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09/27/2011

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Páginas Amarillas

Someone who feels passionately about the value of strategy formulation and execution in driving higher levels of organizational performance success and more sustainable business

Ashton Nembhard

Sandy,
I think companies often confuse strategy with operating budgets. If I were to define strategy it would be the actions required to change the company’s business model to meet its governing financial objection – e.g. annual total shareholder return or targeted business value increase.
Strategy starts with defining a company’s business model i.e.:
Where do we compete? - i.e. products, geographies or customers.
How do we compete? – i.e. offering, asset configuration or pricing.
To adequately complete the above description the business will have to conduct a fact base exercise (e.g. quantify the performance of each product line and attractiveness of the underlying market) and in the process it will uncover issues and opportunities associated with its business model. An example of an issue could be an underperforming product line that is in a profitable market. The resolution of this issue becomes the strategy (with actions and quantification) that is layered onto the base business operating budget. My approach has been to couple the strategic plan and the 5 year financial plan where the first year of the financial plan becomes the operating budget for the business thus creating the linkage between the two processes. The managers are paid their incentive based on achievement of the budget which by definition includes the strategy.
Achievement of the operating budget will require a number of tactical actions but this exercise can occur at later time.
Conducting strategic planning in this manner will take extra time in the first year but my experience with a billion $ business was that in subsequent years the process would normally take 1.5 months.
Changes to the business model which become strategies are few (maybe 2) – less is more!!!

Sandy Richardson

I couldn't agree with you more Isabel!

Isabel Romero Zabalbeascoa

Quite interesting, in this crisis enviroment most of the Clients are really focussed on short term and tactical actions, it's difficult therefore to talk about Strategy, neverthelees it's easier if we told them what strategy means: yes, we need to walk, of course but it will be interesting if we know were to go, it will be nice if we are well prepared for the road and it will be wonderfull if we know what to do when we end our walk.

We need, we are forced to keep walking but at the same time we do need to know our goals....

In my experience it's much easier to set up strategy if we can take some time to explaian that it is not need to stop the day to day business, that it is not a need to destry the pass of the company and that they can still preparing their tactical actions while preparing a Strategic plan for the coming times. Strategic planning now a days must be flexible, easy to implement and comprehensive with the context and the content of the business.

Strategic planning must set up the basis and the goals of the Business (mission, vision, usp, values) but the plans must be set in short, medium and long term, and those plans must be reviewed at least as fast as the economy, the competitors and the consumers do.

As some of the colleages wrotte: Flexibility is a must

writing jobs

So, in my opinion, strategic planning should be an ongoing thing, not an onerous "that time of year" activity, which everyone hates and yields the results you so well describe.However, until thinking is seen as a valuable business activity, strategic planning may continiue to be a casuality.... Sandy

Sandy Richardson

Hi Allen: thank you for your comments. Isn't the inconsistency in the terminology used in strategic, etc. planning frustrating? Anyway, I was talking about strategic planning. In my mind, an organization's mission will remain constant, however, everything else could be in flux - even the strategic objectives selected to help achieve the mission can change (often based on learning and the business environment). The key is to stay agile and have regular opportunities to review and adjust the plan (objectives down to tactics) as required. To me, strategic planning and business/operational planning are part of a continuum and there has to be regular opportunities to adjust the plans to keep them relevant and and useful in moving the business forward. Sandy

Sandy Richardson

Hi Dave: Thank you for your comments. I also wonder some times if avoiding strategy is a "cultural" thing in that we are rewarded for taking action and not for thinking. Just look at how hard it is to schedule time into the business day for thinking - you might get some strange looks from your peers if you said you were booking thinking time into your calendar! As we both know, thinking and then acting usually produces better results, often more efficiently. However, until thinking is seen as a valuable business activity, strategic planning may continiue to be a casuality.... Sandy

Dave

Hello Sandy, Like Allen, I don't profess to be an expert in this area as well but in my opinion you will find more business leaders that are more tactical than strategic in their approach. I don't know if this is because of human nature ("do this tactic and get this result; repeat if works) or if this is drilled in from corporate culture.

It seems that asking someone to address what they are trying to accomplish strategically is actually asking them to perform an extra step in the process of getting from A to B. But it is one of the most important steps to take and if skipped then the larger goal of the exercise (the strategic goal) can be missed.

Lastly, I think the people have put strategy into a category of "nice to have" but not necessary" in running a business today. The best combination to find (and rarest) is someone who can understand and address the need for an overall strategy and can identify the tactics to get the job done.

Thanks

Dave

Slim

Thank you. Slim
ps. Great Blog

Allen Bourne

I don't profess to be any kind of expert in this area, but it seems to me there are a few pieces missing in your otherwise excellent assessment.

Maybe you meant business planning and not strategic planning. I've always understood that the hierarchy is as follows:

- Goa - not a quantitative thing; more aspirational
- Objectives - quantifiable, measurable things you have to do to have a sustainable business and achieve the Goal
- Strategies - the "how" behind each objective that will help you achieve it, so there will be many
- Tactics - the specific actions you will take to realize each strategy

When looked at this way, the Goal remains relatively constant, Objectives shouldn't change a lot either when you're talking about what it takes to stay in business or meet investor requirements, Strategies are added or retired based on current market conditions and so may change during the year, and Tactics get added as Strategies do.

So, in my opinion, strategic planning should be an ongoing thing, not an onerous "that time of year" activity, which everyone hates and yields the results you so well describe.

Too often, in my opinion, the first two are unclear or are poorly articulated to employees

Sandy Richardson

Hi Jocelyn:
I really love your counter-arguments! They are so true and you laid it out very clearly. I am glad that strategy prevailed! Sandy

Sandy Richardson

Hi Slim:
a very interesting story! My take away is that while the plan is great and necessary, it is just a plan - the real value comes in execution (the project) where things finally get done! Sandy

Jocelyn

Great article and examination of the subject! I recently had a similar discussion with a potential client who thought that strategic planning would be:

1. a distraction
2. too time consuming
3. something that they could do once they reached a certain point

I countered:

1. Strategic planning will take some time and energy, but you will be able to continue your day to day business during the process...it is flexible.

2. Not having a plan, goals and clear direction and wasting time trying to figure those out on the fly will be more time consuming.

3. You need to plan BEFORE you get there...

A nice discussion followed and strategic planning prevailed!

Slim

Sandy,

Quite by coincidence, when a member of a Chamber of Commerce Economic Development Committee, Strategy became a dirty word when the focus was shifted from project to plan.

This inspired the monograph China: The economy and a word beginning with the letter P.

http://slimviews.blogspot.com/2011/06/china-economy-and-word-beginning-with.html

Regards,

Slim

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