The Strategic Plan

1. The Strategic Plan A review of the eight strategies common to all organizations against factors in the changing external environment

2. Course Deliverables Day 1 Produce a Situation Analysis Day 2 Produce a Strategic Plan Day 3 Produce a Business Plan Introduction

3. Results: Strategic Plan Content Introduction • The Fact Gathering Process • Major External Factors • Stakeholder Expectations • Organizational Performance • Description of Current Strategies and Strategy Configuration • Facts • The Situation • Analysis 2. Analysis Issue Development • The Analysis Process • Likely Impact of Major Factors • A Ranking of Major Factors & Expectations • Possible Responses & Rationale • A Description of Changes, if any, to Strategy • An Explanation of the Rationale for Change • Impact on the Organization (Timing and Degree) • Major Risk Factors / Assumptions • Financial Implications • Long Term Hoped for Impact 3. Strategy The Change Agenda

4. Steps 5 – 8: Strategic Planning Introduction 1. Choice of Planning Process: Should we be doing strategic planning or business planning? Day One: Situation Analysis 2. Scoping Expectations: Have we assessed the expectations for strategic planning? 3. Internal Assessment: Do we truly understand the what’s, how’s and why’s of our current strategy? 4. External Assessment: What factors in the external environment must we truly understand? 5. The Situation Analysis Review: Do we have enough understanding to support informed decisions? Day Two: Strategic Planning 6. Issue Development: Are we able to connect external factors to the strategy framework? 7. Strategic Issue Identification: Are we able to develop scenarios to identify possible strategic issues? 8. Strategic Plan Communication: Have we described the likely “what” and “when” impact of change? 9. Strategic Plan Review: Do we understand the strategic plan and how it is likely to impact us? Day Three: Business Planning 10. Expectations Impact: Can we identify theimpact of strategic plan expectations on functional activities? 11. Expectations Testing: Are the strategic plan expectations consistent with competitive reality ? 12. Strategy Implementation: How are new expectations (if any) to be integrated with ongoing responsibilities?

5. What SWOT can & can’t tell us Under Tarion’s Control – What is the situation inside Tarion?       Not Under Tarion’s Control – What has changed in the External Environment?

6. Fact vs. Fiction Belief Tarion is controlled by the builders Fact Builders only control the nomination process and 8 of 15 seats on the board. Belief Tarion’s responsibilities as a regulator and warranty vendor conflict Fact The KPMG study found the unique combination of responsibilities a significant success factor. BeliefAll builders pay the same registration fee Fact The builder registration fee is only one aspect of licensing. Belief The private sector warranty vendors could provide better warranties cheaper Fact The KPMG study found no evidence to support this Belief Tarion has a monopoly on new home warranty insurance Fact All new homes must carry the Tarion warranty as the minimum warranty – not the only warranty Belief New home building industry standards in Ontario need to be improved Fact New home industry standards are the highest of any jurisdiction. Belief BC has put into place a new home warranty program structure that Ontario should adopt Fact The BC program is unproven and the BC market for is a fraction of the size of the Ontario market. Beilef Tarion could easily extend its regulatory and warranty coverage to the renovation industry Fact The renovation industry is fundamentally different from the new home building industry

7. Stakeholder Identification Understand the Appetite for Change Step 5 The major Tarion stakeholders and their role in the strategic planning process

8. ONHWP Act Consumer Protection Model Understand Internal Assessment Findings Step 5 Consumer Protection Risks to Consumer Builder Risk Assuring Builder Ability to Perform Insuring Builder Failure to Perform Regulatory Protection Mandatory Builder Registration & Minimum Standards of Acceptable Builder Performance Financial Compensation No-fault Consumer Warranty Coverage & Simplified Consumer Claims Process Delivered by a not-for-profit industry stakeholder controlled corporation & completely self-funded from fee income Accountable to Ministry (MOU) Accountable to Industry Stakeholders Accountable to Corporate Law

9. Understand Internal Assessment Findings Step 5

10. Understand Internal Assessment Findings Step 5 Source: Seeingstrategy.com

11. Management Activities Analysis Understand Internal Assessment Findings Step 5

12. Management Activities Conclusions Understand Internal Assessment Findings Step 5

13. Industry Analysis (as Warranty Co.) Understand External Assessment Findings Step 5

14. Competitor Analysis (as Warranty Co.) Understand External Assessment Findings Step 5

15. Customer Analysis as Warranty Co. Understand External Assessment Findings Step 5

16. External Factors Identified Understand External Assessment Findings Step 5

17. Nominal Group Factors Ranking Exercise Goal To demonstrate Nominal Group Technique Step 5

18. Factors Scoring Exercise Step 5

19. Cross Impact Analysis Theory Step 5 0 = none 1 = weak 2 = medium 3 = strong sum of row = ∑ni sum of column = ∑nj product = ∑ni ● ∑nj quotient = ∑ni / ∑nj See T.J. Gordon and H. Hayward Initial Experiments with the cross- impact matrix method of forecasting Futures 1, 100 -116 (1968)

20. X-Impact Analysis Calculations Theory Step 5 Active = Q > 1.0 Critical = P > (n-1)2 Reactive = Q < 1.0 Inert = P < (n-1)2 • Technology • Q = 2.0 • P = 128 > • Case Law • Q = 0.4 • P = 60 > • Best Practices • Q = 0.4 • P = 144 > • Builder Expectations • Q = 1.6 • P = 273 > • Act & Regulations • Q = 1.4 • P = 176 > • Consumer Expectations • Q = 1.0 • P = 420 > • 12. BRRAG Report • Q = 0 • P = 0 < • BC New Home Warranty • Q = 6.0 • P = 6 < • Insurance Industry Prac • Q = 4.0 • P = 24 < • 15. Financial Regulatory Req • Q = 2.0 • P = 2 < • Construction Technology • Q = 1.0 • P = 5 < 7. New Home Builder Perf Q = 0.6 P = 135 > 8. Transparency Q = 1.0 P = 121 > 9. E-Commerce Q = 0.5 P = 32 < 10. Media Q = 2.0 P = 8 > 11. Barrett Commission Q = 0 P = 0 <

21. Plotting the Results Critical strong influencer / strongly influenced 1Technology 2 Case Law 3 Best Practices 4Builder Expectations 5 Act & Regulations 6Consumer Expectations 7 New Home Builder Performance 8Transparency 9 E-Commerce 10 Media 11 Barrett Commission 12 BRRAG 13 BC New Home Warranty 14 Insurance Industry Practices 15 Financial Regulatory Requirements 16 Construction Technology 425 400 375 350 325 300 275 250 225 200 175 150 125 100 75 50 25 0 6 4 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 1 2 3 4 5 6 7 8 Active strong influencer / weakly influenced Reactive weak influencer strongly influenced 5 3 7 1 8 2 9 10 14 13 15 16 11 12 Inert weak influencer / weakly influenced

22. Factors Risk Assessment - Technology - Best-Practices - E-Commerce - Case Law - Consumer Expectations - Builder Expectations - Transparency high - Construction Technology Probability - Finance Regulatory Requirements - Insurance Industry Practices - BC New Home Warranty Collapse - The Media - The Act & Regs - New Home Builder Performance - BRRAG Report - Barrett Commission medium low low medium consequence high Impact Theory Step 5

23. Step 6 Objectives 6. Issue Development: Are we able to connect external factors to the strategy framework? Step 6 Prepare Statement of Strategy & Impact Conduct Scenario Analysis Convert Factors to Strategy Issues Review the Situation Analysis Select an Identified Factor Understand the Appetite for Change Connect the Factor to One of the 8 Strategies Understand Internal Assessment Findings Answer the Strategy Change Question Understand External Assessment Findings

24. Current Strategy Configuration

25. Strategic Issue Definition A question about strategy The two strategy questions: 1. Do we improve existing strategy ? or 2. Do we replace existing strategy with a new strategy ?

26. The CEO Aligns the 8 Strategieswith Major Stakeholder Expectations and Competitive Reality Mandate Bus Definition Production/ Service Delivery Marketing / Communi- cations Growth Risk Org Tech Finance Changes in Need / Risk Changing Trends Change in Alternatives/ Competition Changes in Demand Changed Stakeholder Expectations Industry Change Changes in Best Practices

27. All Managers Align Activities Assigned to Themto Strategic Plan Expectations (and then to competitive reality) Call Centre Customer Relations Marketing / Services Recruiting Training Budget Admin Compliance Monitoring Vice President Regional Call Centre Operations Changed Expectations

28. Alpha Sets Culture Identity Organization 8 Strategy Focus Actual Strategy Information Technology IBM Business Definition Morphing to the high margin Major Global Design Firm Stantec Growth Growth by Acquisition Canada’s Financial Risk Manager Bank of Canada Risk Managing Investor Expectations Deposit-Taking The Bank of No Surprises Bank of Montreal Financial Management One-of-a-kind design Frank Gehry Architects Organization Starchitect The Biggest Cloud Google R&D / Technology To manage all your information needs The Swooch Nike Marketing Clothing for winners Service Excellence FedEx Service Delivery 24 Hour Delivery

29. Strategy Focus (Public / NFP) Entity The 8 Strategies Mandate Toronto Police Services Risk Ontario Financing Authority Financial Management Stratford Theatre Company Organization Management National Research Council R&D / Technology CICA Marketing / Communications Nova Scotia Government Service Delivery

30. Drafting the Issue Theory Step 6

31. Issues: Connecting Factors to Strategy Exercise: To connect an External Factor to one of the 8 Strategies Step 6

32. 7 Ways to Avoid Action 1. For every proposal, point out every possible problem. 2. Ask detailed questions which cannot possibly be answered. 3. Profess not to have any answers while earnestly cautioning against proceeding. 4. Emphasize that the issue cannot be separated from all the other issues and therefore, cannot be resolved until all the other issues are resolved. 5. Appoint a consultant. 6. Create a committee. 7. Congratulate the issue. Discussion on it wasted 3 hours, but we are better for it. Step 6

33. Step 7 Objective 7. Strategic Issue Identification: Are we able to develop scenarios to identify possible strategic issues? Step 7 Prepare Statement of Strategy & Impact Identify Strategic Issues Convert Factors to Strategy Issues Review the Situation Analysis Develop Scenarios to Assess Strategy Issues Select an Identified Factor Understand the Appetite for Change Draft Competing Strategic Issues Connect the Factor to One of the 8 Strategies Understand Internal Assessment Findings Answer the Strategy Change Question Answer the Strategy Change Question Understand External Assessment Findings

34. Strategy Scenario Development Develop Scenarios to Assess Strategy Issues Step 7 1. In the lower left, describe how we look today because of the strategy we are using 2. In the upper right, identify an organization that is the best example of what we could look like if we successfully implemented the strategy and it became our Dominant Strategy. Current Strategy Changed Who is closest to what we do, represents a great example of what we could look like if this strategy became our dominant strategy? External Factor Addressed External Factor not Addressed What organization would an outsider think we look like because of our present strategy? Current Strategy not Changed

35. Strategy Scenario Development Example Step 7 Change EB Marketing Strategy - A highly focused retailer Customer Factor not Addressed Customer Factor Addressed - A retailer in trouble No Change in EB Marketing Strategy

36. Strategic Issue Development Exercise Step 7 Redrafted Strategic Issue: Should we change our present strategy which has characterized us as to a strategy which will change our image to and, by , deliver ?

37. Step 8 Objectives 8. Strategic Plan Communication: Have we described the likely “what” and “when” impact of change? Step 8 Prepare Statement of Strategy & Impact Identify Strategic Issues Convert Factors to Strategy Issues Review the Situation Analysis Frame Strategies as SMART Objectives Develop Scenarios to Assess Strategy Issues Select an Identified Factor Understand the Appetite for Change Identify Strategic Assumption Draft Competing Strategic Issues Connect the Factor to One of the 8 Strategies Understand Internal Assessment Findings Communicating the Strategic Plan Select the Strategic Issue Answer the Strategy Change Question Understand External Assessment Findings

38. Strategy or Objective Frame Strategies as SMART Objectives Step 8 English Bay Business Definition Strategy (Objective): To become (return to being) a niche retailer with 80% of profitability coming from well-defined EB customers within the next 2 years

39. Tarion Strategies (Objectives) Frame Strategies as SMART Objectives Step 8

40. Strategic Assumption Identification Identify Strategic Assumption Step 8 Assumptions Considered conjecture on specific factors

41. Risk

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