Surprise Chamber of Commerce On Business Planning

1. Surprise Chamber of CommerceOn Business Planning

2. Background Dick Jensen • Held executive staff positions since 1978 • Engineering, product development, marketing, sales & CEO • Founder of 4 different high technology companies • Venture, Private equity, debt • Sizes ranged from startup to over 1000 employees. • Director & Committee Chairman of Associations • Founder of WSA (Now WTIA) largest tech organization in US • International Experience (Europe/Asia/South America) • Consulting on Business & Marketing since 1999. • High Tech • Retail • Service • B to B • Distribution/Reseller

3. Planning – A Three Phase Approach

4. Why Strategy First ? • It enables you to have a clear vision • Vision provides the Key elements of any decision path • Vision includes: • The Business Your In and its future • How your organization is structured • How decisions are made • It provides the background of opportunities & threats • Opportunities stem from changing conditions • Environment, Technology, Government, Demographics, etc. • Threats are really missed opportunities

5. How to get started • Gather information • Markets, Competition, Use of Technology, Government • Sources • Most important (Your experience & knowledge) • You and employees know far more then you believe. • Trade Magazines • News Sources • Set aside the time and place • Preferably off-site • It takes more than one day! • Hire a facilitator if possible

6. First Things First • Ensure you stay within the scale of your company. • Startup • Small Company • Lifestyle • Growth • Growth Company • IPO Candidate Company • Public Company

7. Start with Vision • Can you describe your VISION • Seeing Clearly comes from reducing the clutter. • The everyday environment reduces our ability to see clearly. • Generally speaking – The higher we climb the further we can see. • Strategic Planning in business is really in the “Art of the long view”

8. What is Strategy ? • LUST • Logic , how are you to gain an ….. • Unfair advantage in the pursuit of ….. • Success and the ….. • Tactics employed to achieve the how! • A process upon which you endeavor to establish a path to set and achieve goals and objectives.

9. Hierarchy of Planning Terms Methodology of Achieving Objectives Measurable Milestones Desired Outcome Methodology for setting and achieving goals

10. Resource Time Behavior Setting The Planning Domain

11. Behavior • What We Know We Know & What We Care About • The set of Forces that act upon your business environment • Government/Politics • Demographics/Social • Technology • Economics • Climate and Seasonal Behavior

12. Time - Horizon There is NO certainty in what may happen in a strategic planning horizon. A minimum period should be at least 3 years +

13. Resources • Personnel Capabilities • Experience • Education • Desire • Capitalization • Retained Earnings/Investment • Leverage/Borrowing • Equity • Facilities/Location

14. Strategic Business Planning 8 Deadly Sins ofStrategic Planning

15. Eight Deadly Sins • Goals & Objectives Define Strategy • Choosing What Should Be • Organization Centric Thinking • Control • Assuming Behavior • Under Estimating • Believing Strategy is Static • Not providing for proper execution

16. Trap ONE • Allowing Goals & Objectives to define Strategic Direction. • Without an overall strategy, goals and objectives will consume all resources without delivering the desired outcome. • The first strategy is defining the “Planning Domain” • The second strategy is allowing the planning to establish the vision of your strategy.

17. Trap TWO • Not Recognizing the difference • What should be done • What can be done • What Should be done is generally endemic in most organizations. • What can be done represents change and change is threatening to most.

18. VISION BUDGET MISSION GOALS TACTICS OBJECTIVES Trap THREE Organization Centric Approach Each step in the approach diminishes the choices in the following step

19. Trap FOUR • The More you manage and structure strategic thinking the less strategic you become. • Strong management/control of the process insures the process becomes a rubber stamp for the leader. • Why not just dictate blindly and save the planning process. • Using the Domain process planning provides for open communication and information sharing.

20. Trap FIVE • Failure to identify the key drivers of market behavior. • The markets behavior is driven by outside forces including culture, technology, politics, perceptions. • Identify and address the forces and clear strategies will emerge.

21. Trap SIX • Under Funding or Over Estimating Capabilities • Small Business fails because of under funding but bigger business miss major opportunities. • Fear of funding constraints causes many organizations to underestimate time and cost of initiatives. • Driving this fear is a bigger fear. The fear of over estimating the resulting gains.

22. Trap SEVEN • Strategy is Static • Strategies must accommodate possible change as predicted behaviors and time reveal their truths. • All products and processes go through learning curves, market curves, acceptance curves and manufacturing curves and J-Curves. Are you on the curve? The “J” Curve

23. Trap EIGHT • Assuming proper execution will automatically follow strategy. • You must carefully craft an Operating Plan that outlines the responsibilities & assignments and carefully disseminate it to create the necessary actions that will bring the vision to reality. • Time is an element that magnifies the creative tension between vision and results. • The more time, the more tension!

24. Providing a Clear Vision • Fully Explore each Force affecting the business • Government/Politics • Demographics/Social • Technology • Economics • Climate and Seasonal Behavior • Competitive Environment • Take your Time – It provides the essential Background • Rank the relative influence (1-10) • Why the ranking?

25. Scenario Development • Scenarios are stories of possible outcomes: • As a group – develop different stories as to how the market will evolve considering the influences of the forces you discussed. (Develop at least 3 scenarios) • Provide a NAME for each Scenario – • ie Automation World • Develop indicators/measures/metrics for each scenario that will provide assurance the scenario is happening. • ie Widget Market growth increases greater than ….. • Decide on the most likely scenario – • What are the indicators/measures /metrics that will validate the assumptive scenario. • This provides the background for completing a plan

26. Measure Your Environment • Is your scenario choice/direction in play? • Economy • Technology • Demographics • Government • Competitive Field • Remember, Strategy is NOT STATIC • It may need adjusted from time to time

27. Capabilities Assessment • With a chosen scenario established – • Choose how you fit into the outcome! • In order to fit, what do you currently have as assets: • Personnel • Skills • Leadership • Market Presence • Resources • Capital • Manufacturing/Equipment/Office/Geographic Presence • Brand/Awareness/Positioning

28. Market Presence Must Defend Position Market Influencer Should Directly Attack Leader Must use flanking Strategy Become a Guerrilla

29. Chart A Course • Current Position • Resources • Market • Time • New Position • Resources Required • Market Penetration • Time • Strategies to Affect the Change • Objectives • Measures

30. Conclusion • You wouldn’t fly an airplane in clouds without the instruments needed to provide direction, control and vision. • Why run your business without business instruments. • Without a strategy, a sailboat will eventually reach land …… somewhere. • A strategy leverages the elements need to arrive at a planned destination

31. Results • Time invested in strategic planning provides better ROI’s than most investments. • Outside facilitation of the processes helps avoid organization centric conclusions. • A clear strategy leads to better operational decisions, lower costs and improved top line.

32. Thank You Next Month – Creating an Operating PlanQuestions? Dick Jensenwww.StrategicOutlooks.com