In yesterday’s Strategy Check Newsletter, titled Cut Costs Now by Renegotiating with Suppliers and Vendors, we examined the opportunities for cost-cutting that exist in our enviornements due to the economic downturn. Right now, many businesses are turning to renegotiating the terms of their contracts with vendors and suppliers in order to save their organizations money and secure their long-term viability.

But, one important thing to remember is that once the economic crisis has ended and business has gone back to normal, you’ll still be working with many of those vendors- and you don’t want to burn your long-term relationship now, just for savings today.

One of the articles that we referenced, from Network World, highlights the practice of renegotiations in Indian technology firms, specifically detailing how some companies are taking the short-term route of forcing suppliers into accepting unfavorable provisions and damaging long-term relationships.

Of particular financial pain to vendors, he continues, are software deals that, as a study from Accenture points out, are “being clinched largely on the strength of off-list discounts of up to 70%.”

Evidently, that isn’t a sustainable way to do business. And smart CIOs look for everyone’s best interests — even their vendors’, says the CIO of a pharma company. He says that he focuses on coming up with alternative options to these discounts that are discussed in a spirit of partnership.

That spirit of support, says industry watchers, is also complementary to the way business is done in India, where relationships count. Many CIOs agree that relationships can sometimes be deal clinchers and so it only follows that when it’s time for renegotiations, relationships play an important role. “We stress the importance of the relationship we both enjoy and how it is up to both parties to ensure that it survives,” says Suresh Kumar, Director-IT, KPMG

The important thing to remember here is that every organization exists within an ecosystem. Right now, almost all of those ecosystems have been negatively effected by the current economic crisis, and every member relies on the success of one another, to some extent. If squeezing too hard on a supplier damages their long-term viability, then you may be threatened yourself when they’re no longer around. Furthermore, you’ll be sitting down to negotiate again some time after the crisis is averted, and you’d much rather have an ally across the table rather than an adversary who carries a grudge.

If you plan begin the negotiation conversation by bringing up market value, or even more favorable competitor pricing, be aware of the message you’re sending: “we’re considering leaving you and willing to do it.” This can start things off badly by putting your vendor in a defensive posture- it can feel more like arm-twisting and less like an attempt to find a win-win situation. Instead, make sure that you’ve figured out a situation that you feel works well for both parties. Networkworld’s article explains the same sentiment shared by Indian companies as such:

Fortunately for vendors, many CIOs agree with Sahai and reject the idea of browbeating their vendors into submission. They say that strong relationships and knowing a vendor’s senior management on first name basis, all help in a renegotiating process, but what really clinches things is having an alternative option before a negotiation.And, all it takes to put those tricks up your sleeve is some homework. Some skillful negotiators will, for example, ensure that they thoroughly understand the market and the product.

Remember, we’re all in this together. The economic crisis has caused many business leaders to think short-term, and in their own interests, but that won’t help in the big picture. Instead of getting caught in that trap, use sound strategy and long-term business practices that strengthen the relationships you have with the organizations you rely on.

You may also be interested in:

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• How to Really Have Customer Relationships Guest post from Chris Champayne Customer relationship management centers around...
• The Do’s and Dont’s of Cost Cutting How to Trim your Costs While Keeping Clients and Employees...

We’ve had to get used to a lot of changes during the current economic crisis. Employees have come to understand that jobs aren’t secure, benefits are becoming thinner, and retirement is becoming a myth. Companies are also having to cope with tougher competition, lack of credit and limited resources. What’s been making the news lately have been the many bankruptcies and bailouts, but recently I’ve noticed something that, as a tech-worker, really bothers me.

Instead of worrying about completely losing services that are going out of business, I’m more concerned about the subtle erosion of the many services that we count on to make our living.

I work on the web. I have to be able to access the web. Lately, on days that I have chosen to work at home, my internet access is spotty at best. In fact, for every hour, I average about 5-10 minutes of downtime, with periodic small outages that can total 4 or 5 an hour.

That’s debilitating.

In addition to internet outages, local customers are also experiencing unreliable cable tv service as well. I assume that this has to do with our cable company recently declaring bankruptcy, and their subsequent cost cutting attempts and lack of credit. But to me this spells greater trouble in the long run.

Will I have to get used to 85-90% up-time? Can I?

• What if my mechanic could complete 85-90% of my issue? How confident would I be?
• How about if my doctor could only get me 85-90% well?
• And our water was only 85-90% pure?

Many of the services that we rely on to do our jobs will continue to feel the effects of the recession, and surviving won’t always be enough. If I can’t get reliable internet service, I can’t do my job. Period.

But what if it doesn’t improve? What if 85-90% is the best my cable provider will be able to achieve?

As these smaller ineffieciencies creep up on us, I have to be concerned with just how much of this can happen before it begins to bring our ability to compete to a standstill. Sure, we all notice when companies we rely on fall away completely, but will the service-creep take us by surprise?

You may also be interested in:

• Has the Recession Caused You to Think More or Less Strategically? Since the onset of the current economic downturn, what has...
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Has the recession impacted your decision-making?

One great resource we found lately was Kim Girard’s excellent article titled How to Decide in a Time of Confusion, at Bnet.com.

1. Study Your Business Environment
   Collecting relevant data and putting them them to work is essential to being able to make decisions. Kim lists plenty of practical sources.
2. Build a Plan
   Well, we’re always fans of this route! There’s not a whole lot of info on exactly how to craft a plan but at we do know a pretty good resource for that- you’re on it.
3. Be an Intense Leader
   This step offers a few reminders on maintaining strong communication- which is essential not only for being able to execute your decisions as a manager, but also in maintaining employee engagement throughout the downturn.
4. Strengthen the Team
   Kim offers more management tips here for keeping your team focused and encouraging them to assert themselves.
5. Get Close to Your Network
   Keeping close to your network is essential during a downturn, as highlighted throughout our recession-planning toolkit.

For more info on decision-making, you can check out our own presentation about Choosing your Opportunities Strategically below.

Video

You may also be interested in:

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MyStrategicPlan has been named a Finalist in the category New Product or Service of the Year in The 2009 American Business Awards! More than 2,600 entries from companies of all sizes and in virtually every industry were submitted for consideration in more than 40 categories, including Most Innovative Company, Best Management Team, Best New Product or Service, Best Corporate Social Responsibility Program, Best Corporate Environmental Responsibility Program. M3 Planning will be competing in the New Product or Service of the Year category for Computer Software - New Version.

We’re all extremely excited about this, as our whole team worked hard to get us this far. We’d like to take a moment, though and highlight the hard work that our developers and designers have accomplished in the last year by listing some of the impressive features that have been added to our strategic business planning system, MyStrategicPlan.

American Business Awards

April 2008

“View My” stuff: We have added a new feature at the top of the “Goals & Actions” page at the department manager/team lead and team member levels that allows users to toggle between “View My” and “View All” plan information. This means that these users can choose to view only their assignments according to their role or view the plan in its entirety. The default selection is “View My”.

New viewing rights: Plan administrators now have the option of restricting the viewing rights of departments and/or team members to view the plan information of other departments and team members. The default selection is “No” restrictions. Account>Company Information>Restrict View

Develop your own goals: Department managers/team leaders and team members can now create self-assigned goals for themselves. This means that a department manager/team leader can add a department goal that supports a corporate goal. Likewise, team members can create their own goals that support a goal of their department.

Create cross-collaborative goals: Team members can now be assigned goals in support of another department. This action must be initiated by the team member’s department manager/team leader or the team member; the plan administrator cannot do this. Please note that this action is not possible when view restrictions are turned on.

New execution reports have been added that include status/variance. Reports>Full StrategicPlan (with Status)>Executive Summary (with Status)>Action Sheets

August 2008

More customized terms have been added so users can now change more terms to better reflect their particular organizational language. Fields for pluralized terms have also been included. Account>Customize Terms

Decimal values are now accepted by the system for “Target” fields and “Scorecard” reporting.

Remarks in the “Comments” fields in the execution module now have a pop-up link to view comments instead of taking up space on the reporting page. Execute Your Plan>Track Goals

New reports include the Road Map and Scorecard. The Road Map is a summary of goals broken out by year according to the dates established during goal creation. If a goal rolls over into more than year, it will be reflected in each year. The Scorecard report is an overview of your organization’s goals, measurements, and targets with dedicated fields to track both year-to-date and monthly progress.

November 2008

Goal Re-ordering: Plan Administrators now have the ability to re-order goals on the same level (i.e. an organization goal may be moved from under one strategic objective to another strategic objective, and a department goal may be moved from under one organization goal to another organization goal). Select the “Reorder Items” on the “Strategic Objectives and Organization Goals” page to re-order goals. Build Your Plan > Strategic Objectives and Organization Goals

Reports: New Roadmap report reflects objectives and goals by category and sorts goals by short-term, mid-term, and long-term. Also, reports are now available as PDF files for easier downloading and formatting.

Once again, we’d like to congratulate our designers and developers for the hard work that went into all of these new features, and for the work they continue to do in order to make strategic planning a reality for businesses all across the world. They don’t often get the spotlight, but without their long hours and dedication we wouldn’t be able to make the impact that we do. Once again we are all honored to be nominated by the Amercian Business Awards, and very grateful to have such a spectacular team to depend on, as well as a fantastic group of organizations that we have had the pleasure to work with.

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With Google’s recent announcement that they developed an algorithm for sniffing out dissatisfied employees, there’s been a significant amount of speculation around how the company plans to use it, or even whether it’s the best approach.

Since yesterday’s WSJ article announcing the algorithm explained the what, but not the how, it may not have been the best approach for the company. According to WSJ:

Google officials are reluctant to share details of the formula, which is still being tested. The inputs include information from surveys and peer reviews, and Google says the algorithm already has identified employees who felt underused, a key complaint among those who contemplate leaving.

While the company prides itself in being able to search effeciently, we wonder if they have a solid plan in place to actually improve their efforts at employee engagement. While many are awaiting more information on what they expect to be Google’s reinvention of staff retention, information further in the article points to a lack of execution in fundamental employee engagement practices:

Current and former Googlers said the company is losing talent because some employees feel they can’t make the same impact as the company matures. Several said Google provides little formal career planning, and some found the company’s human-resources programs too impersonal.

“They need to come up with ways to keep people engaged,” said Valerie Frederickson, a Silicon Valley personnel consultant who has worked with former Google employees. “If Google was doing this enough, they wouldn’t be losing all these people.”

I want to see a plan for change. If I were working at Google, it wouldn’t be enough for them to tell me “rest assured, if you’re feeling underutilized, we’ll find you.” I’d want to know that there’s a plan for each and every employee to feel as fulfilled in their job as they did when they announced to friends and family, “I’m a Googler now!”

More discussion on the web:

• Google’s Approach to Higher Turnover, Lower Engagement
• Google can now predict which employees will quit?
• Google algorithm knows which employees will quit?
• Google Turns “Magic Algorithm” Inwards, Predicts Which Employees Will Quit
• QuitRank: Google Algorithm Predicts When Employees Will Quit
• Employee engagement 2.0 has arrived courtesy of Google
• Google’s new algorithm: Will it help engage employees?

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• GOOGLE’S ANSWER TO UNHAPPY EMPLOYEES MAY MISS THE MARK Google announced this week that in response to an increase...
• Functional Approach The Functional Approach to leadership is a perspective that defines...

• Let’s Face It - The Economy Sucks (Hospitality Trends)
  Far from just being a b*tch session about how the economy is tanking, this article reinforces the need for strategic planning during an economic crisis.
• Some Do’s and Dont’s of the process (The Vamburg Group)
  This is a good collection of short tips for your strategic planning process. All very practical and common-sense- check it out right before your next strategic planning session.
• Rewards Metrics: Engagement versus the Bottom Line (Compensation Force)
  If you’re heavy on financial (lagging) metrics in your scorecard, this is a wakeup- metrics that track employee engagement activities will give you the leading insight you’re in need of.
• Yeah Man, That’s The Good Stuff: Defining the Slippery Nature of Employee Engagement (Foster Excellence)
  This article brings up a great point- one reason why employee engagement has a hard time catching on is that we’re all not really sure what it means. There’s a few definitions offered as well as some good food for thought.
• Four Fatal Flaws of Strategic Planning (Harvard Business Publishing)
  This didn’t get published this week, but it’s really worth a look. Broken into four parts, the article says the four flaws that’ll lead to strategic planning fatality are skipping rigorous analysis, believing strategy can be built in a day, failing to link strategic planning to strategic execution and dodging strategy review meetings.

You may also be interested in:

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Here at MyStrategicPlan we’ve been scheming & planning something awesome: a comprehensive course on strategic planning that’ll take any business person from novice to skilled strategist, through practical, tested methods, tools, tips and how-tos. If you’ve spent any time wandering through our articles, glossary, videos or the rest of our resources, then you have a grasp of the wealth of knowledge we’ve amassed over our years online. Now, we’ve collected our best information in a weekly course that we’ll be unveiling very soon

Before we do, though, we want your input.

What would you want to see in a course. Imagine a 30 minute class based on a management principle that’s either piqued your curiosity or vexed you for some time. What would that be?

• Do you want broad-based theory?
• Hands-on workshops?
• Short whiteboard videos?
• Longer lectures?
• Advanced? Introductory?

Please put all of your suggestions and requests in our comments section and we’ll take any input to heart as we formalize the curriculum and format of this powerful training package before we launch it.

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A recent BusinessWeek article from Harvard University’s Bill Taylor piqued my interest this week. It’s an issue that’s made it’s way through the business press as well as business blogs and elsewhere for some time now- are MBA’s really worth it? Mr. Taylor, cofounder of FastCompany and recent Author of Mavericks at Work, seems to be baiting the same argument with this intro:

Now, I understand the use of students from elite business schools as a proxy for “talent” in the business world. But as the economy experiences the most deep-seated changes in decades, maybe it’s time to change our minds about what kinds of people are best-equipped to become business leaders. Is our fascination with the comings and goings of MBAs as obsolete as our lionization of investment bankers and hedge-fund managers? Is it time to look elsewhere for the “best and the brightest” of what business has to offer?

The rest of the article makes sense- basically it’s citing work that has suggested that MBA’s come out of college filled with booksmarts and ready to write maticulous business plans, while entrepreneurs are quicker thinkers, more prone to seat-of-their pants leadership ready to make snap decisions. Meh.

As an MBA and an entrepreneur, I take offense to this kind of either/or argument. In fact, the majority of business students that I took classes with had already proven their leadership skills in the “real world” (I wasn’t ever aware of any of my classmates coming from imaginary worlds) before deciding to enter school again for their master’s degrees. There didn’t seem to be sides drawn between who had book smarts and who had street smarts- we were all fairly smart people who had learned how to work with each other.

Had every single one of us lead the charge during a recession? No. But you could carve up any two groups and try and pitt them against one another in this kind of thinking. Who’s more prepared to deal with the recession? Blue Collar or White? Conservative or Liberal? Men or Women?

I personally think that those who are willing to persist will win this one, and they didn’t go to any particular school to get any particular degree- they’re just people who won’t stop working. What do you think? Are business schools somehow producing a class of workers unprepared for the real world?

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Here’s a recap of some of the strategy-focused blog posts we found interesting this week:

• 15 Ways to Position Yourself (slackermanager.com)
  This is a great article with practical tips that don’t just help you market your business, but also help you relate to people on their level, in a way they will trust.
• What Type of Recognition do you Need? (employeeengagement.ning.com)
  We’ve spoken about employee recognition from the perspective of management, but this article asks the reader what needs they personally have.
• Strategic Planning Calls for Peer Support and Advice (strategicconversations.com)
  Peer groups are something that don’t get discussed enough. It’s great to think that you can do it all by yourself, but all of the business people I look up to have had great mentors.
• Using the Recession to Trigger Rejuvenation (cssp.com)
  The current economic downturn can be a great catalyst for making decisions you put off when times were better. This article takes a positive look at opportunities to change during recessions.
• How to Define Strategic Planning (djchuang.com)
  Taking a page from the book, Strategic Planning for Non-Profits, this short post mentions a great definition for strategic planning- we can always use these succinct explanations of a sometimes confusing concept.
• Why Bother with Vision and Mission (pictureyourmeeting.com)
  Over at Picture your Meeting, a graphical facilitation blog, there’s a nice reminder of the difference between Vision and Mission statements
• The Most Important Vote You’ll Cast This Week (verneharnish.typepad.com)
  Ok this one isn’t about strategy per se, but it’s written by a guy who always has some great stuff to say and it’s supporting a worthy cause! Check it out and vote if you’re so inclined.

You may also be interested in:

• This Week in Strategy for 05-15-09 Let’s Face It - The Economy Sucks (Hospitality Trends)...
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Most everyone is familiar with the 4 P’s of Markting, Product, Place, Positioning and Price- but have you heard of the 4 E’s of Marketing?

Christopher Graves, President & CEO, Asia Pacific, Ogilvy Public Relations Worldwide, authored a presentation found on Scrib’d that explains just how the P’s have become the E’s, highlighting how:

• Product >>> has changed to >>> Experience
• Place >>> has changed to >>> Everyplace
• Price >>> has changed to >>> Exchange
• Promotion >>> has changed to >>> Evangelism

While there’s no audio, and I’m planning on looking up more from Graves on the subject, it’s pretty easy to realize what he’s getting at. Things have changed.

Experience: Where marketers used to focus on their product, now we must think of the entire customer experience- what does a customer encounter related to purchasing and using your product/service?

EveryPlace: Today, place has become everyplace- there’s just SO MANY methods for conveying your message: IM, SMS, countless social media websites, video games, product placement in places like TV, Movies, internet video clips- the list goes on.

Exchange: With so much on the web being offered for free, pricing has become much different. Words like Freemium, describing how premium services pay for free services offered by the same company would have boggled marketers minds a few years ago.

Engagement/Evangelism: Promotion isn’t enough any longer. With so many more message channels, we can’t just bombard people with messages and hope they’ll pick them up. Companies have to figure out how to get consumers to allow them into their attention spans.

As I said, I want to read more, and I encourage you to check out the presentation yourself. Staying on top of the changes in marketing is essential, but the good news is that while many of the changes in the last few years may require deeper thought about what customers want, many also have come with a cheaper price tag (as we’ve discussed earlier).

Good luck learning how to utilize the 4 E’s!

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