The New Manager’s Course Management 1: The New Manager’s Course Strategic and Business Planning Alan Kennedy November 2013 © 2013 Alan W. Kennedy on behalf of Schulich Executive Education Centre (SEEC). All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, recording, photocopying or otherwise, without written permission of the copyright holder Manager 1: Strategic & Business Planning 1

Manager 1: Strategic & Business Planning About the Presenter Alan Kennedy B.A. LLB. CMC Alan is a partner with Gibson Kennedy & Company, a Toronto consulting firm offering Canadian clients strategy counsel and competitive research services since 1990. Gibson Kennedy is the authorized correspondent in Canada for Kaiser Associates Inc., a Washington-based consultancy offering global competitive research services to North American based clients. Alan’s practice focuses exclusively on matters of strategy, risk, and capital projects planning and communication using The Alpha Strategies model he pioneered. Alan has been teaching strategy for the Schulich Executive Education Centre since 1992. His principal course is Strategic Management, a three day course on Situation Analysis, Strategic Planning, and Business Planning. In addition to being a member of the faculty for Management I, Alan also teaches in the Insurance Industry Leadership Program, a one week program for insurance industry executives. Alan is a frequent speaker on matters of strategy. Alan’s book, The Alpha Strategies – Understanding Strategy, Risk, and Values in Any Organization was published in February is now available at all online retailers and for free in pdf format at www.thealphastrategies.com Alan is a Honor Roll member of the Canadian Association of Management Consultants. Alan received his degrees from Dalhousie University and served as Senior Vice President & General Counsel for both Oxford Development Group and Campeau Corporation and as a member of the Board of Directors for both companies. Manager 1: Strategic & Business Planning 2

Manager 1: Strategic & Business Planning The Day’s Objectives how strategic planning differs from business planning how stakeholder identification & expectations analysis factor in strategy decisions how a business plan implements the intent of the strategic plan Manager 1: Strategic & Business Planning

Your Issues / what do you want to learn more about?

Module One A Brief Introduction to Strategy & its History Manager 1: Strategic & Business Planning 5

The Issues in Strategy Source: Robert F. Felton and Pamela Keenan Fritz, The View from the Boardroom McKinsey Quarterly 2005 Special Edition: Value and Performance Manager 1: Strategic & Business Planning

Manager 1: Strategic & Business Planning June 4, 2013 A majority of leaders (64 percent) said the biggest frustration for managers is having too many conflicting priorities. Most executives (54 percent) said they do not believe that their company’s strategy will lead to success. Most (53 percent) could not say their strategy is understood by employees and customers. Only a third (33 percent) said they feel the company’s core capabilities fully support the company’s strategy. Only 21 percent could say all of their businesses leverage their core capabilities. http://www.booz.com/global/home/press/display/coherence-profiler-results Manager 1: Strategic & Business Planning

“Strategy is a description of a chosen course of action” Strategy Definition “Strategy is a description of a chosen course of action” “Our long term strategy is to be around for the long term. Our short term strategy is to not do anything that would screw-up our long term strategy” Stanfield’s, The Underwear Company Truro, Nova Scotia Manager 1: Strategic & Business Planning

A Competitive Researcher’s Perspective on Strategy - 8 strategies are common to all organizations - 3 types of strategy are common to all organizations - 1 strategy is the organization’s dominant strategy Manager 1: Strategic & Business Planning

8 strategies are the source of all subsequent implementation strategy and organization design 10 Manager 1: Strategic & Business Planning 10 10

Origin of The 8 Strategies Manager 1: Strategic & Business Planning

The 8 Strategy Definitions Business Definition / Mandate Focus on positioning the business / on interpreting the mandate parameters Risk Focus on the unacceptable and ways to manage it Growth Focus on type and rate of growth Financial Management Focus on sourcing, allocation, and management of capital and revenues R&D / Technology Focus on the creation and/or use of intellectual capital / technology Organization Mgmt Focus on sourcing, allocation, and management of personnel Marketing / Communications Focus on identifying and capturing customers and clients (i.e marketing through to sales) Service Delivery / Production / Manufacturing Focus on fulfilling the marketing promise of value / relevance Manager 1: Strategic & Business Planning

The Generic Strategies Business Definition / Mandate Business Positioning: Niche, Specialty, Commodity Mandate: Narrow Interpretation; Middle-of-the-Road; Broad Interpretation Risk Focus: Internal; External; Both Management: Accept, Avoid, Transfer, Mitigate Growth Type: Internal, External (acquisitions, partnerships, alliances, joint ventures) Rate: Bigger, Smaller, No Change Financial Management Sourcing: Capital markets, debt, equity, self-funding Allocation: Strategies; Business Units Management: Performance; Control, Both R&D / Technology Follower, Leader, Adapter Organization Mgmt Sourcing: Internal; External Allocation: Employee; Contract; Outsourcing Management: Entrepreneurial; Bureaucracy; Adhocracy; Centralized, Decentralized Marketing / Communications Identifying: (ie. Marketing): Product / Service; Price; Place; Promotion Capturing: (ie. Sales): Targeting; Approaching; Pitching; Overcoming Objections; Closing; Follow-Up Service Delivery / Production / Manufacturing Delivering the Promise: Needs / Requirements; Inputs; Production; Quality; Delivery; Follow-up (Warranty) Manager 1: Strategic & Business Planning

Management 1 Course Structure The 8 Strategies Wednesday Business Definition / Mandate Risk Growth Financial Management Thursday R&D / Technology Organization Management Monday, Tuesday, Friday Marketing / Communications Tuesday Service Delivery / Production / Manufacturing Manager 1: Strategic & Business Planning 14

Understanding Current Strategy Manager 1: Strategic & Business Planning

Manager 1: Strategic & Business Planning Module Two How strategic planning differs from business planning Manager 1: Strategic & Business Planning 16

Manager 1: Strategic & Business Planning 3 types of strategy are common to all organizations Influencers are the three strategies which most closely guide and constrain implementation of the Alpha and the remaining four strategies, the Enablers Alpha is the one strategy which leads the organization and sets its character. e.g. Nike is Marketing Enablers are the remaining strategies Manager 1: Strategic & Business Planning

Examples of Dominant Strategy Organization Dominant Strategy IBM Business Definition (but not Mandate) WalMart, Stantec, McDonald’s Growth CHMC, Bank of Canada, RCMP, Sun Life, OTPP, CRA Risk Bank of Montreal, Ontario Financing Authority Financial Management Frank Gehry Architects Organization Management Google, Intel, NASA, NRC R&D / Technology Pepsi, Coca-Cola, Nike, The Bay, United Way Marketing / Communications Toyota, FedEx, Amazon, many Hospitals, much of Government Service Delivery / Production / Manufacturing Manager 1: Strategic & Business Planning

How are your strategies organized? Alpha Influencers Enablers Manager 1: Strategic & Business Planning 19

Blackberry The Alphas Blackberry Business Definition To be the global leader in wireless data communications Risk To protect our intellectual property and to protect network security and integrity Growth To focus on expanding our customer and subscriber base through marketing efforts, strategic alliances, and acquisitions Financial Management To access capital markets through TSX / NASDAQ listings Technology To focus research on broad market applications for products derived from the existing technology base. 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 To encourage the adoption of our platform by wireless network service providers globally and their customers, and to focus on licensing components of the BlackBerry platform to key handset and service vendors Manufacturing To deliver wireless data security and network reliability Manager 1: Strategic & Business Planning 20

Organization Management Blackberry Alpha Influencers Enablers Organization Management Manufacturing Financial Management Marketing R&D / Technology Risk Growth Business Definition Manager 1: Strategic & Business Planning

Manager 1: Strategic & Business Planning The Alphas Tarion Strategic Plan Mandate Administration of the ONHWP Act. Risk Use of insurance industry practices and regulatory authority 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 Regulator decisions are isolated from interference by the Board or the Insurance function Marketing To educate new home buyers and home builders Service Delivery To deflect risk away from the program onto builders Manager 1: Strategic & Business Planning 22

Manager 1: Strategic & Business Planning Alpha Influencers Enablers Organization Management Mandate R&D / Technology Risk Service Delivery Marketing Financial Management Growth Manager 1: Strategic & Business Planning

The One-Page Strategic Plan The 8 Strategies Strategy Description Alpha Influencer Enabler Business Definition / Mandate How is the organization positioned? What is the mandate? - Risk How are risks identified and managed ? Growth How does the organization grow? Financial How are the finances managed? R&D / Technology What is the focus of R&D / Technology ? Organization Where are people sourced; how are responsibilities and authority delegated; what is the culture i.e. alpha? Marketing / Communications How does the organization identify and capture customers / the perception of value? Service Delivery / Production How are products / services are produced? Manager 1: Strategic & Business Planning 24

factor in strategy decisions Manager 1: Strategic & Business Planning Module Three How stakeholder identification & expectations analysis factor in strategy decisions Manager 1: Strategic & Business Planning 25

The Facts that Support Strategy Decisions Current Strategy Stakeholder Expectations Customers (Users) & Markets (Need Demand) Industry Dynamics Competitors Trends Best Practices Manager 1: Strategic & Business Planning

Stakeholder Identification Stakeholder Types Actual Stakeholder Names  The Authority Group Those Stakeholders who approve the plan and authorize implementation The Involve Group Stakeholders who should be involved because of the role they will play in implementation The Inform Group Stakeholders who need to be told what to do so that their actions are consistent with implementation The Consider Group Any Stakeholders not falling in any of the above categories and who could have a response to implementation Manager 1: Strategic & Business Planning

Expectations Are Widely Used for Individual Planning Exceeding Expectations Meeting Expectations Not Meeting Expectations Manager 1: Strategic & Business Planning

Expectations in Public Sector Planning Manager 1: Strategic & Business Planning

Cabinet Implementation Expectations Cabinet Strategy Cabinet Implementation Expectations Ministry Strategies To Satisfy Expectations Business Plan Detail Manager 1: Strategic & Business Planning

Boeing Goal Flowdown / Expectations Process See: http://baldrige.nist.gov/PDF_files/Boeing_Aerospace_Application_Summary.pdf Manager 1: Strategic & Business Planning

Canadian Military Use of Expectations Based Planning Source: a.k.a. Expectations See: http://www.mors.org/meetings/cbp/read/TP-3_CBP.pdf Manager 1: Strategic & Business Planning

The 3 Levels of Expectations Which level applies to you? Rigid Clear & Rigid Expectations Set Across all 8 Strategies Moderate Expectations not set for 3 or 4 the 8 Strategies Do Your Own Thing Usually only 2 or 3 Expectations Identified Manager 1: Strategic & Business Planning 33

Tell us about your functional area The 8 Strategies Expectations Imposed on your function / department / business unit Business Definition / Mandate What is the mandate of the function / business unit / department ? - Risk What expectations are imposed by risk? Growth What expectations are imposed by growth? Financial Management What expectations are imposed by financial management? R&D / Technology What expectations are imposed by R&D / Technology? Organization Management What are the expectations are imposed by Organization Management? Marketing / Communications What expectations are imposed by marketing / communications? Service Delivery / Production What expectations are imposed by service delivery / production? Manager 1: Strategic & Business Planning 34

Manager 1: Strategic & Business Planning Module Four How business plans implement the intent of the strategic plan Manager 1: Strategic & Business Planning 35

Building the Business Plan You have just been made the manager of a facility within your organization. Which expectations seem to be the most important achieving success and what would be your plan to meet those expectations? The 8 Strategies Expectations imposed on the operator Business Definition To offer fast food services within a hospital Risk To comply with all mandated health and safety policies and procedures Growth - To grow the per capita spend Financial To follow mandated reporting requirements To achieve imposed margin expectations To make all required remittances to the VP Finance of the hospital on time Technology - To use mandated information systems Organization To maintain a staff of 25 – 30 to be able to run the location 24/7 To develop a customer-centric team To hire and train employees to deliver to mandated service standards To comply with the Collective Bargaining Agreement at all times Marketing - To follow all mandated promotions Service Delivery To be a 24 / 7 operation To follow all mandated processes for service delivery To deliver to mandated quality standards To offer all mandated products and services Manager 1: Strategic & Business Planning 36

Manager 1: Strategic & Business Planning Pros & Cons Analysis Expectation: Pros Cons Manager 1: Strategic & Business Planning

Building the Action Plan – a Visual 6. Long Term Short Term 4. F G 3. 2. 5. D E B C 1. Today A Steps What How Who Schedule Metrics Budget 1. A to B - 2. B to C 3. C to D 4. D to E 5. E to F 6. F to G Manager 1: Strategic & Business Planning 38

Seeing the Plan as the Big Picture Long Term 4. 6. F G 3. 2. 5. D E B C 1. Mid Term Today A Short Term Manager 1 Strategic & Business Planning

Manager 1: Strategic & Business Planning The Day’s Objectives how strategic planning differs from business planning how stakeholder identification & expectations analysis factor in strategy decisions 3. how a business plan implements the intent of the strategic plan Manager 1: Strategic & Business Planning