1、Strategic Planning in the Private SectorContact:Phyllis Yale, Hernan Saenz Glenn Haufler August 2003AgendaWhat successful companies doExamples from the private sector2Success is rare and few entities accomplish their goals3 Keys to successA well developed, differentiated strategyA rigorous, fact bas

2、ed planning process to connect strategy with tacticsA well aligned, effective organization to execute 4“Strategy” defined: Oxford dictionary“The art of a commander-in-chief. The art of projecting and directing the larger military movements and operations of a campaign.Usually distinguished from tact

3、ics which is the art of handling forces in battle or in the immediate presence of the enemy.”5“Strategy” defined: Bain perspectiveA dynamic plan to differentiate a business from its competitors profitably and sustainablyA proprietary set of actions that create and capture value by serving customers

4、in a superior way relative to competitorsInforms virtually all decisionsPortfolio strategy: Where to play?Business unit strategy: How to win?6Strategy is about making choicesWhere we will and wont competeWhere we will and wont investBusinessesCustomersGeographiesActivitiesMarkets7Companies who succe

5、ed are focused and are the best at what they do020406080100%Multi coreNoneRegional focusOne businessChannel focusPercent of companiesCustomer focus8 Keys to successA well developed, differentiated strategyA rigorous, fact based planning process to connect strategy with tacticsA well aligned, effecti

6、ve organization to execute 975% of U.S. organizations believe they need to upgrade their strategic planning process“Our strategic planning process is effective”“Our strategic planning process is fully developed”10Best demonstrated strategic planning process MissionDefine the missionRarelyPortfolio S

7、trategyDecide what businesses and markets to compete inDetermine success metrics by businessEvery 5 yearsBusiness Unit StrategyDevelop differentiated offeringIdentify changing dynamicsExternalInternalIdentify key gapsEvery 2-3 yearsTactical PlanningSet targets and timelinesDesign key initiatives Dev

8、elop implemen-tation plansRealign organizationAnnuallyExecution and TrackingTrack performance against plansModify plans as necessaryOn-going11Business unit strategy must be informed by the facts around the “3Cs”Fact based diagnostic and value propositionCustomersCompetitorsCostsWhat does our target

9、customer value?What can competitors offer and how can we beat this offering?How can we provide our value proposition at minimum costs?Market sizeMarket growthCustomer segmentsChannel segmentsPrice experienceCost experienceProduct profitabilityChannel profitabilityValue chain economicsSystems costCos

10、t positionCompetitive positionProfitabilityStrategyCommitment12Strategic planning is often done without reference to factsActual average market growthForecast average company growthForecast average company earnings growth13Planning processes of best-in-class firmsSenior management devotes significan

11、t timeSystematic, with clearly defined stepsRigorous, fact-based approach, and a consistent view of the futureCoordinated across business units Enables quick decision making and course correction Note: Examples include GE, Dell, Agilent, Abbott, Emerson Electric, Sun14 Keys to successA well develope

12、d, differentiated strategyA rigorous, fact based planning process to connect strategy with tacticsA well aligned, effective organization to execute 15A high performance organization aligns five elements2. Drives effective decisions3. Aligns the front linewith right jobs and right incentives4. Right

13、peopleLeadershipDecisionsProcessesPeople Culture1. Provides sustained leadership5. Creates a high performance culture16AgendaWhat successful companies doExamples from the private sector17Successful strategic planning begins with a clear, focused mission Force trade-offs between competing resource de

14、mandsTest soundness of a particular actionSet clear boundaries on what to do and what not to doMake clear what “the core” isMemorable distillation of strategy clearly understood by all18A well defined mission helps answer the questions that define the core businessWhat are your most critical product

15、 and service offerings?What are your most differentiated and strategic capabilities?What are your most important channels?Who are your most profitable, franchise customers?What are the other critical strategic assets that contribute to the above?Core business19Examples of clear, focused, private sec

16、tor missions: Dell and SouthwestSouthwest AirlinesDell Computer“Meet customers short-haul travel needs at fares competitive with the cost of taking a bus.”“Be direct.”20In 1993, Dell strayed from its mission and its coreSituationOnly in the direct channel (“core”)PC market was explodingWanted to cap

17、ture a larger part of the growthComplicationExpansion into retail channel21Dell: Back to the core missionDell withdrew from retail22Examples of clear, focused, private sector missions: Dell and SouthwestSouthwest AirlinesDell Computer“Meet customers short-haul travel needs at fares competitive with

18、the cost of taking a bus.”“Be direct.”23Southwest translated its mission into clear, measurable goalsSuperior customer serviceAchieve low cost position30% lowerAffordable travel40% lower24Industry dynamics and competitive positioning(The 4Cs)CustomersMarket sizeMarket growthCustomer segmentsChannel

19、segmentsPrice experienceCostCost experienceProduct profitabilityChannel profitabilityValue chain economicsSystems costCompetitorsCost positionCompetitive positionSources of profitabilityStrategyCommitmentCapabilitiesHuman resourcesInformationProductProcessCapacitySouthwest used a rigorous factbase t

20、o set its strategy and targetsBuilding a rigorous factbase around the “4Cs” informs sound strategy and practical targetsBusiness definition25Southwest researched target customer segment needs and preferences26Southwest focused on key metrics for the target population vs. competitorsPriceSchedule27So

21、uthwest aligned its cost structure to support its positioning vs. competitorsOne type aircraftSecondary airportsCustomer self serviceNo frills, no meals serviceCost Initiatives28Southwest ignored traditional airline measures that competitors focused onRepeat purchase29Southwest aligned its organization to implement success