Amsterdam , NL 17 October, 2014

The Death of the Business

Plan

Birth of the Statement of Strategic Modality

Chris Catto

The Author

The Disconnect

How Does a Leader Create Value?

The Re-connect

Business Model v Business Modality

Modality of Revenue Generation

High Street Retail Modality

Changes in Organisational Design

The Collective

The Critical Mass

The Conclusion

The References

The ContentChris Catto

The Author – The ContextChris Catto

Misspent Youth – For 7 years from the age of 14 to 20 Chris trained in athletics under the guidance John Boas OA. John coached Olympic and Commonwealth games medallist and multiple Australian

Champions including Gary honey, David Culbert, Andrew Murphy. Being part of an elite training squad, Chris had exposure to high performance environments and great athletes such as Olympic Champions

Linford Christie and Cathay Freeman.

The Corporate Years - From 1997 to 2011Chris was employed by global industry leading organisation such as BBC, Ericsson, Toll and Aviva in reporting and performance management roles.

At the Coalface – In late 2010 Chris founded Putney Breeze Business Advisors and has since successfully consulted in the most dynamic Business environment (SMEs) to over 60 privately owned

enterprises on strategy and business performance improvement and Consults on Corporate Performance Management Systems Best Practice.

Director & Chief Performance Partner – Putney Breeze Business Advisors

Author of Premiership Business

The DisconnectBusiness Plan or Fanciful Treasure Map?

PESTAL

SWOT

5 Forces

BSC

Chris Catto

The Disconnect

The Construct

The Business Plan Audience

Professional Managers v Industry Experts (the consumer inside?)

What about what the customer wants?

Who deals with the customer?

Hierarchy and span of control?

Perception?

Motives?

Chris Catto

The DisconnectThe Construct

The Business Strategy

Product or Service Profile

Market overview and Promotional Plan

Management and operations

Financial Analysis and Projections

The Audience

The traditional construct of a business Plan is written for an external Audience, Shareholders and Financiers

The Construct of a business plan often fails to transition into a scheme of actions (the plan itself) with direct measurable

activity required to deliver the strategy

Corporate level strategy focuses on Alliances, Diversification and Vertical integration – Business Level Strategies focus

on Product Differentiation and Cost Leadership (Porter)

Professional Managers v Industry Experts (the consumer inside?)

Are your managers also consumers of your product, if not why not, are they the right people to be making decisions on

product quality and customer service

“A lot of the time, people don’t know what they want until you show it to them” Steve Jobs

Perceptions and motives

Deliberate strategy executed as intended v emergent strategy situational influenced by conflicting goals of decision

makers (Mintzberg)

Chris Catto

What is his View?

How much does his view matter?

Chris Catto

How does a Leader Create

value?

Facilitator of Strategic Direction, Conductor of Strategic

Action

Leaders create an environment for Individual

performance that enables collective advancement

“give your employees the leaders they want and will

follow, if you want to create an environment within your

organisation where staff can produce their most

capable efforts or as we say, they are the “heroes””

David Parkin* & Paul Bourke

*David Parkin – 4 x Premiership Coach

Australian Football League

Chris Catto

The Application

• Budgets &

Forecasts

• Performance

Appraisals

• KPIs & KRAs

• Individual Bonuses

• Salary Bands

• Gaming

The DisconnectChris Catto

Reward, Recognition and

Management Control Practices

focus on individual endeavour,

but does Solely individual focus

and control environment

enhance group performance?

As ultimately High performance

Organisations perform as a

collection of teams not a

collection of Individuals.

Chris Catto

Self Interest Collective Interest

Autonomy HighLow

Collective

Self

Interest

Choose a

company that has

lost relevance in

their chosen

market place!

The Re-connect

Industry

Leaders

Amoeba Management Philosophy

Kazuo inamori – “Management by All… The Company is divided

into small units, orientated around a unit leader, all members take part in managing the unit”

Family, Tribe, Village

Mandy Johnson “There was a lot of individual autonomy –consultants set their own goals and targets, had their own clients, did their own local marketing, paid their own bills and received a share of

the takings”

Jan Wallander’s WayDecentralisation, regional and branch autonomy, customer focus rather

than Product focus

Values Driven companyFocus on empowerment of all employees “Take whatever action they

deem necessary to meet customer needs” work practices serve to reinforce self-worth of employees

Chris Catto

Business Model v Business Modality

Natural Business State

Solid v Fluid?

Static or Moving Parts?

Chris Catto

What is the Modality of your

Industry?

What parts require:

Updating?

Maintenance?

Re-engineering?

Replacing?

Each industry has a particular tried and tested methods of revenue generation, product development, manufacturing, service delivery and customer

service.

While the fundamental principles of the business modality remain constant,

tactics for delivery are continuously improved, challenged, refined and

enhanced with the introduction of new

technology and change in social norms

Chris Catto

Modality of Revenue Generation

B2B Volume Transactions

Products

Chocolate Bar

Infrastructure Engineering

Projects

Motor Vehicle

Complexityinterchangeable

with Volume

Price

Discretionary

Non -Discretionary

Decision Making - High Requirement

for Trust, Personal

Relationship, History,

Explanation, Analysis, High

Risk,

Life Time Value

White Goods

DesignerFurniture

House

FamilyHoliday

Commercial Aircraft

Groceries

Ships

Decision Making - Low Requirement

for Trust, Personal

Relationship, History,

Explanation, Analysis, Risk

Exposure

Professional Services

iPadVolume

interchangeable with Complexity

Business Travel

Professional Short Course

Education

High Personal Selling

Low Personal Selling

The nature of your product in terms of price, life-time

value, complexity and volume will predetermine

the buying behaviour of your market place, influencing the mix of skills and techniques required in your Sales and

Marketing model.

Craftsmanship is unavoidable, what are the skills and techniques your business needs to hone?

Pg. 81 Premiership Business, C Catto

Chris Catto

High Street Retail Modality

Chris Catto

Price

Complexity

Life time Value

Volume

Low Medium High

Meal Family Holiday Home Loan

Low

Low

High

Medium

Medium

Medium

High

High

Low

McDonalds – Discretionary spend - low personal selling, low complexity, high volume product , high reliance on marketing advertising.

Flight Centre - Medium level, annual/bi-annual spend, reliance on personal selling, matching product availability to customer needs at the right price. Reliance on Personal selling, complemented with advertising

Handelsbanken – High, infrequent spend, high personal selling and relationship based referrals supported by localised Marketing

What is the Modality of your

Industry?

The modality of your industry will determine the skills required and influence the design of your organisation.

The example provided for Sales and Marketing can extended define specific requirements in operations, Production, service delivery, inventory management, Procurement, Supply chain, Risk and Cash flow management.

The Specific requirements in your industry influence the design of your organisation.

Capacity requirements influence stages of Redesign

Chris Catto

Changes in Organisational Design is in step with

Modality of your Industry and Changes in

Capacity Requirements

Chris Catto

Cash

Revenue

Time

Capacity Limitations

Change in Organisational Design

Reinvestment in Assets or Staff

Premiership Business 1 Day Workshop Content

Is your Industry Modality

Changing? When does the Modality Die? When the vehicle for servicing the “need” changes

If the Need no longer exists, Then The need you were servicing was a fad!

How often has your

Modality been reinvented

or even completely

substituted across

History?

Chris Catto

The Collective

The Artisans of the 21stCentury

Individuals form Teams within the Business Modality – Modality is formed of natural overlapping components.

Teams have collective Skill sets that complement the Modality Components.

Modality Components include: Sales, Marketing, Product development, engineering, manufacturing, Logistics, service delivery, Administrative Support

Leaders within the teams are self determined by combination of skill Mastery and as the facilitators of Collaboration. Ultimately Leaders act as natural catalyst for problem solving.

Chris Catto

The Collective

McGregor: Theory X Theory Y

Maslow: Hierarchy of

Needs

Argyris: Theories of

Action, double loop

learning

Organisational Performance is a function of Environment

The Collective Mastery of skill in a favourable Human Environment

Principle for individual Performance is mirrored

Mastery of required skill placed in a favourable human Environment

Chris Catto

“Individual mastery is the only viable problem-solving mechanism in complexity” Niels Pflaeging

The Critical massEach business has a

tipping point

A critical mass

required to;

first - to break inertia

Second - to

continuously service

the critical mass to

maintain momentum

The momentum in

business is

represented by the

Flow of sustainable

Cash

The Implication for

Organisational design

is to align the collective

skills with the Business

modality;

That generates the

cash flow momentum;

That exceeds the

Sustainable Business

tipping point

Chris Catto

The Critical mass

Just as seasonal rains bring life to the

living environment

The Focus of Organisation Design is to

maintain momentum of Cyclical

*Self improvement

*Advancement of Collective knowledge

*Innovation

*Product Development

*Infrastructure reinvestment

*Positive Market Engagement

The Rain that maintains the momentum

of the water wheel

The Conclusion

The Business Plan as we know it is as useful

as a message in a bottle

• Designed for Wrong Audience

• Insular,

• hopeful,

• A Limited communication Medium

• Practically direction less,

• beholden to the currents that surround it

Chris Catto

Alternative:

Strategic Modality Statement

1) Define the Goals and destination of

the Organisation

2)Understand the Modality that services

the core Market need

3) Align the Collective

4) Recognise change and Sustain

Critical mass

Implications for Organisational Design

The Artisan OrganisationDesigned around Teams of Skill and

mastery optimised in a favourable

Human Environment

The References

Niels Pflaeging, Organize for Complexity – How to get life back into work and build the high performance organization, BetaCodex Publishing, New York, 2014

David Parkin & Paul Bourke, Captain – Coach Leadership – Performance Strategies from Professional Sport, Integro Systems Pty Ltd, Melbourne, 2011

Mandy Johnson, Katrina Beikoff, Family Village Tribe – The evolution of Flight Centre, William Heinemann Australia, 2013

Kazuo Inamori, Amoeba Management – The Dynamic Management System for Rapid Market Response, CRC Press, Boca Raton, FL 1999

John Milliman, Jeffery Ferguson, David Trickett, Bruce Condemi, Spirit and Community at Southwest Airlines: An investigation of spiritual values-based model, Journal Of Organizational Change Management, Vol 12, No 3 1999, MCB University Press

R. Murray Lindsay, Theresa Libby, Svenska Handelsbanken: Accomplishing Radical Decentralisation through “Beyond Budgeting” Beyond budgeting Round Table

Douglas McGregor, The Human Side of Enterprise, McGraw-Hill, USA, 1960

Chris Argyris, Donald A. Schon, Theory in Practice – Increasing Professional Effectiveness, Jossey-Bass Publishing, San Francisco, 1974

Michael Porter, Competitive Advantage of Nations, The Free Press, New York, 1990

Henry Mintzberg, Patterns in Strategy Formulation, Management Science 24(9), 1978

M Christopher Catto. Premiership Business – The Premiership Business Equation, Createspace, Charleston USA, 2013

The AuthorChris Catto

Director & Chief Performance Partner –

Putney Breeze Business Advisors

Author of Premiership Business

For more information, strategic facilitation or Speaking engagements contact

info@putneybreeze.com.au

Amsterdam 17 October, 2014

The Death of the Business

Plan

Birth of the Statement of Strategic Modality

Chris Catto