Linking Your Business Strategy to Your Technology Strategy Smart man learns from his mistakes Wise...

Linking Your Business Strategy to Your Technology Strategy

Smart man learns from his mistakesWise man learns from smart man’s mistakes

Chinese proverb

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© Growth Strategy Partners www.GrowthStrategyPartners.com 2

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What specifically do you want to learn today? What are three key components in a good technology strategy?


Objectives for this Hour

Communicate proven growth disciplines

Define how to build a good business strategy

Identify how to link the technology strategy to the business strategy


An Introduction to Growth Strategy Partners

Our Differentiators

Growth research based consulting firm

Has unique and proprietary diagnostic and rapid implementation tools

Accomplished Consultants

Partners with clients to develop long term, sustainable growth

Selected by Inc. magazine to be their growth strategy consulting practice

Value Proposition: We can help you grow your business faster and more efficiently than you can on your own.

Our Definition of Growth Revenues Profit Talent


Research Drives Our Approach

What winners do, and how they do it

Experiences of Growth Strategy Partners’ Consultants who have been highly successful CEOs and business executives

3 3 Growth Growth DisciplinesDisciplines

Other “growth” lists

Ten Years of Proprietary Research with over 500 CEOs of America’s Fastest Growing Private Companies

Over 25 sources


Right Seats1. Functional2. Level

Right People1. Skills2. Knowledge3. Behaviors4. Results

1. Limited Initiatives2. Aligned Resources3. Linked Incentives4. Culture of Discipline

Right People In the Right People In the Right SeatsRight Seats Ability to ExecuteAbility to Execute

1. Effective Growth Planning Process2. Advanced Customer

Management3. Robust Processes4. Differentiated Products

and Services5. Strong Core Values

Implementing RightImplementing RightPracticesPractices

Three Growth DisciplinesThree Growth Disciplines

“Over 80% of most companies are not effectively implementing the Three Growth Disciplines. Those who do are growing faster and more efficiently.”

Christopher DiCenso


Developing An Effective Strategy

“Recent research published in the Harvard Business Review suggests that organizations on average deliver only 60% of what their strategies promise. More than one-third of these

companies achieved less than 50%. …Companies are delivering only about two-thirds of their potential due to failures in planning and execution... “

CFO.com

“Surveys show that 70% to 90% of organizations fail to successfully execute their strategies. In most cases, the failure is one of execution, not of the strategy itself. Our own research traces

this failure to two causes. The first is that since there is no generally accepted way to describe a strategy, organizations are attempting to execute something that isn’t even articulated.”

Balanced Scorecard Collaborative

Strategies Fail to Deliver Due To Failures In Planning

Strategies Fail To Deliver Due To Poor Articulation

Are you failing to plan or planning to fail?

“66% of fast growth companies have a strategic plan.…These companies are 40% larger and 45% more productive than comparison companies.”

PricewaterhouseCoopers

Companies With An Effective And Articulated Strategy Grow


What Are the Keys to a Good Strategy?

Understanding of a company’s core competence/method of competition Product leader, Customer intimacy, Operational excellence

Understanding of operational strategy Catalog orders Custom orders High volume Low volume

Clearly defining and communicated objectives, tactics and activities Financial, customer, process, people Customer groups, markets, geographies, products, services

Owners of objectives Leadership team

Incentives linked to objective PROCESS to react to and implement strategic decisions

Large line item orders Small line item orders Mix


Method of Competition Definitions

Product Leadership Definition: Continuously introduce innovative products and services. Goal of

obsoleting their own products or services (before the competition does). Examples: Intel, Gillette, BMW, J&J

Customer Intimacy Definition: Providing unique and tailored products and services to specific

segments of the market. Views lifetime value of customer experience. Examples: Nordstrom, Disney World, USAA*, Charles Schwab

Operational Excellence Definition: Price and convenience leader. Strategic approach to the production

and delivery of products and services. Always seeking ways to reduce inefficiencies and optimize cross function and organizational processes.

Examples: Amazon, Dell, Wal-Mart

* also mastered operational excellence

“Be Great at One and Good at the Other Two” (based on customer perspective)


Method of Competition Prioritized

Priority WeightingCurrent Score

Winning Score

Score Gap

Weighted Gap

Product Leadership 3 9% 39 48 9 5%

Customer Intimacy 2 26% 58 73 15 25%

Operational Excellence 1 65% 75 92 17 70%

Where Should You Focus Your Strategies and Resources For Growth?

Weighted gap = winning score – current score x weight

Sum of weighted gap


How Compete

ProductLeadership

CustomerIntimacy

OperationalExcellence

• Product/service dev.• Customer feedback• Techy platforms dev.

• Customer intimacy• Order processing• Customer service

Supply chain• Order entry• Order build• Order delivery

• ERP• ASP• WMS

• CRM• SFA

• CE• DFMA• PDM• CAE

• Transaction volume

• high / low

• Order Type

• Large orders

• Small orders

• Mixed

• Product Type

• Custom

• Catalog

• Mixed

• Customers

• Markets

• Geography

• Custom

• Catalog

• Fast follower

• Early adopter

• Centralized

• Disruptive techy

• M&A vs internal growth

• Core competencies

Linking MOC to Strategy to Technology

Strategy Product/Service Profile Key Processes Tools/Techy


Strategy MapMETHOD OF COMPETITION Operational Excellence Customer Intimacy Product Leadership

Priority 1 2 3Weighting 66% 26% 9% OBJECTIVE OWNER MEASURE TARGETS INITIATIVES BUDGET

(Cumulative Annual Growth Rate)FINANCIAL 25% Net Income increase Frank Net income 25% per year -$

20% Contribution Margin increase Bill Contribution Margin 20% per year

Less than 15% overhead increase Sean OH growth rate under 15% -$

CUSTOMER Be competitively priced Frank Question on Customer SurveyAverage score of 4.5 on this question Create and implement customer survey -$

Redesign rating card

Be easy to do business with Frank Question on customer surveyAverage score of 4.5 on this question Restart rating card follow up program -$

Provide good quality work Tom Question on customer surveyAverage score of 4.5 on this question

Create and implement manager Quality Training 1,000$ Create and implement Practical Training program 10,000$

PROCESS Training of Miscrosoft Programs 2,000$ Improve the selling and estimating process Dave Time to complete an estimate Reduce time needed by 15%

Implementation of Dave's automated program by all managers 2,000$

Improve the delivery process Bill CM productivity Define at mapping process Core process mapping process 7,500$

Improve marketing and lead generation focus Bob % increase in # of leads

18% increase in leads and 18% increase in leads over $200K

Addition of lead generation to Team Player Plan; -$

Creation of cross-selling grid -$

LEARNING

Improve selling skills ChuckSuccess Ratio (Won Deals/Won Deals + Lost Deals) 40% Success Ratio

Create and implement a defined Sales Process 1,000$

Drive the Values through the business Steve % that can name the Values

Managers & up - 95% by 8/20/04 Rest of org. - 50% by 08/20/04 Develop and conduct Values survey 3,000$

% that are living the Values

Managers & up - 50% by 11/31/04 Rest of org. - 35% by 11/31/04

Implement "Ever-Present Reminders" of Values

Improve trade and job mgmt skills BillBonus hours earned/Total hours worked 20% of hours are bonus hours Manager Training program 2,500$

Time tracking, reporting and measurement process

Balanced Scorecard Action Plan

Increase Net Income at 25%

CAGR

Keep overhead growth below 15% /yr

Be competitively priced

Be easy to do business with

Improve the selling and estimating processes

Improve marketing and lead generation

focus

Improve the delivery process

Improve selling skills

Improve trade and job mgmt skills

Drive the Values through the business

To achieve our vision, how should we appear to our customers?

To satisfy our customers, which operational processes must we excel at?

How wil we sustain our ability to change and improve?

To financially sustain our mission, what must we focus on?

Increase Contribution Margin 20% / yr

Provide good quality work

Sample Strategy Map and Balanced Scorecard


Dashboard Performance ViewAre We Building Our Backlog?

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

Jan. Feb. Mar. Apr. May

$ T

ho

usan

ds

TPM Backlog

Change in TPM Backlog

TPM Contracted Backlog External Budget

Are We Growing Revenues?

0

2,000

4,000

6,000

8,000

10,000

12,000


Reven

ue $

Th

ou

san

ds

TPM Budget TPM Cumm Budget TPM Cumm. TPM

$11,681,250 budget

How are our Projects Doing?

-4%

-2%

0%

2%

4%

6%

8%


Fade Overall Project Profitability(GP) Budget Fade for 2005

How Happy Are Our People?

93%94%95%96%97%98%99%

100%101%

Jan. Feb. Mar. Apr. MayR

ete

nti

on

Rate

Retention Rate

Are We Growing More Efficiently?

(5)

-

5

10

15

20


$ T

ho

usan

ds

TPM Revenue/FTE Gross Profit /FTE Operating Income/FTE

Is Our Pipeline Growing?

0

5

10

15

20

25

30


Co

un

t

Annalized Proposals Annalized Interviews

Budgeted Annualized Proposals Budgeted Annualized Interviews

How are the Sales People Doing?

-

50

100

150

200

250

300


$ T

ho

us

an

ds

TPM Revenue/Salesperson (FTE) 4.75

Are We Growing Profits?

-600

-500

-400

-300

-200

-100

0

100

200

300


$ T

ho

usan

ds

NI (Operating Income) Budget NI (Operating Income)

Cumm Budget NI (Operating Income) Cumm. NI (Operating Income)

Are Our Gross Margins Growing?

0

200

400

600

800

1,000

1,200

1,400


$ T

ho

usan

ds

Gross Profit Budget Gross Profit

Cumm Budget Gross Profit Cumm Gross Profit

Risk Adjusted Revenue Forecast

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000


$ T

ho

us

an

ds

Contracted Wherego Stretch Lead track

Revenue Forecast by Function

-

200

400

600

800

1,000

1,200

1,400

1,600

Jan. Feb. Mar. Apr. May Jun Jul Aug Sept Oct Nov Dec

$ T

ho

us

an

ds

Planning Design Design Build General Conditions

Are Our Customers Happy?

-

5

10

15

20


$ T

ho

us

an

ds

TPM Revenue/FTE Gross Profit /FTE

© Growth Strategy Partners www.GrowthStrategyPartners.com

Growth Disciplines ScorecardGROWTH

PRACTICE

NON PERFORMING BEGINNER INDUSTRY AVERAGE ADVANCED EXPERT

Effective Strategy Design and Execution

No strategic objectives or resemblance of goals. No formal budgeting

CEO driven objectives, mostly undocumented, with little input from team. Some financial metrics summarized. Informal yearly review process. Budgeting exists.

Strategic objectives defined, semi-effective annual review process, Objectives partially linked to rewards. Team involved in planning. Summary metrics reviewed.

Strategic objectives set by team with bi-annual review and adjustment process. Objectives linked to incentives of top layer. Key metrics published.

Strategic objectives set and reviewed/adjusted quarterly. Over 80% of objectives completed yearly. Incentives linked to objectives 2 layers down. KPIs in dashboard format.

Advanced Customer Management

Target customers and value proposition not clearly defined. Selling everything to everyone.

Target customers defined. Weak value proposition. Customer rationalization not clearly defined. No specific customer channels. Customer profitability not well defined.

Some custom solutions to targeted customers. Customer segments managed. Some rationalization. Some customer feedback mechanisms. Top customer and product profitability.

Targeting and managing customer segments with custom solutions. Customer and product profitability managed well. Some direct customer feedback. Unique customer channels defined.

Custom solutions developed for targeted customers. Value proposition defined and known by customers. Customer profitability managed very well. Great customer feedback processes. Very discrete customer channels.

Robust Processes

Core processes not defined. Have not improved any processes in over 1 year.

Core processes understood yet not defined or measured. Some process mapping. Improved a process or two in last year (focused effort).

Core processes defined, documented (flowcharted) and measured. Some continuous improvement efforts. Processes are semi-effective or efficient.

Core processes defined, documented, measured. Tools such as kaizen, six sigma or reengineering have been specifically applied. Continuous improvement efforts defined.

Core processes very effective and efficient. Good measurements. Process improvement tools instituted (six sigma, etc). Technology applied to core processes. Core processes reviewed yearly for robustness.

Innovative Products & Services

Products or services not differentiated. Value proposition not effectively defined.

Product & service value proposition understood yet not clearly communicated. Profitability known yet not managed effectively. Weak product development process.

Products & Services differentiated with unique value proposition. Profitability managed. Some rationalization exists. Product development process exists.

Clear product/service differentiation and value proposition. Profitability managed well. Robust product development process. Pipeline of new product ideas exists

Superior products & services. Strong product development process. Maximization of product & service profitability. Technology leveraged. Steady stream of new products being introduced.

Strong Core Values

Core values not defined. Little interest from leadership

Core values are communicated but not consistently. Not defined or documented.

Core values documented defined, and communicated by leadership. Partial communication by employees. Partially “living” values.

Core values defined, documented and communicated by employees. “Living” some of the values.

Majority of employees can recite values and believe company is living them. Strong self-eject mechanism.

Right Seats with Right People

Roles and responsibilities undefined. No organizational structure. No performance reviews. High turnover. Difficulty finding talent to fill openings

Organizational design driven by existing talent availability. Ad hoc talent selection. Poorly defined roles and responsibilities. Ad hoc performance reviews. Difficulty competing for key talent

Organizational design influenced by strategy. Formal talent selection. Job descriptions. Formal performance reviews measured against specific goals. Competes for key talent

Organizational design and talent aligned with strategy. Formal performance management system. Ad hoc leadership development programs. Employer of choice for key positions

Continuous process for identifying, recruiting and developing high performance leaders. Active robust succession planning. Talent bank. Employer of choice for all positions

Ability to Execute

With no plans and no priorities, daily requirements are not always achieved. No performance standards. No performance incentives.

Focus on a long list of daily to dos. Few incentives. None linked to performance. No tracking or discipline.

Focus on a many initiatives, most with objectives and milestones but resources are not allocated. Incentives not linked to performance. Limited tracking and discipline

Focus on a few initiatives, with objectives, milestones and resources allocated. Incentives informally influenced by performance. Informal review of process. Developing culture of discipline

Focus on a few initiatives, each with objectives, milestones and allocated resources. Incentives linked to performance, process of review and change, culture of discipline


Thank You!!

For more information, please contact:Marcia Nita Doron

Altico Advisors508-485-5588 x107

[email protected]

“Do what you can, with what you have, where you are.”Theodore Roosevelt

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