Posts Tagged ‘processes’

Avoiding Strategic Planning Failure

Tuesday, April 14th, 2015

This week’s guest is Leslie Heller, a management consultant focused on business strategy, change management and growth initiatives. He has 15 plus years in consulting and business leadership roles, where he led teams of over 1,200 employees, held accountability for over $850 MM in sales and $36 MM in payroll, and implemented growth initiatives in diverse business lines. Leslie’s motivation is to create an environment where businesses can implement change and deliver value for their customers. Leslie also volunteers as a mentor with Enterprise Toronto helping young people build businesses.

 

The strategic planning process is the time to develop corporate direction and vision that create value and excitement for companies and their stakeholders. This article highlights three points to include in the planning process that increase the chances of implementing a successful strategy. While no exhaustive list of what it takes to avoid strategic planning failure exists, these points will help planning at the team, project, division, business unit and company level.

1. Strategy and Execution

We often hear that “Strategies most often fail because they aren’t well executed”, but how “right” could the strategy have been if it failed in execution? If a strategy failed in execution it is likely that one or more of the following three points was missed in the strategic planning process:

i.     Ensuring the right skill-set is in place
ii.    Ensuring adequate resources are available
iii.   Ensuring processes to track, highlight and resolve issues throughout the project life-cycle are implemented

The ability to execute a strategy is part of strategic planning. When strategy ignores internal capabilities or does not address how capabilities will be addressed there is increased risk in delivering the strategic objectives. Spend the time to honestly assess internal capabilities upfront to avoid frustrating time-consuming issues later on.

2. Beware the Fouled Up System

In the article “On the Folly of Rewarding A While Hoping for B” (Steven Kerr, Academy of Management Journal, 1975, www.ou.edu/russell/UGcomp/Kerr.pdf), the author addresses how reward systems influence behaviour, and highlights examples where the behaviour does not align with the intent of the reward system. You likely have your own examples; for instance, when next years’ expense budget is based on current years’ spend, do all managers strive to find one-time (non-recurring) expense saving opportunities? How about if they are already surpassing their Plan… near year-end? Or consider performance metrics that measure attendance and productivity when a company really wants to measure employee engagement and quality. The down-stream impact of mistaking attendance for engagement or productivity for quality is increased customer support and rework that is often difficult to address, correlate and impact after the fact. Perhaps worst of all is the risk of setting strategy on misinterpreted business unit performance.

Selecting the right tracking metrics to influence employee behaviour within the strategic plan can be tricky and needs to be addressed, not only by strategy teams but by operational leaders who are more likely to identify disconnects between the intent of the reward system and the anticipated employee behaviour.

3. Change Management

Corporate strategies result in projects and projects result in change. Even positive change creates anxiety and needs to be managed (think about the last time you upgraded your corporate coffee system!). Change management is the act of using a structured process to lead the people side of change to increase the likelihood of project success.

According to Prosci, the world’s leading benchmarking research and change management product company, the top issues that derail change initiatives are ineffective project sponsorship, employee resistance to change and not using a structured change management approach. Change management has gained considerable attention lately and change management offices have popped up in banks and other institutions over the past few years. Including change as a topic in strategic planning, and then managing change with structured processes and communication plans should be built-in to the strategic planning process.

Summary

In summary, (i) ensuring executional capabilities are part of strategic planning, (ii) figuring out the best metrics to use to align employee behaviour to a new corporate direction, and (iii) using change management methodologies, will help your organization avoid strategic planning failure. Ensure that you include these on your strategic planning agenda!

For further information on avoiding strategic planning failure and change management you can reach Leslie Heller at lheller00@yahoo.com (Note: this is a summarized version of Leslie’s presentation at the 5th Annual Strategic Planning for Boards conference held in Toronto earlier this year.)

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Your Company, Your House

Tuesday, March 3rd, 2015

I heard a wonderful metaphor a couple of weeks ago.To grow your business, think of your company as a house

Think of your company as a house.

The functional areas or departments – for example sales, marketing, operations, HR and finance – each represent a room in the house.

You can’t have a house without rooms and rooms have no purpose on their own. A house is not a home if it’s just a bunch of rooms.

The construction materials with which your house is built are, for example, peoples’ skills and experience; processes that enable the areas to function effectively; IT systems that provide data to manage performance.

Your culture is the mortar holding your house together.

What happens when we decide we want to grow? After all, as business owners, our main – if not sole – focus is on growth.

Growth can be achieved in 2 ways. By making one or more rooms in your existing house larger or by designing and building a bigger house.

1.  Making one or more rooms bigger

You can do this by, for example, adding more sales people to bring in more orders, or by launching a marketing campaign to generate more leads.

But making one room in a house bigger puts pressure on the other rooms. That has consequences. If you don’t believe me, try making one of your children’s bedrooms larger while making another one’s smaller.

As one room or area grows, everything else is forced out of proportion. You may even put pressure on the structure of the house and cracks will appear as the bricks and mortar strain to hold everything together.

A couple of examples of the business equivalent are tight cash flow, an increasing backlog of orders or losing good people.

2.  Designing and building a bigger house

Design and build a larger house and you grow, while structurally keeping everything in proportion.

How does this apply to your Company?

Designing and building a bigger house is equivalent to developing and executing a business strategy.

Each of the functions, or rooms, still has its own strategy. But they work in the context of, and by supporting, the strategy for the entire house/business.

If you involve your team in the design, the end product will be better and they’ll be more committed to getting it built.

I like this metaphor. What do you think?

 

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

6 Tips For Growing Your Business in 2015

Tuesday, January 13th, 2015

January is the month for New Year’s resolutions, freezing cold and, for many, a new fiscal year.Tips to successfully grow your business in 2015

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.

That said here are some of the things that the companies I’ve seen grow successfully have in common.

Those companies are:

1.  Very willing to try new things (innovate, adapt). However they don’t bet the farm. They do limited scale tests of new products and ways of doing things first. Ones that work are rolled out quickly; ones that don’t are killed – just as quickly.

2.  Always trying to be better – than themselves. They are continually looking for ways to, for example, improve their own quality, do things more quickly and become more efficient. They don’t compare themselves to others, they just want to the best they can be.

3.  Following a strategy or plan. They know where they want to be in 3 – 5 years but don’t expect to get there by following a straight line. They try to keep growing steadily in good times and in bad.

4.  Skilled at turning their plan into results. Knowing what success will look like makes it easier for them to set priorities and allocate the resources and funds to achieve them. They link every individual and every department’s work to the company’s goals and hold themselves accountable.

5.  Able to spot trends earlier than most of their competitors. They stay close to their customers and suppliers, monitor their competitors and watch for developments in technology.

6.  Working from a solid foundation. All of their core business processes – sales, marketing, operations, finance and HR – are tried, tested and automated wherever possible. They find, hire and retain smart people who are a good “fit” with their culture and values. They are fiscally cautious, never over extend themselves and can fund their growth.

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. And if you need some help just give us a call…….

 

If you enjoyed this post you’ll also enjoy 3 Leadership Tips From A Great Scotsman

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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

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!

7 Ways to Hold Consultants Accountable Now

Tuesday, September 23rd, 2014

7 ways to hold consultants accountable nowMy wife will tell you I like giving other people advice.

That’s probably why I’m a management consultant.

But even consultants have to take some of their own advice – and change in order to grow.

For example, we must find a process for linking our compensation to our results in a meaningful way.

There’s no doubt this is hard to do. But that’s no excuse for refusing to try.

However, at the risk of making a huge understatement, it’s going to take time.

So, while we’re waiting, what can a business owner do to make sure the consultants they hire actually deliver results?

1. I talked about our own solution to linking compensation to results last year in a post called “Let’s Hold Consultants Responsible For Results”. It isn’t perfect, but it’s better than the traditional model.

2. Four years ago I suggested how owners can keep control when they work with consultants.

3. Around the same time I highlighted 3 reasons why consulting engagements fail. It’s really not difficult to avoid making them.

4. Look for consultants who have had practical, “hands on” experience operating a company. They have 2 clear advantages over consultants who have spent their entire career in consulting roles, as I pointed out in 2011.

5. There are also clues that you can listen for. Consultants who are effective tend to say certain things.

Here are 2 more things that I thought about this week.

6. Yesterday I was talking to a business owner who had been referred by an existing client. He asked if I would go out and meet him. I agreed immediately because that’s the only way to determine if there’s any chemistry between us.

Some people might consider the idea of “chemistry” to be foolish. But I can tell you from experience, that without it, the risk of a project failing increases dramatically.

7. Ask what success will look like. It’s more than just a description of what the consultant’s going to do and the services they’ll deliver. It’s about knowing how, when and what they will do to help you get the results you want.

Success, they say, comes not from doing one big thing well, but from doing many little things well. Perhaps change is like that too.

We at ProfitPATH, and lots of other consultants, are chipping away, doing the necessary things that will bring change to our business.

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Jim StewartJim 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, Capabilities – and The Beatles

Tuesday, February 11th, 2014

It’s 50 years since the Beatles first appeared on the Ed Sullivan show and took the USA by storm.What it takes to develop a dynamic capability

At that time I was 12 years old, living in Scotland and proud of my collection of Beatles songs, all of which were recorded on the EMI label.

Now EMI was an interesting company. For example, during World War 2, they built the first airborne radar.

And in 1971 one of EMI’s engineers introduced the first commercial CT scanner. However, like many other companies, it never profited from its invention.

Why? EMI knew the market of CT scanners lay in the US, but it didn’t have manufacturing capabilities there. In the time it took to build a plant, GE and Siemens had reverse-engineered the CT scanner – and the rest is history.

This is a classic example of a company having a good strategy, but not the capabilities to exploit it.

Clearly, capabilities are crucial to success. But what are they and why are they so important?

David Teece¹  defines a capability as “a set of learned processes and activities that enable a company to produce a particular outcome”.

Ordinary capabilities are like best practices. They start in 1 or 2 companies but spread throughout an industry.

Dynamic capabilities are, on the other hand, unique to each company. They’re based on things a company has done successfully in its past and captured in business models developed over many years. As a result they’re difficult to imitate.

A business owner must do 3 things to make a capability dynamic.

First, identify and evaluate opportunities in the market. Then quickly mobilize the company’s resources to capture the value in those opportunities. Finally create an environment of continuous renewal.

Why are dynamic capabilities crucial?

EMI discovered the hard way that spotting an opportunity isn’t enough. The resources must be in place to quickly take advantage of the opportunity.

And Nokia is an example of what can happen when even market leaders aren’t in continuous renewal. Teece believes they missed the smartphone revolution because they relied on R&D which took place in Finland. Apple, based in San Francisco, was much more in touch with North American consumers’ wants and emerging technologies.

Developing dynamic capabilities could be a way to survive in a world where change is taking place more quickly than ever before.

______________________________________
¹ “The Dynamic Capabilities of David Teece”, Strategy + Business, 11 Nov 13
http://www.strategy-business.com/article/00225?pg=all&tid=27782251

 

If you enjoyed this post you’ll also enjoy 5 Tips for Fast Growth in a Slow Economy

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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

Top Ten In 2013……

Tuesday, January 7th, 2014

The votes (page views) have been counted; the results can be announced!

Our top 10 blog posts in 2013 were:

1.   6 Challenges Fast Growing Companies Face, which won by a good margin, discusses the 6 challenges of execution which, if not dealt with, could prove fatal.

2.   10 Tips To Improve Your Public Speaking Body Language, written by Mark Bowden of TruthPlane, is the first of our guest posts to make the list.

3.   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.

4.   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.

5.   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.

6.   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.

7.   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.

8.   Strategy, Culture and Leadership deals with how these 3 things affect the development and the execution of strategy.

9.   10 Commandments of Business Development are the basic, common sense principles every business owner can apply to their business development efforts.

10.  How To Keep Control When You Work With Consultants provides steps business owners can take to maintain control when they work with consultants.

If you haven’t seen them before, here’s your opportunity!

3 Questions Linking Strategy and Execution

Tuesday, August 6th, 2013

My friends think it’s a little sad, but I get excited when I find a book about business strategy that I haven’t read.The link between strategy and execution

I saw an article about one the other day, and was impressed by the author’s answers to 3 questions about the link between strategy and execution.

Judging by the article, the book focuses on larger corporations. But the lessons apply, I think, equally to owner-managed businesses.

Question 1:  Why do companies spend more energy on strategy development than execution?

Strategic planning off-sites usually take a few weeks to prepare and only last a few days.

But executing a strategy takes months or years during which time things go wrong – e.g. the economy changes, competitors react and the managers who developed the strategy leave the company.

Also there are more people involved in execution than in development. Some have different attitudes and levels of commitment to the strategy than the people who developed it. They may not really understand how what they do fits into the strategy or they become distracted by day-to-day problems.

So it’s easy to give up when things get in the way of execution.

Question 2:  What are the biggest mistakes, or most common pitfalls, when it comes to turning strategy into results?

A big one is failing to realize that there’s no silver bullet. Turning a strategy into results takes time.

Another classic is not putting a detailed implementation plan in place. Without one there can be no focus on key action plans and the responsibility and accountability for completing them. Nor will there be a process to manage the relationships and reactions between the constantly changing variables – e.g. resources, priorities, departmental rivalries – that are in play.

A third is that, in some bigger companies, management think that having created this beautiful strategy, their work is done. “Other people” have to buckle down and turn it into action.

Question 3:  What can you do to improve the odds of executing successfully?

Here’s where the saying “culture eats strategy for breakfast” comes into play.

Because the best way to execute successfully is to have a company that is “results oriented”. In those companies everything – the values, processes, individual rewards and, most of all, the behavior of the owner and management team – supports the achievement of the company’s goals.

Building this kind of culture isn’t easy and it can’t be done quickly.

It takes time build a workforce in which employees’ personal values match those of the company. And it takes time for employees to feel confident that they won’t be ridiculed if they suggest something new, or penalized if they take a risk and it goes wrong.

By the way, the book I found is called “Making Strategy Work: Leading Effective Execution and Change” and the author is Lawrence Hrebiniak. You can read more about it here.

 

If you enjoyed this post you’ll also enjoy So Tell Me, What Is Strategy?

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Why Conflict In A Family Business Is Bad For Strategy

Tuesday, July 23rd, 2013

We’ve worked in a lot of family businesses over the past 12 years.The negative impacts of confrontation and infighting on strategy

During that time we’ve had assignments disrupted, even brought to a premature end by family conflict.

I’ve seen family members say, and do, some terrible things to each other.

It’s not as if it’s a new experience. I saw some ugly political games in the 25 years I spent climbing the corporate ladder.

Confrontation and infighting are bad for any business. Their impact on the strategy, however brilliant and well executed, can be enormous.

There’s a difference though. In a family business, the damage isn’t just to the company.

The unpleasantness spills over into private lives, and relationships that should be close – parents and children, brothers and sisters – are shattered. And sometimes they remain unrepaired until it’s too late, because one of the parties dies.

I’d realized that the conflict in family firms seemed more intense than the ones I’d seen in my corporate days. But I hadn’t realized why until a blog post I read recently made it clear.

Corporations have barriers that prevent conflict becoming too ugly. Rules, processes and structures govern the behavior of every employee, from the lowest to the highest. For example, if a manager talks or behaves inappropriately, he will find himself on the wrong end of disciplinary action initiated by HR.

The same rules exist in many family businesses, but they apply to everyone except the owners.

Why? Family members apply the dynamics from their personal relationships to business situations – even though they know they shouldn’t. For example:

•  When a child becomes an adult and joins the family firm, the parent who raised her remembers her missteps and miscues from childhood and adolescence.

•  Parents try to resolve disputes by forcing everyone to toe the line.

•  Siblings deal with difficult circumstances by withdrawing, avoiding, or undermining each other.

Even if the child has left the family home, the plant or office can become a replacement.

As the owners of the business, the family can ignore the rules or processes. So there is nothing to stop conflict, caused by the ineffective behavior of both generations, blowing the lid off the family’s assumed harmony and threatening the success of the business.

Does this mean that every family business is fated to erupt into a bitter fight? No, of course not.

Some families use their values, long-term orientation to their investment and loyalty to employees and customers to maintain a “professional management” approach to challenges, problems and conflict.   In the other cases, family members can be helped to understand that conflicts can result if there are no formal boundaries on their behavior.

And, in fact, we have been able to help families like these, put greater structure in place. Which enables focus to go back on the execution of the strategy and getting results.

If you want to read the full blog post you can find it here.

 

If you enjoyed this post you’ll also enjoy Little Things Can Have a Big Impact

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3 Reasons Growth Slows In Good Companies

Tuesday, June 18th, 2013

It caught my attention immediately.Periodic slow-downs in growth are inevitable, even in solid companies

A blog post about why successful companies stop growing. A topic I was tempted, only last week, to call an obsession.

While the examples Ron Ashkenas uses are all large corporations, it really doesn’t matter.

The points he makes apply equally well to business owners and family businesses.

Ashkenas argues that periodic slow-downs in growth are inevitable – even for solid companies. That doesn’t mean that business owners and their management teams can’t do anything to slow the decline or to reverse it quickly.

First, however, they have to understand the 3 forces that Ashkenas says always slow down high-flying companies. Here they are.

1.  The Law of Large Numbers

When revenues are $5 million, targeting annual growth of 20% means adding $1 million to the top line. When they’re $50 million, chasing 20% growth means adding $10 million in sales in 12 months.

It takes significantly more resources to support $10 million in new sales than it does to add $1 million. And some of them, e.g. people with the skills and experience required, can’t always be found quickly and easily.

Then there’s the size and growth rate of the market. If it’s $100 million and growing quickly, adding $1 million in sales means taking, at most, 1% more market share. However, adding $10 million in a mature or declining market means getting 10% more market share – and that probably means taking it away from competitors.

2.  Market Maturity

When a market turns hot, competitors multiply like mosquitos. That limits the potential for price increases, which are a relatively easy way to increase revenues.

Some companies build stronger brand loyalty than others, slowing the ability of the weaker competitors to grow. Some products become commoditized, price becomes king and margins become thin, affecting bottom line growth.

Eventually markets become saturated and the bigger, stronger players either gobble up the weaker ones or force them out.

3.  Psychological Self-Protection

Ashkenas describes this as pressure to maintain the base business and unwillingness to risk it with innovative new products.

In the companies we’ve worked with, it often appears in a different form (and perhaps deserves a different name). As these companies grow, the management team spends more and more time focusing on meeting the increasing demand while maintaining quality. This is often caused by weak processes, lack of discipline and lack of accountability.

In both cases, however, management is the cause of the declining growth.

No company grows forever without hitting some bumps along the way. The challenge for the business owner is to recognize what’s really going on and to deal with it.

Sometimes it takes an external, third party to be able to do that.

You can read Ron Ashkenas’ full post here.

 

If you enjoyed this post you’ll also enjoy Why Would Anyone Hire A Management Consultant? and Why Would Anyone Hire A Management Consultant? – Part 2.

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