Total Strategy FTW

Doing better than the competition is often a zero sum game. Your gains in market share come at the expense of your competition and vice versa. Even if your markets are expanding, it’s typically a battle for share. To be better than the competition you either need to be lucky or good. And while a little bit of luck doesn’t hurt anyone, it’s hardly the foundation of a solid business plan. So, let’s focus on being better. One path to improvement is through improving internal communication and strategic alignment. Total Strategy is an excellent way to excel at both.

Total Strategy Avoids Typical Planning Traps

Strategic planning processes must identify the company’s greatest opportunities. Many organizations struggle with cross-departmental communication. Annual business planning activities are challenging because the scope is immense. Starting with a fresh slate may be the best path, but it isn’t the easiest. Freshening up last year’s plan is so much easier, despite being less effective. So, what usually happens? Executive teams often slip into the comfortable exercise of running the numbers, making minor tweaks to last year’s plan, settling on a budget and sending out a PowerPoint.

Total Strategy combines the principles of organizational health and marketing. It can improve your bottom line. And it can keep your leadership team’s eyes on the prize.

Total Strategy Is Robust and Holistic

Total Strategy is the process of organizing the margin drivers, defining operational needs and identifying the forces that impact your organization’s performance. It is a comprehensive approach that solves for the biggest problems. It’s a framework custom-fit to your company’s unique space in the market, identifies your unique organizational challenges and is bound by the resources available. It delivers actionable, preordained marching orders for each department. It will help your organization figure out if the plan is working, and allow it to make the fine adjustments that respond to shifting market dynamics and unexpected challenges.

Top Down Starting at the Bottom Up

Organizations should begin their strategic planning process by unearthing opportunities from folks who are on the frontlines. Folks like your sales staff, customer service representatives and tech support experts are in constant contact with your customers and clients. While their anecdotes don’t replace more sophisticated primary research, it certainly gives you an excellent sense of how your products, services and brands are perceived.

Ideas generated at this stage are shaped by your company’s core values. (Now may be a good time to check whether you have a set of core values, as well as whether anyone knows what they are.) Use a wide set of innovation tools and exercises to shape the discussion. Keep the brainstorming focused. To increase engagement, make sure each team knows the importance of their input to the organization’s strategy.

The ideas that come to the surface will range from tactical projects to “big picture” opportunities. Some will be great, and some will be goofy. All of them will be food for thought, and spur additional thinking. These ideas may also bring to light things that have flown under the radar. This approach simultaneously improves employee engagement while providing thought starters for strategic planning. It may also enable budget development and the holistic assessment of needs, risks and opportunities from across your business. Once these ideas have been pooled together and moved up through the organization, leadership will have the benefit of knowing what its employees believe are vital to growth. The leadership team will know which opportunities exist, and provide a foundational base of knowledge from which the strategic planning process can continue.

Strategic Windsocks

Reading the winds that are howling through your hallways and understanding those swirling outside are instrumental to your success. You need to connect the dots between ways to improve the business, to agree on which levers to pull and how to chart a course.

Internally, gauging employee engagement, detecting and monitoring risks and improving communication will play a huge role in how your company performs. If you don’t have the means to understand what is going on within your organization, make sure creating those instruments is a chief priority.

Companies need to look beyond their own walls. Shifting competitive landscapes, market disruptors and blossoming technological magic need to be taken into account. The larger you are, the more you need to pay attention to the geopolitical winds as well. For example, trade wars, embargos and unstable foreign regimes may all hamper your success.

Groupthink can be a huge problem. Symptoms of groupthink include hearing “that’s just how we’ve always done it” and “I know what our clients want.” Processes need to leverage new technology like AI, and the false consensus effect is real. Defeat groupthink by incorporating industry-wide research from sources like Gartner and Forrester into planning. These outlets will help to assess the macro trends that impact your business, and to understand and predict where your competitors may be headed. It’s also incredibly important to have your own research strategy and resources in place. If you don’t have a research discipline, now is a great time to start developing one.

By the way, change isn’t easy. 98.6% of companies aspire to be a data-driven culture. However, only 32.4% of these same companies think they’ve achieved that goal.

Create a Financial Picture

Analyze trends in your company’s revenue streams and maximize opportunities to improve them. It’s time to take a hard look at cash flows. Companies need to take a research-based approach to reviewing performance.

Financially, you’ll be able to identify where your company has been, where it is and where it may be able to go. Keep in mind these are just numbers, and they can’t tell the whole story. (If the numbers were the whole story, there would be no need for both a Chief Strategy Officer and a Chief Financial Officer.) It is also important to understand the holes in the reporting, the assumptions made in the reports, and the veracity of the data. This step is susceptible to “garbage in garbage out,” so take care in understanding the sourcing and validity of the data. To wit, only 3% of data records can be rated “acceptable” using the loosest-possible standard.

Engage Your Marketing Department and Agencies

Marketing generally bears much of the revenue generation responsibility through a combination of product development, communication strategy and advertising initiatives. Largely because of its responsibility to drive revenue, marketing is often also responsible for capturing, summarizing and bringing business challenges to the table.

The marketing team and its agencies can provide the current segmentation strategy, along with research, insights, product enhancements and details about the customer experience. The success of the marketing team is directly tied to the strength and alignment of the finance, operations, human resource and IT departments. This may sound as if this framework puts marketing’s needs in the driver’s seat, but it isn’t a marketing-first approach. Rather, it relies upon marketing as the lens through which to view the current, holistic customer experience.

The team should be able to answer the following questions:

• What product lines have been showing strong growth?

• Is there room to improve margins?
• What opportunities are there for moving into similar markets?
• What new competitors are in the market?
• What is our competition within each market doing?
• What customer feedback have we collected?
• What does the broader research tell us?
• Where is the greatest opportunity overall?

These discussions are an opportunity to share ideas and develop initiatives that expedite the improvement of the customer experience. This creates an open dialogue about the current state, the ideal future state and the potential paths to bridge the gap between the two.

Let the Team Tackle Tacking

It’s time to chart a course. Define a small set of big objectives for the next five years, with more granular plans and tactics for the next year. Your Big Five Year Plan will change over time, but having a destination in mind helps your team understand where everyone is headed. Creating a plan for the coming year improves action, execution and results. Finally, make sure budgets are defined for each objective and that the majority of expenditures are intimately tied to at least one strategic objective.

Don’t get too granular. Create some free will within your company. It’s hard to let go, but you’ve assembled a great team of managers and subject matter experts, and now it’s time to empower them. There are a few ways to accomplish this.

One method is to earmark 50% of the budget at the executive level. Carve out specific expenditures to support your annual objectives. The remaining 50% should still be tied to objectives, however the exact way in which it will be invested should be left up to each department. This enables and empowers teams further down the chain to support the big objectives through tactical investments in each team’s line of sight throughout the planned period.

Likely the most famous example is Google’s 20% Rule. Google encourages employees to spend the equivalent of one day each week working on their own pet projects. This 20% time allocation was responsible for 50% of Google’s products as of 2013, including GMail and AdSense. While not every Googler has leveraged the full 20%, it has resulted in a significant amount of revenue-generating innovation. (Certainly, not all of them were great. Remember Google Wave?) It helps a company increase the number of bets they make on new products, and this increases the odds the company will be able to weather disruptors.

You Can’t Manage What You Can’t Measure

You’ve now gathered and reviewed just about all of the available information, generated a bounty of new ideas, settled on a destination and mapped out a way to get there. It is going to be awesome. Now it’s time to set up some key performance indicators (KPIs).

In designing and implementing your KPIs, you need to follow a few key principles. You can’t utilize the same measurements for your social media campaign and your direct mail piece. The revenue goals that exist for your sales team don’t make any sense for your customer service department. They also need to ladder up from the digital marketing specialist all the way up through the executive dashboard.

Here are some pointers for designing an effective set of measurements, metrics and benchmarks. They should be:

• • Appropriate at each level of the organization. Create performance metrics for each role and level in your organization. Whichever metrics are chosen, they need to be items to which each contributor can be held accountable. In other words, if you hold someone accountable for a tally, they need to be able to impact it. Delivery drivers can’t be held responsible for revenue targets, but they can be held responsible for making sure packages arrive in a timely and efficient manner.
  • Connected from top to bottom. The executive dashboard will likely have a half-dozen numbers on it. They will cover everything from employee engagement through product quality and revenue growth. Each of those dashboard elements need to be derived from measurements that begin at the ground level. For example, delivery times could be one measure that goes into overall customer experience metrics. Per capita sales growth can be tied to overall margin expansion. Whatever key KPIs the executives want to see need to be derived from, connected to and provide visibility into what is happening at each management layer.
  • More than just a set of numbers. It is important that your KPIs are more than just quantitative measurements. The overall health of your organization is more than just your sales growth last quarter or customer wait times. There also needs to be qualitative reporting that may include things like progress towards new market expansion, or the status of key projects that support the organization’s chief goals.
  • Reviewed and available. Perhaps most importantly, it is imperative that there is a consistent cadence and agenda for the KPI review meetings. Reports need to be reviewed regularly both to hold people accountable and to help shift the culture towards a more data-driven company. The metrics also need to be widely available. Making sure most of the reporting can be seen by the entire organization helps instill trust. And with so many eyes reviewing and digging into the information, data democratization helps to make sure the data is accurate.

One Final Thought

Your organization needs to be prepared to re-align its planning processes and adopt new approaches. Change management is difficult, however careful planning throughout the process will help to ensure success. Kindly remember that reporting mechanisms may not exist for a new KPI effort, that the entire organization may not be aware of customer segmentation efforts, and that new ideas may be rejected immediately by a conservative, risk-averse culture.

Persistently stick to the plan and implement it with great patience. Gather buy-in and support, and make sure everyone understands their role and how they can help. Create your own communication plan to keep the organization up on the progress and importance of the approach. Keep people motivated and enthused about it. It’s a big deal for the company, and it’s going to take some time to see this through.

You’ve got this.

If you need help, call us. We’ll be happy to help you throughout this journey.