Strategic Planning

Strategic Planning Stuart Hazell PhD MASM GAICD Fusidium Pty Ltd

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Strategic Planning We’re all going away for a weekend to the Sunshine Coast to do our strategic plan. The Chairman will be coming on the first day to provide a few words of inspiration. We have hired a good facilitator and this will be a fun weekend that will show us the way forward for the next year. After the weekend we have a week to write up a document for the Board meeting. Fusidium

Strategic Groan • Love fest • Glossy document full of self-serving motherhood statements • Ends up in the bottom drawer

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Is Strategic Planning important?

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Is Effective Strategic Planning important?

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Panbio’s Performance 2002 - 2007

EBIT (A$ x1,000)

Earnings Profile $3,000 $2,000 $1,000 $0 -$1,000 -$2,000 -$3,000 -$4,000 -$5,000

EBIT EBIT before HA

2002

2003

2004 2005 2006 Financial Year

2007

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Panbio’s Performance 2002 - 2007

EBIT (A$ x1,000)

Earnings Profile $3,000 $2,000 $1,000 $0 -$1,000 -$2,000 -$3,000 -$4,000 -$5,000

EBIT EBIT before HA

2002

2003

2004 2005 2006 Financial Year

2007

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If Strategic Planning is so important why is it done so badly?

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Overview • • • • •

Vision Mission The Strategic Plan Operational Plans Staff Action and Development Plans

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Vision “We shall not flag or fail. We shall go on to the end. We shall fight in France. We shall fight on the seas and oceans. We shall fight with growing strength in the air. We shall defend our island, whatever the cost may be. We shall fight on the beaches. We shall fight on the landing grounds. We shall fight in the fields and in the streets. We shall fight in the hills. We shall never surrender.” Fusidium

Mission "I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth." Robert F Kennedy

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Mission Landing a man on the moon and returning him safely to the Earth.

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Strategic Plan The Vision and the Mission frame the Strategic Planning process; however, the outcome of the Strategic Planning may change the Vision and Mission. Strategic Planning is hard work, which only pays off when you get it right.

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Developing a Strategic Plan • A Strategic Plan is an Outward Looking Document • Linked to those who will determine your success – your Strategic Partners

Note: your Strategic Partner may not be on your side! Fusidium

Strategic Plan • • • • • •

Realistic and grounded in research Long horizon On the desktop with total buy-in Measured and reported on Reviewed regularly Linked down to operational plans

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Developing a Strategic Plan • Know your industry and where it is going • Know your business and where it wants to go 

SWOT • • • • • •

 

Spend some money Don’t reinforce your bias and blind spots Don’t believe your own PR Talk to at least 3 authoritative persons for each internal opinion Break the circle The strongest voice is not always right

Where do you fit Barriers to entry and cost of entry

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Developing a Strategic Plan •Who Determines Your Success (Strategic Partner)  Customers

 Regulators

 Staff

 Distributors

 Shareholders

 Key

 Suppliers  Tax

office  Financial institution

opinion leaders  Competitors  Potential acquirer (M&A)  Granting body Fusidium

Developing a Strategic Plan •Who Determines Your Success (Strategic Partner)  Customers

 Regulators

 Staff

 Distributors

 Shareholders

 Key

 Suppliers  Tax

office  Financial institution

opinion leaders  Competitors  Potential acquirer (M&A)  Granting body Fusidium

Strategic Partner Strategy Exclusivity

Reliable supply

Value for customers

Product training

Marketing support

Trading terms

Profit

Price

Distributor

Technical support

Profit

Price

Company

Market intelligence

New product ideas

Revenue growth

Improved sales of slow moving lines

Trading terms

Forecasts

Stock levels

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Strategic Partner Strategy Distributor To increase sales of slow moving product lines

Strategic Issue being Addressed Pricing Marketing and Sales training Product range

To increase the level of stock held by distributor

Revenue potential Trading terms

To drive new product ideas from distributor

Exclusivity Revenue potential

Strategy Revise pricing matrix to encourage and facilitate Increase provision for product and sales training Increase product range to complement fast moving products Use sales promotion incentives to drive stocking of pipeline Direct trading terms to encourage and facilitate Offer first to launch rights Provided extended discount from list price to idea generator

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Strategic Plan Remember, not doing something or stopping an activity can be as an important outcome as planning a new action.

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Biotech Start-up Strategic Plan •Who Determines Your Success (Strategic Partner)  Customers

 Regulators

 Staff

 Distributors

 Shareholders

 Key

opinion leaders  Suppliers  Competitors  Tax office  Potential acquirer/IPO investors  Financial institution  Granting body  Angel investors  VC fund Fusidium

Biotech Start-up Strategic Plan •Who Determines Your Success (Strategic Partner)  Customers

 Regulators

 Staff

 Distributors

 Shareholders

 Key

opinion leaders  Suppliers  Competitors  Tax office  Potential acquirer/IPO investors  Financial institution  Granting body  Angel investors  VC fund Fusidium

Strategic Partner Strategy Understand the Business Plan - Who, What & When Exit Strategy Profit

Angel Investor

Profit

Company

Access to Networks

Be involved

Funding

Management support

Business development and succession strategy

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Developing a Strategic Plan • When you have the Strategic Plan, set:  Targets

and timelines  Accountability  KPIs  Review framework

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Process So Far • Vision – Framed by the Board and developed by the CEO (may take weeks, months or years) • Mission – Defined from and by the Vision. Developed by the CEO and Executive Team and approved by the Board (weeks or months) Fusidium

Process So Far • Strategic Plan – Driven from the Vision and Mission. Grounded in real work and solid intelligence. Developed by the CEO and Executive Team and approved by the Board (months). • The Strategic Plan may redefine the Vision and Mission. Fusidium

When you have a Strategic Plan

Push it down

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Operational Plans • The operational plan is in essence the actions that will improve the efficiency and performance of the business internally while serving the strategic objectives of the organisation.

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Operational Plans • • • • • • • • •

Must be linked to Strategic Plan Inward looking Realistic and grounded Competence based Short horizon On the desk top with total buy-in Measured and reported on weekly and monthly Reviewed regularly Linked to individual goals of team members Fusidium

Operational Plans Elements of a Marketing Operational Plan Critical Element Pricing

Forecasting

• •

• • •

• •

Action Consolidate pricing to a common base. Establish volume and value criteria for direct customers to enable the Sales Dept. the authority to negotiate pricing based on volume. Introduce annual pricing review Revise forecast monthly & report accuracy. Include Sales, Operations & Planning meeting into forecasting procedure. Prioritise forecasting requirements by product. Develop accuracy targets that ensure sufficient stock to meet order fill rate targets, while keeping inventory level acceptable.

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Individual Goals and Employee Development • Individual goals linked to Operational Plan • Short horizon • Measure, review and report regularly (6 monthly cycle) • Critically assess competence • Link training needs to company objectives first, but look to personal development and succession planning also • Ensure staff understand linkage to their actions to overall vision and mission

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Performance Linkage Vision Mission Strategic Plan Unit Operational Plan

Unit Operational Plan

Individual Performance Goals

Individual Performance Goals

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The Fish Rots from the Head • The CEO is accountable to the Board and Shareholders for the success or failure of any venture. • The CEO must lead. • The CEO should be the champion of the Strategic Planning process. • If members of the Executive Team are not onboard, they’re not onboard. Fusidium

Recommended Reading • Good to Great – Jim Collins (Harper Business) • Strategic Factors – Graham Kenny (President Press) • Monash: The Outsider Who Won a War – Roland Perry (Random House)

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