8. Strategic Planning and Execution (Power Point Show)

8/3/2019 8. Strategic Planning and Execution (Power Point Show)

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Strategic Planning and Execution

Presented ByeLearning Classroom

Compiled By Hardeep Kumar


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Strategic Planning and Execution Slide 2 of 184

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Objectives of this course

To present the strategic devices of mission, vision,goals, and strategy and demonstrate exactly how theyare created.

To show that the way a strategy is presented is differentfrom the way it is crafted.

To reveal the secrets of how great entrepreneurs executestrategy through the formation and organization of agreat group.

To provide a case that details the four tipping points ofsuccessfully implementing your strategy within anorganization.


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Course Outline

1. What is strategic planning?

2. Knowing your purpose and mission

3. Defining a vision

4. Forming goals and objectives5. The two kinds of strategy

6. Crafting internal strategy

7. Crafting external strategy

8. Presenting strategy as story9. The secrets of organizing genius

10. Tipping point execution


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What Is Strategic Planning?


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Writing the future

The future is a mere storyalbeit a powerful one.

You are either writing the story of the future or you are

living inside the story of another. There can be no other

possibilities. The entrepreneur has no choice but to anticipate the future,

to attempt to mold it, and to balance short-range and long-

range goals.

To accomplish this, the entrepreneur needs to thinkstrategicallyand this is the domain of strategic planning.


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Strategic planning is

The continuous process of making present

entrepreneurial decisions systematically with the

greatest knowledge of their futurity,

Organizing systematically the efforts needed to

carry out these decisions, and

Measuring the results of these decisions against

the expectations through organized systematicfeedback.


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Its not a bundle of techniques

Strategic planning is not a box of tricks or a bundle of

techniques.

Quantification is not planning. Some of the most important

questions in strategic planning can be phrased only interms such as larger or smaller, sooner or later.

Strategic planning is not the application of scientific

methods to a business decision.

It is the application of thought, analysis, imagination, and

judgment.


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Its not about forecasting

It is not masterminding the future. Any attempt to doso is foolishthe future is unpredictable.

Strategic planning is necessary precisely because we

cannot forecast. Since the entrepreneur upsets the probabilities on

which predictions are based, forecasting does notserve the purposes of planners who seek to direct theirorganizations to the future.

Forecasting is of little use to planners who wouldinnovate and change the way in which people live andwork.


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It doesnt deal with future decisions Instead, it deals with future-aspects of present

decisions.

Decisions exist only in the present. The question that faces the strategic decision-

maker is not what his/her organization should do

tomorrow.

It is, What do we have to do today to be ready fortomorrow?


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It doesnt attempt to eliminate risk

It is not even an attempt to minimize risk.

Economic activity, by definition, commits present

resources to the future. To take risks is therefore the

essence of economic activity. While it is futile to try to eliminate risk, it is essential that

the risks taken be the right risks.

The end result of successful strategic planning must be the

capacity to takegreaterrisks, for this is the only way toimprove entrepreneurial performance.


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The devices of strategic planning

Each device in strategic planning is meant to answer one

fundamental question about your plan:

Vision: Answers the question of what. What will our future

look like? What will we accomplish? What is our dream with adeadline?

Mission: Answers the question of why. Why do we exist? Why

is our vision important?

Goals: Answer the questions of who and when. Who will do

what? When will they do it? Strategy: Answers the question of how. How will we achieve

our goals? How will our vision bring our mission to life?


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Knowing Your Purpose And Mission


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Mission and Vision

Though the terms are often used interchangeably,

there is a vast difference between a mission and a

vision.

While the two concepts play-off of one another,

they work in very different ways.

The purpose of the next two sections is to examine

exactly what makes mission and vision differentand to demonstrate why you need to have both.


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Clarity about mission and vision

Clarity about mission and vision is both an operational and

spiritual necessity.

Mission provides a guiding star, a long-term purpose that

allows you to balance the inevitable pressures between theshort-term and the long-term.

Vision translates mission into truly meaningful intended

resultsand guides the allocation of time, energy, and

resources. It is only through a compelling vision that a deep sense of

purpose comes alive.


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The dynamic interplay

Mission is about preservingthe core

Provides continuity and stability

Fixed stake in the ground or the horizon

Limits possibilities Conservative act

Vision is aboutstimulatingprogress

Urges continual change

Impels constant movement

Expands possibilities

Revolutionary change


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The eyesight metaphor

Mission and Vision are like your eyes.

Each is independent of one another, yet each works

together to provide both depth and breath ultimately

coming together to make one in sight. The absence of one or the other (or both) is akin to looking

at your organization with one only eyeor less.

It can truly be said that nothing happens until there is

vision. But it is equally true that a vision with nounderlying sense of purpose is just a good ideaall sound

and fury, signifying nothing.


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What is mission?

Mission is the purpose or reason for existence of

your business.

It is a general heading or directionit is abstract.

A mission is what youstand for.

A mission should be timeless. It should rarely, if

ever, change. It should stand the test of time.

Example: To increase mans capability toexplore the heavens.


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The ground-rules of mission

Paradoxically, if an organizations mission is trulymotivating it is never really achieved.

Mission provides an orientation, not a checklist of

accomplishments. It defines a direction, not a destination.

It tells the members of an organization why they areworking together and how they intend to contribute to theworld.

Without a sense of mission, there is no foundation forestablishing why some intended results are more importantthan others.


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The missions of enduring companies

Company Core Purpose

3M To solve unsolved problems innovatively

Fannie Mae To strengthen the social fabric by continually

democratizing home ownership

Hewlett-Packard To make technical contributions for the advancementand welfare of humanity

Mary Kay To give unlimited opportunity to women

McKinsey To help leading corporations and governments be more

successful

Merck To preserve and improve human life

Nike To experience the emotion of competition, winning,and crushing competitors.

Wal-Mart To give ordinary people the chance to buy the same

things as rich people.


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Being mission-based

There is a big difference between having a mission

statement and being truly mission-based.

To be truly mission-based means that key decisions can be

referred back to the missionthe reason for being. This also gives some clue as to why being mission-based is

so difficult. It gets to the core of power and authority. It is

profoundly radical. It says, in essence those in the

positions of authority are not the source of authority. It says rather, that the source of legitimate power in the

organization is its guiding ideas.


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Power from ideas not people

Mission is therefore the belief that power

ultimately flows from ideas, not people.

Moreover, mission is inherently fuzzy and

abstract.

It is so much easier to make decisions based on the

numbers, habit, and unexamined emotions.

To be mission-based requires everyone to thinkcontinuously.


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Mission is a balancing act

It should not be so generic that it reads somethinglike: Our mission is to deliver the best quality product at the

lowest price through the most knowledgeableemployees for the benefit of all stakeholders.

This is simply stating best practice or the rules ofthe game of business itselfthe basic ticket foradmission if you will.

Instead, it should speak to some universal orcultural human need or condition.


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On the flipside

A mission cannot be too narrow in scope either.

Saying:

The mission of ACME is to serve medium-sized

original equipment manufacturers by providingsmall power generators.

This mission is a current marketing strategy, not atimeless reason for existence.

The statement is far from timeless since both thecustomer and the products could change as thebusiness grows.


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Now its time to write your mission

Right now on a piece of paper, write down your

mission statement.

Remember, a mission is the reason or purpose for

the business.

Write it as simply and honestly as you can.

Example: The mission of CEDC is to increase the

entrepreneurial capacity of our clients.


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The mission in review

Remember a mission statement should be somewhat

timelessit should apply to not only today but possibly

fifty years from now.

It should put forth a general direction or heading statingwhat it is that you stand for.

In essence, a mission can never really be achievedit

should be ongoing. If it can be achieved and completed

then it is a vision or goal, not your mission.

You should think of your mission as your true north

heading on your compass.


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Finally, check your mission

Your mission should

Provide continuity and stability

Act as a fixed stake in the ground or the horizon

Limit possibilities

Be a conservative act


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Defining A Vision


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What is vision?

A vision is aspecific future destinationit isconcrete.

A vision is a dream with a deadline.

It should change over time.

It must say yes to some ideas and no to others.

Its about what the future might be, could be, andshouldnt be.

Example: To put a man on the moon before theend of the 1960s.


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Defining a vision

In some ways, defining vision is easier than

knowing your purpose or mission.

Business people by nature are pragmatic;

ultimately they are concerned about results and

must concentrate on what and how, not just why.

This is why vision matters. Visionan image of

the future we seek to createis synonymous withintended results.


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The ground-rules of vision

Vision is a practicaltool, not an abstract concept.

Visions can be long-term or intermediate term.

While an organization should exist for one, singlepurpose, multiple visions can coexist, capturing

complimentary facets of what people seek to

create and encompassing different time frames.


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Vision-based leadership

Leaders who lack vision fail to define what they hope to

accomplish in terms that can ultimately be assessed.

While mission is foundational, it is also insufficient

because, by its nature, it is extraordinarily difficult toassess how we are doing by looking only at the mission.

For this we need to stick our necks out and articulate an

image of the future we seek to create.

Results-oriented leaders, therefore, must have both amission and a vision. Results mean little without purpose.


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Vision is intrinsic

Ultimately, vision is intrinsic not relative.

Its something you and your organization desire for itsintrinsic value, not because of where it stands you relativeto another. Relative visions may be appropriate in theinterim, but they will rarely lead to greatness.

Nor is there anything wrong with competition.Competition is one of the best structures yet invented byhumankind to allow each of us to bring out the best in each

other. But after the competition is over, after the vision has (or

has not) been achieved, it is the sense of purpose thatdraws you further, that compels you to set a new vision.


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Now lets define your vision

Remember, a vision is a specific, futuredestination.

Its your dream with a deadline.

Therefore, the first thing we need to do is establisha time frame that we want to look ahead.

You will obviously choose the timeframe(s) thatbest fits your specific vision, but for the sake of

this exercise, we are going to look out 5 years intothe future.


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Ask yourself such questions as

What big, audacious goal(s) do you want to try to achieve

in five years from now?

What does success look like in five years?

In five years time, how should your business be differentthan it is now?

Using your own metrics of success, what must you

accomplish in five years for you to consider yourself

successful? Right now, on a sheet of paper, write down your vision.


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Now review what you have written

Remember a vision should be a description of a specificfuture destination.

It should speak to what your future should be and to

what it shouldnt be. It should excite the human imagination over a long

period of time.

It should be bold, but there must be a belief that it can beachieved.

Remember: Its not what the vision is, its what thevision does.


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Finally, check your vision

Your vision should

Urge continual change

Impel constant movement

Expand possibilities

Result in revolutionary change


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Having a vision is but one facet

Having a well-defined vision is not enough by itself to

transform an organization to greatnessan organization

must also have a good handle on its current reality.

And so, defining the current reality of the situation in all ofits gory detail is equally important.

It sets the stage for the future story that is about to unfold.

Truly creative organizations use the gap between vision

and reality to generate energy for change.


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The formation of creative tension

If you have an intriguing and well-constructed vision thatexcites the human imagination, there will be a gap betweenyour defined vision and your current reality.

This gap is the source of creative energy that makesachievement of the vision possible. This gap is calledcreative tension.

Having an accurate, insightful view of current reality istherefore as important as having a clear vision.

Unfortunately, most of us are in the habit of imposingbiases on our perceptions of current reality which destroysmuch of the energy generated by creative tension.


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Leveraging the brutal facts of reality All successful companies began the process of finding a path to

greatness by confronting the brutal facts of their current reality.

When you start with an honest and diligent effort to determinethe truth of your situation, the right decisions often become self-

evident. Once the vision is defined and compared with an accurate,

truthful map of current reality, the imagination cannot help butto begin filling in the holes created by the gapexploringscenarios, generating possibilities, and testing new ideas.

But as stated earlier, many more organizations are usually thevictim of an unrealistic view of current reality than the victim ofa poorly defined vision.


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Your current reality and situation

Right now, on a sheet of paper, write down a description of

your current reality.

Make the description of your situation as truthful and vivid

as you can render it. Dont hide any constraints that you believe might keep you

from achieving your vision.

The truly creative organization knows that all creating is

achieved through working with constraints. Withoutconstraints there can be no creation.


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Forming Goals And Objectives


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What are goals and objectives?

Goals are yourdefinition of what success looks

like.

Goals are yourvision in miniature.

They specify what work of your vision will get

done, by who, and by when.

In effect, goals pose the question, What will I

have to accomplish by the end of this year toconsider myself a success?


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The purpose of goals and objectives

Objectives clarify what it is you are trying to accomplish inspecific, measurable goals.

For an objective to be effective, it needs to be a well-defined target with quantifiable elements that aremeasurable.

Whereas your vision statement is expansive and idealistic,and the mission short, powerful, and memorable, yourobjectives are designed to focus your resources onachieving specific results.

The purpose of well-defined objectives is to causemeaningful action.


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Types of objectives

There are many types of objectives and your planshould include a wide-variety.

For many businesses the two most important

categories will be the financial and marketingobjectives.

It is important, however, to tailor your objectivesto cover the entire scope of your business,

focusing on the goals that are most critical to yoursuccess.


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What targets will you aim for?

Most objectives can be broken down into the

following general headings:

Financial

Marketing and Sales

Operations

Human Resources

Research & Development

Manufacturing

Personal


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What do you need to accomplish?

To create a solid objective you must:

1. Describe the activity required.

Example: Introduce new products

2. Describe what will happen and when.Example: a book by 6/30 and a CD-ROM by 8/15

You can then wordsmith these pieces into a

complete objective:

Marketing ObjectiveIntroduce a book by June 30th

and a CD-ROM by August 15th.


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What works and what doesnt

Right: Obtain Oracle Named Account Status by

July 2003 and SunMicro key account status by

year end. (Measurable and easily understood)

Wrong: Develop strategic marketing alliances

with key partners. (With who? and by when?)


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What works and what doesnt

Right: Reduce overtime to maximum of 3%;

introduce 401k plan by June 30th; implement

recognition program by September 30th.

Wrong: Increase employee morale.


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Expansive and intrinsic goals

Many world-class companies will not only set business andoperational goals for themselves, but also expansive goals aswell.

Expansive goals are intrinsic and seek to set the standard

extremely highbased upon some subjective standard ofgreatness.

The premise of these goals is not about outrunning competitorsbent on reaching the same prize. Rather, its about having onesown view of what the prize is. There can be as many prizes as

runnersimagination is the only limiting factor. What distinguishes leaders from laggards, and greatness from

mediocrity, is the ability to uniquely imagine what could be.


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An expansive goal example

Bill Russell, the legendary center for the Boston Celtics

basketball team, used to keep his own personal scorecard.

He graded himself after every game on a scale of one to one

hundred. In his career he never achieved more than sixty-five.

Now, given the way most of us are taught to think about goals,

we would regard Russell as an abject failure. The poor soul

played in over1,200 games and never achieved his standard.

Yet, it was striving for that standard that made him arguably the

best basketball player ever. Its not what the vision is, its whatthe vision does.


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Developing your goals

Think back to your vision statement once again.

If you recall, your vision statement looked five years into

the future toward a specific destination that you want to

arrive at. Next, read your current reality description that wrote.

Now think about the activities you need to accomplish this

year in order to move from your current situation toward

that destination. Create 5 to 6 objectives that are critical to arriving at your

envisioned future.


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Example of well-defined goals

Vision: By 2005, 50% of all revenue will occur

through our own branded product line.

One year objectives:

Secure trademark and other intellectual property by

February 28th.

Establish website with e-Commerce capabilities by

March 15th.

Complete 8 products by the end December 31st.

Secure 10 content licenses by October1st.


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The Two Kinds Of Strategy


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What is strategy?

People use the term strategy to describe onething, but it is actually a bundle of insights andactivities.

There are fundamentally two kinds of strategy:internaland external.

The concept is so simple and obvious that mostmanagers and entrepreneurs simply overlook it.

And yet, few managers or entrepreneurs are taughtto craft strategy with these insights in mind.


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Why internal and external strategy?

The reason why internal and external strategy exist isbased on the rules of the game of business itself.

By definition, in order to fulfill a need or want, there mustbe an organization anda customer so that an exchange ofvalue can take place.

But each of these players in the game is seeking somethingdifferent and operating under different rule-sets.

Therefore, creating only an internal orexternal strategy

(but not both) ignores the very definition of a businesstransaction and allows you to only look on one side of theequation.


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Thinking of the two independently

If internal and external strategy are not thought of

independently, you can not appreciate the fact that

they are

Createddifferently,

Using a fundamentally different approach,

Leveragingdifferent resources,

Focusingon different aspects, and

Resultingin completely different outcomes.


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The two kinds of strategy

Internal External

Created Inside-out Outside-in

Fundamental

Approach

Creative Strategic

Leverages Assets Communications

Focus Organization Customer

Desired Result Innovation Positioning


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Resolving the apparent conflict

The existence of both internal and external strategy beginsto explain why so many business books and consultantsseem to contradict one another when talking aboutstrategy.

One school of thought says that you need to begin withyour organizational vision and work outwards, whileothers state that you need to instead begin with thecustomer and work backwards.

This paradox is resolved when you recognize that eachschool is simply describing either internal or externalstrategy. And since both kinds of strategy are createddifferently, it makes for what appears to be a contradiction.


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The kind of problem you are solving

The most common strategic planning mistake is made when you

dont understand the kindof problem you are working on.

In most planning sessions, little regard is given to the whether

the organization is currently crafting internal or external

strategyit all gets blended together.

But internal and external strategy are different kinds of

problems requiring different solutions solved through different

means.

Once you understand this basic assumption you will begin to seemore clearly what to focus on, what approaches are available to

you, and what outcomes to expect.


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An integrated system

The fact is your organization must think about and craftboth types of strategy.

You must understand how each kind of strategy is created,what makes it different, and what the desired results should

be.

External strategy follows internal strategy the way the leftfoot follows the right foot in walking.

In effect, both kinds of strategy support the organization as

well as each other. Each precedes the other, and follows it,except when the two move together, as the organizationjumps to a new position.


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The feet metaphor

If mission and vision are like your eyes that come

together in making one in sight, then

Internal and external strategy are like your feet

moving you forward, backward, or sideways.

Each is again independent of the other, however,

they work together in a complex system constantly

reinforcing each other and playing-off one anotherin creating movement.


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Crafting Internal Strategy


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What is internal strategy?

Internal strategy is created from the inside-out.

Its fundamental approach is internaland creative.

It leverages assets as part of the creative process.

Its primary focus is upon yourorganization.

The desired result of successful internal strategy is

innovation and the creation of new wealth.


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Strategy inside-out

Internal strategy is best summed up by Jim Collins, author of the book

Built To Last, when he stated:

If you did a word search across my research materials on the

greatest company builders of the past 100 years, you would find

almost no mention of competitive strategy. Not that thosebuilders had no strategy; they clearly did. But they did not craft

their strategies principally in reaction to the competitive landscape

or in response to external conditions. Without question, they kept

a wary eye on the brutal facts of reality. The fundamental drive to

transform and build their companies was internaland creative.


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Crafting your organization

The philosophy of internal strategy is to think of your

organization as the ultimate creationas if being crafted like a

lump of clay on a potters wheel.

You are the craftsman and your organization is your clay and,

like the potter, you sit between a past of (organizational)

capabilities and a future of (market) opportunities.

It involves the constant and systematic application of the

principles of creation, preservation, and destruction.

As with any craft, formulation and implementation merge into afluid process of learning through which creative strategies

evolve.


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The three acts of internal strategy

Creation is about the deliberate conception of new

ideas, thinking, and assets.

Preservation is about remembering, infrastructure,

and consistency.

Destruction is about getting rid of the old and the

obsoletewhether it be hard assets or the soft

concepts of ideasand freeing up these resources

for the creation of new wealth.


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Internal strategy is an understanding Your internal strategy is not a goal to be the best,

an intention to be the best, or a plan to be the best.

It is a fundamental understandingof what you can

be the best at. This distinction is absolutelycritical.

It comes from a particular state of mind ratherthan some routine process.

And that mindset concerns clock-building ratherthan just time-telling.


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Good versus great The essential strategic difference between great

companies and the good, lay in two fundamentaldistinctions.

First, great companies build their strategies on deep

understanding of: What they are passionate about,

What they can be best in the world at, and

What drives their economic engine.

Second, great companies translate that understanding into asimple, crystalline concept that guides all their efforts.

Jim Collins calls this concept the hedgehog concept.


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The power of knowing one big thing

In his famous essay, The Hedgehog and the Fox, Isaiah

Berlin divided the world into hedgehogs and foxes, based

upon an ancient Greek parable: The fox knows many

things, but the hedgehog knows one big thing.

These words may mean nothing more than the fox, for all

his cunning, is defeated by the hedgehogs one defense.

From this parable it can be extrapolated that all companies

can be separated as either foxes or hedgehogs.

The question is which is your company.


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Is your company a hedgehog?

Hedgehogs simplify a complex world into a single

organizing principle.

They leverage a single, universal, organizing principle in

which all that they are and say has significance. They use this principle as their frame of reference when

making any and all decisions.

They understand that the essence of profound insight is

simplicity.


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Some sample hedgehog concepts

SamWalton,Wal-Mart: Serving small, out-of-

the-way, rural towns.

MichaelDell, Dell Computer: Sell computer,

then build computer.

Howard Schultz, Starbucks: The concept of the

thirdplaceits not work, its not home.

Steve Jobs, Apple Computer:T

he computer forthe rest of us.


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Or is your company a fox?

Foxes, on the other hand, pursue many ends, often

unrelated and even contradictory.

They see the world in all of its complexity.

Their thought is scattered and confused, moving

on many levelsnever integrating their thinking

into one overall concept or unifying vision.


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The hedgehogs internal strategy

Hedgehogs use their single organizing principle as the lens

in which they make all decisions regarding the assets they

create, preserve, and abandon.

This is not something that will come during the course ofan afternoon planning sessiondeep understanding never

does.

But you must constantly be aware of the concept of your

one big thing as you discover the necessary insights

along the way.

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Hedgehog questions to ask yourself

Your hedgehog concept needs to be run through thefollowing test: Are we passionate about it?

Can we be best in the world at it?

Is there a sufficient economic engine to drive it?

Now ask yourself the following questions: What are the things that we are currently engaged in right now that

fail the above test?

What are things that we are already doing that meet the test that we

should continue to do? What are things that we are not doing that meet the test that we

should seriously consider doing?

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The generic internal strategies

In a very general sense, there are only a fewgeneric internal strategies you can employ.

You can:

Create new assetsLeverage the assets of another

Buy new assets

Abandon old assets

Of course, the imagination can dream up aninfinite combination of these strategies.

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Broadening and coordinating assets

The transition of a fledgling business into a growingenterprise requires a fundamental transformation ratherthan a simple scaling up.

Building a large and enduring company requires a

considerable broadening of the companys assets and theestablishment of effective mechanisms to coordinate thoseassets.

As for their asset mix, quickly growing businesses have abroad and well-coordinated portfolio of products,

relationships, know-how, and other such assets that allowthem to profitably compete in large markets.

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Not just hard assets, but soft ones

Most companies know how to leverage traditional hard

assets such as equipment, real estate, and so forth.

But these represent only a fraction of the capabilities and

advantages that companies have at their disposal. Every organization has numerous hidden assets that may

include unique customer access or relationships, technical

know-how, an installed base of equipment, a window on

the market, a network of relationships, information, or a

loyal user-community.

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Asset-based questions

Think a moment about your vision and from an

internaland creativeperspective ask yourself:

What old assets will we abandon?

What new assets will will create?

What assets can we leverage within our network?

What assets should we buy?

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Internal strategy review

When crafting your internal strategy remember:

How: Inside-out, Creative

Who: Organization

What: Assets

Result: Innovation

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Crafting External Strategy

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What is external strategy?

External strategy is about your approach to

communications.

It is built from the outside-infrom the customer

backwards.

Positioningtheory provides the body of

knowledge for crafting this type of strategy.

Its focus is purelystrategic as opposed to thecreative orientation of internal strategy.

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The origins of positioning

In their1981 book,Positioning: The Battle foryour Mind,Al Ries and JackTrout describe how positioning is used asa communication tool to reach target customers in acrowded marketplace.

Not long thereafter, Madison Avenue advertisingexecutives began to develop positioning slogans for theirclients and positioning became a key aspect of marketingcommunications.

While positioning begins with a product, its not what you

do to a product.

Positioning is what you do to the mind of the customer.

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Why positioning?

Ries and Trout explain that the concept is really aboutpositioning a product in the mindof the customer. Strategyis therefore planned in the mind, not the marketplace.

Marketing then becomes a battle of perception not

products. This approach is needed because consumers are

bombarded with a continuous stream of high-volumeadvertising.

The consumer's mind reacts to this high volume ofadvertising by accepting only what is consistent with priorknowledge or experience.

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The positioning strategies

In a very general sense, there are only a few

generic external positioning strategies you can

employ:

Getting into the mind firstfinding the niche, Positioning yourself to the leader, or

Repositioning the competition.

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The importance ofbeing first

The easiest way of getting into the mind is to be first.

As proof of this concept, answer these questions:

Who was the first person to fly solo across the North Atlantic?

Charles Lindbergh, right? Who was second?

Who was the first person to walk on the moon? Neil Armstrong,

of course. Who was second?

Whats the highest mountain in the world? Mount Everest in the

Himalayas, right? Whats the second highest?

Whats the largest-selling book ever published? The Bible, of

course. And the second largest selling book? Who knows?

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The easy way into the mind

It is very easy to remember who is first, and much more

difficult to remember who is second.

Even if the second entrant offers a better product, the first

mover has a large advantage that can make up for othershortcomings.

However, all is not lost for products that are not the first

its not about being first physically to the marketplace.

By being the first to claim a unique position in the mind of

the consumer, a firm effectively can cut through the noise

level of other products.

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Finding your unoccupied position

If a product is not going to be first, it then mustfind an unoccupied position in which it can befirst.

At a time when larger cars were popular,Volkswagen introduced the Beetle with the slogan"Think small.

Volkswagen was not the first small car, but they

were the first to claim that position in the mind ofthe consumer.

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Positioning to a leader

Consumers rank brands in their minds. If a brand is not numberone, then to be successful it somehow must relate itself to thenumber one brand.

A campaign that pretends that the market leader does not exist is

likely to fail. Avis tried unsuccessfully for years to wincustomers, pretending that the number one Hertz did not exist.Finally, it began using the line, "Avis is only No. 2 in rent-a-cars, so why go with us? We try harder."

For13 years in a row Avis lost money. After the campaign,Avis quickly became profitable. Whether Avis actually triedharder was not relevant to their success. Rather, consumersfinally were able to relate Avis to Hertz, which was number onein their minds.

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You must own your space

Remember, you must own your niche and own it

outright. No one else can occupy your space.

If you cant own it, especially from a marketing

expenditure outlay, then decrease the size of nicheuntil you can.

If somebody else occupies your chosen space you

must try to reposition them.

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Repositioning the competition

Sometimes there are no unique positions to carve out. Insuch cases, Ries and Trout suggest repositioning acompetitor by convincing consumers to view thecompetitor in a different way.

Repositioning a competitor is different from comparativeadvertising. Comparative advertising seeks to convince theconsumer that one brand is simply better than another.Consumers are not likely to be receptive to such a tactic.

Tylenol successfully repositioned aspirin by running

advertisements explaining the negative side effects ofaspirin.

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Tylenol burst the aspirin bubble

For the millions who should not take aspirin. If yourstomach is easily upsetor you have an ulceror yousuffer from asthma, allergies, or iron-deficiency anemia, itwould make sense to check with your doctor before you

take aspirin. Aspirin can irritate the stomach lining, triggerasthmatic or allergic reactions, cause small amounts ofhidden gastrointestinal bleeding. Fortunately, there isTylenol

Sixty words of ad copy before any mention of the

advertisers product. Sales ofTylenol took off. Today, Tylenol is the No. 1

brand of analgesic.

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Repositioning Stolis Competition

Consumers tend to perceive the origin of a product by itsname rather than reading the label to find out where itreally is made.

Such was the case with vodka when most vodka brands

sold in the U.S. were made in the U.S. but had Russiannames.

Stolichnaya Russian vodka successfully repositioned itsRussian-sounding competitors by exposing the fact thatthey all actually were made in the U.S. (by listing the cities

they were produced in) and that Stolichnaya was made inLeningrad, Russia.

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Repositioning Pringles

When Pringle's new-fangled potato chips were introduced,they quickly gained market share.

However, Wise potato chips successfully repositionedPringle's in the mind of consumers by listing some of

Pringle's non-natural ingredients that sounded like harshchemicals, even though they were not.

Wise potato chips of course, contained only "Potatoes.Vegetable oil. Salt.

As a result of this advertising, Pringle's quickly lost marketshare, with consumers complaining that Pringle's tastedlike cardboard, most likely as a consequence of theirthinking about all those unnatural ingredients.

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The United States of Columbus?

As every school child knows, the man who discovered Americawas poorly rewarded for his efforts. Christopher Columbusmade the mistake of looking for gold and keeping his mouthshut.

Amerigo Vespucci didnt. Amerigo was 5 years behindColumbus. But he did two things right.

First, he positionedthe New World as a separate continent,totally distinct from Asia. Second, he wrote extensively of hisdiscoveries. Both brilliant external strategies.

As a result, Europeans credited Amerigo Vespucci with thediscovery of Amercia and named the place after him.

Columbus died in jail.

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Other positioning examples

Other positions that firms successfully have

claimed include:

age (Geritol)

high price (Mobil 1 synthetic engine lubricant) gender (Virginia Slims)

time of day (Nyquil night-time cold remedy)

place of distribution (L'eggs in supermarkets)

quantity (Schaefer - "the one beer to have when you'rehaving more than one.")

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You must begin with the customer

All successful external strategies must start with the mind

of the consumer and then work backward.

This is true because the answer is not contained within the

product or service itself.

No amount of creative thinking or analysis will result in

the insights needed to successfully position your company,

product, or service.

The answer rests instead in the mind of your customer.

You must begin with whats already there and then work

backwardsoutside-into create your external strategy.

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To create your external strategy

Ask yourself, What position do I own now?

External strategy is thinking in reverse. Instead of starting

with yourself, you start with the mind of the prospect.

Instead of asking what you are, you ask what position youalready own in the mind of the prospect.

Changing minds in our over-communicated society is an

extremely difficult task. Its much easier to work with

whats already there.

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What position do you want to own?

Next, ask yourself, What position do I want toown?

Ask yourself, How can I be thefirstto claim a

unique position in the mind of my customer. Here is where you try to figure out the best

position to own from a long-term perspective.

Own is the key word. Too many programs set

out to communicate a position that is impossible topreempt because someone else already owns it.

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External strategy review

When crafting your external strategy remember:

How: Outside-in,Strategic

Who: Customer

What: Communications Result: Positioning

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Presenting Strategy As Story

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Presenting a strategy

The methods, craft, and techniques by which you present a

strategy are different from those used to create it.

Contrary to conventional wisdom, PowerPoint

presentations, statistics, and rational argument-style

methods are not the most effective ways to communicate

your strategic plan.

Entrepreneurial leaders know the best way to engage

listeners on a whole new level is to toss the rational,

statistical presentations and learn to tell good storiesinstead.

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The importance of persuasion

Persuasion is the centerpiece of business activity.

Customers must be convinced to buy your companysproducts or services, employees and colleagues to go alongwith a new strategic plan or reorganization, investors to

buy (or not to sell) your stock, and partners to sign the nextdeal.

But despite the critical importance of persuasion, mostentrepreneurs struggle to communicate, let alone inspire.

Even the most carefully researched and considered effortsare routinely greeted with cynicism, lassitude, or outrightdismissal.

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Persuasion using rhetoric

A big part of an entrepreneurs job is to motivate people toreach certain goals.

To do that, he or she must engage their emotions, and the key totheir hearts is story.

There are two ways to persuade people. The first is by usingconventional rhetoric, which is what most business people aretrained in.

Its an intellectual process, and in the business world it usuallyconsists of a PowerPoint slide presentation in which you say,Here is our companys biggest challenge, and here is what weneed to do to prosper. And you build your case by givingstatistics and facts and quotes from authorities.

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The problem with rhetoric

But there are two problems with rhetoric.

First, the people youre talking to have their ownset of authorities, statistics, and experiences.

While youre trying to persuade them, they arearguing with you in their heads.

Second, if you do succeed in persuading them,youve done so only on an intellectual basis.Thats not good enough, because people are notinspired to act by reason alone.

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The other way to persuade

The other way to persuade peopleand ultimately

a much more powerful wayis by uniting an idea

with an emotion.

The best way to do that is by telling a compellingstory.

In a story, you not only weave a lot of information

into the telling but you also arouse your listeners

emotions and energy.

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Harnessing the imagination

Persuading with a story is hard.

Any intelligent person can sit down and make lists. It takes

rationality but little creativity to design an argument using

conventional rhetoric.

But it demands vivid insight and storytelling skill to

present an idea that packs enough emotional power to be

memorable.

If you can harness imagination and the principles of a well-

told story, then you get people rising to their feet amidthunderous applause instead of yawning and ignoring you.


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Dealing with opposing forces

A good storyteller describes what its like to dealwith these opposing forces, calling on theprotagonist to dig deeper, work with scarceresources, make difficult decisions, take actiondespite risks, and ultimately discover the truth.

All great storytellers since the dawn of timefrom the ancient Greeks through Shakespeare andup to the present dayhave dealt with this

fundamental conflict between subjectiveexpectation and cruel reality.

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Humans want stories

Stories have been implanted in you thousands of times since your

mother took you on her knee. Youve read good books, seen

movies, attended plays.

Whats more, human beings naturallywantto work through

stories. Cognitive psychologists describe how the human mind, in its

attempt to understand and remember, assembles the bits and pieces

of experience into a story, beginning with a personal desire, a life

objective, and then portraying the struggle against the forces that

block that desire.

Stories are how we remember; we tend to forget lists and bullet

points.

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Telling strategic stories

Businesspeople not only have to understand their

companies past, but then they must project the future.

And how do you imagine the future? As a story.

You create scenarios in your head of possible future eventsto try to anticipate the life of your company or your own

personal life.

So, if a businessperson understands that his or her own

mind naturally wants to frame experience in a story, the

key to moving an audience is not to resist this impulse butto embrace it by telling a good story.

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What makes a good story?

You emphatically do not want to tell a beginning-to-endtale describing how results meet expectations.

This is boring and banal. Instead, you want to display thestruggle between expectation and reality in all its nastiness.

For example: Lets imagine the story of a biotech start-up well call Chemcorp,

whose CEO has to persuade some Wall Street bankers to invest inthe company. He could tell them that Chemcorp has discovered achemical compound that prevents heart attacks and offer up a lot ofslides showing them the size of the market, the business plan, theorganizational chart, and so on. The bankers would nod politelyand stifle yawns while thinking of all the other companies betterpositioned in Chemcorps market.

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The alternative pitch

Alternatively, the CEO could turn his pitch into a story,

beginning with someone close to himsay, his father

who died of a heart attack.

So nature itself is the first antagonist that the CEO-as-

protagonist must overcome.

The story might unfold like this:

In his grief, he realizes that if there had been some chemical

indication of heart disease, his fathers death could have been

prevented. His company discovers a protein thats present in theblood just before heart attacks and develops an easy-to-administer,

low-cost test.

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The story continues

But now Chemcorp faces a new antagonist: the FDA. The

approval process is fraught with risks and dangers.

The FDA turns down the first application, but new

research reveals that the test performs even better than

anyone had expected, so the agency approves a second

application.

Meanwhile, Chemcorp is running out of money, and a key

partner drops out and goes off to start his own company.

Now Chemcorp is in a fight-to-the-finish patent race.

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The resolution

This accumulation of antagonists creates great suspense. The

protagonist has raised the idea in the bankers heads that the

story might not have a happy ending.

By now, he has them on the edges of their seats, and he says,

We won the race, we got the patent, were poised to go publicand save a quarter-million lives a year.

And the bankers just throw money at him.

Screenwriting coach Robert McKee can attest to these results:

I know that the storytelling method works, because after I

consulted with a dozen corporations whose principals told

exciting stories to Wall Street, they all got their money.

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Character versus characterization

Characterization is the sum of all observable qualities of a

person or organizationbut its not character.

Beneath the surface of characterization, regardless of

appearances, character answers the question: Who is the

organization?

The only way to know the truth is to witness it making

choices under pressure to take one action or another in the

pursuit of its desire.

Pressure is essential. Choices made when nothing is at riskmean little.

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Business presentations and character Most business presentations and business plans only present the

characterization of an organization. For Example:

Chemcorp is a multinational manufacturer of pharmaceutical-basedchemical products with revenues of $1.8 billion. This is strictlycharacterization or boring, rational description.

Character, on the the other hand, would explain what Chemcorpwould do when it discovers that a drug it has developed for riverblindness was not going to be paid for by the government or otherthird party. It must make a choice under pressure.

This was exactly the dilemma faced by pharmaceutical-maker

Merck after it had developed Mectizan. Merck chose to give thedrug away free to all who needed itat its own expensethis ischaracter.

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Positioning your problems upfront

If entrepreneurs would take the time to psychoanalyze their

companies, amazing dramas pour out.

But most companies and entrepreneurs sweep the dirty

laundry, the difficulties, the antagonists, and the struggle

under the carpet.

They prefer to present a rosyand boringpicture to the

world. But as a storyteller, you want to position the problems

in the foreground and then show how youve overcome them.

When you tell the story of your struggles against realantagonists, your audience sees you as an exciting, dynamic

person.

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The problems of a positive picture

The problem with a positive picture is it doesnt ring true.

You can send out a press release talking about increasedsales and a bright future, but your audience knows itsnever that easy.

They know youre not spotless; they know your competitordoesnt wear a black hat. They know youve slanted yourstatement to make your company look good.

Positive, hypothetical pictures and boilerplate pressreleases can actually work against you because they

foment distrust among the people youre trying toconvince.

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How to discover your strategic story

The storyteller discovers a story by asking certain

key questions.

First, what does my protagonist want in order to

restore balance in his or her life? Desire is the blood of a story.

Desire is not a shopping list but a core need that, if

satisfied, would stop the story in its tracks.


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The choices made under pressure

Next, ask how would my protagonist decide to act in orderto achieve his or her desire in the face of these antagonisticforces?

Its in the answer to that question that storytellers discover

the truth of their characters, because the heart of a humanbeing is revealed in the choices he or she makes underpressure.

Finally, the storyteller leans back from the design of eventshe or she has created and asks, Do I believe this? Is it

neither an exaggeration nor a soft-soaping of the struggle?Is this an honest telling, though heaven may fall?

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The craft of story

Designing story tests the maturity and insight of the writer,

his knowledge of society, nature, and the human heart. Story

demands both vivid imagination and powerful analytic

thought.

All stories must have a form, but form does not meanformula. Story is too rich in mystery, complexity, and

flexibility to be reduced to a formula.

There is no magic formula for you to use in crafting a story to

present your strategic planthere is only craft. A wonderful book about this craft is Robert McKees Story:

Substance, Style, and the Principles ofScreenwriting.

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The Secrets OfOrganizing Genius

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The importance of execution

Having a strategic plan is one thing, but the otherhalf of the equation is of course theimplementation of the plan.

For the entrepreneur, implementation is at least asimportant as the development of a sound strategy.

Indeed for many entrepreneurial firms, superiorexecution can be the strategy.

The next two sections examine what the bestentrepreneurs know about strategic execution.

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The myth of the lone hero

There is a strong individualistbent in American culture.

The myth of the triumphant individual is deeply ingrained

in the American psyche.

Whether it is midnight rider Paul Revere or basketballsMichael Jordan, we are a nation enamored of heroes.

But the more you look at the history of business,

government, the arts, and the sciences, the clearer it is that

few great accomplishments are ever the work of a single

individual.

Our mythology refuses to catch up with our reality.

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Consider your own perceptions

Who painted the ceiling of the Sistine Chapel?

The famous Renaissance artist Michelangelo

right?

Actually, this misconception is a result of ourindividualist cultural mythology.

We know now from historical accounts that

Michelangelo actually worked with a group of13

artists in painting the ceiling of the Sistine Chapel.

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The dark side to American ideology

Our mythology continues to promote the triumphs of the

great individual at the expense of the great group or team.

But the group is the vehicle how the world actually gets

changed today.

In a society as complex and technologically sophisticated

as ours, the most urgent projects require the coordinated

contributions of many talented people.

There are simply too many problems to be identified and

solvedtoo many connections to be made for any oneperson to deal with.

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The need for organizing genius

Even as we make the case for collaboration, we resist the idea of

collective creativity. But many great entrepreneurs throughout

history have understood the limitations and dark-side of the hero

mythology.

Instead, they have systematically organized genius and thepower of great groups in getting their visions brought to life.

And this is the precise skill and discipline you must practice if

you expect to bring your strategic plan to life.

Your only chance is to bring people together from a variety of

backgrounds and disciplines who can refract a problem through

the prism of complementary minds allied in common purpose.

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The secrets of great groups

In order to study how great groups work, Warren Bennis inhis book, Organizing Genius: The Secrets ofCreativeCollaboration, studied some of the most noteworthy of ourtime, including:

the Manhattan Project, the paradigmatic Great Group that inventedthe atomic bomb;

the computer revolutionaries at Xerox's Palo Alto Research Center(PARC) and at Apple Computer, whose work led to the Macintoshand other technical breakthroughs;

the Lockheed Skunk Works, which pioneered the fast, efficient

development of top-secret aircraft; and the Walt Disney Studio animators.

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The 10 principles of great groups

Every great group is extraordinary in its own way, but a

study put forth by Bennis suggests 10 principles common

to alland that apply as well to their larger organizations.

These principles not only define the nature of Great

Groups, they also redefine the roles and responsibilities of

leaders.

To be sure, Great Groups rely on many long-established

practices of good managementeffective communication,

exceptional recruitment, genuine empowerment, andpersonal commitment.

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A shared dream

At the heart of every Great Group is a shareddream.

All Great Groups believe that they are on a

mission from God, that they could change theworld, make a dent in the universe.

They are obsessed with their work. It becomes nota job but a fervent quest.

T

hat belief is what brings the necessary cohesionand energy to their work.

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They manage conflict

They manage conflict by abandoning individual egos to thepursuit of the dream.

At a critical point in the Manhattan Project, GeorgeKistiakowsky, a great chemist who later served as Dwight

Eisenhower's chief scientific advisor, threatened to quitbecause he couldn't get along with a colleague.

Project leader Robert Oppenheimer simply said, George,how can you leave this project? The free world hangs inthe balance.

So conflict, even with these diverse people, is resolved byreminding people of the mission.

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They are protected from the "suits

All Great Groups seem to have disdain for their corporate overseers

and all are protected from them by a leadernot necessarily the

leader who defines the dream. This dual administration can be

found in all great groups.

In the Manhattan Project, for instance, General Leslie Grove kept the

Pentagon brass happy and away, while Oppenheimer kept the group

focused on its mission.

At Xerox PARC, Bob Taylor kept the honchos in Connecticut

(referred to by the group as "toner heads") at bay and kept the group

focused.

Kelly Johnson got himself appointed to the board of Lockheed to help

protect his Skunk Works. In all cases, physical distance from

headquarters helped.

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They have a real or invented enemy

Even the most noble mission can be helped by an onerousopponent.

That was literally true with the Manhattan Project, which hadreal enemiesthe Japanese and the Nazis.

Yet most organizations have an implicit mission to destroy anadversary, and that is often more motivating than their explicitmission.

During their greatest years, for instance, Apple Computer'simplicit mission was, Bury IBM. (The famous 1984 MacintoshTV commercial included the line, "Don't buy a computer you

can't lift.") The decline of Apple follows the subsequentsoftening of their mission.

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They see themselves as the winning

underdogs. All successful entrepreneurs inevitably view

themselves as the feisty David, hurling fresh ideasat the big, backward-looking Goliath.

World-changing groups are usually populated bymavericks, people at the periphery of theirdisciplines.

The sense of operating on the fringes gives them a

don't-count-me-out scrappiness that feeds theirobsession.

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Members pay a personal price

Membership in a Great Group isn't a day job; it is a nightand day job.

Divorces, affairs, and other severe emotional fallout aretypical, especially when a project ends.

At the Skunk Works, for example, people couldn't even telltheir families what they were working on. They werelocated in a cheerless, rundown building in Burbank, of all

places, far from Lockheed's corporate headquarters andmain plants.

So groups strike a Faustian bargain for the intensity andenergy that they generate.

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Great Groups make strong leaders

On one hand, they're all nonhierarchical, open, and very

egalitarian.

Yet they all have strong leaders. That's the paradox of

group leadership.

You cannot have a great leader without a Great Group

and vice versa. In an important way, these groups made the

leaders great.

The leaders studied were seldom the brightest or best in the

group, but neither were they passive players. They wereconnoisseurs of talent, more like curators than creators.

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The product of meticulous recruiting

It took Oppenheimer to get a Kistiakowsky and a Niels

Bohr to come to his godforsaken outpost in the desert.

Cherry-picking the right talent for a group means knowing

what you need and being able to spot it in others. It also

means understanding the chemistry of a group.

Candidates are often grilled, almost hazed, by other

members of the group and its leader. You see the same

thing in great coaches. They can place the right people in

the right role. And get the right constellations andconfigurations within the group.

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Great Groups are usually young

The average age of the physicists at Los Alamos was about25. Oppenheimer"the old manwas in his 30s.

Youth provides the physical stamina demanded by thesegroups. But Great Groups are also young in their spirit,

ethos, and culture. Most important, because they're young and naive, group

members don't know what's supposed to be impossible,which gives them the ability to do the impossible.

As Berlioz said about Saint-Saens, "He knows everything;

all he lacks is inexperience." Great Groups don't lack theexperience of possibilities.

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Getting the right people on the bus

In a similar way, research into what transforms good

companies into great companies conducted by

management author Jim Collins in his book, Good To

Great, found many similar group characteristics as

compared to what Warren Bennis found. Collins used the metaphor of getting the right people on

the bus and in the right seats (and the wrong people off the

bus).

And only then did the good-to-great companies figure outwhere they wanted to drive it.

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Start with who, then ask what

In working with your vision, if you begin with who, ratherthan what, you can more easily adapt to a changing world. If

people join the bus primarily because of where it is going, whathappens if you get ten miles down the road and you need tochange direction? Youve got a problem.

But if people are on the bus because of who else is on the bus,then its much easier to change direction: Hey, I got on this bus

because of who else is on it; if we need to change direction to bemore successful, fine with me.

If you have the wrong people, it doesnt matter whether you

discover the right direction; you still wont have a greatcompany. Great vision without great people is irrelevant.

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The entrepreneurial leader

In the end, the single job of the entrepreneurial

leader is to instill effort with meaning.

Documents

8. Strategic Planning and Execution (Power Point Show)