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Lecture Materials
LEADERSHIP BEYOND MANAGEMENT
Terry Saber Partner, Strategic Advisory Services
Wipfli LLP Edina, Minnesota [email protected]
952-548-3363
August 7, 2015
© Copyright 2015 - Wipfli LLP 1
www.wipfli.com
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STRATEGIC PLANNING7 Parts to the Plan
Graduate School of Banking 2015
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On the other
side of
challenges
lie great
opportunities!
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Unprecedented Times . . .
. . . Affirm or alter strategic direction!
• Market
• Customer base
• Shareholder needs and dynamics
• Employees
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Unprecedented Times!
Does Senior Management really “get” that the world has
changed?
. . . So what new / different strategies do you have at the
Bank?4
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Best Practices
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90% “Strategic Planning is very important.”
32% “We are effective at it.”
41% “We use our plan actively to guide the institution.”
ABA Survey of Best Practices in Strategic Planning
The Ultimate Challenge . . .
From where will tomorrow’s profitable growth come?
• What Markets . . .
• Which Niches within those markets . . .
• Habits of consumers . . .
• The role of Technology . . .
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2 Objectives
1. Recognize the 7 parts of a Plan and distinguish between each
2. Recognize the difference and alignment between strategic planning, profit planning and budgeting
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Key Objective
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Enhance your Bank’s strategic planning . . . or “jump-start”!
And link critical strategies tobottom-line profit
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Industry Overview
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2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
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Savings Institutions
Commercial Banks
Total Number of Institutions Reporting: 6,509Commercial Banks: 5,642
Savings Institutions: 867
Total Number of Institutions Reporting: 6,509Commercial Banks: 5,642
Savings Institutions: 867
Commercial Banks and Thrifts
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Source: State Bank Performance SummaryFourth Quarter 2014
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Wells Fargo$1.5 Trillion
10%
104 Banks
$6.1 Trillion in Assets39% of Industry Assets
Citigroup$1.3 Trillion
9%
100M-1B3,957 Institutions
8% of Industry Assets
JPMorgan Chase$2 Trillion
13%
1B-10B580 Institutions
10% of Industry Assets
Bank of America$1.6 Trillion
10%
$-
$1
$2
$3
$4
$5
$6
$7
Top 4 Banks > $10B Banks < $10B
Top 4 Banks$6.5 Trillion in Assets
42% of Industry AssetsTotal Industry Assets
$15.6 Trillion
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Data Source: FDIC Institution Directory. Active Institutions as of December 31, 2014.
Asset Distribution
0-100M1,873 Institutions
1% of Industry Assets
A Closer Look at the 99%
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Asset Size# of
Institutions% of Total Number
% of Total Assets
$0-100M 1,873 29% 1%
$100M-1B 3,957 61% 8%
$1B-10B 580 9% 10%$10B> 104 1.6% 39%
Big 4 4 0.06% 42%
TOTAL 6,518 100% 100%
Data Source: FDIC Institution Directory. Active Institutions as of December 31, 2014.
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Key External Themes
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The “wave of consolidation” is expected to accelerate.
If your financial institution is going to be a survivor, how will you compete successfully?
What does that portend for strategy?
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Key External Themes
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The core business model should be examined to decide which strategies will maximize shareholder value and ensure a return on investment.
Future sustained profitability mustcome from the ability to profitably
grow revenue.
Key External Themes
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Ultimate strategic challenge: Identify the source of tomorrow’sprofitable growth.
Regulatory reform has changed the game.
At the end of the day, it’s still about the ability to manage risk within a complicated
complex web of regulation.
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Key External Themes
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A distinctive competitive advantage needs to be ensured.
Key to success: Ensure focus and prioritization.
Alignment of Capital Plan
Capital as the Umbrella
• Capital Policy
• Capital Plan
• Alignment with strategic priorities
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If we always do what we’ve always done, we will always
get what we always got.
3 Key Components
• Plan
• Process
• Implementation
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Strategic Planning Cycle
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PLANNING TEAM /PROCESSSelection
Development
STRATEGIC ASSESSMENTEnvironmental Trends
SWOTFinancial Analysis
STRATEGIC PLAN/IMPLEMENTATIONPerformance Against PlanValidity of AssumptionCorrective Action
STRATEGIC PLAN (1-3 yrs)Strategic Goals, Objectives & MeasurementsAnnual Action PlansBudgeting
STRATEGIC DIRECTIONMission
VisionGuiding Principles
STRATEGIC POSITIONING (3 yrs)Strategic Priorities
Performance Targets
Strategic Planning Team
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How “Strategic” is yours?
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Strategic Planning Team
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Size:
Typical: 8 - 15
Strategic Planning Team
Ideally:
Smartest
Creative / Innovative
Devil’s Advocate
Change Agent
Wisdom / Wise Sage24
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Timeframe for Planning
• “Rolling” 3-year Plan
• Updated annually and extended
• Impetus for annual budget and annual plan
• Departmental/location/individual work plan content: 3 years and annually
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Charting Strategic Direction
© Wipfli LLP
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Putting all the pieces together …
7 Parts of a Plan
1. SWOT
2. Vision
3. Mission / Core Values
4. Strategic Priorities
5. Goals / Strategies
6. Action Plan
7. Financial Measures
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“In order to get
where we want to
be . . . We have to
know where
we’re starting
from.”
Part 1: SWOT
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1.
2.
3.
4.
5.
6.
1.
2.
3.
4.
5.
6.
1.
2.
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6.
1.
2.
3.
4.
5.
6.
STRENGTHS
(Leverage)
WEAKNESSES
(Improve/Strengthen)
OPPORTUNITIES
(Capitalize)
THREATS
(Minimize)
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Part 2: The “Vision thing!”
Perhaps the most
critical retention
question!
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The “Vision thing!”
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So . . .
Where are we headed?
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“Picture” of the end destination at
a given point in time . . . a journey!
Vision
• 3 or 4 paragraphs
• Ultimately, belongs to the CEO
• “Paints” the picture
• Vision 2020
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Pause and Ponder
Your 4 - 5
Strategic Priorities
In 2015 to 2018
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Vision
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Decision Measuring Stick
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Part 3: Mission
Answers two questions . . .
“Why are we there?”
“What’s our purpose?”
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Part 4: Strategic Priorities
• Flow directly from the SWOT and the Vision
• “Cylinder” of the Funnel
• Typically 4 or 5
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Typical Broad Priorities
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Board Governance
Leadership & Management
Risk Management
Sales & Growth
Profitable Growth
Customer Relationships
Delivery Channels& Marketing
Employee Engagement
Productivity & Efficiency
Part 5: Goals & Strategies
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Most important,
“best” strategies to
accomplish each priority
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(Priority) ____________________
Goal #1:
Strategy 1:
Strategy 2:
Strategy 3:
Strategy 4:
Strategy 5:
Developing Action Plans
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The Key to
Implementation!
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Part 6: Action Plan
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A page for each StrategyWHAT specifically needs to be done:
. . . by WHOM
. . . by WHEN
. . . and in WHAT order!
Part 7: Financial Measures
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Key:
The numbers are not the plan!...…but they ARE a key measuring stick!
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Part 7: Financial Measures
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Discussion:
Role of Proforma and annual budget
2 distinctly different pieces!
Four Summary Questions
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1. Is strategic planning
fundamental to running a
high- performing financial
institution?
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Four Summary Questions
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2. Are tools, process and people
fundamental to plan
development?
Four Summary Questions
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3. Does your Bank’s strategic thinking result in needed change to the fundamental way in which you think about the future of your business?
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Four Summary Questions
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4. Do you have the leadership to pull it off?
Questions?
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QUESTIONS?
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Terry A. SaberPartner, Strategic Advisory Services
(952) 548-3363
www.wipfli.com
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www.wipfli.com/fi