The Organizational Strategist

April 21, 2010

Strategic Divestments – Learning the Right Time to say NO to a Customer

Filed under: Strategy — Tags: , , , , , , — Whit @ 12:27 am

-Introduction-

When would you want to say “no” to a sale from a repeat or potential customer? Some say the answer may be never. To others, the answer may vary depending on how selective they are with their products/services and interactions with customers. The more mature an organization’s sales process and data collection is, the more refined their answer will be to that question. The reason for that is that with tracking information done on customer purchasing habits, patterns, variance, averages and other statistics, it can be discovered what business sales efforts are the most profitable.

For those that have worked in the retail industry or in a similar customer service capacity, it is well known that selling the same kind of item from one customer to another may result in very different experiences. One customer may be pleasantly interested and choose to buy an item. Another customer might take an inordinately long time deciding, going over information that has already been discussed, or doubt the word of the sales associate before buying an item. When the investment of support people into customers equates to top and bottom line dollars, organizations may need to get picky with how their products/services are sold.

-Maintaining a Focus on Business Strategy to make the Tough Choices-

Periodically it is helpful to analyze your customer base via segmentation to find out the buying, selling, transaction, communication and handling data for the different types of customers you have. The larger the number of customers you have, the more it can help to look at their statistical patterns for specific groups, irregularities for outlier examples, and trends to forecast what a given customer may need. Consider these questions as a starting point:

  • Which customers shop online, in person, or via different means?
  • Which customers have the lowest/highest likelihood of buying again?
  • Which customers buy the least/most and the least/most often?
  • Which customers have strategic importance, leverage, or potential in the future?
  • Which products/services have the highest/lowest ROI?
  • Which products/services are the least/most frequently repeatedly purchased?
  • Which products/services require the least/most amount of organizational support (tech-help calls, sales meetings, manuals, on-site visits, etc)?

Through this kind of analysis, the system-wide cost involved with customer types can be discovered. Additionally, this exercise should reveal what all of the benefits are in having a particular customer type. This information can lead to decisions being made on what products/services and support can be adjusted, in order to make the organization more profitable. This activity would then be a strategic divestment. A sharp sting may occur to rapidly remove a band-aid, but it would have hurt a lot more and over more time to slowly pull it off.

It can seem very strange to turn down business. However, in the long run and on an overall revenue basis, this can make a lot of sense as well as dollars to go through with a strategic divestment. Ideally, you would be able to find the best kind(s) of customers to do business with so that your organization’s efforts are maximized as is the profit basis. Here are examples of strategic choices that can be made from knowing customer and product/service information:

  • Which geographic region or area will lead to the most sales, profitability and repeat sales
  • Which customer types require the least support and organizational hand holding
  • Which products/services best correlate to specific customer segments
  • Recommended bundles, packages or other offerings of product/service combinations
  • Strategically prioritized and targeted customer segments to cultivate
  • Which customer types, products, and/or services could be let go with the smallest impact to your organization’s revenue
  • Where to expand your organization (infrastructure, geography, market spaces, etc) to lead to more sales

-Summary-

Some organizations may never decline a sale to a customer. Other organizations may pick and choose the customers that are the best fit for them while redirecting other sales to another organization. The organizations that would benefit from strategic divestments the most are the ones with mature, well organized and stable sale histories and horizons. If there is no stability in an organization, who knows what may happen in the future. Undertaking a daring strategy has its risks and rewards. If an organization makes the tough choices that may lead to strategic divestments, they stand to gain in their own prosperity through their educated, informed decisions.

April 14, 2010

Taking the initial footsteps to walking your personal strategy


Introduction

An individual’s strategy is much like an organization’s strategy. In its own way there are stakeholders, opportunities, challenges, strengths, a market environment and more. A colossal organization must do much of the same things as an individual in order for his, her or their strategy to be successful. To be effective working within an organization’s strategy, all of the component elements (business units, products, services, teams, on down through individuals) must be in alignment. In order to find which organization would be the best one to utilize your strengths, aspirations and ideals, find your own personal strategy so that you can add your resources and capabilities the most effectively.

-Increasing Self Awareness and Knowledge-

When organizations design and implement strategy, information gathering inside and outside the organization is constantly being gathered. Strategy models are done to evaluate how an organization might be comparatively positioned against competitors, organize the innovation pathways inside an organization, map out the abilities, competence, and opportunities of an organization, and to find out many other helpful sources of information. Strategic dialogues and planning organize, communicate, and harness the possibilities to prepare and coordinate an organization’s efforts. An organization should be aware of itself and of its surroundings. Informed decision making leads to better implementation and results.

Individuals are no different in that they too should understand themselves and what is around them. Creating plans, methods, and approaches are all valuable. However, it can be more difficult to get to the core of oneself where the most valuable information is stored. Self awareness is what brings forth the deep, impactful and most important information for a person. Awareness of information leads to knowledge. The application, digestion, and realization as to what the knowledge means to a person create wisdom. The more wisdom a person has, the more authentic the person can be. From that, living the person’s strategy to achieve, be or do whatever he or she wants is much easier and attainable. When you know what you want, you can define success, understand what to accomplish, and find what it means to win in your market.

The first step, which should be revisited over time, is to cultivate self awareness. This can be accomplished through many means. There are tools, activities, resources and so forth that enable information gathering and presentation. Everyone is different as to how they learn and their comfort level with experimentation, reflection, risk taking, and taking action. I outlined how I feel a personal strategy should be discovered, cultivated and realized in my earlier article “Finding, living and thriving in your Personal Strategy”. From my own journey I have found many different ways of becoming more aware. Here is a sample

Tools and Assessments:

  • Myers Briggs personality test – this is a well known test that can show where and how you fit for a career or role
  • FIRO-B (Fundamental Interpersonal Relations Orientation) – this test shows three categories (inclusion, control, and affection) along with what you express versus what you actually want
  • Birkman – this longer online tool gives more on stresses, behaviors, relationship approach, interests and organizational focus. It’s pretty thorough and helpful. As an added interest point, it can be used as a comparison tool to another who’s taken the tool to see how compatible you may be with a team or an individual
  • ESCI (Emotional Social Competency Inventory) – this is a 360 assessment that gives information regarding emotional intelligence by pulling in peers, significant other, bosses, friends, colleagues, subordinates and more to give a more holistic picture
  • StrengthFinder 2.0 by Tom Rath – this short online assessment and book list your top 5 strengths. The book is helpful in that it gives situations, explanations, and ideas for partnership or enablement for you to exhibit your strengths
  • POQ (Philosophical Orientation Questionnaire) – this assessment shows you the relative priorities you take in your decision making and approach in three categories (human, intellect, and practical)
  • LSI (Learning Style Indicator) – this tool plots where and how you fit best within a learning cycle

Activities:

  • Writing your own autobiography – the sheer amount of time, dedication and depth that this can involve is impressive. With a series of leading questions to ensure that relationships, critical points of change or influence, and evolution of the individual is brought up this is a very powerful and revealing activity
  • Finding, contracting and working with a professional coach – there are many kinds of coaches, which can help in various ways. At their core, coaches help you to think and work in different ways to see more of what is possible and help you to reach your goals
  • Working in a team where everyone really gets to know each other well, shares and takes in feedback constructively, and invests yourself to allow for risks taking and growth
  • Writing out your “Bucket List” – while this may be seen as morbid by some, it can be seen as a way of living life to its fullest by an optimist
  • Partnership with those close to you – I have found that my fiancé is a fantastic source of inspiration, information and intrigue. Having someone close that provides helpful, constructive feedback is a great source of information and potential growth
  • Writing out your dreams using a set of SMARTER goals (Specific, Measurable, Acceptable, Realistic, Time Frame, Engaging, and Rewarding) – this may be very similar to the Bucket List but more reaching and encompassing
  • Conducting a Best Self Appreciative Inquiry exercise with your network to give you a picture of your best self
  • Taking time to reflect, renew, understand, and learn from your own experiences – It can help you speed up in the long run if you take time out to slow down from time to time

 

-Summary-

The path a person takes to walk their personal strategy is unique to each individual. The more effective people are more aware of themselves and those around them. Information or knowledge alone is not power unless it holds meaning or relevance. Self awareness helps shape knowledge into wisdom for a person. I’ve given a short list of some pursuits I have found value in. I encourage readers to provide resources and ideas on what has helped them in their personal learning, development and growth. There are numerous other resources available that are just awaiting you to find them. The doors of opportunity may be all around you, but you need to be aware of them to answer the doors that open.

-Links-

“Finding, living and thriving in your Personal Strategy” Organizational Strategist blog article: http://blog.seattlepi.com/organizationalstrategist/archives/199444.asp

April 6, 2010

The Dos and Don’ts of Strategy

Filed under: Strategy — Tags: , , , , , — Whit @ 11:24 pm

-Introduction-

The strategy an individual or an organization takes utilizes processes that involve deep thinking, purposeful activity and dedication. Strategy is decided upon through planning, analysis, and the synthesis of external and internal information. Implementing a strategy is an activity that follows a very particular path. Knowing what choices to make based off of a strategy is just as much what to do as what not to do.

-Strategic Choices-

All of the decisions made by a leader should tie back to the overall strategy. If a choice does not fit with the strategy, then it detracts from the effectiveness of that strategy. If choices do not align with the trajectory of the strategy, it gets pulled astray or becomes counterproductive. Strategy should follow a direct path to win in the market through the alignment of resources and capabilities.

A bullet fires in a line. If a bullet is misshapen because its casing and molding were not cast correctly, it will not fire as straight or as fast. The aerodynamic variables of a bullet impact its effectiveness and efficiency. In that way, strategy is like a bullet because all of the elements that go into making the execution smooth will directly affect the outcome.

Choices of strategic action have lasting influence on an organization. Once a decision is made it can signal future changes and influence future decisions to be made. Much like how a court case decision can be referenced to clarify law, previous decisions that defined and implemented a strategy provide clarity into how the path of that strategy should be walked in the future. A decision to outsource an aspect of a service or product may lead to faster throughput, lower cost, and higher quality. However, the area of outsourcing might create a dependency upon the outsourcing partner, which may be an unintended consequence. Over time, that dependency may be a great enablement or an eventual detriment to winning in the market.

-Summary-

A well understood and clear strategy makes positive momentum and change easier to enact. From clarity of purpose and knowledge of the scope of a strategy come the information needed to know where and when to go forward with an initiative and when not to do so. It is important to keep in mind that the Yes answers and the No answers can be equally helpful in aligning resources and capabilities to win in a market.

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