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Responding to Crisis:Planning and Execution as Competitive Advantage
16 August, 2011
Agenda
• Introductions• Marketplace Study Overview• Market Insights• Implications• Solution Set• Discussion
MARKETPLACE STUDY OVERVIEWResponding to Crisis: Planning and Execution as Competitive Advantage
Original Study Purpose
1. Determine perceived impact of debt limit debate on general business sentiment
2. Ascertain forward looking expectations of:1. Revenue trends2. Hiring plans3. Fixed asset investment4. Continuous improvement projects
Something Interesting Happened
• S&P downgrade• Stock market crash• Market recovery• A large amount of bad economic news all at
once
A Lot of Data Floating About
Bad News
• Housing starts down• Consumer sentiment weak• Employment gains have
been far too slow • Import costs up• S&P Downgrade• Fears of a double dip
Good News
• Shift to multi-family units • Consumer spending up• Weaker dollar helps export
&domestic consumption• Energy costs down• Lower interest rates• Industrial production spiked
Two Narratives Being Told
• “My business looks fairly solid”– Fact driven personal narrative– Order books holding strong into 4th quarter– Cautious optimism about the future
• “The economy is faltering”– Opinion driven global narrative– Fear about “them” making a mess of things– Waiting for the shoe to fall
MARKET INSIGHTSResponding to Crisis: Planning and Execution as Competitive Advantage
Survey Set
• Reached out to thousands of C-level decision makers
• Responses from 115• Broken into two distinct groups:– Pre August 8th – August 9th and later
Manufac
turing
Business
servi
ces
Logis
tics
Finan
ce/ban
king
Distrib
ution
Consumer
servic
esOther
Constructi
on
Component/p
roduct
assem
blyReta
il
Restau
rant/h
ospita
lity0%
10%
20%
30%
40%
50%
60%
70%
38%
25%
15%
10%
4% 4% 4%0% 0% 0% 0%
62%
4%2% 3%
9%
0%
6%3%
1%
10%
0%
What is your firm's primary role?
Pre Aug 8Aug 9 & later
< $5 m
illion
$5 milli
on - $24 m
illion
$25 milli
on - $99 m
illion
$100 milli
on - $249 m
illion
$250 milli
on - $500 m
illion
> $500 m
illion
0%
5%
10%
15%
20%
25%
30%
35%
40%
23% 23%
33%
10%
5% 5%3%
31%
37%
20%
5%3%
What are your company's anticipated 2011 revenues?
Pre Aug 8Aug 9 & later
Very much hurt Hurt a bit No impact Helped a bit Very much helped0%
10%
20%
30%
40%
50%
60%
33%
52%
5% 5% 5%
39%
47%
2%
10%
2%
Do you believe that the method and language coming from the recent debt ceiling debate has helped or hurt the U.S. economy?
Pre Aug 8Aug 9 & later
Decline >10% Decline 1% - 10% Flat Grow 1% - 10% Grow >10%0%
10%
20%
30%
40%
50%
60%
0%
4%
14%
52%
28%
3%
19%
24%
35%
18%
Compared to the second half of 2010, how do you anticipate your firm's revenue will perform in the second half of 2011?
Pre Aug 8Aug 9 & later
Decline >10% Decline 1% - 10% Flat Grow 1% - 10% Grow >10%0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0% 0%
38%
47%
14%
7%
10%
40%
37%
5%
Compared to the second half of 2010, what are your firms' plans for hir-ing in the second half of 2011?
Pre Aug 8Aug 9 & later
Decline >10% Decline 1% - 10% Flat Grow 1% - 10% Grow >10%0%
5%
10%
15%
20%
25%
30%
35%
40%
0%
14%
28%
33%
23%
5%
10%
36%
34%
15%
Compared to the second half of 2010, what are your firms' plans for fixed asset investment in the second half of 2011?
Pre Aug 8Aug 9 & later
Decline >10% Decline 1% - 10% Flat Grow 1% - 10% Grow >10%0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0%
4%
28%
47%
19%
2%4%
33%
48%
13%
Compared to the second half of 2010, what are your firms' plans for investment in cost reduction and/or continuous improvement pro-
grams during the second half of 2011?
Pre Aug 8Aug 9 & later
Direct Comparison
Pre S&P Downgrade
• Revenues:– 78% expect revenue growth– 4% expect revenue decline
• Hiring:– 51% expect hiring growth– 0% expect hiring decline
• Fixed Asset Investment:– 56% expect CapEx growth– 14% expect CapEx decline
Post S&P Downgrade
• Revenues:– 52% expect revenue growth– 22% expect revenue decline
• Hiring:– 42% expect hiring growth– 17% expect hiring decline
• Fixed Asset Investment:– 49% expect CapEx growth– 15% expect CapEx decline
Direct Comparison (cont’)
Pre S&P Downgrade
• Continuous Improvement– 66% expect increased CI– 4% expect decreased CI
• Worries
Post S&P Downgrade
• Continuous Improvement– 61% expect increased CI– 6% expect decreased CI
• Worries
Reven
ue
Another rec
ession or e
conomic d
ownturn
Raw m
ateria
l costs
Labor c
osts
Energ
y costs
New pro
duct dev
elopmen
t
Transp
ortation co
sts
Availa
bility o
f cap
ital
0.00
1.00
2.00
3.00
4.00
5.00
6.00 5.20
4.60
3.803.30 3.20 3.00 2.70 2.60
5.09 5.034.41
3.33
2.41 2.412.76 2.55
Please rank the following concerns as they relate to your business. (1 = Least, 8 = Most)
IMPLICATIONSResponding to Crisis: Planning and Execution as Competitive Advantage
Significant Ambiguity• Will the economy fall into recession?• What happens to commodities?• Will the consumer stop spending?• Are industrial production numbers a mirage?• What about automotive?• Where will construction go?• Will we have jobs?• What about the debt reduction plan?• What happens if Europe collapses?• Will a slowing China ruin everything?• Will energy prices skyrocket?• What happens if stagflation returns?
Traditional Business Planning Insufficient
• Chart a single course of action• Heavy on outcomes, weak on tactics for
implementation• Three to five year goals• Assume too little• Unresponsive to changes in market realities
SOLUTION: ACTION BASED PLANNING
Responding to Crisis: Planning and Execution as Competitive Advantage
Expectation: Managed Ambiguity
• Multiple higher-likelihood scenarios• Timeline and action driven• Heavy focus on next 90 days• Well defined future state• Clearly outlined assumptions • Short term focus on revenue, internal
obstacles
A Well Managed Business
Goals
Objectives ObjectivesObjectives
Action/ Behavior
Action/ Behavior
Action/ Behavior
Action/ Behavior
Action/ Behavior
Direction Feedback
Elements, In Triplicate Please
• Clearly defined future state• Small number of achievable objectives• Understanding of external threats• Documented list of assumptions for success• Internal focus on why it won’t work• 90 day action plan
Plan the Work, then Work the Plan
• Review weekly– Sales activity– General assumptions– KPI
• Review monthly– Revenue– Specific objectives
Harness Your Team
• Small group of leaders who can get things done
• Define a game plan, playbook for each scenario
• Fewer meetings, more joint work• In God we trust, all others bring data
In Review
• C-suite sentiment has softened somewhat• Ambiguity has increased dramatically• Traditional planning approaches are too rigid,
timeframe too long• Action focused planning is a better option• Listen to the business• Nothing matters more than the next 90 days
DISCUSSIONResponding to Crisis: Planning and Execution as Competitive Advantage
NEED SUPPORT?CONTACT US:PHONE: 616.635.2920EMAIL: [email protected]
Responding to Crisis: Planning and Execution as Competitive Advantage