Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited
Association of Strategic Planning: driving growth from change
Article Type: Conference report From: Strategy & Leadership, Volume 36, Issue 4
The theme of the Seventh Annual Conference of the Association of Strategic Planning, Strategic Planning and Action: Driving Growth from Change held this year in Marina Del Rey, California was addressed by four keynote presentations – two on driving growth and two on leading responsibly.
“Driving Growth through Decision-Making and Execution” – Michael Mankins, Partner, Bain & Company, San Francisco
Good decisions create options and bad decisions limit them. And good execution creates valuable future options and bad decisions limit them. The goal of management, therefore, should be to seek to realize most value from its decision-making. To discover how good companies are at decision-making and execution, Bain surveyed senior leaders in large companies in collaboration with The Economist: the sample included over 650 companies with over $1 billion in annual revenues, over 68 in-depth surveys of Bain & Co. clients, and 117 interviews with C-level executives of the world’s best companies.
The variables studied were how frequently decisions were made (“pace,” P, the number of strategic decisions made per year), quality of the decisions (“quality,” Q, the percentage of decisions that were “right”), the “yield” (Y, expected value per decision), and the level of effort expended (“effort,” E). The purpose of the research was to determine whether companies’ decision-making could be improved, or whether the Decision Multiplier, expressed in the equation below, could be increased:
Results from the survey are shown in Exhibits 1 and 2. The striking finding is that many companies make relatively few strategic decisions a year, fail to get their decisions “right,” derive low yields from their decisions, and spend too much effort in making and executing decisions.
Exhibit 1 Pace, quality, and yield results from survey
Exhibit 2 Effort required to make and execute decisions
What do top-quartile performers do to achieve their strong results? Exhibit 3 summarizes their techniques and actions.
Exhibit 3 Techniques of top-quartile performers
Companies can start improving their Decision Multipliers by following this process:
Make certain decision makers have the requisite facts and understand key issues.
Generate viable strategic alternatives. Questions to ask: Are these the best ones? Are there others? Would you be willing to allocate resources to any of them?
Choose criteria and evaluate the alternatives. Questions to ask: Which is the best one and why? Why reject the others? Let’s go with the decision.
Using this process can shorten the planning cycle from 9-15 months to 3-6 months.
“The Responsibility Gap: Social Impacts and Management’s Accountability” - Ira Jackson, Henry Y. Hwang Dean and Professor of Management, The Drucker School, Claremont, California
Ira Jackson challenged his audience to face the dire state of ethics and responsibility in management, which he broadly defined, as “responsibility for society.” He cited Peter Drucker’s view that “Management is deeply involved in moral concerns,” and also that, “Management has to be accountable for performance.”
Some evidence of the scope of the problem:
Fifty-six percent of graduate business students admit to cheating.
A typical CEO earns in five hours what the average worker earns in a year.
Twenty-four thousand people die each day from hunger, yet the world has excess food to feed them.
About 2.6 billion people go without sanitation, 1.1 billion lack clean water and 1.8 million each year die as a result.
Over 1.2 million kids per year drop out of school.
About 20 thousand loose nuclear warheads (57 percent in Russia) are unaccounted for.
Thirty-two percent of countries are governed by flawed democracies.
Recent “back-dated stock-options” scandal.
Jackson urged managers to take a Hippocratic Oath on taking office: “Above all, do no harm to others - mistakes matter, ideas matter, people matter, we all matter.”
As an example of a company making profits by being socially responsible he cited Proctor & Gamble (Corporate Sustainable Development Dept). The social need: diarrhea kills over two million people per year, largely through drinking contaminated water. The corporate response: P&G makes PUR water purifiers. One packet costs five cents and purifies 20 gallons in less than 20 minutes.
“Three Strategic Steps You Can Take Today to Drive Organic Growth Tomorrow” - Kevin J. Clancy, PhD, Chairman, Copernicus Marketing Consulting, Waltham, Massachusetts, author of Counterintuitive Marketing and Your Head Is Smarter than Your Gut
Clancy offered a Peter Drucker insight: “the business enterprise has two - and only two - basic functions: marketing and innovation.” Clancy then cited a number of consequences of not emphasizing marketing and innovation enough:
Only 20 percent of companies grow organically via marketing and innovation - the rest hold their own or decline.The average ROI of most marketing programs is zero.Nielson reports a 95 percent failure rate for new product development.The Marketing Science Institute reports that a 100 percent increase in advertising yields only a 1 percent increase in sales.Marketing Management Analytics reports that every $100 invested in advertising returns only $54.In 48 out of 51 categories, brand equity has been in decline.Switching media for advertising and even measuring ROI won’t improve performance if the underlying problems aren’t fixed first.
Clancy suggests a three-step process to what he calls a “transformational strategy:”
Target responsive and profitable markets; create hundreds of ways to segment the market.Pay special attention to positioning, and make it compelling; no or poor positioning won’t improve brand equity or ROI.Recognize that exceptional implementation is just as important as great strategy. Three different studies report that most marketing strategies and plans are not being implemented today. Marketing, sales, PR, and advertising have to work well together.
“New Models of Strategic Leadership” - Art Kleiner, Editor-in-Chief, Strategy+Business, New York City
As examples of failed leadership, business editor Art Kleiner offered three corporate dilemmas that are unresolved:
Continuing to produce addictive and harmful cigarettes.
Producing cell phones that may cause brain damage, especially to children.
Large automobile manufacturer, losing market share, continuing to produce vehicles that are not environment-friendly.
It’s not so much what we’re going to do, Kleiner said, but rather what we’re going to be. These aren’t so much strategy questions as leadership questions. He maintains that leadership is mostly unverifiable - there’s no cause and effect.
Therefore, Kleiner proposed a working hypothesis of “strategic leadership:” “Great leaders are neither born nor made, but are those who create a context of leadership around them as a basis for change.” The “context of leadership” in this hypothesis has four parts:
A core ideal, purpose, or vision - held by the organization as a whole - which must be larger than just “to make money”.
A leadership team - the best ones are gradually developed from within, such as through internal succession. Moreover, a diversity of thinking must be developed and nurtured among the management team.
The requisite capabilities and resources to make things happen.
Clarity on everyone’s part on what it takes to make the strategy happen.
Highlights of some breakout sessions
Decision clarity. William Malek, Strategy Execution Officer, Strategy2Reality LLC, claims that almost every decision anyone makes in an organization, from formulating strategy to execution, is beset with uncertainty and subject to personal perceptions that could be wrong. The need for clarity is paramount, for example, goals and objectives can be positive or negative, general or specific, clear or unclear, explicit or implicit, single or multiple, linked or not, and bounded or not. Malek exposes these and other problems, suggesting that striving for clarity will go a long way towards easing communications with others.
Chief Strategy Officer. Walt Shill, Managing Director, North America Consulting Practice, says that in many corporations, the CEO and other C-level executives are overwhelmed by their own responsibilities to monitor and oversee the execution of the company’s strategy. Shill suggests creating the position of Chief Strategy Officer (as AIG, Motorola, Kimberly-Clark, and Yahoo! have done) to do precisely that, align operations with strategic direction, and make sure new initiatives are implemented.
Marketing to raise shareholder value. V. Rory Jones, Co-founder, Business Intelligence Associates, warned that while market strategy has the most impact on cash flow and company value, most marketing strategies are focused on increasing revenues, not cash-based profitability (net income). The result is that companies don’t derive the fullest increase in shareholder value from marketing because they are focused on revenues and market share, not profits.
Identifying opportunities for innovation. Yoram Solomon, Senior Director, Industry Relations and Technology Strategy, CTO Office, Texas Instruments, reexamined the $1.3 trillion electronic-product market, together with its various technologies and trends for each one. He demonstrated that even the fastest moving trends are predictable, as are consumption trends. Focusing on where these trends intersect provides the necessary data and impetus for innovation. His three-step process involves predicting technology and other trends, identifying opportunities for products or new technologies, and then navigating them through the industry maze (innovating).
Business-planning software. Carlos Centurion, VP Strategy and Marketing, River Logic, Inc., demonstrated proprietary integrated business-planning software, which could produce a holistic model of the business, provide multiple views for different organizational levels, and establish links with operational planning.
Competitive-intelligence research. John McGonagle, Jr, Managing Partner, The Helicon Group, used case examples to consider the pros and cons of strategic planners doing their own competitive-intelligence research. His examples identified best practices and were designed to allow attendees to decide whether they should do the research or engage a CI professional.
Executing plans. Alan Leeds, President, Y-Change and Jeff Mains, President & CEO, ANPC described the 15-year process that ANPC undertook to go from a startup in 1991 to a supplier of major navigational systems for government and military organizations. ANPC has always found it difficult to link strategic decisions with operational actions. With Y-Change’s help, it aligned its operational and strategic objectives, initiatives, and metrics, and used cascading change-management techniques.
Business maps. Jay Kurtz, President, KappaWest, Inc. maintains that business maps can be prepared to support planning at any level. A business map displays data in the form of pictorial or graphical information that makes it easier to generate the level of intelligence you need. Data are necessary but inadequate for decision-making. Information exploits data to create pictures, trends, maps, relationships, etc. Intelligence, ultimately, is derived from rigorous analysis of information and data in the context of a mission. Only from intelligence can one learn about opportunities, obstacles, risks, and threats.
Notes1. All data shown in this summary came from Michael Mankin’s presentation at the ASP Conference, February 25, 2008.2. All data cited in this summary came from Ira Jackson’s presentation at the ASP Conference banquet, February 25, 2008. See also Ira Jackson and Jane Nelson, Profits with Principles: Seven Strategies for Delivering Value with Values, Doubleday, 2004.3. All data cited in this summary came from Kevin Clancy’s presentation at the ASP Conference, February 26, 2008. See also Kevin Clancy, Your Gut Is Still Not Smarter than Your Head: How Disciplined, Fact-based Marketing Can Drive Extraordinary Growth and Profits, Wiley, 20074. All data cited in this summary came from Art Kleiner’s presentation at the ASP Conference, February 26, 2008.5. William Malek, “Strategic success is about the pursuit of organizational clarity.” See also Mark Morgan, Raymond Elliot Levitt, and William Malek, Executing Your Strategy: How to Break It Down and Get It Done, Harvard Business School Press, January 2008.6. Walt Shill, “The chief strategy officer: why you need one, how to find one.” See also R. Timothy S. Breene, Paul F. Nunes, and Walter E. Shill, “The chief strategy officer,” Harvard Business Review, October 20077. V. Rory Jones, “The executive guide to boosting shareholder value.”8. Yoram Solomon, “Bowling with a crystal ball.” See also Yoram Solomon, Bowling with a Crystal Ball: How to Predict Technology Trends, Create Disruptive Implementations and Navigate Them through Industry, BookSurge Publishing, 20079. Carlos Centurion, “More insight. More impact. More profit. Less time.”10. John J. McGonagle, Jr, “Sometimes you do & sometimes you don’t – when do strategic planners need competitive intelligence professionals?”11. Alan Leeds and Jeff Mains, “Bridging the strategy chasm: achieve strategic goals through cascading management.”12. Jay Kurtz, “Preparing and using business maps to develop more effective strategy.”
Stan AbrahamProfessor of strategy and entrepreneurship at Cal Poly Pomona and a Contributing Editor for Strategy & Leadership. He has reported on every Association of Strategic Planning annual conference since 2001 for S&L. For more on the keynotes and other presentations visit the ASP website: www.strategyplus.org.