In my last blog we shared some power tools that
StreetSavvy Business Executives can use to help find the path for profitable
revenue growth. I used this information in a talk I gave at UCI Applied
Innovation to 100 plus budding entrepreneurs and sitting executives.
Now, I want to provide 4 additional tools to help with
the direction and management of strategic initiatives which will help
StreetSavvy Business Executives find their true north and set the stage for executing
their plans.
Scenario planning and visioning is a tool that has less
structure than some of the other tools in this compendium. Yet is a powerful
tool to be used by executives, department heads, and teams to construct the
vision of where that organization is heading and the outcomes to be achieved. I
started using this tool in the 90s when I was heading marketing at a wireless
company. Given the competition that was coming about due to changing
regulations and changing technology and due to the increasing use of the
internet, it was time to think about where we needed to be heading.
Our visioning exercise was used to determine not only where
we wanted to go, but also to ensure there was alignment among the executives in
carrying out the strategic and business plans.
To do this correctly, each executive or team member has to
address different questions including some of the following questions. They do
this by visualizing a future state as if they walked in the shoes of their
customers, their board, or other constituents.
- What does the company look like in the next five or 10 years?
- What kind of products will it sell and how will they be sold?
- What will the customers look like?
- What competencies will you need to put in place?
- Who will the competition be?
- What messages would you want to get across to the board of directors, to an investment group and to your customers?
Scenario planning and visioning is a tool that has less
structure than some of the other tools in this compendium. Yet is a powerful
tool to be used by executives, department heads, and teams to construct the
vision of where that organization is heading and the outcomes to be achieved. I
started using this tool in the 90s when I was heading marketing at a wireless
company. Given the competition that was coming about due to changing
regulations and changing technology and due to the increasing use of the
Internet, it was time to think about where we needed to be heading.
Our visioning exercise was used to determine not only where
we wanted to go, but also to ensure there was alignment among the executives in
carrying out the strategic and business plans.
To do this correctly, each executive or team member has to
address different questions including some of the following questions. They do
this by visualizing a future state as if they walked in the shoes of their
customers, their board, or other constituents.
The best parts of this exercise are listening to the
answers, debating the vision, and then coming to a singular purpose and vision.
Product Innovation
Charter
A product innovation charter is a format used by companies
to determine the company’s (or team’s) product management or development
strategy. What risks and returns do they want to take? What type of innovation
will they consider- a new-to-the-world product will have substantially more
risk than a line extension. It is used for products, not processes and sets the
charter, i.e. the conditions under which the company or team will operate in
making decisions.
The format of the charter is straightforward and simple, yet
the end result is very powerful.
Product Innovation Charter
Background: What the reason for this charter? What
problems are you trying to address?
Goals: What are the specific goals that can be met? SMART
Goals: specific, measurable, actionable, responsible party, and time
frame should be defined.
Objectives: What is the overall objective of the
charter? Is it to increase dominance in one area or to play catchup? Is the
goal to develop breakthrough products or provide a specified risk/return ratio?
Guidelines: How does this charter fit into the
corporate strategy? How much money is funded by this charter? What are the
decision making capabilities of the leaders of this charter?
Boundaries: What are the rules of implementing the
charter? For example, is this an entirely internal team approach or should
partners be considered? Are there certain companies that are off limits to
partnerships? Is this for consumption in the US or the entire world?
The Balanced Scorecard can be construed as a complete
management system as originally conceived by Kaplan and Norton in the mid
1990’s. The original structure of the
balanced scorecard pointed to four elements as shown in the following diagram
where each of the elements supported the vision and strategy of the company.
Over time, the balanced scorecard has evolved and in our
interpretation it provides a structure for companies to use and modify
according to the priorities and needs of the company. In some companies, there
is less “learning” and more growth oriented actions. In other companies,
especially in the Internet world, the focus may be on replicable processes, or
maintaining a specialized workforce, or even implementing strategic initiatives
to maintain an edge in the market.
Such thinking doesn’t detract from the structure and use of
the tool, yet the tool can
to be modified to accommodate different companies.
Analytic Hierarchical
Process
The analytic hierarchy process (AHP) was developed by Thomas Saaty, a professor at the University
of Pittsburgh in the 1970s at which time, as a mathematician and engineer I
fell in love with the methodology and have adapted it to fit my needs in
corporate America and in our consulting practice.
It is a structured technique for organizing and analyzing complex decisions such as funding
different product development efforts, selecting a leader of a cross-functional
team, or determining which investment
or partnership makes the most sense. The “most sense” is based on a combination
of mathematics and beliefs – some supported by data – of different people and
teams evaluating several options. What I like about it is the fact that by
expressing answers in mathematical terms, you almost take out the emotion of
decisions and can better evaluate disparate options. For example, you can use
it for the classic guns v. butter decisions.
The strength of the process is that it helps decision
makers find solutions that best suit their goal and their understanding of the
problem. It provides a rational framework for structuring a decision problem,
for representing and quantifying its elements, for relating those elements to
overall goals, and for evaluating alternative solutions.
The users of the AHP first decide on the elements upon
which decisions are based and the comparative weights of those elements. That
would be a one-tier hierarchy. But the power of the system extends when each of
the primary elements has a subordinate structure. Let’s say financials was one
criteria and that weight was 25% as shown below. A second level hierarchy could
be developed based on cash flow, capital and margin.
To us, the important part of the exercise is to give the
different team members or decision makers the opportunity to debate and
determine the correct elements, the hierarchy and the weights. Then, once
complete, each case can be analyzed and an ordinal ranking can be determined
based on a score. It still enables flexibility by the team to make final
adjustments. What it prevents, though, is one dominant player swaying the votes
of the others. Sometimes, in organizations, that is easier said than done.
Here’s what a two level system looks like for a company
that was analyzing different product development opportunities. It can be
applied in any business or industry or functional area.
With these tools, the executive can determine the direction
of the company, ensure the executive team is in alignment, determine priorities
and execute the plan. Of course, we at C-Level Partners are glad to help. Call
me at 949 4394503 or write to me at dfriedman@clevelpartners.net to
see if you qualify for a complementary one hour discussion of your business issues.
