The Five Key Elements of The Five Key Elements of Strategic PlanningStrategic Planning

Delivered For: Vistage 9017Delivered For: Vistage 9017

Date: July 19, 2007Date: July 19, 2007

Presented by: Jim AlampiPresented by: Jim Alampi

The CEO TuneUp IIThe CEO TuneUp II

Jim AlampiJim Alampi

April 21, 2023April 21, 2023

Alampi & Associates, LLCAlampi & Associates, LLC

Great CompaniesGreat Companies

The 11 Great companies had aThe 11 Great companies had a5 times multiple in profit 5 times multiple in profit

performance and a 10 times performance and a 10 times multiple in valuation multiple in valuation

compared to the Good companies.compared to the Good companies.Good to GreatGood to Great, Jim Collins, Jim Collins

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Our Agenda TodayOur Agenda Today

• The 5 Key Elements of Strategic PlanningThe 5 Key Elements of Strategic Planning– Core ValuesCore Values– PurposePurpose– MissionMission– BHAGBHAG– HedgehogHedgehog

• The One Page TranslatorThe One Page Translator – getting your strategic – getting your strategic plan onto one page so you can execute itplan onto one page so you can execute it

• Execution and ResultsExecution and Results

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High-performing CompaniesHigh-performing Companies

Companies don’t fail for lack of vision. Companies don’t fail for lack of vision. They fail because they cannot They fail because they cannot

translate their vision into execution.translate their vision into execution.

Vision without execution is Vision without execution is hallucination.hallucination.

Companies don’t fail for lack of vision. Companies don’t fail for lack of vision. They fail because they cannot They fail because they cannot

translate their vision into execution.translate their vision into execution.

Vision without execution is Vision without execution is hallucination.hallucination.

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High-performing CompaniesHigh-performing Companies

““Great performance is about 1% Great performance is about 1% vision and 99% alignment”vision and 99% alignment”

Jim CollinsJim CollinsBuilt to LastBuilt to Last

““Great performance is about 1% Great performance is about 1% vision and 99% alignment”vision and 99% alignment”

Jim CollinsJim CollinsBuilt to LastBuilt to Last

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One Page Translator™One Page Translator™

How does a company translate its visionHow does a company translate its vision into execution and results? into execution and results?

It all starts with a vision (core ideology) It all starts with a vision (core ideology) and then a specific plan and processand then a specific plan and process

to execute that vision to execute that vision

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One Page TranslatorOne Page Translator™™

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One Page TranslatorOne Page Translator™™

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Core ValuesCore Values• Not as important Not as important whatwhat they are but that an they are but that an

organization organization hashas them them• Small set of essential and enduring tenetsSmall set of essential and enduring tenets• Already exist and need to be Already exist and need to be discovereddiscovered• Do not change in response to market conditionsDo not change in response to market conditions• Should be evident to allShould be evident to all

““We would hold onto our Core Values even if We would hold onto our Core Values even if they became a competitive disadvantage”they became a competitive disadvantage”

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The Value of Core ValuesThe Value of Core Values

• Daily reinforcement of behaviorDaily reinforcement of behavior• ““Moments of Truth” * Moments of Truth” * • Hiring process – interviewingHiring process – interviewing• Performance management processPerformance management process

* Moments of Truth* Moments of Truth, Jan Carlzon, 1987, Jan Carlzon, 1987

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The Hiring MatrixThe Hiring MatrixValues Values

AlignmentAlignment

Experience & SkillsExperience & Skills

HH

HHLL

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The Values ModelThe Values Model

AspirationalAspirationalPermissionPermissionTo PlayTo Play

AccidentalAccidental

CoreCoreValuesValues

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Discovering Core ValuesDiscovering Core Values

Jim Collins Martian exercise and modelJim Collins Martian exercise and model• Identify candidates who Martians should observeIdentify candidates who Martians should observe• Capture two or three key attributes from eachCapture two or three key attributes from each• Look for similarities and consolidate into five to sixLook for similarities and consolidate into five to six• Sort into Core, PTP, Accidental & Aspirational valuesSort into Core, PTP, Accidental & Aspirational values• Divide up, write one sentence descriptions and agreeDivide up, write one sentence descriptions and agree• Snicker-test allSnicker-test all• Reconvene, review and modify as requiredReconvene, review and modify as required• Rollout carefully and Rollout carefully and withoutwithout splash splash

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PurposePurpose

• An organization’s reason for being - Answers the An organization’s reason for being - Answers the question question “Why do we exist?”“Why do we exist?”

• Lasts the life of the leader / founder(s)Lasts the life of the leader / founder(s)• A star on the horizon (forever pursued, never reached)A star on the horizon (forever pursued, never reached)• Internal useInternal use

To get at purpose, ask “Why” five timesTo get at purpose, ask “Why” five times

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Why does your company exist?Why does your company exist?““We provide automotive intelligence”We provide automotive intelligence”

Why?Why?““Because the OEM’s need it”Because the OEM’s need it”

Why?Why?““To select the best potential dealers”To select the best potential dealers”

Why?Why?““It increases the new dealer success rate”It increases the new dealer success rate”

Why?Why?““It improves their decision-making”It improves their decision-making”

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R.L. PolkR.L. Polk

Purpose: We help people make Purpose: We help people make better decisions.better decisions.

Purpose: We help people make Purpose: We help people make better decisions.better decisions.

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Purpose ExamplesPurpose Examples

• 3M: To solve unsolved problems innovatively3M: To solve unsolved problems innovatively• Cargill: To improve the standard of living around the Cargill: To improve the standard of living around the

worldworld• Mary Kay: To give unlimited opportunity to womenMary Kay: To give unlimited opportunity to women• Merck: To preserve and improve human lifeMerck: To preserve and improve human life• Wal-Mart: To give ordinary folk the chance to buy Wal-Mart: To give ordinary folk the chance to buy

the same things as rich peoplethe same things as rich people• Disney: To make people happyDisney: To make people happy

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MissionMission

• Should answer the questions:Should answer the questions: What Business are we in?What Business are we in? What do we do every day to achieve our Purpose?What do we do every day to achieve our Purpose?

• Long-term time horizonLong-term time horizon• Can drive a tag line or an “elevator pitch”Can drive a tag line or an “elevator pitch”• External useExternal use

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““Elevator Statement”Elevator Statement”

WeWe provide (product or service) provide (product or service)

ForFor (target customers) (target customers)

WhoWho (statement of need or opportunity) (statement of need or opportunity)

TheThe (product/service name or category) (product/service name or category)

ThatThat (statement of key benefit) (statement of key benefit)

UnlikeUnlike (primary competitive alternative) (primary competitive alternative)

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Jim Collins’ Hedgehog?Jim Collins’ Hedgehog?

““The fox knows many things, but the hedgehog knows one big thing”The fox knows many things, but the hedgehog knows one big thing”Isaiah Berlin

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HedgehogHedgehog

• What kind of work, customers, business are we really What kind of work, customers, business are we really passionate about?passionate about?

• What What can wecan we be best in the world at (and what is our be best in the world at (and what is our world)?world)?

• What drives our economic engine (profit / X)?What drives our economic engine (profit / X)?

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HedgehogHedgehog

PASSIONATECAN BEBEST INWORLD

ECONOMICENGINE

““Hedgehog is a great Hedgehog is a great filter to test new filter to test new opportunities against opportunities against to assure a company to assure a company remains focused on remains focused on key areas”key areas”

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Hedgehog ExamplesHedgehog Examples

• WalgreensWalgreens– The best, most convenient drugstores with high profit per The best, most convenient drugstores with high profit per

customer visit.customer visit.

• Wells FargoWells Fargo– Run a bank like a business with a focus on the Western United Run a bank like a business with a focus on the Western United

States.States.

• AbbottAbbott– The best company in the world at creating products that make The best company in the world at creating products that make

health care more cost effective.health care more cost effective.

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Hedgehog or Fox?Hedgehog or Fox?

• HedgehogsHedgehogs– Simplify complex issuesSimplify complex issues

– Focus on a single idea, Focus on a single idea, concept or visionconcept or vision

– Unify multiple visions and Unify multiple visions and guide actionsguide actions

• Anything that does not relate Anything that does not relate to the Hedgehog idea holds to the Hedgehog idea holds little relevancelittle relevance

• FoxesFoxes– Pursue many ends at the Pursue many ends at the

same timesame time

– See the world in all its See the world in all its complexitycomplexity

– Are scattered and diffused, Are scattered and diffused, moving on numerous levelsmoving on numerous levels

– Never integrate thinking into a Never integrate thinking into a single overall concept or single overall concept or unified visionunified vision

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BHAGBHAG

• At least 10 years out (10-30 years)At least 10 years out (10-30 years)• Has to reinforce core values, purpose and business Has to reinforce core values, purpose and business

fundamentalsfundamentals• Need a clear finish lineNeed a clear finish line• A catalyst that can drive emotionsA catalyst that can drive emotions• Gulp factor; audacious but not braggadociosGulp factor; audacious but not braggadocios• The center or “sweet spot” of your HedgehogThe center or “sweet spot” of your Hedgehog

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Four Types of BHAG’sFour Types of BHAG’s

• Target BHAG – qualitative or quantitativeTarget BHAG – qualitative or quantitative

• Common enemy BHAGCommon enemy BHAG

• Role model BHAGRole model BHAG

• Internal transformation BHAGInternal transformation BHAG

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BHAG ExamplesBHAG Examples

• Become a $125 billion company by the year 2000 Become a $125 billion company by the year 2000 (Wal-Mart, 1990)(Wal-Mart, 1990)

• Become the dominant player in commercial aircraft Become the dominant player in commercial aircraft and bring the world into the jet age (Boeing, 1950)and bring the world into the jet age (Boeing, 1950)

• Become the Harvard of the West (Stanford, 1940’s)Become the Harvard of the West (Stanford, 1940’s)

• Crush Adidas (Nike, 1960’s)Crush Adidas (Nike, 1960’s)

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Strategic Thinking MapStrategic Thinking Map

BHAGBHAG 10 – 15 Years10 – 15 Years

HedgehogHedgehog 3 – 10 Years3 – 10 Years

ThrustsThrusts 3 Years3 Years

InitiativesInitiatives 1 Year1 Year

RocksRocks 90 Days90 Days

Vision

Core Values

Purpose

Mission

SWOT

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Leadership Habits Drive ExecutionLeadership Habits Drive Execution

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Leadership Habits Drive ExecutionLeadership Habits Drive Execution

The Rockefeller Habits

• Priorities - Top 5 and #1 of 5

• Rhythm – Executive team meetings

• Data Driven - MetricsTitan, Ron Chernow

Biography of John D. Rockefeller

Mastering the Rockefeller Habits, Verne Harnish

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The Rockefeller HabitsThe Rockefeller Habits

1.1. PrioritiesPriorities - Top 5 and #1 of 5 - Top 5 and #1 of 5

2.2. RhythmRhythm – Executive team meetings – Executive team meetings

3.3. Data DrivenData Driven - Metrics - Metrics

Titan, Ron Chernow

Biography of John D. Rockefeller

Mastering the Rockefeller Habits, Verne Harnish

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Habit #1 - PrioritiesHabit #1 - Priorities

• Ivy LeeIvy Lee• Top 5 focus areas (maximum)Top 5 focus areas (maximum)• Issues where executive Issues where executive teamteam focus will have greatest focus will have greatest

impact for the companyimpact for the company• Know the Top #1Know the Top #1• For the Current Year and QuarterFor the Current Year and Quarter• For Company / Department / Individual levelsFor Company / Department / Individual levels

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The 3 Rockefeller HabitsThe 3 Rockefeller Habits

1.1. PrioritiesPriorities - Top 5 and #1 of 5 - Top 5 and #1 of 5

2.2. RhythmRhythm – Executive team meetings – Executive team meetings

3.3. Data DrivenData Driven - Metrics - Metrics

Titan, Ron Chernow

Biography of John D. Rockefeller

Mastering the Rockefeller Habits, Verne Harnish

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Rhythm is all about FrequencyRhythm is all about Frequency

Increase the frequency and you will Increase the frequency and you will naturally increase the resultsnaturally increase the results

Activity

Time

ActivityTime

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Habit #2 - RhythmHabit #2 - Rhythm

• Annual executive team off-site – 2 days Annual executive team off-site – 2 days

• Quarterly executive team off-site – 1 day Quarterly executive team off-site – 1 day

• Monthly management meeting - ½ dayMonthly management meeting - ½ day

• Weekly executive team meeting/call – 60 - 90 min.Weekly executive team meeting/call – 60 - 90 min.

• Daily huddle or call – 15 minutes maximumDaily huddle or call – 15 minutes maximum

““This structured format utilizes less than 10% This structured format utilizes less than 10% of an executive team’s total time”of an executive team’s total time”

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The 3 Rockefeller HabitsThe 3 Rockefeller Habits

1.1. PrioritiesPriorities - Top 5 and #1 of 5 - Top 5 and #1 of 5

2.2. RhythmRhythm – Executive team meetings – Executive team meetings

3.3. Data DrivenData Driven - Metrics - Metrics

Titan, Ron Chernow

Biography of John D. Rockefeller

Mastering the Rockefeller Habits, Verne Harnish

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Habit #3 – Data DrivenHabit #3 – Data Driven

• Standard Corporate NumbersStandard Corporate Numbers– Financial and operational numbers / ratiosFinancial and operational numbers / ratios– Rear-view lookRear-view look

• Smart NumbersSmart Numbers– Typically 3 in any organizationTypically 3 in any organization– Leading indicators around Business DriversLeading indicators around Business Drivers

• Critical NumberCritical Number– 1 or 2 Numbers targeted to a Critical Weakness1 or 2 Numbers targeted to a Critical Weakness– Targeted for a specific period of time (e.g., Quarter)Targeted for a specific period of time (e.g., Quarter)

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The Right MeasurementsThe Right Measurements

• Graph it (actual against plan, etc.)Graph it (actual against plan, etc.)

• Visual - get it up and around the organizationVisual - get it up and around the organization

• Frequent - 6 data points to spot a trend Frequent - 6 data points to spot a trend

• Measure what’s important, not what’s easyMeasure what’s important, not what’s easy

• Absolute numbers vs. %’s - choose which is appropriate for Absolute numbers vs. %’s - choose which is appropriate for the measurementthe measurement

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SummarySummary

• The 5 Key Elements of Strategic PlanningThe 5 Key Elements of Strategic Planning– Core ValuesCore Values– PurposePurpose– MissionMission– BHAGBHAG– HedgehogHedgehog

• The One Page TranslatorThe One Page Translator – getting your strategic – getting your strategic plan onto one page so you can execute itplan onto one page so you can execute it

• Execution and ResultsExecution and Results

04/21/23