2 | Planning
10 Insights into Strategic Planning
Joan Magretta wrote a guide to strategy guru Michael Porter’s work called Understanding Michael Porter. As she worked on the book, she kept a list of insights, including “that most companies think they have a strategy when they don’t,” as she noted in an article on HBR.
Here are her ten insights and how they relate to the Baldrige model:
- You gain a competitive advantage by creating unique value for customers. Customer-driven excellence is a Baldrige core value, defined as an organization’s performance and quality being judged by its customers. If customers rate your performance and quality high, you will gain a competitive advantage.
- Your strategy must also clarify what the organization will not do. The Baldrige model asks several questions about how you develop strategies that will help you prioritize your strategies.
- “Competition is about profits, not market share,” writes Magretta. You grow a company by increasing profits, not market share.
- Brilliant strategies will not lead to performance excellence unless you execute them. The Baldrige Criteria devote an entire section to strategy implementation.
- Good strategies are interconnected and build on core competencies. The Baldrige Criteria ask how your strategic objectives capitalize on your core competencies and balance short- and longer-term challenges and opportunities.
- While it’s important to be flexible, your organization must stand for and excel at something. You must have the resources and capabilities to execute the plan
- You need not predict the future to commit to a strategy.
- “Vying to be the best is an intuitive but self-destructive approach to competition,” Magretta writes.
- You need both a distinctive value proposition and…
Which Comes First: Facts or Opinions?
The Baldrige model supports fact-based decisions. Management by fact is one of 11 Baldrige core values. One of the seven categories in the Baldrige Criteria focuses on measurement and analysis. Measurement—“how do you know?”—is woven into questions throughout the other five “process” categories, and the results of your key measures are reported in the seventh category.
Here’s what management guru Peter Drucker wrote on the topic: “Executives who make effective decisions know that one does not start with facts. One starts with opinions.”
I disagree.
According to Drucker, which Stephen Wunker addresses in his post on the HBR Blog Network here, if leaders do not make their opinions clear, they will simply find the facts that confirm what they believe. The problem is that the opinions and the confirmatory facts push the organization in one direction without considering other courses of action. Wunker writes, “Decision makers may have a general sense of stakeholders’ opinions, but in their eagerness to act and to avoid controversy they do not probe to understand these perspectives fully. Rather, they quickly make a decision and then marshal facts to support it.”
In the Baldrige model, the process of understanding opinions and perspectives fully would be part of the strategy development process, which encourages collecting and analyzing data and information to create an effective plan. As a result, decision makers can generate informed opinions based on their interpretation of fact-based knowledge about markets, customers, competitors, internal capabilities, and long-term needs. Rather than basing their opinions on assumptions and best guesses,…
7Nov2011 | Steve George | 0 comments | ContinuedWhat Path Is Your Organization Taking?
In the day-to-day effort make an organization work, it’s easy to lose sight of the path your organization is on and the direction that path is taking you. The Baldrige model helps you see the big picture and how the work you are doing supports—or ignores—your mission and vision.
The question leaders of organizations, business units, divisions, departments, and teams need to continually ask is: What is truly important? Baldrige can help you answer that.
7 Rules for an Effective SWOT Analysis
The Baldrige Criteria ask how, as part of your strategic planning process, you collect and analyze relevant data and information pertaining to your organization’s strengths, weaknesses, opportunities, and threats (SWOT).
Strengths and weaknesses are internal factors; opportunities and threats are external factors. A post on RapidBI describes the characteristics of each:
- Strengths are positive tangible and intangible attributes, internal to your organization, that are within its control.
- Weaknesses are factors within your control that detract from your ability to attain your goal, but that you could improve performance on.
- Opportunities represent the reason for your organization to exist and develop; identify them by time frames.
- Threats are beyond your organization’s control, which could place your mission or operation at risk. Classify them by their seriousness and probability of occurrence and develop contingency plans to address them if they occur.
RapidBI describes two acronyms for identifying the factors to address in your SWOT analysis:
- PRIMO-F for strengths and weaknesses: People, Resources, Innovation/Ideas, Marketing, Operations, and Finance
- PESTLE for opportunities and threats: Political, Economic, Social, Technological, Legal, and Environmental
The post offers simple rules for a successful SWOT analysis:
- Be realistic about the strengths and weaknesses of your organization
- Distinguish between where your organization is today and where it could be in the future
- Be specific. Avoid gray areas.
- Always analyze in relation to your competition and whether you are better or worse
- Keep your SWOT short and simple; avoid unnecessary complexity and over analysis
- Don’t list an opportunity if the same opportunity is available to competitors
- Don’t list a strength if your competitors also has it.
The top five…
18May2011 | Steve George | 0 comments | ContinuedStrategy Deployment at MEDRAD
At MEDRAD, which won the Baldrige Award for the second time in 2010, strategic planning aligns the work of each employee with the mission and philosophy of the company. The process begins with a review of the mission and philosophy and the prior year’s plan. (Learn how Baldrige Award winners develop strategies by subscribing to Baldrige.com’s free report in the purple box on the right.)
According to MEDRAD’s application summary, available here, “each business and function champion uses common planning templates and workbooks designed to ensure that blind spots are addressed, SWOT’s are analyzed, core competencies are defined, and early indications of major shifts are addressed.”
The diagram at the left shows how MEDRAD “waterfalls” its strategic plan, scorecard, and objectives throughout the company. Top 12 and Strategic Action Team objectives flow to managers, who create group objectives and plans. These objectives are refined and aligned through team meetings and discussions and used by employees to create individual objectives in the Performance Management (PM) process.
For hourly employees, objectives are team-based to help drive performance in manufacturing. In addition, all employees create written development plans that address areas to improve and the knowledge and skills they need to move into other roles.
Progress on objectives is reviewed by senior leaders, department and team leaders, and employees and their managers.
To strengthen alignment with corporate goals and objectives and promote a “we are all in this together” attitude, MEDRAD provides a gainsharing payout each year based on achieving the corporate objectives except for the employee satisfaction…
13Apr2011 | Steve George | 0 comments | ContinuedFREE REPORT: Strategy Development
How do Baldrige Award winners conduct strategic planning? You can learn from the best practices of six recent Award winners in our free report. Enter your name and email address in the purple box on the right and you will receive a PDF that includes:
- The strategic planning processes of four organizations: Heartland Health, Premier, the VACSP Center, and MidwayUSA
- Ideas on how to prepare to plan, including where to look for relevant data and information and how to analyze what you collect (Iredell-Statesville Schools is a example)
- The key questions Cargill Corn Milling asks to determine how it should act within a strategic space
- How these organizations determine and review their core competencies and strategic challenges and advantages
- Four key elements to consider while developing your strategic plan
- How to identify effective strategic objectives
As the report concludes, strategy development at these six Award winners shares common elements that your organization can use to create an effective approach:
- Strategic planning must be a well-defined and refined process that involves key stakeholders in developing strategies. As the diagrams in this report illustrate, a systematic strategic planning process shows who does what, when, with an emphasis on involving key stakeholders in the process.
- Strategy development is an ongoing process. The front end of the process, collecting data and information, occurs daily throughout the year, a responsibility of key people in the organization to find, collect, and communicate what is happening—or may happen—that could affect your organization’s future. The back end of the process, reviewing performance to plan, must be flexible to allow…
Identifying Game Changers
I’m getting ready to offer the next free report about best practices among Baldrige Award winners—it’s about strategy development—and an article on CNNMoney.com caught my eye.
The Baldrige Criteria ask how your strategic planning process identifies potential blind spots and how you address early indications of major shifts in technology. One of the favorite examples of why this is important is the market leader in horse-drawn carriages when the first Model T’s appeared: If you don’t have processes in place to detect disruptive technologies or recognize your blind spots, you expose your organization to irrelevance.
The article in CNNMoney.com, available here, has the potential to change how cell phone service is delivered. The explosion of smartphones has stretched wireless networks to the limit, forcing companies like AT&T, Verizon, and Sprint Nextel to cap data, charge for overages, and raise prices on phones and tablet plans. And mobile data usage is expected to grow 30 times in the next four to five years. The cell towers and antennas that create the networks are large, inefficient, and expensive to maintain, costing the industry $210 billion a year to operate and another $50 billion to upgrade.
It’s a perfect climate for innovation, and that innovation may be the lightRadio by Alcatel-Lucent. About the size of a Rubik’s cube, the lightRadio “takes all of the components of a cell phone tower and compresses them down into a 2.3-inch block.” It can be deployed almost anywhere: on bus station awnings, the sides of buildings, lamp posts, etc. It…
22Mar2011 | Steve George | 0 comments | Continued
