How to Communicate Your Strategic Plan to Employees

Apr09
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Your strategic planning efforts are only as good as how well you communicate the plan to employees.  Here are some areas that you can focus on for communicating a strategic plan to increase the likelihood of success.

Place the objectives and definitions in context. It’s not enough to say that your quarterly strategic plan is to increase revenue by 10%. Your employees will nod sagely, but they may not have an exact idea of what they can do to meet this revenue plan. By placing it in the context of the larger company mission or shorter term goal, the individual employees start to see the picture more clearly and their role within it. So the next time you bring your department heads together, give them more context as to how their departments can meet these goals. For instance, acquire several new customers with incremental revenue targets.

Talk about the significance of content. Content that incorporates the strategic plan – websites, blogs, client communications – creates a consistency in messaging. Focus the quality, completeness and depth of your company and team’s content within the context of the greater strategic plan.

Highlight the benefits of the strategic plan openly. When you talk openly about the benefits of the strategic plan, the employees know what they are getting behind and why. This allows them to feel more comfortable with, and even excited about, the way things are going.  When you talk about benefits, don’t just gloss over the details. Actually give details about how the strategic plan at hand is going to benefit the company, the community, and everyone involved in the process.

Clear up misconceptions along the way.  Misconceptions can arise from understanding the definitions of key metrics to the company culture you are striving to get achieve. Explain things, hold town-hall like meetings and respond quickly to misconceptions that may arise.

Strategic planning is more successful when the entire company is engaged. By communicating the goals, values, and mission repeatedly to team managers, they can craft a plan to motivate employees.  When you follow up by integrating the ideas into company culture it not only serves as a reminder for the goals, but also motivation as to what the company is striving forward to.

Treating Acquisition Synergies as Real Options

Feb25
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jpegA successful acquisition increases not only the economic capital available to your company, but also the strategic capital available to it. Ideally, the acquiring company and the acquired company together are worth more than the sum of their parts. The additional strategic capital created during an acquisition is commonly termed a synergy or a set of synergies.

For the purposes of developing an acquisition strategy, it can be useful to treat acquisition synergies as a real option that the acquiring company would gain during the acquisition. Synergies add measurably to the overall profit gained from an acquisition. By valuing the possible acquisition synergies that would be gained from different acquisitions, an acquiring company can develop a smarter, more circumspect acquisition strategy.

Synergies do not spring out of inaction on the part of either company in an acquisition; like other real options, synergies require an investment and come with risks. What these investments and risks will be depend on is the kind of strategic capital you want to gain from your acquisition synergies. Frequently, an acquiring company will have the opportunity to invest in several different synergies as part of the acquisition process. Choosing which synergies to invest in–and which synergies to avoid investing in–is an important decision that will determine what kind of strategic capital your company gains from its acquisitions.  An example of a synergy may be leveraging a distribution channel of one company to sell the others’ products or combining intellectual property to launch a new product.

Just as investing in synergies can be treated as a real option that comes with risks and benefits, the option not to invest in synergies can be seen as a form of strategic capital. Maximizing the value of an acquisition frequently depends on your company’s ability to recognize opportunities for valuable synergies, as well as synergies which would be a less profitable and more risky investment.

For a more in-depth discussion of the the strategic value of acquisition synergies, you can refer to “Acquisition Strategy and Real Options” by Mikael Collan and Jani Kinnunen. Their paper includes a defense of valuating synergies as real options as well as a discussion of the strategic effects of an acquired company’s non-core assets.

Garrison Street is dedicated to helping companies grow through intelligent strategy; contact us to find out more about our services.

Trust – An Essential Element of Negotation

Feb12
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WWWEV641_RED-675Whether you’re negotiating to resolve some sort of disagreement, to close a business arrangement, or something in between, an essential element of that negotiation is trust. As it applies to negotiations, trust is a level of confidence that the parties involved in the process will bargain in good faith, and live up to the commitments they make.

Creating an Atmosphere of Trust

Some people think that in order to create an atmosphere of trust, they need to give something away in the beginning of the process. Typically when people do this, it’s something fairly insignificant that they are perfectly willing to give up anyway. So they think there’s no harm. But by doing this, they not only give up a potential bargaining chip, they may display a measure of weakness that the other side may try to exploit.

Creating trust is actually a process that begins with a warm, cordial demeanor at the outset and progresses from there.

Increasing Trust

As negotiations progress, negotiators begin to get an even better feel for the other people involved. This is where their initial level of trust can either increase or decrease, depending on how you conduct yourself. If you’re consistent in your approach to the issues raised and the people raising them, trust in you will likely increase. On the other hand, if you’re aggressively shouting one minute and submissively calm the next, people’s trust level in you will diminish.

Of course, some might argue that by constantly changing demeanor you can keep the other parties off guard, thereby strengthening your position. That might work as a short term tactic, but as a long term strategy it will do damage to your reputation that is difficult to repair. Even if you never have to deal with that particular individual again, reputational risk increases through reference checks.

Validating Trust

If you wish to be a successful negotiator long term, you need to create and nurture a reputation that makes others want to negotiate with you. While the way you act during a given negotiation can have an immediate impact on whether people trust you, how you conduct yourself after the final agreement is reached can make or break people’s trust in you. If you deliver on everything you promised, people’s trust in you will be validated, and they’ll be happy to deal with you again. If you renege in any way, people will be less likely to want to deal with you again. It’s as simple as that.

If you would like to learn more about Garrison Street and our offerings contact us online or call 617-996-9159.

Leveraging A Platform Strategy for Growth

Jan31
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Screen shot 2012-02-10 at | Feb 10 | 2.40.01 PMIn a classic tome on new product development (Revolutionizing Product Development, Free Press, 1992), Steven Wheelwright and Kim Clark describe an “aggregate product plan.” Today, we refer to this approach as a platform strategy.

A platform is a set of core building blocks or a common technology that allows a company to develop a series of products and services. The core architecture is shared across derivative products in a number of ways. For example, Pillsbury has perfected a process to make refrigerated dough (the platform). Utilizing a platform strategy, the company then develops and sells derivative products into a number of markets: bread, cookies, and biscuits. Similarly, Toyota incorporates quality through automobile engine design (the platform) into a number of products across a variety of market segments: value (Scion), mass market (Toyota), and luxury (Lexus).

The advantages of a platform strategy are countless for a business. First, the firm can optimize their capital investment by leveraging the core technology across several market segments and for a long period of time. Of course, lower capital investment for product derivatives leads to streamlined operations and higher profitability.

Second, introduction of new product launches are managed in a more controlled manner. Timing of commercialization of derivative products is known and planned based upon the platform strategy. Upgrades and feature additions are also logically planned and leverage the core technology.

Next, markets can be segmented to take advantage of the breadth of a platform and to overtake the competition. Often the platform concept allows a firm strategic advantage due to overall market share. Consider the example of Pillsbury once again. If a competitor introduces a new refrigerated pie crust dough, Pillsbury’s platform expertise and market knowledge allows the company to respond rapidly to regain competitive strength.

Finally, a platform strategy allows a firm to focus on customers, markets, and technologies as core capabilities. Too many start-up firms fail because they have no framework to introduce follow-on products and service. Leveraging a platform strategy builds in future upgrades and product releases based upon the firm’s known expertise.

A platform strategy is a great way to leverage a company’s core strengths. To learn more about how you can add a platform approach for business growth, please contact us.

The Role of Services in Corporate Development

Jan27
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transitMultidimensional organizations need multidimensional approaches to succeed. Often firms focus their strategies on a few key themes, for instance, delivering cost leadership by providing the lowest cost manufacturing and distribution, yielding higher profit margins than their competitors. Other companies focus on differentiation by designing and developing new products that offer a unique customer value proposition. Yet, many will miss the role of services in corporate development.

In today’s globally competitive marketplace, services can make the difference between stellar success and “me-too” competition. In a classic Harvard Business Review article (Quinn, et al, Mar/Apr 1990), the elements of a service-based strategy are laid out concisely. Despite two plus decades of intervening time, a service-based strategy can still deliver growth and profit to the corporate bottom line. In fact, with technological advances, one could argue that services are even more important today.

For example, manufacturers of tangible goods should still consider the role of service in their operations. Services such as design and engineering allow for the production of the manufactured good. Technology services allow customers to identify the products and assist in selling goods in the internet economy. Market research, another service, helps the manufacturing firm identify product improvements and build relationships with customers.

Moreover, many companies rely solely on services for their business model. Consider insurance, web design, and health care, for instance. Each of these industries is driven by and growing from enhanced service delivery.

Corporations cannot ignore the role of services in their strategic growth plans. Yet, service development can be more complicated than product development. Services are evaluated immediately by customers and a bad experience can negatively impact the long-term relationship with that market segment.

On the other hand, service development is tested much easier than new products under development. For example, a new service that allows an automobile driver to file an insurance claim by mobile phone can be tested within a small, regional market. Improvements in the new service offering can then be quickly scaled and implemented for future roll-outs.

Corporate development relies upon a multifaceted approach, including strategic product and service development. For more information on strategic corporate growth, please contact us.

Letting Your Guard Down: When Sharing Intellectual Property Drives Innovation

Jan15
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TelstarSat_bLawyers are trained to think about property, including intellectual property, as a “bundle of sticks.”  One stick is the right to possess your property, and another stick is the right to keep others from possessing or using your property.  The right to exclude has long been considered one of the most important sticks in the bundle; the “no trespassing sign” or its equivalent has been one of the definitive elements of property law since the Middle Ages.

In the age of the internet, the right to keep others from using one’s property has been vigorously defended by media companies, whose efforts to prevent piracy of their products have driven a great deal of development in the music and video game industry.  This right has also been reconsidered by software developers, who are finding that loosening the restrictions on the use of their intellectual property is not always a way to lose market power.  Non-profits such as the Apache Software Foundation exist solely to make their intellectual property available to the public free of charge, while major market players like Apple and Google have developed strategies for making their intellectual property available to potential collaborators.

Strategies for allowing the collaborative use of intellectual property fall along a spectrum of restrictiveness.  Apple’s strategy for letting independent developers use its application programming interface (API) falls on the more restrictive end of the spectrum.  Independent developers must work with limited information about the iPhone, and their apps are subject to a review process that ensures their quality and their compatibility with Apple’s vision.  While this  strategy ensures a consistent product and lowers the risk that independent developers will dilute Apple’s market power, it also limits the innovation that independent developers are allowed to bring to the table.

On the other end of the restrictiveness spectrum is the Android platform, an open source platform released by Google under the Apache license.  The “no trespassing” signs have been taken down from this intellectual property; developers are free to use it without a rigorous review process or negotiation with the company that developed it.  This strategy means that low-quality apps will inevitably be developed, and it creates a risk that an independent developer will do something that dilutes Google’s market power.  However, it has also meant that developers designing apps for Google’s Moto X have a much wider range of possibilities for innovation.

In today’s world of fast-paced development, placing less emphasis on the right to exclude others from using one’s intellectual property can be part of a sound business strategy.  Exactly how important the right of exclusion is to a piece of intellectual property depends on where that property fits in with the company’s intellectual property strategy, which in turn depends on how each company organizes its priorities.  Developing a strong strategy for managing intellectual property depends on knowing not only how to guard intellectual property, but also on when to let that guard down.

Garrison Street is committed to helping companies develop innovative strategies that drive their growth; contact us to find out about the solutions we can help develop for your business.

Risk Management is a Strategic Planning Tool

Jan09
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deadWhile strategy tends to focus on long-term goals and designing a new vision for the firm, risk management is a useful tool for strategic planning. Competitive threats to a business need to be recognized and acted upon in order to successfully implement strategic decisions.

Strategy may be defined as the mission, vision, and values of a firm. Strategic planning involves a roadmap to deliver competitive products and services, new technologies, and improvements to markets and customers over a three to five year period. Risks are identified as unknown events or uncertainties that can negatively impact the firm.

For example, Russell Walker, author of “Winning with Risk Management,” identifies two categories of risk: explicit or implicit, and finite or persistent. In the former case, explicit risks are known and recognized as part of the business strategy. Implicit risks are unknown but are typically accepted as part of the cost of doing business. A finite risk is represented by a bank loan, for instance, in which a maximum loss is known in advance. Persistent risks have long-term impacts and may be quite complex in nature.

As further examples, an implicit risk is one that cannot truly be separated from the act of implementing the business strategy and conducting the business of the company. For instance, accepting the uncertainty of shipments during periods of bad weather is an implicit risk since the shipments must go on yet the direct cost to the business of delayed delivery is difficult to calculate.

Finite risks, like the category of explicit risks, are known and capped with a maximum investment. If a company goes bankrupt, a stockholder’s loss is finite and limited to the amount s/he has invested. The investment itself was considered strategic while the downside is restricted within a range of the investment. The finite risk can be managed by the amount of the investment, for example.

Perhaps most troubling from a strategic standpoint are the persistent uncertainties. These risks can linger for years and can have impacts over a very long period of time. Often, persistent risks are manifested through liabilities, such as environmental or regulatory impacts. Consider examples of asbestos and silicone implants that were strategically important innovations, but left persistent risks with companies long after production was halted.

Strategic planning should be an endeavor to find the best market path forward. However, the most competitive firms will continually analyze the markets, technologies, and customer data to manage potential risks.

The Story of Success: Developing Your Product Launch’s Narrative from the Beginning

Jan09
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northript-600It’s no secret that one of the keys to a successful product launch is getting people involved in conversations about your product.  One of the great successes of social media marketing has been its  ability to weave products into the short stories that people are constantly telling each other using mediums like Twitter and Facebook.

The stories your customers are telling should by no means be limited to short, hash-tagged anecdotes that involve your product as a bit player.  Developing your product’s narrative will get consumers to tell each other stories not just involving your product, but revolving around it.  Your product launch, while vital in your product’s story, should by no means be its beginning.

Many of the stories that captivated audiences in the last decade, from the film adaptations of Tolkein’s works to the Die Hard saga, present the story’s hero as a solution to a problem established near the beginning of the narrative.  Middle Earth is under attack, Hans Gruber has crashed the office Christmas party–unless the hero arrives soon and solves the problem, things are going to be looking very dire indeed.

Like these blockbusters, the story of your product will be at its most compelling if it begins by explaining the problem that compelled your product’s existence.  This technique puts your company and its product in a perfect position to save the day.  If your company’s processes–like sourcing sustainable materials or using eco-friendly waste disposal technologies–are part of the solution your customers want, then implementing these processes can become an important part of the pre-launch narrative.

While your product launch shouldn’t be the beginning of the product’s narrative, it should not be its end either.  Continuing the product narrative post-launch is a critical means of getting your customers involved on a personal level with your product and your brand.  The most effective narrative for your product will depend on a number of factors, including the culture of your target market and the development processes favored by your company.  Focus on how to construct the best possible product narrative as the company enhances its story.

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