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Strategic Thinking & Planning SII 2014

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Strategic Thinking / Planning lecture from John Spence

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Page 1: SII  SIFMA Wharton 2014

Strategic Thinking & Planning

SII 2014

Page 2: SII  SIFMA Wharton 2014

Learning Objectives:

• Address key elements of a business plan that align your firm’s critical objectives with those of your individual’s business unit’s objectives.

• Discuss common mistakes in writing strategic business plans. • Identify guidelines on how often to review your strategy,

adjust and change or be flexible. • Provide each participant with numerous tools, ideas and skills

to apply when creating a detailed and realistic strategic business plan.

Page 3: SII  SIFMA Wharton 2014

Do NOT freak out!• I have a ton to cover and I will go pretty fast.• Please take notes and ask questions.• I will gladly send you a copy my strategic planning

workbook. • I am happy to answer any of your questions, offer

advice and recommend books at any time.• [email protected]

Page 4: SII  SIFMA Wharton 2014
Page 5: SII  SIFMA Wharton 2014

90+ since 1994

Page 6: SII  SIFMA Wharton 2014

For the past 21 years…

Page 7: SII  SIFMA Wharton 2014

“Simplicity is the ultimate sophistication” Leonardo da Vinci

Page 8: SII  SIFMA Wharton 2014

Five Foundations of Effective Strategic Thinking

Business Acumen

Personal Experience

Pattern Recognition

Strategic Insight

Disciplined Execution

Page 9: SII  SIFMA Wharton 2014

Most people think of:

Rivalry Among Existing

Competitors

Threat of New

Entrants

Bargaining Power of Buyers

Threat of Substitutes

Bargaining Power of Suppliers

Page 10: SII  SIFMA Wharton 2014

Effective Strategy =

Valued Differentiation x Execution

Page 11: SII  SIFMA Wharton 2014

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.

Page 12: SII  SIFMA Wharton 2014

The Four – I’s• Ignorance

• Inflexibility

• Indifference

• Inconsistency

Page 13: SII  SIFMA Wharton 2014

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.

• Passion and commitment at all levels.

• Foster a healthy paranoia.

• Revel in change.

Page 14: SII  SIFMA Wharton 2014

From the CEO of a little 241 billion dollar company…

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.

Page 15: SII  SIFMA Wharton 2014

Strategy is INTERNALas well as EXTERNAL

Page 16: SII  SIFMA Wharton 2014

Breakthrough Strategies

GE: 1- 2 or F.S.C. Intel: memory to processors Microsoft: installed base Apple: chaos to elegance Saturn: no haggling

Page 17: SII  SIFMA Wharton 2014

Southwest

1 type of planePoint-to-point

Fast turnsLow fares / no frills

Friendly staff

Page 18: SII  SIFMA Wharton 2014

Dell

BTOJIT

Inventory turnsLogistics vs. Technology

VOC

Page 19: SII  SIFMA Wharton 2014

100,00ELP

No FrillsLogistics

Page 20: SII  SIFMA Wharton 2014

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

Page 21: SII  SIFMA Wharton 2014

Educated Guess Focus

Resource AllocationBold not Risky

What NOT to do

Page 22: SII  SIFMA Wharton 2014

What are some of the major

external / global strategies your

firm sets?

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(T + C + ECF) x DE = Success

Page 27: SII  SIFMA Wharton 2014

The Four Primary Practices:1. A sharply focused, clearly communicated and well-

understood 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

Page 28: SII  SIFMA Wharton 2014

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

Page 29: SII  SIFMA Wharton 2014

Assessing the Strategic SituationSimplicity Complexity

Certainty Uncertainty

Knowing Forecasting

Proactive Adaptive

Strategic Planning

Scenario Planning

Page 30: SII  SIFMA Wharton 2014

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.

Page 31: SII  SIFMA Wharton 2014

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.

Page 32: SII  SIFMA Wharton 2014

It is all about finding the patternsVision - Mission - Values

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Common Problems• Putting It Off• Idea inflation• Diluted priorities• Vague goals• No execution plan!!!

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10 – 15 %

Page 35: SII  SIFMA Wharton 2014

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

4. Inability to work together (21%)

3. Company culture (23%)

2. Economic climate (29%)

1. Holding onto the past / unwillingness to CHANGE (35%)

Page 36: SII  SIFMA Wharton 2014

Vision+

Values

Strategy

Commitment

Alignment

Systems Communication

Support

Adjust /Innovate

Reward /Punish

Where are we going + how will we behave on the way?

FocusDifferentiation“No”

Stakeholders + guiding collation

Vision + ValuesStrategyPlansGoals / ObjectivesTactics / Actions

Procedures / ProtocolsRepeatable ProcessClear / consistent / relentless

Training +time / money /

supplies / people

Measure / TrackCommunicate

Transparency Renewal

Praise + Celebration and

Eliminate Mediocrity

9 Steps forEnsuring

Effective Execution

Page 37: SII  SIFMA Wharton 2014

Accountability

• 100% Clarity

• Agreement

• Tracking

• Coaching

• Reward / Punishment

Page 38: SII  SIFMA Wharton 2014

Some thoughts on measurement

Less is moreResults not activityEasy / HardPost and reviewHelp not punishment

Page 39: SII  SIFMA Wharton 2014

Scenario Planning

Begin with the end in mind

Page 40: SII  SIFMA Wharton 2014

RISK is simply an element of

effective strategy

Page 41: SII  SIFMA Wharton 2014

Quantitative & Qualitative

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Take a Chance Take A Pass

Delegate Take Your Time

HIGH P

LOW P

LOW I HIGH I

Probability

Impact

LOW P

LOW I

HIGH P

HIGH I

Page 43: SII  SIFMA Wharton 2014

Trigger Points

Page 44: SII  SIFMA Wharton 2014

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

Page 45: SII  SIFMA Wharton 2014

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

Page 46: SII  SIFMA Wharton 2014

If you have any questions at all please do not hesitate to send a note or call.

My email address is: [email protected]

Please connect with me on LinkedInAlso, you might find value in the ideas I share in my blog. You can sign up for it at:

www.blog.johnspence.com

Lastly, these slides and my full strategic planning workbookhave already been uploaded to:

www.slideshare.net/johnspence