Strategic Planning in a Recovering Market (3 of 3)

October 12, 2010

Here are some of final insights from a NIWeek 2010 Alliance Day presentation given by Don Roberts, Exotek. He is a principal of a consulting and operations-support company focused solely on the systems integrator.

Objectives and Measures

The end result of good strategic planning is a set of goals considered critical to the future success of the organization. Each goal is accompanied by specific objectives clarifying what must be done and what is critical to success. Just as important, are defining the measures that will track the accomplishment of the objective? The measures should be:

  • Linked: Measurements communicate what is strategically important by linking back to your strategic objectives.
  • Repeatable: Measurements are continuous over time, allowing comparisons.
  • Leading: Measurements can be used for establishing targets, leading to future performance.
  • Accountable: Measurements are reliable, verifiable, and accurate.
  • Available: Measurements can be derived when they are needed.

Examples

  • Over the next six months, delivery times will decrease by 15% through more localized delivery centers.
  • By the year 2013, customer turnover will decline by 30% through newly created customer service representatives and pro-active customer maintenance procedures.
  • Un-billable time will get cut in half by cross training front line personnel and combining all four operating departments into one single service center.

Plans into Actions

As you put your plans into actions, determine who is the right person or team to accomplish these goals. Consider all people that influence change, including outside contributor or perhaps even a facilitator. Then, decide what the appropriate timing is. A major plan may take more than a year, but should have quarterly or monthly reviews.

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Strategic Planning in a Recovering Market (2 of 3)

October 5, 2010

Last week, I shared some of the insights from a NIWeek 2010 Alliance Day presentation given by Don Roberts, Exotek. He is a principal of a consulting and operations-support company focused solely on the systems integrator. Continuing on, Don suggested some tools to assist in your strategic planning process.

Strategy maps put into focus the often-blurry line of sight between your corporate strategy and what your employees do every day

                                                – Kaplan and Norton

Strategic Maps and Balanced Scorecards

Strategic maps help communicate your corporate strategy. And, balanced scorecards are a way to measure your strategic progress. They typically focus your company strategy around the following areas:

  • Financial Perspective – How do you look against the financial objectives of the company’s owners
  • Customer Perspective – How do you look to your current and prospective customers?
  • Internal Business Perspective – What must you excel run an effective business?
  • Learning Perspective – What must you organization learn to improve your business?

These perspectives then help to layout both your strategic map and balanced scorecard. There are more details, then I could effectively cover in this blog, but there are lots of useful information available on-line. Don offered an example for an Alliance Partner.


Strategic Planning in a Recovering Market (1-3)

September 28, 2010

Many companies begin their annual planning process in Q4 of each year. So, I thought that I would pass along some of the insights of Don Roberts, Exotek. He is a principal of a consulting and operations-support company focused solely on the systems integrator. At NIWeek 2010, Don offered his advice on strategic planning as our market recovers.

More than 75% of the average company’s market value comes from intangible assets that traditional metrics don’t measure

                                -Kaplan and Norton HBR 2000

Strategic Planning

The primary goal of strategic planning is to build organizational focus and competency. It gives you the opportunity to balance short term pressures with your long term goals. You can also assess your market situation and react to the changing environment proactively. Then, you can establish organizational alignment.

Strategic planning also provides a recurring process whereby your organization makes choices:

  • Why do we exist?
  • What are our major goals?
  • What resources do we need for a successful future?
  • Who will be our customers?

But, strategic planning is not a way of making future decisions. You can’t create a blueprint of the future because there is no guarantee that things will not change. So, strategic planning should not be a long and drawn out process, but rather an efficient annual assessment of your business to make necessary course adjustments.

Getting Started

Don recommends beginning your strategic planning process, but clarifying:

  • Mission – Why do we exist
  • Core Values – What is important to us
  • Vision – What we want to be

He cautions that semantics not important. The real goal is develop a consensus on the fundamental aspects of your company that will govern your strategic decisions.

Next, consider your product and/or service offering. Review what you are currently selling from your customer’s perspective. Why are they buying from you? What is your competitive strategy? Is your offering valued by customers? Sustainable? Hard to match?

Next, you can define what you want to accomplish in the coming year.  These objectives can be hard or soft, but there can only be one set. Consider organizing them into four perspectives:

  • Financial
  • Customer
  • Internal Processes
  • Learning and Growth

Once your objectives are set, you can drive them into your annual operating plans. For instance, determine how these objectives translate into specific goals for your leaders and how they affect the personal development of your employees. How do your objectives impact the development plans for your products and services? And, what are your marketing and sales plans to capture business for those products and services.


Customer Selection (Part 2 of 4) – Know Thy Customer

June 15, 2010

In his Are You Selecting Your Customers…Or Are They Selecting You?  presentation at CSIA 2010, Dean Streck, CEO of V I Engineering, Dean starts with recommendation to ‘Know Thyself.’  You must first figure out who you are as a company today and the company that you want to be. Then, you can be proactive about selecting the customers that will help you achieve your goals.  In part 2, he then describes methods to ‘Know Thy Customer.”

The 80/20 Rule

The role 80-20 rule, also known as the Pareto principle applies. Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population. It is a common rule of thumb in business: 80% of your sales come from 20% of your clients.

Whale of a Tale

Dean goes further to show that your top 20% of your business actually generates 180% of the profits. The middle 60% of your business is basically breakeven. And bottom 20% of your business loses the 80% of potential profits.

So What Then Must We Do

The revelation that 20% of your customers generate the bulk of your profit and the ‘other’ 20 percent cost you most of that profit, then raises the question. What should I do about it? Should I just focus on the top 20%? Should I fire the rest? What about everyone in between. In the next couple of posts, we will look at techniques to deal with these issues.

Customer Selection (3 of 4) – Activity-Based Costing


Strategic Planning – Plans for 2010

December 15, 2009

As we look forward to an economic recovery in 2010, we must make plans to grow our system-level business in conjunction with our Alliance Partners. We continue to add sales resources to identify and pursue these system-level opportunities.

Our Mission Remains the Same

National Instruments mission remains the same – create innovative products and delivering quality support. We are working hard to empower you with:

  1. Delivering new products with the latest technologies along with quality technical support.
  2. Well-integrated platforms like PXI and CompactRIO where you can pick the modules that meet the customer’s application.
  3. We also continue to give you more ability to customize our products. Not only in software, we now let you program the hardware with FPGAs. We even let you designs your own hardware – like CompactRIO modules and the new FlexRIO front-end for PXI.
  4. We also provide you with reference designs and architectures to help your engineers build good solutions for our customers.

We encourage you can learn more about how these products can create more opportunities for your businesses.

Working On Your Business, Not Just In IT

But, for you, it’s not just about having good technology, it’s about managing your business. It is not simply about solving the technical challenges of a particular project, but building a system integration company that can reliably deliver those solutions.

As I travel around the world, it has been a privilege to learn about your businesses. And, I try to share what I have learned in Alliance Day presentations, one-on-one business consultations …. I have even started this blog to foster best business practices.


Strategic Planning – Outlook for 2010

December 8, 2009

So, when will we see an economic recovery? We believe that we have seen the worst of it. And while we must rebuild from 2006 levels, we are expect a modest recovery in the coming years. The good news is that NI is in an even stronger position as we continue to take market share.

Purchasing Managers Index (PMI)

National Instruments often refers to the PMI which has been a good indicator of how our business will perform. The PMI began to decline in 2007, the deteriorated rapidly in 2008-09 with the severity of the economic downturn. But, over the last few months, the global PMI has begin to recover – becoming positive in Q3.

National Instruments Outlook

We have seen our business stabilize over the last several months. We believe that we have ‘hit the bottom’ and are beginning to rebuild from that new level. We saw a return to growth in Q3 and are anticipating sequential growth in Q4 as well.

And, as the economy recovers, we believe that we will be in an even stronger market position. We’ve continued to make strategic investments through this downturn and belive that we are actually gaining market share. So, we will reap the benefits of this position as the market returns.

Our Partner Business

As our system-level business returns, we expect our Alliance Partner business rebound and continue to grow as a percentage of our overall business. Those Alliance Partners that can successfully manage their business will be in a better position for growth.


Strategic Planning – Review of 2009

December 1, 2009

Well, here we are in December. As always it is an opportunity to review our performance over the past year as well as make adjustments and plans for next year. 

The Great Recession

It has been a challenging year for most of us, so I thought I’d offer a little humor. During my 20 year career at National Instruments, our business mostly looked like this. That was until year year – and the Great Recession.

After several years of steady growth in our revenue, we began to see the effects of the Great Recession in the 4th quarter of 2008. This trend continued into 2009. And, although the decline has stopped, our business is significantly down from where it was a year ago.

Impact on our Partner Business

Unfortunately, this trend has also adversely affected our Alliance/VAR business. For the past several years, we not only growing revenue, but actually increased it as a percentage of our business.  But, as the recession took it’s toll, particularly on our larger system-level business which is commonly channeled by our partners, we’ve seen an adverse affect on our partner business.

OK, enough bad news. Next week we’ll talk about the chances of an economic recovery and what that will mean for NI and our partner business.