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© The Strategic Plan A review of the eight strategies common to all organizations against factors in the changing external environment.

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Presentation on theme: "© The Strategic Plan A review of the eight strategies common to all organizations against factors in the changing external environment."— Presentation transcript:

1 © The Strategic Plan A review of the eight strategies common to all organizations against factors in the changing external environment

2 © Course Deliverables Day 1 Day 2 Day 3 Produce a Situation Analysis Produce a Strategic Plan Produce a Business Plan Introduction

3 © Results: Strategic Plan Content - The Fact Gathering Process - Major External Factors - Stakeholder Expectations - Organizational Performance - Description of Current Strategies and Strategy Configuration - The Analysis Process - Likely Impact of Major Factors - A Ranking of Major Factors & Expectations - Possible Responses & Rationale - A Description of Changes, if any, to Strategy - An Explanation of the Rationale for Change - Impact on the Organization (Timing and Degree) - Major Risk Factors / Assumptions - Financial Implications - Long Term Hoped for Impact 1.Facts The Situation Analysis 2. Analysis Issue Development 3. Strategy The Change Agenda Introduction

4 © Steps 5 – 8: Strategic Planning 2. Scoping Expectations: Have we assessed the expectations for strategic planning? 3. Internal Assessment: Do we truly understand the whats, hows and whys of our current strategy? 4. External Assessment: What factors in the external environment must we truly understand? 1. Choice of Planning Process: Should we be doing strategic planning or business planning? Day One: Situation Analysis Day Two: Strategic Planning Day Three: Business Planning 5. The Situation Analysis Review: Do we have enough understanding to support informed decisions? 7. Strategic Issue Identification: Are we able to develop scenarios to identify possible strategic issues? 6. Issue Development: Are we able to connect external factors to the strategy framework? 8. Strategic Plan Communication: Have we described the likely what and when impact of change? Introduction 9. Strategic Plan Review: Do we understand the strategic plan and how it is likely to impact us? 10. Expectations Impact: Can we identify the impact of strategic plan expectations on functional activities? 11. Expectations Testing: Are the strategic plan expectations consistent with competitive reality ? 12. Strategy Implementation: How are new expectations (if any) to be integrated with ongoing responsibilities?

5 © What SWOT can & cant tell us Under Tarions Control – What is the situation inside Tarion? Not Under Tarions Control – What has changed in the External Environment?

6 © Fact vs. Fiction BeliefTarion is controlled by the builders BeliefTarions responsibilities as a regulator and warranty vendor conflict BeliefAll builders pay the same registration fee BeliefThe private sector warranty vendors could provide better warranties cheaper BeliefTarion has a monopoly on new home warranty insurance BeliefNew home building industry standards in Ontario need to be improved BeliefBC has put into place a new home warranty program structure that Ontario should adopt BeilefTarion could easily extend its regulatory and warranty coverage to the renovation industry FactBuilders only control the nomination process and 8 of 15 seats on the board. FactThe KPMG study found the unique combination of responsibilities a significant success factor. FactThe builder registration fee is only one aspect of licensing. FactThe KPMG study found no evidence to support this FactAll new homes must carry the Tarion warranty as the minimum warranty – not the only warranty FactNew home industry standards are the highest of any jurisdiction. FactThe BC program is unproven and the BC market for is a fraction of the size of the Ontario market. FactThe renovation industry is fundamentally different from the new home building industry

7 © Stakeholder Identification The major Tarion stakeholders and their role in the strategic planning process Stakeholder CategoriesActual Stakeholders The Authority Group Those Stakeholders who approve the plan and authorize implementation The Board The Involve Group Stakeholders who should be involved because of the role they will play in implementation Consumer Associations Builders Associations (OHBA, GTHBA) Ministry (MCBS) Tarion Management Staff The Inform Group Stakeholders who need to be told what to do so that their actions are consistent with implementation Media (Print / Radio / T.V. / Magazine) Municipalities Builders Consumers Tarion Employees The Consider Group Any Stakeholders not falling in any of the above categories and who could have a response to implementation Industry Professionals - Lawyers - Architects - Engineers - Bankers Industry vendors: trades, manufacturers DAA Critics: CIELAP - Other DAAs Other Ministries: (MMAH) - Other govt orgs: (CMHC) Competitors: (warranty companies) Other jurisdictions: (B.C.) Step 5 Understand the Appetite for Change

8 © ONHWP Act Consumer Protection Model Risks to Consumer Consumer Protection Builder Risk Insuring Builder Failure to PerformAssuring Builder Ability to Perform Regulatory Protection Mandatory Builder Registration & Minimum Standards of Acceptable Builder Performance Financial Compensation No-fault Consumer Warranty Coverage & Simplified Consumer Claims Process Delivered by a not-for-profit industry stakeholder controlled corporation & completely self-funded from fee income Accountable to Ministry (MOU) Accountable to Industry Stakeholders Accountable to Corporate Law Step 5 Understand Internal Assessment Findings

9 © The AlphasCurrent Strategy Mandate Administration of the ONHWP Act. Risk Firstly, use of regulatory authority; and secondly, use of insurance industry practices to manage risks to new homebuyers Growth Rise and fall with the new home building industry cycles Financial Use of insurance industry capital reserving practices; revenues from fees from sale of warranties and from builder licensing Technology Enable management productivity; e.g. call center, web-based services Organization A regulatory mentality and culture first and foremost; 2 nd an insurer Marketing To educate new home buyers and home builders on the regulatory regime Service Delivery To deflect risk away from the Tarion onto builders Step 5 Understand Internal Assessment Findings

10 © Step 5 Understand Internal Assessment Findings Source: Seeingstrategy.com

11 © Management Activities Analysis Business Model Management StrengthsWeaknesses Governance strong structures good participation good skill mix Board appointments builder majority on board Builder Registration acceptance of security KPMG found the registration tied to builder performance and history mandatory registration stable builder population misunderstanding of how Tarion differentiates pricing for builders productivity low Enforcements KPMG found better consumer protection lack of transparency on operating statistics Enrollments mandatory more technology for productivity Warranty Services Tarion offers most extensive coverage of any jurisdiction home covered whether or not requested not well known that Tarion is only program to cover consumers whether or not home or bldgs registered system clogged, consumers unhappy Risk Management impact of various risk prevention measures such as security not enough communication on improving builder performance Finance adapting insurance industry practices $2 billion in reserves not enough disclosure I.T. ready for e-commerce could be more use of technology Human Resources mostly financial services or legal backgrounds low personnel production no disclosure of performance measures Corporate Affairs builder research consumer research one way communication no transparency need to address criticisms need to publicize KPMG Step 5 Understand Internal Assessment Findings

12 © Management Activities Conclusions Business Model Short Term Improvement Opportunities External Factors Most Impacting Performance Governance disclosure on Board composition, activities, etc. transparency trend in government - ministry expectations (MCBS) Barrett Commission Builder Registration individual performance measures Industry best practices Enforcement disclosure of activities, issues media Enrollments individual performance measures best practices - insurance industry practices e-commerce Warranty Services performance measures New home builder performance - warranty industry practices best practices - e-commerce - builder expectations consumer expectations - BRRAG Risk Management more disclosure Review of builders involved in conciliations Present building code legislation - Tarion Act & regulations BRRAG - case law / judicial decisions -warranty industry / BC construction technology Finance & Administration more disclosure insurance industry practices -Stock/Bond market performance financial regulatory requirements - builder expectations B.C. Home Warranty - Warranty Industry Practices -Practices of other DAAs I.T. more disclosure technology Human Resources more disclosure outsourcing trend Facilities needs assessment Corporate Affairs disclosure transparency -competitors for warranty - DAA practices Step 5 Understand Internal Assessment Findings

13 © Industry Analysis (as Warranty Co.) Segment What is my chosen market called? New Home Warranty Segment Size / Growth How big is it and is it growing? Averages 50,000 new homes but ranges from a high of 70,000 to lows of 25,000 Growth is a function of provincial economy and population growth Segment Dynamics What dynamics are most shaping the segment? Customers/competitors/ Suppliers/Barriers to Entry/Alternatives Consumers dont want to pay cost until they need protection Mortgage lenders require warranty on high-ratio loans Builders want rational cost since, in most markets, warranty cost cannot be tacked on to selling price Competitive pressure: lower costs, more choice Critical Success Factors What must a competitor do to succeed? not-for-profit status (to recognize economic fragility) industry self-management model (to recognize need to balance true cost/liability associated with added consumer protection elements and to manage scope creep inherent in government & monopoly bureaucracies) bundled regulatory authority / insurance responsibility (to recognize need to enforce a minimum standard) no-fault coverage for consumers (to recognize new home warranty is essentially about consumer protection) autonomy from government (to control scope creep and bureaucracy and to isolate reserve fund from political pressure) ongoing management of stakeholder expectations to stay aligned with major stakeholder groups Segment Evolution How is this segment likely to change over time? Given the evolution of the National House Building Council in Britain, it is likely to evolve into a competitive model – with the issue being whether Tarion becomes the mandatory minimum or the rump insurer of last resort to the industry. The New Jersey State model is the rump model – however, at the cost of the loss of no-fault for consumers. Step 5 Understand External Assessment Findings

14 © Competitor Analysis (as Warranty Co.) Industry Attractiveness Competitors GE Capital Paveco London Life Competitor Focus Urban, large builders Deposit insurance Conversion coverage Excess coverage Industry Critical Success Factors Competitor Strengths Cost Control / Productivity Marketing Pricing Product selection Financial strength Competitor Weaknesses No commitment to stay in the market No commitment to small builders Slow to pay claims No pricing breaks to consumers in good times No direct link to regulator Warranty is a trigger product – not a primary product Industry Evolution Likely Future CompetitorsPrivate sector competitors Likely Areas of Functional ExcellenceOn-line delivery of builder and consumer services Step 5 Understand External Assessment Findings

15 © Customer Analysis as Warranty Co. QuestionAnswer Who are our most important customers? Builders are the most important customer. Consumers do not want to know anything about new home warranty products until they have a claim. Consumers cannot be educated on the value of new home warranty (which is why the purchase needs to be mandatory) What criteria drive the customers purchase decision? The criteria that drive the purchasers decision are bank requirements and cost. Banks in Canada require a warranty policy as a condition of mortgaging How do we compare, in the customers view to the competition? Tarion do not compare favourably to the competition because of bad press rather than actual performance. Tarion has done little to address the misinformation provided to consumers and builders about the Tarion model and the Tarion Act Which of our products & services are truly valuable to them? The registration requirements imposed on builders (e.g. security requirements, limits on units to be built, etc) is probably the most valuable to most consumers since the practice virtually eliminates warranty claims. The deposit loss coverage is the most important product to most consumers who have had to make a warranty claim What are the steps and who influences the purchase decision? The builder, in Ontario, is the source of the new home enrolment and transfer of the coverage to the consumer. In jurisdictions where warranty is not mandatory, lenders require warranty coverage for high ratio loans. How are customer criteria and behavior likely to change? As the overall cost of homes escalates, in terms of overall price and percentage of total family income dedicated to home ownership, there is likely to be less concern about defects insurance and more concern about insolvency and major structural defects insurance. What products and services are our customers going to need? As new homes continue to proliferate in terms of type (e.g. conversions, time-share, business/home use, etc.) home buyers (through builders and bankers) will demand products to cover these products. Step 5 Understand External Assessment Findings

16 © External Factors Identified External FactorDescription 1. TechnologyI.T. to enable productivity & e-business 2. Case Law / Judicial DecisionsInterpretation of the Act & Regs 3. Warranty CompetitorsPrivate sector warranty vendors 4. Best PracticesBest practices in business & govt 5. Builder ExpectationsLess bureaucracy, secrecy, more transparent, productive 6. Ministry ExpectationsExpectations of MCBS 7. The Act and RegistrationsTarion interpretation of Act & Regs 8. Consumer ExpectationsLess bureaucracy, secrecy, more transparent, productive 9. New Home Builder PerformanceAs shown in operating statistics 10. TransparencyThe trend to full information disclosure 11. E-CommerceTaking the business online 12. The MediaPrint/T.V./Radio 13. Barrett é BC New Homes CollapseThe report on the collapse of BCNHW 14. BRRAG / Tourdes DAA Review ReportBuilding Industry Regulatory Reform 15. BC New Home Warranty ProgramThe now defunct BC warranty program 16. Insurance Industry PracticesProcess and practices 17. Financial Regulatory RequirementsCapital and reporting requirements 18. Construction Technology / PracticesMaterials, practices & products Step 5 Understand External Assessment Findings

17 © Nominal Group Factors Ranking Your Ranking Factor Name Factor I.D. 1 2 3 4 5 6 7 8 9 10 Step 5 Exercise Goal To demonstrate Nominal Group Technique

18 © Factors Scoring Step 5 Exercise WeightingX10X9X8TotalRank Your Ranking123 Factors:

19 © Cross Impact Analysis 12345678910111213141516ASP 1 TechnologyX03103113000030116128 2 Case Law0X11111000000000560 3.Best Practices00X00033000001018144 4 Bldr Expects313X23323100000221273 5 Act & Regs0333X3300000100016176 6 Cons Expects31330X331000011120420 7 Bldr Perform030033X0000000009135 8 Transparency1022022X1100000011121 9 Economics10100101X0000000432 10 Media000101110X00000048 11 Barrett Comm0100000000X0000010 12 BRRAG00101000000X000020 13 BCNHWP010121100000X00066 14 Ins Pracs0011110000000X00424 15 Reg Reqmts00001100000000X022 16 Constr Tech.000001000000000X15 81218131121151182001615PS 2.4 1.61.4.9.61.52006421Q See T.J. Gordon and H. Hayward Initial Experiments with the cross- impact matrix method of forecasting Futures 1, 100 -116 (1968) 0 = none 1 = weak2 = medium 3 = strong sum of row = ni sum of column = nj product = ni nj quotient = ni / nj Step 5 Theory

20 © 1.Technology Q = 2.0 P = 128 > 2.Case Law Q = 0.4 P = 60 > 3.Best Practices Q = 0.4 P = 144 > 4.Builder Expectations Q = 1.6 P = 273 > 5.Act & Regulations Q = 1.4 P = 176 > 6.Consumer Expectations Q = 1.0 P = 420 > 7.New Home Builder Perf Q = 0.6 P = 135 > 8. Transparency Q = 1.0 P = 121 > 9. E-Commerce Q = 0.5 P = 32 < 10. Media Q = 2.0 P = 8 > 11.Barrett Commission Q = 0 P = 0 < 12.BRRAG Report Q = 0 P = 0 < 13.BC New Home Warranty Q = 6.0 P = 6 < 14.Insurance Industry Prac Q = 4.0 P = 24 < 15. Financial Regulatory Req Q = 2.0 P = 2 < 16.Construction Technology Q = 1.0 P = 5 < Active = Q > 1.0Critical = P > (n-1) 2 Reactive = Q < 1.0Inert = P < (n-1) 2 X-Impact Analysis Calculations Step 5 Theory

21 © Plotting the Results 1 Technology 2 Case Law 3 Best Practices 4 Builder Expectations 5 Act & Regulations 6 Consumer Expectations 7 New Home Builder Performance 8 Transparency 9 E-Commerce 10 Media 11 Barrett Commission 12 BRRAG 13 BC New Home Warranty 14 Insurance Industry Practices 15 Financial Regulatory Requirements 16 Construction Technology 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.81 2 3 4 5 6 7 8 425 400 375 350 325 300 275 250 225 200 175 150 125 100 75 50 25 0 Inert weak influencer / weakly influenced Critical strong influencer / strongly influenced Active strong influencer / weakly influenced Reactive weak influencer strongly influenced 1 10 2 3 4 5 9 15 16 11 7 8 14 13 6 12

22 © Factors Risk Assessment - Technology - Best-Practices - E-Commerce - Case Law - Consumer Expectations - Builder Expectations - Transparency - Construction Technology - Finance Regulatory Requirements - Insurance Industry Practices - BC New Home Warranty Collapse - The Media - The Act & Regs - New Home Builder Performance - BRRAG Report - Barrett Commission lowmedium consequence high Impact medium high low Probability Step 5 Theory

23 © Step 6 Objectives Prepare Statement of Strategy & Impact Conduct Scenario Analysis Convert Factors to Strategy Issues Review the Situation Analysis Understand the Appetite for Change Understand External Assessment Findings Understand Internal Assessment Findings Select an Identified Factor Answer the Strategy Change Question Connect the Factor to One of the 8 Strategies 6. Issue Development: Are we able to connect external factors to the strategy framework? Step 6

24 © Current Strategy Configuration

25 © Strategic Issue Definition A question about strategy The two strategy questions: 1. Do we improve existing strategy ? or 2. Do we replace existing strategy with a new strategy ?

26 © Change in Alternatives/ Competition Mandate Bus Definition Risk Growth Finance Tech Org Marketing / Communi- cations Production/ Service Delivery Changes in Need / Risk Changing Trends Industry Change Changes in Demand Changes in Best Practices Changed Stakeholder Expectations Changed Stakeholder Expectations The CEO Aligns the 8 Strategies with Major Stakeholder Expectations and Competitive Reality

27 © All Managers Align Activities Assigned to Them to Strategic Plan Expectations (and then to competitive reality) Call Centre Training Recruiting Monitoring Admin Compliance Budget Marketing / Services Customer Relations Changed Expectations Changed Expectations Vice President Regional Call Centre Operations

28 © Alpha Sets Culture Stantec IBM Nike Bank of Canada Growth Business Definition Marketing Risk Organization8 Strategy Focus FedExService Delivery Bank of MontrealFinancial Management GoogleR&D / Technology Frank Gehry ArchitectsOrganization Growth by Acquisition Morphing to the high margin Clothing for winners Managing Investor Expectations Actual Strategy 24 Hour Delivery Deposit-Taking To manage all your information needs Starchitect Major Global Design Firm Information Technology The Swooch Canadas Financial Risk Manager Identity Service Excellence The Bank of No Surprises The Biggest Cloud One-of-a-kind design

29 © Strategy Focus (Public / NFP) CICA Toronto Police Services Marketing / Communications Risk EntityThe 8 Strategies Nova Scotia GovernmentService Delivery Ontario Financing AuthorityFinancial Management National Research CouncilR&D / Technology Stratford Theatre CompanyOrganization Management Mandate

30 © Drafting the Issue Tip #1???? Frame issues as questions -The Distilled Spirits Industry in Canada has no future -We need to exit the Distilled Spirits Industry in Canada -Should we exit the Distilled Spirits Industry in Canada? Tip #2Should Frame the issue in a way that invites debate -Are we going to… -How do we… -Can we… -Could we… -Should we exit the Distilled Spirits Industry in Canada? Tip #3Yes or No Answer the question Yes No Dont Know Step 6 Theory

31 © Issues: Connecting Factors to Strategy 1Description of the External Factor under Discussion: 2External Factor Background: a) Without any response from us, what is the likely impact of this External Factor? b) Does current research and analysis offer insight on how best to respond? c) Have we taken action consistent with research to address this External Factor? d) How effective has our action been? 3Draft a question that best connects this factor to one of the 8 Strategies Draft Issue: Should ? 4Draft Issue Answer Yes No Dont Know 5Further Research Required if answer to #4 is Dont Know: Step 6 Exercise: To connect an External Factor to one of the 8 Strategies

32 © 7 Ways to Avoid Action 1. For every proposal, point out every possible problem. 2. Ask detailed questions which cannot possibly be answered. 3. Profess not to have any answers while earnestly cautioning against proceeding. 4. Emphasize that the issue cannot be separated from all the other issues and therefore, cannot be resolved until all the other issues are resolved. 5. Appoint a consultant. 6. Create a committee. 7. Congratulate the issue. Discussion on it wasted 3 hours, but we are better for it. Step 6

33 © Step 7 Objective Prepare Statement of Strategy & Impact Identify Strategic Issues Convert Factors to Strategy Issues Review the Situation Analysis Select an Identified Factor Answer the Strategy Change Question Connect the Factor to One of the 8 Strategies Develop Scenarios to Assess Strategy Issues Answer the Strategy Change Question Draft Competing Strategic Issues 7. Strategic Issue Identification: Are we able to develop scenarios to identify possible strategic issues? Understand the Appetite for Change Understand External Assessment Findings Understand Internal Assessment Findings Step 7

34 © Strategy Scenario Development Develop Scenarios to Assess Strategy Issues Step 7 Current Strategy not Changed Current Strategy Changed External Factor not Addressed External Factor Addressed 1. In the lower left, describe how we look today because of the strategy we are using 2. In the upper right, identify an organization that is the best example of what we could look like if we successfully implemented the strategy and it became our Dominant Strategy. Who is closest to what we do, represents a great example of what we could look like if this strategy became our dominant strategy? What organization would an outsider think we look like because of our present strategy?

35 © Strategy Scenario Development No Change in EB Marketing Strategy Change EB Marketing Strategy Customer Factor not Addressed Customer Factor Addressed Example Step 7 - A highly focused retailer - A retailer in trouble

36 © Strategic Issue Development First Statement of the Issue: Should we change our Strategy? Redrafted Strategic Issue: Should we change our present strategy which has characterized us as to a strategy which will change our image to and, by, deliver ? Exercise Step 7

37 © Step 8 Objectives Prepare Statement of Strategy & Impact Identify Strategic Issues Convert Factors to Strategy Issues Review the Situation Analysis Develop Scenarios to Assess Strategy Issues Select the Strategic Issue Draft Competing Strategic Issues Frame Strategies as SMART Objectives Communicating the Strategic Plan Identify Strategic Assumption 8. Strategic Plan Communication: Have we described the likely what and when impact of change? Understand the Appetite for Change Understand External Assessment Findings Understand Internal Assessment Findings Select an Identified Factor Answer the Strategy Change Question Connect the Factor to One of the 8 Strategies Step 8

38 © Strategy or Objective Precise & specific in content? Performance can be measured? Provides the starting point for action? Realistic balance of expectation & ability? Has a specific deadline? English Bay Business Definition Strategy (Objective): To become (return to being) a niche retailer with 80% of profitability coming from well-defined EB customers within the next 2 years Frame Strategies as SMART Objectives Step 8

39 © Tarion Strategies (Objectives) Strategy Framework Element Proposed Strategy Present Strategy MandateStick to the Act Risk Enforce compliance and embrace insurance practices Growth Rise and fall with industry cycles Financial Management Only take what is needed / Return surplus Organizational Design Separate Regulator from Insurer CommunicationsEducate stakeholders OperationsDeflect risk to builders TechnologyEnable management Step 8 Frame Strategies as SMART Objectives

40 © Strategic Assumption Identification 1. What is the Major External Factor driving Strategy Change? 2. What about that Factor could change and threaten our strategy 3. Do we have a contingency plan if this starts happening? 4. Is this assumption about the Factor beyond our control? 5. Should the assumption about this Factor be monitored. Assumptions Considered conjecture on specific factors Step 8 Identify Strategic Assumption

41 © Risk

42 ©

43 © 43 Strategy ElementStrategy MandateAs stated under the York University Act. 1965, as amended RiskEnterprise risk management GrowthGrowth driven by campus construction – If we build it, they will come FinancialDebt financings supplementing provincial funding TechnologyEnabler (including Orion Network) OrganizationBicameral system (Separate Academic and Administrative Governance) MarketingFocused on attracting students and donors Service DeliveryGraduate and undergraduate degree programs across 11 faculties.

44 © 44

45 © 45 8 StrategyStrategy Business Positioning Hydro Ottawa Limited is an Ontario regulated electricity local distribution company (LDC) that owns and operates distribution infrastructure in the City of Ottawa and the Village of Casselman and is the largest LDC in eastern Ontario and the third largest municipally-owned LDC in the Province of Ontario. Risk Hydro Ottawa manages risk by staying in compliance with the regulatory framework impacting the industry to employ fixed price contracts to reduce exposure to spot market prices, the continuance of Hydro Ottawas exceptional health and safety record, Growth Hydro Ottawa growth is strategy s expanding our distribution business beyond our current service territory; Financial Hydro Ottawa is a MEU under the Electricity Act. Revenues are regulated. Finances are managed to retain its credit-rating; compliance with OEB requirements, and, if appropriate, dividends to the parent Technology / R&D Hydro Ottawa has 2700 kilometres of underground cable, 2,700 kilometres of overhead lines, 40,500 transformers and 48,700 hydro poles.,Ottawa Hydro will introduce more intelligence and automation into our distribution system, in 2014, Hydro Ottawa will complete the development of a more detailed Smart Grid plan, as required by the Green Energy and Green Economy Act. Organization Hydro has a workforce of about 600 employees of which a large percentage are eligible for retirement in the next 5 years creating the need for a workforce replacement strategy and the development of a skilled, engaged and prepared workforce for the future Marketing Hydro Ottawa serves the residential; small business and bulk-metered; and large user customer segments The fundamentals of customer value in the electricity business are quality and cost – delivering a reliable service, while operating efficiently and effectively to keep rates competitive. Hydro Ottawa is consistently among the top performers in Ontario in both of these areas. Service Delivery Hydro Ottawa Limited has two core responsibilities. First, Hydro Ottawa is responsible for the safe and reliable delivery of electricity to more than 300,000 customers in the City of Ottawa and the village of Casselman. Second, Hydro Ottawa Limited bills for its services and for the services provided by other organizations in Ontario's electricity system.

46 ©

47 © 47 The 8 StrategiesStantec Strategy Business Definition Fully integrated North American engineering and architectural services Risk Market, services, and life cycle diversification and no exposure to construction risk Growth To become and remain a top 10 global design firm through acquisitions Financial Management NYSE /TSX listed and growth funded by issuing equity Technology To support Best Trained, Best Informed, Best Equipped employees Organization Use of a Balanced Leadership Model for top and bottom line focus Marketing A top 3 service provider in chosen markets and seen as a Single Brand Identity Service Delivery Local Strength – Global Expertise; One Team. Infinite Solutions

48 ©

49 © The AlphasStrategy Business Definition To be the global leader in enterprise wireless data communications Risk To protect our intellectual property and to protect network security and integrity Growth To resize to fit our chosen markets Financial Management To access capital markets through TSX / NASDAQ listings R&D / Technology To focus development of our proprietary platforms & services Organization Mgmt To use the strength of market position and value proposition to enable HR pull potential employees and to leverage proximity and relationship with University of Waterloo Marketing -QNX software -BB Messenger chat app -Fleet mgmt for govt & corp users Service Delivery To deliver data security and network reliability

50 ©

51 © Course Deliverables Day 1 Day 2 Day 3 Produce a Situation Analysis Produce a Strategic Plan Produce a Business Plan

52 © Day Three Preparation Review the Goldstone Case Review the Day 3 Materials Review the Business Plan (Schedule C)

53 © Day Two – Preparation - Read the Tarion Case - Review the Day 2 Materials - Review the Tarion Strategic Plan (Schedule B) - Identify the top 3 external factors you believe ONWHP must address because those factors will significantly impact Tarion over the next 3 to 5 years Strategic Planning Reference Material

54 © The 4 Steps in Strategic Planning Step 8Step 7Step 6Step 5 Prepare Statement of Strategy & Impact Identify Strategic Issues Convert Factors to Strategy Issues Review the Situation Analysis Develop Scenarios to Assess Strategy Issues Select the Strategic Issue Draft Competing Strategic Issues Frame Strategies as SMART Objective Communicating the Strategic Plan Identify Strategic Assumption Understand the Appetite for Change Understand External Assessment Findings Understand Internal Assessment Findings Select an Identified Factor Answer the Strategy Change Question Connect the Factor to One of the 8 Strategies

55 © External Factors: Builder Expectations 1Description of the External Factor under Discussion: Builder Expectations being those expressed in various surveys of builders and those expressed by major builder associations. 2External Factor Background: a) Without any response from us, what is the likely impact of this External Factor? Implementation of BRRAG recommendations and loss of Tarion registration authority; loss of mandatory enrolment; loss of new home building industry control over Tarion to the residential building as a whole. b) Have we developed a strategy to address this External Factor? Project Simplify: an initiative to describe in detail the requirements of S.13 (the construction warranty) and the time frames within which builders must comply with S.13. c) How effective has our strategy been? No results except for a proposed appeal process by which builders may appeal Tarion decisions under the present conciliation process. d) Does current research and analysis offer insight on how best to respond? - Benchmarking Tarion conciliation / claims inspection process productivity reveals tremendous short term productivity potential - Analysis of the complaints process reveals unnecessary bureaucracy and opportunities for productivity improvement - Analysis of staffing requirements of the inspections and claims repair management process reveals opportunities for outsourcing and elimination of regional offices - Builder research says that to reduce cost, make fairer, make more certain 3Draft a question that best states the essence of the required response? Draft Issue: Should we change the way we presently administer consumer complaints, conciliations and claims practices? 4Draft Issue Answer Yes No Dont Know 5Further Research Required if answer to #4 is Dont Know: Step 8 Communicating the Strategic Plan

56 © External Factors: Consumer Expectations 1Description of the External Factor under Discussion: Consumer Expectations for management of complaints, conciliation and claims management (recognizing that these consumers represent a very small fraction of the consumers holding Tarion warranties (less than 0.6% in a year). 2External Factor Background: a) Without any response from us, what is the likely impact of this External Factor? Consumer complaining could drive BRRAG implementation (competitive warranty, move builder registration back to Ministry, include renovations in warranty). Consumer issues are popular with the media. b) Have we developed a strategy to address this External Factor? Project Simplify c) How effective has our strategy been? No results to date except for a builder appeal process to be added onto the end of the existing conciliation process d) Does current research and analysis offer insight on how best to respond? Eliminate time-wasting bureaucracy from the complaints, conciliations and claims processes. 3Draft a question that best states the essence of the required response? Draft Issue: Should we change the way we manage the complains, conciliations and claims processes? 4Draft Issue Answer Yes No Dont Know 5Further Research Required if answer to #4 is Dont Know: Step 8 Communicating the Strategic Plan

57 © External Factors: Transparency 1 Description of the External Factor under Discussion: Transparency: The move by corporations and government to be open and accountable to stakeholders by providing comprehensive information disclosure and discussion of major issues. 2 External Factor Background: a) Without any response from us, what is the likely impact of this External Factor? - Continuing and growing builder and consumer dissatisfaction - Growing misinformation and misunderstanding about Tarion and the Act b) Have we developed a strategy to address this External Factor? - Development of a somewhat more informative Annual Report c) How effective has our strategy been? No further research conducted. No evidence that enough has been done. d) Does current research and analysis offer insight on how best to respond? - Implementation of other DAA practices - Implementation of corporate best practices - Builders want disclosure on reserving practices and management of the Guarantee Fund - Builders want disclosure on operating expenses - Consumers want more access to information and more information on status of claims - Most consumers expect to be able to access /input their file on-line - Both builders and consumers need more information on how the Board is appointed /operates 3 Draft a question that best states the essence of the required response? Draft Issue: Should we change our disclosure policies 4 Draft Issue Answer Yes No Dont Know 5 Further Research Required if answer to #4 is Dont Know: Step 8 Communicating the Strategic Plan

58 © Service Delivery Analysis Consumer / Builder Expectations not Addressed Change Warranty Service Delivery No Change to Warranty Service Delivery Today A regulator 1.Spin 2.Some other strategy 3.Expectations / Factor changed 4.Improve existing strategy An Insurer? 1.Spin fails to explain 2.Strategy implementation flawed 3.Expectations changed 4.Old strategy seen as superior to new Consumer / Builder Expectations Addressed Step 8 Communicating the Strategic Plan

59 © Direction: Successful pursuit of this direction will brand the organization 1. The question: How would changing the complaints / conciliation / claims process brand or change Tarion direction? 2. The status quo: How is Tarion branded today? What is Tarion known for? Answer: Policing builders. 3. The choices: Stop policing builders. Start delivering insurance practices. Keep policing restricted to Act enforcement. Risk / Reward: The risk could be greater than risk as currently quantified and the returns could be greater than those presently enjoyed 1. The question: How could stopping policing change generate unusual risk or reward? 2. The status quo: What is todays measure of risk / reward? Answer: # of complains / # of conciliations / # of claims 3. The choices: Eliminate complaints / conciliations by having an acceptable trigger for claims. Risk is that conciliation activity would turn into claims at 1800 @ $8000 each ($14.4 million) Reward is that most costs associated with complaints and claims could be eliminated (say 50% of $10 million). Implementation Period: It will take at least as long as the planning period to implement 1. How long will the change take to implement? 9 months for immediate change and up to 3 years for other changes 2. What are the major milestones? 9 months / 24 months / 36 months Implementation Review: There will be a need to reassess implementation from time to time if risks/rewards are greater or less than anticipated Time if risks / rewards are greater or less than anticipated 1. Would this proposed change warrant monitoring ? Answer: Yes. There would have to be industry / ministry buy-in. Approval: The issue, restated as an objective, would require approval to implement 1. Who within Tarion would need to approve this proposed change. Answer: The Board of Directors 2. What information would they need in order to be able to consider approving? Answer: Description of proposed change, rationale, impact, benefits, risks. Redraft as Strategic Issue: Should… Tarion implement insurance industry practices to manage the compensation provisions of the Act so Tarion would become solely an insurer to most builders and to consumers; all present policing practices for administering those provisions and the costs associated with those practices could be significantly reduced; and service delivery to consumers could be greatly improved? First Statement of the Issue: Should Tarion change the complaints conciliation claims process? Strategic Issue: Service Delivery Process Step 8 Communicating the Strategic Plan

60 © Strategic Issue: Transparency Direction: Successful pursuit of this direction will brand the organization 1. The question: How would changing the information disclosure practices brand or change Tarion direction? 2. The status quo: How is Tarion branded today? What is Tarion known for? Answer: Secretive. Note: This does not appear to be an issue of strategic direction as much as an operational improvement Risk / Reward: The risk could be greater than risk as currently quantified and the returns could be greater than those presently enjoyed 1. The question: How could information disclosure generate unusual risk or reward? 2. The status quo: The risk is political interference to end the Tarion model or Tarion administration of the model. The reward is stakeholder satisfaction. Note: This does not appear to be an issue of Risk / Reward as much as an issue of operational improvement Implementation Period: It will take at least as long as the planning period to implement 1. How long will the change take to implement? 2. What are the major milestones? Implementation Review: There will be a need to reassess implementation from time to time if risks/rewards are greater or less than anticipated Are greater or less than anticipated 1. Would this proposed change warrant monitoring? Approval: The issue, restated as an objective, would require approval to implement 1. Who within Tarion would need to approve the proposed change Answer: The Board of Directors 2. What information would they need in order to be able to consider approving? Answer: Description of proposed change, rationale, impact, benefits, risks. Redraft as Strategic Issue: Should… Transparency would not appear to be a strategic issue as implementation will not change the strategic direction of Tarion or attract unusual risk or reward. The Board will, no doubt, want to approve the ultimate disclosure recommendations. First Statement of the Issue: Should Tarion change its information disclosure practices? Step 8 Communicating the Strategic Plan

61 © Strategy Conclusions Strategy Element Present StrategyProposed Strategy Authority Group Mandate Restrict focus to administer ActNo ChangeOK Risk Keep enforcing compliance and adopting prudent insurance industry practices No ChangeOK Growth Follow industry cycles (boom to bust) No ChangeOK Financial Management Return the surplus not required through fee reductions No ChangeOK Organizational Design Command and control Change the culture and the values / beliefs to service mentality OK Communications One Way communication from Regulator (Tarion) to Regulated (Builders and Consumers) Two-way communication & information access OK Service Delivery Focus on ensuring builder compliance and Tarion claims avoidance Focus on servicing consumers as an insurer OK Technology Limited useMove from bricks to clicksOK Step 8 Communicating the Strategic Plan

62 © Strategic Assumptions Service Delivery Strategy: To convert Tarion administration of S. 14 (Claims) and S.17 (Conciliations) of the Act to an insurance response by adopting practices common to the insurance industry so that service delivery to consumers is greatly improved and Tarion costs associated with these services are greatly reduced Assumption: That builder performance will not deteriorate from the present standards of performance: I.e. 1.6% rate of conciliations to annual enrolments and insignificant claims arising from conciliation Will failure threaten the strategy? Yes Tarion could be overwhelmed in claims Will failure trigger a contingency plan? Yes Perhaps a Builder auditing program? Is the assumption beyond control?Yes Should the assumption be monitored?Yes Step 8 Communicating the Strategic Plan

63 © Impact on Business Performance Major Functional Areas Short Term Priorities Mid Term Priorities Longer Term Priorities Step 8 Communicating the Strategic Plan

64 © Impact on Todays Reality Major FunctionsShort Term PrioritiesMid Term PrioritiesLonger Term Priorities Registration Review processes Move from paper – based to I.T. based On-line builder registration Enforcement No change Research use of I.T. to improve productivity Enforcement of conditions of registration Warranty Services - Inspections outsourcing - Close regional offices - Complaints intake rationalization - Claims management processes - Implement Project Simplify - Implement tech. based processes - Reduce associated costs (e.g. legal) Risk Management - Review possible impacts on claims - Identify builders involved in conciliation inspections for the last 3 years - Implement registration recommendations for problem builders - Implement recommended registration process improvements, if any Finance & Admin Reviewing reserving processes Implement new reserving practices Use of insurance industry rations to measure performance Corporate Affairs Identify immediate disclosure opportunities Enhanced website Use of stakeholder feedback to drive further disclosure I.T. Research of insurance processes Implement technology to support consumer processes Implement technology to support builder processes Human Resources - Communicate strategic plan - Begin staff file review for downsizing - De-hiring strategy - Identify training needs to move culture from policing to service - Redraft values / beliefs to reflect service instead of policing - Training of warranty service personnel in consumer service - Performance measurement system to monitor and evaluate individual performance Facilities Review leasesPlan head office space needs Move head office to a more economical location Step 8 Communicating the Strategic Plan

65 © Stakeholder Expectation Analysis Strategy Framework Element Proposed Strategy BuildersConsumersMinistry Business Definition / Mandate Risk Growth Financial Management Organizational Design Marketing Operations Technology Step 8 Communicating the Strategic Plan

66 © Stakeholder Expectation Analysis Strategy Framework Element Proposed Strategy BuildersConsumersMinistry Business Definition / Mandate No Change Narrow interpretation Consumer advocates want renovation warranty Ministry would like renovation warranty Risk No Change Think ONWHP too cautious / over- reserved No ExpectationsNo Change Growth No ChangeOkNo Expectations Within Act Ok; corporate growth is a question Financial Management No Change Reduce operating costs to lower fees Expect Tarion to be there when needed Minister pleased with lower fees Organizational Design Change the culture and the values / beliefs to service mentality Change the culture Change the culture to service / consumer bias Unclear Marketing Two-way communication and information access As much information as possible As much as is usually available from insurers / government Follow the lead of the Provincial Government Operations Focus on servicing consumers as an insurer / restrict policing to Act enforcement / Reduce costs Take focus off all builders and focus on Bad builders Online / fairness and certainty in claim management Make consumers happy Technology Move from bricks to clicks Okay if it reduces costs Give me the same as I get from other insurers / govt Online Tarion builder and consumer services Step 8 Communicating the Strategic Plan

67 © Tarion Strategic Assumption 1. What is the Major External Factor driving Strategy Change? Builder & Consumer Expectations 2. What about that Factor could change and threaten our strategyMore Failures / Claims 3. Do we have a contingency plan if this starts happening? Could we trigger Builder audits / claims tracking? 4. Is this assumption about the Factor beyond our control?Yes 5. Should the assumption about this Factor be monitored.Yes Strategic Assumption: That Builder performance and / or Consumer claims practices will not adversely change because of some unanticipated (by Tarion) impact of changes to current Tarion practices during the course of strategy implementation. Step 8 Identify Strategic Assumption

68 © Executive Summary 1. Planning Objective To develop a 3 year strategic plan for Tarion Warranty Corporation 2. Planning Scope: The members of the Board of Directors were canvassed on the range of strategy choices that would be acceptable to them. From this research, it was determined that the Board wanted the strategic plan focused largely on change that would improve Tarion service delivery to consumers. 3. Data Collection: To identify the relevant external factors to which Tarion must respond, the Tarion business model was constructed and Tarion management of that model was analyzed for strengths and weaknesses. That analysis identified 19 external factors to which Tarion must respond. Of those 19, 3 were identified as the most important for strategic planning purposes. The remaining 16 will be addressed in functional planning. 3. Strategic Issue Identification Analysis of the 3 external factors revealed that both builders and consumers want change to the way Tarion manages the complaints, conciliation, and claims processes and that both stakeholder groups want Tarion to start making available significantly more information on financial and operating performance than Tarion has provided in the past. The move to disclosure was not deemed to be a strategic issue – but rather something that Tarion must do. Changing the way Tarion manages the complaints, conciliations, and claims process was deemed to be strategic because, if the changes builders and consumers want are implemented, Tarion will become largely an insurer organization to most builders and all consumers. Risk would stay the dominant strategy Tarion today administers the Act as a regulator. The policing approach Tarion brings to the complaints, conciliations and claims practices, which are largely insurance practices, is no longer seen as acceptable by either stakeholder group. The approach is too costly, not nearly as effective as taking security from builders upon registration, and no longer seen as necessary since statistically, taking security and other risk prevention initiatives have virtually eliminated the need for the approach. 4. Impact of Change on Tarion The implementation of the proposed changes will end the current Tarion regulator mentality by which it sees all builders as potential bad guys and consumers as victims. This mentality will be replaced with an insurers mentality in which assuming, the customer has the conditions of the policy, the customer deserves the policys protection. The approach should also vastly improve service delivery to consumers and reduce operating costs. 5. Next Steps: Detailed implementation planning will begin after approval of the strategic plan is obtained. Step 8 Communicating the Strategic Plan


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