building successful business growth
DESCRIPTION
This approach is one intentional, structured and dynamic approach to designing & supporting business growth efforts. The process is described in these slides; but the WORK - of engaging and mobilizing people, groups and companies - you'll have to experience directly. Please contact us for more information... [email protected]TRANSCRIPT
CONTACT:
http://www.schafferresults.com
Business Growth
Building a Successful Growth Strategy & Track Record
contact: [email protected]/5/2011 Page 2
Implications of Organizational
Capability
Successful Growth Strategy is Built on a Firm’s Value Chain –Discovering Where Organic and Integrative Initiatives Can Add Value
Technology
Development
Product
DesignManufacturing
Marketing &
DistributionService
Rev. +_%
Earn. +_%
Rev. +_%
Earn. +_%
Impacts Growth
__ __%
ROA
_ _%
Revenue
Growth
_ _%
Earnings
Growth
+
Structure
Staff
Strategy
Skills
Systems
Style
Superordinate
Goals
Formulatio
n
of
Strategic
Objectives
Transaction
Transition ImplementationBusiness
Improvement
Monitoring & Evaluation
Organic Value Chain
M & A Value Chain
Set the Stage: Build Growth Culture: 4+2, 7S, others
Primary:
•Strategy
•Execution
•Culture
•Structure
Secondary:
•Talent
•Innovation
•Leadership
•Mergers and partnerships
4+2
Customers
(Segments,
Groups)
TIME0 mos. 12–36 mos
contact: [email protected]/5/2011 Page 3
Growth Strategy: Research by Chris Zook Yields Two Master Conclusions for Companies That Want to Grow…
1. Most sustained, profitable growth comes when a
company pushes out the boundaries of its core
business into an adjacent space
2. Companies profitably outgrow their rivals by
developing a formula for expanding those boundaries
in predictable, repeatable ways.
• Companies that have hit upon a repeatable formula show
success rates as high as 50%; some drive their rates up to 80% or
higher
• Repeatability allows the company to systematize the growth and,
by doing so, take advantage of learning-curve effects
Chris Zook, James Allen, ―Growth Outside the Core,‖ Harvard Business Review, December 2003.
contact: [email protected]/5/2011 Page 4
Repeatable Formulas Matter
The Majority of Standout Growth Companies Have One or Two Powerful,
Repeatable Formulas That Generate Successive Waves of New Growth
• Never put the core business at risk
• Never make a move unless you have a good shot at being one of the top three
players in a new space.
• Pursue only one move at a time
• The most important screen for new adjacencies is to limit the number of new
variables managed to a small number: one
These formulas are applied by leaders who approach growth strategy with
a strong sense of discipline and restraint
Typically, growth-standout companies grew three times faster than did the average company in their respective
industries, returning 22% annually to shareholders.
Chris Zook, James Allen, ―Growth Outside the Core,‖ Harvard Business Review, December 2003.
contact: [email protected]/5/2011 Page 5
Type Example
Expand Along The Value ChainA difficult adjacency move
De Beers extended its diamond business from wholesaling into retailing
Grow New Products and Services IBM moved into global services, which now constitutes 50% of the company’s revenue and pretax profits
Use New Distribution Channels
EAS made minor changes in formulation, packaging, and celebrity sponsorship of its Myoplex sports bar and moved from a niche position in specialty nutrition stores to become the leader in its category, selling to Wal-Mart
Enter New GeographiesVodafone expanded from the UK to Europe, the United States, Germany, and Japan
Address New Customer Segments… perhaps by modifying a proven product or technology
Charles Schwab expanded its advisory services for discount brokerage customers to target high-net-worth individuals
Move Into the “White Space” With a New Business Built Around a Strong Capability (the “Blue Ocean” Strategy)
American Airlines created the Sabre reservation system, a spin-off now worth more than the airline itself. Sabre, in turn, went on to create a new business adjacency of its own in the online travel agent Travelocity
Growth Into An Adjacent Market Space Can Take Place in One of Six Ways
Michael Treacy, ―Double-Digit Growth: How Great Companies Achieve It — No Matter What,‖ Portfolio, August 2003.
contact: [email protected]/5/2011 Page 6
In What Dimension/ Direction Does Your Growth Strategy Extend?
Product
Customer
Growth Driver Example
More revenues per existing customers/channels via new products
Dole• Bananas and pineapples
• Fresh fruit and vegetables
• Packaged goods: desserts, juices
• Fresh prepared (pre-cut salad)
Offering tailored to meet (new) customer segment needs
Club Med• Single party-oriented vacationers
• Family vacations
Similar offer extended to new regionsGeography
Coca-Cola• US
• Europe
• Other developed countries
• New entry in emerging markets
ChannelSimilar offer reaching customers via new medium • Theme parks
• Studio/Tour attractions
• Product licensing
• Retail
Disney• Movies
• Television
• Videos
• Cable subscription
• Hotels
contact: [email protected]/5/2011 Page 7
Current State
Where are we? How do we know? What’s our fact base?
Desired Future State
VISION & VALUES
STRATEGY & GOALS
The Need for Change:
Complications
BUSINESS PROCESSES
ORGANIZATIONAL STRUCTURE
IMPLEMENTATION
REINFORCEMENT
Source:
The Strategic Change Process: Follows a Set of Steps
contact: [email protected]/5/2011 Page 8
What Are Your Business Growth Objectives?
How will your business achieve sustainable growth in ROA, revenue and profit, without putting results in the short- to medium- time-frame at risk?
• Build core business
• Avoid contracting in existing shrinking market
• Fill/ use existing capacity
• Diversify into adjacent business offerings
• Enter new markets
Schaffer Consulting helps clients achieve growth objectives through a structured process of development:
• Define clear thinking – shared business logic, terms definition and operating-model ―languages‖
• Surface data – just the right amount – to support effective analysis and prioritization of opportunities
• Drive decision-making processes through facilitated organizational-management and workforce engagement
• Generate prioritized set of options
– Organic and internal-growth, and
– Acquisition/ partner development
• Enable effective organizational implementation, execution, and change
contact: [email protected]/5/2011 Page 9
Building An Effective Growth Strategy Means Pursuing a “Parallel Path” of Activities for Your Executive Leadership & Working Teams…
Phase 1: Initial Assessment/ Strategy Hypotheses
• Top team work, strategy outline, current state assessment, leader development
• Align the organization/ key teams through facilitated meetings and the use of common
language, tools and frameworks
• Agree conceptually about
– The likely business scenarios with which we’re working
– The areas that present the greatest growth opportunities, and
– The functions within the business most in need of investment
Phase 2: Additional Internal and External Analysis
• Evaluate (and either confirm or iterate) initial assessment/ strategy ideas using both
internal and external sources of data. Ideas to be evaluated include:
– Markets: Sizing, segmentation and competitive attractiveness
– Products: Size of the opportunity, investment required, risk assessment
– Internal investments in capability building in functional areas: determine competitive necessity and
perform a make versus buy assessment
– SWOT analyses of your organization relative to key competitors in each product area
– ―Fit‖ between your organization’s
described strengths and desirable opportunities
– Team engagement re: findings …On a Rapid Cycle
contact: [email protected]/5/2011 Page 10
Building An Effective Growth Strategy Means Pursuing a “Parallel Path” … On a Rapid Cycle (continued)
Phase 3: Summarize Information, Identify and Prioritize Opportunities, and Develop Strategic Plan
• Establish option evaluation criteria for both internal investment and targeted acquisitions
• Prioritize opportunities and make trade-offs: (You can make the organization do anything management wants--but you do need to make wise investment choices from among universe of desirable possibilities)
– Use facilitated organizational alignment meetings, data/ analyses to support
• Identify next steps for all groups of opportunities & key work teams
• Refine & update strategy outline based on learning
Phase 4: Execute Plan
• Implement initial internal growth initiatives
• Capture learning/ evaluate org capability development
• Acquire initial acquisition targets, complete deals and integrate
• Achieve growth objectives
• Do it again – iterate plan
Approach Summary: In Parallel…
• Define a Common Strategy/ Know
What’s Important to Test
• Get on the Same Page/
Work Together
• Collect Data
• Test Alternatives
• Make Decisions
• Iteratively execute the Plan
contact: [email protected]/5/2011 Page 11
Process to capture
market data in the
development of
objectives and
financial targets
What initiatives can be
undertaken to eliminate the gap
between sales projections and
strategic objectives
Metrics and reporting to support
field efforts and provide visibility of
progress to management
Establish sales plan by
key customer or
segment
As-Is State
Ea
rly W
ins
20
08
20
10 Strategic
Objectives
PerformanceManagement
OperatingPlan
Ambition Statements
Future Performance
End-State Descriptions
Key Goals
Business Benefits/Scorecard Metrics
$ Benefits
Non-Quantified Benefits
Intangible Benefits
Create market-data &
sales projection analyses
to validate strategic
objectives;
Run Strategic
Experiments to test
assumptions in markets
Validationof Assumptions
Gap Analysis
Build case for change/
growth; Set
Leadership, roles,
responsibilities;
Mobilize
Engage Leadership
Build a Transformation Map to Outline and Manage The Growth Initiatives - For Each Key Business
contact: [email protected]/5/2011 Page 12
?Phase 3 Begins
Growth Program Development Process
Transition and Implementation
Workstreams
Organizational Assessment and Planning
Communication Plan Development and Execution
Change Planning & Implementation
Functional Area Planning & Implementation
Value Driver Analysis
Change Design Workstreams
SWOT
Management/ Stakeholder Approvals
(Other Diagnoses/ Tools As Needed)
We Help Clients Create Successful Growth Through Design, Organization & Implementation Activities Operating “in Parallel”
Milestones
Stage
Intervention(s) identified
Definition complete
“First Projects”/ program
architecture complete
Intervention/ Event
Execution
Close + 100 Days
Phase 1: Formulationof StrategicObjectives,
Due Diligence
Monitoring & Evaluation
ImplementationGrowth/
Improvement
Decisions, Events Transition
to Execution
Foundational Integration
Process Workstreams
Overall Growth Program Project Management
Team Formation
Knowledge Capture & Capability Building
Phase 2 Begins
Successful Major Growth
Efforts Put an Emphasis on
Planning, Value Capture,
Communication, Culture and
Employee Development
contact: [email protected]/5/2011 Page 13
Drive Growth in ROA, Revenue, ProfitabilityUnderstand Capabilities, Markets, and Opportunities
Delivering Results Requires Discipline
TIME FRAMESTART 36 mos.12–24 mos.
3–6 mos.
Some Models -Portfolio Analyses:
• Value disciplines
• 4+2
• 7 S
• Value Chain
• Growth tools
Establish Frameworks and
Common Language
• Organizational assessment
• SWOT, Capabilities
Internal Assessment
• SWOT
• External position vs. competitors;
• Value Proposition
External Assessment
This approach has delivered results at global companies such as • Fuji • Sumitomo Heavy Industries • Cadbury–Schweppes • Intermagnetics/ Philips Medical
• Options identified
• Trade-offs made
• Initial acquisition(s)completed
• Initial Organic growth initiatives completed
• Internal capabilities (like delivery time) improved
Focused Growth Plan Implemented
Growth InitiativesIntroduced
Meet/ Exceed Mid-Term Plan
• ROA
• NOI
• Revenue
Refine Assets, Opportunities, Strategies, Scenarios
Implement Growth Strategy
contact: [email protected]/5/2011 Page 14
High-level Growth Strategy Work Plan (Sample)Timeline Varies Based on Client, Urgency, Resources…
Feb
• Work planning
• Background data analysis
• Clarify charter
• Kick Off [date]
Project Set UpFundamentals
OverviewExternal Market
Research
Develop Detailed Implementation
Plan
Mar Apr May-Jun July-Sept
• Org capabilities & market
• Preliminary interviews
• Early hypothesis generation
• Refine scope
• Update meeting [date]
• Understand customers & markets
• Competitive intelligence
• Industry benchmarks
• Identify potential growth areas
Internal Data Analysis
• Detailed review of performance and operations.
• Customer, channel profitability
• Identify growth options
• Organic
• M&A
• Recommend strategic direction [date]
• State strategy
• Outline organizational impact
• P&L, O.P. plan direction
• Costs, ROI
• Rollout/Transition plan
• Sensitivity analysis
Refine Scope
Understand How
Business Model Works TODAY
Understand Position in Markets, Opportunities and Future Potential
Opportunities
Generation
and
Prioritization
Senior Approval on Strategic
Direction
Deliver Targeted
Growth Plan
Preliminary Business Assessment
Schedule TBDThree Months, estimated…
contact: [email protected]/5/2011 Page 15
How Does Your Business Plan to Achieve Its Growth Objectives?
Strategy is the evolution of a central idea over continually changing circumstances.
-- Helmuth von Moltke,19th c. Prussian general
Schaffer Consulting is the global leader in helping leaders and organizations to focus on rapid and frequent results as the most powerful engine for achieving critical performance and strategic outcomes, and developing organizational capability to drive and sustain change.
Over the past 50 years, CEOs and other leaders around the world have relied on our experience and methodologies to catalyze momentum and produce tangible results in growing revenues, integrating acquired businesses, restructuring/ reducing costs, gaining efficiencies and simplifying their organizations.
We created the ―Rapid Results Approach‖ used by hundreds of organizations large and small to produce breakthrough results. We also worked with GE to develop its famed WorkOutmethodology for accelerating results while building a culture of speed, simplicity and transparency. For more information: www.schafferresults.com
Schaffer Consulting helps clients to achieve objectives through a structured
process of engagement:
• Defining clear thinking – shared business logic, terms definition and operating-model ―languages‖
• Rapidly engaging key leaders and participants
• Surfacing data – just the right amount – to support effective analysis and prioritization of the
opportunities in your ―risk portfolio‖
• Driving decision-making processes through facilitated organizational-management and workforce
engagement
• Generating prioritized set of options
• Enabling effective organizational implementation, execution, and growth-results
Develop and implement a Growth and Innovation Approach that fits your organization
contact: [email protected]/5/2011 Page 16
Contact Us
Evan Smith
http://www.schafferresults.com
914.613.3187 direct
203.322.1604 office