"Change anything that gets in the way with effective-

ness, no matter how long it has been in place. Methods

are for today, not tomorrow; you can change them

without impacting company progress."

-- Built To Last, by James Collins and Jerry Porras

Counselor

JULY 1996 Number 103

Your Wisconsin Workforce Management & Employment Law Authority

Strategic Thinking: It's Your Future By Paul Woerpel, Transformation Consulting Group, Milwaukee

resent success is no guarantee of future suc- cess. Indeed, if your organization hasn't developed the capacity for industry, market and competitive foresight, there is a danger

you are relying on prescriptions which are rapidly becoming ineffective. When you become complacent, you fail to clarify how you will compete and succeed in the future. A prosperous and sustainable future is predicated not only on "doing things right" (the operational excellence imperative), but on "doing the right things" (developing a clear, competitive positioning: product, market and customer focus). Determining

the "right things" is accomplished via a process called Strategic

Thinking.

What is Strategic Thinking? Many business leaders think of strategic planning as no more than conducting a SWOT Analysis (an evaluation of Strengths, Weaknesses, Opportunities and Threats) and writing a Mission Statement. Too often these efforts lead to a perfunctory re-examination and reaffirmation of "what is," rather than what could be, or should be. The critical questions are simply not addressed. Strategic thinking is a dynamic, exploratory process—more qualitative than quan- titative—used to develop the insight and foresight nec-essary to effectively focus and leverage the organization's resources. The process defines the parameters of future business pursuits and, more importantly, the investment priorities which will enable the company to exert a disproportionate influence in the markets it chooses to serve. By systematically probing a range of external issues and trends, your management team develops a collective perspective about the future. This understanding becomes the basis for a conceptual model (strategic framework) which outlines what the business will do to achieve market leadership and control its own destiny. (That framework must be continually re-visited, tested, expanded and adjusted.)

Continued on Page 2

P P

!

Inside… Taxes and Benefits: Keeping Control with Stock

Gifts; Deducting Business Interest; How the

IRS Defines Repairs, Page 2

Employment Law: Review Your Employee

Handbook Today to Avoid Costly Errors;

Develop Severance Packages Before You

Downsize, Pages 3-5

Total Quality: How to Build Teams That

Succeed, Page 6

ISO 9000: Should You Certify Your Small

Service Business?, Page 8

Comment: Political Positives, Negatives, Page 11

__________________________

Review WISCONSIN UPDATE

Today in Pullout Section ! ________________________

• An importer of pri-vate label footwear struggles as its cus-tomers increasingly order factory-direct.

• An inspirational catalog products firm focuses on

innovation, gener- ating several new spin-off opportuni- ties … but fails to exploit its name

recognition and unique gift market

niche.

WISCONSIN SMALL BUSINESS

!

MANAGEMENT!

Strategic Thinking, cont. from Page 1

Strategic Thinking Questions

These questions should stimulate a dialog among your senior managers that facilitates exploration of individual per-spectives, tests assumptions, and synthe- sizes shared understanding. ! What trends… economic, social, political, regulatory and technological… will shape your company's future? What will their impact be? ! What opportunities, challenges and threats will impact your current cus-tomers? How will these then impact you? ! Answer the above question as it applies to your Competitors. And then to your Suppliers. How can you test/val- idate your conclusions? ! Who will be your company's com-petitors in the future? What will be the new forms of competition (replacement technologies or products)? ! What is the opportunity to rewrite the rules of competition in your industry? Can you create additional leverage through alliances with suppliers, cus-

tomers, or even com- petitors? ! What will be the unique skills or capabilities on which you will compete? Are you investing to de-velop these competencies before your competitors? ! What opportunities are there to satisfy cus- tomer needs (or customers) currently un-

served? How are you anticipating their needs? ! What assets are underperforming and should be sold to create capital to invest in a new, more opportune thrust? Can you reduce cycle time through pro-

2 Wisconsin Small Business Counselor

cess redesign? ! How much can you gain in resource leverage and strategic advan-tage through merger or acquisition? What new technologies, products or businesses can you acquire that will catapult your company forward and leapfrog the competition? ! What will be the scope of your company's product/service offering in the future? What will be the extent and the limits of your abilities to serve your chosen markets? ! Which new markets or market segments will your company serve in the future? Have you defined niches where you can create customer value and competitive differentiation? ! Which channels of distribution will be utilized to reach chosen future markets and customers? Can you improve "speed to market"?

Requires Discipline The answers to these strategic thinking questions help you determine how to position the company, and where to focus resources to create both short and long term success. Caution: Once having established a direction for the business, the challenge is to stick to the chosen path. There can be a temptation to force fit opportunities to the strategy, or to abandon the strategy altogether. Certainly, even the "best laid plans" should be re-tooled from time to time… but the place shouldn't be the weekly operations review meeting.

Meeting the Challenge As a business leader, how much of your time and energy is spent focused on internal issues… versus external opportunities, on present realities… ver- sus future possibilities, on doing…versus learning? To what extent do you struggle to play by today's rules … as opposed to writing the rules by which the game will be played tomorrow? Have you and your key people developed a deeply shared, well tested view of the future? What is your vulnerability to a competitor who better under-stands industry, market and competitive dynamics? Perhaps it's time to make strategic thinking and planning a discipline in your organization.

--Paul Woerpel, Transformation

Consulting Group, Milwaukee assists leaders in

the formulation and implementation of strategic

vision and organizational change. Phone: (262)

691-4540.

Reprinted With Permission

• A manufacturer of cast and machined replacement parts for the pulp and paper industry underestimates the impact of paper recycling.

• A magazine distribution business foresees its customers' desire for a single, regional source of supply, but fails to respond quickly enough.

• A small insurance company fails to consider merger/acquisi-tion alternatives to expand its volume rapidly enough to leverage required MIS investment.

• A screen printer

reacts slower than the competitors to digital technology that is transforming the printing industry.