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Strategic PlanningCreates Value

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Agenda

• What is strategy?• How does it create value?• Why does it fail?• What are the critical components? • What are some good tools to use?• How can I improve our outcome?

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Strategy: What is it?

“An integrated overarching externally oriented concept of how the business will achieve its objectives.”

— Donald Hambrick/James Fredrickson

“Performing different activities from rivals’ or performing similar activities in different ways.”

— Michael Porter

“Unique and sustainable ways by which organizations create value.”— Robert Norton/David Kaplan

“How you spend your money.”— Anonymous

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The Enterprise Model (Proprietary)

BusinessProcesses

Human Capital

Knowledge/Information

Management

Organizational

Structure

Goals and Measures

Culture and Leadership

Strategy

Business Capabilities

The Market Environment

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Strategy: What it isn’t!

• A process • A SWOT analysis• A budget• Operating enhancements• Too generic..it IS a fingerprint

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Strategic Plans Create Value

• Gives purposeful direction • Identifies competitive advantage• Helps make choices in limited resource

environment• Resolves specific issues• Aligns company and business partners • Saves time: sets clear priorities and

identifies decision criteria

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Why Strategic Plans Fail

• Lack of execution. Why?– No real commitment or comfort– Not founded on good market knowledge– Not well communicated– Lack well defined objectives, accountabilities– Do not know how to change

• Focus on process, not content• Organization resources not aligned

• Too many sacred cows

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What you do?

Who you serve?

How you deliver?

How you are different?

How you transition?

How do you obtain your return?

Strategic Choices

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“Hedgehog Concept” from Good to Great by Jim Collins

What you can be best at

Whatdrives your economic

engine

What you are

passionate about

Strategic Excellence

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Competitive Map

• Determine how we perform on critical dimensions when evaluated through our customer’s eyes on key dimensions

• Graphically chart current and ideal positions on key benefits sought by customers

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Southwest Airlines Competitive Map

High other airlines

Southwest Airlinescar Low

SpeedFriendlyHub Connections

Seating Choice

LoungesMealsPrice Frequency

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Competitive Map (Proprietary)

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Value Proposition Statement

• What are the benefits that are delivered to your customer?

• How is your business differentiated and defined through your customer’s eyes?

• What are the key areas you need to deliver across the organization?

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Customer Value Proposition:Southwest Airline Example

Target Customer: Travelers on short haul routes, primarily families, willing to trade convenience for on-time, fun travel at a lower price

Benefits:1. When I fly on Southwest it takes less total travel time door-

to-door

2. When I interact with Southwest people they are more fun and sincere than what I experience on other airlines

3. When I fly Southwest I am willing to give up assigned seats and meals for a better value

Price: 25-30% below standard business rates

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Other Tools

• Communication Plan

• Dashboard Measures

• Strategic Sequencing

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Our Dashboard

Revenue

PROFIT

External Internal

Ext. Int.

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Strategic Sequencing: the building blocks of our strategy

0-18 mos. 18-36 mos. 36 mos.+

Fix BrokenProduct Lines

Add NewBusiness Lines Add New Product

Categories

• Invest in high-potential product lines

• Divest low-performing product lines

• Begin research on new products

• Introduce one new product per year that is related to core

• Begin development/ testing of new business

• Add new business that markets to same consumers, but is different adjacent category

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Improving Your Outcome

• Involve the right people• Tailor the process to work for your culture• Start with good information; look outside-in• Be clear about what you do well; develop

unique strategy that leverages strengths• Prioritize: What you don’t do is important• Strategy needs to enable your profit drivers• Communicate!• Do it!

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Every 5 years

Annual

Every 3 to 5 years

Ongoing

SCANCompetitorsCustomersCapabilities

What We Do Who We Serve

How We Deliver

How We’re Better

Mission

Vision

High Level Strategic Questions

How To Make Money

Every 5 years

Organizational Alignment

Resource Allocation Annual Initiatives

Strategy & Goals

Strategic Planning Process (Proprietary)

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Questions?

THANK YOU!

816-350-7680

mreynolds@reynolds-consulting.com