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January 29, 2011
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“There is nothing quite as wonderful as money“ – From the Strategic Plan to the Annual Budget

Reading time: 3 – 5 minutes

“There is nothing quite as wonderful as money
There is nothing quite as beautiful as cash
Some people say it’s folly
But I would rather have the lolly
With money you can make a splash”

“The Monty Song”  Monty Python

____________________________________________________

This is the 10th post in the series on Strategic Planning.  Note that you can subscribe to the blog postings by completing the form in the “Subscribe Free” tab.  Or, you can link with an RSS feed.

Isn’t this true.  “There is nothing quite as wonderful as money.” Maybe I should qualify that and say….there is nothing quite as wonderful as enough money to get the job done.  And, if your experience in business is like mine…it seems like there is never enough.  That brings us back to the focal point of Strategic Planning.  With good planning, you focus your financial resources on the most important activities of your company or your area of responsibility within the company.

You can now transfer your strategies and tactics to a spreadsheet.  The first column of the spreadsheet (column A) will be the listing of strategies and tactics.  The columns to the right will be the months of the year.  Now you can plug in the costs of the various tactics into the month(s) they will be executed.  Total the columns and you have the monthly costs of the strategic plan.  Total the rows and the final column and you have the annual cost.

One could argue that you can take these tactical expenses and put them into the line-by-line chart of accounts in the company wide budget.  This is true.  Eventually, that is where these expenditures should go.  No doubt you have a budget line for trade show expenses.  And, several budget lines related to advertising.  However, if you jump right to this, you will lose the big picture.

By seeing the budget from the standpoint of Strategies and Tactics, you can make tactical financial decisions.  If, for example, the budget seems to high, you can look for a specific tactical area to eliminate to reduce expenses.   It is easier to locate and agree on a low priority tactic that can be cut.  Perhaps it is a series of exhibits at tradeshows in a secondary market.  When the Strategic Plan was originally written, everyone agreed that this secondary market would be good to explore for additional revenues.  However, when costs were associated with the plan, it became obvious that this year it would be too expensive to explore the secondary market.

In earlier posts about strategic planning I made the point that a strategic plan is a dynamic tool.  We just used the example of eliminating a tactical area to bring the budget into line.  At the same time, if in the first quarter or two of plan execution, your team is overachieving revenue goals, you could decide to re-instate this strategy and its tactics.

“I know money is the root of all evil
Do funny things to some people
Give me a nickel, brother can you spare a dime
Money can drive some people out of their minds”

“For the Love of Money”  The O’Jays


My hope is that good strategic planning tied with a budget that is related to real tactics will prevent the money from driving you out of your mind.
January 14, 2011
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Time for a little vacation

Reading time: < 1 minute Dear readers, Medical Device Success will be quiet for the next 10 days as I take some vacation time. When I get back we will get into: 1. Relating the tactics of your plan to a budget 2. Trade show goals, preparation & execution=$$$ 3. Leadership - it isn't what most people think it is - you may have more leadership potential than you think you do 4. Co-op marketing with doctors for medical device companies - Yes, it is possible I will be back soon. Sincerely Yours, Ted Newill 92WN647GJTW3

January 8, 2011
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Key Strategies and Supporting Tactics – Turning Talk into Action!

Reading time: 4 – 7 minutes

This is the ninth post in the series on Strategic Planning.  Note that you can subscribe to the blog postings by completing the form in the “Subscribe Free” tab.  Or, you can link with an RSS feed.

In the last post on the subject of strategic planning, we made sure we understood the difference between strategies and tactics.  And, we had a little fun using a New Year’s Resolution as a Key Goal.  Then we came up with a Key Strategy and supporting Tactics to support that goal of losing weight.  I sincerely hope that no one in the blogosphere picked up my post in a search for weight loss and ended up buying blinders and a nose plug to use in the grocery store.  If you see someone walking through the candy aisle with blinders on…..you know where they got the idea.  And, you have my permission to gently take them aside and tell them that this part of my post was just some good humor.  Better yet…maybe I could start a business selling Diet Blinders!  OK…never mind…bad idea.

Back to business!!

In today’s post we will take one of the imaginary Key Goals I used in post number 7 on “Key Strategic Goals” and make a Key Strategy and supporting Tactics for this goal.  All the initial elements of strategic planning seem a bit cerebral at first.  Some people may demand, “Where is this going?  I see lots of meetings and brainstorming and no action!”  By the end of this post we will see very clear tasks that can be assigned to individuals and give very clear expectations.

Let’s use goal #3.  Lead management is a pet peeve of mine.  A lot of companies do a poor job of lead management.  They spend a lot of money to advertise and attend trade shows.  They get a lot of leads.  And, they DO distribute them.  The problem is lack of follow-up.  Another problem is that the leads do not become part of a database for emails and mailings.  So, these companies are not getting a good return on their advertising and tradeshow investments.  They are leaving money on the table.

3. Lead management software and/or system in place by April 1st . (Note – this could be part of a CRM program. I am trying to be very specific.)

The Key Strategy could be:

“Improve return on marketing investments by implementing a lead management system that assures complete qualification and follow-up of leads.”  This is a clear overall descriptor of the effort that will support the Key Goal above.

The tactics and sub-tactics(tasks) that support this strategy could be:

  • Select Contact Management System (CMS) or Customer Relationship Management (CRM) software by February 15.
    • Assign project manager by January 14.
  • Assign Lead Management Coordinator (LMC) by February 28.  Project Manager to involve LMC in as many planning meetings as possible.
  • Project manager to hold meeting with prospective users and other stakeholders to explain strategy and projects and to get feedback/ideas.
    • In one of these meetings, with an executive leader present, gain commitment of users and stakeholders to support strategy.
  • Via networking with business colleagues get recommendations for 3 vendors or software programs.
    • Study reviews on-line.
    • Present costs, features and benefits to strategy team on February 1 for decision.
    • Place order by February 4.
  • Load software on one computer and run beta testing with other systems if other systems are involved (customer service, accounting, etc.) by February 18.
    • Hire consultant to assist project manager and IT with install and testing
    • Meet with IT support and schedule load by Feb. 11.
  • Write draft lead management protocol by February 11.
    • Review, revise and gain agreement from prospective users by February 25.
  • Train various users and stakeholders by March 25.
    • With help of consultant, create training agenda and curriculum.
    • Set training dates for various users – marketing, sales, customer service, etc – all to occur by March 25.
    • Organize and create training support materials – presentations, handouts, manuals, etc.
    • Coordinate with IT so they have time to load software into user computers prior to training.
    • Conduct training programs.
  • Begin feeding leads into new CMS or CRM system by April 1.

You can get as detailed as you want.  Notice that I did not get into the supporting tactics for the follow-up percentage rates that were part of the Key Goal.  I think you understand enough now to do that.  And, I don’t want to take more of your time here.

A comment on lead management systems – if you are a small company, don’t be intimidated by the feature rich and expensive lead management options available on the market today.  You can start with a simple yet effective system by purchasing one software license to ACT, Goldmine, Salesforce.com, etc. and have one person in the company be responsible for managing the leads, distributing them and insisting on follow-up.  From this simple beginning you can always expand and buy more licenses.  The important thing is a closed loop system that really tells you what happened with a lead and lets you go back to the prospect later.

Now, take the Key Strategies and have your team build in the tactics that support them.  Soon you will have the foundation of a Strategic Marketing and Sales plan!!

January 4, 2011
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Critical – The Difference between Strategies and Tactics

Reading time: 4 – 6 minutes

HAPPY NEW YEAR! The party is over and we are back at the office confronted by 2011.

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”  From The Art of War by Sun Tzu

This is the eighth post in the series on Strategic Planning.  Note that you can subscribe to the blog postings by completing the form in the “Subscribe Free” tab.  Or, you can link with an RSS feed.

First, let’s make sure we have the lingo of strategic planning in place.  Many people…including company leaders…get strategies and tactics mixed up.  Long term, this confusion can be like a fatal self-inflicted wound.  I have actually been in a board meeting where tactics were presented as strategies!  The scary thing was that no board members challenged the presenter.  You may have experienced leaders that rattle off a lot of tasks the team needs to do.  If the tasks don’t have a common thread, then they are probably unrelated tactics.  The team chases after the tasks without any clear feeling of direction (strategy).  Resources get spread out.  The team becomes “busy fools”.  Financial results are flat.  And, don’t confuse operational effectiveness with sound strategic practice.

“There’s a fundamental distinction between strategy and operational effectiveness. “                                                                                                Michael Porter

Let’s go over the lingo:

Key Goals – in the last post we discussed setting your Key Goals for the year.  And, we talked about the need for goals to be as quantitative as possible.  It is not unusual for goals and strategies to sound similar.  A good way to keep this straight is to remember that the result of the implementation of a strategy will be the achievement of a goal.

Key Strategies – these are the 5 or 6 strategies that MUST be executed in order to achieve the Key Goals.  A strategy is an overall descriptor of the direction a company will take in a specific area of effort over a period of time.  In our case, the strategies are for one year.  However, if successful, they could be continued.  Many business gurus say that the strategy is “what” we are going to do to achieve a goal.

Still scratching your head?  That’s OK.  Hang in there.  Let’s talk about Tactics and then use an example.

Tactics – tactics are “how” the strategy will be executed.  They are much like tasks. Several tactics and sub-tactics may be required to carry out a strategy.  For example:

New Years Resolution Goal – Lose 10 pounds in 4 months. (quantitative)

  • One strategy could be  – Follow a healthy diet.  (overall descriptor of an effort to achieve the goal)
    • The tactics that support this strategy would be:
      • Buy a healthy diet cookbook
      • Add a calorie counter app to my iPhone
      • Make a meal plan for every day that limits daily consumption to 2,000 calories or less
      • Log my caloric intake after every meal
      • Take blinders to the store and use them to walk through the candy aisle
      • Wear a nose clamp when in the bakery so you are not tempted by the wonderful smells of donuts, cakes and cookies
      • Always use the “non-candy” cashier aisle – for my international readers…this is true…we have non-candy cashier stations so children that are accompanying their parents while grocery shopping are not tempted by candy and gum

See how the strategy gives an overall direction for an area of effort – “Follow a healthy diet”.  The tactics are very specific steps toward following the diet.  “Buy a healthy diet cookbook” is not a strategy.  It is a tactic that supports the strategy.

There is a nuance here that can be confusing.  Some would say that “Follow a healthy diet” is “how” you are going to achieve the goal of losing 10 pounds.  Doesn’t that make it a tactic?  No.  Remember, it is the descriptor of an overall direction that will be taken.  It is one of the “whats” that you will do.  It does not have the specifics of how the health diet will be accomplished. You could follow an entirely different direction or strategy to achieve this goal.  Your strategy could be to exercise more regularly.  Of course, with a goal of losing 10 pounds, you will probably want to follow both strategies.

In the next post we will create some strategies and tasks that are more medical device related.

December 17, 2010
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Key Strategic Goals – Making the commitment for the year ahead

Reading time: 4 – 6 minutes

This is the seventh post in the series on Strategic Planning. Note that you can subscribe to the blog postings by completing the form in the “Subscribe Free” tab. Or, you can link with an RSS feed.

Now it is time to set Key Goals with your team. You want to be sure that your destination…..Point E….is very clear.

A picture of the landscape ahead of you on the road from A to E should be relatively clear. The Data, Assumptions and SWOT analysis have helped you define this landscape. Will you be able to go from A to E in an efficient straight line? Probably not. While you may have Strengths and Opportunities in your favor, you also have Weaknesses and Threats that are the mountains you will have to travel around or over. And, there may be a couple of rivers to cross without a bridge. The good news is that a road map is becoming clear.

Key Goals

Notice we precede the work “Goal” with the word “Key”. These goals should be the most important achievements of the year. If they are accomplished, you are confident that they year will be a success. You will have lots of other goals for your company. The difference between all those other goals and Key Goals is that the Key Goals are CRITICAL. Setting Key Goals sends a strong signal to your team as to what is most important. And, because they have participated in the strategic planning so far, they should “buy in” to these Key Goals.

Together, you and your team are putting a stake in the ground (making a commitment) and getting aligned for the year ahead! This is leadership. And, it will get results.

Your Key Goals should be as quantitative as possible with metrics to measure the results by. Revenue and profit goals are clearly quantitative. Others are not. Try to have some metric associated with each Key Goal.

You are probably thinking that this is a “no brainer” (to my international readers “obvious”). Increased revenues and profits are the first goals on everyone’s lists. The pre-goal planning you have done will help keep these revenue and profit goals realistic. If you are a multi-product company, you may want to target revenues related to a specific product that your SWOT analysis identified as strong and profitable. So go ahead and put these down as Key Goals:

1. Overall revenue increase of 15% to $XYZ

• 20% revenue increase for the PoxDetector to $ABC

2. Profit before taxes of 10% of revenues

Next, consider some goals that if achieved will set you up for success with your revenue and profit goals. During your team discussions on Data and SWOT analysis it may have become clear that your lead management system is terrible. A lot of good leads are not being followed up on. I use this example because many small to medium sized companies have this problem. Sending a lead out to a sales person is not “lead follow-up” unless it requires the sales person to regularly report the status of that lead. There has to be a closed loop. To improve lead follow-up is an inexpensive way to improve revenues. This is a good example of a goal that may seem more qualitative than quantitative. By including a due date and utilization rates we can make this quantitative. So, the goal would be:

3. Lead management software and/or system in place by April 1st . (Note – this could be part of a CRM program. I am trying to be very specific.)

• Document a 85% follow-up rate by June 1.

• Document a 95% follow-up rate by August 1.

Perhaps during the Data gathering and SWOT analysis it became evident that your web and social media presence were weak compared to your competitors. Your traffic isn’t as good and your site doesn’t provide the same value to customers and prospective customers. Improvements at the website will yield improvements in revenue. The goal here would be:

4. Increase website traffic by 20% and website qualified lead generation by 25%.

Finally, one of your more mature yet successful product’s revenues has flattened because the competition has more features. You and your team have been working on enhancements to this product. The prototypes received positive customer feedback. It is critical to get this product launched. Making this a Key Goal will make it clear to the team that this must get done on time. The goal here would be:

5. Launch the TennisElbowEliminator XL by May 1.

• 5% increase in TEE XL sales over prior year TEE sales for remainder of year.

Examples of other Key Goals could be:

• Create joint venture with Technology Company B to enhance product development

• License rights to a certain technology to apply to a key product to make it more competitive

• Implement total CRM system

• Increase international sales in targeted countries by 10%

• Qualify a back-up manufacturer of key product A

• Secure a second source for key component #34

In the next blog post, I will take the above examples of Key Goals and craft the Key Strategies that support them. You have come a long with in your strategic planning. With Key Strategies and the supporting Tactics, an operational plan starts to take shape.

December 8, 2010
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Avoid needing a SWAT team with a good SWOT analysis!

Reading time: 5 – 8 minutes

This is the sixth post in the series on Strategic Planning.  Note that you can subscribe to the blog postings by completing the form in the “Subscribe Free” tab.  Or, you can link with an RSS feed.

If there is a SWAT team nearby, then you know there is a crisis of some sort.  That is what we are trying to avoid with some good planning.  And, the SWOT analysis is the next step toward the strategic plan.

This is exciting! With a pool of data and a set of assumptions you are ready to complete a SWOT analysis.  The reason this is exciting is because as you finish the SWOT analysis, you will start to see a clear picture of where you are right now.  You will know the starting point, point A, on the map of your strategic journey.  This will position you to set your Key Goals which are the equivalent to the destination or Point E.  And, this will help guide you in the selection of your Key Strategies and Tactics which are the equivalent to the road you plan to follow from Point A to Point E.  As indicated in the first post in this series, you want to keep this road from wandering around too much on your way to achieving your Key Goals.

Another note – A SWOT analysis can be used for decision making related to a variety of projects and proposals.  The Data Gathering and Assumptions steps some management gurus may compare to a PEST analysis.  We are trying to keep this simple yet effective.

SWOT = Strengths, Weaknesses, Opportunities and Threats

Strengths and Weaknesses are attributes related to your business and products.   These factors are internal to your company.  A strength is an inherent advantage your team and/or technology has in the market.  A weakness is something that puts you at a disadvantage relative to the other players in your market.  You have to be very intellectually honest in this exercise.  Surely you are very proud of your products.  However, you cannot list as a strength that “We are the gold standard” unless you have irrefutable data that supports this.  And, you cannot claim as a strength that you will be the next gold standard.  That is a goal.

Examples of Strengths would be:

  • Lowest cost of manufacturing.
  • Key product features that are exclusive and protected by patents.
  • Mostly top tier distributors in US sales channel.
  • Sales team with high close rate when working with distributors.
  • Solid financial base at current revenue and expense levels.
  • Strong R&D allows for reaction to competition.
  • Good KOL support for Product Z.
  • High market awareness of Product Z. Try to have a quantitative measure here.
  • Large customer base in certain product categories.

Examples of Weaknesses would be:

  • US sales channel not complete – open areas.
  • No relationships with KOLs in target market segment for new Product X.
  • Low market awareness for Product X.
  • International sales channels dominated by competitors.
  • Manufacturing is at 95% capacity – could limit growth.
  • Website isn’t designed for commerce like the top two competitors.
  • No internal knowledge of social media.
  • No system to manage and track leads (basic CRM).
  • Outdated pricing on Federal Supply Schedule.

Opportunities and Threats come from outside the company.   They can be economic, technological and related to competition.

Examples of Opportunities are:

  • US Market for all our product categories is forecast to grow by 6% (your data should back this up).
  • Competitor B is exiting the market.
  • Section 179 tax break at current level in US extended for at least one year.
  • India’s Defense department has issued a bid for 1,000 units of products in the “Z” category.
  • Non-competitor Cureeverythinginsight sales representatives claim that doctors who use our Product Z in conjunction with their products obtain better clinical results with their products. This has lead to increased sales of their products.
  • A completely new medical market has shown interest in Product Z.

Examples of Threats are:

  • Supplier D of main parts for Product Z is taking actions that indicate they are considering making their own product and entering the market.
  • Competitor C has added more regional sales managers to manage their distributors.
  • Competitor C received $Y million dollars in venture financing to support the launch of products competitive to ours.
  • Competitor E continues to offer to make an OEM product like Product Z to our largest distributor.
  • Chinese companies are making higher quality imitations of our Product M.

There is a lot of information on the Internet related to SWOT analysis if you want to dig into this further and give your team more guidance:

So….schedule two meetings for the SWOT analysis.  Get two flip charts in the room with several markers.  Spend the extra money for the Post-It type of flip charts so you can easily put completed sheets of paper up on the wall for all to see.

The first meeting is the first run at the SWOT analysis.  In this meeting you will have created a draft SWOT.  After the meeting be sure to summarize the draft SWOT in a memo and send it to all the participants for review.

The second meeting is to refine the SWOT.  The second meeting could be very productive now that you have everyone thinking strategically.

The discussions in both meetings should be fun and interesting.  Encourage debate.

In the next post on Strategic Planning we will explore setting Key Goals and the Key Strategies that support these goals.  Your strategic journey is becoming clearer.

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