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Building a Successful Company: Planning Jackie Kimzey, Rosemary Remacle

Building a Successful Company: Planning Jackie Kimzey, Rosemary Remacle. Thursday, September 26. Program: Thursday. Session Objectives. Important elements of a comprehensive plan Integration of plan into organization Determining ratio of “planning time” to “execution time”

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Building a Successful Company: Planning Jackie Kimzey, Rosemary Remacle

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  1. Building a Successful Company: Planning Jackie Kimzey, Rosemary Remacle Thursday, September 26

  2. Program: Thursday

  3. Session Objectives • Important elements of a comprehensive plan • Integration of plan into organization • Determining ratio of “planning time” to “execution time” • Importance of setting expectations and communicating • Highlight importance of a customer-focused strategy • Re-enforce relationships between strategic and operating plans

  4. How Do We Know If Our Planning Process Is Not Working?

  5. Early Warning Signs – Trouble in Camelot • Financial discipline only in the face of crisis • Inability to get the burn rate under control • Financial surprises are routine • Planning processes are non-existent • Product milestones are missed • Product fails to meet customer expectations • Quarterly projections are frequently missed • As the company grows, the initial team appears weaker • Failure to think about creating a strong, scalable team

  6. Early Warning Signs – Round of Funding • Seed • Fundamental blind spots exist in marketing and financing • Management has incomplete picture – they don’t know what they don’t know • Staffing has been handled awkwardly or inefficiently • No clear understand of working capital requirements • B Round • Too many priorities have diluted focus • Management is overwhelmed by a need for clarity • Firefighting consumes everyone’s attention • Key gaps in the team remain unfilled • C Round • Lack of cohesive strategy to rise above completion • Board meetings still uncovering unpleasant product/financial surprises • Cash burn not in sync with capital plans

  7. Why Is Planning So Difficult? How Do We Overcome Those Difficulties?

  8. Startups and Planning: The Dilemma • Too much to do • Too few resources • Dynamic environment but… • Without strategy and planning, it’s impossible to build a successful company Optimum balance between disciplined process and “overdoing it” is required

  9. Some Definitions Strategic Plan • A clear roadmap to the future, where the company is going in the next few years • “A roadmap, lightly filled in” – Larry Bossidy, Allied Signal Annual Operating Plan • How the company will execute the strategic plan, a year at a time • A series of milestones that will bring reality to a strategy

  10. Company Planning Foundations AnnualOperatingPlan StrategicPlan MarketVision Mission • Company • Functions/Departments • Market opportunity: context for company’s long term success • Company-specific raison d’etre related to market opportunity ( 5 years) • 2-3 year strategic plan supporting market vision and mission • 12-month operating plan detailing actions, milestones, metrics, responsibilities necessary to execute against the strategic plan

  11. Benefits of Planning • Execution ownership and organizational alignment • Focus/prioritization • Linkage between strategy and tactics • Resource requirements • Foundation for departmental plans and connections that cross functional lines • Gives BoD basis of evaluating CEO performance • Defines the basis for an organization-wide performance “report card” • Single document • Process forces important discussions Execution Metrics Communication

  12. Making the Plan “Live” in Changing Environments Plan Communication Communication Execute Execute Update/Revise Monitorand Measure Communication Planning is an ongoing and iterative process

  13. Communication and Monitoring Processes Corporate Strategic Objectives + Annual Operating Plan Functional Plans Individual MBOs + Quarterly Reviews of Annual Operating Plan by Executive Staff with ES and the BOD Managing in a Changing Environment + Review of Individual Performances (not always formal) Successful Company

  14. Characteristics of a Good Plan (Strategic and Operating) • Market and customer segment-focused • Reality-based with formal, external input • Flexible, but stable • Tops down/bottoms up input • Cross-functionally/departmentally linked execution • Written down • Actionable and measurable, with built-in accountability • (Pragmatic) process-based, process-driven An annual operating plan  spreadsheet

  15. Self Evaluation Exercise • Take 5-10 minutes and respond to the questions on the following page • Identify the 2-3 most important planning-related issues that you need to address within your company

  16. Planning – Self Evaluation

  17. Planning – Self Evaluation (cont’d) Today, are you “on plan” or “off plan”? Do you understand why or why not?

  18. 20 minute break

  19. Strategic Plan Components • Market Vision: Environmental assessment (market trends, technology enablers, problem/opportunity) • Mission statement • Key business assumptions • Competitive environment • Barriers to adoption • Positioning strategy (product/service category, market/customer segments targeted, problem solved, benefits/competitive differentiation) • Customer Requirements: Total product roadmap • Company strengths/weaknesses relative to its ability to execute against the strategy • Business model/pricing • Marketing and Sales strategy • Corporate strategic objectives (3-5) • Corporate culture and values description

  20. Market Segment Customer Segment ? Customer Segment ? Customer Segment ? Market Entry Customer Segment Market Entry Customer Segment Customer Segment ? Customer Segment ? Market Segment Market and Customer Segmentation

  21. Why Aren’t All Company Strategies (and Plans) Customer Segment-Focused?

  22. The Customer Segment Focus ‘Problem’ Disconnect Company Customer Segment The Causes: • Hearing what you want from the customers rather than what they are really saying • Small number of potential customers ‘interviewed’ • Tunnel vision: technology/product • Lack of regular market assessment • Not understanding the customer buying decision process • Inability to develop consistent, compelling, customer segment-focused messages

  23. MarketAcceptance Must Have Very Critical Solution Need Nice to Have Not so critical Market and Customer Segmentation: Understanding Critical-ness of Problem(s) • It’s the basis for differentiation, essence of value proposition • The better the match between customer need and the Company’s solution, the faster market acceptance will be Are you trying to sell something that the customer really needs?

  24. Customer Segment Total Product Requirements BetaCustomers Performance Benchmarks Channels Generic Product • Specs • Packaging CompanyReputation Partnerships OSes Supported TechnicalSupport Source: Conceptual model, Ted Levitt, The Marketing Imagination The more closely aligned the company’s product is with the total product requirements of customer segment, the easier it is to “own” that segment

  25. Industry Analysts Market segment reports and discussions Customers Sales calls Customers Strategy discussions Strategic Plan Consultants Qualitative third-party market and customer segment research (interviews) Customers Product requirements discussions Other Influencers? Partners Strategy discussions Competitors Collateral, Websites, Tradeshows Building a Customer Segment-Focused Strategic Plan

  26. Key Requirements For Success • Think about both a company and a product positioning strategy from the beginning • Focus on a well-defined and accessible market entry customer segment • Prioritize resources against that customer segment’s problem and total product requirements • Develop a complete competitive analysis • Lead with a compelling competitive differentiator (directly related to the customer’s problem) • Track key shifts in the market environment (especially new technologies) • Maintain awareness of evolving customer (total product) needs and buying behavior • Target most influential customers and partners rather than the ones that are most easily accessible • Form a realistic assessment of the organization’s ability to execute against the strategy (team, time and money)

  27. Summary: Keys to a Customer Segment-Focused Strategy • Define your market and customer segment • Listen to multiple customers and synthesize their inputs • Understand ‘the problem’ and its critical-ness to them • Define the customer segment’s total product requirements • Execute!! Have you embedded a customer segment focus in your company’s mission statement?

  28. “It’s Not Just the Plan, It’s Also the Process”

  29. Annual Operating Plan Components • State of company • Review of prior year’s performance against the strategic plan, corporate strategic objectives • Key corporate accomplishments • Financial performance/health • Variances from plan • What’s changed since last year-environmental assessment & strategic plan update • Key business assumptions • Key initiatives for next year (“must do’s”) • Risk factors • Hinge factors • Functional/departmental Must Do’s • Marketing plan (includes total product roadmap) • Sales plan • Engineering plan (includes technology and product roadmaps) • Finance and administration plan (Finance, IT, H/R) • Manufacturing/Operations • Management team/personnel • Headcount • Performance reviews • Next year management team compensation recommendations • Next year management team measurement criteria

  30. Annual Planning Cycle (Tops Down/Bottoms Up)

  31. Roundtable Exercise • 15 minutes – Discuss question and possible answers with other participants at your table; give examples from your own experiences • Chair #2 manages discussion • Chair #5 is scribe, capturing potential answers to the question on the table • 10 minutes – Each table’s scribe reports to entire group quickly and briefly ( 1 minute) on top two ideas discussed by the group

  32. Roundtable Questions Tables 1 & 9: How does the CEO involve people in the planning process to ensure the right balance between top down/bottoms up planning? Table 2: How does the CEO ensure linkage between the strategy and annual operating plan (especially in emerging and dynamic markets)? Table 3: How does the CEO set objectives in a non revenue environment? Table 4: How does the CEO hold the organization accountable for executing against the plan? Tables 5 & 6: How does the CEO ensure that the annual operating plan remains relevant to daily company activities? Table 7: What steps can the CEO take to ensure the company’s strategy remains customer focused? Table 8: How will planning improve execution at your company?

  33. Summary • Planning is a “never-ending” process • It considers all of the elements required for success (flexibility to react to unexpected changes) • The Plan builds ownership • The Plan links performance to plan • The Plan identifies key initiatives • The Plan communicates to everyone expectations and responsibilities The market and customer segment should be the focal point of the plan

  34. Planning – Action Plan • Fill out the Planning section of your CEO Action Plan • Review your Self Evaluation and Action Plan with your SRF board member post Summit • Implement the changes that will matter the most • Lunch in Terraza Ballroom • Move to a new table after lunch, check pocket agenda

  35. Reference MaterialAnnual Operating Plan Example

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