Strategy Simplified How to incorporate strategy into your business
Nov 01, 2014
Strategy Simplified
How to incorporate strategy into your business
Overview
• Laying the groundwork• Characteristics of a strong plan• The Strategy Map• The Balanced Scorecard• Bridging the gaps• Managing your strategy• Potential pitfalls• Next steps
Laying the Groundwork
• Why is research important?• External research– State of market demand– Competitive Forces
• Internal research– Current state capabilities– SWOT analysis
Characteristics of a Strong Plan
Strategic business plan must:• Have a strong financial model• Meet market demands• Identify key success factors• Align the organization• Be clearly communicated
The Strategy Map
The Strategy Map
• Ensures the plan is comprehensive• Defines the strategy’s key objectives• Map captures the plan in one simple
document• Provides the Foundation for the Balanced
Scorecard
The Strategy Map
The Map ensures the plan is comprehensive
Result Objectives• Financial: The ultimate results of the strategy• Customer: The value the customer receives
Driver Objectives• Process: The activities that create the value•Learning and Growth: How people, technologyand organizational structure support the strategy
The Strategy Map
Defines the strategy’s key measurable objectives within each perspective
Financial: Increase GM%, Reduce SGA%, Improve EBITDA
Customer: Service Oriented, Consistent Quality, Responsive
Process: Increase Proposal Effectiveness, Pipeline Consultants, Improve Response Time
Learning and Growth: Improve Sales Skills, Increase Sourcing Automation
The Strategy Map
Sample Strategy Map
Financial
Customer
InternalProcesses
Learning & Growth
IncreaseGM%,
ImproveEBITDA
Reduce SGA %,
ServiceOriented High Quality Responsive
IncreaseProposal
EffectivenessPipeline
Consultants
IncreaseProspecting
Activity
Improve SalesSkills
IncreaseSourcing
Automation
Specialized
Improve Response Time
The Strategy Map
Acts as the foundation of the Balanced Scorecard• Objectives are defined within the four
perspectives (Financial, Customer, Process, Learning and Growth)
• Map ensures objectives are relevant to the strategy
The Balanced Scorecard
The Balanced Scorecard
• Balanced Scorecard is organized by the same four perspectives as the Map
• Refines the objectives by assigning measures and targets
• Defines the gaps and determines initiatives• Tracks the progress of the objective
Sample Balanced Scorecard
Strategy
Objectives Measures Targets Initiatives
Adapted from the Balanced Scorecard by Robert S. Kaplan and Dave P. Norton. Harvard Business School Press. 1996.
Financial Increase GM% GM% of NewBusiness 40% Rate Negotiations
Customer Responsive % %% RFPs %%%%%%% within 48 hours 80% Recruiting Process
Improvement
Internal BusinessProcesses
Increase ProspectingActivity
# of Monthly SalesMeetings 20 Lead Generation
Learning & Growth Automate Sourcing # of Candidates
%%%%%%% ThroughTool
150 Add Tool
Functionality
Initiatives: Bridging the Gaps
Initiatives are projects designed address performance gaps of objectives
Improve sourcingautomation
Decrease response time by 30%
Improve responsetime
Objective Gap Initiative
Initiatives: Bridging the Gaps
Good strategic initiatives should have:• Accountability at the leadership level• Milestones, along with start and end dates• Clear deliverables• Budget• Committed resource allocation
Managing the Strategy
Managing the Strategy
• Leadership team should conduct separate strategic reviews
• Operational performance is a consideration but not the driving force
• Meeting focuses on the results of the balanced scorecard and strategic initiatives
Managing the Strategy
Operational Review Meetings Strategic Review Meetings
Focus on near-term performance Focus on long term strategy
Weekly or monthly Monthly or Quarterly
Data from Operational Dashboard Data From Balanced Scorecard
Focused on detail drill-down Focus on decision making
Budget review Strategic issue review
Forecast analysis Strategic risk review
P&L review Analysis and graphs
Potential Pitfalls
• Strategy does not line up with capabilities• Poor communication and change
management• Management rolls out strategy but doesn’t
follow through• Organization becomes overly structured
Next Steps
• Document your current strategy• Read “Strategy Focused Organization”– Robert Kaplan and David Norton– Harvard Business School Press
• More Resources– http://hbr.org/– www.chartedpathllc.com