Exploring the 6 Key Components of a Sound Business Strategy

Thank you for joining us at our inaugural CMC podcast, Your Expert Advantage, a higher level of management consulting. This podcast is produced by the Canadian Association of Management Consultants, CMC Canada. My name is James Grieve and I'm a Certified Management Consultant out of British Columbia and a member of CMC Canada. Our hope over the coming weeks and months with this podcast is to provide management consultants with great thought leadership, case studies and actionable info in a conversational format that you'll be able to take back to your office and implement. Part of what we'll be doing is telling some great stories from those who've earned their Certified Management Consultant designation to show you the value of CMC, the profession's only international certification recognized in over 40 countries. Today, to kick things off, we're going to focus on the topic of strategy. And today we have with us Connie Sue. Connie is a consultant, author of Get Results That Count, a practical guide on business results measurement and a speaker. She helps businesses develop focused growth strategies, build on operational excellence and implement meaningful KPIs for guiding execution. Connie has worked with business owners and executives of companies in diverse industries. They include financial services, food, healthcare, professional services, utility, transportation, telecommunication, manufacturing, packaging, higher education, and government organizations. Connie joins us now. Welcome Connie. Thank you, Jane. Happy to be here. Thanks for having me. So as we get going, Connie, just like to have you introduce yourself and tell us why you got into consulting and what you do for your clients, your area of specialty and who your typical clients are. It is an interesting journey on how I got into consulting, Jane. My background is in structural engineering. Upon graduation, I did a short thing in engineering and got my professional destination. As an engineer, you know, you can avoid site work. I love the design part, but not too crazy about working in the rain, climbing up and down, half finished structures, or working on muddy slopes. So I decided to swap my still-toed boots for more fashionable shoes, went back to business school, and that opened many doors for me. I got into consulting and founded my own consulting practice, got my certification, CMC, and never looked back. Today, I help clients in three areas, strategy development, operational excellence, and designing for KPIs to monitor performance. My company, CDC Synetics, is based out of Richmond, which is Columbia. And in terms of consulting, it is a good fit for me because I am an inquisitive individual, and every project is different and is rewarding for me to be able to help companies excel while learning at the same time. Fantastic. Well, you might have found really interesting there, Connie. As you mentioned, you know, you have the talk about your shoes and the key thing is the boots on the ground. So what I found, you know, interesting and relevant here for consultants and consultants serving their clients is people who have actually been in the trenches, right? So they understand how projects are conducted and have actually been either on the shop floor or in the field. So that's fantastic that you made that transition from being an engineer into the consulting world and understanding how not only designing strategy, but implementing strategy is so important for your clients. Yeah, I definitely enjoyed it. And the pod I really enjoy as a consultant is being able to go into the business, doing site research and working side by side with people at all levels so actually can see how they work and be able to identify areas for improvement, for instance. Fantastic. And, you know, you mentioned strategy and that's a key component of your practice. Now, the word strategy, you know, it's assumed so many different meetings in the course of business such as pricing strategy, long range strategic plans. There are several different definitions of strategy. How would you define strategy for a business and how do you apply that for your clients? I couldn't agree more, James. The word strategy has been used loosely, often for operational decisions. By the example you gave, pricing strategy for marketing, the VP of people has a talent development strategy, and director of technology has a data mining strategy. So you might notice that the word strategy is used in the context of how the business tackles different operational challenges. I define strategy to be the direction for a business, which markets it will serve, what products and services it will offer, and what capabilities are critical for success. And hence, that's very important for a strategy to set a clear specific direction for the business because strategy drives focus, focus drives investment and investment drives retail. No, that's fantastic. That's a very clear definition of it. And it explains why it's essential to every business. True. So, you know, based on that, you know, strategy is obviously a core function of this and essential to every business. Would you agree with that statement that every business should have a strategic plan and how that's rolled out? You bet. Without that, you have no aim in this dangerous proposition because different departments will be working on what's best in their own interpretation for the business. Now, we hear the word strategy so often used, and companies or individuals or leaders feel that they have a strategy, and they like to think they have one, and many of them hopefully have great strategies. But there is a difference between sound strategies and mediocre ones. And that could be really critical to the vitality and the sustainability of a business. How would you distinguish between a sound strategy and a mediocre one based on your experience? Excellent question, James. In my mind, there are six characteristics to a sound strategy. Number one, it has a clear vision that not a star on what the business wants to become, what the future looks like. And if I may quote Apple's position is to make the best product on earth and to leave the world better than we found it. It is inspiring, and we can attest to that revolutionary product Apple has introduced us to. The iPod, the iPhone, the iPad. The second characteristic is the, it needs to have specific well-defined goals. And I want to emphasize the word specific here. We tend to use broad, warm and fuzzy words to describe goals. If you look at the goal to be innovative, it means different things to different departments. Engineering would associate the word innovative with new product design. Marketing would explore new ways to run social media campaigns. And operations would associate the word innovative with lower cost options to support customers. When you're not clear with your goals, people do their own interpretation. And unfortunately, despite good intentions, you may end up with departments working in silo and leading in different directions. So it is very important to be very clear and specific what you want to achieve from being innovative. It is all about changing product design, new product design, say so. You can do safe marketing and operations, a lot of time and effort. So the more specific you are with your goals, the better, because there's no guessing. The third characteristic is the strategy. Strategy needs to have clear prioritization of all the different growth opportunities. There's only so much resources, namely money, people and time. So it's important to focus. Based on my experience, an organization might have less than five strategic pillars. And those pillars might be profits, operational efficiency, safety, for instance. And each pillar could comprise three or more goals. And each goal to turn into multiple projects. You can do the math. Easily from a strategic plan, you might end up with 10, 20, maybe even more projects of different sizes. Keep in mind that you are going to be drawing on the same people who are running the day-to-day operations. So that's a lot of traditional work. More is really less. So you've got to be realistic on what you can take on. Overloaded and fragile workers and happy employees. The fourth characteristic is the strategy needs to identify the key capabilities required. Strategy without execution is hallucination. So it's crucial to identify the capabilities you need to execute. If this capability is available in health, perfect. If there's any need to develop the skills, hire experts, or partner with another company, it will be good to know where the gaps are. So you can plan accordingly. It does take time to get people and processes in place to do the work. And let me give you an example. For a company that has an ambitious growth plan, but it faces a major hurdle, it needs to replace all the legacy systems with an integrated operational platform. So that capability becomes critical and they need to put number one priority on it before they can sequence all the other initiatives. Characteristic number five, it needs to have an action plan. And this high-level action plan on who is accountable for what helps to drive focus for the business units and the department. So the action plan will align the key initiative, the timelines, and the people to be involved. All the key elements for execution of that strategy. And when you are very clear on the action, it makes it very easy to communicate as well. And people can grasp what you're trying to get to. And the last characteristic is that alignment. You want to see alignment because there will be, and I promise you, there will be unforeseen events and roadblocks. And when you have alignment, you are voicing the finger pointing. The aligned teams will collaborate to tackle issues together instead of pitting against each other. So the six characteristics for a sound strategy are pre-vision, well-defined goals, priority, capabilities required, action plans, and alignment. That's fantastic that there's a six-step process. I think it makes it easier for people to understand that there is a process to this and there are complexities to this. And every stage is interdependent. Is that correct? Yes. If you look at your strategy, I would urge you to do a check to see if you see all these elements. And that leads us to the topic, maybe later on, that we can talk about the preparation and the process that you use for strategy development. Right. And with one, if any of these elements are not considered and explored fully, then it just leads for the other ones, for the implementation, the execution of this to fail. Is that correct? Yes. I think ideally you want the strategy to be ready specifically enough that it's ready for execution when you hand it off to the next level of the organization. And your system lays it out so nicely and clearly. I've never seen it or heard it laid out like this before, which I think is wonderful. And for business owners, this is a great process to follow as well. And we'll talk more about that. And there are many approaches to strategy formulation. And what would you suggest to business owners and executives to build on this, to take those next steps to formulate a strategy? Indeed. There are many approaches and tools available. There are the SWAT analysis, looking at the strengths, weaknesses, opportunity, and threats. There are the five forces analysis that you can look at your competitive landscape. There is the balance scorecard, which was originally created for performance measurements, but now has been widely adopted for strategic planning. There is the Blue Ocean strategy, which focuses on value creation, exploring opportunities in uncontested market space. So creating that Blue Ocean rather than competing head on with your competition in a crowded space. There are many, many more. And what I do normally is I will use a combination of different approaches tailored to the business. But it really boils down to two elements that are critical to work through the process. The first one is preparation. And the second one is a process you will use for strategy formulation. The more organized you are, the better. And for preparation, it includes understanding where the business is today, what the industry trend is, what gets your customers excited or frustrated, and what are the main challenges that you have to overcome and the growth opportunity that you can put forward to your team. The more information you have at your fingertips, the easier it is to filter noise and make informed decisions in the fashion. And that minimizes the need to put decisions on hold. With respect to the process, you want to follow a structured approach, because a logical flow of discussion will help to put all the puzzle pieces together. And for me, I generally start with revisiting the mission and mission for the business before getting into the core competencies that have helped the business excel. And we'll look at those to see how much leverage they could use to build future growth. Then we look at the competitive landscape before identifying growth opportunities and evaluate them. And depending on the level of preparation and process that you use, you can have different outcomes. So I'd like to maybe take a couple minutes to look at some of the potential outcomes when there's a lack of preparation and/or using a disorganized approach for that work for you, Jane. Absolutely. And one of the things that came to mind for me is the depth and complexity of developing a strategy here. And in my practice, and seeing a lot of business owners, I work with small to medium-sized business owners, quite often they're so busy working in their business, they don't have the time to step back and work on their business. And if they try to do it themselves, it's very hard to keep up with trends in the industry and that type of thing. And it really speaks to the value that an external consultant would bring to this and someone who has a methodology and a process to de-risk or mitigate risk in the business and uncover some blind spots yet, at the same time, find opportunities. Just like before we go on to the KPIs here, just to discuss that for a moment on the value of having an external person outside the firm coming in as a consultant to just really review and take a different lens on a business based on your experience here. And obviously, you have a lot of experience. You've got great models here because business owners can go into, regardless of the size of their business, they can go to a bookstore and see all these books on the shelf or read it in different publications and journals. And how do you pick the right strategy that aligns with their particular business? And strategy is one of these things, like many things in a business, if you don't get it right, it could have some pretty severe consequences. So back to my questions, just the value of having a certified management consultant come in to the business and see things and the results and the impact they provide. Yes, definitely. I think for my clients, I always hear that the number one benefit is having an impartial individual to help them to work through the process because then you bring that objective lens and also fresh ideas as well because I don't live in the organization, so I tend to have a fresh perspective and also bring new ideas. Great. And when you're working in businesses, there's got to be areas that companies tend to overlook. Now, you may see these because strategy is your distinct advantage here and you live it and breathe it. What are some of the things and areas that companies tend to overlook when they formulate their strategy? Is there any common things you're seeing, regardless of industry or the clients you work with, that they overlook that they really should be looking into deeper? Yeah, I'd like to share five areas that I would like to highlight. The first one is look out for goals that are broad and vague. When you have vague goals, they tend to leave too much room for improvisation. Let's look at an example. Company with a goal to embrace technology. Imagine the executive sitting in the room trying to figure out what outcomes they want to achieve for this particular goal. The VP of technology is keen to work on this day of the art technology. The operations director wants to replace the ERP and the customer experience VP has the integration of the contact center application with the CRM top of mind. You can see that each person focuses on his own needs. So it is important that you can turn, you got to turn those vague goals into specifics. And the earlier you know that, the better because you're going to save a lot of time from unnecessary debates down the road. When you don't do that, you're leaving that decision on what are the most important projects to focus on to your next level of the management team and directionless improvisation to steer the business off on a tangent. Number two thing, second thing to look for is the use of action goal. There's a tendency to use action, what will be done as goal, for example to open an office in the UK. That is just one of the many tasks needed to penetrate the UK market. The real goal there is to grow revenue in UK. The danger with using action as a goal is a shift to focus to task and potentially narrow your thinking. And action is a mean turn in, not all actions are equal. So instead of saying open an office in UK as a goal, reward it to grow revenue in UK. You get people to think about what is the fastest way to build traction and make the first sale in UK. And that's more effective than just opening an office there. The third area is the presumption on customer needs. Many companies don't have a persistent way to gather customer input on a regular basis. And if you happen to be in that situation, at a minimum, I will urge you to reach out to a few key customers before your strategy session and get a sense of what they are thinking. Talking to your customers directly is the best source of growth intelligence. And the information you gather will help to identify changes necessary to continue to serve their market or grow that market. And that also helps to build an informed growth projection. When you look at the growth projection and it's insufficient to realize your target, it also sheds light on additional opportunities of business we need to explore. Customer intelligence is critical because developing a strategy interact with them is wishful thinking. The fourth area is risk assessment. This is an area that many companies tend to be a bit light with. As you evaluate your growth options, it is beneficial to identify the potential risk. Look at the likelihood of occurrence and the severity of the impact. And of course, having a mitigation plan in your back pocket will be helpful. And you can easily incorporate all this into your prioritization effort. And an example with a toy distributor, it was planning to expand east to eastern Canada. And they were aware that commercial real estate is difficult to find. But this company, they want to keep all operational activities in health and may need to have a better control over service quality. It did not have a backup plan. But a nine month search turned out to be full tau. If it had had done a better job with assessing the risk and have a mitigation plan, they would have talked to third party logistics providers. And that delay was very costly to the company. The fifth area is the alignment. It is important, I mentioned earlier already, as a key characteristic of a sound strategy is alignment. You want to make sure that the high level initiatives at the corporate level is supported by your departmental initiatives. An example with a software company that works with, they have a corporate objective to broaden the market adoption of the ERP. And the idea there is to develop better plugins and mobile features. But the VP of product development had also a list of new features that he wanted his team to work on. So as a result, the developers were poor in the direction and that led to departure of several key personnel. So I'd like to emphasize that as you work through your strategy, you want to have explicit and I want to emphasize explicit discussions on what the priorities are and get alignment on them. And that's the best way to get a coherent roadmap that everyone across the organization will work together, aim for the same outcome. And that also helped to optimize collaboration. This is great stuff. And when I look at this and the model that's provided here, you can see how that you could affect change in organization. And people command it with business plans and they have strategic planning. And when they don't take the proper steps, they may overlook things, as I said, it's been critical to a business. When you were looking at this also, how do you ensure that it's sustained over time? So there's the plan, there's business plan, and then there's the strategic planning. And then how do you sustain that people will have this going forward? So when you're consulting, do you go in once and then provide them with the tools to do that? Or typically people, you know, work with this and then have a consultant back into the mix to work on continuously with them as they grow and develop and reevaluate the strategic planning and that type of thing. Great question. Normally, how I work is I will go in, if it's a new client, work to the strategy with them. We have an action plan for the next year or 18 months that will help them to lay out the focus for the different areas. And normally then I'll go back every six months to check on how they're doing and then revisit the strategy at least every year to see whether it needs to update. And that helps them to reinforce whether the strategy that was developed a year ago is the relage, or if they need to pivot or modify any certain elements of the strategy to make sure that they are still serving the market that they are aiming for. As business alignment changes so quickly and the technology advances very quickly, it is important to keep on top of that. So this, you bring a very good point there. So the role of a consultant, particularly a certified management consultant, is you actually become an extension of a very important part of their business. So you don't just come in and write a report and then exit. You're actually seen as, you know, a trusted advisor in their business going forward because you've taken the time to understand their business, what the external environment is, what their capabilities are internally, how well they're aligned to actually apply this, and then continue to work with the client as you go forward. Now, of course, there's different types of consulting assignments, but it sounds like for strategy, it is really quite impactful to understand the business and carry forward with them and always tweak this as it goes along so they're maximizing the utility of their people and time and financial resources. Is that a correct assessment? Definitely, definitely, because I think having that continuity always helps. And as you can appreciate with COVID over the past year, 18 months now, things are constantly changing. And for companies that have successfully pivoted, that's great. But for those who are still struggling, I think it might be a good time to take a look at the strategy and see where they should be headed. Before I get into the topic of your book, which I want to address as well, because there's some really great things that come with it. Is there any, you know, cases where you've had any resistance to companies? Of course, they're set in their ways. You know, they've had a strategy for a certain number of years. They realize they have to change. But are people typically embracing this? Or when you use this framework, do they seem to understand it more effectively and then understand it, you know, how it can impact their business? Or, you know, when you're coming in to provide a new strategy for them, what are some of the hurdles you find with businesses where they think, oh, we've got this. Why do we have to change our strategy? Yes, I think a lot of time is the approach that they take. Many might think that developing a strategy is just pulling all the key management team members together and put a plan together quickly. When you don't prepare or don't have a structure process for that, you tend to end up with a disjointed bottom-up projection. So everyone will bring a plan, what they think is best for their function, rather than for the corporate overall. So we need to look out for that. But when you follow a structured approach, you will have a orderly discussion of the topic. And you also will be consistently using the same model or mechanism to weigh and compare your options. So it's more rigorous and it's a more transparent way to work to what the business would focus on and you get alignment on that. A key success that I will mention and I would like to share is helping clients overcome that fear of missing out. A lot of times they throw so much into the strategy thinking that they can handle it all. But if you have a rigorous process to work through all the options and understand what each option involves, for instance potential for revenue and also the associated costs involved, that also will be information that you can use to build your financial projection. And that really gives you the big picture, putting all the pieces together, understanding, okay, this is where we're headed in the next three to five years. Do the numbers work for us? Do we want better or are we happy with that? Then that will also be a way to gauge whether they should do more or less. That's really good insight there. And prior to becoming a consultant, I've experienced this firsthand where in companies I work for, you have a strategic planning retreat or it's an annual meeting of the leaders, the company, the managers, whatever the case may be. And everybody comes prepared to make their presentation and it just reverts to doing the same things after everybody gets back from the retreat. Quite often because it was never facilitated by someone with a process and a system. And in hindsight now, I could see how these planning retreats could have been so much more effective if we would have had a system like yours there that could actually have accelerated the business that much more. And I think I'm sure our listeners can relate to that as well, how it could be just a waste of time if everybody just comes up with a plan. It's just the thing you check off the box and say, "Well, this is what we're going to do this year without a process to make it work effectively." So I think that's really important. It actually bridges to my next topic here in your book, Get Results That Count. You talk about the use of relevant key performance indicators, KPIs, to monitor strategic results. It's one thing to have the idea and to say, "So first of all, why are we doing this? What are we going to do? Who's doing it? When? Where?" That type of thing. But it's really important to measure what matters. Now about monitoring strategic results and tell me more about this, about the importance of KPIs and what type of KPIs are involved in a strategy and why they're so effective. Yes. Get Results That Count was written based on my experience working with clients on results reporting over the years. As a consultant, I get to talk with people at different levels of an organization about the subject. Many companies focus heavily on financial results, which is natural. But when it comes to non-financial metrics, they are at a loss on what is meaningful to monitor. I have two goals for the book. One is to offer some insight on how to figure out what is meaningful to measure. The second goal is to use KPIs as an early warning tool for proactive business management. And when you look at your strategy and your goals, you do need KPIs to track how you're doing, what is going well and what is not. So that means that you need to make sure your goals are specific and measurable. Hence my emphasis about clear and specific outcomes earlier. And KPIs also steer people to focus. We hear often what gets measured, gets managed. And this reinforces that we ought to measure the right things. And in addition, KPIs are a great tool to drive accountability. So when we lay out the action plan that I mentioned earlier, we outlined the initiatives, the timeline, and the people, we make sure that the outcomes and associated goals are identified as well. And that's when the KPI comes in. And when people are clear on what they are accountable for, they will align their decisions and actions in the day-to-day work. So that makes everything easier and helps them to link all the pieces together. Now that makes great sense. And you can see how it provides the opportunity for everybody to have a dashboard or insight into what success looks like. And success looks like different things, different organizations. I'm sure the KPIs differ. So the indicators differ from organization to organization, which is another important aspect here of involving a consultant with experience and models like you have as well is that it's not a one-size-fits-all approach. So just to conclude our podcast here, just to talk about the difference between all these different approaches and why it's important not just to have a one-size-fits-all and to have someone who has experience coming in as a consultant who can provide that perspective so that you could actually guide companies in the proper direction so that they can actually achieve their results. I definitely agree with that, James, because not one-size-fits-all, whether it's looking at the strategic approach, whether you want to use different models because it has been so popular, you want to make sure that you bring in specific emphasis that your business needs. If you are in a situation where you're trying to be ahead of your competition, maybe a more thorough competitive analysis is called for. If you're in a space where you want to create something new, maybe using the strategy canvas from the Blue Ocean strategy will work. So you want to bring in the tools that are relevant for that business. Exactly. And one of the things that I'm finding is a common theme here, and I'll end it with this, is that by bringing in a strategic consultant or consultant that works with strategy, you have the opportunity to deliver the result of leaving it better than you found it. And certainly, that's what you did here today in our podcast. So I really appreciate your time, Connie. One thing I just wanted to, before we close up here, is how can our listeners get in touch with you? I know you have a white paper on strategy that's fantastic. How do we get a copy of that? Yes. Please go to my website, getresults.count.com/essential, and you can download it. Fantastic. Well, thank you again so much for your time. And this has been wonderful. This has been our inaugural CMC podcast. So I appreciate you being the first to join us here. Brought to you by CMC Canada. CMC Canada administers and its provincial institutes confer the Certified Management Consultant designation in Canada. And the Certified Management Consultant designation is the profession's only international certification recognized in over 40 countries. You can learn more about what it takes to earn a CMC and all the benefits that come along with joining CMC Canada on our website, cmc-canada.ca. If you've been a fan of the show, tell someone about us or leave us a rating in the Apple podcast store. We appreciate your time. Connie, thank you so much. And I'm pleased to have you as a colleague and a fellow CMC. And I'm anxious to hear about all the great value you're going to provide with our clients and your clients going forward. Thank you so much. Thank you for having me, Jane.