A review of the eight strategies common The Strategic Plan A review of the eight strategies common to all organizations against factors in the changing external environment Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy Course Deliverables Day 1 Day 2 Day 3 Produce a Situation Analysis Produce a Strategic Plan Produce a Business Plan Strategic Management © 2015 Alan W. Kennedy

Reviewing the Situation Module 1 – Day 2 Reviewing the Situation Strategic Management © 2015 Alan W. Kennedy

Module 1 – Day 2 Reviewing the Situation Strategic Plan Content & Process SWOT Analysis Redux Situation Review Nominal Group Technique & Cross-Impact Analysis Strategic Management © 2015 Alan W. Kennedy

Strategic Plan Content 1. Content & Process Strategic Plan Content Facts The Situation Analysis The Fact Gathering Process Major External Factors Stakeholder Expectations Organizational Performance Description of Current Strategies and Strategy Configuration 2. Analysis Issue Development The Analysis Process Likely Impact of Major Factors A Ranking of Major Factors & Expectations Possible Responses & Rationale 3. Strategy The Change Agenda 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 Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 1. Content & Process Strategic Planning 1. Choice of Planning Process: Should we be doing strategic planning or business planning? Day One: Situation Analysis 2. Scoping Expectations: Have we assessed the expectations for strategic planning? 3. Internal Assessment: Do we truly understand the what’s, how’s and why’s of our current strategy? 4. External Assessment: What factors in the external environment must we truly understand? 5. The Situation Analysis Review: Do we have enough understanding to support informed decisions? Day Two: Strategic Planning 6. Issue Development: Are we able to connect external factors to the strategy framework? 7. Strategic Issue Identification: Are we able to develop scenarios to identify possible strategic issues? 8. Strategic Plan Communication: Have we described the likely “what” and “when” impact of change? 9. Strategic Plan Review: Do we understand the strategic plan and how it is likely to impact us? Day Three: Business Planning 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? Strategic Management © 2015 Alan W. Kennedy

Strategic Planning Process 1. Content & Process Strategic Planning Process Step 8 Step 7 Step 6 Step 5 Prepare Statement of Strategy & Impact Identify Strategic Issues Convert Factors to Strategy Issues Review the Situation Analysis Frame Strategies as SMART Objective Develop Scenarios to Assess Strategy Issues Select an Identified Factor Understand the Appetite for Change Identify Strategic Assumption Draft Competing Strategic Issues Connect the Factor to One of the 8 Strategies Understand Internal Assessment Findings Communicating the Strategic Plan Select the Strategic Issue Answer the Strategy Change Question Understand External Assessment Findings Strategic Management © 2015 Alan W. Kennedy

 SWOT 2. SWOT Redux Under Tarion’s Control – What is the situation Not Under Tarion’s Control – What has changed externally? Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy Fact vs. Fiction 3. Situation Review Fiction Tarion’s Board of Directors is controlled by the builders Fact Builders have 8 of 16 seats on the board. Fiction Tarion’s responsibilities as a regulator and warranty vendor conflict Fact The KPMG study found the combination of responsibilities a significant success factor. Fiction All builders pay the same registration fee Fact The basic registration fee may be the same but conditions of licensing vary dramatically. Fiction Tarion has a monopoly on new home warranty insurance Fact All new homes must carry the Tarion warranty as the minimum warranty – not the only warranty Fiction New home building industry standards in Ontario need to be improved Fact New home industry standards are the highest of any jurisdiction. Fiction BC has put into place a new home warranty program structure that Ontario should adopt Fact The BC program is unproven and the BC market for is a fraction of the size of the Ontario market. Fiction Tarion could easily extend its regulatory and warranty coverage to the renovation industry Fact The renovation industry is fundamentally different from the new home building industry Strategic Management © 2015 Alan W. Kennedy

Stakeholder Identification 3. Situation Review Stakeholder Identification The major Tarion stakeholders and their role in the strategic planning process Stakeholder Categories Actual 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 Tarion Management and Staff The Inform Group Stakeholders who need to be told what to do so that their actions are consistent with implementation Tarion Employees The Consider Group Any Stakeholders not falling in any of the above categories and who could have a response to implementation Consumer Associations - Builder Associations – Ministry Industry Professionals - Lawyers - Architects - Engineers - Bankers Industry vendors: trades, manufacturers DAA Critics: CIELAP - Other DAA’s Other Ministries: (MMAH) - Other gov’t orgs: (CMHC) Competitors: (warranty companies) Other jurisdictions: (B.C.) Media (Print / Radio / T.V. / Magazine) Municipalities Strategic Management © 2015 Alan W. Kennedy

3. Situation Review ONHWP Act Model Consumer Protection Risks to Consumer Builder Risk Assuring Builder Ability to Perform Insuring Builder Failure 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 Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 3. Situation Review The Alphas Current Strategy Mandate Administration of the ONHWP Act. Risk First, use of regulatory authority. Secondly, use of security / reserves Growth Rise and fall with the new home building industry cycles Financial Self-funding / Use of insurance industry reserving practices Technology Enable management productivity Organization Centralized / Expectations are to take a regulatory approach Communications To educate new home buyers and home builders on their responsibilities Service Delivery To deflect risk away from Tarion and onto builders Strategic Management © 2015 Alan W. Kennedy 2 - 12

Current Strategy Configuration 3. Situation Review Current Strategy Configuration Strategic Management © 2015 Alan W. Kennedy 2 - 13

From Strategy to Org Design President & Registrar Chief Operating Officer VP & CFO VP & CIO VP & General Counsel VP Licensing & Underwriting VP Human Resources VP Warranty Services VP Financial Process Improvement Strategic Management © 2015 Alan W. Kennedy

Strengths & Weaknesses 3. Situation Review Strengths & Weaknesses Business Model Management Strengths Weaknesses Licensing & Underwriting & Enforcements $2.4 B in condo builder security conditions of licensing mandatory registration & stable builder population bureaucratic processes Builders slow to adopt change Warranty Services No fault coverage home covered whether or not requested complaints process slow and bureaucratic Risk well mitigated through financial reserves focused on legal risks Finance adapting insurance industry practices not enough disclosure I.T. ready for e-commerce could be much more use of technology Org Management Human Resources diverse board low personnel production no disclosure of performance measures no disclosure of salaries over $100K High payroll Strategic Management © 2015 Alan W. Kennedy

Strengths & Weaknesses 3. Situation Review Strengths & Weaknesses Business Model Management External Factors Impacting Performance Licensing & Underwriting & Enforcements Industry best practices, complaint, online practices best practices - insurance industry practices – online Warranty Services New home builder performance - warranty industry practices best practices - e-commerce - builder expectations consumer expectations – Ministry Media Transparency Risk Present building code - The Act & regulations -case law / judicial decision - construction technology Finance insurance industry practices -Stock/Bond market performance financial regulatory requirements - builder expectations B.C. Home Warranty - Warranty Industry Practices -Practices of other DAA’s I.T. technology Org Management Human Resources Builder expectations on productivity Strategic Management © 2015 Alan W. Kennedy

Warranty Industry Analysis 3. Situation Review Warranty Industry Analysis 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 drops dramatically in times of recession Growth is a function of condo popularity in the major cities, provincial economy and population growth Segment Dynamics What dynamics are most shaping the segment? Customers/competitors/ Suppliers/Barriers to Entry/Alternatives Consumers don’t want to pay cost until they need protection Mortgage lenders require warranty on mortgages Competitive pressure: lower costs, more choice Critical Success Factors What must a competitor do to succeed? not-for-profit status of Tarion (to recognize economic fragility) industry self-management model (to recognize need to balance true cost/liability associated with added consumer protection elements bundled regulatory authority / insurance responsibility (to recognize need to enforce a minimum standard) no-fault coverage for consumers (i.e. whether home or builder are registered) autonomy from government to isolate capital reserves and fees 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? The model could evolve as the regulator of more segments of the housing industry Strategic Management © 2015 Alan W. Kennedy

Warranty Competitor Analysis 3. Situation Review Warranty Competitor Analysis Warranty Industry Attractiveness Competitors Travelers The Guarantee National Home Warranty & Aviva Canada Pacific Protected Competitor Focus Excess deposit insurance for condo buyers (i.e. over $20,000 Conversion project warranty insurance Critical Success Factors Competitor Strengths Cost Control / Productivity Online accessibility – Clear processes Marketing - Pricing Product selection Financial strength Developing a strong builder customer base Competitor Weaknesses No commitment to stay in the market No commitment to small builders Warranty is a trigger product Warranty Industry Evolution Likely Future Competitors Private sector competitors from other provinces/US Likely Areas of Functional Excellence On-line delivery of builder and consumer services Strategic Management © 2015 Alan W. Kennedy

Warranty Customer Analysis 3. Situation Review Warranty Customer Analysis Question Answer The most important customer Builders are the most important customer. Consumers do care about new home warranty until they have a claim. Consumers cannot be educated on the value of new home warranty Criteria driving purchase decision Mandatory purchase but also a condition of most mortgage lenders Comparison to competitors? If push came to shove, most builders still think private sector insurers could do a better job. Most valuable products & services More information on builders so an informed decision can be made Purchase decision steps and influencers Purchase is mandatory Likely change in customer behaviour To fix things immediately rather than let a “conciliation” process emerge Future product & services needs Warranty claims process no different than making a car accident claim Strategic Management © 2015 Alan W. Kennedy

External Factors Identified 4. Tools External Factors Identified External Factor Description 1. Technology All manner of technology to enable productivity & e-business 2. Case Law / Judicial Decisions Interpretation of the Act & Regs by the courts 3. Warranty Competitors Private sector warranty vendors 4. Best Practices Best practices in business & gov’t 5. Builder Expectations More productive builder registration process; go after bad builders 6. Ministry Expectations Keep new homebuyers happy and Tarion off the radar 7. The Act and Registrations The current model of consumer protection as described in the Act & Regs 8. Consumer Expectations More online builder info; faster claims processes; more info 9. New Home Builder Performance The trend showing better built homes, less claims 10. Transparency The trend to full information disclosure on every aspect of Tarion 11. E-Commerce Full online accessibility 12. The Media Print / T.V./ Radio media and its reporting on Tarion 14. Tourdes DAA Review Report A situation analysis of Tarion and other DAA’s 15. BC New Home Warranty Program The regulatory and warranty scheme now in place in BC 16. Insurance Industry Risk Practices Pricing and use of security in the management of risk 17. Financial Regulatory Requirements Capital and reporting requirements imposed on Ontario insurers 18. Construction Practices Materials, practices & products being used by Ontario builders Strategic Management © 2015 Alan W. Kennedy

Nominal Group Factors Ranking 4. Tools Nominal Group Factors Ranking Your Factor Ranking Factor Identification / Name #1 #2 #3 4 5 6 7 8 9 10 Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 4. Tools Factors Scoring The Factors X10 X9 X8 Total Rank Strategic Management © 2015 Alan W. Kennedy

0 = none 1 = weak 2 = medium 3 = strong 4. Tools Cross Impact Analysis 0 = none 1 = weak 2 = medium 3 = strong 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 AS P 1 Technology X 128 2 Case Law 60 3.Best Practices 144 4 Bldr Expects 21 273 5 Act & Regs 176 6 Cons Expects 20 420 7 Bldr Perform 135 8 Transparency 121 9 Economics 32 10 Media 11 Barrett Comm 12 BRRAG 13 BCNHWP 14 Ins Pracs 24 15 Reg Reqmts 16 Constr Tech. 18 PS .4 1.6 1.4 .9 .6 .5 Q sum of row = ∑ni sum of column = ∑nj product = ∑ni ● ∑nj quotient = ∑ni / ∑nj See T.J. Gordon and H. Hayward Initial Experiments with the cross- impact matrix method of forecasting Futures 1, 100 -116 (1968) Strategic Management © 2015 Alan W. Kennedy

X-Impact Analysis Calculations 4. Tools X-Impact Analysis Calculations Active = Q > 1.0 Critical = P > (n-1)2 Reactive = Q < 1.0 Inert = P < (n-1)2 Technology Q = 2.0 P = 128 > Case Law Q = 0.4 P = 60 > Best Practices P = 144 > Builder Expectations Q = 1.6 P = 273 > Act & Regulations Q = 1.4 P = 176 > 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 < BC New Home Warranty Q = 6.0 P = 6 < Insurance Industry Prac Q = 4.0 P = 24 < 15. Financial Regulatory Req Q = 2.0 P = 2 < Construction Technology Q = 1.0 P = 5 < Strategic Management © 2015 Alan W. Kennedy

Critical Active Reactive Inert 4. Tools Critical strong influencer / strongly influenced 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 14 Insurance Industry Practices 15 Financial Regulatory Requirements 16 Construction Technology 425 400 375 350 325 300 275 250 225 200 175 150 125 100 75 50 25 6 4 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 1 2 3 4 5 6 7 8 Active strong influencer / weakly influenced Reactive weak influencer strongly influenced 5 3 7 1 8 2 9 10 14 16 15 Inert weak influencer / weakly influenced Strategic Management © 2015 Alan W. Kennedy

Factors Risk Assessment 4. Tools Factors Risk Assessment - Technology - Best-Practices - E-Commerce - Case Law - Consumer Expectations - Builder Expectations - Transparency - Construction Technology - Finance Regulatory Rqmts - Insurance Industry Practices - The Media - The Act & Regs - New Home Bldr Performance low medium consequence high Impact medium Probability Strategic Management © 2015 Alan W. Kennedy

Module 1 – Day 2 Reviewing the Situation Strategic Plan Content & Process SWOT Analysis Redux Situation Review Tools: Nominal Group Technique & X-Impact Analysis Strategic Management © 2015 Alan W. Kennedy

The First Step towards Change Module 2– Day 2 The First Step towards Change Strategic Management © 2015 Alan W. Kennedy

Module 2 – Day 2 The First Step Towards Change Process Overview Strategic Issues Issues Identification Strategic Management © 2015 Alan W. Kennedy

Understand the Appetite 1. Process Step 6 Objectives 6. Issue Development: Are we able to connect external factors to the strategy framework? Step 6 Prepare Statement of Strategy & Impact Conduct Scenario Analysis Convert Factors to Strategy Issues Review the Situation Analysis Select an Identified Factor Understand the Appetite for Change Connect the Factor to One of the 8 Strategies Understand Internal Assessment Findings Answer the Strategy Change Question Understand External Assessment Findings Strategic Management © 2015 Alan W. Kennedy

Strategic Issue Definition 2. Strategic Issues 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 ? Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy The CEO Aligns the 8 Strategies with Major Stakeholder Expectations and Competitive Reality 2. Strategic Issues Tech Org Marketing / Communi- cations Production/ Service Delivery Mandate Bus Definition Risk Growth Finance Changing Trends Changes in Demand Change in Alternatives/ Competition Best Practices Changes in Changed Stakeholder Expectations Changes in Need / Risk Industry Change Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 2. Strategic Issues All Managers Align Activities Assigned to Them to Strategic Plan Expectations first and with competitive reality second Admin Compliance Budget Marketing / Services Customer Relations Call Centre Training Recruiting Monitoring Changed Expectations Strategic Management © 2015 Alan W. Kennedy

Alpha Sets Culture 2. Strategic Issues Organization 8 Strategy Focus Actual Strategy Identity IBM Business Definition Morphing to the high margin Information Technology Stantec Growth Growth by Acquisition Major Global Design Firm Bank of Canada Risk Managing Investor Expectations Canada’s Financial Risk Manager Bank of Montreal Financial Management Deposit-Taking The Bank of No Surprises Frank Gehry Architects Organization Starchitect One-of-a-kind design Google R&D / Technology To manage all your information needs The Biggest Cloud Nike Marketing Clothing for winners The Swoosh FedEx Service Delivery 24 Hour Delivery Service Excellence Strategic Management © 2015 Alan W. Kennedy 2 - 34

Strategy Focus (Public / NFP) 2. Strategic Issues Strategy Focus (Public / NFP) Entity The 8 Strategies Mandate Toronto Police Services Risk Ontario Financing Authority Financial Management Stratford Theatre Company Organization Management National Research Council R&D / Technology CICA Marketing / Communications City of Toronto Service Delivery Strategic Management © 2015 Alan W. Kennedy

3 Tips for Drafting Issues 3. Issues Identification 3 Tips for Drafting Issues Tip #1 “????” / Frame issues as questions AVOID STATEMENTS There is no need for a warranty conciliation process We need to eliminate the warranty conciliation process ASK QUESTIONS Should we eliminate the warranty conciliation process? Tip #2 “Should” / Frame the issue in a way that invites debate Are we going to… How do we… Can we… Could we… Tip #3 “Yes” or “No” / Answer the question  Yes  No  Don’t Know Strategic Management © 2015 Alan W. Kennedy

Issues: Connecting Factors to Strategy 3. Issues Identification Issues: Connecting Factors to Strategy 1 Description of the External Factor under Discussion: 2 External 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? 3 Draft a question that best connects this factor to one of the 8 Strategies Draft Issue: Should ? 4 Draft Issue Answer  Yes  No  Don’t Know 5 Further Research Required if answer to #4 is “Don’t Know”: Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 3. Issues Identification 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. Strategic Management © 2015 Alan W. Kennedy

Module 2 – Day 2 The First Step Towards Change Process Overview Strategic Issues Issues Identification Strategic Management © 2015 Alan W. Kennedy

Building Strategic Issues Module 3 – Day 2 Building Strategic Issues Strategic Management © 2015 Alan W. Kennedy

Module 3 – Day 2 Building Strategic Issues Process Overview Scenario Thinking Drafting the Strategic Issue SMART Strategy Statements & Assumptions Strategy Focus & Impact Strategic Management © 2015 Alan W. Kennedy

Assess Strategy Issues Understand the Appetite Step 7 Objective 1. Process Overview 7. Strategic Issue Identification: Are we able to develop scenarios to identify possible strategic issues? Step 7 Prepare Statement of Strategy & Impact Identify Strategic Issues Convert Factors to Strategy Issues Review the Situation Analysis Develop Scenarios to Assess Strategy Issues Select an Identified Factor Understand the Appetite for Change Draft Competing Strategic Issues Connect the Factor to One of the 8 Strategies Understand Internal Assessment Findings Answer the Strategy Change Question Answer the Strategy Change Question Understand External Assessment Findings Strategic Management © 2015 Alan W. Kennedy

SWOT: The Basis of All Strategic Thinking 2. Scenario Thinking Strength Threat Opportunity Weakness Heinz Weihrich, The TOWS Matrix, A Tool for Situational Analysis. Source: http://www.usfca.edu/fac_staff/weihrichh/docs/tows.pdf Strategic Management © 2015 Alan W. Kennedy

Strategy Development: 2 Basic Strategic Thinking Frameworks 2. Scenario Thinking Strategy Development: 2 Basic Strategic Thinking Frameworks Assessing Expectations Assessing Strategy Expectation 1 Met Strategy Changed Expectation 2 not Met Expectation 2 Met External Factor Not Addressed External Factor Addressed Expectation 1 not Met Strategy Not Changed Strategic Management © 2015 Alan W. Kennedy

Strategy Scenario Development Thinking 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. Current Strategy Changed Who would we want to look like if this became our dominant strategy? External Factor Addressed External Factor not Addressed Who do we look like to an outsider because of our strategy? Current Strategy not Changed Strategic Management © 2015 Alan W. Kennedy

Strategy Scenario Development Thinking Change EB Marketing Strategy - A highly focused retailer Customer Factor not Addressed Customer Factor Addressed MEXX, Target, Sony Stores, American Apparel, Jacob, American Eagle No Change in EB Marketing Strategy Strategic Management © 2015 Alan W. Kennedy

Strategic Issue Development 3. Drafting Strategic Issues 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 ? Strategic Management © 2015 Alan W. Kennedy

Assess Strategy Issues Understand the Appetite Step 8 Objectives 4. SMART Objectives 8. Strategic Plan Communication: Have we described the likely “what” and “when” impact of change? Step 8 Prepare Statement of Strategy & Impact Identify Strategic Issues Convert Factors to Strategy Issues Review the Situation Analysis Frame Strategies as SMART Objectives Develop Scenarios to Assess Strategy Issues Select an Identified Factor Understand the Appetite for Change Identify Strategic Assumption Draft Competing Strategic Issues Connect the Factor to One of the 8 Strategies Understand Internal Assessment Findings Communicating the Strategic Plan Select the Strategic Issue Answer the Strategy Change Question Understand External Assessment Findings Strategic Management © 2015 Alan W. Kennedy

SMART Strategy (Objective) Statement 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 return to being a niche retailer over the next 2 years so that 80% of profitability comes from stores serving markets of our target customer Strategic Management © 2015 Alan W. Kennedy

Strategic Assumption Identification 4. SMART Objectives Assumptions Considered conjecture on specific factors 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. Strategic Management © 2015 Alan W. Kennedy

Strategy Framework Element Organizational Design 5. Strategy Impact & Focus Strategic Focus Strategy Framework Element Present Strategy Proposed Strategy Mandate Administration of the Act Risk Compliance enforcement / security & reserves Growth Rise and fall with industry cycles Financial Management Insurance risk best practices R&D/Technology Enable management Organizational Design Centralized as a regulator Communications Educate stakeholders Service Delivery Deflect risk to builders Strategic Management © 2015 Alan W. Kennedy

Impact of Strategic Focus (Change Implementation) 5. Strategy Impact & Focus Impact of Strategic Focus (Change Implementation) Strategy Framework Element How will change be implemented? Present Strategy Mandate Administration of the Act Risk Enforce compliance and embrace insurance practices Growth Rise and fall with industry cycles Financial Management Insurance risk best practices R&D/Technology Enable management Organizational Design Centralized as a regulator Communications Educate stakeholders Service Delivery Deflect risk to builders Strategic Management © 2015 Alan W. Kennedy

Module 3 – Day 2 Building Strategic Issues Process Overview Scenario Thinking Drafting the Strategic Issue SMART Strategy Statements & Assumptions Strategy Focus & Impact Strategic Management © 2015 Alan W. Kennedy

Communicating the Strategic Plan Module 4 – Day 2 Communicating the Strategic Plan Strategic Management © 2015 Alan W. Kennedy

Module 4 – Day 2 Communicating the Strategic Plan Communicating Change – Canada Post Assessing the Tarion Plan Selected Examples Evolution of a Firm Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 1. Canada Post Strategic Management © 2015 Alan W. Kennedy 2 - 56

Assessing the Tarion Plan http://www.tarion.com/AnnualReport/2013/init.html#1 Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 3. Examples The Alpha Strategies Strategy Mandate As stated under the York University Act. 1965 Risk Enterprise risk management Growth “If we build it, they will come” Financial Debt / government funding / donations / tuition fees R&D / Technology Enabler Organization Mgmt Bicameral system (Separate Academic and Administrative Governance) Marketing / Sales Focused on attracting students and donors Service Delivery Graduate and undergraduate degree programs across 11 faculties. 58 Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 3. Examples 59 Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 3. Examples 8 Strategy Strategy 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 Ottawa’s 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. 60 Strategic Management © 2015 Alan W. Kennedy 2 - 60

Strategic Management © 2015 Alan W. Kennedy 3. Examples Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 3. Examples The 8 Strategies Stantec 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 62 Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 3. Examples Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy 3. Examples The Alphas Strategy 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 gov’t & corp users Service Delivery To deliver data security and network reliability Strategic Management © 2015 Alan W. Kennedy 2 - 64

Strategic Management © 2015 Alan W. Kennedy 3. Examples Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy The Growing Up Years 4. Evolution of a Firm 1953 - 1975 Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy The Maturing Years 4. Evolution of a Firm 1976 - 1993 Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy The Acquisition Years 4. Evolution of a Firm 1994 - 2011 Strategic Management © 2015 Alan W. Kennedy

The Future: A Top Ten Global Design Firm 4. Evolution of a Firm 2012 - 2025 Strategic Management © 2015 Alan W. Kennedy

Module 4 – Day 2 Communicating the Strategic Plan Communicating Change – Canada Post Assessing the Tarion Plan Selected Examples Evolution of a Firm – The Stantec Story Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy Course Deliverables Day 1 Day 2 Day 3 Produce a Situation Analysis Produce a Strategic Plan Produce a Business Plan Strategic Management © 2015 Alan W. Kennedy

Strategic Management © 2015 Alan W. Kennedy Day Three Preparation Review the Goldstone Case Review the Day 3 Materials Review the Business Plan (Schedule “C”) Strategic Management © 2015 Alan W. Kennedy