Here’s what’s growing:

• Shortage of raw materials and development of new materials: With the cost of oil on the rise, demand for non petro-chemical-based materials is increasing. Same goes for other natural resources.
• Increasing population: By 2050, the global population is estimated to reach 9.2 billion people.
• Environmental sustainability: Huge opportunities exist with reusing, recycling, and creating biodegradable products. Clean energy is booming with solar cells, wind turbines, and eliminating preventable energy loss.

Leave it to DuPont to develop a product to replace plastic. Its newest product is called Sorona, a corn-based version of plastic. DuPont clearly identified the growing threat of high oil prices, and turned it into an opportunity by creating a solution. Sorona, referred to as the new nylon, is expected to hit the streets in a few years and could soon be in everything from underwear to carpet.

A strategic plan provides a business with the roadmap it needs to pursue a specific strategic direction and set of performance goals, deliver customer value, and be successful. However, this is just a plan; it doesn’t guarantee that the desired performance is reached any more than having a roadmap guarantees the traveler arrives at the desired destination. Remarkably, the majority of companies who have strategic plans fail to implement them. In fact, according to a Fortune cover story in 1999, nine out of ten organizations fail to implement their strategic plan.

We believe the new execution module helps you plan more effectively and use your time more efficiently to make more informed decisions with features like at-a-glance tracking that identifies goals and action items as completed, pending or overdue. But we encourage you not to overlook the components necessary for supporting a successful implementation. Consider these five key elements:

1. People – Make sure you surround yourself with the right people on board with the right competencies and skills to support your plan.
2. Resources – You’ll need sufficient funds and enough time to support implementation. True costs can include a realistic time commitment from your staff  to achieve a goal, a clear identification of expenses associated, or unexpected cost overruns by a vendor. Be prepared as well that employees will need enough time to implement what may be additional activities that they aren’t currently performing.
3. Structure – Be sure to set your structure of management, appropriate lines of authority, and clear lines of communication with your employees. A plan administrator and regular strategy meetings are two of the easiest ways to put a structure in place.
4. Systems – Both management and technology systems help track the progress of the plan and make it faster to adapt to changes. Be sure to include milestones with achievements and specified time frames as part of you plan.
5. Culture – Create an environment that connects your employees to the organization’s mission and that makes them feel comfortable. You can reinforce the importance of focusing on strategy and vision by rewarding success. There should be some creative positive and negative consequences for achieving or not achieving the strategy so people make it a priority.

Consider G-Sky, a Vancouver, British Columbia, company that installs
green roofs – vegetation and soil covered roofs that help lower heating
and air-conditioning costs along with dramatically reducing rainwater
runoff. According to an article in Business 2.0, the total square
footage of green roofs in the United States is already growing at the
healthy rate of 125 percent a year, and now some entrepreneurs like
G-Sky are “placing (their) bets on something even more
forward-thinking: green walls”.

Green walls can provide as much bill-saving insulation as green roofs,
and they put less load-bearing strain on the building. They can also
help offset the urban heat island effect caused by heat-absorbing city
surfaces that can raise temperatures as much as 8 degrees higher than
the surrounding countryside. When G-Sky started looking long-term, they
saw a world where “carbon-trading is king and companies are eager to
offset their greenhouse gas emissions”. Now, G-Sky is installing
plant-filled wall panels that can go on any vertical surface – meaning
that “G-Sky just quintupled its opportunity” since for every roof there are four walls. Early G-Sky clients include Whole Foods and the W Hotel chain.

What can we learn from this trailblazer?

• Build on your company’s strengths: Your strengths
  encompass everything that your company does well. Consider your
  company’s capabilities, skills and resources and draw on them to
  execute plans and actions.
• Consider your operational processes: What do you
  already excel at that might have other applications? G-Sky identified
  an opportunity to grow their business 4X with their existing expertise!
• Capitalize on any opportunities that may exist: Keep in mind that opportunities may be political, social, environmental or technological.

• In the general administration area, the newspaper’s invoices only offered one method of payment, when there were actually three ways to pay. The publisher immediately revised the invoices to include all options. The cost to the company was next to nothing as they were computer-generated. Decrease in delinquent accounts: 40 percent.
• In the human resource management area, the organization’s high turnover rate made customers question the viability of the newspaper. The publisher instituted a more rigorous hiring process that included a third-party skills and personality assessment to make sure theat the right people were "on the bus."
• In the area of technology, the newspaper didn’t have an online renewal form. This feature was quickly added, which allowed subscribers to maintain their subscriptions with a click of their mouse instead of calling, faxing, or snail mailing in their renewal forms.

Don’t these changes seem obvious and straight-forward? It’s easier to see the errors of others or after someone points them out to you. Well, it wasn’t until the publisher used the value chain that he realized where the links were broken. The organization’s core product is highly regarded in the community, but the supporting activities were hindering business growth.

Want a good example of franchising? Great Harvest Bakery has successfully opened 206 franchises nationwide with an unusually loose model. The company encourages entrepreneurial spirit and open communication between storeowners, who enjoy the freedom to run their businesses their way. In fact, the Uniform Franchise Offering reads: "Anything not expressly prohibited is allowed." Because the company is privately held, financial information isn’t available, but its continued growth, with 13 stores expected to open this year, is an indicator that the company developed a very successful partnership model.

Wonder why you wouldn’t want to franchise?  Check out Jamba Juice, the maker of fruit-juice smoothies. They backed away from franchising as a growth strategy specifically because of the inability to control product quality. At the time the company was making the critical decision about how to grow, founder Kirk Perron decided that consistency in location, store design, in-store merchandise, and smoothie ingredients was what would lure repeat customers. By franchising, Jamba Juice didn’t have the ability to monitor the quality so important to the company’s distinctiveness. Opening wholly-owned stores funded by a handful of big name venture capitalist proved a winning strategy for the company. The company now has 500 stores nationwide with net sales of $300 million in 2005.

Years later, America Online is now the biggest ISP. Prodigy and CompuServe are virtually unheard of anymore. How did America Online win the war? The folks at AOL understood two key things customers valued at that time:

• Personalization of accounts: A person could get an e-mail address like joesmith@aol.com from AOL whereas Prodigy assigned him the e-mail address JS12345@prodigy.com, and CompuServe assigned 56789@compuserve.com. As a customer, I want my name if I can get it, or something else that is personally meaningful to me, like a personalized license plate from the DMV at no extra charge, would you do it? Most people would.
• Fewer rules: AOL has fewer rules governing the virtual community of chat rooms and bulletin boards. People could pretty much talk about whatever they wanted to in cyberspace within AOL, whereas CompuServe and Prodigy had more restrictions on that kind of activity. Naturally the virtual community growth was viral, multiplying their user base tenfold.

Over time, most people picked AOL over the competition. AOL went for customization and personalization against the bigger, more well-funded competition. That’s using competitive advantage to dominate your space, to grow, and to become successful!

The Anthropologie customer is affluent but not materialistic. She’s focused on building a nest but hankers for exotic travel. She’s like to be a domestic but has no problem cutting corners (she prefers the luscious excess of British cooking sensation Negella Lawson to the measured perfection of Martha Stewart). She’s in tune with trends, but she’s a confident individualist when it comes to style. She lives in the suburbs but would never consider herself a suburbanite."

Can you visualize Anthropologie’s customers? Without a doubt! Now don’t worry if your customer profile isn’t this specific. In fact, it probably won’t be. Not everyone in this company’s market exhibits all of these traits; that would be too narrow. Nevertheless, this example illustrates the power behind really, truly knowing your customers. You can immediately see how this profile helps the company select which products to carry in the store, what messages to use in the advertising campaigns, how to price the merchandise, and what type of customer service drives repeat business.

View strategic plan examples.

A recent New York Times Magazine cover story chronicled the rise of Toyota from one-time textile loom manufacturer to “not only the best automaker in the world, but also maybe the best corporation”. Indeed, according to that article, Toyota has just about every major company in the world asking the question: “What can we learn from Toyota?” In fact, “what you can learn from Toyota is something even Bill Gates has pondered publicly.”

What doesn’t surprise anyone familiar with Toyota’s strategic history is that the company "never makes rash moves or false promises." One obvious example of Toyota’s approach is the Prius hybrid. Jim Press, president of Toyota Motors North America, said that ‘about the same time the Prius made its debut, Ford rolled out the huge S.U.V. franchise’ even though ‘both of us had the same tea leaves, the same research. One of us bet on hybrid, one of us bet on big S.U.V.s.’ Toyota pondered, according to Press, that ‘First of all, long term, is fuel going to get cheaper or more expensive? Is oil going to become more plentiful or less plentiful? Is the air going to become cleaner or more polluted? And so, do you do something proactive and innovative, to be in tune with where society is going? Or do you hold on to where it has been, and then don’t let go, to the bitter end?’ Toyota’s overarching principle, according to Press, is ‘to enrich society through the building of cars and trucks’, and the company’s decision to pursue hybrids ten years ago was the answer to the question, ‘What’s the right thing to do to sustain the ability to sell more cars and trucks?’

The New York Times Magazine article quoted a Toyota employee who said that ‘Toyota expects to be in business 100 years from now, long after oil has been depleted or rendered unusable because of its carbon content, and for that reason it has placed all its bets on hybrid technologies.’

Is your business equally prepared?

I
think it’s important to stress here that
successful strategic planning is a continuous process. It isn’t just a
one-time event; you need to make it a habit. I know how easy it is to get lost
in the process, especially when you’re also in the middle of your
organizations’ everyday operations, and in the coming weeks I’d like to share
some suggestions that should help you embed successful strategic planning
concepts into your organization. Consider them an easy-to-follow Strategic
Planning Process Checklist to help keep your team on track.

First,
I urge you to “Get Ready and Get
Organized”. This may sound elementary, but you’d be surprised by the number
of businesses that sabotage their strategic planning efforts by poor
preparation. Take your time here; this is about your past, present and future.
I encourage you to identify the specific issues and choices your strategic plan
should address. I’ll elaborate on this topic later, but for now you should
start thinking about where it is exactly you want your organization to go.
(i.e. Start thinking “big picture” and “end game”) Determine your organizational readiness.
(i.e. Do you have complete commitment and support from top leadership and key
management? Is yours a culture that is open to looking beyond the status quo to
find new ways of doing things?) Create your planning committee (i.e. Who will
you rely on to implement your strategic plan? Who will be you plan
administrator and who will be your most valuable players?). And finally,
identify the information which must be collected to help make sound decisions. (i.e.
What reporting is necessary to access your current situation and measure your
efforts in reaching your goals?) A plan is only as good as the information on
which it’s based. Don’t rely on assumptions or hunches. Again, I can’t stress
enough that you can never underestimate the power of preparation and research.

Please
join me as we continue down the Strategic Planning Process Checklist in this
space. Next time, I’ll discuss “Articulating
your mission and vision”. Meanwhile, keep in mind that success is not a matter of chance, but rather success is a matter of
choice.

Take the Tour de Nez, a small local cycling race. It was started 13 years ago by Tim Healion, owner of Reno’s first coffeehouse Deux Gros Nez, to celebrate the restaurant’s anniversary. Over the years, the event has grown from a bunch of revelers riding bikes to a pro cycling event with eight different races. With the growth also came the pre-event expenses. Although Tim was experiencing national recognition and wild success, the financial viability of the race became more and more dire. For a while the coffeehouse profits were used to finance cash shortfalls. But eventually, the event’s cash demands became even too much to finance internally. The result? Tim narrowly avoiding going broke this year through some big sponsorship sales. But next year presents the same issues again. His accounts payables continually outpace his accounts receivable, no matter how successful the event is.

How do you avoid going broke? Protect your balance sheet at all costs. Most businesses owners get caught up in the income statement showing growth in sales. But it’s easy to overlook how this growth impacts the balance sheet. Most of the cash in the business is actually generated and consumed on the balance sheet (by buying inventory, carrying receivables, paying off creditors, and buying fixed assets). Therefore, any time sales go up, it has an immediate and direct impact on both cash flow and the balance sheet. Understanding these relationships holds the key to surviving rapid sales growth.

The recently appointed CEO of the Jetset Travelworld Group, Michael Reed, has made his mark with a plan to direct the company’s focus on strategic planning. “Many analysts claim the future looks gloomy for traditional travel retailers when compared to the online approach. I couldn’t disagree more,” stated Reed. “We are operating in a world where, increasingly, the internet is king, but service is paramount.”

He has emphasised the need to emphasise the possibilities of traditional travel retailers for providing exceptionally high service standards. He believes that the timing is perfect for the Jetset Travelworld Group to reinvest in the brand.

“I believe there are opportunities to better clarify not what we do, but what we are – what brand equity we have among consumers, and even among our own network.”

Not every company finds itself in such a place - but when it does, what a great time to reassess before moving forward. Good luck to Michael and his team!

These two airplane manufacturers are always swapping for first place in this highly competitive, and expensive, industry. Right now - Boeing is on top again. It just goes to show you that it takes more than government subsidies (i.e. The French government) to be successful.

Let’s look at the different strategic positions these two giants find themselves in:

Airbus:
Airbus sales have dropped by more than 50 percent for the first six months of 2006 compared to the same period last year. The company is behind schedule to land more than 250 sales, which are necessary in order to capitalize on its design and production investment of $13 billion. So what is the source of this mess?

• Delivery delays in the A-380, a super jumbo jet
• A class action lawsuit and the threat of more litigation accusing management of hiding problems
• Infighting by French and German executives at the parent company, EADS
• A management shakeup at Airbus
• The recent deadly Airbus A-310 accident in Russia that killed scores of passengers and crew.

This is a classic example of a company getting caught flat footed. It looks to me like Airbus does not have a clear strategy and it did not take plan for environmental changes - such as high fuel costs. Airbus didn’t factor whether airports worldwide would even want to construct longer runways for landings and takeoffs to accommodate its huge A-380. Add $70 per barrel for oil to the list of concerns for the airlines.

Boeing:
On the other hand, Boeing has whopping 480 orders this year for the fuel-efficient 787 Dreamliner. Why? Because Boeing strategized a few years ago that its highly efficient 787 Dreamliner would prove to be popular with airlines. Executives did the proper job of scanning the environment, looking at trends, and building a product that would sell in those projected conditions. Note: Boeing was not sitting pretty just a few years ago - but it looks like they learned their lesson.

What should Airbus do?
If you were running Airbus, what would you? Let’s hear it!!

“Starbucks forces [independents] to stay on their toes, get creative, exploit their advantage of being more nimble,” says consultant Bruce Milletto, president of Bellissimo Coffee Infogroup of Eugene, Ore. “Starbucks provides a safe place to have your first latte,” he says, explaining that specialty coffee is still a young industry with plenty of room to win new converts. When those latte novices are comfortable with their specialty brews, many will try, and perhaps prefer, the nearby independent.

“There’s a delicate balance between the synergies [two combatants] can generate on one hand and too much competition on the other,” says Joan E. Primo, a principal of real estate and retail consultants The Strategic Edge of Southfield, Mich. “You have to ask yourself whether there’s enough pie for everyone.”

In other words, it makes sense to welcome battles for market share that make the pie bigger for everyone; but battling for a bigger slice of a pie that’s not growing is a zero-sum game.

That’s why Starbucks has done its rivals a favor, says David J. Reibstein, a professor of marketing at the Wharton School. By building primary demand—demand for a category of offerings, in addition to demand for a particular brand—Starbucks has given the entire sector a shot in the arm.

Quotes: From the Harvard Business Review

Who: Jeff Weinstein
Company: The Counter
Type of Business: A burger joint
Founded: 2003
Success: Sold development rights - soon to be 400 to 600 locations across the country
How: Hit the market dead on!

"I started the restaurant out of a desire to do something that was different from what anybody had ever done before," says Jeff Weinstein, proprietor of the Los Angeles-based burger joint, The Counter. And he has. At The Counter, customers can order ultra-customized burgers for about $6 to $12 apiece, starting with a choice of beef, chicken, turkey, veggie, salmon or ahi tuna. Then they can choose from 10 cheeses, 26 toppings, 17 sauces and eight types of buns.

"When I started The Counter, I just had thoughts of making enough money to support my wife and me," Weinstein said. But now, "watching the growth is the best part - seeing people who believe in it and are willing to back it."

Read the whole story.

The reasons for EDS’s downfall, as discovered by Dick Brown were that 1) there was a great deal of internal competitiveness, 2) the 48 divisions with their own profit and loss responsibilities did not communicate with each other, 3) the divisions competed with each other and 4) there was no single corporate strategy to compete in the marketplace.

Brown initiated strategies to reunite the company and restore its competitiveness. He reinvented the brand by authorizing a commercial to air at the Super Bowl that portrayed EDS as a company that rided herd on complexity and “makes technology goes where clients want it to go”. The commercial was hugely successful. Furthermore, Brown recreated the company in that he demanded instant feedback on company projects and “unfiltered” communication. He demanded the development of a system whereby, with Web access, customers could rate EDS project performance at any time. This information was available to everyone within EDS. This system alerted EDS to any customer dissatisfaction. A merit system for employees based on delivering solutions to either internal personnel or customers was instituted. The result was the development of a new corporate culture that collaborated within the organization to support its customers.   

Brown’s strategy has been successful. As of 2001, EDS increased revenue by 7.5 percent, announced a 17 percent increase in quarterly profits and booked $80 billion in backlogged signed contracts. The turnaround of the company is attributable Brown’s corporate strategy which evolved its employees to embrace a new corporate culture with new objectives.

Trader Joe’s is committed to providing selective products that cannot be found in grocery stores. It does not carry commodities such as soft drinks. The company prides itself on the quality of its private label products, which account for 70 percent of the product offerings. Personnel at Trader Joe’s scour the world for products free of preservatives, artificial colors or flavors or genetically altered ingredients. They taste-test all foods considered for private labeling. If the taste testers are unanimous in their high recommendation of the product, Trader Joe’s buys it and relabels it. The result is assured quality that other groceries stores do not attempt.

The value that Trader Joe’s offers to customers includes “taste, quality, private labeling and price” according to the CEO Don Bane, and the strategy is successful. Grocery stores measure profitability by sales-per-person hours. Whereas Whole Foods bragged about 52 sales-per-person hours as referenced in the article, Trader Joe’s averaged 212 during the same timeframe. It is clear that the unique branding strategy of Trader Joe’s differentiates itself from all other grocery store chains, and that differentiation as a corporate strategy can produce dramatic results.

If you love TJs, tell us why! If you don’t, I’d like to hear that too!