by Elizabeth Hines | Aug 10, 2015 | Blog, Content Marketing, Marketing, Strategy
Being in the strategic advisory space, I get a lot of exposure to various business strategies, strategic plans, and sales plans, both internally to organizations and from outsiders looking to raise money or gain influence.
When it comes to strategic planning, too often there is “creative accounting.” That is, the artful creation of financials that match and make numerical sense, but have very little credibility in the real world because the important business details are left out.
Businesses spend far too much time creating spreadsheets and devote too little time paying attention to information that really matters. As a result, any plan that cannot be substantiated outside of a spreadsheet is doomed to be discounted…and so are the presenters.
Don’t get me wrong, you need to have a financial base and rock solid financial modeling in your planning efforts. It is, however, equally important to spend time on building credibility in those numbers by focusing on what interested parties need to know outside of the spreadsheets in order to make an informed decision.
I encourage clients to focus on these 4 items in order to build credibility in their financial plans and create a winning business model:
1) What is the opportunity? What the business will sell, who is buying, why are they buying, how much are they buying now, and how much and how fast will their buying increase (or decrease) and why?
2) Who are the people involved? The internal team, the external team, any outside resources or partners providing key services or important resources, contingencies for the partnerships and the switching costs involved if needed.
3) The financial context. How will interest rates, buying trends, competition, demand, and for that matter, supply shape the financials of the plan.
4) The up-side and the down-side risk. What can go right or wrong, to what extent (up or down) and how will the team or company adjust to the increased revenue opportunity as well as the opposite…the decrease in the need for the product or service. Do these risks and rewards make sense in real world scenarios?
Gone are the days where financial engineers can develop models without operational integrity. Business models that make sense financially and operationally are now in vogue…thank goodness.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Elizabeth Hines | Aug 5, 2015 | Blog, Strategy, Supply Chain
Before you finalize your budget, take inventory. What do you really need?
A friend recently shared a story with me. Her company had been subject to budget cuts over the past several years. Each year the question wasn’t if there would be cuts, but rather how much would be shaved off an already tight budget.
Because budgets had to be submitted before it was clear what the cuts would be, people began to pad their budgets in the hopes that they would be able to get the resources they needed for that year, and so they could stockpile resources for future years in case budget cuts were even deeper than anticipated. This year, however, things were different.
The company had a new CEO. She was convinced that continued budget cuts were not necessary. Rather, she maintained that there were hidden ways the company could save money. Unbeknownst to the employees, the new CEO looked in every closet, every corner, every storeroom, and every nook and cranny of the building and created an inventory of what was there.
She was shocked at what she found. For example, hidden away she found enough staples, copy paper, and pens to support the company for one, and maybe even two, years. The CEO had the supplies sorted and moved to the cafeteria. She then invited the employees to come and take a look.
What the employees saw were table after table covered in office supplies. The employees were then told that this year the budget process would be different. Instead of padding budgets, employees were asked to put together budgets that accurately reflected their needs. Additionally, rather than procure supplies from vendors, shopping would be local.
That is, shopping hours were posted and employees were told to bring their budgets to the cafeteria and do their shopping there. With very few exceptions everyone was able to purchase the supplies they needed. As a result, budget cuts were not necessary for the first time in several years.
At first glance, this story seems absurd. But, how often have you conducted a full inventory? Start by opening your desk drawer. What office supplies do you have hidden away so that they are at your fingertips, and not a walk away in the storeroom? Are you surprised by what you found?
Before you finalize your budget for this year, I challenge you to look in those dark, and not-so-dark corners, to learn what your company has on hand and what you really need. Can you too shop local? Think about your supply chain, too. How would you bring this lesson to the budget challenges there?
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Elizabeth Hines | Jul 16, 2015 | Blog, Strategy
Remember the days when a rear-view mirror was all we needed to make business decisions? Now, predictive analytics appears poised to turn hindsight into a relic of the past.
Two Gartner analysts echo that sentiment, stating, “Few technology areas will have greater potential to improve the financial performance and position of a commercial global enterprise than predictive analytics.”
Executives are eager to jump on the bandwagon too. Although only 13% of 250 executives surveyed by Accenture said they use big data primarily for predictive purposes, as many as 88% indicated big data analytics is a top priority for their company. With an increasing number of companies learning to master the precursors to developing predictive models — namely, connecting, monitoring, and analyzing — we can safely assume the art of gleaning business intelligence from foresight will continue to grow.
Amid the promises of predictive analytics, however, we also find a number of pitfalls. Some experts caution there are situations when predictive analytics techniques can prove inadequate, if not useless.
Let’s consider three examples:
- Predictive analytics works well in a stable environment in which the future of the business is likely to resemble its past and present. But Harvard Business School professor Clayton Christensen points out that in the event of a major disruption the past will do a poor job of foreshadowing future events. As an example, he cites the advent of PCs and commodity servers, arguing computer vendors who specialized in minicomputers in the 1980s couldn’t possibly have predicted their sales impact, since they were innovations and there was no data to analyze.
- Bias in favor of a positive result is another danger when interpreting data; One of the most common errors in predictive analytics projects. Speaking at the 2014 Predictive Analytics World conference in Boston, John Elder, president of consulting firm Elder Research, Inc., made a good point when he noted that people “‘often look for data to justify our decisions, when it should be the other way around.”
- Mining big data will further do little good if the insights are not directly tied to an operational process. I’ve a feeling more companies than we realize are wasting precious time and manpower on big data projects that are not adequately understood, producing trivia rather than actionable business intelligence.
With the above challenges in mind, talent acquisition and thorough A/B tests will be key components of any predictive analytics project. What else do you think organizations need to do to use foresight effectively?
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Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Elizabeth Hines | Jul 15, 2015 | Blog, Leadership, Strategy, Supply Chain
The sharing of tangible and intangible assets will increasingly become a fundamental feature of successful businesses.
Few developments of late are as intriguing as the rise and disruptive impact of the collaborative economy. In a very short time, services that we may have thought of as permanent fixtures of our business and personal lives have been rendered obsolete by the sudden sharing of tangible and intangible assets in the peer-to-peer, business to consumer (B2C), and business to business (B2B) spheres.
B&B and hostels, car rental, and DVD rental are giving way to peer-to-peer accommodations, car sharing, and music and video streaming. The Marriott Hotel chain used the online platform LiquidSpace to convert empty conference rooms into rentable work spaces for guests as well as outside visitors. Walgreens teamed up with TaskRabbit, an online marketplace for outsourcing errands, to deliver products during flu season. The list is endless.
Rachel Botsman, an innovation strategist who has spent the past four years studying 500 collaborative economy startups worldwide, concludes in Harvard Business Review:
The real power of the collaborative economy is that it can serve as a zoom lens, offering a transformative perspective on the social, environmental, and economic value that can be created from any of a number of assets in ways and on a scale that did not exist before. In that transformation lie threats—and great opportunities.
While consumer sharing may have received the most media attention, Robert Vaughan, an economist at PwC Strategy & Inc., argues the open sharing of resources among businesses may present an even larger opportunity. Although, on the surface, it seems like an unlikely marriage – businesses do compete, after all – a growing number of successful collaborations prove Vaughan is right.
He writes:
In just a few years of activity, it has become clear that the unfettered exchange of otherwise unused major assets, including physical space and industrial equipment, allows a sharing company to operate more efficiently than its non-sharing rivals. Companies that go further still, wholeheartedly embracing the sharing of less tangible assets, may benefit from a different sort of change, one involving their culture, that builds new types of connections with, and sensitivity to, the world outside.
One example of an interesting collaboration involves General Electric and Quirky, an online inventor community. GE and other market giants such as IBM and Samsung file thousands of patents every year, most of which never move beyond the drawing board. The collaboration gives Quirky open access to GE’s patents, allowing for products that normally would not have been put to productive use – such as a smartphone controlled window air conditioner – to be brought to market.
Sometimes a direct collaboration may not even be necessary. A company may choose to place an undeveloped product on an online technology exchange, thereby opening itself to the possibility of building a connection to another company with complimentary expertise.
In many respects, enterprise sharing is still in its infancy and is likely to evolve just like Airbnb, whose concept seemed “fringe” when it launched in 2008 (it was initially marketed as a service for people to stay the night on their air beds in strangers’ homes). Now the company has amassed more than 650,000 rooms in 192 countries and threatens to disrupt not only the hotel industry but the entire hospitality sector.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Elizabeth Hines | Jul 13, 2015 | Big Data, Blog, Data/Analytics, Strategy, Supply Chain
Analytics is good for business — as long as you can make sense of it.
Does your business suffer from a case of data overload? Or do you steer clear of new investments in supply chain analytics because you are afraid they could yield more data than your business can handle? You are in good company.
Several recent surveys indicate companies either are wary of advanced analytics tools or say they have failed to leverage the technology. The issue does not seem to be a lack of knowledge of its existence or potential impact — end users are generally well informed — but how to absorb the data effectively and apply it across the entire organization.
According to a Telematics Update, for example, vendors would be wise to spend less time on their sales pitch and more time presenting the data in a digestible format, ensuring compatibility with the end user’s legacy systems, and aligning the solution with the end-user’s key performance indicators.
The challenge is also captured in an Accenture survey in which only one in five companies said they are “very satisfied” with the returns they have received from analytics. And it’s not for lack of trying. Two-thirds of companies have appointed a chief data officer in the last 18 months to oversee data management and analytics, while 71 percent of those who have not created such a position plan to do so in the near future.
This passage from Accenture’s survey report hits the nail on the head:
Companies wanting to compete more aggressively with analytics will move rapidly to industrialize the discipline on an enterprise-wide scale, redesigning how fact-based insights get embedded into key processes, leading to smarter decisions and better business outcomes.
Most organizations measure too many things that don’t matter, and don’t put sufficient focus on those things that do, establishing a large set of metrics, but often lacking a causal mapping of the key drivers of their business.
As the survey suggests, the move away from an isolated approach to an integrated cross-functional model may be the key to squeezing the most out of supply chain analytics. According to Deloitte, the key to delivering strategic insights is creating asingle authoritative data set from which all business units can draw information.
However, only 33% of the Accenture survey respondents said they are “aggressively using analytics across the entire enterprise.” Instead, highly customized data is often collected for units within the organization. A spending forecast by procurement may look nothing like its counterpart coming out of logistics. The inconsistency in reporting makes it hard to share the knowledge, and that takes us back to square one: lots of data and little useful information.
Jerry O’Dwyer, a principal with Deloitte Consulting, summed it up this way in a 2012 post:
If you are performing analytics in different areas of the supply chain — for example, spend analytics or demand planning — you may be missing opportunities that an expansive approach can yield. For companies of all kinds, in-depth supply chain analysis offers an opportunity to create increased value throughout their operations.
Let’s hear it: What do you think companies need to do to put analytics to effective use?
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
