effective strategic planning

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Strategic PlanningStrategic Planning

Stuart Hazell PhD MASM GAICD

Fusidium Pty Ltd

Fusidium

Strategic PlanningStrategic Planning

The Chairman will be coming on the first day to provide a few words of inspiration.We have hired a good facilitator and this will be a fun weekend that will show us the way forward for the next year.After the weekend we have a week to write up a document for the Board meeting.

We’re all going away for a weekend to the Sunshine Coast to do our strategic plan.

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Strategic GroanStrategic Groan

• Love fest• Glossy document full of self-serving

motherhood statements• Ends up in the bottom drawer

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Is Is Strategic PlanningStrategic Planning

important?important?

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Is Is EffectiveEffective Strategic PlanningStrategic Planning

important?important?

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Panbio’s PerformancePanbio’s Performance2002 - 20072002 - 2007

Earnings Profile

-$5,000-$4,000-$3,000-$2,000-$1,000

$0$1,000$2,000$3,000

Financial Year

EBIT

(A$

x1,0

00)

EBIT

EBIT before HA

2002 2003 2004 2005 2006 2007

Earnings Profile

-$5,000-$4,000-$3,000-$2,000-$1,000

$0$1,000$2,000$3,000

Financial Year

EBIT

(A$

x1,0

00)

EBIT

EBIT before HA

2002 2003 2004 2005 2006 2007

Earnings Profile

-$5,000-$4,000-$3,000-$2,000-$1,000

$0$1,000$2,000$3,000

Financial Year

EBIT

(A$

x1,0

00)

EBIT

EBIT before HA

2002 2003 2004 2005 2006 2007

Earnings Profile

-$5,000-$4,000-$3,000-$2,000-$1,000

$0$1,000$2,000$3,000

Financial Year

EBIT

(A$

x1,0

00)

EBIT

EBIT before HA

2002 2003 2004 2005 2006 2007

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If If Strategic PlanningStrategic Planning is so is so important why is it done so important why is it done so

badly?badly?

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OverviewOverview

• Vision• Mission• The Strategic Plan• Operational Plans• Staff Action and Development Plans

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VisionVision

“We shall not flag or fail. We shall go on to the end. We shall fight in France. We shall fight on the seas and oceans. We shall fight with growing strength in the air. We shall defend our island, whatever the cost may be. We shall fight on the beaches. We shall fight on the landing grounds. We shall fight in the fields and in the streets. We shall fight in the hills. We shall never surrender.”

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MissionMission

"I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth."

Robert F Kennedy

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MissionMission

Landing a man on the moon and returning him safely to the Earth.

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Strategic PlanStrategic PlanThe Vision and the Mission frame the Strategic Planning process; however, the outcome of the Strategic Planning may change the

Vision and Mission.

Strategic Planning is hard work, which only pays off when you get it right.

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Developing a Strategic PlanDeveloping a Strategic Plan

• A Strategic Plan is an Outward Looking Document

• Linked to those who will determine your success – your Strategic Partners

Note: your Strategic Partner may not be on your side!

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Strategic PlanStrategic Plan

• Long horizon• On the desktop with total buy-in• Measured and reported on• Reviewed regularly• Linked down to operational plans

• Realistic and grounded in research

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• Know your industry and where it is going• Know your business and where it wants to go

SWOT• Spend some money• Don’t reinforce your bias and blind spots• Don’t believe your own PR• Talk to at least 3 authoritative persons for each internal opinion• Break the circle• The strongest voice is not always right

Where do you fit Barriers to entry and cost of entry

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Customers Staff Shareholders Suppliers Tax office Financial institution

Regulators Distributors Key opinion leaders Competitors Potential acquirer (M&A) Granting body

•Who Determines Your Success (Strategic Partner)

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Strategic Partner StrategyStrategic Partner Strategy

Distributor

Company

Profit

Product trainingValue for customers

Reliable supply

Marketing support

Technical support

Trading termsExclusivity

Price

Profit

Forecasts

Market intelligence

Improved sales of slow moving lines

New product ideas Revenue growth Trading terms

Price

Stock levels

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Distributor Strategic Issue being Addressed

Strategy

Pricing Revise pricing matrix to encourage and facilitate

Marketing and Sales training

Increase provision for product and sales training

To increase sales of slow moving product lines

Product range Increase product range to complement fast moving products

Revenue potential Use sales promotion incentives to drive stocking of pipeline

To increase the level of stock held by distributor

Trading terms Direct trading terms to encourage and facilitate

Exclusivity Offer first to launch rights To drive new product ideas from distributor Revenue potential Provided extended discount from

list price to idea generator


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Strategic PlanStrategic Plan

Remember, not doing something or stopping an activity can be as an important outcome as

planning a new action.

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Biotech Start-up Strategic PlanBiotech Start-up Strategic Plan

Customers Staff Shareholders Suppliers Tax office Financial institution Angel investors

Regulators Distributors Key opinion leaders Competitors Potential acquirer/IPO investors Granting body VC fund

•Who Determines Your Success (Strategic Partner)

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Biotech Start-up Strategic PlanBiotech Start-up Strategic Plan

•Who Determines Your Success (Strategic Partner) Customers Staff Shareholders Suppliers Tax office Financial institution Angel investors

Regulators Distributors Key opinion leaders Competitors Potential acquirer/IPO investors Granting body VC fund

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Angel Investor

Company

Profit

Exit StrategyUnderstand the Business Plan - Who, What & When

Be involved

Profit

Management support

Funding

Business development and succession strategy

Access to Networks


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• When you have the Strategic Plan, set: Targets and timelines Accountability KPIs Review framework

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Process So FarProcess So Far

• Vision – Framed by the Board and developed by the CEO (may take weeks, months or years)

• Mission – Defined from and by the Vision. Developed by the CEO and Executive Team and approved by the Board (weeks or months)

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Process So FarProcess So Far

• Strategic Plan – Driven from the Vision and Mission. Grounded in real work and solid intelligence. Developed by the CEO and Executive Team and approved by the Board (months).

• The Strategic Plan may redefine the Vision and Mission.

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When you have a Strategic PlanWhen you have a Strategic Plan

Push it down

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Operational PlansOperational Plans

• The operational plan is in essence the actions that will improve the efficiency and performance of the business internally while serving the strategic objectives of the organisation.

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• Inward looking• Realistic and grounded• Competence based• Short horizon• On the desk top with total buy-in• Measured and reported on weekly and monthly• Reviewed regularly• Linked to individual goals of team members

• Must be linked to Strategic Plan

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Critical Element Action Pricing Consolidate pricing to a common base.

Establish volume and value criteria for direct customers to enable the Sales Dept. the authority to negotiate pricing based on volume.

Introduce annual pricing review Forecasting Revise forecast monthly & report accuracy.

Include Sales, Operations & Planning meeting into forecasting procedure. Prioritise forecasting requirements by product. Develop accuracy targets that ensure sufficient stock to meet order fill rate

targets, while keeping inventory level acceptable.

Elements of a Marketing Operational Plan

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Individual Goals and Employee DevelopmentIndividual Goals and Employee Development

• Short horizon• Measure, review and report regularly (6 monthly

cycle)• Critically assess competence• Link training needs to company objectives first,

but look to personal development and succession planning also

• Ensure staff understand linkage to their actions to overall vision and mission

• Individual goals linked to Operational Plan

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Performance LinkagePerformance LinkageVision

Mission

Strategic Plan

Unit Operational Plan Unit Operational Plan

Individual Performance Goals Individual Performance Goals

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The Fish Rots from the HeadThe Fish Rots from the Head

• The CEO is accountable to the Board and Shareholders for the success or failure of any venture.

• The CEO must lead.• The CEO should be the champion of the

Strategic Planning process.• If members of the Executive Team are not

onboard, they’re not onboard.

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Recommended ReadingRecommended Reading

• Good to Great – Jim Collins (Harper Business)• Strategic Factors – Graham Kenny (President Press)• Monash: The Outsider Who Won a War –

Roland Perry (Random House)