Lecture Materials LEADERSHIP BEYOND MANAGEMENT · PDF fileLecture Materials LEADERSHIP BEYOND...

Lecture Materials

LEADERSHIP BEYOND MANAGEMENT

Terry Saber Partner, Strategic Advisory Services

Wipfli LLP Edina, Minnesota [email protected]

952-548-3363

August 7, 2015

© Copyright 2015 - Wipfli LLP 1

www.wipfli.com

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STRATEGIC PLANNING7 Parts to the Plan

Graduate School of Banking 2015

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On the other

side of

challenges

lie great

opportunities!


Unprecedented Times . . .

. . . Affirm or alter strategic direction!

• Market

• Customer base

• Shareholder needs and dynamics

• Employees

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Unprecedented Times!

Does Senior Management really “get” that the world has

changed?

. . . So what new / different strategies do you have at the

Bank?4


Best Practices

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90% “Strategic Planning is very important.”

32% “We are effective at it.”

41% “We use our plan actively to guide the institution.”

ABA Survey of Best Practices in Strategic Planning

The Ultimate Challenge . . .

From where will tomorrow’s profitable growth come?

• What Markets . . .

• Which Niches within those markets . . .

• Habits of consumers . . .

• The role of Technology . . .

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2 Objectives

1. Recognize the 7 parts of a Plan and distinguish between each

2. Recognize the difference and alignment between strategic planning, profit planning and budgeting

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Key Objective

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Enhance your Bank’s strategic planning . . . or “jump-start”!

And link critical strategies tobottom-line profit


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Industry Overview

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

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Savings Institutions

Commercial Banks

Total Number of Institutions Reporting: 6,509Commercial Banks: 5,642

Savings Institutions: 867

Total Number of Institutions Reporting: 6,509Commercial Banks: 5,642

Savings Institutions: 867

Commercial Banks and Thrifts

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Source: State Bank Performance SummaryFourth Quarter 2014


Wells Fargo$1.5 Trillion

10%

104 Banks

$6.1 Trillion in Assets39% of Industry Assets

Citigroup$1.3 Trillion

9%

100M-1B3,957 Institutions

8% of Industry Assets

JPMorgan Chase$2 Trillion

13%

1B-10B580 Institutions


Bank of America$1.6 Trillion

10%

$-

$1

$2

$3

$4

$5

$6

$7

Top 4 Banks > $10B Banks < $10B

Top 4 Banks$6.5 Trillion in Assets

42% of Industry AssetsTotal Industry Assets

$15.6 Trillion

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Data Source: FDIC Institution Directory. Active Institutions as of December 31, 2014.

Asset Distribution

0-100M1,873 Institutions


A Closer Look at the 99%

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Asset Size# of

Institutions% of Total Number

% of Total Assets

$0-100M 1,873 29% 1%

$100M-1B 3,957 61% 8%

$1B-10B 580 9% 10%$10B> 104 1.6% 39%

Big 4 4 0.06% 42%

TOTAL 6,518 100% 100%

Data Source: FDIC Institution Directory. Active Institutions as of December 31, 2014.


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Key External Themes

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The “wave of consolidation” is expected to accelerate.

If your financial institution is going to be a survivor, how will you compete successfully?

What does that portend for strategy?


Key External Themes

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The core business model should be examined to decide which strategies will maximize shareholder value and ensure a return on investment.

Future sustained profitability mustcome from the ability to profitably

grow revenue.

Key External Themes

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Ultimate strategic challenge: Identify the source of tomorrow’sprofitable growth.

Regulatory reform has changed the game.

At the end of the day, it’s still about the ability to manage risk within a complicated

complex web of regulation.


Key External Themes

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A distinctive competitive advantage needs to be ensured.

Key to success: Ensure focus and prioritization.

Alignment of Capital Plan

Capital as the Umbrella

• Capital Policy

• Capital Plan

• Alignment with strategic priorities

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If we always do what we’ve always done, we will always

get what we always got.

3 Key Components

• Plan

• Process

• Implementation

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Strategic Planning Cycle

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PLANNING TEAM /PROCESSSelection

Development

STRATEGIC ASSESSMENTEnvironmental Trends

SWOTFinancial Analysis

STRATEGIC PLAN/IMPLEMENTATIONPerformance Against PlanValidity of AssumptionCorrective Action

STRATEGIC PLAN (1-3 yrs)Strategic Goals, Objectives & MeasurementsAnnual Action PlansBudgeting

STRATEGIC DIRECTIONMission

VisionGuiding Principles

STRATEGIC POSITIONING (3 yrs)Strategic Priorities

Performance Targets

Strategic Planning Team

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How “Strategic” is yours?



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Size:

Typical: 8 - 15


Ideally:

Smartest

Creative / Innovative

Devil’s Advocate

Change Agent

Wisdom / Wise Sage24


Timeframe for Planning

• “Rolling” 3-year Plan

• Updated annually and extended

• Impetus for annual budget and annual plan

• Departmental/location/individual work plan content: 3 years and annually

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Charting Strategic Direction

© Wipfli LLP


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Putting all the pieces together …

7 Parts of a Plan

1. SWOT

2. Vision

3. Mission / Core Values

4. Strategic Priorities

5. Goals / Strategies

6. Action Plan

7. Financial Measures

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“In order to get

where we want to

be . . . We have to

know where

we’re starting

from.”

Part 1: SWOT

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1.

2.

3.

4.

5.

6.

1.

2.

3.

4.

5.

6.

1.

2.

3.

4.

5.

6.

1.

2.

3.

4.

5.

6.

STRENGTHS

(Leverage)

WEAKNESSES

(Improve/Strengthen)

OPPORTUNITIES

(Capitalize)

THREATS

(Minimize)


Part 2: The “Vision thing!”

Perhaps the most

critical retention

question!

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The “Vision thing!”

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So . . .

Where are we headed?


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“Picture” of the end destination at

a given point in time . . . a journey!

Vision

• 3 or 4 paragraphs

• Ultimately, belongs to the CEO

• “Paints” the picture

• Vision 2020

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Pause and Ponder

Your 4 - 5

Strategic Priorities

In 2015 to 2018

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Vision

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Decision Measuring Stick


Part 3: Mission

Answers two questions . . .

“Why are we there?”

“What’s our purpose?”

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Part 4: Strategic Priorities

• Flow directly from the SWOT and the Vision

• “Cylinder” of the Funnel

• Typically 4 or 5

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Typical Broad Priorities

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Board Governance

Leadership & Management

Risk Management

Sales & Growth

Profitable Growth

Customer Relationships

Delivery Channels& Marketing

Employee Engagement

Productivity & Efficiency

Part 5: Goals & Strategies

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Most important,

“best” strategies to

accomplish each priority


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(Priority) ____________________

Goal #1:

Strategy 1:

Strategy 2:

Strategy 3:

Strategy 4:

Strategy 5:

Developing Action Plans

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The Key to

Implementation!


Part 6: Action Plan

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A page for each StrategyWHAT specifically needs to be done:

. . . by WHOM

. . . by WHEN

. . . and in WHAT order!

Part 7: Financial Measures

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Key:

The numbers are not the plan!...…but they ARE a key measuring stick!


Part 7: Financial Measures

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Discussion:

Role of Proforma and annual budget

2 distinctly different pieces!

Four Summary Questions

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1. Is strategic planning

fundamental to running a

high- performing financial

institution?



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2. Are tools, process and people

fundamental to plan

development?


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3. Does your Bank’s strategic thinking result in needed change to the fundamental way in which you think about the future of your business?



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4. Do you have the leadership to pull it off?

Questions?

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QUESTIONS?

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Terry A. SaberPartner, Strategic Advisory Services

[email protected]

(952) 548-3363

www.wipfli.com

52

www.wipfli.com/fi

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