Keith Prather is Managing Director of Armada Corporate Intelligence, a corporate business intelligence firm that functions as outsourced members of corporate strategy groups and consults with companies of all sizes on strategy and implementation. Armada is sponsoring this week of posts on getting ready for 2010 planning.
I've known Keith for nearly a decade and have worked with him closely on a variety of strategic and market planning efforts. Today, I'm excited he's sharing his professional perspectives on getting a better understanding of your external environment during this period of dramatic global change in business and consumer markets:
A critical component of a successful strategic plan is a well-established strategy foundation – a compilation of information and intelligence covering your industry, global markets, customers, and the environment. Particularly relevant this year is the need to produce an accurate economic forecast with meaning and relevance for the business. And given the uncertainty surrounding the global economy, this can be a daunting task.
Following the most basic tenets, forecasters need to identify the supply and demand drivers for an industry, and capture meaningful data describing the condition and outlook for them. Sometimes though the most impactful elements on a business are not what we think. Going to the expense side of the income statement and understanding the biggest cost items in your business will help determine the real key elements of supply – those you rely on.
For instance, one client believed steel (which was one of the company's top expenses) was the primary input for its business, with countless hours spent monitoring, forecasting, and negotiating steel prices. Energy costs, on the other hand, were not considered to have a material impact, and were lumped into utility and overhead costs. In 2008, however, consumption of oil-based resources drove prices up significantly. As a result, oil costs had to be factored much more directly into forecasting models to improve their accuracy. By not anticipating this significant change to the company's business mix, however, it was caught flat footed.
On the demand side, the challenge is more complex. While providing future economic insights for clients, several fundamental items seem to be driving things developments. First, everything ultimately circles back to consumers. You and I, spending money, drives more than 70% of the nation’s $13 trillion in GDP. Watching consumer spending, consumer confidence, housing, and several other metrics tracking consumer activity are useful in helping gauge future activity. One great aggregator site for basic economic information is the US Census Bureau’s Economic Indicator page.
There are some other great free aggregator sites providing solid current economic news and explanations of some of the items driving current activity. One of my favorites is the RTTNews Daily Market Analysis. We also pay a lot of attention to the Financial Times, CNBC, Wall Street Journal, and Global Insight for forecasting information.
For manufacturing, the Institute for Supply Management publishes one of the most accurate gauges of manufacturing activity, the Purchasing Managers' Index (PMI), on a monthly basis. You can read about the PMI in simple, easy to follow prose at the ISM website.
Calculating risk is also an important component to a well-done strategy foundation. With a wave of new legislation floating around in Congress, it is important for companies to use scenario planning in considering impacts of various regulatory actions on the company. From health care to energy legislation, companies will be hit with direct and indirect risks as a result. Using a system such as the Lockwood Analytical Method for Prediction (LAMP) can help in gauging which scenarios provide the greatest risk – and the greatest likelihood of occurring.
It can’t be said enough, a solid strategy foundation is the underpinning to a successful strategic plan. Woodrow Wilson once said: "We should not only use all the brains we have, but all the brains we can borrow." If you can’t build the strategy foundation in-house, it’s worth getting help to make sure that the business landscape is being accurately portrayed. Otherwise, you might be building a ship when what you really need is a bicycle. - Keith Prather
Tuesday, November 17, 2009
Getting Ready for 2010: A Strategy Foundation - Guest Post by Keith Prather
Monday, November 16, 2009
Getting Ready for 2010
My, how times change!
In the old days, I'd get twitchy if our planning group's attention hadn't turned to readying for the next year's planning by April with completion targeted for early September. Amid a changing business environment, however, those dates got progressively later until the prospect of nearly coincident planning left us unphased.
At the Frost & Sullivan event I participated in during the first week in November, attendees were asked who was still working on 2010 plans. Based on the large percentage of hands raised, it looked like many companies have pushed back planning efforts much later.
As a result, Brainzooming is focused on 2010 planning, providing tips and ideas to prepare your plan for what your marketplace holds next year. Here's what's coming this week:
- Tuesday - My Brainzooming Instigation buddy Keith Prather from Armada Corporate Intelligence will highlight approaches and tools to survey your external environment. Armada is sponsoring this week's Brainzooming features on 2010 planning, so beyond upcoming posts on the topic, check out the services Armada offers to help you get through this challenging business period.
- Wednesday - Mid-week, we'll feature links to more than 15 Brainzooming articles to support your planning efforts.
- Thursday - There are various planning environments you may face. On Thursday, we'll share stories of how Brainzooming has teamed with Armada Corporate Intelligence, using the Brainzooming approach, to successfully address frequent planning challenges.
- Friday - Previous guest author Barrett Sydnor of Sydnor and Associates will cover making investment decisions in this business environment.
Friday, November 20, 2009
Getting Ready for 2010: Planning in a Recession - Guest Post by Barrett Sydnor
Today's guest post addressing preparing for 2010 comes from Barrett Sydnor, one of the first guest authors ever on Brainzooming back in early 2008. I've worked with Barrett on various strategic planning projects over the past 15 years, including quite a bit of quantitative industry analysis and supply/demand forecasting.
Today, he's addressing the right marketing stance to have during and coming out of a recession:
Fortune Favors the Bold.
The Roman playwright Terence wrote that in the 2nd century BC, though Virgil often gets credit because a similar line later appears in the Aeneid. Terence was probably talking about the military strategy of some emperor, but it turns out that the sentiment applies to businesses—small and large—as they face figuring out how to plan for 2010.
A natural tendency when looking at bad or uncertain times is to hunker down, keep spending to a minimum, and stay with what you have done in the past. Natural, but maybe not smart.
A Hurwitz & Associates report found that 65% of small businesses that expected increased revenues during 2009 had raised or planned to increase marketing spending. Increased revenues were expected by only 30% of those who were keeping marketing spend flat, and almost half (41%) of those who were cutting marketing spend were expecting a decrease in revenue.
This correlates with a study done at Penn State after the 2000 recession. The authors say that using what they call “proactive marketing” can allow firms to improve both capital market and business performance during a recession. They cite increased marketing spending by P&G, Kellogg, Intel, and Wal-Mart during recessions—and depressions—as a way to grab or consolidate dominant market shares.
For sports fans, one way to restate “Fortune Favors the Bold,” is “The Best Defense is a Good Offense.” You might ask, "How did that work out for Bill Belichick and the Patriots against the Colts?" While the execution lacked, he had the science—and the odds on his side (discussion here, here, and here).
In planning, as in coaching football, getting the odds on your side is really is what you are trying to do. Being more aggressive with your 2010 plan may be the way to tilt those odds in your favor. - Barrett Sydnor
Wednesday, November 18, 2009
Getting Ready for 2010: Tools to Improve Your Success
With 2010 looming and the importance of approaching the year with creative business and competitive options, here are links to a variety of tools to help if you're under the gun to get a successful plan completed.
A Foundation on Strategic Thinking
- Steps to Re-evaluate and Focus on Important Elements in Your Business
- Better Understanding What's Strategic in Your Business
- Thoughts on Dealing with Uncertainty
- Steps to Deal with Planning Amid Uncertainty
- Quickly Developing Options When Your Current Plan Isn't Working
- Having to "Wing" Your Strategy Because of Uncertainty
- Re-checking Your Marketing Plan for Completeness
- Reviewing and Modifying Your Strategic Direction
- Updating a Marketing Plan Under Tight Resources
- Generating New Ideas When You Need Them
- When A More Aggressive Competitive Strategy Is Needed
- You're Fighting an Uphill Battle and Need a Contrarian Strategy
- Developing a Low-Investment Marketing Strategy
- You Have a Turnaround to Fix
- Urbanization
- Fragmentation in what constitutes luxury
- Increasingly complex online presences
- A push for mass IRL interactions emanating from online networks
Thursday, November 19, 2009
Getting Ready for 2010: 3 Real Life Planning Successes
I'm a proponent of spreading strategic thinking broadly in a company and not readily handing off strategy development to outside parties exclusively. Yet I've been a part of many examples where an outside perspective helped move strategy development ahead much more quickly.
Here are several examples you may be facing where it's good to get outside expertise:
Turning Talk Into a Plan
A small subsidiary's three-person management team was told to get a plan in place to show corporate management the company's direction. They had no planning process and only ten business days to deliver a comprehensive strategic plan. We brought in the Brainzooming process to develop an innovative strategic plan in one day. The output couldn't be simply a bunch of ideas nor could it be only a rote plan with little strategic insight.
Structuring a day-long session using question-based exercises allowed the team to answer questions about the business, participate in exercises to stretch strategic perspectives on competition and opportunities, and come back the next morning to make people and timing decisions on a tight plan to share with the operating president.
As non-planners, they wouldn't have been able to put together a coherent business plan in ten days, but they did understand their business and the general direction they needed to head. We combined their deep knowledge with exercises and facilitation allowing us to challenge and create a strategic flow from their answers. We delivered the best of both worlds - a structured plan reflecting their intent for the business with sound strategic logic and more innovation than they'd have ever brought to it alone. This experience demonstrated the clear benefit of the emerging Brainzooming process.
Stimulating a Management Team that Knows It All
We rolled into town to help a really experienced senior management team tackle annual planning. Because of their tenure and smarts, they knew the company inside- out. This knowledge rendered them ill-suited to solving a long-term growth challenge: as every idea was uttered, they "knew" why it wouldn't work for the brand.
During the course of a day-long planning session, I created a new exercise on the fly based on a brand in a very different industry sharing the same fundamental characteristics of our client. I asked the group to suggest how this other company could address the same challenge they were facing. All of a sudden ideas started flowing non-stop. We were able to take the concepts and strategically apply them to their business.
Left on its own to think strategically, the management team would never have reached an alternative look at its business. An outside perspective, unburdened by excessive detail was critical to identifying an analogous situation, providing an entree for innovative strategic thinking and implementation.
Doing the Thinking for a Distracted Management Team
We had a pre-scheduled planning follow-up with a management team who, since our initial session, had been charged with exploring a major brand contraction. Unable to convince them their new assignment should be the focus for our session, we instead spent time addressing the status quo scenario. Unfortunately, the status quo wasn't likely or compelling enough to command much of their attention and strategic creativity.
Frustrated by the lack of intensity while addressing the status quo, we wrapped the effort early. We told them we'd work on the status quo scenario, delivering 200 prioritized, fleshed out ideas and concepts within 3 days. Using several creativity techniques during the flight home, we generated really strong creative concepts for the status quo or, with some modification, for the alternative scenario also.
This was a great example of the importance of a balanced group in doing the best strategic thinking. The client's management team had business experience and functional knowledge, but was sapped of any creative energy it ever had. Bringing in outside talent for a creative spark was needed to turn lackluster thinking into vibrant, implementable ideas. - Mike Brown
Sunday, November 1, 2009
No matter what challenges 2010 holds, you need a solid plan.
Armada Corporate Intelligence can help.
If you need to outmaneuver competitors and grow, Idea Generation Sessions jump start an innovative 2010.
If you are staying with the basics, but want stronger performance, a Plan Audit evaluates current efforts, makes needed updates and prioritizes your best moves for the coming year.
If you are looking for a whole new approach, Fast-Track Planning makes the most of your team’s expertise with out bogging you down in endless meetings and iterations.
2010. Some will bank on hope.
Others will contact Armada Corporate Intelligence
To find out more, email us at 2010Plan@ArmadaCI.com.
