So many of us are questioning the GDP numbers - especially since most of it is comprised of the cash for clunkers initiative...but i've been wondering for a few months on the impact of all the cost cutting companies have taken on the long-term...and guess what,  so has Business Week (see link below and the article will be in my weekly email for those that get it).  With cost cutting in training, R&D, etc., we are sacrificing the longer-term growth opportunities for our companies and our country.

What does this mean? well, some companies are starting to invest - see today's WSJ article on Rio Tinto's growth and diversification strategy due to their hopeful view of the economy.  But for those that haven't, it will be a harder uphill climb.

As I look at the companies I know - including a few of my clients - a few have had the insight and wisdom to invest in the tangibles and intangibles that create growth and cut in those areas that don't - and they are well poised to create new value - for their customers, their employees and their shareholders...but it has taken guts and focus...not easy.

 

A lot of folks create their plan, communicate it and that's it.  If you don't integrate it into your day to day operations, well, you know the rest.  That's key to implementation and after all, part of your strategic plan should have an operational component.  Depending on your strategies, where you are as an organization, how well you drilled down in your plan, you may already have your operations aligned with your plan - Terrific - you're done.  See you next week.

If you haven't, here are some ways to do this.  Using the strategies in your plan evaluate your current organizational structure vis-à-vis the plan (if you didn't do this already).  Structure should follow Strategy, not trump it - tho that's usually the case.  Is your structure more Function/Process driven or Purpose Driven or both?  If you see the need to change structure - do a cost/benefit analysis of the potential structures just as you would any project.  Identify what are the key measures that would drive the desired structure.

If a Function/Process structure is the best one, then most likely your key measure is Efficiency (e.g., cost/unit, economies of scale, duplicated resources, cost of coordination, etc.).  The Costs are things like coordination of functions and groups, silo-focus, tactically-focused, bureaucratic (potentially), but the Benefits are expertise/knowledge, economies of scale AND scope, career paths, reduction of duplicate and scarce resources, etc.

If a Purpose structure is the best one, then most likely your key measure is Effectiveness (innovations and introductions, customer satisfaction, revenue and market share growth, time to market, etc.).  The Costs are the duplication of scarce resources, economies and efficiencies (yes, really).  The Benefits are customer-focused products/services, fewer coordination issues, ability to quickly respond to market changes, etc.

You may have a hybrid - you can have an "AND" structure with some Function/Process AND Purpose - they are not mutually exclusive at all - it's just an issue of balance (as is most life).

Another issue regarding structure is the classic centralized vs. decentralized (some say command and control vs. entrepreneurial, but that doesn't have to be the case).  As with all things, there is balance between the two and it's not an ‘either/or' but an ‘AND' in terms of functions/processes, markets, etc.  You need to determine what the right balance is for you, depending on the business you're in, how you go to market(s), where you go to market(s), etc.  The decision making process is both a leading and trailing indicator - what is the best way for you to make decisions, with best meaning effective AND efficient? Is it lateral, sequential, in parallel, hierarchical?

Generally, Centralized structures are seen with low-cost strategies so you can leverage economies of scale, efficiencies in commodities and be price competitive via standardization, volume, repetition of work, no duplication of scarce resources, etc.

Centralized structures are generally seen with purpose/focus strategies where you have a dedicated division or staff, where the focus is an object of the strategy (e.g., product, geography, demography, etc.) and where you need minimal centralized staff.  Differentiation strategies also tend to fare better in a decentralized structure allowing each division to differentiate based on their markets (e.g., high/low-end, performance, etc.) and, or, where the division is fairly self-contained - it has very different resources and competencies from the other units.

So, remember at a very fundamental level, integrating the plan with operations is NOT!!! a budget exercise!  You need honest, open discussion of the assumptions, no ‘sacred cows' and understand the trade-offs.  Identify your assumptions and their affect on the business line by line - by product, by segment, by geography - including positive and negative assumptions (e.g., increase in price oil, decrease in sales, R&D budget overuns of X%, etc.).  Create your operational plans around real things, not wish-lists.  Create targets, Create actions with trade-offs and with measures.  Get sincere agreement and commitment from everyone.  Create contingency and mitigation plans...just in case, and then finalize your budget - aligned with both the plan and operations.

You know the phrase what are the 3 keys to real estate? Location, location, location? Well, what are the 3 keys to implementing strategic plans? Communication, communication, communication!  You just can't over-communicate.  So, since it's so important, it has to have time and effort focused on it.  One good way is to create a communications plan.  This helps you make sure all the stakeholders are represented, all ‘communicators' are held accountable, the message of what was said to who is known, and the appropriate means of communication is used.

Create a simple table/excel sheet keeping track of (and tie it into your schedule/outlook) who is being told, how often, how (e.g., face 2 face, email, e-newsletter, paper letter, blog, podcast, webinar, etc.), what the message is, who is ‘authoring' that message and who is delivering that message and if possible, reaction to the message. This may sound pretty detailed, and it is - but details matter (remember, we're talking about execution)

It's helpful to plan out 1 year in advance if you can - schedule around your quarterly results and quarterly review meetings so you will have fresh content, integrate it with timeframes within the plan itself, and leverage any other ‘obvious' events or traditions in your organization. 

See, this sounds pretty simple - and it is, but it's so important.  If you can periodically meet with as many employees throughout the organization - via town halls, plant meetings, whatever, you will have a tremendous impact on the implementation and performance of your plan.

A Little Freedom Goes a Long Way

A blog post in the WSJ details how a bank's branch manager noticed the queue outside getting longer before opening so she opened up early - despite corporate policy that all branches open/close at the same time (they thought that was key to brand equity).  Word spread - other branches were doing the same!!! Corporate relented but with great concern that the brand would be jeopardized.  However, given the new freedom, one branch even created a mobile bank - a trailer the size of an ice cream cart it towed around town!  Eventually, corporate realized this was a good thing - branches were building community, business was increasing - go figure!  So, how did they keep this transformation growing?

1) Incentives - they rewarded the right behavior to encourage innovation that enhanced, not diminished the brand: bonuses based on profits > plan, products sold, team-based success linked to sales and customer satisfaction; and

2) Information - they provided daily, detailed, clear P&L statements to the branches and trained branch personnel on understanding those statements.

So, sometimes if you allow people to 'open' and 'close' when they want,  a flood of innovation is unleased and you realize superior peformance in many ways!

May seem mundane, but getting a schedule set for reviewing your plan and it's progress is critical...it helps establish discipline and rigour and, of course, helps lead to success!

REGULAR REVIEWS:

Ok, so let's talk about regular reviews of the plan.  It's good to meet at least bi-weekly - perhaps after time you can do monthly but even if you're doing well, it's a good thing to meet more regularly.  If you have a regularly scheduled leadership/mgmt/whatever you call it meeting, take time out of that for this - in the beginning it may take up to 1hr, but over time, it will take lots less as you get into the habit. Now, pretend you're a reporter - let's ask some basics:

WHO: attendees are your strategy and tactic owners, anyone else from the planning team and anyone else you think should be involved for whatever reason

WHEN: regularly dedicated and scheduled time - can be the same time as other regularly scheduled times for this team

DURATION: initially 1hr, eventually make take less; some folks do it in 1/2hr or even 15min because of preparation....

WHAT: 3 days (or more) before the meeting, all owners should update their strategy, tactic, measure, scorecard in the planning document (can be an excel file, word doc, another form) on your intranet - this way everyone can review the information before the meeting and come prepared with questions, concerns, suggestions but you won't waste time doing the updating at the meeting - this is a MAJOR productivity enhancer if you do it beforehand.

AGENDA:

-  For each strategy: review status of measures (good and bad) with explanation and review each top tactic

-  For each top tactic: review performance measures (good and bad) and explanation and root cause analysis (what are the symptoms, what are the root causes (prioritized), what is the solution, who will do it, by when, what is ‘it' and define ‘done'); review the tasks/accomplishments - status of each task and agreement on ‘done', outstanding issues or problems and who will resolve by when

-   Any other open issues or issues affecting the plan with ownership and timeframes

QUARTERLY REVIEWS:

Regardless of how well you're doing on your regular meetings, you should gather the team together on a quarterly basis to just make sure everyone is on track, identify if anything has changed, etc.

WHO: as appropriate, the strategic planning team that created the plan and any other key people

WHEN: just after the release of quarterly results if possible

DURATION: about 3hrs - can be on-site, better if off-site but not necessary

WHAT: Do the regular 3-5 day pre-work that you do for regular reviews on your living plan document and then a quick re-assessment of trends and market forces, update SWOTS if necessary, any new voice of the customers if necessary

AGENDA:

-  Review impact of any updated information from trends, SWOTS, etc. and modify plan if needed

-  Follow Regular Review agenda

-  Communicate quarterly results and plan update results together if you can, or separately if must, to all employees - show how you are committed to and executing the plan which strengthens their resolve to commit as well.

ANNUAL REVIEW:

It's very important to review the plan each year - afresh.  The world is so dynamic and change is the only certainty these days so you will look at the world again and see what impact it has -

WHO: attendees are your strategy and tactic owners, anyone else from the planning team and anyone else you think should be involved for whatever reason

WHEN: around the anniversary of the plan's creation

DURATION: 1 full day off-site (can do more than 1 day, which is a good idea to celebrate as well)

WHAT: Regular plan updates (3-5 days prior) that you do on a regular and quarterly basis, but you'll also update as much information as you can - update all trends and market forces, update SWOTS, internal analyses, assessments - all the material you created to create the plan.

AGENDA:

-   Review where you are with the plan - quantitative and qualitative accomplishments - are you were you wanted to be and why (whether yes or no!) - discuss obstacles - professional, political and business

-   Review the updates - how does this new information affect the current plan? What do we need to change, tweak, dramatically redo, reassign, reconfirm, etc.

-   Confirm and re-commit to the (amended) plan and ownerships

-  Celebrate your success!!!!