SII 2016

Do NOT freak out!• I have a ton to cover and I will go pretty fast

• Please take notes and ask questions

• You will have access to a portal which will have todays presentations and workbooks in addition to other resources

• I am happy to answer any of your questions, offer advice and recommend books at any time

• John@johnspence.com

Five Foundations of Effective Strategic Thinking

Business Acumen

Personal Experience

Pattern Recognition

Strategic Insight

Disciplined Execution

The Four – I’s

• Ignorance

• Inflexibility

• Indifference

• Inconsistency

How to avoid the Four I’s

• Aggressive external market focus

• Aggressive customer focus

• Keep the “Main Things” the main things

• Bullish on knowledge sharing and learning

• Teamwork is mandatory – not optional

• Passion and commitment at all levels

• Foster a healthy paranoia

• Revel in change

Most people think of:

Rivalry Among Existing

Competitors

Threat of New

Entrants

Bargaining Power of

Buyers

Threat of Substitutes

Bargaining Power of Suppliers

Effective Strategy =

Valued Differentiation x Disciplined Execution

What strategy is not…

• More, better, faster is not a strategy

• Effectiveness and efficiency are necessary… but not sufficient

• Superb execution of fundamental business processes… is expected

• Being extremely good at what you are supposed to be good at… gets you no extra credit at all

Look, what is strategy but resource allocation? When you strip away all the noise, that’s what it comes down to. Strategy means making clear-cut choices about how to compete. You cannot be everything to everybody, no matter what the size your business or how deep its pockets…

Jeffrey Immelt

You have to figure out what to say NO to.

“

”

Strategy is INTERNALas well as EXTERNAL

“Simplicity is the ultimate sophistication”

Leonardo da Vinci

Breakthrough Strategies

GE: 1- 2 or F.S.C.

Intel: memory to processors

Microsoft: installed base

Apple: chaos to elegance

Saturn: no haggling

Southwest

1 type of planePoint-to-point

Fast turnsLow fares/no frills

Friendly staff

Dell

BTOJIT

Inventory turnsLogistics vs. Technology

VOC

100,000

ELP

No Frills

Logistics

Southwest – Dell – Walmart

What is the pattern?

• Extreme Efficiency

• Minimize Costs to as close to zero as possible – w/o negative impact

• All focused on delivering specific customer value

Educated Guess Focus

Resource AllocationBold not Risky

What NOT to do

The Four Primary Practices:

1. A sharply focused, clearly communicated and well-understood vision and strategy for growth.

2. Flawless operational execution that consistently delivers the value proposition.

3. A performance-oriented culture that does not tolerate mediocrity.

4. A fast, flexible, flat organization that reduces bureaucracy and simplifies work.

From: What (really) Works by Joyce, Nohria, Roberson

The Secondary Management Practices:

• Talent = find and keep the best people

• Key leaders show commitment and enthusiasm for the business

• Embrace strategic innovation

• Master the power of partnerships

From: What (really) Works by Joyce, Nohria, Roberson

Assessing the Strategic Situation

Simplicity Complexity

Certainty Uncertainty

Knowing Forecasting

Proactive Adaptive

StrategicPlanning

Scenario Planning

What Business Planning is Not!

• Business planning does not attempt to make future decisions

• Business planning is not forecasting

• Business planning is not an attempt to blueprint the future

• Business planning is not necessarily the preparation of massive plans and reports

• Business planning is not an effort to replace good management judgment

• It is just a really good guess!!!

Why Planning Pays Off

• Asks & answers questions of importance

• Simulates the future

• Forces the setting of objectives

• Gives a framework for decisions

• Develops performance measurements

• Improves communications

Common Problems

• Putting it off

• Idea inflation

• Diluted priorities

• Vague goals

• No execution plan!!!

10 – 15%

What Inhibits Execution?National Survey of 4,000 Senior Executives

Inability to work together

Company culture

Economic climate

Holding onto the past/unwillingness to CHANGE

In other words…

• In order to succeed you need a high-performance team that embraces a strong culture of disciplined execution and accountability while being nimble, agile and adaptable to changes in the marketplace.

Some thoughts on measurement

Less is more

Results not activity

Easy/Hard

Post and review

Help not punishment

Scenario Planning

Begin with the end in mind

RISK is simply an element of

effective strategy

Quantitative & Qualitative

Take a Chance

Take A Pass

DelegateTake Your Time

HIGH P

LOW P

LOW I HIGH I

Probability

Impact

LOW P

LOW I

HIGH P

HIGH I

Trigger Points

Review of the plan?

• Twice yearly Strategic Planning Retreat – 1 to 2 days

• Monthly “quick check” meetings 2 – 3 hours

• Weekly Senior team alignment review – 1 hour or less

• Carry plan to every strategic meeting

Summary of Key Ideas

• Major elements: thinking, planning, execution, review

• Strategic thinking = study + experience + pattern recognition

• Strategy = bold bets on resource allocation

• What you say “No” to is a big part of strategy

• Planning is a process

• Analysis is critical – but it is not strategy

• More, better, faster is not a strategy

• This is not blueprinting the future

• Keep it simple, focused and extremely well communicated

• A plan for execution MUST be part of the Strategic Plan

• Alignment + support + measurement + tracking + reward/punishment

• Scenario planning = probability & impact/trigger points

Portal address

Johnspence.com/SII-2016