Strategy ExecutionDeveloping strategic business growth plans that are informed (data driven), that are customer focused, that anticipate and leverage disruptive industry changes and that have high likelihoods of success, require the input, collaboration and creativity of multiple disciplines. Ultimately, the development of strategic growth plans must involve input from key customers and the top talent, leadership and innovators available. The most impactful and complete strategic growth plans are the result of iterative feedback and improvement on the best ideas from multiple disciplines and stakeholders, structured into an overall Strategic Growth Plan.

For that Strategic Growth Plan to be sustainable, execution processes must be used to document the broad objectives, to cascade the objectives to organizational leadership, to track progress, to provide for feedback and improvements and ,finally, to tie execution to accountability, recognition and compensation.  So, following my discussion on creating a Strategic Growth Plan, I will also discuss process.

My method for developing and implementing strategic growth plans starts with the recognition that growth prospects can be categorized into market growth, share capture, expansion into new or adjacent markets and ,sometimes, “invented” markets. Breaking down growth opportunities by these categories is the best place to start building the overall plan. Because growth plans must also realistically deal with fact-of-life constraints like budget, existing business unit capabilities and leadership talent, the planning process must be iterative and, in the end, apply the very best investments using the available resources. Foregoing for now a description of the supporting processes for sustainable Strategic Growth Plan execution, the steps to create such a plan follow:

  • First, the top level objectives of the Strategic Growth Plan need to be established at the senior executive level.  These objectives should be reasonably high level, such as: grow revenue by 18%; improve gross margins by 5%; gain 14% share in the wireless product validation market; etc. Other objectives identifying and managing goals for quality, talent development and customer retention are also appropriate, but the plan should center on material goals for achieving growth. While these objectives should be high level, the top-level plan should also provide context for growth (vision) in terms of which markets, technologies, customers, geographies, or other specifics are targeted in order to provide guidance for the organization.  In implementation, responsibilities and actions should cascade as plan objectives through the organization, identifying objectives and deliverables to organization leaders. In larger organizations, the cascade should continue so that the organization’s key plans for growth – and the plans to achieve them – are clear to all.  This drives not only participation and accountability but also, ultimately, engagement and buy-in.
  • In developing the plan metrics, it is important to first establish the “jump off point” for the growth plan, based on the existing portfolio and past performance.  This could be a seasonally adjusted quarter of revenues with the elimination of any exceptions (but taking into account share loss, if any). This establishes the baseline revenue for planning. Assuming established parameters for gross margin and planned profit targets also establishes available investment dollars at that baseline.
  • To validate the “jump off point”, a level-set for the health of the existing portfolio is needed, assessing the relative commercial health of each product line, any end of life issues that should be addressed, any quality problems and any significant competitive threats that impact current revenue and profit run rates. Similarly, any recent or near term enhancements that will have a positive impact on run rates should be added to the “jump off point”.  These steps are critical to ensure that the financial baseline for the rest of the plan is solid and credible.
  • With this updated baseline, assumptions for growth in the addressable markets can be established, based on market segment information and the “jump off point” revenue. Applying market growth (or contraction) to the updated baseline establishes the updated revenue and expense targets.
  • Similarly, plans for commercial actions (based on specific plans from the sales team) for “share gain” should be assessed, validated and then factored in appropriately, again updating revenue and expense outlook.
  • Following this, the more challenging and creative strategic growth planning begins with assessments of what can be done to grow share in the current served market. Competitive offerings need to be evaluated with an examination of their relative strengths and weaknesses. (The best of these competitors, particularly ones with less overlap of solutions offerings can be acquisition targets.)  Maintenance expenses, product line enhancements, new product proposals and innovation proposals should be prepared using standard business case metrics so that they can be compared and prioritized or eliminated. This work should be led by Product Management, but involve cross functional leadership, and should be reviewed with executive leadership as to what competitive advantage the programs would provide and what share capture, revenue dollars, gross margin gains and investment dollars each investment involves. Of course, in this area it is very hard to hit stride unless supporting processes – coordinating and developing the best ideas from sales, customers, product management and engineering – have been feeding a pipeline of new products, innovations or enhancements to the current line (I speak to process development below).
  • Along similar lines, Product Management must work with key thought leaders inside and outside of the organization and work with executive management to identify market expansion opportunities.  Identification of adjacent markets that can be tapped with relatively minor adjustments to underlying product technology can be ideal.  Alternatively, from an acquisition perspective, very different technical solutions that can be sold to adjacent or existing customers can also be ideal. From these investigations, additional organic investment business cases are created and proposed for comparison to other programs under consideration.  These investigations also provide input to the inorganic or acquisition pipeline.
  • The next step in building the plan is to choose among the competing investment alternatives, evaluating current product line enhancement investments, investments in new products or services and investments in new markets (or “invented” markets). Choosing the right set of programs to fund may require more heuristics than math in the end, as vision, strategy, balancing near term payback, execution risk, program cost or other factors may sometimes outweigh financial payback calculations.  I favor supporting a mix of investments in the plan, some with near term deliverables that can drive near term revenue and profit gains, as well as other more long term strategic programs. Based on the final selection of programs, some incremental “current year” share capture can be added to the plan, possibly allowing new investments to be included.  In practice, a strategic growth plan is almost never put together in the monolithic fashion described here, as many programs are already approved, funded and in process – in other words, already part of the plan.  However, in any plan construction or review, all investments should be ranked and stacked to be sure that previous assumptions hold true and priorities are correct.
  • Finally, the year 2 and year 3 revenue, expense and profit outlook can be projected, using the combination of current expected returns, expected share capture results from investments made and expected market growth.

In a larger view, the outline above understates the critical cross functional engagement between sales, product management, engineering, operations and finance necessary to build a good Strategic Growth Plan.  In this process it is critical to involve top talent from all disciplines – not only to drive consensus and buy-in, but also to identify and develop the very best ideas and proposals and the best implementation plans to realize program goals.  The role of the executive team is also understated above, as top leadership must provide regular feedback, encouragement, coaching and mentoring throughout the process to keep it on track and to assure that the final plan matches the overall vision and strategy.  Another important caveat to the outline above is the fact that strategic growth plans should not be static.  The plan itself should be assessed quarterly, with progress against objectives tracked monthly.  Further, the plan must accommodate dynamic forces in the market place, and changes to the plan must be managed as needed.

It is also critical to establish appropriate process to complement the building of strategic growth plans, as well as to manage the execution of the plan (as well as other more day to day business).  With solid processes established, there is always a pipeline of programs in various stages of development (from concept to definition, implementation, validation, deployment, etc.).  Commercial share capture plans are in various stages of deployment and solid competitive analysis data is available as a part of day to day team decision making.  The processes that support product development, financial tracking, customer engagement, competitive analysis and acquisition planning and execution, must be in place to successfully execute in a sustained way.

In summary, the processes that enable informed decision making and feed a well-managed Strategic Growth Plan should cover the following areas:

  • Portfolio Management Process – tracking the health of existing products lines, customer concentration, regional results, competitive threats and revenue and gross margin trends (honest level-setting and an assessment of needed portfolio actions to protect current income and gross margins is critical).
  • New Product Introduction “Gate Process” – providing a framework for assessing new product ideas, assessing and prioritizing them (by strategic fit, time to market and Net Present Value or Return on Investment) and tracking execution.
  • Market and Technology Trend Assessment Process – tightly tied to the “Gate Process” and used to identify new opportunities, segment shifts and competitive threats (managed by product management with input from sales and engineering) and reviewed regularly by executive management.
  • Resource Optimization Strategy – providing a focus on eliminating waste, improving re-use, improving core skills and capabilities and managing talent.
  • Customer Engagement Process – ensuring tight interactions between customers and product management, sales leadership and executive leadership to focus solutions on real-world needs and to drive customer loyalty.
  • Acquisition Funnel Process – maintaining a cadence for evaluation of acquisition targets (based on direction from strategic planning), target engagement, partnership development and, ultimately, acquisition.
  • The Strategic Planning Process itself – led by the business unit executive annually, this process must leverage the input from the sub-processes and the creative insight of engineering, product management, sales, other executives and other key stake holders to execute the process described above. This process must identify and develop the most impactful strategic actions and priorities for the business unit.
  • Strategy Deployment Process – tying together the elements of the Strategic Growth Plan into a process that can be communicated, appropriately delegated for execution and tracked.  Major elements of strategic growth plans are the centerpieces of this process, and supported by other actions needed for success.

If these processes or similar processes are not already in place, they need to be created.  While the processes should be “right sized” to the organizational capabilities and cannot be allowed to strangle creativity and organizational speed, such a framework should improve speed and optimize decision making if properly managed. Working in concert, these processes provide the tools to optimize strategic growth planning and execution.

As to rationalizing the plan across multiple levels of an organization, cross functional participation in the process steps drives consensus building and engagement and ensures buy-in, often with passion and enthusiasm.  But beyond this, it is critical for the business unit executive to work with key stake holders on critical pieces of the plan, to understand issues or objections and to work with employees and functional leaders to build consensus, enthusiasm and buy-in.  If issues and objections exist, there is probably a reason, and the plan needs to overcome or account for such problems.

However, while a solid framework for strategic management is critical to making the best strategic choices, tough calls will have to be made in the end.  It is important for responsible executives to develop their personal views thorough open discussions with key stakeholders, engineering, customers and the rest of the senior leadership team.  The process for making the tough calls can often be fertile ground for breakthroughs.  When all the insights of an organization’s leadership are brought to the front, valuable ideas can often be synthesized.  This is the ideal.