Invent your future with better strategic planning

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I read a quote somewhere a few years ago that really made me think. The author said “the future is an invention anyway, you might as well invent a good one”.

If you stop and think about it, it’s really, true the choices and decisions we make throughout life accumulate to determine where we are and what we’re doing.  How many times have you hard someone say, if we knew then what we know now.

Well what if we did know then?  What if you actually had a vision of where you wanted to be in five or ten years, and made decisions and choices based on attaining that vision? You really would be inventing your future. Many successful people employ goal setting as a regular part of their lives. Goal setting focused on a clear vision.

Most people just don’t do that. They spend more time and effort planning a two-week vacation than they do determining what they are going to do with their lives. You wouldn't begin a road trip without a map, why would this be any different? 

Many of us look back one day and realize life just happened and they are where they are by _______________. You fill in the blank, luck, fate, breaks, whatever word you choose.

Well experience has taught me that organizations function in much the same way. The choices and decisions they make everyday accumulate to determine where they are in their market, and how well they’re doing. If those decisions are made with reference to a clear vision and direction, they would find that they are indeed creating their own future.

Chapter two of my book, “Bottom Line Focus” is entitled “Start with the end in mind”. It’s aimed at helping organizations and leaders develop a better strategic planning process, drive execution, and ultimately produce better bottom line results. The point of the chapter is before you start a planning process, sit down with all of the stakeholder and determine exactly where it is you want to go.

I don’t mean some vague statement saying I want to double sales, or double margins, but a clear crisp vision of what your organization will look like in five years. What businesses will you be in, what market share, what your market differentiator will be. It should be clear enough you can articulate it to everyone. Next step is sharing it with stakeholders often.

Once everyone understands the vision clearly, all decisions, processes, incentives, investments and other resources should be aligned to attain that vision. It makes decisions easier by simply answering the questions does this take me closer or further from my vision.

If you think about it you are inventing your future. You are clarifying what you want, and taking measured steps to get there. Of course it takes a few other things like honestly and objectively determining where you are now, and developing crisp goals to get from here to there. I could put a plug in here like hiring a great business coach to facilitate the process is a great help.

The point is, invent your future by making it happen rather than letting it happen.

Better strategic planning drives bottom line results

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I’m reading an interesting book titled “How Toyota Became Number One” Leadership Lessons From the World’s Greatest Car Company by David Magee.  It discusses the Toyota strategy process in detail from their first introduction into the United Sates until the present time. It also talks about how their strategic thinking and customer understanding differs from the U.S car companies.

It points out that Toyota isn’t perfect and have made some market and strategy mistakes, but they recognized them quickly and corrected them just as quickly.

There are several major differences between domestic manufactures and even the other Japanese manufacturers and Toyota, but they all start with better strategic planning.

Toyota develops strategies based on recognizing what the customer needs and wants, and then executes to that strategy. How do they know what the customer wants? They ask them. They don’t guess and build large quantities of what they think will sell and push the units into the dealer network they study the customer. The book talks about the development of the Lexus brand in the U.S. Toyota sent a team to Laguna Beach, CA in 1985 to “live a life of luxury” and study the habits of luxury car buyers. They learned what the customer wanted and the shortfalls of the other luxury cars on the market. The result is Lexus, the largest luxury car brand in the United States selling over 300,000 cars per year.

Toyota’s strategy isn’t to be the number one car company in sales, it is to build the best car on the market and give the customer more value than he or she pays for. They believe that holding to this strategy and keeping a long-term focus rather than short-term results will drive sales.

The book talks about how Detroit automakers rode the SUV wave throughout the last decade. They were the highest margin cars ever built and they built them bigger and bigger up to and including the Excursion, the Suburban and the Hummer. Toyota offer SUV’s as well in the Highlander and the Land Cruiser, they didn’t go after the SUV market in a big way. They instead spent nearly $1 billion on development of the hybrid Prius. GM put nearly as much money into development of the Hummer Because SUV’s were the current fad and they were very profitable. One doesn’t have to look hard to see which company planned for the future and which one went for short-term profits.

The messages I got from reading this book complemented nicely with what I had written in my book, “Bottom Line focus”.

1.  Understand your customer’s needs and wants.
2.   Deliver value.
3.  Develop a strategy that drives your vision
4.  Execute to that strategy.

This isn’t intended to be a commercial for Toyota cars and trucks, it’s a roadmap for long-term viability and profitability from a company that seems to have done it right.

There are other examples of excellent quality, customer service and best value for the customer’s money you just have to look for them.

I will say they are more rare than companies that don’t have a clear vision, and strong execution.

Better strategic planning and vision provides better bottom line results because the best marketing strategy is word-of-mouth from loyal customers.

Do airline mergers alone produce better bottom line results?

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The news today reports a pending merger between United Airlines and Continental to be completed with a 3 billion dollar stock swap. The combined company will result in the world’s largest airline. The pending deal will surpass the recent Delta/ Northwest merger that  I believe, then created the world’s largest airline.

The real question is do airline mergers add value and increase bottom line profits?

The intent is to merge routes, cut redundant flights and service providers, and reduce costs. The real world result is often different.

Cost reduction gained by reducing headcount is often eliminated by higher wages and benefits given to labor to support the merger the subsequent loss of jobs and changes in work rules. About a year ago I wrote an article for an investment banking newsletter about mergers and acquisitions. The article was entitled “Can Acquisitions Work”?

Research for that article cited a study done by KPMG in 1999 that showed that “83% of mergers were unsuccessful in producing any business benefits regarding shareholder value” (Feldman & Pratt 1999).

The reasons given were loss of productivity of up to 50% for 4 to 8 months following a deal, as well as difficulty in merging systems, cultures, and work rules.

If we apply those findings to any airline merger the potential of adding value and providing better bottom line results is even more questionable.

Is any industry more tied up in regulations and work rules than the airline industry? Government regulations, union agreements, agreements with lenders all put pressure on airline profits. Not to mention fuel costs, inability to quickly reduce unprofitable flights, difficulty reducing workers, or the difficulty in merging reservations systems, call centers, and ticket outlets.

The hope of both companies behind a deal like this is to combine services, cut costs, and keep all of the revenue that both companies have today. The thinking is that passengers at a given city are captive since many cities are only served by one or two airlines.

I think what makes this strategy risky today is the willingness of the flying public to accept more service interruptions and inconveniences is greatly deteriorating. Looking at it from a passenger standpoint and not as an airline industry analyst flying just isn’t a great experience.

Speaking for myself as a former frequent flyer with over 2 million miles on two major airlines, I’d rather do nearly anything than take a commercial flight. Increased security and long lines at airports, poor customer service, flight consolidations and delays, tighter seating, smaller planes make what used to be a tolerable experience a dreaded chore.

I think until airlines realize that they are a customer service provider that provides transportation, not a freight carrier dealing in numbers the public will continue to look for ways to minimize air travel. The recent recession has caused companies to reduce travel due to cost concerns. New technology such as affordable teleconferencing has made some non-critical travel easier to eliminate.

There will always be a need to have face to face contact with customers, but companies are looking for ways to minimize the frequency.

Smaller more nimble carriers such as Jet Blue and Southwest are working hard to gain market share. That market share has to come from somewhere and that somewhere is the large carriers. Bigger is not automatically better, unless the combined entity can increase performance, develop a loyal customer base and maintain sales at current levels or better, this merger will join a long list of those losing value for the shareholders.

Better bottom line results start and end at the top

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I've been saying that accountability is absolutely necessay for better bottom line results. I've also been preaching that accountability starts at the top. I ran accross an article written by a collegue that says essentially the same thing. It's nice to see some support in this area.

 Follow the link to the article. 

 http://www.leadershiparticles.net/Article/The-ACCOUNTABILITY-Challenge-for-Today-s-Business-Management/816

Use a process for better sales results

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Sales is a process just like any other business function.There are steps that every salesperson must go through in order to be successful over the long term.

There have been numerous books and articles written about the pro’s and con’s of relationship selling but one thing to remember, sales activity invariably involves an interaction between people. We all have our internal thought processes, attitudes, and personality traits and that will spill over to both the buyer and seller in the sales process.

 A quote from Zig Ziglar says it very well, “If people like you they’ll listen to you, but if they trust you they’ll do business with you”.

So they have to like you enough to listen to your preliminary fact finding questions, and you have to use that opportunity to build trust.

The illustration below was discussed in my book, “Bottom Line Focus” relative to the steps in the buying process

The first step is you must develop a basis of trust between you and the prospective customer. They must trust and like you before they will even look beyond that.

Then they have to trust your company. Does your product or service have a solid reputation in the marketplace?

Third they have to have a need and understand that your product or service is the best solution for that need.

Then they will move on to price and delivery.

Taking a shortcut on any of these steps introduces doubt into the equation. If you walk in the door and cut price immediately you may get a quick sale but you will have cheapened you product or service in the eyes of the customer. Any effort to increase prices without establishing value and trust will be met with opposition.

Sales is like any other worthwhile venture, for better sales results, follow the process.

Better sales results often need a different look.

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If you do what you’ve always done, you’ll get what you’ve always got.

Or as Einstein is quoted as saying, “Insanity is doing the same thing over and over and expecting different results”.

Everyone has heard these phrases but many business owners and leaders simply don’t see it as applying to them. When looking at ways to improve sales results, or improve profitability they use the same processes over and over, with the same people and expect different results.

Often a leader and a management team will spend years within the same company and the same industry with little or no knowledge of other markets. While they may be experts in running their plants and making quality products they have had little opportunity to learn from what other companies are doing to improve operating results. Worse the management team often develops a “herd mentality”. Knowing what the boss wants to hear, and not wanting to rock the boat. This is especially true of past ideas have fallen by the wayside. The feeling is nothing is going to change anyway why make waves?

Unfortunately this situation is all too common in small to mid-sized companies, and failure to recognize this shortfall can result in lack of sales growth and decreasing profits.

Working to improve sales results is an area where outside consultation can be especially beneficial. A business coach or consultant with broad experience has seen many industries and markets, and has learned what works as well as what doesn’t

work in the sales process. A competent coach will challenge your views and will make you defend your assumptions while providing you with options to look at.

The world is changing rapidly, your ability as a leader to recognize the need to change is as important as dealing with change, since one must proceed the other.

Look for cash internally while getting better bottom line results.

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Every business person knows money is tight, and the credit markets show little signs of helping anytime soon. Since businesses don’t have the luxury of the government to simply print money when they need it, they have to look for more practical sources.

One of the least expensive places to find of cash is internal. Make sure you have tightened up internal processes and exhausted all internal potential. This source of cash is the least expensive, the fastest, and it can give you better bottom line results.

Where are internal sources of cash? Some are obvious and some are tougher to spot. Here are a few examples:

Inventory – is cash sitting on your floor.  If it isn’t moving find a buyer for it even at a discount. Utilize just in time purchases to minimize cash tied up in inventory.

Accounts Receivable – money is tight for everyone, allowing your customers to stretch you out makes their problem your problem. One thing I found that works well is a small prompt payment discount. Especially larger companies are open to shorter terms such as 10 days for a 2% discount. The discount is cheaper than borrowing money.

Quality and rework- this is a huge cash burner. Scrap must be measured and controlled. If you are buying raw materials and aren’t using them to generate sales that’s waste. You’re spending cash and not recovering any.The same is true of poor quality. If you ship and bill something and have to accept a return and reship, it’s incurring costs without increasing sales.

Poor performing employees – they cost the same as top performers, but don’t produce as much. Demand a return on all of your investments including your investment in people.

All of this is made easier by having clear and timely data to support your decisions.