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