© The Strategic Plan A review of the eight strategies common to all organizations against factors in the changing external environment

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The Strategic Plan

A review of the eight strategies common to all organizations against factors in the changing external environment

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Course Deliverables

Day 1

Day 2

Day 3

Produce a Situation Analysis

Produce a Strategic Plan

Produce a Business Plan

Introduction

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Results: Strategic Plan Content

- The Fact Gathering Process- Major External Factors- Stakeholder Expectations- Organizational Performance- Description of Current Strategies and Strategy Configuration

- The Analysis Process- Likely Impact of Major Factors- A Ranking of Major Factors & Expectations- Possible Responses & Rationale

- A Description of Changes, if any, to Strategy- An Explanation of the Rationale for Change- Impact on the Organization (Timing and Degree)- Major Risk Factors / Assumptions- Financial Implications- Long Term Hoped for Impact

1. FactsThe Situation

Analysis

2. AnalysisIssue

Development

3. StrategyThe Change

Agenda

Introduction

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Steps 5 – 8: Strategic Planning

2. Scoping Expectations: Have we assessed the expectations for strategic planning?

3. Internal Assessment: Do we truly understand the what’s, how’s and why’s of our current strategy?

4. External Assessment: What factors in the external environment must we truly understand?

1. Choice of Planning Process: Should we be doing strategic planning or business planning?

Day One:SituationAnalysis

Day Two:StrategicPlanning

Day Three:BusinessPlanning

5. The Situation Analysis Review: Do we have enough understanding to support informed decisions?

7. Strategic Issue Identification: Are we able to develop scenarios to identify possible strategic issues?

6. Issue Development: Are we able to connect external factors to the strategy framework?

8. Strategic Plan Communication: Have we described the likely “what” and “when” impact of change?

Introduction

9. Strategic Plan Review: Do we understand the strategic plan and how it is likely to impact us?

10. Expectations Impact: Can we identify the impact of strategic plan expectations on functional activities?

11. Expectations Testing: Are the strategic plan expectations consistent with competitive reality ?

12. Strategy Implementation: How are new expectations (if any) to be integrated with ongoing responsibilities?

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What SWOT can & can’t tell us

Under Tarion’s Control – What is the situation inside Tarion?

Not Under Tarion’s Control – What has changed in the External Environment?

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Fact vs. Fiction

Belief Tarion is controlled by the builders

Belief Tarion’s responsibilities as a regulator and warranty vendor conflict

Belief All builders pay the same registration fee

Belief The private sector warranty vendors could provide better warranties cheaper

Belief Tarion has a monopoly on new home warranty insurance

Belief New home building industry standards in Ontario need to be improved

Belief BC has put into place a new home warranty program structure that Ontario should adopt

Beilef Tarion could easily extend its regulatory and warranty coverage to the renovation industry

Fact Builders only control the nomination process and 8 of 15 seats on the board.

Fact The KPMG study found the unique combination of responsibilities a significant success factor.

Fact The builder registration fee is only one aspect of licensing.

Fact The KPMG study found no evidence to support this

Fact All new homes must carry the Tarion warranty as the minimum warranty – not the only warranty

Fact New home industry standards are the highest of any jurisdiction.

Fact The BC program is unproven and the BC market for is a fraction of the size of the Ontario market.

Fact The renovation industry is fundamentally different from the new home building industry

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Stakeholder Identification

The major Tarion stakeholders and their role in the strategic planning process

Stakeholder Categories Actual Stakeholders

The Authority Group

Those Stakeholders who approve the plan and authorize implementation

The Board

The Involve Group

Stakeholders who should be involved because of the role they will play in implementation

• Consumer Associations• Builders Associations (OHBA, GTHBA)• Ministry (MCBS)• Tarion Management Staff

The Inform Group

Stakeholders who need to be told what to do so that their actions are consistent with implementation

• Media (Print / Radio / T.V. / Magazine) • Municipalities• Builders• Consumers•Tarion Employees

The Consider Group

Any Stakeholders not falling in any of the above categories and who could have a response to implementation

•Industry Professionals - Lawyers - Architects - Engineers - Bankers Industry vendors: trades, manufacturers DAA Critics: CIELAP - Other DAA’s• Other Ministries: (MMAH) - Other gov’t orgs: (CMHC)• Competitors: (warranty companies)• Other jurisdictions: (B.C.)

Step 5 Understand the Appetite for Change

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ONHWP Act Consumer Protection Model

Risks to Consumer

Consumer Protection

Builder Risk

Insuring Builder Failure to PerformAssuring Builder Ability to Perform

Regulatory ProtectionMandatory Builder

Registration & Minimum Standards of Acceptable Builder Performance

Financial CompensationNo-fault Consumer Warranty Coverage

& Simplified ConsumerClaims Process

Delivered by a not-for-profit industry stakeholder controlled corporation & completely self-funded from fee income

Accountable to Ministry (MOU)

Accountable toIndustry

Stakeholders

Accountable toCorporate Law

Step 5 Understand InternalAssessment Findings

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The Alphas Current Strategy

Mandate Administration of the ONHWP Act.

RiskFirstly, use of regulatory authority; and secondly, use of insurance industry practices

to manage risks to new homebuyers

Growth Rise and fall with the new home building industry cycles

FinancialUse of insurance industry capital reserving practices; revenues from fees from sale of warranties and from builder licensing

Technology Enable management productivity; e.g. call center, web-based services

Organization A regulatory mentality and culture first and foremost; 2nd an insurer

Marketing To educate new home buyers and home builders on the regulatory regime

Service Delivery

To deflect risk away from the Tarion onto builders

Step 5Understand Internal

Assessment Findings

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Step 5Understand Internal

Assessment Findings

Source: Seeingstrategy.com

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Management Activities Analysis

Business

Model ManagementStrengths Weaknesses

Governance• strong structures good participation

• good skill mix

• Board appointments

• builder majority on board

Builder Registration

• acceptance of security

• KPMG found the registration tied to builder performance and history

• mandatory registration

• stable builder population

• misunderstanding of how Tarion differentiates pricing for builders

• productivity low

Enforcements • KPMG found better consumer protection • lack of transparency on operating statistics

Enrollments • mandatory • more technology for productivity

Warranty Services•Tarion offers most extensive coverage of any jurisdiction

• home covered whether or not requested

• not well known that Tarion is only program to cover consumers whether or not home or bldg’s registered

• system clogged, consumers unhappy

Risk Management • impact of various risk prevention measures such as security • not enough communication on improving builder performance

Finance• adapting insurance industry practices

• $2 billion in reserves• not enough disclosure

I.T. • ready for e-commerce • could be more use of technology

Human Resources • mostly financial services or legal backgrounds• low personnel production

• no disclosure of performance measures

Corporate

Affairs

• builder research

• consumer research

• one way communication

• no transparency

• need to address criticisms

• need to publicize KPMG


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Management Activities Conclusions

Business ModelShort Term

Improvement Opportunities

External Factors

Most Impacting Performance

Governance• disclosure on Board composition, activities, etc.

• transparency trend in government - ministry expectations (MCBS)•Barrett Commission

Builder Registration• individual performance measures

•Industry best practices

Enforcement• disclosure of activities, issues

•media

Enrollments• individual performance measures

• best practices - insurance industry practices• e-commerce

Warranty

Services• performance measures

•New home builder performance - warranty industry practices• best practices - e-commerce - builder expectations• consumer expectations - BRRAG

Risk

Management

• more disclosure• Review of builders involved in conciliations

• Present building code legislation - Tarion Act & regulations• BRRAG - case law / judicial decisions -warranty industry / BC• construction technology

Finance & Administration • more disclosure

• insurance industry practices -Stock/Bond market performance• financial regulatory requirements - builder expectations•B.C. Home Warranty - Warranty Industry Practices -Practices of other DAA’s

I.T. • more disclosure • technology

Human Resources • more disclosure • outsourcing trend

Facilities • needs assessment •

Corporate Affairs • disclosure • transparency -competitors for warranty - DAA practices


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Industry Analysis (as Warranty Co.)

Segment

What is my chosen market called?

New Home Warranty

Segment Size / Growth

How big is it and is it growing?Averages 50,000 new homes but ranges from a high of 70,000 to lows of 25,000

Growth is a function of provincial economy and population growth

Segment Dynamics

What dynamics are most shaping the segment?

Customers/competitors/

Suppliers/Barriers to Entry/Alternatives

• Consumers don’t want to pay cost until they need protection• Mortgage lenders require warranty on high-ratio loans• Builders want rational cost since, in most markets, warranty cost cannot be “tacked on” to selling price• Competitive pressure: lower costs, more choice

Critical Success Factors

What must a competitor do to succeed?

• not-for-profit status (to recognize economic fragility)• industry self-management model (to recognize need to balance true cost/liability associated with added consumer protection elements and to manage “scope creep” inherent in government & monopoly bureaucracies)• bundled regulatory authority / insurance responsibility (to recognize need to enforce a minimum standard)• no-fault coverage for consumers (to recognize new home warranty is essentially about consumer protection)• autonomy from government (to control “scope creep” and bureaucracy and to isolate reserve fund from political pressure)•ongoing management of stakeholder expectations to stay aligned with major stakeholder groups

Segment Evolution

How is this segment likely to change over time?

Given the evolution of the National House Building Council in Britain, it is likely to evolve into a competitive model – with the issue being whether Tarion becomes the mandatory minimum or the “rump” insurer of last resort to the industry. The New Jersey State model is the rump model – however, at the cost of the loss of no-fault for consumers.

Step 5 Understand External Assessment Findings

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Competitor Analysis (as Warranty Co.)

Industry

Attractiveness

Competitors

•GE Capital•Paveco•London Life

Competitor Focus

•Urban, large builders•Deposit insurance•Conversion coverage•Excess coverage

Industry

Critical Success

Factors

Competitor Strengths

•Cost Control / Productivity•Marketing•Pricing•Product selection•Financial strength

Competitor Weaknesses

•No commitment to stay in the market•No commitment to small builders•Slow to pay claims•No pricing breaks to consumers in good times•No direct link to regulator•Warranty is a trigger product – not a primary product

Industry Evolution

Likely Future Competitors •Private sector competitors

Likely Areas of Functional Excellence •On-line delivery of builder and consumer services


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Customer Analysis as Warranty Co.

Question Answer

Who are our most important customers?

Builders are the most important customer.

Consumers do not want to know anything about new home warranty products until they have a claim.

Consumers cannot be educated on the value of new home warranty (which is why the purchase needs to be mandatory)

What criteria drive the customer’s purchase decision?

The criteria that drive the purchaser’s decision are bank requirements and cost. Banks in Canada require a warranty policy as a condition of mortgaging

How do we compare, in the customer’s view to the competition?

Tarion do not compare favourably to the competition because of bad press rather than actual performance. Tarion has done little to address the misinformation provided to consumers and builders about the Tarion model and the Tarion Act

Which of our products & services are truly valuable to them?

The registration requirements imposed on builders (e.g. security requirements, limits on units to be built, etc) is probably the most valuable to most consumers since the practice virtually eliminates warranty claims. The deposit loss coverage is the most important product to most consumers who have had to make a warranty claim

What are the steps and who influences the purchase decision?

The builder, in Ontario, is the source of the new home enrolment and transfer of the coverage to the consumer. In jurisdictions where warranty is not mandatory, lenders require warranty coverage for high ratio loans.

How are customer criteria and behavior likely to change?

As the overall cost of homes escalates, in terms of overall price and percentage of total family income dedicated to home ownership, there is likely to be less concern about “defects” insurance and more concern about insolvency and major structural defects insurance.

What products and services are our customers going to need?

As new homes continue to proliferate in terms of type (e.g. conversions, time-share, business/home use, etc.) home buyers (through builders and bankers) will demand products to cover these products.


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External Factors Identified

External Factor Description

1. Technology I.T. to enable productivity & e-business

2. Case Law / Judicial Decisions Interpretation of the Act & Regs

3. Warranty Competitors Private sector warranty vendors

4. Best Practices Best practices in business & gov’t

5. Builder Expectations Less bureaucracy, secrecy, more transparent, productive

6. Ministry Expectations Expectations of MCBS

7. The Act and Registrations Tarion interpretation of Act & Regs

8. Consumer Expectations Less bureaucracy, secrecy, more transparent, productive

9. New Home Builder Performance As shown in operating statistics

10. Transparency The trend to full information disclosure

11. E-Commerce Taking the business online

12. The Media Print/T.V./Radio

13. Barrett é BC New Homes Collapse The report on the collapse of BCNHW

14. BRRAG / Tourdes DAA Review Report Building Industry Regulatory Reform

15. BC New Home Warranty Program The now defunct BC warranty program

16. Insurance Industry Practices Process and practices

17. Financial Regulatory Requirements Capital and reporting requirements

18. Construction Technology / Practices Materials, practices & products


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Nominal Group Factors Ranking

Your Ranking Factor Name Factor I.D.

1

2

3

4

5

6

7

8

9

10

Step 5Exercise Goal

To demonstrate NominalGroup Technique

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Factors ScoringStep 5 Exercise

Weighting X10 X9 X8 Total Rank

Your Ranking 1 2 3

Factors:

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Cross Impact Analysis

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 AS P

1 Technology X 0 3 1 0 3 1 1 3 0 0 0 0 3 0 1 16 128

2 Case Law 0 X 1 1 1 1 1 0 0 0 0 0 0 0 0 0 5 60

3.Best Practices 0 0 X 0 0 0 3 3 0 0 0 0 0 1 0 1 8 144

4 Bldr Expects 3 1 3 X 2 3 3 2 3 1 0 0 0 0 0 2 21 273

5 Act & Regs 0 3 3 3 X 3 3 0 0 0 0 0 1 0 0 0 16 176

6 Cons Expects 3 1 3 3 0 X 3 3 1 0 0 0 0 1 1 1 20 420

7 Bldr Perform 0 3 0 0 3 3 X 0 0 0 0 0 0 0 0 0 9 135

8 Transparency 1 0 2 2 0 2 2 X 1 1 0 0 0 0 0 0 11 121

9 Economics 1 0 1 0 0 1 0 1 X 0 0 0 0 0 0 0 4 32

10 Media 0 0 0 1 0 1 1 1 0 X 0 0 0 0 0 0 4 8

11 Barrett Comm 0 1 0 0 0 0 0 0 0 0 X 0 0 0 0 0 1 0

12 BRRAG 0 0 1 0 1 0 0 0 0 0 0 X 0 0 0 0 2 0

13 BCNHWP 0 1 0 1 2 1 1 0 0 0 0 0 X 0 0 0 6 6

14 Ins Pracs 0 0 1 1 1 1 0 0 0 0 0 0 0 X 0 0 4 24

15 Reg Reqmts 0 0 0 0 1 1 0 0 0 0 0 0 0 0 X 0 2 2

16 Constr Tech. 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 X 1 5

8 12 18 13 11 21 15 11 8 2 0 0 1 6 1 5 PS

2 .4 .4 1.6 1.4 .9 .6 1 .5 2 0 0 6 4 2 1 Q

See T.J. Gordon and H. Hayward Initial Experiments with the cross-impact matrix method of forecasting Futures 1, 100 -116 (1968)

0 = none 1 = weak 2 = medium 3 = strong

sum of row = ∑ni sum of column = ∑nj product = ∑ni ● ∑nj quotient = ∑ni / ∑nj

Step 5 Theory

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1. Technology

Q = 2.0P = 128 >

2. Case LawQ = 0.4P = 60 >

3. Best PracticesQ = 0.4P = 144 >

4. Builder ExpectationsQ = 1.6P = 273 >

5. Act & RegulationsQ = 1.4P = 176 >

6. Consumer ExpectationsQ = 1.0P = 420 >

7. New Home Builder Perf

Q = 0.6P = 135 >

8. TransparencyQ = 1.0P = 121 >

9. E-CommerceQ = 0.5P = 32 <

10. MediaQ = 2.0P = 8 >

11. Barrett CommissionQ = 0P = 0 <

12. BRRAG Report

Q = 0P = 0 <

13. BC New Home WarrantyQ = 6.0P = 6 <

14. Insurance Industry PracQ = 4.0P = 24 <

15. Financial Regulatory ReqQ = 2.0P = 2 <

16. Construction TechnologyQ = 1.0P = 5 <

Active = Q > 1.0 Critical = P > (n-1)2

Reactive = Q < 1.0 Inert = P < (n-1)2

X-Impact Analysis CalculationsStep 5 Theory

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Plotting the Results

1 Technology2 Case Law3 Best Practices

4 Builder Expectations5 Act & Regulations

6 Consumer Expectations7 New Home Builder Performance

8 Transparency9 E-Commerce10 Media11 Barrett Commission12 BRRAG13 BC New Home Warranty14 Insurance Industry Practices15 Financial Regulatory Requirements16 Construction Technology

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 1 2 3 4 5 6 7 8

425

400

375

350

325

300

275

250

225

200

175

150

125

100

75

50

25

0

Inertweak influencer / weakly influenced

Criticalstrong influencer / strongly influenced

Activestrong influencer / weakly influenced

Reactiveweak influencer

strongly influenced1

10

2

3

4

5

9

151611

78

1413

6

12

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Factors Risk Assessment

- Technology- Best-Practices- E-Commerce

- Case Law- Consumer Expectations- Builder Expectations- Transparency

- Construction Technology

- Finance RegulatoryRequirements- Insurance Industry Practices- BC New Home WarrantyCollapse- The Media

- The Act & Regs- New Home Builder Performance- BRRAG Report- Barrett Commission

low medium consequence highImpact

medium

high

low

Pro

bab

ility

Step 5 Theory

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Step 6 Objectives

Prepare Statement ofStrategy & Impact

Conduct ScenarioAnalysis

Convert Factorsto Strategy Issues

Review the Situation Analysis

Understand the Appetitefor Change

Understand External Assessment Findings

Understand InternalAssessment Findings

Select anIdentified Factor

Answer the StrategyChange Question

Connect the Factor to One of the 8 Strategies

6. Issue Development: Are we able to connect external factors to the strategy framework?

Step 6

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Current Strategy Configuration

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Strategic Issue Definition

A question about strategy

The two strategy questions:

1. Do we improve existing strategy ? or

2. Do we replace existing strategy with a new strategy ?

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Change in A

ltern

atives/

Competition

MandateBus Definition

RiskGrowth

FinanceTech Org

Marketing /

Communi-

cations

Production/

Service

Delivery

Changes in

Need / Risk

Changing

Trends

Industry

Change

Changes in

Demand Changes in

Best Practices

ChangedStakeholderExpectations

ChangedStakeholderExpectations

The CEO Aligns the 8 Strategieswith Major Stakeholder Expectations

and Competitive Reality

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All Managers Align Activities Assigned to Themto Strategic Plan Expectations (and then to competitive reality)

CallCentre

TrainingRecruiting

Monitoring

Admin

ComplianceBudget

Marketing /

ServicesCustomer

Relations

ChangedExpectations

ChangedExpectations

Vice PresidentRegional Call Centre Operations

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Alpha Sets Culture

Stantec

IBM

Nike

Bank of Canada

Growth

Business Definition

Marketing

Risk

Organization 8 Strategy Focus

FedEx Service Delivery

Bank of Montreal Financial Management

Google R&D / Technology

Frank Gehry Architects Organization

Growth by Acquisition

Morphing to the high margin

Clothing for winners

Managing Investor Expectations

Actual Strategy

24 Hour Delivery

Deposit-Taking

To manage all your information needs

Starchitect

Major Global Design Firm

Information Technology

The Swooch

Canada’s FinancialRisk Manager

Identity

Service Excellence

The Bank of No Surprises

The Biggest Cloud

One-of-a-kind design

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Strategy Focus (Public / NFP)

CICA

Toronto Police Services

Marketing / Communications

Risk

Entity The 8 Strategies

Nova Scotia Government Service Delivery

Ontario Financing Authority Financial Management

National Research Council R&D / Technology

Stratford Theatre Company Organization Management

Mandate

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Drafting the Issue

Tip #1 “????” Frame issues as questions

-The Distilled Spirits Industry in Canada has no future-We need to exit the Distilled Spirits Industry in Canada-Should we exit the Distilled Spirits Industry in Canada?

Tip #2 “Should” Frame the issue in a way that invites debate

-Are we going to…-How do we…-Can we…-Could we…-Should we exit the Distilled Spirits Industry in Canada?

Tip #3 “Yes” or “No” Answer the question

Yes No Don’t Know

Step 6 Theory

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Issues: Connecting Factors to Strategy

1 Description of the External Factor under Discussion:

2 External Factor Background:

a) Without any response from us, what is the likely impact of this External Factor?

b) Does current research and analysis offer insight on how best to respond?

c) Have we taken action consistent with research to address this External Factor?

d) How effective has our action been?

3 Draft a question that best connects this factor to one of the 8 Strategies

Draft Issue: Should

?

4 Draft Issue Answer Yes No Don’t Know

5 Further Research Required if answer to #4 is “Don’t Know”:

Step 6 Exercise:To connect an External Factor to one of the

8 Strategies

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7 Ways to Avoid Action

1. For every proposal, point out every possible problem.

2. Ask detailed questions which cannot possibly be answered.

3. Profess not to have any answers while earnestly cautioning against proceeding.

4. Emphasize that the issue cannot be separated from all the other issues and therefore, cannot be resolved until all the other issues are resolved.

5. Appoint a consultant.

6. Create a committee.

7. Congratulate the issue. Discussion on it wasted 3 hours, but we are better for it.

Step 6

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Step 7 Objective


Identify Strategic Issues



Select an Identified Factor


Connect the Factor toOne of the 8 Strategies

Develop Scenarios toAssess Strategy Issues


Draft CompetingStrategic Issues

7. Strategic Issue Identification: Are we able to develop scenarios to identify possible strategic issues?




Step 7

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Strategy Scenario Development Develop Scenarios toAssess Strategy IssuesStep 7

Current Strategy not Changed

Current Strategy Changed

Ext

ern

al F

acto

r n

ot

Ad

dre

sse

d Exte

rnal F

actor A

dd

ressed

1. In the lower left, describe how we look today because of the strategy we are using2. In the upper right, identify an organization that is the best example of what we could look like

if we successfully implemented the strategy and it became our Dominant Strategy.

Who is closest to what we do, represents a great example of what we could look like if this strategy became our dominant strategy?

What organization would an outsider think we look like because of our present strategy?

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Strategy Scenario Development

No Change in EB Marketing Strategy

Change EB Marketing StrategyC

ust

om

er F

acto

r n

ot

Ad

dre

ssed C

usto

mer F

actor A

dd

ressed

ExampleStep 7

- A highly focused retailer

- A retailer in trouble

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Strategic Issue Development

First Statement of the Issue:

Should we change our Strategy?

Redrafted Strategic Issue:

Should we change our present strategy

which has characterized us as

to a strategy which will change our image to

and, by

, deliver ?

ExerciseStep 7

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Step 8 Objectives






Selectthe Strategic Issue


Frame Strategies asSMART Objectives

Communicatingthe Strategic Plan

Identify StrategicAssumption

8. Strategic Plan Communication: Have we described the likely “what” and “when” impact of change?







Step 8

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Strategy or Objective

Precise & specific in content? Performance can be measured? Provides the starting point for action? Realistic balance of expectation & ability? Has a specific deadline?

English Bay Business Definition Strategy (Objective):

To become (return to being) a niche retailer with 80% of profitability coming from well-defined EB customers within the next 2 years

Frame Strategies asSMART ObjectivesStep 8

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Tarion Strategies (Objectives)

Strategy Framework Element

Proposed Strategy

Present Strategy

Mandate Stick to the Act

RiskEnforce compliance and embrace insurance practices

GrowthRise and fall with industry cycles

Financial ManagementOnly take what is needed / Return surplus

Organizational DesignSeparate Regulator from Insurer

Communications Educate stakeholders

Operations Deflect risk to builders

Technology Enable management

Step 8Frame Strategies asSMART Objectives

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Strategic Assumption Identification

1. What is the Major External Factor driving Strategy Change?

2. What about that Factor could change and threaten our strategy

3. Do we have a contingency plan if this starts happening?

4. Is this assumption about the Factor beyond our control?

5. Should the assumption about this Factor be monitored.

Assumptions Considered conjecture on specific factors

Step 8


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Risk

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Strategy Element Strategy

Mandate As stated under the York University Act. 1965, as amended

Risk Enterprise risk management

Growth Growth driven by campus construction – “If we build it, they will come”

Financial Debt financings supplementing provincial funding

Technology Enabler (including Orion Network)

Organization Bicameral system (Separate Academic and Administrative Governance)

Marketing Focused on attracting students and donors

Service Delivery Graduate and undergraduate degree programs across 11 faculties.

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8 Strategy Strategy

Business Positioning

Hydro Ottawa Limited is an Ontario regulated electricity local distribution company (LDC) that owns and operates distribution infrastructure in the City of Ottawa and the Village of Casselman and is the largest LDC in eastern Ontario and the third largest municipally-owned LDC in the Province of Ontario.

RiskHydro Ottawa manages risk by staying in compliance with the regulatory framework impacting the industry to employ fixed price contracts to reduce exposure to spot market prices, the continuance of Hydro Ottawa’s exceptional health and safety record,

Growth Hydro Ottawa growth is strategy s expanding our distribution business beyond our current service territory;

Financial Hydro Ottawa is a MEU under the Electricity Act. Revenues are regulated. Finances are managed to retain its credit-rating; compliance with OEB requirements, and, if appropriate, dividends to the parent

Technology / R&D

Hydro Ottawa has 2700 kilometres of underground cable, 2,700 kilometres of overhead lines, 40,500 transformers and 48,700 hydro poles.,Ottawa Hydro will introduce more intelligence and automation into our distribution system, in 2014, Hydro Ottawa will complete the development of a more detailed Smart Grid plan, as required by the Green Energy and Green Economy Act.

OrganizationHydro has a workforce of about 600 employees of which a large percentage are eligible for retirement in the next 5 years creating the need for a workforce replacement strategy and the development of a skilled, engaged and prepared workforcefor the future

MarketingHydro Ottawa serves the residential; small business and bulk-metered; and large user customer segments The fundamentals of customer value in the electricity business are quality and cost – delivering a reliable service, while operating efficiently and effectively to keep rates competitive. Hydro Ottawa is consistently among the top performers in Ontario in both of these areas.

Service Delivery

Hydro Ottawa Limited has two core responsibilities. First, Hydro Ottawa is responsible for the safe and reliable delivery of electricity to more than 300,000 customers in the City of Ottawa and the village of Casselman. Second, Hydro Ottawa Limited bills for its services and for the services provided by other organizations in Ontario's electricity system.

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The 8 Strategies Stantec Strategy

Business Definition Fully integrated North American engineering and architectural services

Risk Market, services, and life cycle diversification and no exposure to construction risk

Growth To become and remain a top 10 global design firm through acquisitions

Financial Management NYSE /TSX listed and growth funded by issuing equity

Technology To support Best Trained, Best Informed, Best Equipped employees

Organization Use of a Balanced Leadership Model for top and bottom line focus

Marketing A top 3 service provider in chosen markets and seen as a Single Brand Identity

Service Delivery Local Strength – Global Expertise; One Team. Infinite Solutions

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The Alphas Strategy

Business Definition To be the global leader in “enterprise” wireless data communications

Risk To protect our intellectual property and to protect network security and integrity

Growth To resize to fit our chosen markets

Financial Management To access capital markets through TSX / NASDAQ listings

R&D / Technology To focus development of our proprietary platforms & services

Organization Mgmt

To use the strength of market position and value proposition to enable HR “pull” potential employees and to leverage proximity and relationship with University of Waterloo

Marketing - QNX software- BB Messenger chat app- Fleet mgmt for gov’t & corp users

Service Delivery To deliver data security and network reliability

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Course Deliverables

Day 1

Day 2

Day 3

Produce a Situation Analysis

Produce a Strategic Plan

Produce a Business Plan

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Day Three Preparation

Review the Goldstone Case

Review the Day 3 Materials

Review the Business Plan (Schedule “C”)

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Day Two – Preparation

- Read the Tarion Case

- Review the Day 2 Materials

- Review the Tarion Strategic Plan (Schedule “B”)

- Identify the top 3 external factors you believe ONWHP must

address because those factors will significantly impact Tarion

over the next 3 to 5 years

Strategic Planning

Reference Material

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The 4 Steps in Strategic Planning

Step 8 Step 7 Step 6 Step 5






Selectthe Strategic Issue


Frame Strategies asSMART Objective

Communicatingthe Strategic Plan








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External Factors: Builder Expectations


Builder Expectations being those expressed in various surveys of builders and those expressed by major builder associations.



Implementation of BRRAG recommendations and loss of Tarion registration authority; loss of mandatory enrolment; loss of new home building industry control over Tarion to the residential building as a whole.

b) Have we developed a strategy to address this External Factor?

Project Simplify: an initiative to describe in detail the requirements of S.13 (the construction warranty) and the time frames within which builders must comply with S.13.

c) How effective has our strategy been?

No results except for a proposed appeal process by which builders may appeal Tarion decisions under the present conciliation process.

d) Does current research and analysis offer insight on how best to respond?

- Benchmarking Tarion conciliation / claims inspection process productivity reveals tremendous short term productivity potential- Analysis of the complaints process reveals unnecessary bureaucracy and opportunities for productivity improvement- Analysis of staffing requirements of the inspections and claims repair management process reveals opportunities for outsourcing and elimination of regional offices- Builder research says that to reduce cost, make fairer, make more certain

3 Draft a question that best states the essence of the required response?

Draft Issue: Should we change the way we presently administer consumer complaints, conciliations and claims practices?



Step 8Communicating

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External Factors: Consumer Expectations


Consumer Expectations for management of complaints, conciliation and claims management (recognizing that these consumers represent a very small fraction of the consumers holding Tarion warranties (less than 0.6% in a year).



Consumer complaining could drive BRRAG implementation (competitive warranty, move builder registration back to Ministry, include renovations in warranty). Consumer issues are popular with the media.


Project Simplify


No results to date except for a builder appeal process to be added onto the end of the existing conciliation process


Eliminate time-wasting bureaucracy from the complaints, conciliations and claims processes.


Draft Issue: Should we change the way we manage the complains, conciliations and claims processes?



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External Factors: Transparency


Transparency: The move by corporations and government to be open and accountable to stakeholders by providing comprehensive information disclosure and discussion of major issues.



- Continuing and growing builder and consumer dissatisfaction- Growing misinformation and misunderstanding about Tarion and the Act


- Development of a somewhat more informative Annual Report


No further research conducted. No evidence that enough has been done.


- Implementation of other DAA practices- Implementation of corporate best practices- Builders want disclosure on reserving practices and management of the Guarantee Fund- Builders want disclosure on operating expenses- Consumers want more access to information and more information on status of claims- Most consumers expect to be able to access /input their file on-line- Both builders and consumers need more information on how the Board is appointed /operates


Draft Issue: Should we change our disclosure policies



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Service Delivery Analysis

Consumer / Builder Expectations

not Addressed

Change Warranty Service Delivery

No Change to Warranty Service Delivery

TodayA “regulator”

1. Spin2. Some other strategy3. Expectations / Factor changed4. Improve existing strategy

An “Insurer”?1. Spin fails to explain2. Strategy implementation flawed 3. Expectations changed 4. Old strategy seen as superior to new

Consumer / Builder ExpectationsAddressed

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Direction: Successful pursuit of this direction will “brand” the organization 1. The question: How would changing the complaints / conciliation / claims process brand or change Tarion direction?

2. The status quo: How is Tarion branded today? What is Tarion known for? Answer: Policing builders.

3. The choices: Stop policing builders. Start delivering insurance practices. Keep policing restricted to Act enforcement.

Risk / Reward: The risk could be greater than risk as currently quantified and the returns could be greater than those presently enjoyed

1. The question: How could “stopping policing” change generate unusual risk or reward?

2. The status quo: What is today’s measure of risk / reward? Answer: # of complains / # of conciliations / # of claims

3. The choices: Eliminate complaints / conciliations by having an acceptable trigger for claims. Risk is that conciliation activity would turn into claims at 1800 @ $8000 each ($14.4 million) Reward is that most costs associated with complaints and claims could be eliminated (say 50% of $10 million).

Implementation Period: It will take at least as long as the planning period to implement 1. How long will the change take to implement? 9 months for immediate change and up to 3 years for other changes

2. What are the major milestones? 9 months / 24 months / 36 months

Implementation Review: There will be a need to reassess implementation from time to time if risks/rewards are greater or less than anticipated

Time if risks / rewards are greater or less than anticipated

1. Would this proposed change warrant monitoring ? Answer: Yes. There would have to be industry / ministry buy-in.

Approval: The issue, restated as an objective, would require approval to implement 1. Who within Tarion would need to approve this proposed change. Answer: The Board of Directors

2. What information would they need in order to be able to consider approving? Answer: Description of proposed change, rationale, impact, benefits, risks.

Redraft as Strategic Issue: Should…Tarion implement insurance industry practices to manage the compensation provisions of the Act so Tarion would become solely an insurer to most builders and to consumers; all present policing practices for administering those provisions and the costs associated with those practices could be significantly reduced; and service delivery to consumers could be greatly improved?

First Statement of the Issue: Should Tarion change the complaints conciliation claims process?

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Strategic Issue: Transparency

Direction: Successful pursuit of this direction will “brand” the organization

1. The question: How would changing the information disclosure practices brand or change Tarion direction?

2. The status quo: How is Tarion branded today? What is Tarion known for? Answer: Secretive.

Note: This does not appear to be an issue of strategic direction as much as an operational improvement

Risk / Reward: The risk could be greater than risk as currently quantified and the returns could be greater than those presently enjoyed

1. The question: How could information disclosure generate unusual risk or reward?

2. The status quo: The risk is political interference to end the Tarion model or Tarion administration of the model. The reward is stakeholder satisfaction.

Note: This does not appear to be an issue of Risk / Reward as much as an issue of operational improvement

Implementation Period: It will take at least as long as the planning period to implement

1. How long will the change take to implement?

2. What are the major milestones?

Implementation Review: There will be a need to reassess implementation from time to time if risks/rewards are greater or less than anticipated

Are greater or less than anticipated

1. Would this proposed change warrant monitoring?

Approval: The issue, restated as an objective, would require approval to implement

1. Who within Tarion would need to approve the proposed change Answer: The Board of Directors

2. What information would they need in order to be able to consider approving? Answer: Description of proposed change, rationale, impact, benefits, risks.

Redraft as Strategic Issue: Should…Transparency would not appear to be a strategic issue as implementation will not change the strategic direction of Tarion or attract unusual risk or reward. The Board will, no doubt, want to approve the ultimate disclosure recommendations.

First Statement of the Issue: Should Tarion change its information disclosure practices?

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Strategy Conclusions

Strategy Element

Present Strategy Proposed StrategyAuthority

Group

Mandate Restrict focus to administer Act No Change OK

RiskKeep enforcing compliance and adopting prudent insurance industry practices

No Change OK

GrowthFollow industry cycles (boom to bust)

No Change OK

Financial ManagementReturn the surplus not required through fee reductions

No Change OK

Organizational Design Command and controlChange the culture and the values / beliefs to service mentality

OK

CommunicationsOne Way communication from Regulator (Tarion) to Regulated (Builders and Consumers)

Two-way communication & information access

OK

Service Delivery

Focus on ensuring builder compliance and Tarion

claims avoidance

Focus on servicing consumers as an insurer

OK

Technology Limited use Move from bricks to clicks OK

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Strategic Assumptions

Service Delivery Strategy:To convert Tarion administration of S. 14 (Claims) and S.17 (Conciliations) of the Act to an insurance response by adopting practices common to the insurance industry so that service delivery to consumers is greatly improved and Tarion costs associated with these services are greatly reduced

Assumption:That builder performance will not deteriorate from the present standards of performance: I.e. 1.6% rate of conciliations to annual enrolments and insignificant claims arising from conciliation

Will failure threaten the strategy?Yes

Tarion could be overwhelmed in claims

Will failure trigger a contingency plan?Yes

Perhaps a Builder auditing program?

Is the assumption beyond control? Yes

Should the assumption be monitored? Yes

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Impact on Business Performance

Major Functional

AreasShort Term Priorities

Mid Term

Priorities

Longer Term

Priorities

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Impact on Today’s Reality

Major Functions Short Term Priorities Mid Term Priorities Longer Term Priorities

Registration Review processesMove from paper – based to I.T.

basedOn-line builder registration

Enforcement No changeResearch use of I.T. to improve

productivityEnforcement of conditions of

registration

Warranty Services

- Inspections outsourcing- Close regional offices- Complaints intake rationalization- Claims management processes

- Implement Project Simplify- Implement tech. based processes

- Reduce associated costs (e.g. legal)

Risk Management

- Review possible impacts on claims- Identify builders involved in conciliation inspections for the last 3 years

- Implement registration recommendations for “problem” builders

- Implement recommended registration process improvements, if any

Finance & Admin Reviewing reserving processesImplement new reserving

practicesUse of insurance industry

rations to measure performance

Corporate AffairsIdentify immediate disclosure

opportunitiesEnhanced website

Use of stakeholder feedback to drive further disclosure

I.T. Research of insurance processesImplement technology to

support consumer processesImplement technology to

support builder processes

Human

Resources

- Communicate strategic plan- Begin staff file review for downsizing- De-hiring strategy- Identify training needs to move culture from policing to service- Redraft values / beliefs to reflect service instead of policing

- Training of warranty service personnel in consumer service

- Performance measurement system to monitor and evaluate individual performance

Facilities Review leases Plan head office space needsMove head office to a more

economical location

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Stakeholder Expectation Analysis

Strategy Framework ElementProposed Strategy

Builders Consumers Ministry

Business Definition / Mandate

Risk

Growth

Financial Management

Organizational Design

Marketing

Operations

Technology

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Stakeholder Expectation Analysis

Strategy Framework ElementProposed Strategy

Builders Consumers Ministry

Business Definition / Mandate No ChangeNarrow

interpretation

Consumer advocates want

renovation warranty

Ministry would like renovation warranty

Risk No ChangeThink ONWHP too

cautious / over-reserved

No Expectations No Change

Growth No Change Ok No ExpectationsWithin Act Ok;

corporate growth is a question

Financial Management No ChangeReduce operating costs to lower fees

Expect Tarion to be there when needed

Minister pleased with lower fees

Organizational Design

Change the culture and the values /

beliefs to service mentality

Change the cultureChange the culture

to service / consumer bias

Unclear

MarketingTwo-way

communication and information access

As much information as

possible

As much as is usually available from insurers /

government

Follow the lead of the Provincial Government

Operations

Focus on servicing consumers as an insurer / restrict policing to Act enforcement / Reduce costs

Take focus off all builders and focus on “Bad builders”

Online / fairness and certainty in

claim management

Make consumers happy

TechnologyMove from bricks to

clicksOkay if it reduces

costs

Give me the same as I get from other

insurers / gov’t

Online Tarion builder and

consumer services

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Tarion Strategic Assumption

1. What is the Major External Factor driving Strategy Change?Builder & Consumer

Expectations

2. What about that Factor could change and threaten our strategy More Failures / Claims

3. Do we have a contingency plan if this starts happening?Could we trigger Builder audits / claims tracking?

4. Is this assumption about the Factor beyond our control? Yes

5. Should the assumption about this Factor be monitored. Yes

Strategic Assumption: That Builder performance and / or Consumer claims practices will not adversely change because of some unanticipated (by Tarion) impact of changes to current Tarion practices during the course of strategy implementation.

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Executive Summary

1. Planning ObjectiveTo develop a 3 year strategic plan for Tarion Warranty Corporation

2. Planning Scope:The members of the Board of Directors were canvassed on the range of strategy choices that would be acceptable to them. From this research, it was determined that the Board wanted the strategic plan focused largely on change that would improve Tarion service delivery to consumers.

3. Data Collection:To identify the relevant external factors to which Tarion must respond, the Tarion business model was constructed and Tarion management of that model was analyzed for strengths and weaknesses. That analysis identified 19 external factors to which Tarion must respond. Of those 19, 3 were identified as the most important for strategic planning purposes. The remaining 16 will be addressed in functional planning.

3. Strategic Issue IdentificationAnalysis of the 3 external factors revealed that both builders and consumers want change to the way Tarion manages the complaints, conciliation, and claims processes and that both stakeholder groups want Tarion to start making available significantly more information on financial and operating performance than Tarion has provided in the past. The move to disclosure was not deemed to be a strategic issue – but rather something that Tarion must do.

Changing the way Tarion manages the complaints, conciliations, and claims process was deemed to be strategic because, if the changes builders and consumers want are implemented, Tarion will become largely an insurer organization to most builders and all consumers. Risk would stay the dominant strategy

Tarion today administers the Act as a regulator. The policing approach Tarion brings to the complaints, conciliations and claims practices, which are largely insurance practices, is no longer seen as acceptable by either stakeholder group. The approach is too costly, not nearly as effective as taking security from builders upon registration, and no longer seen as necessary since statistically, taking security and other risk prevention initiatives have virtually eliminated the need for the approach.

4. Impact of Change on TarionThe implementation of the proposed changes will end the current Tarion regulator mentality by which it sees all builders as potential “bad guys” and consumers as “victims”. This mentality will be replaced with an insurer’s mentality in which assuming, the customer has the conditions of the policy, the customer deserves the policy’s protection . The approach should also vastly improve service delivery to consumers and reduce operating costs.

5. Next Steps:Detailed implementation planning will begin after approval of the strategic plan is obtained.

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Documents

© The Strategic Plan A review of the eight strategies common to all organizations against factors in the changing external environment