Strategic Planning
Strategic planning is clarifying the overall purpose and desired results of an organization, and how those results will be achieved.
What Is The Premise Behind Your Pace? Part 2
Many factors affect the pace of a company’s growth and operations. Often times executives within a company differ on what they believe determines this pace. One side will believe that the market drives the pace, while on the other hand the ability and staffing of operations will make that determination. Below I will show how this decision can vary from one department to another and how they can all get on one page.
For example:
The Exec VP Sales, argues that their company should “at least match the pace of growth of the market.”
The COO, is equally forceful when he says that the company’s pace is “strictly a matter of how quickly the business can produce quality products and services.”
The CMO asks “why shouldn’t we try to outpace all competitors if we have the potential to do so?”
The VP HR values corporate culture and thinks that their pace of growth should be “fast enough to provide career advancement and learning opportunities for employees but not work them so hard that they feel taken for granted or consider leaving.”
The company’s CFO gets annoyed about what is perceived as personal preferences about pacing. “Our capacity to attract financing is the optimizing and the limiting factor,” he says flatly.
The R&D Director feels proud of their track record and reputation. “Our customers expect to see innovative new products from us. If they don’t see it, they’ll go elsewhere.”
Then the outsourced market researcher presents findings and recommends that the company should pick up its pace “to catch up” and observes that there is a window of opportunity.”
One of the most fascinating elements of a CEO’s role is facilitating the process among these participants to articulate the logic behind optimum pacing. What and who will lead? What and who will follow?
If “at least matching the pace of growth of the market or industry” is the premise or strategic driver, then the COO might have to find new ways to speed up the production of quality products and services…like acquisitions or joint ventures. If your competitive advantage is largely about the attraction and retention of top talent or innovation, the CFO may need to find new sources of financing to fuel an increased pace. And if hitting a defined window of opportunity is the defining principle, the deadline becomes the focus for everyone.
What determines the pace of your business? Is everyone on the same page with this view?
PACING – Part 1
Kind of a funny topic, huh?….when so many companies are not growing during these uncertain times. But the majority of the readers of this blog ARE growing. You are the companies that get on and then stay on the INC 500 list of the fastest growing privately held companies. So how is the pace of growth set for you and your company? Maybe…fast growth just happens to you and you feel like you are constantly drinking from a fire hose!
One of my strategic planning clients recently executed a management buyout. Congratulations! They aren’t waiting for something to happen TO them. Like many financial deals these days, a significant portion of the funding for loan repayment must come from increased net profitability of the company. The strategic planning team took another look at the math to determine if their existing plan’s pacing would adequately fund the management buyout. This company already had an aggressive growth plan based on market dynamics, their desire to attract top talent, a need for upgraded technology, and their readiness to go after much larger accounts. In their case, the pacing needed to fund the management buyout is compatible with the growth needed to serve their other goals.
But what if the various dynamics that drive growth (desired ROI, market demands, competition, advances in technology, capacity to attract/retain top talent, meeting the terms of a joint venture, funds needed for product innovation, etc) are not congruent? That is the more typical scenario.
Another strategic planning client’s production department cannot keep pace with the company’s marketing offer, sales promises, and investor commitments. Despite their preference to “go it alone”, they are now in merger and acquisition negotiations. Sometimes, another company with superior production capability is needed on your team. It is not OK to just accept whatever your current production team can deliver or hear “we are working on it” any longer.
Although there are usually several elements that drive the pace for growth, there is usually one dominant premise that takes the lead. Does every member of your executive team know which factor defines the pace of growth for your business?
What is the premise behind your pacing?
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search. 2013 is Ambler’s 9th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr.) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
Various Roles for the CFO During Real Strategic Planning (Part Two)
Having helped over 800 clients do real strategic planning, I have had the privilege to work with lots of fabulous CFOs who are a competitive advantage for their companies. These CFOs are open-minded, constructive, and instructive.
Because strategic planning should be tailored for each unique company, the role of the CFO changes too.
It’s a joy to do strategic planning with companies that benefit from open minded CFOs. Instead of jumping to conclusions and shutting down discussion, effective CFOs help executives consider expanded options. The CFO can also ask if they should consider approaches like acquisitions, private investors, an IPO, or franchising to lift off a stubborn plateau, compete more effectively, penetrate a new market, develop exciting products, or pick up speed. Feasibility analysis and determining optimum pacing for those strategies comes soon enough.
Recently, we helped a client retain the services of an interim CFO. This client was experiencing several behavioral symptoms (blaming, silos, passive aggressive communication, and avoidance) that would sabotage successful implementation of any strategic plan. At the time, we were utilizing our Synthesis ™approach to strategic planning that features a teambuilding process running parallel to the strategic planning sessions. The Controller of this family owned business was an in law who contributed to the continuation of dysfunctional behavior. They benefited from the Interim CFO’s objective questions, capacity to imagine success, and expansive thinking. I wasn’t the only person who could envision growth and emphasize leveraging their strengths.
It’s not surprising that the majority of INC 500 companies have CFOs who are optimizers. They think of ways to find more money, know how to squeeze cash flow, understand currency rates, and have established strong relationships with external resources. I’ve noticed that the CEOs of highly successful midsized companies, who are guests on my syndicated weekly peer to peer talk show, frequently brag about their visionary CFOs. (Visit www.GrowthStrategistShow.com to access the archive of 300+ interviews.)
Recently, a client needed our Catalytic™ approach to strategic planning which includes a problem solving process that runs parallel to strategic planning. They had tolerated the chronic recurring problem of generating inadequate gross profit from their primary service way too long. The CFO played a key role in the success of both the problem solving and the strategic planning. She dove in and captured the necessary data, provided reports to help the account managers and department head, and participated in executive level decision making. Compiling financial data, creating reports, and participating in decisions are central to the CFO role, but you would be mistaken if you assume that all CFOs would have risen to the occasion as well as she did.
There has been great progress, but unfortunately…fabulous, optimizing, open minded CFOs are still not the norm. Too often, CFOs play the role of “naysayer” during strategic planning. The Marketing VP starts to talk about new products or expanded markets and the CFO is the first person to say why the company shouldn’t even consider expansion. The CIO shares the observation that the company will need to “go to the cloud” to serve clients better and/or reduce downtime and the wet blanket CFO asks about cost too soon. The Sales VP shares information about how/why competitors are landing larger accounts and the grouchy CFO complains about the current high cost of account acquisition. Or the negative CFO becomes condescending when the HR Director suggests that the company may need more career advancement opportunities or increase compensation formulas. The lingering period of uncertainty that has followed the 2008 recession doesn’t help.
Usually such pessimism develops in CFOs when:
- they are really Controllers and not trained to think strategically,
- their informed advice is discounted too often,
- they are overburdened with too much day to day accounting so their minds are preoccupied with details and reports, or
- the CEO/CFO relationships push the CFOs into the negative role.
A company clearly increases its growth potential when the CFO addresses the causes of any negativity before the next round of real strategic planning should start. Having a bright, open minded, optimizing, instructive, constructive CFO is a competitive advantage for any company.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search. 2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
Various Roles for the CFO During Real Strategic Planning (Part One)
Having helped over 800 clients do real strategic planning, I have had the privilege to work with lots of fabulous CFOs who are a competitive advantage for their companies. These CFOs are open-minded, constructive, and instructive.
Because strategic planning should be tailored for each unique company, the role of the CFO changes too.
We use what we call our Insight™ approach to strategic planning with executives who realize that they have been making very important decisions based on outdated or insufficient information. Nine times out of ten, it’s updated market research that is needed because customer needs and preferences are changing so rapidly. During a recent Insight™ strategic planning assignment, the client was fortunate because the CFO was genuinely curious about the significance of buying patterns and factors that influence customer satisfaction. This CFO was interested in causal factors and not just bottom line results after the fact. The CFO was one of the reasons this company could fully embrace the goal of quickly tripling gross revenue while only doubling operating expenses.
When real strategic planning is indicated, a capable CFO can serve as an important sounding board, teacher, and advisor for other members of the executive team. He/she can help fellow executives tweak and rehearse their presentations. If the proposals of the Marketing VP cannot be understood by a bright CFO, the presentation is not ready for the entire executive team. The CFO can help the VP Client Services make sure that his/her ideas can generate the necessary gross profit.
The executives in one of our client companies affectionately refer to their CFO as “Guru.” He is well versed in projections, budgets, financing, ways to increase profitability, etc. Plus he is bilingual. This CFO can speak both “Accountese” and English. The best part is that he respects people. He can patiently explain which factors impact gross profit to a department head with no previous training in accounting … without any condescension in his voice. We led our Accelerate™ strategic planning process with this client and the CFO has been a trusted teacher and advisor for just about every member of their executive team.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search. 2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
Do You Need Strategic Planning This Year or Just Tactical Planning?
Want to make an experienced CFO angry? Ask him/her to prepare specific budgets, change cash management systems, and secure new financing when clear strategic direction and priorities don’t exist. Or waste his/her time in meetings about strategy when the company is clearly deep in the process of implementing a strong strategic plan and he/she could be finalizing a bank deal or providing valuable information to optimize capacity utilization.
Does Your Company Need Updated Tactical or Strategic Planning?
One technique to test if your company should just update its tactical plan or do real strategic planning is to convene the executives and pose the question: “Could we triple gross revenue while only doubling operating costs?” The leaders of most companies do not actually commit to tripling, but posing what we call the Triple/Double Option™ generates some great questions and insights. The discussion surfaces the full range of growth goals and ambition within the leadership team.
Since so many executives assume that the question means “triple quickly,” the discussion surfaces any concerns about ineffective or insufficient systems, limited production capacity or quality control, etc. That’s important information to hear and address through stepped up tactical planning focused on operational improvements. The primary strategic question would be about pacing. How fast or slow should those operational improvements be made?
Real strategic planning is clearly needed when posing The Triple/Double Option ™cues the executive team to express:
- questions about whether the market is now saturated or is changing too fast
- worry about industry consolidation, rollups or competition
- confusion about why net promoter scores (customers recommending the company to others) have been going down
- frustration that the sales cycle is growing while the closing rate is shrinking
- disagreement with orno excitement about existing strategy, priorities, plans,
- lack of confidence in leadership
- pessimism that the company can lift up off of a stubborn plateau and/or
- concerns about the company’s capacity to attract bright talented employees.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search. 2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
Watch Your Words When You are Updating a Strong Strategic Plan
It’s so exciting to work with high performing organizations.
I was recently invited to speak at an all staff event for a regional organization that is part of a national entity. National headquarters had required four locations to merge a few years ago. Everyone had to reapply for their jobs and/or express an interest in another role…even the people who had been with the organization for over 20 years!
The leader of the new combined regional organization had welcomed input and guidance from the national headquarters. They did pilot projects. They established new procedures. They embraced national’s updated vision and mission. This region is now the role model for others. WOW have they been busy!
The pre-merger regional strategic plan was exceptionally well done. And now it was time to “refresh” the strategic plan. So they created a few task forces. They brought in board members, employees, customers, and volunteers for a few full day Saturday sessions. And they utilized conference calls in between. Very impressive, huh? Clearly, this organization has proven that the people are capable, dedicated, team players who want things to turn out well.
When the board convened to report out on the conclusions reached by the task forces, there were tweaks to the mission statement and updated numbers for goals. And there were major initiatives proposed. It’s helpful that the “refreshed” strategic plan had been a participative process because the proposed new initiatives are very ambitious.
Before being a guest at that board meeting, I had just spent a day conducting back to back interviews with key employees and board members from various locations. They are bright, hard working…and tired.
I found myself speaking up at the board meeting asking the leadership to revise some of the wording on the refreshed strategic plan so they wouldn’t sound like the next wave of effort would be as difficult and stressful as the last. Instead of a big new initiative or asking MORE MORE MORE, it pays to use words that convey that they are building on success, can become more specific now, can realize better results if some details now develop. They built a great huge cake coming through that merger intact. A request now must sound like the addition of icing and not like a demand to bake tons of pies.
A few years living and experiencing a bold strategic plan surfaces insights, deeper details, and raises the bar. It’s important not to skip past the celebration of success before demanding bigger and better things from people who are already tired.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search. 2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
Ahhh, Family
The brother came to quarterly board meetings, but that was about it. He happily pulled his share of the profits from the family business for years and years and years. Amazingly, he became tired of having to go to board meetings and asked his siblings to just buy him out which they did.
The sister had an impressive title. According to the company’s organizational chart, she oversaw four departments. The reality was that professional managers had been brought in to really run the departments. They each kept her informed just in case, but no real value resulted from their meetings with her.
The younger brother was president, and he wanted the business to truly grow, be successful, and stand for something. He developed a strategic plan, invested in multiple locations, and occasionally tried to motivate his sister. One day, the sister came into a management meeting and loudly declared, “I don’t want to be held accountable by anyone,” and the sibling president was put on the spot. He could have just fired his sister, bought her out, and kept growing the business. But instead, he invested hours and hours, days and days, weeks and weeks to get a fair valuation, find buyers, and negotiate the best price.
The parent and each sibling ended up with a great deal of money…multi-millions.
So now, no one in the family is talking to the younger brother. He got them more money than they could have ever imagined. He was the only sibling actually working. The reasons? “[He] had embarrassed his siblings. [He] should have tried harder.”
The sister spoke up recently and actually asked to help. She didn’t want her children to think that she didn’t work/have a job or career.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search. 2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
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