Business Strategy versus Tactics When it comes to running your own business, everyone seems to have a plan to make

you successful. You can read and study and even mimic the greats but that doesn't necessarily mean you will succeed. To really rock the business world, you need both strategy and tactics that work and you need them to work effectively together. This is where many people in business fail because they miss one or both parts of this equation. A better understanding of strategy and tactics as well as how they work together will help you prepare properly for your business. Your strategy is the plan of action you want to take to achieve success in your business. Your business tactics are the specific steps you take to achieve those goals. It is important that you know and understand the difference between the two and how they are applied to business. When it comes to your business, before you start any marketing or advertising campaign, you need to have a strategy and you need to implement that strategy into your techniques. What is Strategy? Your strategy is the act of creating decisions that will benefit the future outcome of your business. Strategy is the set of directions you make or your situation and position within the business community. Strategy often also refers to your timing in the marketplace and strategically choosing the most beneficial time to launch your business or your campaign. 1. Strategy is your overall goal in your business. 2. Strategy is your standing within the marketplace. 3. Strategy is your position in your niche. What are Tactics? Tactics should work with your strategy and they are the set of requirements need for your plan to take place. Your tactic is your device used for meeting your goals set by your strategy. Strategy and tactics should always be relative to one another because the tactics are the set of actions needed to fulfill your strategy. 1. Tactics are the tools you use to achieve your goals. 2. Tactics include things like advertising and marketing. 3. Tactics are the steps taken to achieve your goals. Strategy vs. Tactics To be successful in your business, you need to have a plan and a strategy. This strategy will include your goals and objectives for your business. They may be short term and long term. You will need to have a goal for where you want to be with your business in the future. Your tactics are what you will use to ensure that plan happens as it should.

If your plan is to have x amount of sales by x date, then you need to have tactics that will help you carry out that goal. You don't want to just run wildly into your business hoping that luck will be in your favour and you will succeed. You need to have a direct set of directions and plans for meeting each goal. Your strategy will include many goals and you will want to have a tactical plan for meeting each and every one of them. These tactics will be step-by-step directions on how to meet each business goal. With proper planning and strategy and tactics that work together, you can be a business success story

Modern Business Strategies and Tactics Modern business tactics often concentrate on developing international brands and products, but before developing any product it is important to assess the potential worldwide demand. While most companies do consider this aspect while developing a new product or brand, some companies concentrate on just getting worldwide acclaim and ubiquitous recognition. The result can be customer disappointment when the actual product fails to live up to the hype and disappointing sales. Companies in the manufacturing and service sectors have realized that to achieve economies of scale they need to formulate management policies based on modern business strategies. Being able to sell the same product or market the same brand at the global level helps to increase the efficiency of their related industrial activities such as product packaging, graphics and advertising. They also gain all of the benefits that are derived from the use of common technology, product specifications, and raw materials. However, being actually able to maintain such global presence in a diverse world is much easier said than done. The simplest solution that companies have is to recognize common product preferences in different countries and make minor changes to the fundamental product design. This is the best way of optimizing their product or service for both the worldwide and local market at the same time. Business strategies are also associated with effective management of capital flows, human resources and other factors of production. The use of information technology in almost every type of industrial process has contributed to the development of the strategies and tactics. With the aid of the Internet, information related to any new idea or design is distributed all over the world very quickly. This is why the strategies that support product development or facilities development have to move at a much faster speed than ever before. Any business strategy or tactic that is not up-to-date will prove ineffective when it comes to achieving departmental and organizational targets. Modern business strategies lay stress on using the latest communication tools such as video conferencing and e-mail for improving communication within the organization as well as with clients. Project management techniques used in some of the biggest multinational companies such as Sony, Intel, Microsoft, Time and others are based on such modern business strategies. With multi-billion dollar mergers becoming a norm, companies are concentrating on formulating innovative strategies rather than just concentrating on established management techniques. Organizations such as Glaxo-Welcome and Merck, who have grown through mergers and acquisitions, have reorganized their international product lines with the help of modern business strategies and techniques. With the help of modern procurement strategies, global giants have managed to build and operate production centers in international locations at the least possible cost and in minimal time. If modern business strategies are implemented properly, they can easily accommodate for the diversity that exists between countries. These can be used to develop innovative project management methods that can help achieve greater uniformity and economies of scale across the business. They encourage knowledge-based innovation and help develop the ability to execute on commitments and deliver higher standards of customer satisfaction. Modern business strategies revolve around producing and marketing international products and brands that are then tailored to local markets. As such, in today's world of globalization, the concept of localization has become inherent in almost all strategies...

Why Build a Business Strategy? Kmart, a leader in the discount retailing industry in the late 70's, had close to 1900 stores and average revenues of well over $7 million per store. Wal-Mart, on the other hand, was a much smaller retailer with just over 200 stores and average revenues per store only half those of Kmart. But just ten years later, Wal-Mart had become the largest and highest profit retailer in the country with an annual growth rate at 25% per year with a 32% return on equity. What happened? Kmart's response to business challenges was to try to seal off and defend its markets, a common tactic years ago when the industry was characterized by defined markets, stable customer needs and clearly defined competitors. Wal-Mart found competitive advantage by realizing that success would not come from capturing and holding a market but by being nimble and responsive to changing market conditions. It built business processes and core competencies in such areas as transportation and information sharing which allowed it to respond to rapidly changing conditions and move inventory quickly to serve store-by-store customer demand. Kmart's inability to respond to changing market conditions and to continue to ride a dead strategy eventually led to its reorganization under Chapter 11. It's a fact that those organizations that adapt to changing conditions thrive and grow. Those that remain unaware or misjudge these challenges and opportunities and fail to develop a new business strategy eventually die. Why Build a Strategic Plan? In a word, the answer to this question is focus. Strategy creates context for operating decisions. It establishes the playing field and provides guidance for decision-making about the types of experience and skills needed by employees, how marketing and advertising should be positioned, the priority of initiatives, how to structure the organization, and a host of other issues. A plan is necessary to guide decision-making, channel resources and define direction. Because of that, building a strategic plan should be well worth the time it will take to develop it, debate it and secure agreement on its direction. Strategy is the way in which an organization meets the challenges and opportunities of its environment. It is often an overused and misunderstood concept. Strategic thinking does not necessarily imply long term. In some industries, long term is less than one year. It is not tactics, though strategy needs to be supported through tactics. It doesn't necessarily imply something big. The decision to move across town may have more human impact than the decision to do business in another city. Strategy is a set of choices that defines the nature, direction and value system of an organization. It is not a document. It is a mindset which should be understood by every person in the organization and used to guide all decision-making within the organization. In developing strategy, leaders make conscious and informed choices about who they are and what they stand for:

* What are our core values and beliefs? * What markets and customer groups will we serve? * What products or services will, or will we not, deliver? * What competitive advantages will cause us to succeed? * What core competencies must we have to fuel our growth? * What infrastructure, core processes and resources must we have to succeed? * What financial results will we achieve? * What should be our planning horizon? * What is the quality-of-life contribution we want to make to our customers, our employees or the places in which we operate? Next, and the hardest part, is plan implementation. In the United States, the average firm only achieves about 63% of its strategic plan. Studies also show that 90% of strategies that fail do so because of lack of execution. Research in the last several years has pinpointed many reasons why business plans fail, including the following: 1. Poorly understood strategy -- most organizations have a strategy but, according to one study, fewer than 5% of their employees know what the strategy is. 2. Weak strategy execution -- Studies show that up to 90% of strategies fail due to execution. 3. Inability to adapt to change -- Once a business makes plans, the chaos of everything changing around it may gradually erodes those plans unless the organization can adapt. Many cannot. 4. Lack of a systematic approach - When an organization reaches a certain size, lack of alignment between different people or departments who handle different functions may hamper success. 5. People are not engaged - An engaged worker is one who is personally committed to the goals of the company. Unfortunately, 90% of the time what passes for commitment is compliance. If you cannot get people engaged, no improvement will last. 6. A gap between knowing what to do, and doing it. Many things can get in the way including substituting talk for action, employee fear or mistrust of management, using the firm's history instead of sound judgment to dictate action, and badly designed or complex measures. In the end, a solid business strategy and implementation plan may not solve all of your problems but those firms that do plan enjoy a much brighter track record. Plan well and beware of the pitfalls in implementation and you can enjoy your best year yet...

Strategic Planning Improves Results with Consistent Implementation Strategic plans only help organizations when they are kept active and implemented. The strategic plan defines the business direction. That direction is based on the future, the vision of the company. Before an effective strategic plan can be developed a clear and compelling vision is needed. Visions are optimistic, the ideal picture of the future. The strategic plan is the map to the vision and then only effective if it is implemented. Strategic plans can sound intimidating and overwhelming to many small business owners. The most effective strategic plans are those that are simple, completed with the leadership team and key people in the company. Complex documents that consume excessive amounts of time to create don't guarantee success. In fact, the large and cumbersome strategic plan can be so overwhelming that it just doesn't work. Start with vision. Write down what you envision for the future. What does the future of your business look like? What do you want for the future? Vision stories are inspiring, it's your dream. Once you have created your vision you can begin building strategies. The vision is the destination, where you are going. The strategies are the map that gets you to the vision. Company values are the guide or the "compass" in our map metaphor for making decisions along the way. Values keep you oriented and in alignment. When values are out of alignment the company is off track; not moving in the direction of the vision. Strategic goals can be limited to the top 6-10. By having fewer goals the plan is able to stay alive and in front of you. By alive, it means that the plan is always where you can see it, use it and keep working on it. To set strategies for your business first look at the vision, the different aspects of the vision. Brainstorm all of the goals, all of the strategies for each aspect of the vision. With brainstorming it is important to get all of the ideas out and write them down without judging them or editing them. Often the best idea comes from an idea that at first look seems too wild or crazy. Ideas jump off of other ideas. Once you have brainstormed all of the ideas, prioritize them. Often ideas can be grouped with similar ideas. This can help in the prioritization process. The goal is to narrow the list down to the top 6-10 strategies. What are the goals or strategies that will give your business the future you envision, that will create a breakthrough that will produce the results that you want? Those are the goals that you should be selecting as top priorities. Creating a powerful strategic plan is just one of the first steps. Many organizations have strategic plans that are well thought out and crafted. Where they fall short is in the implementation of that plan. Implementation is the key. If you fail to implement, the results will not be what you set out to achieve. Implementation is the result of focused and continuous action. Strategic plans don't just happen on their own: they require your attention. By keeping the plan in front of you and the team responsible for the plan, focus is maintained. Regular meetings about the plan also keep the plan moving in the right direction. Check-in meetings hold people accountable. When

teams don't meet and don't keep their eye on the plan, the day to day interferes and the status quo remains. In order to make changes in the results that you achieve there has to be intention and commitment on the part of the team. The check-in meeting gives the team the opportunity to review what is happening, what is interfering with the results they want and need and make the changes necessary to change the outcomes. Through the intention of the leadership, the plan and the team, the culture of the workplace can shift from one of non-performance to one of performance focused. Performance focused companies are companies that are thriving. The energy performing teams shifts the energy of the whole organization. It becomes more positive and contagious. People become excited about the vision, the plan and their implementation of the plan. Results create energy and excitement that keeps the plan moving, it propels the plan. Organizations that produce results have a clear vision of the future; have a plan that is simple and strategic; and they work on the plan all the time. Their actions are designed to move that plan forward. They don't let themselves or others get in the way. By implementing the strategic plan organizations achieve results...

Business Improvement Initiatives: Strategic Business Planning, Implementation, and Assessment, Pt 1 The rate of change today is more rapid than it has ever been in history. For that reason, agility in strategic business planning and execution is now more important than ever in maintaining the competitive advantage needed to keep an organization thriving and relevant. Nobody likes change when it affects them, but by following best practices for managing the strategic business planning process, implementing required business improvement initiatives, and assessing progress and results, competitive advantage can be achieved by companies seeking to improve their business processes. Why Change? Creating good business strategy is not difficult. With years of experience in your specific industry, you know what it takes to meet stakeholders' expectations and increase your presence in the market. What is difficult is actually implementing the business improvement initiatives required to meet those objectives. Only about 10 percent of companies actually execute their strategies well and realize the competitive advantages they envisioned. By utilizing best practices, achieving excellence in business processes is not only possible, but can be a foundation for continuous improvement and market leadership. In a continually expanding and changing market, establishing meaningful and differentiating business improvement goals and performance objectives presents a number of critical questions to be addressed by the executive team. Developing improvement initiatives through strategic business planning often begins with these relevant questions: How do we best mobilize our business to meet the needs of our customers? Where are the most effective places to focus our resources to reduce costs, improve the value of our products and services, and become more responsive to our customers while reducing inventory and/or avoiding backorders? Understanding your competitors and being realistic about your ambitions to meet or exceed your market share objective are other important inputs to developing a case for change. Business improvement initiatives should begin with a step that considers, "how good are we versus the best in class regardless of industry; how good are we versus the best company in our industry; and how good are we versus our key competitors?" In a globally competitive environment, maintaining a competitive edge is paramount in maintaining the longevity and success of your company. Effective strategic business planning and execution of related process improvements can elevate your performance to industry leadership. Planning business improvement initiatives includes effectively evaluating your current position and dimensionalizing your gaps to recognized standards of business excellence. You must be able to answer these questions: "Are we in the upper quartile of performance results in our industry? Are we in the upper decile in our industry? How do we find out? You must also understand the gaps between your current business processes and those that meet the standards of best practices. Given the answers to these questions in the strategic business planning process, you can develop and document your business improvement initiative's objectives and goals, and begin creating the organizational structures to achieve those improvements.

Understanding the short-term goals, limitations, and risks in an improvement initiative is prudent, but the focus of the executive team should be on your vision of the company several years from now. Ask yourself where you see your company five years from now if you continue on your current path, and where you could be if you identified a few strategic business planning objectives and launched business improvement initiatives to achieve those competitive advantages. When developing a case for change, it is essential to satisfy the expectations of the Board and other stakeholders. Reassure all stakeholders by clearly communicating the case for change. It is especially important to satisfy and excite those stakeholders inside the company and elicit support of those who must design the new business processes and deliver the bottomline improvements. Helping those individuals understand "what's in it for them" is a key step in the change management process and is crucial during strategic business planning. Finally, periodically examining and critiquing your business strategy, the objectives of the business improvement initiatives, and progress on your path to business excellence ensures that your initiative will remain viable and deliver the needed results in a changing environment. By establishing stretching but attainable goals and deliverables, tracking progress, and maintaining an appropriate sense of urgency, you will realize the bottom-line benefits and competitive advantage of the business improvement initiatives.

Strategic Business Planning When the case for change has been made and communicated, it is time to identify the size of the gaps you must close, the financial case, the sequence of improvements to be made, and the organizational structure needed for redesign of the business processes and delivery of the results. During this phase of strategic business planning, maturity maps are useful benchmarking devices used to help executive teams quickly understand their company's current state of development and the desired state that must be achieved through the business improvement initiatives. When referring to a series of these maps, executive teams can quickly comprehend the gaps in organizational maturity that contribute to an inability to launch products on time, loss of market share, unreliable forecast accuracy, chronic customer service problems, high costs, and/or high inventories. Maturity maps also enable a swift and cost-effective analysis of the cultural gaps standing in the way of the desired improvements. Through strategic business planning efforts, the executive team should prioritize a series of specific competitive advantages to be attained and then establish - normally with the assistance of experienced business excellence educators and coaches - a path forward through a sequence of appropriate business improvement initiatives and milestones. While meeting quarterly expectations of the investment community is an essential part of the business environment, executive teams must also assign resources to deliver long-term, sustainable improvements to ensure the company's future. Strategic business planning involves not only predicting the future but creating it. So the mindset of the executive team must shift from, "We can't afford this initiative given the current economic pressures," to "We can't afford not to invest in these critical business improvement initiatives." The adage that "you have to spend money to make money" applies well to the importance of investing now to ensure the future and should be a primary consideration in driving strategic business planning. Often, executive teams focus on the cost of making process improvements and lose

sight of the value the improvement will bring to the bottom line of the business. Improvement initiatives deliver multiples of their costs to the bottom line in savings when undertaken with a proven improvement methodology, along with education and coaching from skilled and experienced resources. An often overlooked value is organizational time and energy that is freed up for sustaining and continuously improving a company's results. Strategic business planning supports this development, as people methodically begin to move from a culture of reacting to unplanned events to one of avoiding those daily crises. To be continued... Now it is time for the executives to understand their role in leading and supporting the change effort since their active participation is critical. The executive team must demonstrate through personal accountability and day-to-day behaviors - a healthy disrespect of the statusquo, a sense of urgency, and knowledge of business improvement initiatives. They must communicate their expectations of others, the importance of achieving the change objectives identified during strategic business planning, and a willingness to break down barriers to change encountered by their business process owners and improvement project teams. They must, to use an overused phrase, "walk the walk" to empower and also reward those who deliver the results. Following a proven change methodology will keep the project team focused, on task, and on (or under) budget. In business improvement initiatives, clarity about expected deliverables, outcomes, timelines, and tasks provides the structure and discipline that enable team members to focus on essential activities and challenge activities that deviate from the strategic business plan, are unnecessary, or can be delayed. Detailed education of the project team, followed by a detailed assessment against recognized best practices for the change milestone selected, empowers the project team and allows the team to understand the strengths and weaknesses of their current business processes. They then develop a keen understanding of the process and performance gaps that they must close. The project team or teams report to an initiative leader who is responsible for the success of the business improvement initiatives. He or she, in turn, is accountable to an executive sponsor of the initiative and to the executive steering team comprised of the senior executive and those who report directly to that executive. In order for strategic business planning objectives to be successful, this initiative leader serves as the interface between the design teams and the executive steering team. The executive sponsor and initiative leader assume accountability for success and must maintain the sense of urgency and importance of the work to all project team members and to all those who will be affected by the required changes. Setting improvement goals is extraordinarily important in establishing improvement objectives, in measuring progress, and in identifying mid-course corrections of the business improvement initiative's activities if progress is lagging. These goals must be stretching and achievable and must also meet the needs of the stakeholders. The executive steering team must monitor progress and ensure that results are being delivered in a way that supports the company's stated values. Implementing As previously stated, strategic business planning and identifying necessary improvements is performed well by most companies. It is in successfully and wholly executing these strategies

and improvements that most companies fail. The most effective business improvement initiatives are built upon a foundation of knowledgeable, consistent, and highly-visible executive leadership. Best practice education of all steering team and project team members involved in the initiative enables them to answer questions about "how" the individual business processes will be improved, as well as "why" those improvements are necessary. Clear accountability is a key element in successful business improvement initiatives and should be mapped during the initial strategic business planning process. Everyone enjoys responsibility, but accountability can be uncomfortable. Initiative executive sponsors, individual business process owners, and project team leaders must have documented and specific objectives, possess the leadership abilities required to design and implement the new business improvement processes, and accept accountability for process transformation. In addition to being involved with the strategic business planning process, executive sponsors must champion the business improvement initiatives - acting as a liaison between project managers and executive steering team, ensuring a constant flow of communication, and making necessary resources available. A single, full-time initiative leader is typically assigned, although multiple project leaders may be necessary for a larger project in companies with multiple operating divisions and/or geographic regions. Last but not least, if the business improvement initiatives include implementing or improving Sales & Operations Planning/Integrated Business Planning, full-time supply and demand managers will be required for each strategic business unit. As an essential part of strategic business planning, formal benchmarking procedures are necessary to chart the timeliness and efficacy of business improvement processes, to measure results against others in your industry and across all industries, and to determine if improvement milestone requirements have been met. Through the use of qualified outside educators, coaches, and assessors - who have both recognized expertise and personal handson success in such improvement initiatives - the business improvement initiatives will be accelerated and enhanced by those outside experts who have the experience and objectivity required to provide straight feedback and ensure the initiative's ultimate success. Assessment Even though strategic business planning and implementation are complete at the point of a successful assessment, the need for improving business results is not - in fact, a process of cyclical review, assessment, and continuous improvement begins with final assessment of the business improvement initiatives. When the steering and project teams believe they have met the objectives of the improvement initiative, it is important to enlist the outside experts mentioned above to conduct this formal assessment of progress against best practices, behaviors and results. Although the project team and outside coaches will have self-assessed progress routinely during strategic business planning implementation, the view of objective, outside resources is important to validate progress and to suggest additional milestones that will drive even greater benefits to the bottom line. To ensure ongoing continuous improvement of processes and results, process owners must be identified and must never be satisfied with current performance. They must periodically update documented policies and procedures, conduct self-assessments against ever more demanding best practice standards, and establish new improvement goals, normally in the

context of additional business improvement initiatives. The foundation for continuous improvement includes application of continuous techniques, performance assessment of individuals against requirements of their formal role definitions, on-boarding education of people new to the company and/or changing roles within the company, and periodic, formal assessment of the processes by outside experts. By meeting and exceeding best practices and standards for business excellence through strategic business planning, your company can be among that 10 percent that not only desire change, but who actually achieve their strategic business improvement goals. In doing so, your company will deliver its business objectives and goals. Your company will no longer resist the effects of changes in the marketplace, but will embrace and even precipitate industry changes that will reward you with an insurmountable competitive advantage.

Creating a Strategic Vision - Are You Making These 3 Mistakes Most Organizations Unknowingly Make? It is a condition where success can be your greatest impediment to growth and succeeding in the future. Success hides many ills. It masks fundamental weaknesses in the business. And can lead to poor decisions - decisions that could end up fatal to your business. We've all heard the adage - they're throwing money at the problem. Well, today money is scarce for many. And simply stated many businesses literally can no longer afford to throw money at the problem to fix it. We need a better approach, and it starts with creating a sound strategic vision as we work our way out of this recession. While your leadership team works on creating a *new* strategic vision, be careful to avoid these 3 mistakes that most organizations unknowingly make... 3 Top Mistakes Business Leaders Make While Creating Their New Strategic Vision and Direction 1. Failing to look at the organization's current strategic vision for relevance and how the market has changed. Before you even start thinking about creating a new vision for your organization, you need to think about these two things... . Is your past/current strategic vision still relevant in today's economy? . Has your market changed: for the better or for worse? If you were selling subprime mortgages or providing goods and services to the real estate market then your market has changed for the worse. If on the other hand, you are selling goods or services to Apple, Walmart or Target, then you are likely doing reasonably well. Strategy is multi-dimensional and what was successful in the past may not be successful in the future. Context and situation require change, at the very least, re-evaluation and validation. Without a current, sound strategic vision there is no direction for your company and forward momentum will become unlikely. Defining a strategic vision is the starting point as business growth resumes.

2. Failing to ask eight fundamental "business health check" questions. You see, far too often, small to medium size businesses fail to take an objective and dispassionate view of their operations when planning for their future. In many cases, they focus on only one component of the business, such as sales. How does this help you determine how to best position your organization for the future? You must ask these 8 questions... . What's working now and how do you know? . What's not working and how do you know? . What do you want to achieve? . What do you need to avoid? . What do you need to eliminate ("stop doing")? . What do you need to safeguard/preserve? . What could you be doing to better prepare if an ongoing recession, and for the eminent

rebound? (What else could you do to prepare for worse/best case scenarios?) . Then, what are your next best steps to sustain you now and position you for the rebound? It is critical to ask (and listen to your team's responses to) these questions when creating your new strategic vision. And lastly, mistake #3 which is highly interdependent with #2, and most critical to executionthat is, operationalizing your vision to results: 3. Failing to *align* your leadership team with the new strategic vision of where you are headed. If only you or a few of the executives address the questions above in framing out and defining your strategic direction, it results in a gap - a lack of knowing by the very staff that will be making it happen (AKA: EXECUTING). Not knowing organizational priorities results in disarray due to individual agendas and priorities. (Think of individual employees as arrows pointing in different directions, verses focus and energies in a clear and common direction.) For example, one of our leadership consulting clients was running a successful research business in the medical industry with a strong client base. The work product was good, as were sales. And for the most part clients were satisfied. What wasn't working well was the leadership team. Why? Talented researchers were promoted to leadership positions with little (or no) management experience. This created a "learning curve" both for the newly promoted manager (learning how to be a manager) and their employees (learning how to cope with the new manager's learning how to be a manager). The new managers that were thrown into a leadership role brought their baggage with them. That is the politics, behaviors and opinions they had as subordinates. No time was spent working to align the leadership team with the organizational vision and to align the team with itself. As a result, frustration grew - in both the new managers and the employees - and employee turnover became high. In a short time, clients felt the impact. Lack of a commonly understood strategic direction leads to misaligned efforts and frankly poor decisions - and this can end up fatal to your business. The recession has changed many businesses forever. What were opportune and successful strategies in the past will no longer work for many organizations. And believing you will soon return to business as usual is dangerous thinking. Through addressing these 3 mistakes, you can re-surface from the recession by taking an intentional, dispassionate look at your current market situation, asking the tough questions, and defining a strategic vision that is desired and doable by you and your staff.

Stop Making Plans, Start Making Decisions Is strategic planning completely useless? That was the question the CEO of a global manufacturer recently asked himself. Two years earlier, he launched an ambitious overhaul of the company's planning process. The old approach, which required business-unit heads to make regular presentations to the firm's executive committee, had broken down entirely. The ExCom members - the CEO, COO, CFO, CTO, and head of HR - had grown tired of sitting through endless PowerPoint presentations that provided them few opportunities to challenge the business units' assumptions or influence their strategies. And the unit heads had complained that the ExCom reviews were long on exhortation but short on executable advice. Worse, the review led to very few worthwhile decisions. The revamped process incorporated state-of-the-art thinking about strategic planning. To avoid information overload, it limited each business to 15 'high-impact' exhibits describing the unit's strategy. To ensure thoughtful discussions, it required that all presentations and supporting materials be distributed to the ExCom at least a week in advance. The review sessions themselves were restructured to allow ample time for give-and-take between the corporate team and the business-unit executives. And rather than force the unit heads to traipse off to headquarters for meetings, the ExCom agreed to spend an unprecedented six weeks each spring visiting all 22 units for daylong sessions. The intent was to make the strategy reviews longer, more focused and more consequential. It didn't work. After using the new process for two planning cycles, the CEO gathered feedback from the participants through an anonymous survey. To his dismay, the report contained a litany of complaints: "it's disconnected from the way we run the business." And so on. Most damning of all, however, was the respondents' near-universal view that the new approach produced very few real decisions. The CEO was dumbfounded. How could the company's cutting-edge planning process still be so badly broken? More important, what should he do to make strategic planning drive more, better, and faster decisions? Like this CEO, many executives have grown skeptical of strategic planning. Is it any wonder? Despite all the time and energy most companies put into strategic planning, the process is most often a barrier to good decision making, our research indicates. As a result, strategic planning doesn't really influence most companies' strategy. In the following pages, we will demonstrate that the failure of most strategic planning is due to two factors: it is typically an annual process, and it is most often focused on individual business units. As such, the process is completely at odds with the way executives actually make important strategy decisions, which are neither constrained by the calendar nor defined by unit boundaries. Not surprisingly, then, senior executives routinely sidestep the planning process. They make the decisions that really shape their company's strategy and determine its future decisions about mergers and acquisitions, product launches, corporate restructurings, and the like - outside the planning process, typically in an ad hoc fashion, without rigorous analysis or productive debate. Critical decisions are made incorrectly or not at all.

Fair Play Fair Play ruled in my upbringing - in everything from horses to golf to piano competitions to life itself. It's a simple principle promoting that how you play the game is more important than winning. The rules have changed. We have cheating bankers getting federal bailout money while honest people are losing their homes and lives. Then there are companies like GM who ignored the markets and followed their own egos all the way to bankruptcy - well they are bailed out by our tax dollars. Now that I think about it - we've even lost the concept of Fair Play in our sports heroes. I won't keep going - we all know the examples, in business, government, sports and our own personal lives. We all know that Fair Play is becoming more rare every day in certain circles. I wonder if we've let Fair Play slide because life is easier without that rule. Fair Play means that we have to be better than others to succeed. When we deliver a quality product and service to our customers, we have a significantly better chance of winning than the guys who do shoddy work. Fair Play also means we take responsibility for our actions. We step up and deliver - focusing all our energy on our assignment - rather than on who has the power and how we can get more. Fair Play means we focus our efforts to get better and better at what we do. Our skill and knowledge, our performance, becomes our path to accomplishment. We can't use other forms of manipulation to get ahead anymore - they won't work. Think what the return of Fair Play could do for our lives. In business we'd return to the premise that when we deliver quality - we get the rewards. When we deliver crap - we go out of business. Now that would solve a lot of problems, wouldn't it? In our personal lives we'd learn to trust again - knowing that everyone we encountered was playing according to the rules of Fair Play. Wouldn't that be a great step. I believe we Fair Players are the majority in this world. So why do those who break the rules get by with it so often - and for so long? I don't have the answer to that question. Nor do I know how to bring Fair Play back as the name of the game. What I do know is that I don't like it when others get to play by a different set of rules - actually break the rules - and still win.

I want to do something about it. I wonder if I can get my tax dollars back from all those guys? Hmmm...

Selling Your Company for Strategic Value What does strategic value mean as it relates to the sale of a business? To a business buyer it means that your company is viewed to have a value beyond the value that the historical financial performance might suggest. A financial buyer will typically pay between 4 and 6 times EBITDA or free cash flow. There is no magic here. The theme is that this formula gives the buyer the ability to cover the debt service for the loan while providing a reasonable return on their equity. If the acquired company performs at least at the same level post acquisition, it is a safe investment. What would cause a buyer to pay a business seller any more than a financial multiple? Buyers certainly do not willingly volunteer to pay more. They must be encouraged to do this and that encouragement generally comes in the form of other interested buyers that also recognize strategic value. What characteristics of a selling company would cause multiple buyers to seemingly over pay for an acquisition? The key is that the selling company has to create potential that can be leveraged by the new owner. Simply by putting the resources, customer base, brand name, sales force, distribution system, manufacturing efficiencies, etc. behind the acquired assets they can often dramatically improve the return from those assets. One of our clients with the president as the only salesman had only 12 customers. They had a complementary product to the eventual buying company's product line. The buying company had 27 sales people and 800 customers that were fertile prospects for the newly acquired product. Sales exploded post acquisition. The buying company understood the potential that they would be able to unleash and was willing to give our client some credit for this projected success. We did encourage them to take this enlightened view with the help of their biggest competitor who was also interested in the acquisition. One theme that creates strategic value is scalability. Can you take the technology, expertise, processes and procedures and easily translate that from a small company base to a much larger company. At one extreme you have an owner who is the ultimate subject matter expert and all business comes through him. This is not attractive for a buyer. At the positive extreme, the selling company has a well documented procedure manual, a training protocol and a well developed customer relationship management system. This can be more effectively leveraged by the buying company thus setting the stage for driving strategic value. Sometimes just having a coveted customer base with barriers to entry can immediately turn a selling company into a strategic target. Doing business with the Federal Government or the Department of Defense can be a great business, but getting on the approved vendor list can take years.

One of our clients had gotten technical approvals with several telephone companies' and wireless companies' headquarters. This did not guarantee that the multiple local decision makers would buy from him. It did, however, provide him a valuable "hunting license" within these giant companies. Innovation is a powerful driver of strategic value. It is not just limited to software, Internet, Bio Tech, or information technology who are often the poster children for some highly publicized generous acquisition multiples. Innovation can take on many forms including improvements in manufacturing, distribution, training, marketing, sales systems, etc. Your merger and acquisition advisor's ability to recognize, document and articulate this leveragable intellectual property will go a long way toward maximizing your transaction value when you sell your company.

Business Strategy - Conquering a Culture of Indecision The job of the CEO, everyone knows, is to make decisions. And most of them do - countless times in the course of their tenures. But if those decisions are to have an impact, the organization must also, as a whole, decide to carry them out. Companies that don't, suffer from a culture of indecision. In his 2001 article, Ram Charan, one of the world's preeminent counselors to CEOs, addresses the problem of how organizations that routinely refrain from acting on their CEOs' decisions can break free from institutionalized indecision. Usually, ambivalence or outright resistance arises because of a lack of dialogue with the people charged with implementing the decision in question. Charan calls such conversations "decisive dialogues," and he says they have four components: First, they must involve a sincere search for answers. Second, they must tolerate unpleasant truths. Third, they must invite a full range of views, spontaneously offered. And fourth, they must point the way to a course of action. In organizations that have successfully shed a culture of indecision, discussion is always safe. Underperformance, however, is not. Does this sound familiar? You're sitting in the quarterly business review as a colleague plows through a two-inch-thick proposal for a big investment in a new product. When he finishes, the room falls quiet. People look left, right, or down, waiting for someone else to open the discussion. No one wants to comment - at least not until the boss shows which way he's leaning. Finally, the CEO breaks the loud silence. He asks a few mildly skeptical questions to show he's done his due diligence. But it's clear that he has made up his mind to back the project. Before long, the other meeting attendees are chiming in dutifully, careful to keep their comments positive. Judging from the remarks, it appears that everyone in the room supports the project. But appearances can be deceiving. The head of a related division worries that the new product will take resources away from his operation. The vice president of manufacturing thinks that the first-year sales forecasts are wildly optimistic and will leave him with a warehouse full of unsold goods. Others in the room are lukewarm because they don't see how they stand to gain from the project. But they keep their reservations to themselves, and the meeting breaks up inconclusively. Over the next few months, the project is slowly strangled to death in a series of strategy, budget, and operational reviews. It's not clear who's responsible for the killing, but it's plain that the true sentiment in the room was the opposite of the apparent consensus. In my career as an advisor to large organizations and their leaders, I have witnessed many occasions even at the highest levels when silent lies and a lack of closure lead to false decisions. They are "false" because they eventually get undone by unspoken factors and inaction.

Business Strategy - Decisions Without Blinders By the time Merck withdrew Vioxx from the market in September 2004 out of concern that the pain relief drug was causing heart attacks and strokes, more than 100 million prescriptions for it had been filled in the United States alone. Researchers now estimate that Vioxx may have been associated with as many as 25,000 heart attacks and strokes. And more than 1,000 claims have been filed against the company. Evidence of the drug's hazards was publicly available as early as November 2000, when the New England Journal of Medicine reported that four times as many patients taking Vioxx experienced myocardial infarctions as did those taking naproxen. In 2001, Merck's own report to federal regulators showed that 14.6% of Vioxx patients suffered from cardiovascular troubles while taking the drug; 2.5% developed serious problems, including heart attacks. So why, if the drug's risks had been published in 2000 and 2001, did so many doctors choose to prescribe it? Social science research has shown that without realizing it, decision makers ignore certain critical information. Doctors, like the rest of us, are imperfect information processors. They face tremendous demands on their time and must make life-and-death decisions under highly ambiguous circumstances. In the case of Vioxx, doctors more often than not received positive feedback from patients taking the drug. And, as we now know, the Merck sales force took unethical steps to make Vioxx appear safer than it was. So despite having access to information about the risks, doctors - even those who had read the New England Journal of Medicine article - may have been blinded to the actual extent of those risks. And why did Merck's senior executives allow the product to stay on the market for so long? Evidence points to intentional misrepresentation by the sales force, but it is quite possible that some members of Merck's top management team did not fully understand how harmful the drug was. In fact, many respected individuals have vouched for the ethics of former chairman and CEO Raymond Gilmartin, insisting that he would have pulled Vioxx from the market earlier if he had believed that it was killing people. Although senior executives are, ultimately, responsible for what happens in their organizations, the lapse here may have been more in the quality of their decision making than in any intentional unethical behavior. This article examines the phenomenon of bounded awareness - when cognitive blinders prevent a person from seeing, seeking, using, or sharing highly relevant, easily accessible, and readily perceivable information during the decision-making process. "The information that life serves is not necessarily the information that one would order from the menu," notes Dan Gilbert of Harvard University's psychology department, "but like polite dinner guests and other victims of circumstance, people generally seem to accept what is offered rather than banging their flatware and demanding carrots."