TMC White Paper

“Approach for Defining Vision, Mission, Strategies and Organization”

Based on our experience in numerous strategic and organizational review engagements, we know that the role of outside consultants must be appropriately defined.  The engagement approach is the vehicle for establishing and implementing the consultant’s role.

We believe there are three critical elements of our role that, in fact, guide our approach.  The first is objectivity.  Our inputs to the process are based on factual observations, both within and external to your organization; actual strengths and weaknesses of your organization as compared with similar organizations; and expressed interests and desires of those with a “stake” in the business.  The second is sound methodology.  Defining vision, mission, strategies and organization is a process that requires discipline and thoroughness.  Our methodology is based on experiences with a variety of organizations which, in turn, allow us the opportunity to offer a tested approach and one that is customized to fit your specific needs.  The third is balanced involvement.  Our approach is structured so that it neither leads to a defined vision, mission, strategies and organization created solely by us nor totally abdicates our responsibility to advise you.  The target is to compromise these two extremes by interactively involving each participant and TMC partner as an integral team.

Phase I--Profile of the Current Organization and Environment

The first step is to develop an accurate and thorough description of the organization and environment as they currently exist.  It is often the most neglected step in a review such as this, primarily because there is a tendency to assume that such information is already well established.  It has been our experience, however, that it is actually the most critical step in the process for three reasons:

•        It is important that a “benchmark” be established to properly evaluate the potential benefits of recommended changes and to establish a common basis for comparison.

•        Most profile information is by nature segregated and needs to be consolidated to get a complete perspective on the current profile of the organization.

•        The discipline required to determine “where are we now” is an effective ingredient to the creative process of determining “where should we go.”

From our perspective, the profile of a business entity is best described in three dimension:  1) historical performance; 2) “stakeholder” expectations; and 3) external environment.

1) Historical Performance and SWOTS Analysis.  The objective in this area is not to just compile historical statistics, but to also answer six basic questions in the process of compilation:

     • What performance criteria are appropriate for the business?

     • What significant factors have affected performance historically?

     • What strengths, weaknesses, opportunities and threats are reflected in historical

       performance and the current organization?

Examples of data to be examined include:

Financial reports

Targeted markets

Services provided

Innovation in products and services

Uniqueness in market coverage

Human resources

Financial resources

Marketing capability and approach

Management organization

Employee performance

2) “Stakeholder” Expectations.  It is important to separate the expectations of those with a stake in the business from perceived performance results.  There are at least three groups with such expectations: owners, executives and employees, and partners and customers.  The objective for each of the three groups is to gain insight on issues such as:

For owners:

Vision, Mission and Strategies

Management organization, role and responsibilities

Earnings expectations

Shareholder value expectations

Provision of new capital

New business activities

Image and reputation

Acquisitions/merger

Risk

For executives and employees:

New business activities

Personal opportunity, challenge, security, and advancement

Stability and continuity of employment

Monetary rewards

Benefits

Working conditions

Image and reputation

For partners and customers:

Services provided

Price/value

Reliability and competitive quality

Image and reputation

Note that our goal in this step is to assess what is needed to maintain or improve your image among “stakeholders,” not merely to document what that image is.  This is important in assessing the viability of future courses of action.

3) External Environment.  The final component of an accurate profile is the “condition” of the operating environment with an emphasis on competitive positioning.  Specific issues to be addressed are:

•  What trends, constraints, or problems are affecting the industry (for example, regulatory changes; changing technology; new service/market developments)?

•   Who are your competitors and for what products/services?

•   Who will be your likely competitors in three to five years?

•   What is likely to happen in the next five years in key business segments?

•   What trends, constraints, or problems are affecting current and targeted customers?

•   How are you likely to be affected by prospective changes?

Our purpose here is to identify key external issues affecting the business over the near-term and how these issues are likely to affect you.

Phase II-- Vision and Mission

The first step to be accomplished following the Profile Phase is to articulate the Vision or dream for a company.  Questions to be addressed include:

·        What kind of company do we want to be?

·        What “culture” and “values” do we want to foster?

·        What share of the market and industry position should we achieve?

Next, a clear understanding of the company’s Mission or primary means for achieving the Vision should be developed, a cornerstone of a successful, focused business operation.  Questions to be addressed include:

·        What are the essential service areas that we should be in?

·        What services should we be providing?

·        In what markets?

·        Should the company expand horizontally or vertically?

The mission should express a clear concept of what the business profile might be in the next three to five years.  At this point the emphasis should be “what” and “when,” not “how.”  And, most importantly, the mission should clearly be consistent with the Vision and information developed in the Profile Phase.

Phase III--Development of Strategic Alternatives

The next major phase is to develop a rational set of strategic alternatives for the future.  It is important to note that what is considered at this stage are strategic alternatives.  These are broad statements of direction addressing such issues as organizational design, image, growth motivation, and emphasis on profitability and creating shareholder value.  They represent the essence of the “where do we want to go” or “what do we want to be” questions.  Without a clear sense of direction, the complex process of “how do we get there” can be futile, ineffective, and misleading.

The alternatives considered have both subjective and objective criteria to satisfy.  Having completed Phase I as described, we are at least in a position to prospectively screen and rank several alternatives on the basis of:

•  Does the strategic alternative satisfy stakeholder’ expectations?

•   Does the strategic alternative capitalize on internal strengths and external weaknesses?

•   Does the strategic alternative minimize the future impact of internal weaknesses and external vulnerabilities?

•   Does the strategic alternative capitalize on perceived market opportunities?

Strategic alternatives will be generated from our analysis of Phase I results.  A tentative set of strategic alternatives will be developed for the purpose of refining, discarding, or adding to those already developed.

Phase IV--Evaluation and Recommendation of Strategic Alternatives

In Phase IV, each of the strategic alternatives developed is comparatively evaluated to assess relative merit.  Depending on the nature of the alternatives, both quantitative and qualitative methodology will be applied.  It would not be appropriate to restrict the type of analyses at this point without knowledge of the alternatives.  Some examples, however, of the considerations would be:

Quantitative

•   What would be the financial requirements of an acquisition or further expansion?  What pro forma additional costs can be expected as a result of an organizational change?

•   Based on reasonable assumptions of growth, what is the ROI ranking for each alternative?

•   What are the tax implications of an alternative?  How can it be structured to minimize the tax effects?

Qualitative

•   What changes to management’s responsibilities can be associated with a specific alternative?

•   What effects will a specific change in one service or market have on image and will it affect other services or markets?

•   What are the pessimistic, most likely, and optimistic levels of risk associated with each alternative and the associated impacts on various performance measures?

A summary of our evaluations and resulting recommendations will be listed.  All of the quantitative and qualitative assessments will be described to assist in developing a strategy for the future.  This strategy should express a clear concept of where the business will be in the next three to five years and, most importantly, should be consistent with the Vision, Mission and information developed in the profile statement.

Phase V--Development of a Specific Action Plan

After the strategic alternatives have been finalized, the final phase will focus directly on the development of specific objectives and actions necessary to implement the chosen strategic alternatives.  The following presents the overall purpose and objectives of this phase.

In this phase, objectives will be identified for every area of the business which can have a vital impact on its prosperity and survival in general, and the Vision and Mission in particular.  They should emphasize performance and results and, to be understood and accepted, should be specific and realistic.  Wherever possible, they should be stated in quantitative terms, indicating what is to be achieved and when.

There are at least eight areas which should be covered by objectives:

1.  Financial performance

2.  Market position

3.  Innovation--new products and services to be provided and existing services to be challenged

4.  Physical, financial, and human resource requirements

5.  Organizational design

6.  Manager performance and development

7.  Worker performance, attitude, and environment

8.  Client/customer satisfaction

Once objectives have been established, opportunities for achieving them will be identified, evaluated, and chosen.  There are always alternative ways of satisfying an objective, and none of them should be considered unworthy of consideration.  There is no way to make sure that the right strategic opportunities are chosen from those available, but the likelihood of sound selection will be vastly increased if a few basic guidelines are followed:

1.  Focus on achieving objectives rather than minimizing risk.

2.  Scrutinize all major opportunities jointly, systematically, and with respect to their characteristics, rather than one by one and in isolation.

3.  Strike a balance between the immediate and easy opportunities for improvement and the long-range and difficult opportunities for innovation and change.

Applying these few suggested guidelines equates to establishing priorities.  It involves distinguishing between the essential and the less essential and selecting a balance between building on existing strengths and undertaking the risks of new ventures.

After objectives have been established and opportunities for achieving them have been selected, action plans need to be developed.  These plans will include specific and detailed steps to be taken to achieve chosen objectives, including anticipated completion dates and assigned responsibilities for each task and the resources required to achieve the objectives.

During this last phase, the project team’s focus will progressively shift from the general to the specific, that is, from broadly defined Vision, Mission and Strategies to quantifiable objectives and detailed action steps.  As this focus narrows, the project team will become the primary generators of ideas, while our role as consultants will gradually shift from one of initiation to one of review and synthesis.

One of the significant advantages of the above five-phased approach is that it is phased in a manner that not only assures quality of the final product, but also provides tangible and valuable interim results.  Thus, if contingencies, or the interim results themselves, suggest the need for a change in scope or direction, it can be accomplished with little loss of continuity.

Phase VI-- Organizational Review

The conceptual organizational discussion will focus on the design of an aligned, effective and efficient organizational strategy and structure for achievement of the company Vision, Mission and Strategies.  The organizational review will consider the top level organizational strategy and structure and include:

1.      Discussion of organizational strategy alternatives to most effectively support achievement of the Vision and Mission (for example, tall, flat, matrix).

2.      Discussion of organizational structure and functional reporting relationship alternatives.

3.      Discussion of the roles, responsibilities and expectations for key positions and functions.

4.      Discussion of the significant requirements, and authority limits for key positions.

5.      Discussion of the three other critical organizational design components.  The concepts are presented in the TMC Organizational Alignment chart.