Archive for the ‘Strategic Planning’ Category

In 100 Words: Time for Strategy Planning

Tuesday, November 1st, 2016 by Troy Schrock

As leadership teams craft strategy plans for the upcoming year, they should remember the following lessons:

• There are no formulaic answers, however, you can benefit from a systematic approach to both your preparation and strategy planning conversations.

• Markets are dynamic so be disciplined in your strategy thinking. Challenge and test your basic assumptions – even if they are producing good results. Things change.

• Strategy requires clear choices and resource commitment. Each decision either reinforces or weakens the whole. The strength of how the decisions weave together form the fabric of compelling business models (think IKEA, The Container Store and Southwest Airlines).

“Unless commitment is made, there are only promises and hopes… but no plans.” – Peter Drucker

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In 100 Words: Test Your Assumptions

Friday, November 1st, 2013 by Troy Schrock

Every business is built on a particular set of assumptions – assumptions about customer desires, the best delivery solution, the competitive landscape, external trends and internal capabilities.  Considering these varied elements, and their shifting nature, we quickly realize every business model is merely hypothesis.

Over the next several months, companies will engage in the routine of strategic planning for 2014 and beyond.  This is a good time to test a business model hypothesis.  Leadership teams must have the courage to ask the question, “What underlying assumptions about our business are no longer valid?” and wrestle with the answers and related consequences.

“We simply assume that the way we see things is the way they really are or the way they should be.”   (Stephen R. Covey)

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Entrepreneurs: Beware of Boredom

Wednesday, August 29th, 2012 by Troy Schrock

It is not uncommon for entrepreneurs to get bored when their organizations mature to a certain size.  Management becomes procedural, the business is humming, and life becomes all too routine and mundane.  Entrepreneurs can find this environment stifling.

Unfortunately, the reflexive urge is to engage in behaviors that may be destructive to the very existence of the organizations they started.  They pursue growth, jump into other executives’ domains, launch new ventures, or invest in other businesses – anything to break up the new monotony.  These moves aren’t always bad, but only if approached strategically.  They should not be done merely as desperate reaches for something different.

In starting his second restaurant, Union Square Hospitality Group founder Danny Meyer said, “[The first restaurant] was a great canvas, but I needed a new place to express my creativity.  I didn’t think I should alter a successful restaurant because I was restless.  I didn’t have to get all of my ideas into one place.” (as quoted in Small Giants by Bo Burlingham)

Restless entrepreneurs can learn from Meyer’s recognition.  Proper channeling of creative energy can lead to good results for the initial enterprise as well as any new ventures that may arise.

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Rethinking Hedgehog

Thursday, June 28th, 2012 by Troy Schrock

I recently wrote about Phil Rosenzweig’s book The Halo Effect.  One of the notions he challenges is Jim Collins’s Hedgehog Concept – the discipline of focusing on one thing at which you are a uniquely high performer.  The “Good to Great” companies were Hedgehogs, but Rosenzweig cautions that Hedgehogs end up as roadkill at least as often as they succeed.

The opposite of the Hedgehog is the Fox, jumping about from thing to thing.  Andy Grove, the acclaimed CEO of Intel, is noted for Fox-like thinking.  The technology in his industry was changing way too fast for him to focus on one thing.  He repeatedly led his organization through radical changes, including some where they abandoned the very products that had brought them much success.  Had they not been successful, they would have likely been criticized for not having a Hedgehog Concept.  However, Grove realized that there are appropriate times to be a Fox.

To be clear, I am not suggesting we abandon the Hedgehog Concept, and I don’t think Rosenzweig is, either.  We must find the proper balance between Fox and Hedgehog-type behavior.  Once a strategic direction is established, it’s time to focus on making that work, but prior to that, it’s okay to behave like a Fox.  In fact, that Fox-like behavior may be what keeps you alive if your Hedgehog Concept fails.

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Forecasting is a Learned Skill

Wednesday, March 7th, 2012 by Troy Schrock

Forecasting is a learned skill, and as such, it can be taught and improved over time.  It also will never be perfect.  Yet, I often see CEOs and executives giving the financial staff a terrible time when actual results differ from the forecast.  I have also seen many financial personnel terrified to provide a forecast to the executive team because it is built on assumptions rather than “facts.”  By nature, financial personnel tend to be more averse to making mistakes than others.  They want their numbers to be right, but forecasts are never “right” in precisely matching actual results.  No one can absolutely predict the future.  A forecast can only provide a directional view based on the best knowledge available.

Forecasting is not limited to financial numbers.  Every discipline has some kind of key activity or metric to forecast, so CEOs, CFOs, CIOs, COOs, and any other kind of business leader ought to be able to understand the uncertainty and apprehension involved in forecasting.

You can only become excellent at forecasting by working on it.  Mistakes will be made.  Through practice, you will gain a better understanding of the drivers of the key activities which are drivers for the financial results.  Not only will the accuracy of your forecasts improve over time, but you will also gain a deeper understanding of your business (which is the greatest value of forecasting).

For more insight on financial forecasting, consider reading Before You Hire a CFO

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Choosing Smart Numbers (Part 2)

Wednesday, February 15th, 2012 by Troy Schrock

(Read Part 1.)

Once smart numbers are developed, they need to be properly communicated.  The reporting process is as important as the numbers themselves.  Information cannot inform decisions if not shared in a practical and useful way.  A simple scorecard captures the smart numbers on a daily – or at least weekly – basis.  In addition to providing the current smart number, the scorecard should provide context (for example, the smart numbers for each day that week, the prior six weeks, or the last year).

Who should see the smart number report?  At the very least, the executive team should see the report.  Other managers may benefit from seeing the overall company perspective contained in the smart
numbers report.  Keep in mind, the purpose of the smart numbers is to enable decision makers to react quickly to the current reality.  Anyone who can help the company by knowing the smart numbers should be included in the distribution.

The second insight is a practical tip.  Business conditions change over time, so you should periodically review your smart numbers to ensure they are still applicable and appropriate.  Sometimes a slight modification is required, while other times, one or two of the existing smart numbers may need to be replaced completely.

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