Anatomy Of A Great Strategy Dan Greene

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Anatomy Of A Great StrategyDan Greene
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• So Why is Strategy So Important?

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Managing The Present

• So Why is Strategy So Important?
• The challenge for managers in our industry is to
  manage the present better, much better, as
  preparation for the unforeseeable future.

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Strategy Implementation

• Strategies Are Designed To Be Implemented
• Ernst Young 66 of Strategy is Never
  Executed
• Why?
• Doing something new is hard
• Companies must overcome long standing traditions
• Office politics and conflicting interests
• Poor communication channels

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Strategic Choices

• Companies Make Strategic Choices
• Strategic Choices Based On
• Trial and Error What has worked?
• What has not
  worked?
• What is Managements appetite for Risk?
• What have you learned from your analysis to date?
• What are your thoughts on how to best proceed?

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Strategic Frameworks

• Successful Strategies are simply a framework that
  helps business leaders better analyze, understand
  and employ the activities that have been shown to
  produce superior returns and create wealth from
  our business.

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Insight from Good to Great Companies and DRIVEN
Companies
RETURN DRIVEN Abbott, Kimberly-Clark,Gillette,
Walgreens

• DRIVEN Criteria for Selection
• Start with gt20,000 companies
• Three criteria (for gt 10 years)
• Insight from DRIVEN
• Innovate the Entirety of the Offering
• Target Unmet Needs of the Right Customer Groups
• Engage Employees and Others

• GTG Criteria for Selection
• Start with 1,435 companies.
• Screening and selection process Total Shareholder
  Returns
• Insight from GTG
• Level 5 Leaders
• Hedgehog Concept
• Right People on the Bus.
• Confront the Brutal Facts

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Criteria

• Achievements of Top Performers
• The performance of the top companies researched
  in the Return Driven Strategy is based on 3
  Dimensions
• Superior and Sustainable ROI
• Growth in terms of net worth while maintaining
  superior ROI
• Provide company owners with above average returns

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Performance Measurements

• CFROI vs Cost of Capital

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Cash Is A Fact

• Cash Is A Fact. Profit Is Opinion

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Cash Is A Fact

• You Can Be Profitable and Still Go Bankrupt

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CFROI

• Cash Flow Return On Investment (CFROI)
• How well did your investments pay off?
• Investments, not only in equipment, but in the
  right people, marketing programs, etc.

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Opportunity Cost

• Cost of Capital
• We looked at this because every business requires
  some amount of reinvestment to fund equipment,
  inventory, receivables, and other assets.
• These investments have a Real Opportunity Cost.
• The CASH spent on investments in the business
  could have been invested elsewhere.

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When To Grow

• Every Manager should seek to reinvest when rates
  of return can be generated higher than the Cost
  of Capital, and consider shrinking the business
  when returns are below.

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Return Driven Strategy
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Commitment

• OBJECTIVE Increase Wealth or Net Worth
• Wealth of the Company
• Wealth and Security of Employees
• Define in both monetary and non-monetary terms,
  the goals and risk levels

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Benefits of Wealth Creation

• What comes from an increase in the Companys
  Wealth
• Pricing Power
• Reinvestment into productive assets that will
  generate higher returns
• Improve the livelihood of not only owners, but
  employees and customers

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Return Driven Strategy
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Wealth Comes From The Customer

• Creation of Wealth and Higher Returns Come
  Through The Customer
• By fulfilling their unmet needs
• High Performance businesses deliver an offering
  which customers believe is not otherwise available

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BMW
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Target Markets

• Targeting Appropriate Customer Groups
• We need to target clients whose needs are large
  enough to justify the upfront and ongoing
  investments to create and deliver the right
  offerings. (Example Aluminum Extrusion in the
  Rental Market, in-house tension fabric
  capabilities)
• Recognize how being the dominant provider to any
  particular customer group sets the stage for
  higher returns (based on volume), but still
  requires fulfilling the customers unmet needs
  (General Contractors)

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Return Driven Strategy
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Competencies

• There are three Competencies required to achieve
  increased wealth in the higher performance
  companies
• Deliver Offerings (often taken for granted)
• Innovate Offerings
• Brand Offerings

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eBay
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Innovation

• Recommendations on Innovation would be
• Innovate the Entirety of the Offering
• Innovate when previous offerings are dying
• Innovate offerings with no Pricing Power

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Branded Offerings

• Branding our Offerings
• Trade shows and events are two of the most
  powerful branding tools available to clients.
• Brands create the connection between the customer
  and the need it fulfills
• We should brand consistently with the Delivery
  Of Our Offerings to create the strongest
  connection
• Brand the Offerings and the need, Not The
  Company.

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Abbott Laboratories
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Return Driven Strategy
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Support

• Five Contributors to Supporting the Delivery,
  Innovation, and Branding of our offerings
• Partner Deliberately
• Map and Redesign Processes
• Engage Employees and Others
• Balance Focus and Options
• Communicate with a Purpose

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Yahoo
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Support

• Five Contributors to Supporting the Delivery,
  Innovation, and Branding of our offerings
• Partner Deliberately
• Map and Redesign Processes
• Engage Employees and Others
• Balance Focus and Options
• Communicate with a Purpose

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Return Driven Strategy
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Idea Sharing

• Idea Sharing

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