strategy shouldn’t necessarily be changed even if it isn’t producing results. In this situation I always look at how well (or badly) the strategy is being executed before I look at the strategy itself. So when should a company review its strategy? And what makes that review and any subsequent adaptation, revision or re-creation necessary? Here are three occasions. more

10 Commandments of Business Development3.  10 Commandments of Business Development

I’m not enjoying the after-effects of the 2007/2008 financial crisis. And I’m certainly not a fan of the banks, investment and other, which I believe were a significant contributor to the mess. But, while my wife may disagree, I like to think I keep an open mind. So when I saw an article talking about how Goldman Sachs grew from mid-tier firm to global player in a few decades I had to peek. John Whitehead, a co-head of the firm in 1970, wrote the following 10 commandments that guided their business development efforts. I love them. They’re full of common sense and they’re very practical. Written in 1970, these 10 commandments add to my belief that the basic, common sense principles of business never change. Here are 4 things that business owners today can take from them: more

4.  Adaptive Strategy – A Way To Profits In The New Normal?

Adaptive Strategy is an alternative developed by The Boston Consulting Group (BCG)¹. Here’s how I think it applies to owner managed businesses. Adaptive strategy is built on the 3 R’s required in a changing environment². Can adaptive strategy be applied in owner managed businesses? more

5.  6 Ways A Business Owner Can Influence Culture

I wrote last week about the relationship between Strategy, Culture and Leadership. As a result we’ve had some questions about how a business owner can influence the culture in his/her company. Here, in no particular priority, are 6 ways that it can be done. more

6.  The Difference Between A Strategy And A Plan

I want to talk briefly about what I think is one of the worst mistakes – confusing strategy and planning. Roger Martin wrote a post for the HBR last month in which he dealt with this very topic. I frequently hear business owners talk about the need to do “strategic planning” in order to create a “strategic plan”. Some talk – every year – about holding a “strategic planning meeting”. more

7.  6 Challenges Fast Growing Companies Face

I’ve mentioned Inc. magazine www.inc.com several times before. It’s a great resource. There’s a well-researched article in the current issue about 6 challenges fast growing companies face. They’re all about execution – and if the owner doesn’t deal with them well any one of them can be fatal. more

8.  6 Tips For Growing Your Business in 2015 – How to Use Them

I was asked a good question last week. “Loved your last blog post, Jim – but how do companies like mine do those things?” So here are some ways any business owner can implement the 6 tips in his/her company. more

9.  6 Tips For Growing Your Business in 2015

January is the month for New Year’s resolutions, freezing cold and, for many, a new fiscal year. Everyone wants to ‘do better’ in 2015 than in 2014 and, for business owners, ‘doing better’ is shorthand for growing. I don’t know how often, in the last couple of weeks, I’ve been asked something like “What are your top 6 tips for growing successfully”. The answer depends on a number of things. Here’s the rub. All 6 are much easier to talk about than do. But if you start on them now you can make some progress this year. more

10. 3 Reasons Why Strategy Isn’t Dead In The Water

I hate sweeping generalizations. Strategy is dead is one that I particularly dislike. To say that, it seems to me, is to say that it’s a complete waste of time for every company, regardless of size or industry, to have a strategy.
An article appeared in the Globe and Mail late last year, headline “Why Strategy is Dead In The Water.” It was based on an earlier article in Forbes magazine, headline “Is Strategy Dead? 7 Reasons The Answer May Be Yes.” We’d gone from strategy might be dead to signing its death certificate – in the space of two headlines. more

 

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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Top Ten In 2014……

Monday, December 29th, 2014

The results are in!

Our top 10 blog posts in 2014 were:

1.   Adaptive Strategy – A Way To Profits In The New Normal? looks at an alternative strategy that is built on the 3 R’s (Responsiveness, Resilience, Readiness) required in a changing environment.

2.   6 Ways A Business Owner Can Influence Culture looks at the ways a business owner can develop a culture which will help increase operating profits and build shareholder value.

3.   6 Challenges Fast Growing Companies Face discusses the 6 challenges of execution which, if not dealt with, could prove fatal.

4.   3 Times When You May Need To Change Your Strategy explains when a company should review its strategy and what makes that review and any subsequent actions necessary.

5.   The Difference Between A Strategy And A Plan talks about the difference between strategy and planning and why it’s important to understand what these terms mean.

6.   6 Things We Can All Learn From Family-Owned Business puts forward 6 simple things business owners can implement to achieve better long-term financial performances.

7.  Use These 3 Tips To Make Your Next Critical Decision offers 3 things Ram Charan, co-author of “Execution”, says business leaders do when faced with a critical decision.

8.  5 Traits Effective Business Owners Share outlines some of the traits effective entrepreneurs have in common that contribute to the growth of their businesses.

9.  3 Reasons Why Consulting Assignments Fail and 3 Reasons Why Consulting Assignments Fail – Part 2 addresses the most common reasons why things can go wrong between consultants and their clients.

10. Strategic Planning – 3 Things That Are Wrong With It outlines how business owners make 3 mistakes that could destroy their company when they confuse strategy and strategic planning.

If you missed any of them, here’s another opportunity!

ProfitPATH’s Top Ten Blogs – First Half 2014

Tuesday, July 15th, 2014

 

1.   6 Challenges Fast Growing Companies Face

I’ve mentioned Inc. magazine www.inc.com several times before. It’s a great resource. There’s a well-researched article in the current issue about 6 challenges fast growing companies face. They’re all about execution – and if the owner doesn’t deal with them well any one of them can be fatal. more

 

 

Strategy is not planning and the importance of knowing the difference2.   The Difference Between A Strategy And A Plan

I want to talk briefly about what I think is one of the worst mistakes – confusing strategy and planning. Roger Martin wrote a post for the HBR last month in which he dealt with this very topic. I frequently hear business owners talk about the need to do “strategic planning” in order to create a “strategic plan”. Some talk – every year – about holding a “strategic planning meeting”. more

 

3time for a change in the direction you are heading, focus on center of compass....   3 Times When You May Need To Change Your Strategy

Changes to a well thought-out, well-crafted strategy shouldn’t be driven simply because it’s been in place 1, 3 or 5 years. A strategy shouldn’t necessarily be changed even if it isn’t producing results. In this situation I always look at how well (or badly) the strategy is being executed before I look at the strategy itself. So when should a company review its strategy? And what makes that review and any subsequent adaptation, revision or recreation necessary? Here are three occasions. more

4.   Adaptive Strategy – A Way To Profits In The New Normal?

Adaptive Strategy is an alternative developed by The Boston Consulting Group (BCG)1. Here’s how I think it applies to owner managed businesses. Adaptive strategy is built on the 3 R’s required in a changing environment2. Can adaptive strategy be applied in owner managed businesses? more

5.   6 Ways A Business Owner Can Influence Culture

I wrote last week about the relationship between Strategy, Culture and Leadership. As a result we’ve had some questions about how a business owner can influence the culture in his/her company. Here, in no particular priority, are 6 ways that it can be done. more

6.   6 Things We Can All Learn From Family-Owned Businesses

The 6 things I’m going to talk about come from a study of 149 large, publicly-traded, family-controlled businesses. However, stay with me because we’ve seen the same characteristics in the successful family-owned businesses we’ve dealt with – and none of them are publicly traded. Another thing – the study looked at 1997 – 2009, covering some good and some very tough times. Guess what? The family-controlled businesses, on average, turned in better long-term financial performance than non-family businesses – in multiple countries. So what are the 6 things we can learn? more

7.   6 Tips For Finding The Right Buyer

Last week I was one of three speakers at the Toronto Star’s Small Business Club event, “Exit and Succession Planning”. My talk included 6 things a business owner can do to ensure she/he finds the right buyer or successor. more

8.   3 Ways Human Nature Sabotages Strategy

Ask 10 people how long it will take them to complete a task and I’d guess 7 or 8 of them will underestimate the time required. That proportion might increase if the 10 are all type A personalities – i.e. business owners or entrepreneurs. We see this when we take teams through our strategy and business planning processes. For example, at a specific point, we prioritize the things they need to do to close the gap between their company’s current state and where they want it in 3 years’ time. Typically the teams want to tackle more items than is humanly possible given their resources. There’s no ideal number of items – the complexity of each item is only 1 of the variables – but we’ve seen time and again that completing a few key tasks produces better results than taking on too many. more

9.   5 Traits Effective Business Owners Share

I believe the single biggest thing that separates companies that grow from those that don’t is the owner’s awareness of the need for change and their willingness to do so. So, I was interested in a recent post about traits that effective entrepreneurs share. Sure enough, it contained a quote saying that if owners commit to learning more about themselves and becoming the best that they can be, they’ll find that challenges are really opportunities. But what other traits, according to the post, do effective entrepreneurs have? more

10.  Strategic Planning – 3 Things That Are Wrong With It

We all know that picking a strategy means making choices. But that means making guesses about that great unknown, the future. What happens then if we make the wrong choice? Could we destroy a company? That’s why, according to Roger Martin¹, we turn choosing a strategy into a problem that can be solved using tools we are comfortable with. And we call that strategic planning. But, Martin says, companies make 3 mistakes when they confuse strategy and strategic planning. more

 

 

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

Strategic Planning – 3 Things That Are Wrong With It

Tuesday, February 18th, 2014

We all know that picking a strategy means making choices.3 things wrong with strategic planning

But that means making guesses about that great unknown, the future. What happens then if we make the wrong choice? Could we destroy a company?

That’s why, according to Roger Martin¹, we turn choosing a strategy into a problem that can be solved using tools we are comfortable with.

And we call that strategic planning.

But, Martin says, companies make 3 mistakes when they confuse strategy and strategic planning.

1.  Putting the cart before the horse:

All strategic plans have 3 parts:

•  A vision or mission statement,
•  A list of initiatives required to achieve it,
•  The results of those initiatives expressed as financial statements.

These financials typically project 3 – 5 years into the future, making them “strategic” (although management typically focuses on only the first year’s numbers).

But the dominant logic in these plans, says Martin, is affordability; the plan consists of whichever initiatives fit the company’s resources. And that’s putting the cart before the horse.

2.  Relying on cost-based thinking:

The company is in control of its costs – it can, for example, decide how much office space it needs and how to promote its products.

And costs are known, or can be calculated, so fit easily into planning.

This thinking is extended to revenue forecasting and companies build detailed, internal forecasts by, for example, salesperson or product.

But these projections gloss over the fact that customers control revenue and that they decide how much a company gets.

3.  Basing strategy on what the company can control:

A number of well-known models are used for strategic planning. But they can be misused. Take Mintzberg’s concept of emergent strategy.

Martin believes it was intended to make business owners comfortable making adjustments to their deliberate strategy in response to changes emerging in the environment.

However, because waiting, and following what others are doing, is much safer than making hard choices and taking risks, emergent strategy has been hijacked to justify not making any strategic choices in the face of unpredictability.

But following competitors’ choices will never produce a unique or valuable advantage.

What do I think?

I like Martin’s views but the crux still lies in linking planning to execution, turning desire into results.

__________________________________
“The Big Lie of Strategic Planning”, Harvard Business Review, January 2014,
http://hbr.org/2014/01/the-big-lie-of-strategic-planning/ar/pr

 

If you enjoyed this post you’ll also enjoy Bad Strategy – How To Spot 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

Putting The Horse Before The Cart – That’s Strategy!

Tuesday, April 16th, 2013

According to Ken Favaro¹,  we often confuse “some version of a vision, a mission, a purpose, a plan, or a set of goals for a strategy”.Develop a strategy first, then execute it

Why is that important?

While these 5 things (he calls them the ‘corporate 5’) play a part in the execution of a strategy they “do not give you” a strategy.

Surprised?

To quote Favaro, “If the corporate five are the cart and strategy is the horse, leaders who put the cart first often end up with no horse at all.”

Or in my words – you’ll get better results (higher profits, a better valuation) if you first develop a strategy and then execute it – not the other way around.

In the interest of full disclosure Favaro said that corporate executives are guilty of this type of confusion.

But, guess what, in our experience the owners of family businesses and privately-owned companies are just as guilty and do exactly the same thing.

Favaro says there are 5 more fundamental questions (the ‘strategic 5’) that have to be answered before worrying about visions, plans and goals:

• What business should we be in?
• How do we add value to our business?
• Who are the target customers?
• What is our value proposition for those target customers?
• What capabilities are essential for adding value and achieving differentiation?

There’s a reason this is way more than just interesting.

Roger Martin talks about² strategy being “an integrated set of 5 choices” which are made by answering 5 questions:

• What’s our winning aspiration (or the purpose of the business)?
• Where will we play (which cities/provinces/countries, for which end users)?
• How will we win (what is our value proposition or competitive advantage)?
• What capabilities must be in place?
• What management systems are required?

See any similarities?

Martin and Lafley also talk about what strategy isn’t. They say that many leaders (thus including entrepreneurs/business owners) approach strategy in ineffective ways, for example they define strategy as a vision or as a plan.

Again, see the similarities?

Yes, I am back on the topic of the many and incredible ways in which the word strategy has been, and still is, misused. And I love it when people agree with me. Particularly when their reputation (or at least their profile) is bigger than mine.

But why should anyone who makes a living in the real world care?

Because more business owners will make better profits and add more value to their companies if they get better at executing their strategy.

And the first step is to be clear about what strategy is.

                                                                        

¹ “How Leaders Mistake Execution for Strategy (and Why That Damages Both)”, Strategy + Business, 11 February 2013
² “Playing To Win”, A. G. Lafley and Roger L. Martin, Harvard Business Review Press, 2013, pages 3 – 15

 

If you enjoyed this post you’ll also enjoy Strategy Made Practical

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Where Do The People Fit?

Wednesday, February 15th, 2012

A friend asked me a really great question last week.

I was talking to him about the strategy development and execution processes. And he asked……………

“What about the people, where are the people in all of this?”

So I told him about the 5P’s. Of course – being the wit that he is – he immediately thought I was talking about my weak bladder. But I put him straight.

All of the companies that I’ve worked with, which are consistently Profitable, seem to have a focus on the same 4 things. Several years ago we began referring to them as People, Planning, Process and Performance. In the diagram they overlap because they are all in  action at the same time – and they intersect because they interact with each other and form a continuous loop.

Performance

I always start with Performance which provides both clear direction for the company and the benchmark against which success is measured.

It spans having Vision, Values and Mission statements, through setting and communicating clear goals, to making sure every employee understands his/her role in achieving them. And it includes comparing actual results against the goals regularly, giving feedback and adapting where necessary.

Planning

Then I usually talk about the huge difference between Planning – which is a process – and a Plan or Plans– which are outputs.

There are very few occasions when it’s necessary to write a Business Plan, the most common one being when a company is looking for funding.

But Planning is ingrained in the culture in high performing companies. An effective Strategic Planning process will produce a strategy that will work. The Annual Business Planning process is the key to executing that strategy and turning it into results.

Process

I told my friend that we focus on 3 types of Process.

Functional processes keep each area of the company – e.g. Sales, Marketing, HR and Operations areas –operating efficiently. Control processes monitor the key performance indicators – e.g. sales pipeline, product quality and lead times – and give the owner early warning of potential problems.Financial processes produce accurate and timely reports on the financial health of the company.

People

I always save People for last.

After spending 20 some years in corporations and over 12 years working with business owners there is no doubt in my mind that People is the single most important element in success.

The essence of leadership is finding, motivating and engaging the right People and creating an environment (culture) in which they can contribute fully.

A weak strategy in the hands of the right People will trump the right strategy in the hands of weak People – every time.

And that, I told my friend, is where people fit in………….

If you enjoyed this post you’ll like 6 Ways A Business Owner Can Influence Culture

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2 Things That Cause Bad Strategy

Wednesday, September 7th, 2011

Its business planning or budgeting time for many business owners and so in last week’s post I talked about the 4 hallmarks of bad strategy.

They’re featured in an article which was adapted by Richard Rumelt from his new book “Good Strategy/Bad Strategy: The Difference and Why It Matters”. The article appeared in the McKinsey Quarterly

I promised that, for those pressed for time I’d continue summarizing the article in this post and talk about why there is so much bad strategy.

1. Unwillingness or inability to choose

Rumelt argues that a good strategy requires focus. And focus means that business owners have to choose amongst business goals.

Do you remember Digital Equipment Corporation (DEC)? They led the mini-computer industry in the 60’s and 70’s but by the end of the 80’s they were losing ground quickly. There were doubts if the company could survive without making far-reaching changes to their strategy.

Three alternatives were considered – business as usual, become a solutions provider or focus on designing better technology. The CEO wanted consensus on the new strategy but the executive team was divided and unable to reach one.

The result was a compromise, “DEC is committed to providing high-quality products and services and being a leader in data processing.” Like most compromises, it contained a little bit of everything and focused on nothing.

DEC continued losing ground and the CEO was replaced in the early 90’s. His successor focused on technology, but by then it was too late. The losses could only be stopped for a while and the company was acquired by Compaq in the late 90’s.

Failure to choose results in weak strategy and weak strategy results in failure.

2. Confusing “positive thinking” and strategy

Motivational speakers – and their books and web sites – have given rise to the notion that charismatic leaders and positive thinking can achieve the impossible. In concept it’s done by developing a vision and inspiring people to follow it, while empowering them to accomplish it.

The concept was reduced to something of a formula and distilled into a template for strategic planning. But not everyone can be a charismatic leader. Nor can success be achieved simply by applying a formula and completing templates.

A vision has to be more than a statement that the company will be the best, or the leading, or the best known.

The mission has to be filled with more than high-sounding, politically correct statements about the purpose of the business.

And a company’s values can’t be noncontroversial platitudes about integrity, respect and excellence.

Rumelt’s point is that, if the vision, mission and values turn out that way then the strategy is going to be nothing more than aspirations, goals or statements of the obvious presented as decisive insights.

Lack of substance makes a very weak foundation on which to build a future.

3. So what does work?

I’ll save Rumelt’s views on the underlying structure of good strategy for my next post.

6 Ways A Business Owner Can Influence Culture

Tuesday, March 22nd, 2011

The 6 Ways a Business Owner Can Shape Culture.

Communicate and publish the company’s values, vision and mission as widely as possible. This first assumes that they were identified during the strategic planning process. Repeat and discuss them at every opportunity; put them on mugs, t-shirts, mouse pads and baseball caps; reward everyone who can not only remember them – but who also know what they mean.

Be a role model for the values. Employees watch the owner and other leaders’ behaviour all the time. Inconsistencies between the written values and day-to-day action send loud messages about the real culture. For example, having “investing in employees” as a value and then not providing funding for training is inconsistent. So is saying that “being innovative” is a value while punishing employees who attempt to innovate but fail.

Tell stories and help create legends about people. Stories are a great way to reinforce the desired behaviour and culture. If, for example, an employee goes out of their way to help a customer, the owner and management team must repeat the story – and encourage others to do so – at every opportunity. That’s how legends are born. Richard Branson shows how here.

Ensure the organization chart supports the culture. A company’s organization chart is a major way in which they embed and send signals about the culture. It’s easy to be inconsistent. For example if the stated aim is to foster collaboration and teamwork, a flatter organizational structure will be much more effective than a very hierarchical one.

Design the work space appropriately. Much like the org. chart, the physical layout of an office, plant or warehouse can affect company culture. For example, an open environment with no walls creates a very different atmosphere than one in which everyone has their own office with floor to ceiling walls. Neither approach is wrong, but both can be really inappropriate and unsupportive of values and culture.

And number 6 is – The use of rewards and status symbols. Salespeople are usually compensated using reward based systems e.g. commissions, bonuses for being over quota for a quarter or year; trips to exotic destination. But the people on whom the company relies to make and deliver the products or services the sales force sell frequently aren’t rewarded in this way. This difference in approach to pay can damage the culture by creating divisiveness or, if left unaddressed, even bitterness. On the other hand, used effectively rewards and status symbols can build an achievement oriented culture.

In Summary

If a business owner isn’t pro-actively shaping the culture in the company, one will develop spontaneously. And while the culture can support the development and execution of great strategies, which get great results, if it is inconsistent with the strategy, it will dramatically reduce the odds of the strategy being successful.

Taking the initiative and developing a culture which will help increase operating profits and build shareholder value is simply another aspect – or even by-product – of good leadership.

Strategy Made Practical

Monday, October 11th, 2010

Back in June a friend of mine Jeremy Miller at Sticky Branding commented in his blog that “When you get into strategy and planning you can easily get caught up in the MBA speak.” While I might have phrased it differently (probably because I have an MBA) he has a good point.

All of the business owners we talk to have a strategy. Some may not refer to it using the word “strategy”. But they can all answer 3 questions:
1. Why did you start the company?
2. What do you want to get out of it in 3 years?
3. How are you going to get there?

The answer to the first tells us what their vision and mission statements are. Their response to the second question reveals their goals and the answer to the third is their strategy.

Some colleagues argue that we’re over-simplifying. But we always get a response to those questions, while we’ve proved we may not if we say “Tell me your vision for the company”. If the answers we get are not complete we simply ask follow on or clarifying questions.

By asking the questions in a way that they can be easily answered we avoid making anyone feel uncomfortable if they’re not familiar with “technical” terms. And the responses are generally phrased in practical, pragmatic language.

Returning to a sports analogy for a moment, developing and executing strategy is like playing your favorite sport. We all have some level of skill at it but there are times when we need, or want, to improve those skills.

That’s when we get some help from a professional, e.g. a personal trainer. We usually get the best results when their input is in language we understand and is practical.

Imagine a personal trainer saying something like “The rectus abdominals and obliques can be strengthened using a vehicle with wheels which is moved by pushing pedals with the feet while the internal and external obliques can be flattened and the waist can be reduced.”

When they could just as easily have said “Cycling can strengthen your stomach muscles and trim your waist.”

We believe that to get the best results – steady growth and increasing company value – strategy has to be made practical. That’s one of the reasons we started the business.

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