NAWBO-LA PEAK LEADERSHIP ACADEMY Session 3: Strategic Organizational Development Planning – Finalizing Your Business Foundation and Developing Objectives and Goals Management Systems Consulting Corporation 10990 Wilshire Blvd. Suite 1420, Los Angeles, CA 90024 (310) 477-0444 • www.mgtsystems.com Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Organizational Development Planning PURPOSE: Continue developing your company’s strategic plan. OBJECTIVES: 1. Address any questions you have about the “Environmental Scan” and “Organizational Assessment” data you have collected and analyzed to date. 2. Review/refine your company’s Business Concept and Strategic Mission. 3. Develop draft Objectives and Goals to support the achievement of your company’s plan. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 2 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Review: Strategic Planning Framework © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 3 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Process 1 2 ENVIRONMENTAL SCAN ORGANIZATIONAL ASSESSMENT Market Analysis Competitive Analysis Trend Analysis 3 STRATEGIC ISSUE RESOLUTION 4 Business Foundation Issues Strategic Organizational Development Issues STRATEGIC BUSINESS PLAN 6 Culture Management Systems Operational Systems Resources Markets and Products Situation Analysis Business Definition Strategic Mission Strategy Key Result Areas Objectives and Goals Action Plans 5 BUDGETING QUARTERLY MANAGEMENT REVIEW Reports Meetings © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 4 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY What You’ve Completed to Date Box 1 • “Collected” and analyzed information about your environment – using the “Planning Survey” that we gave you (in the binder) at Session 1. Box 2 • “Collected” and analyzed information about your organization’s capabilities – using the “Planning Survey” that we gave you (in the binder) at Session 1. • Received and analyzed Growing Pains and Organizational Effectiveness Survey Results. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 5 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY What You’ve Completed to Date Boxes 3 and 4 • Prepared a draft of your company’s Business Concept and Strategic Mission – at our last session and/or as a follow-up to our last session. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 6 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Quick Review: Growing Pains and Organizational Effectiveness Survey © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 7 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY What Are Growing Pains? • Problems which occur as a result of inadequate organizational development in relation to business size and complexity. • A common set of symptoms that something has gone wrong in the process of organizational development. • A signal of the need to make the transitions from one stage of organizational development to the next. • A set of leading indicators of future financial performance. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 8 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Growing Pains Scoring Interpretation Score Range Color Interpretation 10-14 Green Everything is “OK” 15-19 Yellow Some things to watch 20-29 Orange Some areas need attention 30-39 Red Some very significant problems 40-50 Purple A potential turnaround situation © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 9 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Organizational Effectiveness Survey© (OES) ● The Management Systems Organizational Effectiveness Survey© is a validated instrument. ● The survey consists of 65 items that measure the extent to which an organization has developed the systems and structures needed to support its growth and/or stage of development. ● For an organization to have the highest probability of success over the long-term, it needs to effectively manage all six levels in the Pyramid of Organizational Development plus Financial Results, individually and as a system. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 10 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY OES Mean Score Interpretation Score Range Color Interpretation 4.5-5.0 Green To a Very Great Extent 4.0-4.4 Yellow To a Great Extent 3.0-3.9 Orange To Some Extent 2.0-2.9 Red To a Slight Extent 1.0-1.9 Purple To a Very Slight Extent © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 11 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Scoring Interpretation • This report presents four different types of scores: – Mean score is a standard statistical “average” score on a 5-point (Likert) scale. – % Favorable = (# respondents with scores of ‘4’ or ‘5’)/(Total # respondents) – % Neutral = (# respondents with scores of ‘3’)/(Total # respondents) – % Unfavorable = (# respondents with scores of ‘1’ or ‘2’)/(Total # respondents) © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 12 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Questions About Your Survey Results © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 13 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Most Significant Issues for My Company © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 14 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Share With Your Team: • The 3-5 most significant issues you feel your company is facing at the current time – Based on your review of the information you collected/analyzed (including the Planning Survey, Growing Pains Questionnaire, and Organizational Effectiveness Survey results). • Note any similarities among your team. • Write your list of issues/challenges on a flip chart and be prepared to share them when we reconvene. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 15 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Review: Business Foundation © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 16 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Business Definition A broad statement of what business the firm is in that acts as a lens through which to view future strategies. Addresses the Questions: – Who are our customers? – What are their needs? – How do they buy? – What is value to them? © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 17 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Mission A broad, measurable, time-dated statement of what the organization wants to or needs to become by the end of the planning period. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 18 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Share/Discuss: Business Definitions/Concepts and Strategic Missions © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 19 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY What is Strategy? Conceptual Definition: Strategy can be defined as the different, yet integrated, courses of action that will be taken by a firm or business unit to compete effectively in its chosen markets in order to obtain desired results. Operational Definition: Where you Play “The Game” How you Play “The Game” © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 20 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Where You Play “The Game”: Analysis of the Strategic Board THE STRATEGIC BOARD Product/Service Category or Distribution Channel Horizontal Market Segment I TIERS OF THE MARKET II III + Quality Service Prestige I Price II Price © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. III Quality Service Prestige 21 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Retail Industry by Tier Quality Service Prestige + I Saks, Neiman Marcus, Barneys Price II Nordstrom, Gap, Robinsons-May, Limited Price III K-Mart,Wal-Mart, JC Penney, Discount Stores © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. Quality Service Prestige 22 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Automobile Industry by Tier Quality Service Prestige + I Price Rolls Royce, Ferrari, Mercedes Benz II Honda Accord, Toyota Camry, Ford Taurus, Nissan Maxima Price III Geo Metro, Hyundai, Ford Escort, Toyota Corolla, © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. Quality Service Prestige 23 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY The Strategic Board for the Automobile Industry Vertical Segments Horizontal Segments Sedans Sports Cars SUVs • Lexus • Rolls • BMW • Porsche • Ferrari • Lexus • Range Rover • Hummer • Escalade II • Honda Accord • Toyota Camry • Toyota Celica • Pontiac Solstice • Ford Explorer • Toyota Landcruiser • GMC Blazer • Jeep Cherokee III • Toyota Corolla • Nissan Versa I Light Trucks • Toyota Tacoma • Ford Ranger Minivans • Toyota Sienna • Ford Windstar • Toyota RAV4 • Suzuki Samurai © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 24 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY How You Play “The Game”: Three Levels Of Strategy: Operational Strategies Supporting Strategies Markets Core Strategy Operational Systems © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 25 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Sample Core Strategies • Starbucks o Redefine the nature of the coffee café and “blanket” the U.S. o Use our dominance in retail to become the Coca-Cola of coffee. • Southwest Airlines No frills, short-haul, high frequency discount airfare in relatively non-competitive markets. • TechLink Solutions guaranteed to go live. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 26 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning – Strategic Business Plan 1 2 ENVIRONMENTAL SCAN ORGANIZATIONAL ASSESSMENT Market Analysis Competitive Analysis Trend Analysis 3 STRATEGIC ISSUE RESOLUTION 4 Business Foundation Issues Strategic Organizational Development Issues STRATEGIC BUSINESS PLAN 6 Culture Management Systems Operational Systems Resources Markets and Products Situation Analysis Business Definition Strategic Mission Strategy Key Result Areas Objectives and Goals Action Plans 5 BUDGETING QUARTERLY MANAGEMENT REVIEW Reports Meetings © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 27 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Elements of the Strategic Plan Business Foundation • Business Definition • Strategic Mission • Core Strategy Key Result Areas Objectives Goals Action Plans © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 28 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Terminology © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 29 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Key Result Areas Areas of the business where performance has a critical impact on the achievement of the mission. Defined in one or two words. A category, not an action. We suggest using the 6 levels of the Pyramid of Organizational Development + Financial Results: - Markets - Operational Systems - Products - Management Systems - Resources - Culture - Financial Results © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 30 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Objectives Overall definitions of what is to be achieved in each Key Result Area, typically over several years. Describes a broad outcome, not an action. Each KRA must have at least one stated objective that is derived from the mission statement. Most KRAs will have between three and six objectives. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 31 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Sample Objectives ● Develop and implement a structured corporate-wide and branch office strategy for purchasing from suppliers ● Acquire profitable new products in our current market niches that will contribute to overall growth. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 32 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Workshop: Developing Objectives © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 33 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Working in Your Small Team: • Focus on the most significant challenges/issues identified earlier today by each team member. • Select one of these issues and work as a team to develop one or more Objectives that define the results that team member would like to achieve with respect to addressing that issue. You might use the “Strategies to Promote Success” column in your Planning Workbook (Environmental Scan and Organizational Assessment) as input – that is, refer to the information you wrote in this column for the issue(s) you are focusing upon. • Write this Objective or Objectives on a flip chart. • Continue this process – that is, developing Objectives – until time is called. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 34 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Goals Realistic, time-dated and measurable sub-objectives, the responsibility for which is assigned to a specific individual (usually a manager or department head). Defines scope and timing of an outcome. Each objective should have one or more goals. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 35 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY SMART Goals S Specific Outcome M Measurable/Quantifiable A Accountable/Achievable R Results-Oriented and Realistic T Time-Dated © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 36 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Sample Goals ● Develop and begin production of two new internally generated product ideas that will result in total sales of $4 million by 12/31/0X. [Peter] ● Earn revenues of $5 million by 12/31/0X. [Paul] ● Open new accounts with average sales of $30,000 each by 12/31/0X. [Mary] © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 37 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Workshop: Developing SMART Goals © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 38 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Working in Your Small Team: • Select one of the Objectives your team developed – which should be recorded on a flip chart. • Thinking about the next 12 to 18 months, work as a team to identify the results to be accomplished relative to that Objective in the company (or companies) for whom the Objective was developed. Don’t worry about creating SMART Goals at this point. Instead, just identify as concepts the things you would like to accomplish in the next year or so. • Once you’ve identified these results, work with your team to create SMART Goals that reflect the results you want to accomplish. • Write your SMART Goals on a flip chart and be sure to link them to the Objective that they support. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 39 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Sample Plan Page KEY RESULT AREA: 1.0 Markets and Products Objective 1.1: Grow active buyer base at a rate consistent with overall sales growth per year. Goals Goal Prty Prty Who Who When When 1. Increase our active buyer base by 50% from 10/1/0X to 9/30/0X through existing strategies. A BH 10/1/0X 2. Increase active buyer base by 40% from 10/1/0X to 9/30/0X through new strategies. B LM 10/31/0X 3. Identify and evaluate vehicles for growth beyond FY ‘0X. A BH 9/30/0X 4. Identify new strategies to support FY ‘0X growth. C LM 6/30/0X © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. Status YTD: +39% 40 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Process 1 2 ENVIRONMENTAL SCAN ORGANIZATIONAL ASSESSMENT Market Analysis Competitive Analysis Trend Analysis 3 STRATEGIC ISSUE RESOLUTION 4 Business Foundation Issues Strategic Organizational Development Issues STRATEGIC BUSINESS PLAN 6 Culture Management Systems Operational Systems Resources Markets and Products Situation Analysis Business Definition Strategic Mission Strategy Key Result Areas Objectives and Goals Action Plans 5 BUDGETING QUARTERLY MANAGEMENT REVIEW Reports Meetings © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 41 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Session Follow-Up and Preparation for the Next Session • Work with other members of your team, as appropriate, to continue finalizing your Strategic Plan – with a focus on Objectives and Goals. • Bring a copy of the job description for your role (if you have one). If you don’t have one, don’t worry! We will cover this next time. • Read Chapter 11 and Chapter 12 in Growing Pains. © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 42 Session 3 NAWBO-LA PEAK LEADERSHIP ACADEMY Please note that all of the materials in this slide presentation are the proprietary intellectual property of Management Systems Consulting Corporation and may not be reproduced or otherwise distributed without written permission. For further information about reproduction rights for materials in this presentation, please contact: Management Systems Consulting Corporation 10990 Wilshire Blvd., Suite 1420 Los Angeles, CA 90024 (310) 477-0444 www.mgtsystems.com © Management Systems Consulting Corporation, 1989. Revised 2007. All rights reserved. 43