Download - Strategic Business Growth—day 1 2013.09
Proprietary and Confidential
UNI Strategic Strategic Business Growth
Kuala Lumpur, Malaysia September 23-24, 2013
3 Proprietary and Confidential UNI Strategic
Agenda—Day 1
Agenda Item Time*
Registration 08:30—09:00
Introduction 09:00—09:15
Session #1—Overview of Business Growth Strategy 09:15—10:40
Refreshments & Networking Break 10:40—11:00
Session #2—Conducting a Current State Assessment 11:00—12:45
Luncheon 12:45—14:00
Session #3—Articulating a Business Growth Vision 14:00—15:30
Refreshments & Networking Break 15:30—15:50
Session #4—Driving Organic Growth 15:50—17:00 *Times are approximate—Sessions may cut across breaks
4 Proprietary and Confidential UNI Strategic
Agenda—Day 2
Agenda Item Time
Session #5—Pursuing Inorganic Growth 09:00—10:40
Refreshments & Networking Break 10:40—11:00
Session #6—Developing a Business Growth Strategy 11:00—12:45
Luncheon 12:45—14:00
Session #7—Organizational Readiness & Implement. 14:00—15:30
Refreshments & Networking Break 15:30—15:50
Session #8—Measuring and Tracking 15:50—17:00
*Times are approximate—Sessions may cut across breaks
5 Proprietary and Confidential UNI Strategic
Our Topic—Defined
! Business growth is something for which most companies, large or small, strive • Small firms want to get big, big firms want to get bigger
! The most common measure of growth is financial-based: • Top line—Increase revenue through greater product sales or service income • Bottom line—Increase profitability through the operation by minimizing costs
! Other businesses metrics may use additional criteria for assessing their growth: • Number of employees • Physical expansion • Success of a product line • Increased market share
! Ultimately, success and growth will be gauged by how well a firm does relative to the goals it has set for itself
6 Proprietary and Confidential UNI Strategic
›❯ The topic of business growth—and our agenda, more specifically—is extremely broad in nature. This workshop is designed to be “a mile wide and an inch deep.” Without exaggeration, each of our eight sessions could easily be a standalone, two-day workshop
›❯ The content in this workshop will contain a fair amount of real-world illustrative examples to bring the theories and concepts to life. Effort was made to choose examples that represent a range of different industries, business sizes and geographies
›❯ The agenda has several “practical exercises” which will provide participants the opportunity to apply learning. Rather than using hypothetical case studies, these exercises will ask participants to apply concepts to their actual real-world, business situations
Our Topic—Caveats & Disclaimers
7 Proprietary and Confidential UNI Strategic
Content
! Session #1—Overview of Business Growth Strategy
! Session #2—Conducting a Current State Assessment
! Session #3—Articulating a Business Growth Vision
! Session #4—Driving Organic Growth
! Session #5—Pursuing Inorganic Growth
! Session #6—Developing a Business Growth Strategy
! Session #7—Organizational Readiness & Implementation
! Session #8—Measuring and Tracking
8 Proprietary and Confidential UNI Strategic
Overview of Business Growth Strategy
#1—Overview of Business Growth Strategy
“You will either step forward into growth…or you will step back into safety.”
—Abraham Maslow
9 Proprietary and Confidential UNI Strategic
Business Growth—Not Just for the Sake of Growth
#1—Overview of Business Growth Strategy
! Since the ultimate goal of most companies is profitability, most companies will measure their growth in terms of net profit, revenue, and other financial data
While temporary periods of unprofitable growth may be acceptable—and even
necessary—ultimately, growth without profitability
is a recipe for failure
• Protecting market share • Supporting a new product launch • Entering a new market
Growth > Profitability
?
10 Proprietary and Confidential UNI Strategic
Types of Business Growth
#1—Overview of Business Growth Strategy
Existing Products to Existing Customers
Growth Strategies
Organic Strategies
Entering New Industries
New Products & Services
Existing Products to New Customers
Takeover/Acquisition Mergers
Joint Venture
Strategic Alliance
Horizontal
Vertical
Conglomerates
New Business Models
Vertical Horizontal Unrelated
New to Company
New to World
New Geographies
New Channels
New Segments
Inorganic Strategies
11 Proprietary and Confidential UNI Strategic
#1—Overview of Business Growth Strategy
Organic Growth
! Organic growth is the internal growth of a company due to more product/service sales and better saturation of a market
Organic Growth
• When you grow your business through strong management and effective planning, you know your business inside and out
• You can move quickly to take advantage of changes in the marketplace, and you can experience the satisfaction of seeing your vision come to fruition
• You also have the choice of growing your business at a rate that is comfortable for you
• Instead of merging with another company or buying one, you can sell your business when it is mature. This can create profit for you
• You may have limited resources for growing your own business
• You may find the marketplace will not allow you to grow beyond a certain point. In addition, your plans for your own growth can be thwarted by competition, causing you to cut back expectations and consider the possibility of having to close down due to limited opportunities
• Growing a business from the start-up stage means constantly struggling to make sure you have positive cash flow in order to pay your bills and payroll, as well as finding ways to grow sales
Pros Cons
12 Proprietary and Confidential UNI Strategic
#1—Overview of Business Growth Strategy
Inorganic Growth
! Inorganic growth is achieving growth through means other than internal efforts tied to the core of the business
Pros Cons • Growing your business inorganically involves
joining with another business through a merger or an acquisition. This immediately expands your assets, your income and your market presence
• You will have a stronger line of credit because of the combined value of the two businesses
• You will also benefit from the added expertise from personnel at the new business.
• You will have to expand your management capabilities dramatically when you join forces with another business
• You will suddenly have many more employees and more assets to monitor, use and dispose of as your business needs change
• You may enter areas of the marketplace where you have no expertise
• You can also grow too fast. Most mergers and acquisitions require financing, and you will have to service your debt from the growth you experienced with the merger or acquisition
Inorganic Growth
13 Proprietary and Confidential UNI Strategic
#1—Overview of Business Growth Strategy
Source: The Evolution of Strategic Management/Strategic Planning
! While in the past business strategy has focused on factors such as cost cutting, quality, and productivity, recent trends have suggested an increasing focus on innovation and growth
Trends in Business Strategy
14 Proprietary and Confidential UNI Strategic
CEOs’ Perspectives On Growth
#1—Overview of Business Growth Strategy
! PwC’s Annual Global CEO Survey suggests a decrease in confidence when it comes to identifying and capturing growth opportunities
Source: PwC
15 Proprietary and Confidential UNI Strategic
CEOs Targeting Pockets of Opportunity
! CEOs are pursuing organic growth in existing markets
#1—Overview of Business Growth Strategy
! Half of CEOs’ top ten countries are growth markets
! Additionally, PwC’s Annual Global CEO Survey suggests a tendency toward pursuing organic growth, and in global growth markets
Source: PwC
16 Proprietary and Confidential UNI Strategic
Business Growth—Industry Perspectives
#1—Overview of Business Growth Strategy
! In particular, CEOs in Technology, Capital Markets and Oil & Gas view organic growth in existing markets as integral to their growth plans
Source: PwC
17 Proprietary and Confidential UNI Strategic
The Case for Business Growth
#1—Overview of Business Growth Strategy
Why should you care? How will you benefit?
! As with any topic in business, the case needs to be made for why growth is important and how the company will benefit from it
&
18 Proprietary and Confidential UNI Strategic
Why Should You Care?—Universal & Timeless Need
#1—Overview of Business Growth Strategy
! Growth is possible in any industry, any region, any phase of the business cycle
19 Proprietary and Confidential UNI Strategic
Why Should You Care?—Long-term Business Viability
#1—Overview of Business Growth Strategy
! Simply put, growth is not an option—it’s an imperative. Businesses that do not grow consistently eventually risk market irrelevance and extinction
When companies stop growing, they reach a “stall point” in their revenue growth and almost never recover it
Only 7% ever recover from a stall. Most go on to be acquired or to go into bankruptcy or dwindle at market growth levels of growth for some period after that
They never really recover that next level of true business success and true business impact
Source: Strategic Planning Failure, The Evolution of Strategic Management/Strategic Planning
20 Proprietary and Confidential UNI Strategic
How Will You Benefit?—Improved Financial Condition
#1—Overview of Business Growth Strategy
! Not surprisingly, achieving sustainable growth typically has a direct and profound impact on a company’s bottom line
Improves Business
Value
Generates Additional
Capital
Reduces Fin’l Market
Vulnerabilities
Can Reduce Bank Debt
More Quickly
21 Proprietary and Confidential UNI Strategic
How Will You Benefit?—Increased Shareholder Value
#1—Overview of Business Growth Strategy
Source: A.T. Kearney 5-, 10-, and 15-year analyses of revenue growth and total shareholder returns for the entire Australian Securities Exchange, identifying top performers on the ASX200.
! Long-term growth is the decisive driver of stock prices, thus companies are in control of their own stock price destiny
CEOs stated…
• Growth requires a clearly-articulated and relevant vision
• Growth is a direct outcome of strategy
• Growth requires a solid methodological approach
• Growth success is attributed to to corporate culture and leadership
22 Proprietary and Confidential UNI Strategic
Strategic Business Growth—Best Practices
#1—Overview of Business Growth Strategy
! Through our work helping companies grow, we have identified five best practices that tend to yield the best results
Follow a Process Be a Leader
Find the Next S-Curve Know Thy Customer Embrace Your Inner Innovator
23 Proprietary and Confidential UNI Strategic
1) Best Practices—Find the Next S-Curve
#1—Overview of Business Growth Strategy
! If you wait until you need a new growth strategy, it already may be too late to identify and develop one
24 Proprietary and Confidential UNI Strategic
2) Best Practices—Know Thy Customer
#1—Overview of Business Growth Strategy
! Best practice growth companies excel in the area of customer centricity. They make it a priority to understand their customers better than any of their closest competitors
• Demographics
• Attitudes
• Perceptions
• Beliefs
• Needs
• Wants
• Behaviors
25 Proprietary and Confidential UNI Strategic
3) Best Practices—Embrace Your Inner Innovator
#1—Overview of Business Growth Strategy
! There is an inextricable link between innovation and growth. While growth without innovation is technically possible, it is significantly limited in scope
26 Proprietary and Confidential UNI Strategic
4) Best Practices—Be a Leader
#1—Overview of Business Growth Strategy
! It’s no coincidence that some of the most consistent growth-oriented companies have senior-level leaders who value and reinforce the importance of growth and innovation
27 Proprietary and Confidential UNI Strategic
#1—Overview of Business Growth Strategy
! Growth is typically not accidental—it is the result of establishing and following a well-thought out process and approach
Current State
Assessment
Articulating a Business
Growth Vision
Driving Organic Growth
Pursuing Inorganic Growth
Developing a Business
Growth Strategy
Organizational Readiness & Implementation
Measurement &
Tracking
5) Best Practices—Follow a Process
28 Proprietary and Confidential UNI Strategic
Content
! Session #1—Overview of Business Growth Strategy
! Session #2—Conducting a Current State Assessment
! Session #3—Articulating a Business Growth Vision
! Session #4—Driving Organic Growth
! Session #5—Pursuing Inorganic Growth
! Session #6—Developing a Business Growth Strategy
! Session #7—Organizational Readiness & Implementation
! Session #8—Measuring and Tracking
29 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Conducting a Current State Assessment
“The long run is a misleading guide to current affairs. In the long run, we are all dead.”
—John Maynard Keynes
30 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Win: Win:
Economic Technological S
ocie
tal
Impact of Globalization
Balance of Trade
Access to Capital
Tech. Infrastructure
Tech S
tandards IP
Reg.
IT Product
Develop
R&D
Tax &
Regulatory Sustain-ability
Future Markets
Hum
an
Rig
hts
Dem
ogra
phic
Sh
ifts
Wor
kfor
ce
Tale
nt
Cor
p R
esp.
Mkt
. R
es
Sale
s/M
ktg
Hum
an
Rsc
s
Macro Environment
Industry/Sector
Organization
Current State Assessment—Framework
31 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Economic Trends
Political impasse in the U.S. will leave the government without the borrowing capacity to fund normal operations
Significant risk stems from uncertainty about bold policy action and coordination within and among advanced countries
With weak financial institutions and its infrastructure-led growth model under attack, China may not have all the tools to achieve its goals
Worldwide, we may witness a widening gap between the preferences of savers and the needs of borrowers
The new trend to look for in the euro area will be in the financial markets rather than in the political realm
1 23 45
Source: Brookings Institution
32 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Impact of Globalization Economic
Development
Balance of Trade Product
Markets
Financial
Assets
Access to Capital
Macro Environment
Industry/Sector
Organization
Economic Factors • Which countries are gaining most in
terms of consumer wealth and disposable income?
• Which countries are showing the greatest improvements in economic development and GDP?
• How favorable (or unfavorable) are the current financial markets?
• What is the optimal means for raising capital (e.g., debt, equity)?
• Which regions of the world have the most favorable trade balances?
• What are the implications of your company’s ownership structure (e.g., shareholder expectations)?
• Does you company have adequate access to capital?
• Is your current financial situation conducive to growth? If so, which means of investment are optimal?
1) Economic Factors & Considerations
Questions/Considerations
33 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
2) Technological Trends
Source: PwC
34 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Technological Infrastructure Technological
Ingenuity
Tech Standards Patent
Norms
New Product
Development
R&D
Macro Environment
Industry/Sector
Organization
Technological Factors
2) Technological Factors & Considerations
• Which regions/countries represent the current “hot bed” of innovation?
• Do certain countries or geographies have a more favorable technology infrastructure? What is the basis for this advantage?
• What are the current innovation trends in your industry (e.g. product, service, process, solution)?
• What is your industry’s stance relative to patents (e.g., granting, enforcing)?
• Does your industry aggressively protect proprietary IP, or is it more “open source?”
• What is your company’s track record in new product/service development?
• How strong is your company’s R&D capabilities relative to those of key competitors?
Questions/Considerations
35 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
3) Political Trends
Risks to Conducting Business Internationally:
• Confiscation, Expropriation and Domestication
• Economic risks associated with the political environment (exchange controls, local-content laws, import restrictions, etc.)
• Political Sanctions (e.g., boycotting trade)
• Political and Social Activist and NGOs
• Violence, Terrorism and War
• Cyber-terrorism and Cybercrime
Global Political Trends/Factors:
• Inherently unstable governments
• Changes in ruling political parties
• Extreme nationalism
• Animosity toward specific countries
• Trade disputes
36 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Balance of Power Tax &
Regulatory
Regulatory Environment Incentives
& Support
Public
Affairs
Corp. Gov.
Macro Environment
Industry/Sector
Organization
Political Factors
3) Political Factors & Considerations
• How is the political environment (domestic and international) affecting your business?
• Which countries seem to be the most “business friendly” and receptive to foreign investment?
• Do tax laws make certain countries more or less attractive from an investment/growth perspective?
• Are there trade barriers in current or prospective countries that make partnership and/or investment less feasible?
• Which countries seem to be offering the greatest incentives to encourage foreign investment?
• What is your company’s risk tolerance relative to doing business in foreign countries?
• How strong is your company’s corporate governance function?
Questions/Considerations
37 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
4) Environmental Trends
1. A deeper understanding of what sustainability means
2. Your employees are your secret weapon
3. Speaking with rather than to your customers
4. Your impact goes well beyond what happens in your office
5. Really get to know your suppliers
6. The gap is getting bigger, which is both good and bad
7. A more open environment to explore sustainability
8. The ‘business case’ is wider than most realize
9. Your new recruits will take you there
10. Having fun with it
How Sustainability is Impacting Business:
Source: The Sustainable MBA
38 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Natural Disasters Climate/
Weather
Raw Materials Supply
Stability
Public
Affairs
Environ. Affairs
Macro Environment
Industry/Sector
Organization
Environmental Factors
4) Environmental Factors & Considerations
• To what extent (if any) is your industry affected by climate/weather?
• Does your company have critical infrastructure in countries susceptible to natural disasters (e.g., hurricanes, earthquakes)?
• Is sustainability a big issue in your industry, and if so, how is it impacting your company?
• How stable is the supply of raw materials in your industry? Are supply levels sufficient to meet current and future projected demand?
• Can the futures market help offset risk related to certain critical raw materials?
• How strong is your company in terms of public and environmental affairs?
Questions/Considerations
39 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
5) Societal Trends
1. Value creation shifting from workers to outside the enterprise
2. Business processes as opt-in community-powered activities
3. Mobile experiences as the primary social channel
4. Business engagement driven by social analytics
5. Engagement strategies that scale across all important social channels
6. Anticipating and designing for loss of control
Six Social Trends Impacting Business:
Source: Dachis Group
40 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Demographic Shifts
Human Rights
Workforce Talent Social
Respons-
ibility
Sales &
Mktg.
Market Res.
Macro Environment
Industry/Sector
Organization
Societal Factors
5) Societal Factors & Considerations
• How are recent shifts in global demographic trends affecting your industry and business?
• Are certain countries more or less attractive to your company because of their stance on human rights?
• Is your company able to understand and be sensitive to differences in social norms across the world?
• Which countries and markets are most attractive from a workforce talent perspective (in terms of skill set, wages, etc.)?
• How strong are your sales and marketing functions at identifying societal nuances and leveraging them for competitive advantage?
• Is your company adept at conducting market research, and understanding how attitudes, perceptions and behaviors are changing?
Questions/Considerations
41 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Current State Audit—Template
Economic + -
Macro Environment
• Economic Development
• Impact of Globalization
• Distribution of Wealth
Industry/Sector
• Product Markets
• Balance of Trade
• Financial Markets
Organization
• Financial Assets
• Ownership Structure
• Access to Capital
Environmental + -
Macro Environment
• Climate/Weather
• Natural Disasters
• Sustainability
Industry/Sector
• Supply Stability
• Raw Materials
• Futures Markets
Organization
• Public Affairs
• Investor Relations
• Environmental Affairs
Technological + -
Macro Environment
• Tech. Ingenuity
• Tech. Infrastructure
• Level of Innovation
Industry/Sector
• Patent Norms
• Tech. Standards
• IP Regulations
Organization
• New Product Dev.
• Information Tech.
• R&D
Societal + -
Macro Environment
• Human Rights
• Demographic Shifts
• Social Norms
Industry/Sector
• Social Responsibility
• Workforce Talent
• Training & Dev.
Organization
• Sales & Marketing
• Human Resources
• Market Research
Political + -
Macro Environment
• Tax & Regulatory
• Balance of Power
• Business Posture
Industry/Sector
• Incentives & Support
• Regulatory Environ.
• Trade Barriers
Organization
• Public Affairs
• Legal Affairs
• Corporate Governance
42 Proprietary and Confidential UNI Strategic
#2—Conducting a Current State Assessment
Practical Exercise #1—Current State Assessment
With YOUR organization/business unit in mind, think about the key factors impacting your potential for growth…both internal and external; favorable and unfavorable
! Which of the five factors on the previous page have the most significant impact on your potential for business growth?
! Within each of the five factors, what specific criteria warrant the most consideration as you plan for growth?
! What company resources do you have at your disposal to help you conduct a Current State Assessment?
! What new/additional information, resources, or activities could you leverage to supplement your Current State Assessment?
! How could you potentially modify the framework from this session to make it even more relevant for your organization?
43 Proprietary and Confidential UNI Strategic
Content
! Session #1—Overview of Business Growth Strategy
! Session #2—Conducting a Current State Assessment
! Session #3—Articulating a Business Growth Vision
! Session #4—Driving Organic Growth
! Session #5—Pursuing Inorganic Growth
! Session #6—Developing a Business Growth Strategy
! Session #7—Organizational Readiness & Implementation
! Session #8—Measuring and Tracking
44 Proprietary and Confidential UNI Strategic
#3—Articulating a Business Growth Vision
Business Growth Vision
“A leader has the vision and conviction that a dream can be achieved. He inspires the power and energy to get it done.”
—Ralph Lauren
45 Proprietary and Confidential UNI Strategic
#3—Articulating a Business Growth Vision
! Business Growth Vision is a bridge between the Current State Assessment and the Business Growth Strategy. It essentially articulates the objectives business expansion needs to deliver
Strategic Roles
Business Growth Vision
Growth Gap Decision Filters Growth Charter
Business Growth Vision—Key Components
46 Proprietary and Confidential UNI Strategic
#3—Articulating a Business Growth Vision
! The Financial Growth Gap is a central part of the Growth Vision. It defines how much revenue is required—over and above base business—to achieve financial goals
Activities: ! Gain input through management interviews and analyses ! Collect and understand financial data and division financial/growth trend data ! Determine the growth gap based upon realistic, yet aggressive analysis and planning
Tools: ! Historical growth rate ! Management cited goals ! Financial summary for official growth plans ! Past product launches
Definition: Growth Gap—The difference between total expected business unit revenues from existing products and the revenue goal. This identifies revenues to be generated through growth modes such as new product development and acquisitions.
Growth Gap—Defined
47 Proprietary and Confidential UNI Strategic
#3—Articulating a Business Growth Vision
14.3% CAGR
4.5% CAGR
$200MM
$400MM
$600MM
$800MM
$1B
FY13
$604
$688
FY18
$1 B 18.4% CAGR
Base Business
Growth Gap Expectation
$900
Growth Gap—Disguised Example
! The example below shows how a company projected a growth for its base business (CAGR), and subtracted the resulting amount from its revenue goal to derive its Growth Gap
48 Proprietary and Confidential UNI Strategic
Growth Gap—Assumptions & Scenarios
#3—Articulating a Business Growth Vision
! It is important to develop several assumption-based scenarios when planning for growth
Estimated NP Costs ($MM): Development Costs Acquisition Costs Marketing Launch Costs TOTAL
Assumptions
Annual Gross $ Sales (MM) Gross Retail
• Existing Expertise $35 $50 • NTC $65 $100 • NTW $167 $250
In-House Development Costs ($MM) • Existing Expertise = $1.0 • NTC/NTW = $1.5 - 2.0
Acquisition Costs ($MM) • Medium = $80 • High = $150
Year 1 2.5
-- 25.0 27.5
Year 2 1.0
80.0 25.0
106.0
Year 3 2.5
-- 25.0 27.5
TOTALS 6.0
80.0 75.0
161.0
1 – EE 1 – NTC
$100
1 – EE 1 – NTC
Year 1 Intros
$200
Year 1 Intros
Year 2 Intros
1 – EE 1 – NTC
$300
Scenario 1
($200MM when potential failure rate is applied)
49 Proprietary and Confidential UNI Strategic
Growth Gap—Rollout/Timing
#3—Articulating a Business Growth Vision
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
0 Introductions in FY ‘13 1 year of product development, testing and revisions
3 “events” in FY ‘14 3 “events” in FY ‘15 2 “events” in FY ‘16
B2
C2
A4
A3
C1
B1
A2
$260MM in FY ‘16 (after success rate)
A Low Risk ($25MM Yr 1)
Medium Risk ($60MM Yr 1)
High Risk ($90MM Yr 1)
A1
$156MM in FY ‘15 (after success rate)
$61MM in FY ‘15 (after success rate)
B C
! Additionally, to the extent possible, it is often useful to sequence and time how growth events will play out over the term of the plan
50 Proprietary and Confidential UNI Strategic
Strategic Objectives—Definition & Disguised Example
#3—Articulating a Business Growth Vision
• Increase share of stomach within existing consumer base
• Create new occasions and/or categories for the brand
• Improve current margins
• Grow topline sales while being highly incremental to the parent brand
• Identify consumer problems, opportunities and ideas beyond frozen
• Enhance consumers’ perceptions of Company X
• Leverage internal capabilities, competencies, and capacities
- R&D - Manufacturing
Individual new products/platforms will achieve at least one or more of the following strategic roles in order to build a portfolio of new products/platforms that achieve all the strategic roles:
! Strategic Objectives are very specific goals or expectations that potential growth opportunities should satisfy
51 Proprietary and Confidential UNI Strategic
Decision Filters—Categories/Types
#3—Articulating a Business Growth Vision
! While the categories/types of filters can vary by company, there are several that seem to be commonly used by most organizations. As with Strategic Objectives, they can be either “categorical” or go/no-go
Filter Description
Strategic Fit The extent to which a growth opportunity is a fit with the overall corporate (or BU) business strategy and objectives
Customer/Consumer Fit The extent to which a growth opportunity satisfies a high-potential customer need (especially an unmet need)
Technical Feasibility The extent to which a company is able to achieve a growth opportunity with minimal incremental technological upgrades
Operational Feasibility The extent to which a company is able to achieve a growth opportunity with minimal disruption to ongoing operations
Financial Returns The extent to which a growth opportunity meets the required financial hurdles as determined by the Growth Gap
52 Proprietary and Confidential UNI Strategic
Strategic Fit Hurdle • Does the concept fit with the New Product Vision? Yes / No • Is the concept consistent with Brand Extendibility? Yes / No • Does the concept satisfy one or more Strategic Roles? Yes / No ➔ If yes, which Strategic Role(s) are satisfied? A, B, C, D, E, F • Is there an enthusiastic champion for this concept on the Core Team? Yes/No ➔ Which OC would implement this concept? FRZ ASE GPD OTHER
Consumer Fit • Does the concept offer consumers a very attractive solution to an intense need? Yes / No • Does the concept offer a unique nutritional point of difference? Yes / No • Does the concept have a strong purchase intent? <19.7 19.7-21.6 >23.5 • Does the concept have a strong purchase frequency? L M H
Attractiveness of the Market
• What is the potential size of the market (in $MM)? <$500 $500-2,000 >$2,000 • What is the market growth trend? 1 2 3 4 5
(1 = Declining; 3 = Static; 5 = Growing) • How attractive is the competitive environment? 1 2 3 4 5
(1 = Not at all; 3 = Somewhat; 5 = Very) • Relative to current competitive offerings, how unique is this idea? 1 2 3 4 5 (1 = Not at all; 3 = Somewhat; 5 = Very)
Decision Filters—Disguised Example
#3—Articulating a Business Growth Vision
• = Screen è = Sort/Portfolio Management
53 Proprietary and Confidential UNI Strategic
Growth Charter—Disguised Example
#3—Articulating a Business Growth Vision
Consumers actively looking to improve their overall health and well-being will turn to Company X as their trusted source on healthy foods. Company X will earn their trust by understanding consumer needs and wants and introducing new products that provide nutritionally superior, great tasting “real” foods that make healthier eating easy every day.
• Nutritionally Superior: Every Company X innovation will have a distinctive, relevant and motivating nutritional benefit.
• Great Tasting: Company X foods will be a positive taste experience that consumers enjoy eating.
• Healthier Eating Easy (Convenient): Consumers will find Company X new product introductions as easy, if not easier, to buy and use as the food choices presently in their lives.
• Real Foods/Everyday: Consumers will consider Company X innovations mainstream – not just for special diets, not medicinal, not faddish and not strange. They can relate to and understand the nutrition provided and eat these foods every day with confidence.
54 Proprietary and Confidential UNI Strategic
#3—Articulating a Business Growth Vision
Practical Exercise #2—Articulating a Growth Vision
For YOUR organization/business unit, think about the following components of a Business Growth Vision…
! Growth Gap • What is the assumed growth rate for your base business (CAGR)? • What is the size of your Growth Gap? • Approximately what percentage of future growth needs to be organic?
! Strategic Objectives • What are some specific objectives that come to mind as you think about identifying
growth opportunities for your organization? – Financial? Strategic? Organizational? Operational? Competitive? Other?
! Decision Filters • What are some examples of “Go/No-go” filters that might make sense for your
organization?
• What are some examples of “Categorical” filters that can sure business growth is evenly distributed across different considerations?
55 Proprietary and Confidential UNI Strategic
Content
! Session #1—Overview of Business Growth Strategy
! Session #2—Conducting a Current State Assessment
! Session #3—Articulating a Business Growth Vision
! Session #4—Driving Organic Growth
! Session #5—Pursuing Inorganic Growth
! Session #6—Developing a Business Growth Strategy
! Session #7—Organizational Readiness & Implementation
! Session #8—Measuring and Tracking
56 Proprietary and Confidential UNI Strategic
Driving Organic Growth
#4—Driving Organic Growth
“There are no great limits to growth because there are no limits of human intelligence, imagination, and wonder.”
—Ronald Reagan
57 Proprietary and Confidential UNI Strategic
A.T. Kearney—Strategy for Organic Growth
#4—Driving Organic Growth
! An A.T. Kearney study prescribes a three-pronged strategy for Organic growth that any company can deploy to achieve aggressive growth rates
Source: A.T. Kearney, The Inside Story on Organic Growth
58 Proprietary and Confidential UNI Strategic
1) Capture Short-term Growth Opportunities
#4—Driving Organic Growth
! Nothing ensures success faster than a few quick wins. Once in growth mode you can build momentum across the organization
Low-hanging Fruit Business Growth Momentum
59 Proprietary and Confidential UNI Strategic
2) Eliminate Barriers to Growth
#4—Driving Organic Growth
! Eliminating growth barriers can open up internal and external avenues to growth that many companies do not even realize are blocked
• Large size of company leading to lack of communication
• Lack of salespeople’s knowledge about the product/service/market
• Unproductive work environment
• Too much focus on cost cutting or on improving EBIT creative a disincentive for investment in growth
60 Proprietary and Confidential UNI Strategic
3) Continually Manage for Sales & Marketing Excellence
#4—Driving Organic Growth
! Companies that substantially improved several marketing and sales capabilities at once increased total sales by more than 25% per year
61 Proprietary and Confidential UNI Strategic
Organic Growth—Starbucks
#4—Driving Organic Growth
! Organic growth is the single-minded focus for Starbucks and CEO, Howard Schultz
! Starbucks believes the franchising business presents a clear opportunity, as it allows the chain to open up stores in small towns where a franchisee can contribute their local knowledge and share the cost and risk
! The strategy is about sustaining a revenue growth rate, so the firm is looking to squeeze even more locations into available space
! In January 2013 Starbucks opened its first franchise store in the UK, in Liphook, Hampshire and the franchise has since opened three additional sites
! Starbucks is actively expanding the new U.K. franchise program with a number of experienced and well capitalized regional and national franchise operators as well as growing captive licensed store footprint into important customer segments such as rail stations, airports, universities and hospitals
62 Proprietary and Confidential UNI Strategic
Organic Growth—Lego
#4—Driving Organic Growth
! Lego has never made an acquisition. It focuses on using new product development and innovation as the driver of revenues and profits - to great success
! Since 2007, Lego has tripled its revenues globally and achieves an operating profit margin of almost 25%!
! Its share of the total U.S. toy market has quadrupled in five years. As of the end of 2012 it was 7.9%, up 1.6 percentage points from the previous year
! The strategy of Lego is best summed up by the quote: "We want to be the best, not the biggest”
! On Dec. 26 in the U.K. and Jan. 1 in the U.S., Lego rolled out Lego Friends, aimed at girls 5 and up. It sold better than expected - to the extent that production units were unable to keep pace with demand
! In the U.S., Lego Friends surpassed early projections, with its sales eventually increasing three times more than expected
63 Proprietary and Confidential UNI Strategic
Organic Growth—Framework
#4—Driving Organic Growth
Existing Products to Existing Customers
Growth Strategies
Organic Strategies
Entering New Industries
New Products & Services
Existing Products to New Customers
Takeover/Acquisition Mergers
Joint Venture
Strategic Alliance
Horizontal
Vertical
Conglomerates
New Business Models
Vertical Horizontal Unrelated
New to Company
New to World
New Geographies
New Channels
New Segments
Inorganic Strategies
64 Proprietary and Confidential UNI Strategic
#4—Driving Organic Growth
1) New Geographies
! There are three distinct phases of globalization. Companies and industries do not move smoothly through these phases. Progression is disruptive, and, when one company changes the game, an entire industry can be forced to respond
Export Regionalize Originate
Source: Guiding Global Growth, PwC
65 Proprietary and Confidential UNI Strategic
1) New Geographies—Applied
#4—Driving Organic Growth
! The three phases of globalization can be applied to a number of important dimensions for most global businesses
Source: Guiding Global Growth, PwC
66 Proprietary and Confidential UNI Strategic
1) New Geographies—IKEA
#4—Driving Organic Growth
! Ikea Group, the world’s biggest home-furnishings retailer, plans to increase the number of outlets fourfold in China as the world’s most populous nation is set to become the company’s second-largest market
! China will be Ikea’s number two market relatively soon, and number one maybe in the long run - the furniture retailer plans to add five stores to the 11 it currently has in the country and boost the total to 40 by about 2020
! Its low-price strategy created confusion among aspirational Chinese consumers while local competitors copied its designs. IKEA adapted its strategies and became profitable in China
! The company plans to open its first store in India by 2014 and 25 stores in 10 to 15 years
! The retailer, which is also looking to open more stores in Russia this year, is testing an Internet- based e-commerce business in 10 countries to complement its physical stores
67 Proprietary and Confidential UNI Strategic
2) New Channels
#4—Driving Organic Growth
! To grow profitably, it is critical to understand in which channels to play and to prioritize investments accordingly. The challenge for many companies is to identify through which channels to address which market segments
• Successful players develop channel strategies that provide clear direction on which channels to exploit to target specific segments in specific markets, how to win in new and existing markets and how to be competitive at a local level
• The ability to identify, enact, manage and support local or regional resources with quality channel strategies and execution can mean the difference between profitable growth and floundering business performance
• Simply duplicating channel strategies from core markets can lead to disappointing results
• A well developed and executed channel strategy focuses on understanding the opportunities, drivers and structures of different markets to ensure local firm resources are focused on ensuring goods are in the right place, at the right price, when consumers make a decision to buy
68 Proprietary and Confidential UNI Strategic
2) New Channels—Gap
• Gap Inc. is strategically gaining market share in North America and around the world through its portfolio of six brands -- Gap, Banana Republic, Old Navy, Athleta, Piperlime and newly-acquired Intermix - while investing further in its leading digital and online capabilities
• Company executives have confidence about the long-term growth potential of the brands and reaffirm intentions to expand through geographies and channels including specialty, online, outlet and franchise
• "Over the next five years, key to our continued success will be pushing the envelope further to make shopping seamless to customers through our digital strategy, while seizing the opportunity for Old Navy in many untapped international markets”
• In addition to Gap Inc.'s competitive advantage with its multiple brands, channel and geography model, the company plans to build upon its online success by delivering an omni-channel platform for consumers as the retail landscape continues to merge online and brick-and-mortar shopping experiences
#4—Driving Organic Growth
69 Proprietary and Confidential UNI Strategic
3) New Segments
#4—Driving Organic Growth
! While customers may look alike, their needs, attitudes and purchase drivers may differ significantly
! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !
Customers are all the same Customers have unique needs
• Looking for lowest price
• Want maximum fuel efficiency
Example (Automobiles):
• Safety
• Fuel efficiency
! ! ! ! ! ! ! ! !
• Luxury
• Image conscious
• Performance
• Style
70 Proprietary and Confidential UNI Strategic
3) New Segments—Segmentation Types
#4—Driving Organic Growth
! In general, segmentations based on needs and/or attitudes tend to be more insightful and informative than ones based on channel or firmographics
Key Question:
Variables:
Type: Channel Firmographics Behavior Needs Attitudes
How are they doing it?
Who are they?
What are customers
doing?
What do customers
desire?
Why are they doing it?
§ Purchase
§ Key influencers
§ Sector
§ Geography
§ Spend Level
§ Company size
§ Product usage
§ Brand awareness, usage & loyalty
§ Price paid, share of wallet, and purchase frequency
§ Required/ Have to have
§ Preferred/ Like to have
§ Not needed
§ Category attitudes, desires and beliefs
71 Proprietary and Confidential UNI Strategic
3) New Segments—Characteristics of a Good Segmentation
#4—Driving Organic Growth
! Although may different evaluation systems exist, the following criteria are widely accepted as guiding principles for a good segmentation
• Identifiable—Individual segments should be able to be identified through measurable attributes
• Prioritized—The value of each segment to the business is known and the relative importance to the business can be determined
• Differentiated Needs—Segments need to explain underlying motivations (the “whys”) and the conditions under which they exist (e.g., different usage/purchase occasions)
• Predictive—Segments are predictive of or align with consistent patterns of behavior
• Durable—Segments are relatively stable over time, relieving the need to refresh frequently
• Accessible—Marketing programs can be delivered profitably to the segments through channels they desire
72 Proprietary and Confidential UNI Strategic
3) New Segments—Porsche
• Porsche has extended its product line beyond the flagship 911, and they’ve usually done well with product line extensions
• The key in Porsche’s approach is using the brand to add value in the new category, in this case SUV (sports utility vehicles)
• With the Cayenne Porsche brought luxury and sports car performance into the SUV category. The engine and body shape of the Cayenne was authentically Porsche, creating a distinctive and premium priced value proposition
• It was a conscious decision to attract new buyers who couldn’t ordinarily buy a sports car either because of the price or because they needed greater space for their family
• The Cayenne, launched in 2003, fueled growth of 60% over 3 years. Globally, the Cayenne made up 50% of Porsche’s volume
• The Cayenne is the lowest price point for a Porsche at $122,000 and is now the company’s biggest selling vehicle in Australia
#4—Driving Organic Growth
73 Proprietary and Confidential UNI Strategic
4) New Products/Services—An Holistic Framework
#4—Driving Organic Growth
Innova&on Strategy
Innova&on Process
Por1olio Management
Process Management
Project Metrics
Templates
Tools
Document Organiza&on
Execu&ve Sponsorship
Resource Alloca&on
Team Composi&on
Resources & Organiza&on
Metrics
Process
Strategy Defini&on of innova&on and its role in an organiza&on
Process that is followed to create and develop new products and services
Approach to managing mul&ple innova&on efforts across the por1olio
Oversight of NPD ac&vi&es and how the process is followed
Measurements and hurdles for individual projects and the holis&c por1olio
Set of documents which define and enable NPD ac&vi&es
Mechanisms and resources that aid comple&on of NPD tasks
A space where NPD knowledge is accessed and stored
Degree to which leadership visibly supports and endorses NPD
Decision-‐making process for resources to support NPD
Appropriate human resources that drive and support the NPD process
Lens Dimension Descrip&on
Materials and programs required to educate all NPD stakeholders Training
Templates & Tools
Metrics
74 Proprietary and Confidential UNI Strategic
4) New Products/Services—Six Sources of Inspiration
#4—Driving Organic Growth
! The following Six Sources of Inspiration enable the gathering and developing of a unique set of insights related to the customer, their experiences, the brand, the organization and the industry
Customer Insights
Customer attitudes, behaviors and unmet needs
Experiential Analogs
Customer behavior outside the category
Brand DNA Core Competencies
Brand perceptions and key associations
Strengths of the organization (e.g., partners, assets, resources)
Market & Trend Analysis Expansive set of trends that are not bounded by the business issue or immediate relevance
Archives & Hidden Strengths
Looking into the past, beyond conventional wisdom and/or well below the surface
75 Proprietary and Confidential UNI Strategic
4) New Products/Services—Best Practices
#4—Driving Organic Growth
1) Encourage a culture that fosters risk taking
2) Develop a new products strategy
3) Use multi-functional teams with dedicated members
4) Follow a systematic and flexible stage gate approach
5) Apply compensation and incentives that stimulate an entrepreneurial environment
6) Foster and demonstrate top management commitment to innovation
7) Establish measurement criteria and track the results of innovation efforts
8) Develop new product types to fulfill the strategy and a balanced portfolio
9) Identify customer problems and needs before generating new product ideas
10) Appoint dedicated leaders and develop new product champions
! Below are a handful of “tried and true” guiding principles to maximize the likelihood of successful new product/service launches
76 Proprietary and Confidential UNI Strategic
4) New Products/Services—Johnson & Johnson
#4—Driving Organic Growth
• Johnson & Johnson Pharmaceuticals segment is poised to continue driving growth with more than 10 potential new product filings by 2017
• The Pharmaceuticals segment of J&J has built an industry-leading pipeline that has yielded 11 new product launches since 2009, more than doubling its productivity over the past four years
• The Company's approach to innovation has resulted in a revitalized product portfolio for the Janssen Pharmaceutical Companies in the areas of Immunology, Neuroscience, Infectious Diseases and Vaccines, Cardiovascular and Metabolism, and Oncology
• These new products, coupled with core growth brands, have fueled 12 consecutive quarters of operational sales growth in the segment and contributed significantly to the Company's recent earnings growth
• The Pharmaceuticals business of Johnson & Johnson was the fastest growing in the U.S., Europe and Japan in 2012, with sales of $25.4 billion, an operational increase of nearly 7% versus 2011
• “The innovative new therapies in our pipeline will drive our next wave of growth” --Paul Stoffels, M.D., Chief Scientific Officer, Johnson & Johnson, and Worldwide Chairman, Pharmaceuticals Group
Source: www.marketwatch.com
77 Proprietary and Confidential UNI Strategic
5) New Business Models
#4—Driving Organic Growth
! The emergence of new technologies in recent years has vastly expanded the ability for companies to grow through developing new business models
Value Proposition
Resources
Processes
Profit Formula
A product/service that provides a meaningful end benefit to customers
People, technology, facilities, equipment and cash required to deliver the VP
Assets and fixed cost structure, and the margin and velocity required to deliver them
Ways of working together to address recurrent tasks in a consistent manner
78 Proprietary and Confidential UNI Strategic
5) New Business Models—Types
#4—Driving Organic Growth
! Although there seems to be new business models emerging every day, there are three basic types that many subscribe to
Solution Shops
Value-Adding Process Businesses
Facilitated Networks
79 Proprietary and Confidential UNI Strategic
5) New Business Models—Zara
#4—Driving Organic Growth
• Fashions change at breakneck speed, which means retailers have to keep pace with changing needs yet affordable production of large volumes of clothing has traditionally involved long delivery times
• Zara makes it possible for everyone (in the world) to buy the latest fashions at a price they can afford
• Zara delivers on its brand promise by outperforming everyone else when it comes to precision, speed and small production volumes
• Zara’s success is achieved by one of the most ingenious design, development, production and supply chains in the world. All Zara stores are supplied with a new batch of clothing twice a week
• Delivery time is 24 hours within Europe and 36 hours to all other countries
• A design idea has to be translated into a garment displayed in the store in a matter of just three weeks. This process takes other clothing manufacturers an average of six months
• Whereas three months ago competitors were trying to work out what customers will want three months from now, Zara listens to what the customer wants now and supplies it in three weeks
Source: www.wikibusinessmodels.com