consultgroup, 2008 peter kaye bachelor of economics, university of sydney graduate diploma in adult...
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Consultgroup a Division of Larkin & Kaye Consulting Services Pty Ltd
Executive Assistant Network CORPORATE STRATEGY “How to plan to plan” Peter Kaye Principal Consultant [email protected]
Consultgroup, 2008
Peter Kaye• Bachelor of Economics, University of Sydney• Graduate Diploma in Adult Education, University of Technology • Diploma Company Director, Institute of Company Directors • FIFS: Fellow, Institute of Financial Services • FAICD: Fellow, Australian Institute of Company Directors• CMHRI: Chartered Member, Australian Human Resources Institute• AFACUI: Associate Fellow, Australasian Mutuals Institute• MAIES: Member, Australian Institute of Emergency Services• Member, Social & Ethical Auditing Institute• Member, NSW Justices Association
Made the career change to corporate and NGO management consulting in 1992. Previously held a variety of CEO and management roles in a range of industries
including finance, youth, government, transport.Geelong football club supporter, active community volunteer including the SES, Duke
of Edinburgh’s Awards, SIDS & Kids, and supporting micro finance projects in 8 South Pacific countries.
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• Corporate governance is about the way your company is directed and controlled (governed).
• Corporate governance is the sum of all the policies, practices and other controls that directly impact on your company’s performance, stewardship and its capacity to be accountable to its various stakeholders.
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A BOARD’S & EXECUTIVE MANAGEMENT’S
KEY DECISION MAKING
1. CEO/Senior Management appointment
2. New or revised policy
3. Finance plan
4. Strategic plan development/approval
CORPORATE STRATEGY (1)
Strategic planning principles and practices – moving beyond
theory
Strategic planning is a:
• disciplined, ongoing, informed, ideas based process for
• determining how to confidently take your organisation from where it is today
• to where you wish it to be in the future.
It can be typically 3 – 5 years, depending on the industry and its market volatility
Strategic Planning
Its simple terms, it the organisation’s:
• WHY
• WHAT
• HOW
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The Strategic Plan
• Numerous models
• Regardless, it has 3 key parts, all verifiable
1. WHY: Purpose of Organisation (Vision/Mission)(long term 5 – 10 years)
2. WHAT: Targets of the Organisation (Goals)
(medium term 3 – 5 years)
3. HOW: Main means to achieve above (Strategies)(shorter term 2-5 years Actions/Objectives)
V
A
L
U
E
S
What Makes Something Strategic?
• Timing (eg. by 2009 or by 2011)
• Outcome/Size (10% growth or 100% growth)
• Risk (eg. limited control or very high control)
• Capacity (eg. have excess capacity or need)
• Focus/Direction (eg. readily understood and motivating)
“Most strategic plans are little more than a budget with a narrative… or dressed up management plans.”
Is the Strategic Plan really strategic?A Quick Test
Will it or has it resulted in major change to all or most of these:
• Policy?
• Product and/or Market?
• Delivery Channels or Systems?
• Organisation Structure?
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Measurement & Verification
“If it is not measured
it will not be done”
Examples of Goals & Strategies• Investigate new markets
• Grow the e-commerce sales
• Develop innovative products
• Increase sales by increased market share
• Identify appropriate after sales service standards
• Educate clients in product features
………HOW USEFULL ARE THEY?
HOW CAN WE IMPROVE THEM?
• Investigate new markets
• Grow the e-commerce sales
• Develop innovative products
• Increase sales by increased market share
• Identify appropriate after sales service standards
• Educate clients in product features
CORPORATE STRATEGY (2)
Matching the purpose and content of different types of strategic planning options
Facilitators Observations1. The Board does not have a collective
understanding of their organisation (customers, operations, products)
2. At least 2-3 distinctive profiles co-exist3. Management leads an organisation that has 4+
cultures (value sets) and dysfunction in at least one level
4. The documented Strategic Plan does not drive the organisation
5. Poor risk management, group think and a desire for harmony (Board-Mgt or Mgt-Mgt) dilute real strategy.
Why Plan…. Why Change?What is the need to change?
Self imposed strategy and/or market force driven?
What is the appetite for change?
What is the desire and by whom?
What is the capacity to change?
Consider:
•the human component (especially board, management and key staff)
•the organisation component (systems, products, finances)
•the market and competition ($, client, product take up, penetration, competitor trends)
IS IT A GOAL OR A STRATEGY?
• One company’s goal can be another company’s strategy.
• On the other hand one of your strategies may be your competitor’s goal!
PLANNING MODELS
1. The Basic Model
Vision/Mission
Mission/Goals
Strategies (actions/objectives)
Most common for small-medium size companies and organisations
2. Goal or Issue Based Planning
• May build on basic model or in lieu of
• Focus goals/opportunities or correcting issues
• Typically big picture (macro)
Common for larger organisations
3. Goal or Issue Based Planning
• May build on basic model or in lieu of
• Focus goals/opportunities or correcting issues
• Typically big picture (macro)
Common for larger organisations
4. Scenario Planning
• Considers wider market, social, industry factors and issues
• Question based.
• Establishes and tests hypothesis
• Ideas based
• Opens with qualitative and backed up with quantitative
5. Organic Based Planning
• Relies on trend analysis or linear projections
• Supports sustainable growth
• Inclusive and consultative
• Open to market risk and aggressive competitors
6. Organic Based Planning
• Relies on trend analysis or linear projections
• Supports sustainable growth
• Inclusive and consultative
• Open to market risk and aggressive competitors
CORPORATE STRATEGY (3)
Internal and external data collection and analysis –
identifying what is business critical
Planning: Its about questions not about extending trend lines
What do we do? Where are we going? Where are we now? How will we get there? How did we get here? When will we get there? Why are we in business? What will it cost? What if we do nothing?
Why do they buy from us? Why do they stop buying? Can we be beaten at our own game?
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Key Data: Where Does It Come From?
• Strategic Plan KPIs• Business Plan KPIs• Legislation• Codes, Standards• Industry Benchmarks, Data base• Journals• Subscription Data Bases• Internal Data Mining
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Types of Data
• Strategic
• Financial
• Operational
• Compliance
• Social
• Governance
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Data such as KPIs provide Measures
• Absolute MeasuresQualitative, eg. employee morale, client satisfaction– Surveys
• Relative MeasuresQuantitative,– eg. financial, product usage, customer profile
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Operational Data
• Product & Services
• Staff
• Production
• Delivery
• Contracts
• Risk Management
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Data Analysis
examined over time using historical information, ie TREND ANALYSIS or,
compared against a goal or a target, ie GAP ANALYSIS
Using Competitor and Market Information & Trends
• “the fast eat the slow”• “the light eat the heavy”• “the open thrive more than the closed”• “moving from go alone to the alliance maker”• “being green is being global”
Thomas Friedman, ‘The Lexus and the Olive Tree’,
Harper Collins, 2000
CORPORATE STRATEGY (4)
Implementing a participative process for developing a
Strategic Plan
Planning Is A Process
• “The process is equal to or more important then the document (plan)”
Far more important than the strategic plan document, is the strategic planning process itself.
• Individuals responsible for a company’s strategic plan typically know most of what will be included in the strategic plan.
• BUT…. A participatory process in the development and approval of the strategic plan greatly assist to clarify and unite the organisation's plans and ensure that key leaders are all "on the same page".
Who Contributes and How
• Directors (Drive, committee, review, full Board)
• Management (Drive, information, draft, test, detail)
• Staff (pre input, implementation)
• Other Stakeholders (invited, web, focus group, survey)
– Shareholders/members– Key Suppliers– Community
The Planning Schedule
1. Type of Plan and/or review2. Timing: Duration and Financial Year3. Driver and Facilitation4. Participants/Contributors (role clarity)5. Input: Information & Ideas6. Draft(s)7. Testing and Approval8. Implementation9. Role Out10. Performance Management
Separate the Strategic (Corporate) Plan
from the
Management or Business Plan (Operations)
“CONTROLLED GROWTH” “FINANCIAL STRENGTH” “MANAGING RELATIONSHIPS”
Fin
ancial
Mem
ber
Intern
al B
usin
ess
Processes
(1A) Add and retain high-value and high-potential-value
customers
(1B) Attract more new customers
Value Proposition (1C)
Basic requirements Differentiation•Faster responses•Adequate security•Competitive price•Reliability
•Multiple channels•Service excellence •Customer intimacy
Grow revenue Increase profit
(2A) Increase revenueper customer
Cross-sell branded products and services
Grow revenues from non- branded sources
Increase balances and non interest
income
Grow revenueby increasing
sales
(3A) Create the brand where
customers trust theorganisation and have
a desire to belong
(3B) Meet customers needsthrough personal managed
relationships
Make it EASYfor customers to
do business
MinimiseCustomer loss
Develop and implementnew styles of
marketing programs
Analyse competitorproducts and featuresand personalise sale
Develop superiorservice capability
Retain keystaff
(2C) Use data mining,target marketing and
customer segmentationsystem capacities to
maximise effectiveness ofmarketing campaigns.
(3E) Identify and DevelopThird-Party Relationships
Increase efficiencywith customer self help
(2B) Implementcost controlmechanismsto support
differentiation (3D) Build and maintainstrong relationships withregional communities to
build social capital.
Automate Processes
(2D) Develop staffto manage risks
(3C)Align the culturewith the brand
Create a strategyfocused
organisation
Enable staffto offer solutions
Develop customer
self-service
(1D) Identify collaborativerelationships with
third parties to add value
Learn
ing
and
d
evelopm
ent
Adjust the risk profileto meet customer needs
Attract and developappropriately skilled
people
Keeping It Simple and Focussed
• 1-2 Goals
• 3-4 Strategies
• 5-6 Values
CORPORATE STRATEGY (6)
Critiquing and risk assessing
your corporate plan
CORPORATE STRATEGY (7)
Tips for implementing and integrating the plan into your
business
1. Business critical test
2. Sustainability test
3. Alignment of your plan’s components, ie for compatibility and usability
4. The “4 Times Test”
5. Board Reporting
6. Performance Assessment (Fin. & Non Fin.)
7. Draw the Org. Structure assuming success
Balanced Scorecard (Kaplan & Norton)
Has four processes to implement strategy:• Translating the vision into operational goals; • Communicating the vision and link it to individual
performance; • Business planning; • Feedback and learning, and adjusting the strategy
accordingly.
And uses four perspectives
• Financial perspective;
• Customer perspective;
• Internal process perspective;
• Learning and growth perspective.
…. identifying 5 or 6 goals or measures for each of these and mapping them for interlinkage.
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Corporate Culture
The “corporate culture” of the entire organisation becomes the guiding “brain” when deciding whether a company has broken the law. The intentions of the company will be decided by courts checking on the extent of a culture of compliance.
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Strategic Plan – Knowledge Recap
• What is it and what does it contain?
• Why can it be so important?
• How does it differ from a business plan?
• Who prepares it and approves it?
• How is it tested?
• How is it implemented and used?
• Who and how is it monitored?
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Consultgroup• Board, Director, CEO Performance Assessment • Strategic Planning Facilitation • Board Secretariat Services• Governance Training and Forums Speaking• Governance Reviews and Audits• Governance Policies & Charters• CEO and Executive Recruitment• Director Induction & Professional Devt.• Values Reviews and Audits - Corporate Social Responsibility
(CSR) Consulting• Nominations Committee: Independent members