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December 3, 2010
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Assumptions – Defy the old saying that results in “Ass..u..me”

Reading time: 3 – 4 minutes

Fifth post in the series on Strategic Planning

There is an old saying that to “assume” makes an “ass out of you and me”.   For my international readers this is a play on the word “assume”.   If you break it up, it looks like this “ass u me”.   However, in strategic planning a set of assumptions is important. It is especially important if you have delegated some of the planning to other people in your team.

Let me give you an example of the assumption trap.   The board or your investors or the CEO asks you for a forecast for a new product or a potential acquisition.   You diligently put it together and present it.  It is accepted.   Then, when it is time to implement the forecast through marketing and sales activities, you are told that this incremental forecast must be met within the current budget!   YOU were assuming that a new product or acquired product would be given additional budget resources for marketing and sales.   THEY were assuming they could get the additional revenues for no additional cost.   So, actually, this is a good example of the old saying about “assume”.   An “ass” was made out of “u” and “me”.  Now you are trapped.   I have seen this happen many times.  It is a matter of communication.  And, it is easy for busy leaders to overlook this important part of planning.

Going into the planning process a number of assumptions should be addressed and discussed to give those doing the planning some guidance. Here are some examples:

• The economy will grow or decline by Y%.
• The market categories we compete in will grow by Z%.
• A marketing budget of $2 trillion dollars will be available. (Don’t you wish!)
• A sales budget of $X dollars.
• New product CureAll will be delayed until September for launch.
• Product revisions for the Stitch-me-up Surgical Robot will be complete in April.
• The new manufacturing line required to satisfy sales growth will be online on time in June.
• The acquisition of the Pulsar-Ocular-Enucleator will be complete by August.
• Three new products will have their CE mark by February so they can be launched in Europe eight months prior to US launch.
• No new competitive disruptive technology will be introduced in the year.

When discussing and agreeing on assumptions, it is common to come across information gaps.  Perhaps the needed information wasn’t captured or included in the data gathering phase.  Someone will have to be tasked with getting this information.

In strategic planning, having the assumptions out for all to see keeps the planning process honest.  It provides good guidance. And, if one of the assumptions changes, then it is revised in the quarterly review along with whatever it affects.  For example, a product will be ready for an early launch. Then new strategic and tactical priorities need to be set.

For the company leader: Think about the assumptions that should be made going into the year.  You are in control of some of them.   This needs to be communicated. Then schedule a meeting with the planning team to discuss the assumptions they will be working under.

For the manager that is managing upward and trying to initiate planning: Put yourself in the CEO and CFOs’ shoes.  Try to imagine what the assumptions might be. Then talk to other leaders whose activities may affect your ability to implement your plan.  For example, talk to the Director of Manufacturing to be sure the manufacturing capacity for the Stich-Me-Up Robot will be increased on time.   Finally, schedule a meeting with your boss to discuss the assumptions and come to agreement on them.

In the next post we will dive into the SWOT analysis so you can avoid calling in the SWAT team.

November 29, 2010
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Data – The first Strategic Planning element

Reading time: 4 – 7 minutes

The best place to start strategic planning is with DATA….data that is as accurate as possible.   Data is factual.  Data forces intellectual honesty.  And, good data sets the groundwork in determining your starting point as you map out your strategic journey for the next year.  You may know where you want to go….”Achieve 20% growth in our SuperDuper Surgical Instrument”.  But you won’t know how to get there if your don’t know where you are starting from.  So, it is time for some detective work about your business.

Dr. Joseph Bell, the inspiration for the famous detective character Sherlock Holmes, was a major influence in advances in diagnosis and forensic science.  He taught his medical students that an accurate diagnosis rested on three things:

  1. Observe carefully
  2. Deduce shrewdly
  3. Confirm with evidence

Crown Investigators typically drew up a theory around a crime and then tried to force the facts the fit the theory.  Dr. Bell began to influence these investigators to get the facts first.  Then after reviewing all the facts, determine the hypothesis regarding the crime.

Let’s begin to observe carefully, deduce shrewdly and confirm the data we acquire. Actually, gathering data is fun.  It is also easy to delegate.  The information that will start to pop-up may be surprising and will be a good foundation for the next steps of the planning process.  It will definitely create some interesting discussion amongst your team.

Here is a list of the data you should be assembling:

  • Feature/Benefit matrix comparison with competitive products. This is an easy place to fall into the trap of self-congratulation. Be very honest .  If the competition has a feature that customers like, admit it.
    • Rate the features/benefits in level of importance
  • Pricing matrix of competitive products
  • Market share analysis by product.
  • Sales channel comparison matrix with competitors
  • Market growth rate by product according to their product category
  • Revenue information by product for last 4 years
    • Your growth rate by product
    • Gross margin by product
    • Annual sales cycle
    • Sales by special event – trade shows, etc.
    • Sales by your channels – website sales, direct sales, dealer sales, etc.
  • A copy of one of your advertisements for each of your principle products with copies of competitive ads (use whatever the principle advertisement is – magazine ad, direct mail, e-blast, etc.)
  • A copy of your website home page with a copy of your competition’s home pages
  • A copy of the product brochure for each of your principle products with a copy of the appropriate competitive brochure
  • Customer data
    • Number of active customers (you may have to come up with a definition of “active” like minimum purchases of $Y per year)
    • Number of marginal customers
    • Number of customers that have not purchased from you in over a year (or some other meaningful timeframe related to the nature of your product)
    • Customer segments – by doctor type (generalist vs. specialist), by size (practice, clinic, hospital, etc.)
    • Why do they buy from you?  Ask them.  Don’t assume anything.  Ask the last 5 buyers for each key product why they bought your product.
    • Why do they buy from someone else?  Ask the last 2 or 3 lost prospects why they chose the competition.
  • Reimbursement trends related to your products
  • Brand image
    • Where does the market place you among other similar products and why?
    • What is the market opinion of your products?  Use scales like 1 to 5.

As you are gathering this data you will most likely come across areas where you don’t have the information needed.  This is what I call a “data gap”.  For example, you may not have market share information related to a critical product.  You will need to try hard to fill this gap.  Is there an industry research study that has this information?  If so, can you afford to purchase this study?  If not, is there someone you can borrow it from?  If you can’t get data then you will have to make an honest guess.  Try to get some outside sources to help you with this guess.  An outside source could be executives at non-competing companies, your very own dealers and sales representatives.  Or, market gurus and major customers.  Many medical device markets have analysts associated with them.  You could pay one of these analysts to do some research.  You may also want to do simple surveys with your customers utilizing inexpensive tools like Survey Monkey™ (www.surveymonkey.com) or Constant Contact™ (www.constantcontact.com).  When evaluating where your product stands among others, a focus group can be valuable.  A marketing agency familiar with your market can help here.  Sometimes media publishers in your market can assist with surveys and focus groups.  Try hard to “confirm with evidence”.

While all this information is coming in, we can start working on the Assumptions in parallel.  That will be the subject of the next Strategic Planning post.

To Do:

  • Schedule a meeting to discuss gathering data.
  • Break up the data you are seeking into sections and delegate.
  • Ask people to commit to a data due date.
  • Schedule a follow-up meeting to review progress and to identify data gaps.
  • Create a file folder for each data category and put it in a central file drawer so people can put data in the folders as they gather it.  You may be able to put this on a shared file on your server.

Remember, as Sgt. Joe Friday used to say in Dragnet, “All we want are the facts ma’am.”

November 18, 2010
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Elements of the Strategic Marketing and Sales Plan

Reading time: 2 – 3 minutes

Welcome back – this is the third of a series of posts on Strategic Marketing and Sales Planning.

A good strategic plan consists of the following elements in this order:

  • Data
  • Assumptions
  • SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats)
  • Key Goals
  • Key Strategies
  • Tactics that support the Key Strategies
  • The budget that results from the tactics

We will get into the details of these elements in the next postings.  And, you will be able to start the work.  Some of it can be done in parallel.  Some of it will be delegated.  Some of it will be done in group settings. It will be fun.

These elements all look a bit rigid and permanent.  They aren’t.  A strategic plan is dynamic.  It can be adjusted at any time.  If one of your 510K applications at the FDA is delayed, you go to the plan and make the appropriate adjustments.  The product launch will be delayed.  This affects a lot of strategies and tactics and budget items.  Advertising is rescheduled, website changes are delayed,  sales training is delayed, etc..  Or, a new opportunity presents itself.  Perhaps you put on a strong new distributor in Brazil who commits to a higher amount of orders than you originally forecast for that country. His team may need training in Brazil.  He may need help with translation of literature, etc..  This changes the plan.

You will conduct quarterly reviews of the plan.  During these reviews you and your team can make necessary adjustments.  If an e-blast campaign is not bringing in the leads you expected, perhaps the value proposition needs to be reconsidered.  Or, the email list provider changed.  Or, a different lead generation approach entirely.  You can change the plan before the problem gets worse.  What if  something very positive develops. Perhaps a sales promotion is more successful than you and your team anticipated.  During the strategic review you could consider adding more resources to this campaign to take advantage of this momentum.  In this manner, the strategic plan review becomes a closed loop management system that steers you toward gold mines and away from land mines.

In the next posting we will talk about Data and Assumptions.  And, you will be able to start delegating some of this important preparatory work.

November 18, 2010
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Qualitative Benefits of Strategic Planning

Reading time: 2 – 3 minutes

This is the second in a series of posts about Strategic Marketing and Sales Planning

OK….so after the last post you are thinking about strategic planning but may not be convinced.  You have a lot on your plate.  You don’t need more.  BUT, you are beginning to wonder if good planning may lead to increased revenues, more targeted marketing, enhanced sales activity, etc.

Let me quickly share with you some additional benefits of good planning:

Morale builder – You will be involving some employees in the planning process.  We will get to that later.  However, by delegating some of the planning process to your team, you will lift their morale and their commitment to helping you succeed.  Planning requires a little more transparency than a lot of leaders are used to providing.  Your team will like this.  Productivity will go up!

Respect builder – The plan process will only build your team’s respect for you.  Planning is transparency.  Planning is the willingness to listen and debate ideas.  Transparency earns respect.  This doesn’t mean you become a “softy”.  You are still the boss.  You have to bring reality to the idealistic ideas of less experienced people.  The result will be a higher level of respect directed at you.

Commitment builder – When employees participate in the planning process, they begin to take ownership.  They buy into the plan.  This commitment will spread to the employees that aren’t part of the planning team.  Employees that see a plan in place will feel more secure about this small company they are working for.  Perhaps your company is struggling in the wake of the 2009 economic downturn.  Now that the economy is showing signs of recovery and recruiting efforts in the industry are up, you may have some people looking at other jobs.  The more secure employees feel about the direction of their current employer, the less likely they are to leave.

Time saver – Once a plan is in place, you will get fewer questions like, “Should we do this or do that?” “Are we attending this or that show?” “What ads should be place next month? The media reps are calling with good deals.”  All of these questions are answered in the plan.  You don’t want to go month-to-month planning advertising based on this deal or that deal.  Your advertising should tie to a strategy that ties to meeting one of your objectives.

In my next post we will start to get organized for some strategic planning.

November 18, 2010
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Getting from A to E

Reading time: 2 – 4 minutes

This is the first in a series of posts about creating a Strategic Marketing and Sales plan for your company.

“A goal without a plan is just a wish.”                                                                                 Antoine de Saint-Exupery, French Aviator and Writer

Fact is that people, businesses, athletes and teams that have a detailed plan about how they are going to achieve their goals are more successful than those that don’t. Professional carpenters say measure twice…cut once.  This is planning.  It takes less time to plan carefully than it does to saw from the hip and make a mistake that  is costly and time consuming to repair.  Some mistakes cannot be repaired.

Look at the choices of paths in the illustration above.  Which path would you rather take assuming the true distance from A to E and F to J is the same.  If you are driving a car, you know that it will take less time to follow the path of A to E and it will cost less in fuel.  OK…now you are saying “Ted…you have made your point.”  Then I ask you, “Do you have a formal written plan that articulates the strategies and tactics you will follow in 2011?”  If your company is following the tortuous path of F to J, you are wasting a lot of time, money and human resources.

Would you believe that I know a company with $50 million in revenues without a plan?  I do.  How about a company with $20 million in revenues without a plan.  The CEO as much as admitted it the other day.  Then you say, “Ted, if they are at $20 million or $50 million in revenues they must be doing something right.”  Well….one is not profitable and the other is missing its 2010 revenue goals.  They had goals without a plan.  So, as Saint-Exupery said, their goals were merely wishes.

The most difficult part of Strategic Planning is making the commitment and setting aside the time to do it.  Strategic planning will pay for itself many times over.  Make a commitment to plan strategically now.  You can do it.  The next several posts will guide you.

To do:

  • If you are the company leader…founder, CEO, COO…make the decision.  Write down the fact you will make a strategic plan for 2011 or the next 6 months…whatever.
  • If you are a functional leader….head of sales, head of marketing, etc….tell your company leader that you would like to write a plan for your area.  More than likely you will get enthusiastic support.
November 9, 2010
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Welcome to Medical Device Success!

Reading time: < 1 minute Medical Device Success will be a blog designed to help medical device executives, sales managers, marketing managers and product managers contribute to the success of their companies.  Right now we have a little blog construction to do.  The first posting will be up shortly.

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