Strategic Planning

Strategic planning is clarifying the overall purpose and desired results of an organization, and how those results will be achieved.

[video] It Can Be Very Unsettling to Do Real Strategic Research

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It Can Be Very Unsettling to Do Real Strategic Research

It’s one thing to SAY you want to go about the strategic planning process a completely different way this time around. But, if you are accustomed to the usual SWOT analysis, departmental status reports, and incremental progress goals, you could become very uneasy when the research step starts for truly strategic (not tactical) planning.

Of course names have been changed whenever I provide examples.  See if you identify with Jake’s situation.

Jake is the CEO of a national non-profit/charitable organization. There are no real chronic recurring problems (like tight cash flow, high turnover, etc.). There are no significant organizational issues (conflict, silos, confusion, productivity, etc.). And there is fairly clear information about the competition, and current clients and funding sources.  Jake’s organization knows enough about its day to day operation that they can take this opportunity to pause and consider much larger trends related to: the economy, societal patterns (particularly re. power and influence), how money (including philanthropy) really works, technological advances, the legislative and regulatory environment, best practices of similar organizations and completely different entities, etc.

Each member of his executive team would be assigned one major area (like technological advances) and they could help one another out. They could share what they are learning as they explore.  They could get one another “unstuck” if anyone inadvertently regresses into tactical day to day thinking.  For six weeks, they would each dedicate 10 hours/week to research outside their organization.  It all has an impact on them, but the 6 weeks is about opening their minds and thinking beyond their organization.  Each executive would have a “buddy” from their board of directors.  The Director(s) would not be asked to do research, but the Executive could pick the Director’s brain and benefit from his/her contacts.  Plus, the Directors would feel more engaged and become curious about the upcoming strategic planning retreat.

If you met Jake, you would think he could embrace this.  He thought so.  He has advanced education and a curious mind. But when the research began, he reverted to a bit of a control freak. Poor guy. He needed reassurance that no one was going to make him look foolish and the health of the existing organization wasn’t going to be forgotten or taken for granted.  He became very protective…. of himself, the board members, the executives, the staff, the funders, and the clients.

Punch line: If you engage the services of an outside strategy professional, make sure he/she/they understand the emotional commitment it takes to be a good CEO these days.  Jake has a strong sense of stewardship.  It would be terrible if an opportunity for everyone to open up, learn, and be better prepared for the future didn’t also include compassion for how uneasy bright dedicated people become when they are out of their comfort zones.

“Get Ready To Grow” Strategic Initiative

“Get Ready to Grow Strategic Initiative”

When the leaders of a mid-sized business decide to intentionally accelerate growth, inevitably there are at least a handful of improvements needed.  Solidify gross profit.  Speed up cash flow. Fully commit to recruitment. Refine calculations related to capacity utilization. Aim marketing messages. Update performance pay and incentives.

It pays to frame these projects as a “Get Ready to Grow” strategic initiative.

The more participative the strategic initiative is the better.  That way, client services or the production department can see if/when the marketing department is ready with compelling campaigns. The sales department will be reassured to know that there is sufficient staffing to deliver on their stepped up proposals/ promises. The accounting department will be relieved when client services demonstrates a heightened understanding of what contributes to gross profit. Everyone will be more excited if they know that the results of hard work to grow the company will benefit more than just the owner. Transparency matters during one of these initiatives.

The faster a business can complete a “Get Ready to Grow” strategic initiative the better.  When the process is protracted over several months, the specific tasks (pricing, budgets, account review/planning, job descriptions, scheduling procedures, performance standards, etc.) can become tedious and boring.

It’s worth considering a “Get Ready to Grow” strategic initiative if you (as President) are even slightly reluctant to go after larger client accounts.  Don’t stay stuck there.  It is time to lead a process that creates a larger business instead of inviting your team to try and perfect the current size.

Redefine The Word “STILL” In Your Organization

The Growth Strategist

It is a $22 Mil/yr business. Some days it feels like “CONGRATULATIONS” are in order and other days “CONDOLENCES” might feel more appropriate.

Yes, they generate a net profit.  In fact, their net is exactly the industry average. And yes, most customers would still give them a reasonably good evaluation.

But, a few key people are still working ridiculously long hours.  The Controller still can’t get his arms around the budgeting process.  The Marketing Department seems to always need more money but still can’t adequately measure results. There’s been a revolving door in the sales manager role and the President still has to close the big deals. There are more and more meetings, but folks still complain about a lack of communication. Despite the investment in software and training, the customer-focused departments are still dealing with scope creep, eroded gross profit, and tight project deadline.

Did you pick up on the word “still”?  I think the word was used 7 times in the paragraph describing where things stand.

When team members use the word “STILL” … they are anything but STILL.

They are getting tired.  Their jobs are draining their energy rather than fueling their enthusiasm. For a while, dedicated people keep on running. Most folks try to do their best.  It’s unlikely that the Controller is intentionally trying to screw up the budget process over and over again. The sales managers who quit or were let go weren’t all coasting.

It’s ironic.  A company that is on a plateau involves a whole lot of activity…lots of running…lots of fires being put out.  But all of the activity can feel like running on a treadmill without losing weight or gaining muscle.  Without progress people won’t run in place forever.

Give this some thought!

Is it time for you and your management team to be STILL for a few off sight get-togethers? Strategic working sessions? Is it time to figure out what “the next level” is for your business and start creating that… instead of doing the same thing STILL with no results.

What Is The Premise Behind Your Pace? Part 2

Business growth pace

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?


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.    

[video] Various Roles for the CFO During Real Strategic Planning (Part Two)

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.                 

 

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