Planning. Culture. Team Keys to Building a Successful Company SRF CEO Summit 2002 – September...

Planning . Culture . TeamKeys to Building a Successful Company

SRF CEO Summit 2002 – September 25-27

Building a Successful Company: Planning Jackie Kimzey, Rosemary Remacle

Thursday, September 26

SRF CEO Summit ©2002 Sevin Rosen Funds. All rights reserved.

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Planning . Culture . Team Keys to Building a Successful Company

Program: Thursday

7:00 - 8:00 AM Breakfast8:00 - 8:10 AM Thursday Kickoff

Dave Shrigley8:10 - 9:00 AM The Evolving Role of the CEO

Katherine Catlin9:00 - 9:10 AM Table-level introductions (name, company, product, place on KC chart)9:10 - 10:00 AM Building a Successful Company: Planning

Jackie Kimzey, Rosemary Remacle10:00 - 10:20 AM Break10:20 - 11:50 AM Building a Successful Company: Planning (cont’d)

11:50 - 1:15 PM Break, LunchSpeaker: Mark Templeton

1:15 - 1:20 PM Table-level introductions (name, company, product, place on KC chart)1:20 - 4:00 PM Building a Successful Company: Culture/Team

Dave Shrigley4:00 - 4:30 PM Break4:30 - 7:00 PM Boat Building Contest7:00 - 8:00 PM Dinner


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Session Objectives

Important elements of a comprehensive plan

Integration of plan into organization

Determining ratio of “planning time” to “execution time”

Importance of setting expectations and communicating

Highlight importance of a customer-focused strategy

Re-enforce relationships between strategic and operating plans


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How Do We Know If Our Planning Process Is Not Working?


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Early Warning Signs – Trouble in Camelot

Financial discipline only in the face of crisis

Inability to get the burn rate under control

Financial surprises are routine

Planning processes are non-existent

Product milestones are missed

Product fails to meet customer expectations

Quarterly projections are frequently missed

As the company grows, the initial team appears weaker

Failure to think about creating a strong, scalable team


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Early Warning Signs – Round of Funding

Seed– Fundamental blind spots exist in marketing and financing– Management has incomplete picture – they don’t know what they don’t know– Staffing has been handled awkwardly or inefficiently– No clear understand of working capital requirements

B Round– Too many priorities have diluted focus– Management is overwhelmed by a need for clarity– Firefighting consumes everyone’s attention– Key gaps in the team remain unfilled

C Round– Lack of cohesive strategy to rise above completion– Board meetings still uncovering unpleasant product/financial surprises– Cash burn not in sync with capital plans


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Why Is Planning So Difficult?

How Do We Overcome Those Difficulties?


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Startups and Planning: The Dilemma

Too much to do

Too few resources

Dynamic environment

but…

Without strategy and planning, it’s impossible to build a successful company

Optimum balance between disciplined process and “overdoing it” is required


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Some Definitions

Strategic Plan

A clear roadmap to the future, where the company is going in the next few years

“A roadmap, lightly filled in” – Larry Bossidy, Allied Signal

Annual Operating Plan

How the company will execute the strategic plan, a year at a time

A series of milestones that will bring reality to a strategy


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Market opportunity: context for company’s long term success

Company-specific raison d’etre related to market opportunity ( 5 years)

2-3 year strategic plan supporting market vision and mission

12-month operating plan detailing actions, milestones, metrics, responsibilities necessary to execute against the strategic plan

MarketVision

MissionStrategicPlan

AnnualOperatingPlan• Company• Functions/

Departments

Company Planning Foundations


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Execution ownership and organizational alignment

Focus/prioritization

Linkage between strategy and tactics

Resource requirements

Foundation for departmental plans and connections that cross functional lines

Gives BoD basis of evaluating CEO performance

Defines the basis for an organization-wide performance “report card”

Single document

Process forces important discussions

Execution

Metrics

Communication

Benefits of Planning


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Planning is an ongoing and iterative process

Communication

Plan

Communication

Monitorand Measure

Update/Revise

Communication

ExecuteExecute

Making the Plan “Live” in Changing Environments


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+Quarterly Reviews of Annual

Operating Plan by Executive Staff with ES and the BOD

Quarterly Reviews of Annual Operating Plan by Executive Staff

with ES and the BOD

Review of Individual Performances (not always formal)

Review of Individual Performances (not always formal)

Successful CompanySuccessful Company

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Corporate Strategic ObjectivesCorporate Strategic Objectives

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Managing in a Changing Environment

Annual Operating PlanAnnual Operating Plan Functional Plans

Functional Plans

Individual MBOs

Individual MBOs

Communication and Monitoring Processes


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Characteristics of a Good Plan (Strategic and Operating)

Market and customer segment-focused

Reality-based with formal, external input

Flexible, but stable

Tops down/bottoms up input

Cross-functionally/departmentally linked execution

Written down

Actionable and measurable, with built-in accountability

(Pragmatic) process-based, process-driven

An annual operating plan spreadsheet


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Self Evaluation Exercise

Take 5-10 minutes and respond to the questions on the following page

Identify the 2-3 most important planning-related issues that you need to address within your company


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Yes No

Strategic and Annual Operating Plans

1. Is the company planning process comprehensive? (Addresses all fundamentals, raises the issue of growth?)

2. Have multiple strategy scenarios been reviewed and vetted?

3. Before generating the annual operating plan, has the executive team settled on a market vision, mission and strategy?

4. Do you feel confident that your customers’ requirements are “baked into” the strategy and plan?

5. Are the strategy and plan both grounded in an in-depth competitive understanding and analysis?

6. Are the key assumptions upon which the strategy and plan hinge well tested and solid?

7. Is there an alternative plan of action if one of the key assumptions proves to be wrong?

8. Has the executive team developed a written mission statement?

Annual Operating Plan

9. Have initiatives been prioritized according to their relative importance to the execution of the strategic plan?

10. Is everyone on the “same page”? (Is there alignment with key executives and managers in the organization relative to the strategy, goals and prioritization of initiatives?)

Planning – Self Evaluation


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Yes No

Annual Operating Plan (cont’d)

11. Are both short-term and long-term issues identified and addressed in the plan?

12. Does the entire executive team understand and agree upon the critical issues confronting the plan?

13. Have you communicated the plan to the company employees and board once it was finalized?

14. Do all employees understand the corporate goals, initiatives and their individual responsibilities in execution?

15. Have plan evaluation metrics (milestones been agreed to?

16. Is the performance of the company’s key executives linked to the plan and evaluation metrics?

17. Is the company properly staffed with the right resources, people and skills to execute the strategy and plan?

18. Do you review progress against the plan with your employees and board on a regular (quarterly?) basis?

19. Is the company planning process organized? (Does everyone know the schedule and what is expected of them?)

20. Is the company planning process open and participatory, therefore a catalyst for change? (BoD, bottoms up, tops down)

21. Is the annual operating plan immediately actionable?

22. Is the annual operating plan written down? (spreadsheets don’t count)

Planning – Self Evaluation (cont’d)

Today, are you “on plan” or “off plan”? Do you understand why or why not?

Planning . Culture . TeamKeys to Building a Successful Company

SRF CEO Summit 2002 – September 25-27

20 minute break


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Strategic Plan Components Market Vision: Environmental assessment (market trends, technology

enablers, problem/opportunity) Mission statement Key business assumptions Competitive environment Barriers to adoption Positioning strategy (product/service category, market/customer segments targeted, problem solved,

benefits/competitive differentiation) Customer Requirements: Total product roadmap Company strengths/weaknesses relative to its ability to execute against the strategy Business model/pricing Marketing and Sales strategy Corporate strategic objectives (3-5) Corporate culture and values description


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Market and Customer Segmentation

Market EntryCustomerSegment

Market Segment

CustomerSegment

? Market EntryCustomerSegment

Market Segment

CustomerSegment

?

CustomerSegment

?

CustomerSegment

?

CustomerSegment

?


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Why Aren’t All Company Strategies (and Plans) Customer Segment-Focused?


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The Causes: Hearing what you want from the customers rather than what they are really saying Small number of potential customers ‘interviewed’ Tunnel vision: technology/product Lack of regular market assessment Not understanding the customer buying decision process Inability to develop consistent, compelling, customer segment-focused messages

CustomerSegment

CompanyDisconnect

The Customer Segment Focus ‘Problem’


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It’s the basis for differentiation, essence of value proposition

The better the match between customer need and the Company’s solution, the faster market acceptance will be

MarketAcceptance

Must Have

Very Critical

Solu

tion

Nee

d

Not so critical

Nice to Have

Are you trying to sell something that the customer really needs?

Market and Customer Segmentation: Understanding Critical-ness of Problem(s)


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The more closely aligned the company’s product is with the total product requirements of customer segment, the easier it is to “own” that segment

Generic ProductGeneric Product

ChannelsChannels

BetaCustomers

BetaCustomers

Performance BenchmarksPerformance Benchmarks

PartnershipsPartnerships

TechnicalSupport

TechnicalSupport

OSes Supported

OSes Supported

CompanyReputationCompany

Reputation

• Specs• Packaging• Specs• Packaging

Source: Conceptual model,

Ted Levitt, The Marketing Imagination

Customer Segment Total Product Requirements


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Strategic Plan

Strategic Plan

CustomersStrategy

discussions

CustomersSales calls

Industry Analysts

Market segment reports and discussions

CustomersProduct

requirements discussions

OtherInfluencers? Competitors

Collateral, Websites,

Tradeshows

PartnersStrategy

discussions

ConsultantsQualitative third-party market and customer

segment research (interviews)

Building a Customer Segment-Focused Strategic Plan


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Key Requirements For Success Think about both a company and a product positioning strategy from the beginning Focus on a well-defined and accessible market entry customer segment Prioritize resources against that customer segment’s problem and total product

requirements Develop a complete competitive analysis Lead with a compelling competitive differentiator (directly related to the customer’s

problem) Track key shifts in the market environment (especially new technologies) Maintain awareness of evolving customer (total product) needs and buying behavior Target most influential customers and partners rather than the ones that are most

easily accessible Form a realistic assessment of the organization’s ability to execute against the

strategy (team, time and money)


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Summary: Keys to a Customer Segment-Focused Strategy

Define your market and customer segment

Listen to multiple customers and synthesize their inputs

Understand ‘the problem’ and its critical-ness to them

Define the customer segment’s total product requirements

Execute!!

Have you embedded a customer segment focus in your company’s mission statement?


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“It’s Not Just the Plan, It’s Also the Process”


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Annual Operating Plan Components

State of company– Review of prior year’s performance

against the strategic plan, corporate strategic objectives

– Key corporate accomplishments– Financial performance/health– Variances from plan

What’s changed since last year-environmental assessment & strategic plan update

Key business assumptions Key initiatives for next year (“must

do’s”)– Risk factors– Hinge factors

Functional/departmental Must Do’s– Marketing plan (includes total product

roadmap)– Sales plan– Engineering plan (includes technology

and product roadmaps)– Finance and administration plan

(Finance, IT, H/R)– Manufacturing/Operations

Management team/personnel– Headcount– Performance reviews– Next year management team

compensation recommendations– Next year management team

measurement criteria

Annual Planning Cycle (Tops Down/Bottoms Up)

Week 10Week 5 Week 6 Week 7 Week 9Week 8

Plan Kick-off with Managers/Directors

Final Board Ratification

RevisionsBoard Review

Final RevisionsFinal Management Review

RevisionsManagement Review

Establish Measurement Metrics/CompensationGuidelines

Draft Narrative PlanBuild Business ModelComplete Resources Required by DepartmentComplete Assumptions by Department

Draft Plan/Complete Business Modeling

MeasurementBusiness DriversDepartmental SupportInitiatives/Must Do'sCompany Review

Management Planning Kickoff Meeting

Company FailuresCompany AccomplishmentsFinancial healthEnvironmentMarket PositionCompany Strengths/Weaknesses

CEO "State-of -the-Company" Analysis

Week 4Week 3Week 2Week 1 Week 10Week 5 Week 6 Week 7 Week 9Week 8

Plan Kick-off with Managers/Directors

Final Board Ratification

RevisionsBoard Review

Final RevisionsFinal Management Review

RevisionsManagement Review

Establish Measurement Metrics/CompensationGuidelines

Draft Narrative PlanBuild Business ModelComplete Resources Required by DepartmentComplete Assumptions by Department

Draft Plan/Complete Business Modeling

MeasurementBusiness DriversDepartmental SupportInitiatives/Must Do'sCompany Review

Management Planning Kickoff Meeting

Company FailuresCompany AccomplishmentsFinancial healthEnvironmentMarket PositionCompany Strengths/Weaknesses

CEO "State-of -the-Company" Analysis

Week 4Week 3Week 2Week 1

Annual Planning Cycle (Tops Down/Bottoms Up)


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Roundtable Exercise

15 minutes – Discuss question and possible answers with other participants at your table; give examples from your own experiences

Chair #2 manages discussion

Chair #5 is scribe, capturing potential answers to the question on the table

10 minutes – Each table’s scribe reports to entire group quickly and briefly ( 1 minute) on top two ideas discussed by the group


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Roundtable Questions

Tables 1 & 9: How does the CEO involve people in the planning process to ensure the right balance between top down/bottoms up planning?

Table 2: How does the CEO ensure linkage between the strategy and annual operating plan (especially in emerging and dynamic markets)?

Table 3: How does the CEO set objectives in a non revenue environment?

Table 4: How does the CEO hold the organization accountable for executing against the plan?

Tables 5 & 6: How does the CEO ensure that the annual operating plan remains relevant to daily company activities?

Table 7: What steps can the CEO take to ensure the company’s strategy remains customer focused?

Table 8: How will planning improve execution at your company?


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Summary

Planning is a “never-ending” process

It considers all of the elements required for success (flexibility to react to unexpected changes)

The Plan builds ownership

The Plan links performance to plan

The Plan identifies key initiatives

The Plan communicates to everyone expectations and responsibilities

The market and customer segment should be the focal point of the plan


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Planning – Action Plan

Fill out the Planning section of your CEO Action Plan

Review your Self Evaluation and Action Plan with your SRF board member post Summit

Implement the changes that will matter the most

Lunch in Terraza Ballroom

Move to a new table after lunch, check pocket agenda


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Reference MaterialAnnual Operating Plan Example

Planning. Culture. Team Keys to Building a Successful Company SRF CEO Summit 2002 – September...

Documents

Transcript of Planning. Culture. Team Keys to Building a Successful Company SRF CEO Summit 2002 – September...