© Management 1: The New Managers Course Strategic and Business Planning Alan Kennedy November 2013 © 2013 Alan W. Kennedy on behalf of Schulich Executive.

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Management 1:The New Manager’s Course

Strategic and Business Planning

Alan KennedyNovember 2013

© 2013 Alan W. Kennedy on behalf of Schulich Executive Education Centre (SEEC). All rights reserved.No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, recording, photocopying or otherwise, without written permission of the copyright

holder

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About the Presenter

Alan has been teaching strategy for the Schulich Executive Education Centre since 1992. His principal course is Strategic Management, a three day course on Situation Analysis, Strategic Planning, and Business Planning. In addition to being a member of the faculty for Management I, Alan also teaches in the Insurance Industry Leadership Program, a one week program for insurance industry executives. Alan is a frequent speaker on matters of strategy. Alan’s book, The Alpha Strategies – Understanding Strategy, Risk, and Values in Any Organization was published in February is now available at all online retailers and for free in pdf format at www.thealphastrategies.com

Alan is a Honor Roll member of the Canadian Association of Management Consultants. Alan received his degrees from Dalhousie University and served as Senior Vice President & General Counsel for both Oxford Development Group and Campeau Corporation and as a member of the Board of Directors for both companies.

Alan Kennedy B.A. LLB. CMC

Alan is a partner with Gibson Kennedy & Company, a Toronto consulting firm offering Canadian clients strategy counsel and competitive research services since 1990. Gibson Kennedy is the authorized correspondent in Canada for Kaiser Associates Inc., a Washington-based consultancy offering global competitive research services to North American based clients. Alan’s practice focuses exclusively on matters of strategy, risk, and capital projects planning and communication using The Alpha Strategies model he pioneered.

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The Day’s Objectives

1. how strategic planning differs from business planning

2. how stakeholder identification & expectations analysis factor in strategy decisions

3. how a business plan implements the intent of the

strategic plan

Your Issues / what do you want to learn more about?

• • • • •

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Module One

A Brief Introduction to Strategy & its History

The Issues in Strategy

Source: Robert F. Felton and Pamela Keenan Fritz, The View from the Boardroom McKinsey Quarterly 2005 Special Edition: Value and Performance

June 4, 2013

- A majority of leaders (64 percent) said the biggest frustration for managers is having too many conflicting priorities.

- Most executives (54 percent) said they do not believe that their company’s strategy will lead to success.

- Most (53 percent) could not say their strategy is understood by employees and customers.

- Only a third (33 percent) said they feel the company’s core capabilities fully support the company’s strategy.

- Only 21 percent could say all of their businesses leverage their core capabilities.

http://www.booz.com/global/home/press/display/coherence-profiler-results

“Strategy is a description of a chosen course of action”

“Our long term strategy is to be around for the long term. Our short term strategy is to not do anything that would screw-up our long term strategy”

Stanfield’s, The Underwear Company Truro, Nova Scotia

Strategy Definition

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A Competitive Researcher’s Perspective on Strategy

- 8 strategies are common to all organizations

- 1 strategy is the organization’s dominant strategy

- 3 types of strategy are common to all organizations

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8 strategies are the source of all subsequent implementation strategy

and organization design

Origin of The 8 Strategies

The 8 Strategy Definitions

Business Definition /Mandate

Focus on positioning the business / on interpreting the mandate parameters

Risk Focus on the unacceptable and ways to manage it

Growth Focus on type and rate of growth

Financial ManagementFocus on sourcing, allocation, and management of capital and revenues

R&D / Technology Focus on the creation and/or use of intellectual capital / technology

Organization Mgmt Focus on sourcing, allocation, and management of personnel

Marketing / CommunicationsFocus on identifying and capturing customers and clients (i.e marketing through to sales)

Service Delivery / Production / Manufacturing

Focus on fulfilling the marketing promise of value / relevance

The Generic Strategies

Business Definition /Mandate

Business Positioning: Niche, Specialty, CommodityMandate: Narrow Interpretation; Middle-of-the-Road; Broad Interpretation

RiskFocus: Internal; External; BothManagement: Accept, Avoid, Transfer, Mitigate

GrowthType: Internal, External (acquisitions, partnerships, alliances, joint ventures)Rate: Bigger, Smaller, No Change

Financial Management

Sourcing: Capital markets, debt, equity, self-fundingAllocation: Strategies; Business UnitsManagement: Performance; Control, Both

R&D / Technology Follower, Leader, Adapter

Organization Mgmt

Sourcing: Internal; ExternalAllocation: Employee; Contract; Outsourcing Management: Entrepreneurial; Bureaucracy; Adhocracy; Centralized, Decentralized

Marketing / Communications

Identifying: (ie. Marketing): Product / Service; Price; Place; PromotionCapturing: (ie. Sales): Targeting; Approaching; Pitching; Overcoming Objections; Closing; Follow-Up

Service Delivery / Production / Manufacturing

Delivering the Promise: Needs / Requirements; Inputs; Production; Quality; Delivery; Follow-up (Warranty)

Management 1 Course Structure

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The 8 Strategies Wednesday

Business Definition / Mandate

Risk

Growth

Financial Management Thursday

R&D / Technology

Organization Management Monday, Tuesday, Friday

Marketing / Communications Tuesday

Service Delivery / Production / Manufacturing

Understanding Current Strategy

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Module Two

How strategic planning differs from business planning

3 types of strategy are common to all organizations

Alpha is the one strategy which

leads the organization and sets its character.

e.g. Nike is Marketing

Influencers are the three strategies which most

closely guide and constrain implementation of the Alpha and the

remaining four strategies, the Enablers

Enablers are the remaining strategies

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Examples of Dominant Strategy

WalMart, Stantec, McDonald’s

IBM

Pepsi, Coca-Cola, Nike, The Bay, United Way

CHMC, Bank of Canada, RCMP, Sun Life, OTPP, CRA

Growth

Business Definition (but not Mandate)

Marketing / Communications

Risk

Organization Dominant Strategy

Toyota, FedEx, Amazon, many Hospitals, much of Government Service Delivery / Production / Manufacturing

Bank of Montreal, Ontario Financing Authority Financial Management

Google, Intel, NASA, NRC R&D / Technology

Frank Gehry Architects Organization Management

How are your strategies organized?

EnablersInfluencersAlpha

The Alphas Blackberry

Business Definition To be the global leader in wireless data communications

Risk To protect our intellectual property and to protect network security and integrity

Growth To focus on expanding our customer and subscriber base through marketing efforts, strategic alliances, and acquisitions

Financial Management To access capital markets through TSX / NASDAQ listings

Technology To focus research on broad market applications for products derived from the existing technology base.

Organization Mgmt

To use the strength of market position and value proposition to enable HR “pull” potential employees and to leverage proximity and relationship with University of Waterloo

MarketingTo encourage the adoption of our platform by wireless network service providers globally and their customers, and to focus on licensing components of the BlackBerry platform to key handset and service vendors

Manufacturing To deliver wireless data security and network reliability

Blackberry

Growth

Risk

Business Definition

Financial Management

Organization Management

R&D / TechnologyMarketing

EnablersInfluencersAlpha

Manufacturing

Blackberry

The Alphas Tarion Strategic Plan

Mandate Administration of the ONHWP Act.

Risk Use of insurance industry practices and regulatory authority to manage risks to new homebuyers

Growth Rise and fall with the new home building industry cycles

Financial Use of insurance industry capital reserving practices; revenues from fees from sale of warranties and from builder licensing

Technology Enable management productivity; e.g. call center, web-based services

Organization Regulator decisions are isolated from interference by the Board or the Insurance function

Marketing To educate new home buyers and home builders

Service Delivery To deflect risk away from the program onto builders

Growth

Risk

Mandate

Financial Management

Organization Management

R&D / Technology

Marketing

EnablersInfluencersAlpha

Service Delivery

The 8 Strategies Strategy DescriptionAlpha

InfluencerEnabler

Business Definition / Mandate

How is the organization positioned?What is the mandate?

-

RiskHow are risks identified and managed ? -

GrowthHow does the organization grow? -

FinancialHow are the finances managed? -

R&D / TechnologyWhat is the focus of R&D / Technology ? -

OrganizationWhere are people sourced; how are

responsibilities and authority delegated; what is the culture i.e. alpha?

-

Marketing / CommunicationsHow does the organization identify and capture

customers / the perception of value?-

Service Delivery / ProductionHow are products / services are produced? -

The One-Page Strategic Plan

Module Three

How stakeholder identification & expectations analysis factor in strategy decisions

The Facts that Support Strategy Decisions

Customers (Users) & Markets (Need Demand) Industry Dynamics

Competitors Trends

Best Practices

Stakeholder Expectations

Current Strategy

Stakeholder Types Actual Stakeholder Names

The Authority GroupThose Stakeholders who approve the plan and authorize implementation

The Involve GroupStakeholders who should be involved because of the role they will play in implementation

The Inform GroupStakeholders who need to be told what to do so that their actions are consistent with implementation

The Consider GroupAny Stakeholders not falling in any of the above categories and who could have a response to implementation

Stakeholder Identification

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Expectations Are Widely Used for Individual Planning

Exceeding Expectations

Meeting Expectations

Not Meeting Expectations

x

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Expectations in Public Sector Planning

Cabinet Strategy

Cabinet Implementation Expectations

Ministry StrategiesTo Satisfy Expectations

Business Plan Detail

Boeing Goal Flowdown / Expectations Process

See: http://baldrige.nist.gov/PDF_files/Boeing_Aerospace_Application_Summary.pdf

Canadian Military Use of Expectations Based Planning

a.k.a. ExpectationsSource:

See: http://www.mors.org/meetings/cbp/read/TP-3_CBP.pdf

The 3 Levels of Expectations

RigidClear & Rigid Expectations Set Across all 8 Strategies

Do Your Own ThingUsually only 2 or 3 Expectations Identified

Moderate Expectations not set for 3 or 4 the 8 Strategies

Which level applies to you?

The 8 StrategiesExpectations Imposed

on your function / department / business unit

Business Definition / Mandate

What is the mandate of the function / business unit / department ?

-

RiskWhat expectations are imposed by risk? -

GrowthWhat expectations are imposed by growth? -

Financial ManagementWhat expectations are imposed by financial management? -

R&D / TechnologyWhat expectations are imposed by R&D / Technology? -

Organization ManagementWhat are the expectations are imposed by Organization

Management?-

Marketing / CommunicationsWhat expectations are imposed by marketing /

communications?-

Service Delivery / ProductionWhat expectations are imposed by service delivery /

production?-

Tell us about your functional area

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Module Four

How business plans implement the intent of the strategic plan

Building the Business Plan

You have just been made the manager of a facility within your organization. Which expectations seem to be the most important achieving success

and what would be your plan to meet those expectations?

The 8 Strategies Expectations imposed on the operator

Business Definition - To offer fast food services within a hospital

Risk - To comply with all mandated health and safety policies and procedures

Growth - To grow the per capita spend

Financial

- To follow mandated reporting requirements- To achieve imposed margin expectations- To make all required remittances to the VP Finance of the hospital on time

Technology - To use mandated information systems

Organization

- To maintain a staff of 25 – 30 to be able to run the location 24/7- To develop a customer-centric team- To hire and train employees to deliver to mandated service standards- To comply with the Collective Bargaining Agreement at all times

Marketing - To follow all mandated promotions

Service Delivery

- To be a 24 / 7 operation- To follow all mandated processes for service delivery- To deliver to mandated quality standards- To offer all mandated products and services

Pros & Cons Analysis

Expectation:

Pros

Cons

Expectation:

Pros

Cons

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Building the Action Plan – a Visual

Long Term

Today

1.

2.3.

4. 6.

5.E

A

B

D

C

F G

Steps What How Who Schedule Metrics Budget

1. A to B -

2. B to C -

3. C to D -

4. D to E -

5. E to F -

6. F to G -

Short Term

Seeing the Plan as the Big Picture

Today

1.

2.3.

4. 6.

5.E

A

B

D

C

F G

Short Term

Mid Term

Long Term

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The Day’s Objectives

1. how strategic planning differs from business planning

2. how stakeholder identification & expectations analysis factor in strategy decisions

3. how a business plan implements the intent of the strategic plan