Prioritizing the Implementation Strategy

Too many consultants help businesses develop strategic plans that fail. This is often not the fault of the business or the strategic plan. I don't really fault the consultant except that they did incomplete work. A great BIG picture is draw up, but no blueprints are made. And what we are left with is a pretty picture with no tools to implement it.

There is a way to remarkably simple way to go about prioritizing and implementing your strategic initiatives. Let's walk through it briefly and you tell me if it makes any sense. (For a PDF PowerPoint, go to http://www.marknissley.com/, click Client Access, then click Client Tools in the middle of the page.)

1. First, if all identified strategic outcomes are tied tied to bottom-line values (this means $$$), then you have to revisit them and do so. Generally all strategic goals can be tied to one or more of these three things: increase revenue, increase margins, reduce expenses. All affect the bottom line.

2. Once you've done this, you should have a list of strategic outcomes and the dollar values they will represent annually once achieved. For example, let's say we have a bakery, and we determine that a 20% increase in our birthday cake sales will reap an additional $12,000 in revenue every year. $12,000 is our Annual $ Value.

3. Next, figure out how long it will take for you to reach that outcome. Completely reach or exceed it. Let's say we know how to sell more cakes, but believe it will take us 9 months to actually achieve a 20% increase in sales. 9 is our Months value.

4. We are almost ready to go, we just have to divide these things into 4 categories.

Category A: Anything with any Annual $ Value that can be achieved in 1-3 months. If you have anything that can impact your bottom line immediately, DO IT.

Category B: Take your biggest Annual $ Value (unless is is disproportionately larger than all others, then take your second). Cut that value in half. For example: $12,000 divided by 1.8 is $6667. Anything that will bring more than $6667 to the bottom line is next. The longer the outcome takes, the higher the value must be.

Category C: Take all initiatives with your mid-Annual $ Value or lower. The longer they take the more likely they are to fall in category D.

Category D: Once you get to these projects, they are all fairly low value, so better get more strategic outcome in place fast!

(Graphic representation below.)

5. Execute the outcomes in the order of A,B,C.

You can argue with this all you like, but then you will just be arguing, not DOING, and that gets you nowhere.

(I should note I took this tool from someone, though I can not remember who. All the credit goes to them. I just use it.)

Admitting to Economic Crisis

I generally don't like to comment on the current economic situation in our fair country. However, it seems only responsible to point out a couple things to those that reject the idea that we are in a recession or that there is a crisis.

There seems to be some doubt from some people that we (in the USA and every other country) are in a recession and that prices are rising while income is falling. I am really happy for these people, as the current situation has not yet touched them, or they are sufficiently capable of ignoring it. Perhaps they are Senators. The fact of the matter is we are approaching a turning point in the global economy unlike anything in history. Consumers are just beginning to catch wind of this.

A few things that are and will be affecting the all of us:

1. The American dollar has lost 35% of its value since 2002. This means that anything that is imported, now costs 35% more. Look around your house and tell me how many things you see are imported. Now look in your pantry, you'll be surprised how much FOOD is IMPORTED. The upshot is that much of the rest of the world is following us down the tube, keeping the dollar equitable, but portending to bigger problems later.

2. Not only has the price of a barrel of oil (75% of the cost of gasoline) doubled in the last half decade, but the dollar now buys 35% less barrels (see number 1). Compounding that demand for oil in those 5 years has risen 25%. That being the case, it is incredible that we are only paying $3.50 at the pump. I suspect that we are still buying gas that was purchased at cheaper oil prices with more valuable dollars. Once we start buying gas that was created from oil at today's prices with today's dollars, we will rapidly realize gasoline prices 60% more than what they are today. Demand will drop significantly, which could lead to a collapse of the economics of that critical market.

3. How much of our economy rides on the price of oil? How much BIG business? The answer is anything that relies upon cars, trucks, trains, airplanes, and energy for manufacture and distribution. Or anything that relies upon the manufacture of plastics. That encompasses ALL of the Fortune 1000, which directly affects EVERY consumer. That is you.

From these three things, it is evident that much is riding on the price of oil. Unfortunately, no one is willing or capable of taking definitive action on this. Fortunately, this market, like any other, WILL right itself. This does NOT mean that the price of oil will fall. It means that we will simply learn how to do without. This will not be an easy, nor short, transition. It will take decades. But I do think it will happen MUCH faster than most realize. We won't have a choice.

For us in the USA, we have the unfortunate circumstance of a government that is committing TRILLIONS of dollars to propping up the existing oil-based economy, instead of funding the transition of the economy. Hundreds of billions have gone into the war in Iraq, which is now, or has always been, about controlling oil influence in the world's most oil-prolific region. Hundreds of billions have gone into bailing out oil-dependent industries like automobile manufactures and airlines. This last may have been unavoidable to keep jobs in our economy, but it should have come with more oversight over change. The point is, can you imagine where the US economy would have been in 5 years, if those trillions of $$$ would have been invested in cheaper, emerging technologies that will replace global oil dependence over the upcoming years? Talk about a leadership position! We'd be leading the global economy again, instead of dragging it down like an anchor.

Do with this information what you may...

I went to the grocery store last week and bought exactly the same thing on a grocery receipt I had from the same store six months ago. (I found it when cleaning out a drawer.) My bill last week: $93.54. My bill six months ago: $74.93. That is a 24% increase in food prices, that I will not take to the bank.

What's the trend that is going to impact business landscape 10 years from now?

As all types of resources become more in demand, we are moving to more commodity-driven market places. Oil has lead the way, with wheat and corn close behind. These three items drive cost of living indexes, and the daily patterns of us all. We like to think we live in the age of technology, and to be sure, innovation is increasing rapidly. However, it is traditional commodities that now drive our markets in ways we could never have imagined.

Globalization only expounds this phenomenon. Commodities are much more heavily contested and traded (driving prices further). We are feeling the full weight of population explosions, as global population growth and consumption has finally outstripped our ability to increase resource delivery. As the American dollar plunges in value, the USA's ability to purchase resources becomes crippled, while other nations abilities is enhanced. (There is a positive side to this, as the USA has the opportunity to become more of a producer of resources, mitigating its huge consumption trend.) This upset will take years to stabilize, and will create new way of doing things. Off/on-shoring will take an entirely new meaning.

What does this mean for technology? Technology will move to a more utility role. It will be the medium/tools that the new global commodity market is driven with. Innovations will center more on telecommunications, logistical mapping and control, trading, and process analysis. Business solutions, as opposed to consumer solutions (which have driven technology over the last 5 years). As consumer consumption slows down and business demands increase, this is already beginning to show in the market. Technology will always be innovating, however it will now be the tools of innovation, not the product of innovation.

As with technology, everything else will be driven by the acquisition and transfer of resources. Developing countries are well positioned to take advantage of this, which will ultimately balance the global economy in a way that is difficult for us Americans to imagine. The great fortunes, innovations, and entrepreneurs of the next age will be the innovators of this model.

Entrepreneurial Advantage Over Legacy Businesses

I subscribe to The Ladders jobs site, not just because I am always seeking new opportunity to make a difference, but because I believe the site seeks to provide excellent service and does not fleece the customer in the process. It is a job site that offers true value just for providing your e-mail address, unlike some of the other sites which are just posting board revenue-generators. As a consumer, I like that.

Each week I receive a newsletter from The Ladders that includes a blog-like story from the President, Marc Cendella. Much to my delight, I often find these interesting. I recommend them to anyone that is in the job market or thinks they may be someday.

Today, Cendella posted a newsletter that really made me smile and get on my soapbox. I've included a link to the full text of "Man, I hate American Airlines". (Catchy title, eh?) The general line of the excerpt was this: Cendella was on an American Airlines flight (we all know how bad that can be!) and encountered a flight attendant wearing a pin that said, "I have no idea why I work here." His reaction was this:

"And while Mom said if you can’t say anything nice, don’t say anything at all, I wish the Katherines and the American Airlines of the world nothing but failure. Failure in their campaign to pull down the productive people, failure in their efforts to keep winners from winning, and failure in the marketplace so that better people and companies can serve American Airlines customers."

Wow. Cendella really hit the nail on the head. I too wish these companies and people nothing but failure. They hold us back. They hold our culture back from achieving excellence by forcing us to deal with complacency. Our government (supposedly Republican) has taken to bailing these businesses out of their own self-created problems. Let them die I say. They are dinosaurs, struggling to survive in a world no longer suitable for them. It is time they go extinct.

The typical argument to this path is a lamentation about "all those jobs". That is extortion and altogether bogus. If those people are enterprising workers and seriously about their careers, they will quickly find jobs with new, growing airlines that deliver great rates and great service. or they will find jobs with new companies that will emerge in the cities in which they live. They will prevail and be better for it. We can teach them and help them do that.

But we can no longer subsidize complacency. It will cripple our economy and our culture. Not just for the inertia it creates, but for the opportunity it blocks. Just as the dinosaurs gave way to better adapted and ultimately more successful mammals, these crippled legacy business must give way to new, innovative, flexible ventures. The opportunity we are missing is the opportunity to build something bigger, better, faster, more efficient, which is most easily done from the ground up. Let's take those industries completely apart and rebuild them. Already you can see this happening all over the world, mostly in Asia. New car companies, new airlines, new electronics, building better products for less money. They will inherit the earth. They are entrepreneurs.

The 2nd Component of Entrepreneurial Manifestation: Time

In the first article on this site, I wrote "Energy can be defined as four things in this case (and in most cases): time, money, action, and commitment.... A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested."

Let's talk about time. Time is the one thing that is finite. We can't make more of it. We can make more time available by a variety of time a management methods or simply by paying others to do things for you, hence "freeing" your time. We can not, however, add more time to the overall pool. Time is perhaps the only real direct, flexible expense.

The hard truth in entrepreneurship is also that you may not be able to pay someone else to do what you do. Someone with your expertise may be exceedingly difficult to find. Once you find that person, they may not be able to make the logical leaps you have to get to the right ideas. Or keep those idea secret may be part of your intellectual property. Once you solve all those problems, you could find that another person simply does not fit well in the scenario- they are the wrong person for that "seat on the bus".

Entrepreneurship will take time, and a ton of it. To best ensure the success of the venture, key personnel must be able to commit to the venture full-time. They must clear their time of other things to create as much "free time" as possible. This free time is then "occupied" by the new venture. This takes on a number of strategic advantages. First, the key personnel will not be distracted by other things. This is very important to maximize productivity within the chronological parameters. Second, you will be able to commit the most actual production time within a set quantity of hours. In other words, you will get the most work out of the most time by your key personnel. This moves the venture along as quickly as possible, which is often critical to its success. We will talk more about this when we talk about "action" in the next article.

A talk about investing time energy would not be complete without a discussion of money. Time inevitably costs money. If key personnel are worried about how their mortgage is going to be paid, they can not maximize productivity. And they must be rewarded for their innovation. Reward can be delayed with stock options, and even some salaries can be deferred, but an understanding of compensation must be agreed upon early to ensure that time can be absolutely focused on success.