Posts Tagged ‘Stakeholder’

Evidence: Facts improve the quality of strategic planning

Wednesday, August 7th, 2013

By Kathleen Hosfeld

One of the things that makes a significant difference in the quality of strategic planning is the extent to which the process is informed by objective information. Too often processes can become thinly veiled exercises that reinforce dominant opinion or intuition alone. While intuition is an important tool for planning, it needs to be fed by facts.Positive Earning

A good strategic discussion or planning process will look for facts to answer the following questions.

Who are our competitors or collaborators? What are they experiencing? These questions are answered by an environmental analysis or environmental scan.

Is our mission/vision still resonating internally and externally? What do our employees think? What do our customers or other key audiences think about our mission or vision? Is it still relevant? These questions are answered through dialogue and surveys about mission and vision.

What is happening in our industry? What is no longer happening? What’s starting to happen? How can these changes be measured? This information is explored through review of industry trends and benchmarks.

What do we want to do? How can we measure that? Setting measurable organizational performance outcomes creates a target that guides strategic discussions.

How well are we doing now? Evaluating current performance against target outcomes (above) gives the organization objective information about the gap between current and desired performance.

How do our most important audiences see our challenges and opportunities? Interviews, surveys and focus groups with stakeholder groups provide much needed perspective and often unexpected insights that can fuel the strategic planning process.

How do our conflicts, obstacles or challenges give us an opportunity for innovation? Many organizations see tensions or obstacles as either/or problems. The opportunity for strategic innovation comes from holding the tension between two opposing views until a third (and sometimes more) option appears.

A recent study of strategic planning among non-profit organizations suggests that high performing organizations are more than twice as likely to include the types of evidence-gathering described above. Whether you are a non-profit or for-profit, the degree to which your process uses objective information for decision-making and innovation will make a difference in the value you realize from strategy and execution.

See Related Article on Non-Profit Strategic Planning

Strategic Planning Culture Leads to Non-Profit Success

Tuesday, July 23rd, 2013

By Kathleen Hosfeld

As challenging as it is to find time to create and implement strategic plans, new research reinforces that it’s one of the keys to organizational success. Consistent strategic planning and implementation monitoring practices make the differencestrategic planning hosfeld between moderately and highly successful non-profit
organizations according to a study presented in 2013 at the annual meeting of the Association for Strategic Planning.

The University of Arkansas study surveyed close to 500 non-profits ranging in size from less than $1 million Annual Operating Expenses to greater than $5 million. Non-profits scored themselves on their success level (Low, Moderate, High) on the basis of their overall success and likelihood of success in the future.  What can you learn from their findings?

1. Don’t wait until there’s a crisis

According to the study, 60% self-described Low Success non-profits engage strategic planning reactively when there is either a significant risk or an opportunity, whereas 74% of High Success organizations engage in strategic planning as a matter of routine.

2. Research, metrics and mission/vision discussion key to effective planning

 High Success organizations are twice as likely to integrate evidence-based decision-making (through the use of research), metrics (performance outcomes, industry benchmarks) and mission/vision analysis into their processes. They are far more likely than their counterparts to engage stakeholders via interviews, focus groups or surveys.

3. Follow-through makes the difference

 It’s true in for-profit organizations as well:  Realization of strategic value comes through implementation. While 64% of Moderate Success non-profits had done either a somewhat successful or very successful job at implementation, 88% of High Success organizations had done “somewhat” or “very” successful implementation.

4. Regular progress evaluation and reporting against plan are associated with high success

High Success organizations were more than twice as likely as Medium Success organizations to engage in 1) progress updates in executive staff meetings, 2) annual review of mission/vision alignment with plan, and 3) periodic assessment and reporting. High Success organizations assess and report plan progress at least 3 to 4 times a year or more.

All organizations, small and large, struggle with aspects of strategic planning and implementation according to study. Time is a major consideration. 46% of the High Success organizations say lack of time is a challenge in the planning process; 33.8% say that staff is spread too thin to focus on plan implementation.  In what may seem counter-intuitive, the Higher Success organizations are more likely than Moderate Success organizations to report time constraints associated with both planning and implementation.

Medium Success organizations have different challenges that may also affect their overall success. They report a lack of high-level strategic thinking by leadership (37%) and higher resistance to making hard choices (35%) twice as frequently as High Success counterparts.

The study authors conclude that High Success non-profits have a “culture of planning” that involves a commitment and discipline for planning and implementation.  The evidence of the importance of planning to organizational success from this and other studies is so compelling that the authors recommend that funders emphasize these practices as a means to fulfilling mission.

What you should consider:

  • Develop a planning culture that is committed and disciplined about periodic strategic planning and implementation
  • Utilize research, metrics and mission/vision alignment tools as part of the planning
  • Create an implementation process that involves regular progress reports to the executive level
  • Communicate out progress at least quarterly if not more often to key constituents

The study report can be found here.

Are You Mistaking Vision for Strategy?

Thursday, February 28th, 2013

By Kathleen Hosfeld

At the heart of organizational meaning-making we find corporate vision and mission as definitions of the good or the change that we seek to create in the world. While this is absolutely essential to thriving organizations and engaging the passions of  stakeholders, this is not strategy.strategy in colour 2

Vision and mission are the “what.” Strategy is the “how.” Strategy is the distillation of opportunities and maneuvers that will make it possible to realize your vision and mission. In a recent article in Strategy + Business, Ken Favaro writes that many organizations mistake what he calls “The Corporate Five” for the “Strategic Five.” The Corporate Five are mission, vision, purpose, plan and goals. You can have all of those things and still be missing a strategy.

In order to develop strategy, a firm has to be able to answer what Favaro calls “The Strategic Five” :

1. What business or businesses should you be in?
2. How do you add value to your businesses?
3. Who are the target customers for your businesses?
4. What are your value propositions to those target customers?
5. What capabilities are essential to adding value to your businesses and differentiating their value
propositions?

Although most companies can articulate a vision (for instance, “to be the leading biotech company”), a mission (“to find and commercialize innovative drug therapies”), a purpose (“to improve patients’ lives”), a plan (“to develop molecule X, enter market Y, and partner with company Z”), or a goal (“to bring three innovative molecules to market by 2025”), few convincingly answer all five strategic questions, especially with one voice across their top teams and down their organizations.

They can’t answer those questions because often they haven’t asked them in a very long time, if at all.

Favaro says that companies that focus on the “Corporate Five” are mistaking execution for strategy. I’d counter that since there’s no strategy to start with there’s nothing to actually execute. The so-called “plan” is a checklist of technical to-dos, when in reality an adaptive challenge is at hand that requires new thinking. Strategy work is intrinsically adaptive change work.

Development of mission and vision and purpose are engaging exercises that tap the imagination of all stakeholders. If they are developed outside of a framework that addresses “The Strategic Five,” they are likely to lack substance and fail to achieve traction within the organization. An effective business transformation process will embed the Strategic Five into the entire process.

To read Favaro’s whole article go here.

Interested in finding your own answers to “The Strategic Five?” Read our article “Finding Time To Be Strategic.”

Speeding Strategy to Market

Thursday, January 10th, 2013

Track and Field start shoe on the blocks.By Kathleen Hosfeld

The value of any competitive strategy is the extent to which it creates or deepens relationships with customers.  The faster you implement that strategy, the faster you see return on investment.  The way a team formulates the strategy can make all the difference between its seamless or tortured translation into new or more profitable relationships.  Integrating key market-focused questions into the strategy process will speed your strategy to market.

Take for example, Honda Corporation.  The firm has remained among the top five car manufacturers for many years with its solid strategy and execution. Honda’s core strategy has focused on high quality engine design.  This allowed the firm to grow from selling lawn mowers to motorcycles and then cars. Today, their website and sales collateral continue to emphasize various aspects of their engine expertise – from the combustion engines that drive their sponsored racecars to their market-leading hybrid engines. The promise of superior engine performance — a key aspect of customer satisfaction — is at the heart of all their messaging. This straight line between key elements of their corporate strategy and their markets means faster execution.

How can your firm learn from Honda’s example and accelerate the translation of your organization’s strategy into market impact? Examine your strategy process and ask the following questions:

In what way does planning identify and maximize your firm’s unique know how or what you do best?

Honda’s strategic intent leverages the firm’s knowledge of engine design and manufacturing. Honda built that knowledge systematically as its primary source of competitive advantage. What is the core knowledge in your firm that you could similarly develop?  Does your strategic plan call this out and identify how it will be nurtured and grown over time?

How does your planning seek to leverage the connection between your strengths and customers perceived value?

Many companies seek to create value for their customers. Yet, sometimes there’s a mismatch between what customers value and what the companies think they do or should value. It boils down to evidence. In the course of your strategic planning, this year or in recent years, have you conducted the research to know what customers’ really value about your product or service?

In what way does planning actively identify new potential markets or opportunities through existing strengths?

In the case of Honda’s commitment to engines, they’ve been able to evolve from lawnmowers, to motorcycles, to cars, and now to diversified types of cars including hybrid vehicles. What’s the equivalent strength in your company that creates a platform for new market development, innovation or product evolution?

How does it explore alternatives for positioning your firm or products in ways competitors can’t match?

High performing companies’ plans always address the strengths and weaknesses of competitors. Look deeper than what their advertisements say. Look to their ability to deliver consistently. Focus in areas where you have considerable head start on competitors or untapped opportunities.

In answering all of these questions, keep in mind the power of stakeholder listening and dialogue to tap new perspectives to create new insights and breakthrough thinking.  Employees, customers, value chain partners, community groups may all have unique perspectives that will give your firm an edge.

Streamlining the path to execution is the way to realize more value from your strategic planning process. Using a strategy process that answers these questions enables the firm to accelerate the translation of strategic plans into value propositions, messaging strategies, brand promises and other foundational elements of good marketing.

 

Making the Connections: Implementing a Stakeholder Model

Friday, August 17th, 2012

By Kathleen Hosfeld

Looking to reap the many benefits of a stakeholder centric approach to business Implementing a Stakeholder Modelbut wondering where to start?

First, recognize that you’re not starting from zero. You already have relationships with stakeholders. Many companies can benefit from taking an appreciative approach to identifying what they are already doing well. From there you can measure the gap between the current state and the desired future state of each relationship.

Second, accept that movement toward a stakeholder centric model represents both cultural and operational change and will take time.  This movement will take a combination of both “soft” skills and “hard skills.”  An effective change initiative will address individuals and teams, structures, behaviors and beliefs.

Third, get rid of the notion that this is just corporate social responsibility or good PR.  It’s actually a different approach to business altogether.   It means inviting stakeholders into the value creation process of your company.

While every company’s situation will differ, there are eight basic steps to implementing a stakeholder approach to a business:

  1.  Determine the strategic context:  What are you trying to accomplish? Are you formulating business strategy or functional strategy?  Are you seeking the overall competitive advantage of the firm or are you working in service of a specific business unit, service or product’s performance?
  2. Prioritize stakeholder influences in this strategic context:  Evaluate stakeholders using the criteria of power, legitimacy, urgency, interdependence, cooperation, and conflict. Consider all the stakeholders in your value chain. Note that research shows that investing in employees make the most significant contribution to overall financial performance. This is likely a good place to start.
  3. Assess stakeholder interests and satisfaction: Many executives think they know what stakeholders want, but it’s rare when they actually do. Assessing stakeholder interests and the current state of their satisfaction can take many forms: discussion, surveys, group processes. What’s important is to make this determination based on data.
  4. Harmonize stakeholder interests: Compare the interests of all key stakeholders to identify areas of commonality and difference. Look for the third way when needs or interests seem to compete.
  5. Develop stakeholder strategies: Creating stakeholder strategies is an iterative process with the preceding step. Inherent in each stakeholder strategy is the best way to form a two-way exchange  that creates value for all parties. This step should include a determination of measurable outcomes.
  6. Implement stakeholder strategies: Create a detailed action plan that defines accountability for full implementation of the stakeholder strategies, and support the plan with resources.
  7. Evaluate: Using the measurable outcomes defined above, evaluate stakeholder efforts’ success in creating value for all.

Additional articles about the stakeholder model are available here.

A Rose By Any Other Name: The Case for “Good” Business Smells Sweeter and Sweeter

Friday, August 10th, 2012

By Kathleen Hosfeld

You may call it the triple bottom line, sustainable, green, conscious, responBusiness Case for Good Businesssible or worthy business. Underlying the labels is a common commitment to maximizing value for multiple stakeholders including the community and the environment.  Research continues to show the approach pays off. Financially.

Many people find their motivation for “good” business in an instinctive or intuitive desire to “make a difference,” even if it risks lowering profitability. In the early days of so-called green business, most mainstream business owners and executives saw efforts to manage environmental and social concerns as expensive indulgences that would ultimately cost money and possibly competitiveness.  That perception has shifted as organizations realize meaningful cost savings and risk mitigation from entry level commitments to waste and energy reductions.

But the strategic upside potential of a values-based, stakeholder approach is growing increasingly clear thanks to books like Good Company: Business Success in the Worthiness Era by Laurie Bassi, Ed Frauenheim, and Dan McMurrrer  with Larry Costello.  The book travels many of the same paths of the book Firms of Endearment, by Rajendra S. Sisodia, and colleagues in 2007.  Firms of Endearment made the point that a positive relational approach to multiple stakeholders resulted in superior financial performance. The companies they profiled achieved a higher return on equity (10 year rate of 1025% compared with S&P 500 of 122.3% and Good to Great Companies 331%) in spite of spending considerably more on employees and other stakeholders than most companies.

Bassi et al have done two things to advance the conversation. First, they have compiled a boat load of more recent “hard-nosed” evidence that companies who do well do better and those who do not do poorly by comparison.   A sampling of their citations:

  • In a recent study by consulting firm A.T. Kearney, firms that embraced sustainability outperformed industry averages by 15% from May through November of 2008.
  • According to a study by Packaged Facts, in spite of the recession, sales of “ethical” consumer products have grown at a rate of high single and low double-digits to a projected $38 billion in 2009.
  • Firms on Fortune’s 100 Best Companies to Work For outperform the stock market as a whole.

Bassi’s group has taken this analysis one giant step further. They created a quantitative index of what constitutes a “worthy” company, profiled all the Fortune 100 companies and compared them on three levels: as employers, as sellers and as stewards of society and the environment. They found that companies with a higher Good Company score outperformed their peers with a lower Good Company score by an average of 19.8 percentage points.

On the strength of their findings, the Bassi and her colleagues created Bassi Investments, a money management firm that invests according to the Good Company criteria. The funds were established in 2001 and results continue to support the finding that investing in employees is a best practice of wealth creation.

It may seem counter intuitive that in order to be more profitable a company has to invest more money in an area.  These business results point to the new insights that are emerging as the way we do business continues to change.

More about the Book:

Good Company

Relationships key in new approaches to capitalism

Wednesday, August 8th, 2012

Stakeholder RelattionshipsBy Kathleen Hosfeld

Two of my “summer reads” are books that make the case that strong relationships with key stakeholders are driving financial performance and are central to how business is being reinvented. The first is Patricia Aburdene’s  book: “Megatrends 2010: The Rise of Conscious Capitalism.” The second is “Good Company, Business Success in the Worthiness Era,” By Laurie Bassi, Ed Frauenheim, and Dan McMurrrer with Larry Costello.

Aburdene’s book follows the framework of her hugely successful megatrends books written with John Naisbett, and cites seven interrelated trends that encompass corporate social responsibility, spirituality in business and so-called “conscious capitalism.” The term conscious capitalism, which Aburdene used in speaking engagements for several years prior to the publication of the book, has been picked up by both academics and business people alike.  A conscious business embraces three things:

  • a strong sense of mission and purpose,
  • a stakeholder perspective – which cultivates strong relationships with key stakeholders rather than prioritizing stockholders or profit as the sole directive, and
  • conscious leadership.

“Conscious leadership” in this setting means leading holistically through the lens of relationship-oriented values.  Recently, practitioners have also begun to articulate the cultural dynamics of conscious business as having these key values: Trust, Authenticity, Caring, Transparency, Integrity and Learning.

(Note: This definition of conscious capitalism is complimentary to but not the same as the conscious business model developed by Fred Koffman. That model emphasizes self-knowledge and self-awareness as the basis of conscious behaviors and choices.)

Both Aburdene’s and Bassi’s books look at the question of “why” businesses are changing their practices. Aburdene, while citing multiple drivers of economic necessity and changing values, shines a spotlight on the spiritual values and practices from which the conscious capitalism arises. Bassi and colleagues, who also cite a spectrum of drivers, highlight the changing values and expectations of stakeholders and their influence on company behaviors.  They have created their own term – “worthiness”— which connotes the qualities that make a company worthy in the eyes of customers, employees and other stakeholders.

Good Company emphasizes the role of the employee in all three important “worthiness” areas:  being an employer, seller and steward.  I like the summary of one Amazon reviewer who said “Good Company shows how a strong leadership culture that’s serving all of its stakeholders and society pays off for everyone buying from, working for, investing in, and doing business with the company.”  A worthy company does not choose one stakeholder over another. Everybody – including the community and environment – wins.

Both books include stories of real businesses and executives doing well as a result of a broader stakeholder perspective. One of the things I appreciate about Good Company is that the authors also point out when companies who are doing well in some areas stub their toes in others.  This reads to me as imminently practical and realistic. The new paradigm is still emerging and all of us still in that transition will arrive at various degrees of consciousness – worthiness, goodness, sustainability, etc. — at different times.

(In another article, I will explore the  updated business case for a stakeholder view .)

More about the books:

Megatrends 2010

Good Company

Let the Beauty We Love Be What We Do

Friday, November 20th, 2009

By Kathleen Hosfeld

“Be the change we want to see in the world” is so often used, we have Let the Beauty We Love Be What We Dobecome somewhat immune to its message that it all starts with us. The place we make change most effectively is in our own lives.

As more of us seek to engage in creating economies and communities that work for all, it may be that hope associated with change isn’t enough to inspire us. We’re unclear about what changes are needed to create the world we want. The idea of change begs the issue of strategy. What will work? Which of the many issues I care about should I tackle first?

When such questions paralyze us into inaction, another approach is to move in the direction of what we love. What are we grateful for? What are we so grateful for that we want all to experience it?

The Sufi poet Rumi wrote about how the particular longings of the heart shape our life path. He  said “A rose opens because she is the fragrance she loves.” We grow toward the beauty that most inspires us. We unfold more of ourselves, become more truly ourselves, as we release more of what we love into the world.

Bringing this sentiment to the workplace, to our relationships with clients, customers and other stakeholders involves taking time to ask: “What are we inspired to become? What is our highest aspiration for our work? What joy do I want others to experience?”

It’s not a simple process to bring such thoughts into practical application, and integrate them into our daily lives. But it’s an important process for this time. It means to live a life of faith. Faith in what? Faith in love. In beauty. In hope. In the basic ability of human beings to  work together to create a world that works for all of us.

In another poem, Rumi invites us to “Let the beauty we love be what we do. There are hundreds of ways to kneel and kiss the ground.” Many of us recognize that each person has his or her own unique gifts to give the world. Our individual lives can be a continual exploration of those gifts over time.

So, too, can we as companies and organizations act in service of the beauty we collectively love, and bring it to flower in the world for the good of all. When offered in the spirit of gratitude and generosity, our actions can truly be the change we seek.

~~~

The line “The rose opens….” Is from the poem Every Tree, translated by Coleman Barks in the book The Glance, Songs of Soul-Meeting, published in 1999 by Penguin Books.

The line “Let the beauty we love…” is published in The Essential Rumi, also translated by Coleman Barks, 1997 HarperOne.

~~~

Want a reminder to keep this sentiment alive in your life? Get the “Let the Beauty We Love” mug and we’ll send $5 to Kiva.org to support entrepreneurs around the world through microfinance loans.