- Achieve 100% consensus among key equity/management players as to the direction and intensity of the pace for the company. (One heartbeat)
- Rate each member by these guideline checklists
- Write down all unresolved differences and solve them.
- Meet this one guideline and the rest is possible; otherwise impossible.
- Study the environment and learn from the outside.
- Don’t predict the future. Be happy with uncertainty and as in surfing, play the wave as it breaks for all its worth.
- Have contingencies and play what/if constantly.
- Work hard for long term effects; avoid quick fix traps.
- Have a memorable and operable competitive strategy statement which defines a disciplines scope of customers, products and services to pursue.
- Do a strategic development exercise.
- Summarize in a few pages, and have a short practical mission statement.
- Avoid expensive adventures and inconsistent decisions that spray resources instead of focusing them.
- Know your competition and take them very seriously.
- Survey all informers regularly.
- Keep files and survey comparisons on all of them.
- Psyche them out when possible.
- Jump on weaknesses quickly. Avoid confronting their strengths.
- Have a written plan to fill strategic and growth gaps.
- Objectives; controllable tasks; and measurement/reward systems – not always calendar based.
- Differentiate between output goals and controllable input tactics.
- Review, revise and revive continually.
- Business is like a board game (e.g.: Backgammon):
- You make your luck by working hard for a position and then jump on opportunities.
- When things are good look for seeds of disaster. In disasters look for seeds of opportunity.
- Unsolved problems don’t disrupt the routine; they are the routine.
- Revenge is sweet, but it belongs to the Lord. Don’t create unnecessary enemies.
- Don’t compound risk in too many ways: operational, financial, legal, (business) cyclical, suppliers, customers. Maximize upside and minimize all downsides.
- Don’t win too soon or you won’t enjoy the game. Life is a journey with no happy endings or final summits, so enjoy it a little everyday.
- Put profit first, not volume. Project, conserve and monitor cash-flow (especially for fast growing firms or anyone in a mature, declining industry).
- Cash-flow analysis (on-going).
- Retained after-tax ROE ³ growth to avoid growing out of cash.
- Minimize debt until pre-tax ROTA > prime rate (i.e.: positive leverage).
- Eliminate all inefficiencies on an on-going basis to free up resources to finance targeted growth.
- Tackle the productivity plays.
- Free time; triple profits; care more for key accounts; boost spirit, discipline and wages.
- Expand sequentially from a profitable core base of business.
- Identify core base.
- Do best, better.
- Don’t lose sight of basics, only time to do the basics well.
- Make small, related moves with skilled partners.
- Maximize profits with least energy and risk.
- Increase odds of successful future diversification.
- Maintain a commitment to an “upware spiral” – continuous economic growth. This provides future improvements for all stakeholders.
- Weed coasters; prime tigers; grow peak performers; and give stretch responsibility.
- Renew and revive the firm and keep tigers motivated.
- Grow people who then grow the company.
- The sequence of winners must (usually) be: 1) employees2) customers 3) shareholders and suppliers. (Repeat expanding cycle. Enlightened self-interest, not adversarial.)
- Achieve and sell service excellence and emotional concern for the customer.
- Grow people to top quartile performance and pay.
- Teach all partners the value of the company’s profits to their future.
- Good sustainable profits come as a by-product of running a good business and achieving stakeholders symmetry.
- Define a critical mass of inventory for a target scope of customers and invest to reach it and a 90%(+) fill-rate (situational).
–DO: Ranking reports of SKUs by picks; calculate average order size and extend; and program different fill-rates for A, B, C’s to hit 90%(+).
- Avoid expensive back-orders, buy-outs, and expediting on routine orders.
- Build average order size.
- Out service the competition with least amount of investment.
- Maximize economics of: selling, buying, process-delivery and customer’s buying.
- Run branches and when possible departments, with de-centralized management.
- Hire better managers; train them better; program with FGMM’s incentives.
- Develop automated control systems to monitor, measure and compensate.
- Respond better to the local customer base, competition and supplier reps.
- The best hands-on managers attract and keep good people who provide “service excellence”.
- Go with “intrapreneurial” and cheap DP information trends.
- Maximize gross profit per employee, because of high productivity marketing and zero errors.
- Big order/small order programs, and zero errors.
- Lower turnover; high quality performance and motivation.
- High wages, but low payroll as % of budget.
- Eliminate all politics.
- Measure, negotiate, recognize and promote by objective results.
- Eliminate secrets; communicate all things to all people as much as possible.
- Task and team-oriented employees thrive. Power-oriented, manipulators don’t last.
- Human intelligence is replacing capital as the competitive edge. Finding, developing, motivating, using and keeping good people is the name of the game (see Personnel).
- Change as fast or faster than the environment or degenerate.
- Be a learning, renewing organization.
- Foster innovation (see Innovation).
- Most strategies fail for one or more of the following:
- Too complex; not simple, memorable and operable.
- No consensus understanding or emotional commitment.
- Under-invest and under-persist. Be in for the long run. Have a budget, but secretly be prepared to go 40 – 100% over for surprise factors. Have sufficient courage.
- Too ambitious or risky.
- No priorities and too little discipline.
- Poor strategy selection.
Strategic Guidelines – SECTION ONE