Resources

The Importance of Dealing with Uncertainty

Different Scenarios Enable Successful Strategic  Planning

By Denise Harrison

How can we better deal with uncertainty when we develop our strategic plan?  Many strategic planning teams struggle with this issue.  While it is important to understand what you know as facts and what your assumptions for the future are, I have found that some good scenario planning helps a team prepare for a wider range of possibilities that might occur in the future.  By looking at different scenarios, the team can assess what will work in each scenario and then select the approach that will benefit the company in the most likely scenario, but still balance that approach by not closing out options that will work if another scenario unfolds.

Generating different scenarios

Some teams generate a probable scenario and then move to generate an upside and downside.  For example, the probable scenario is that we achieve 10% growth and the upside is 12.5% and downside in 8%.  While this works, I find that high performing teams that discuss actual events/trends and then develop scenarios corresponding to possible outcomes is a better way of generating scenarios.  Some examples of trends and events include:

  1. Product launch is delayed by 12 months.
  2. Tariffs continue or are raised significantly.
  3. Oil prices stay down longer than our probable scenario (this could be good or bad depending on what your company does and who your customers are).
  4. Economic recession.
  5. Acquisition has unexpected fall-out and customers leave and go to competitors.
  6. Customers’ preferences change faster than we anticipate (Blackberry) or customers do not change as quickly as anticipated (Uber).

You should have your team members come up with ideas for different scenarios.  Generate what these environments will look like out 5-10 years.  Ask the question: What will we need to do to be successful if this is the competitive landscape?  You will notice before you start working, that several of the outcomes will have similar results.  Select scenarios that will generate different actions.

Once you have generated different “success” strategies, then evaluate which scenario is most probable, and then look to see what you can do to accommodate other “success” strategies so that you maintain your flexibility moving forward.   While you may not be able to keep all options open, you may be able to keep some avenues open until time passes and you have a better view of what the future has in store for your company.

Another benefit of this exercise is it allows the team to think more broadly and be more aware of the external factors that impact your business.  This will help the team deal with the changes that will inevitably happen during the planning horizon.  As you start to see movement that makes another scenario unfold, bring the team back together and recast your strategy.  If you anticipate this movement faster than your competition, it will help position your company to gain market share or weather an industry downturn better than your competitors.

If you are interested in discussing more about how to generate scenarios that will enhance your team’s flexibility, please give me a call at: 910-763-5194 or email me at harrison@thestratplan.com .

Denise Harrison is the president of Spex, Inc. Strategic Planning and Execution.


Strategic Planning is Messy

Author: Denise Harrison

“Strategic planning is messy” declared one CEO as a team member expressed a desire for a more linear approach, frustrated because he couldn’t see the end game.  The CEO went on to say, “It’s okay that it is messy – we have to consider many alternatives and new information before we funnel down to the few things that we will select to do.”  I find that when people embark on strategic planning, they want the process to be simple and linear; some want the answers to be obvious.  So why is strategic planning messy?

Contemplating the external factors that impact your business – gathering information and creating a shared base of knowledge

When your team starts its strategic planning journey, it should first identify the topics worthy of research, before the team can make informed decision about the course and direction of the company.  This research allows the team to make decisions based on facts and information, rather than on opinions and top-of-mind thinking.  Typically, information will be collected about:

  • Core business segments – our customers
  • Competitors
  • Technology
  • Suppliers
  • Economic and Industry Trends
  • Regulations
  • Human resource availability
  • Potential new opportunities

Once the information has been gathered in a consistent format, it is shared with the team, so now each team member has a foundation for decision making.

Still, even with this shared base of knowledge, people interpret information differently and give different weights to the information.  But with this base, your team needs to decide:

  • Which of our core businesses should get the most emphasis?
  • What opportunities should we pursue?
  • How can we enhance the way we differentiate ourselves in the market?
  • What do we need to develop internally to get where we want to go?

There are many steps to take to sort out these questions – you often drill down, make selections and then cycle back.  During a recent planning session, we started out reviewing research on 14 opportunities to significantly enhance the company’s growth.  Next, we developed a profile of an industry leader, looking out five to ten years.  Then we screened the opportunities, using the research provided and our vision of the industry leader as a backdrop as we went through the screening process.  We easily selected the top three opportunities – by a landslide!  Next, we discussed the three opportunities and it quickly became obvious that one was not as good as the others.  What was next? Just drill down on the two? No, it was not that easy.  As we discussed the two, we found that we had two ways to pursue each one and thus, we were back up to four.  We then looked at the benefits and costs of each choice and we were able to come back to two.  Now each of the options was well developed and there was consensus that these were the two that needed the team’s effort during the next year.

Was the process pretty?  No, along the way, many voiced frustrations during the journey, sensing that we would never get to a conclusion.  But in the end, all the team members embraced the process and said they wouldn’t have guessed the team would have made the progress that it did coming to a consensus and a clear direction as quickly as we did.  While the process was messy, when it came down to selecting top picks, the list narrowed down quickly.  As the team went through the final discussions, it was able to dig deep and get to the heart of the issue.  Good information enabled the team to sort through what was important and to have a deep dive discussion on the opportunities that rose to the top.  When the team left the meeting, everyone was firmly behind the topics selected and ready to work on developing action plans to achieve success.

But we didn’t use all the information gathered!

Yes, this is often the case; but how do you know what is important when you start?  After researching certain topics, you may conclude that the topic will not impact the strategy for this round of strategic planning.  But, you don’t know this when you start and sometimes a topic may not be relevant, but it will spur discussion on another topic that is important, or it may be important to future strategic planning sessions, so starting people thinking about it see can have some value.

The hardest part of strategic planning is what you say “no” to

As mentioned above, during strategic planning, you will consider a great deal of information and many options to develop the strategic planning that best positions your company for success.  During the life of your company, you will focus in different areas to achieve success.  For instance, take the case where you are having difficulty meeting your delivery schedules and/or have issues with product quality that are causing your company to lose market share.  While it may be fun to think about product innovation, if you can’t get the product out the door with the customer-required quality, all the innovation will go unnoticed or noticed and copied by your competition.  You may have to say “no” to some good ideas until you get to a place where your company is truly able to capitalize on its innovation.  This doesn’t mean you stop innovating, it is simply a question of emphasis.  Sometimes you need to build the foundation for growth to occur.  Unfortunately, this sometimes makes strategic planning seem messy, as people don’t see things happening that are important to them. Making the hard decisions as to what must come first can cause a great deal of discussion and healthy disagreement.  It is through these conversations that the course and direction are selected, and the key strategic initiatives selected – all selected to further position the corporation for future success.  Is fixing production fun?  Enhancing quality sexy?  But often if these aspects are not fixed, we may not have the platform to launch our innovative products and services.

Messy, but thorough

So, no, strategic planning is not necessarily a linear process.  It allows for ideas to come in from multiple sources.  It generates discussions about multiple options, often cycling around and discussing them again.  Then, the actual strategy summarizes what the team has discussed, the course and direction for the next 3-5 years for your core business segments, the new opportunities you want to pursue and what you need to develop internally to get where you want to go.  Then you take it down to tactics – what turns strategy into action:  what are the 6-10 key strategic initiatives the team would like to accomplish in order to move the strategy forward for the next 12 to 18 months.

If you have questions about strategic planning, please contact: Denise Harrison, harrison@thestratplan.com


How Do You Turn Sheets from a Commodity to a Cost Saving Product?

By Denise Harrison 

Before leaving a commodity or price sensitive segment of your business you should ask: is there any way we can add value to our products and services so that customers will pay a premium?  To do this, you must understand what your customers’ needs and preferences truly are and what you can do to add/change your products and services.

Bed sheets: A price sensitive product – how can you differentiate?

Standard Textile was faced with this dilemma – in particular, hotels and hospitals kept going with the vendor with the lowest price.  How could they break the cycle?

Hospitals:

What are the key concerns that hospitals face as regulations increase and hospitals are graded on their healthcare outcomes?  One of the issues that continues to plague hospital patients are bed sores.  How can sheets help prevent bed sores?  The team at Standard Textile aimed to find out.  Here is what they found:  bed sores fester when there is a great deal of moisture and heat generated by the patient’s body.  Once a sore begins to form is further irritated by the friction generated by moving around in a hospital bed.  Standard Textile help resolve this by developing sheets that were cleaner, dryer and smoother.

Bed sores? Ugh! Bed sores impact 2.5 million patients annually and incur $9-11.5 billion/year in health care costs.  The National Pressure Advisory Panel Guidelines: “Consider using a silk like fabric instead of cotton or cotton blend to reduce shear and friction”.

The hospital bed problem:

  • Moisture associated skin damage
  • Excessive moisture and odor
  • Patients that are difficult to move and position

Standard Textile’s solution was DermaTherapy®, sheets that are FDA-approved for atopic dermatitis (bed sores).  These sheets help control moisture, friction and shear.

Now hospitals desiring to lower bed sore occurrences, flock to the Standard Textile sheets to lower the incidence of bed sores, thereby raising their patient outcomes scores and lowering overall system costs.

Hotels:

Over the years, hotels have used bed and bedding materials to differentiate their brands, but what could Standard Textile do to further optimize the hospitality industry’s operating costs? Here is what they found:

  • Hotel’s wash new sheets before they are used for the first time
  • They wanted premium but durable towels that were not only soft, but absorbent
  • Bedcovers – now washed, but how can we get the covers back on the beds after washing without ironing, but still have them look good?

Standard Textile solutions included:

  • Room Ready for You®; sheets that arrive already washed and ready for use
  • Towels that are more absorbent, durable and soft using patented weaving technology
  • Cumulus® Bedcovers: waffle-design bed covers that are room-ready after washing (Cumulus®)

How does Standard Textile turn typically price-sensitive products into value added products? In short, the company works to truly understand customer issues, and then leverages its technical competencies in weaving, textile materials and laundering, to develop products and services that significantly lower their customers operating costs.

What are you doing to lower your customers’ operating costs and thereby raising the value (and potentially, the price) of your formerly price sensitive product?  A true understanding of the issues that your customers face will help you develop products and services that provide more value to your customers’ processes.

If you have questions about turning your price sensitive product into a value-added product, please contact:  Denise Harrison, harrison@thestratplan.com, 910-763-5194.

(c) Spex, Inc., Wilmington, NC, 2018


Stuck in the mud? What can you do to return focus to execution?

What do you do when progress is slowing on your key strategic initiatives?  Leaving your strategic planning session, your team was motivated to get the key strategic initiatives completed.  Action plans complete, resources allocated, and everything was moving forward.  But now, after several months, forward progress has slowed.  Team members have gotten bogged down by the day-to-day requirements of their job.  What can you do to re-invigorate your team? Some thoughts:

Author, Denise Harrison

Have one action plan team report per meeting

Most teams use a monitoring meeting to report on their activity monthly – this group is made up of the senior management team and is an effective way to keep action plans on track. However, if you are looking to re-invigorate, you should have one action plan team report per meeting, getting the whole action plan team involved.  When the action plan team prepares to present, they typically will make more progress so that they look better in front of the senior management team.  You will also find that that team is more committed leaving the meeting.  This is also good two-way exposure for action plan team members with the senior management team.

Ask challenging questions for re-invigorating strategic initiatives:

  1. If we wanted to complete this project three months earlier, what would we need to do?
  2. If we hired an intern to help you on this project, how much sooner would the plan be complete?
  3. What is the expertise you need to move the action plan forward?

Have the team re-write the action plan

Have the team re-write the action plan, clearing out completed items and re-writing future steps.  This will help people get focused on the future and help them discuss any issues that come up as they re-think what is needed for completion.

Talk to the team about what should be delegated

Sometimes we see that the enemy is us…. what are we doing/not doing that is getting in the way?  Talk to the team about what should be delegated, so that they can spend more time on the strategic rather than the tactical.

These are some possible actions that I have seen work successfully.  What other actions have you tried?  If you have additional questions about developing a strategy or executing strategy, please call me, Denise Harrison:  910-264-1350 or harrision@thestratplan.com.

(c) Spex, Inc.  Wilmington, NC 28401


Boiling down IOT (Internet of Things) into Something Useful

By Denise Harrison

Is your company seeing these trends?

  • Many experienced workers are retiring from the workforce, often taking tribal knowledge with them.
  • Hiring difficulty: especially among the skilled trades.

Well, your customers also face these trends – how can you help?  Can you design products/services that will help alleviate these issues for your customers?  Technology can be key to providing the solution.  Yes, you have heard the buzz words “big data” and IOT (Internet of Things) – but how can these technological advances work for you?   Is there a way that you can install sensors in your equipment to have alerts when the systems need maintenance or parts need to be replaced?  Would this ability help streamline and extend your customer’s maintenance department?  (Maintenance departments are one of the areas where there is a shortage of skilled labor.)  Could you add a service that would provide maintenance when these alerts are raised?  This could be onsite service or remote service, directing the plant personnel on what needs to be done.  Would resolving these issues for your customers give you a competitive advantage?

How do you get started?

Start by using sensors and collecting data within your own organization.  Start small (say air compressors); understand what is possible, then assess how you can use this knowledge to provide value to your customers. Starting with an in-house function allows your team to work on the kinks before you get an application into the field.  Your first thoughts on customer applications may change after you have seen the impact of technology in-house.

Buzz words and bite sized chunks

Buzz words like IOT (Internet of Things) can be meaningless unless you cut them down into bite sized chunks, small applications where you can test how they perform.  As you learn by using the technology, you will create a more efficient manufacturing facility as you link operations and then can look at “big data”.  Starting small allows the team not to be overwhelmed by the amount of data generated.  As you develop this knowledge, you will be able to apply it to your products, service and your internal processes.

Technology, one of Michael Porter’s five forces, can be harnessed to give you a significant competitive advantage.  As you develop a strategic plan, be sure to look at emerging technologies and how you can leverage them to provide a competitive advantage.

To learn about how to look at technology in your strategic planning process please contact Denise Harrison: harrison@thestratplan.com.