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  Strategic Planning Committee
  Developing an Appropriate Fact-Base for Strategy Making
 
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  Business Innovation…Table Stakes for "Stayin Alive"
  We often begin engagements with an intergroup competition calling for teams of people to assemble a "product" or achieve a goal by working together toward a "best of breed" solution.
 
  Kipp & Associates

Strategic Planning Committee -
Developing an Appropriate Fact-Base for Strategy Making

In some manner, planning always surfaces data and ideas about:

· Where we are now;
· Where we want to go; and
· How we will get there;

as a platform for determining and deploying strategy.

One very useful way to ask such questions – especially regarding the current situation – is to “drill down” through four levels of inquiry; some “ore-work” on the part of a member of the team contributes strongly to a meaningful discussion on each level:


· Industry;
· Competitors;
· Company; and
· Financial Performance.

Each has important implications and needs to be considered separately. The consideration of each should result in a framework that bring the group to the critical questions for the company. Relevant lines of discussions might be:

· What is the size of this industry?
· What are its boundaries? Are they blurring?
· Are other industries intruding?
· Is id growing, shrinking, or stable?
· What are its logical segments; unique segments?
· Is the available market larger than our served market?
· What is known about customer buying habits – preferences?
· How is the industry structured – and where are we within that structure?
· Where is the industry likely to go over the next several years?

Competitors

Once again, the analysis and deliberation should bring the group to the critical questions for the company. We might ask, for example:


· Who are the strong players in our industry?
· Where does their strength come from?
· How does our performance compare with “the other guys” in the important areas?
· Who could retaliate against a major move on our part – and how?
· Are we likely to see new competitors – traditional or otherwise emerging in the next several years?
· What moves would alter the relative stability among competitors in this business?

Company

A thorough going examination of the company and its business system should also contribute to the identification of critical issues. Relevant studies might be:

· How does the company actually work?
· What’s the dependence upon others for critical business functions… outsourcing, for example?
· Are there pieces of the system we might consider contracting for to our advantage?
· What’s the fit between the pieces of our business system and the key factors for success in the market?
· Is our rate of improvement consistent with the improvement rate in the industry?
· Are there work flows or cycle time issues apparent in the core work process?

Financial Performance

This discussion should also surface critical issues for the business… especially taken in conjunction with issues extracted from other dimensions of the situation analysis. For example, we might discover that 90% of our balance sheet is committed to a North American business whose future is flat, at best. Questions around financial performance might be:

· Is the company recovering its true cost of capital?
· Are margins consistent with those in the industry?
· Are assets focused on value-creating activities?
· Is productivity improving at industry rates?
· What is the impact of receivable and inventory on cash?
· Are supplier/distributor costs growing faster than sales volumes?

Each of these dimensions – industry, competition, company and financial performance – also lends itself to dozens of possible analytical approaches. While none is likely to be used in the planning process, you may want to think beyond instincts and experience. Additionally, you may be reminded of special reports or “ fugitive studies” on various aspects of the business or the industry that you might consider “strategic.”