CEO Balance - Webinar - 11-13-15 - Marketing MO · 2016-10-10 · strategic marketing and sales in...

© Copyright – Practice Strategies & Moderandi - 2015

CEO Balance

Presented by Nick Setchell and Jim [email protected]

[email protected]


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Speaker / Content Introduction

Jim Sagar Nick Setchell

CEO of Practice Strategies Pty Ltd, is the developer of the award-winning RealTime CEO Vistage workshop delivered in the United States,

Australia, UK, Canada and New Zealand.

Within the Vistage community, Nick has been recognized as one of the top 12 speakers from a worldwide pool in excess of 1,500 and has been awarded both Speaker of the Year and International Speaker of the Year.

CEO of Moderandi Inc., is a management consultant and entrepreneur focused on aligning strategic marketing and sales in the midsize

company.

His company’s marketing guidance at MarketingMO.com is used by over 50,000 people each month. Jim is also a co-founder and board member of Medelis, a biotech and pharmaceutical services company founded in 2003.


CEO Balance

Inherent in the main job responsibilities of a CEO

– Creating Value

– Mitigating Risk

“Balance” is hot topic today

Yet how do you really achieve it?

– Lots of talk, but few solutions

– Common “life/work” balance articles


Balance

• Balance is not a “zero sum” – don’t have to reduce one to improve the other

– Don’t think of as a seesaw

• Think of as scaffolding going up. If one side goes up too fast, you fall down


What is the Balanced Skill Set for a CEO?

Leadership and Motivation

Tactical Understanding of Operations

Understanding of Finance

Strategy and Vision

CEO


Common “Out of Balance” CEO Skills?

Leadership and Motivation

Tactical Understanding of Operations

Understanding of Finance

Strategy and Vision

CEO


Imbalance in Business

§ Work / Life

§ Innovation / Marketing

§ Marketing Strategy / Sales Tactics

§ Decision Validation / Gut Feel

§ Culture / Hard Skills

§ Purpose / Product

§ Carrot / Stick

§ Accountability Management / Celebration Culture

§ Proactive Innovation / Reactive Innovation

§ Looking Forward / Looking Back

Here are examples ….


Balance Within a Business

Topics for today

§ Marketing Strategy/Sales Tactics

§ Decision Validation/Gut Feel


Fortune 500 / SMEs

The #1 DIFFERENCE

How they approach the process of acquiring and maintaining customers


Strategic vs. Tactical

THE FORTUNE 500 lead with

STRATEGICmarketing instead of

tactical sales

SMEs

lead with tactical

sales instead of

strategic marketing


What were going to do today is to give you a roadmap of how to correct that imbalance.

Marketing Sales


If you follow the roadmap, you will have a better chance of:

Beating your competition

Achieving sustainable and

profitable growth

Fulfilling the vision of your company

founders


Change How You View “Marketing”

In the typical SME, the marketing function is one of the least valued and least understood business functions

It’s treated as an expense instead of

a strategic investment

It's driven by the VP of Sales

And it’s the first budget cut when times get tough


Long ago Peter Drucker, the father of business consulting, made a very profound observation that has been lost in the sands of time:

“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation.

MARKETING

IN N O VATIO N


MARKETING

IN N O VATIO N

“Marketing and innovation produce results; all the rest are costs.


MARKETING

IN N O VATIO N

“Marketing is the distinguishing, unique function of the business.”


Why is it so common for SMEs to devalue the marketing function?


Little Strategic Marketing Experience in SMEs

People trained in strategic marketing work at big companies or agencies

1

2

3

Few SME business leaders have training in strategic marketing

Sales tactics generate visible activity and incremental results


What Does Strategic Marketing Look Like?

http://www.rackspace.com/en-us/about/history


How the Non-Strategic Communicate

RCA H115 5GB MP3

RCA created the very slick RCA LYRA player in 1999. It came with a 32MB CF card, which was considered a lot of memory back in the day. The later RCA LYRA players came with a lot more memory.


How the Strategic Communicate

iPod

1,000 songs in your pocket.


Appeal to Human Emotions

Storage for 1GB of MP3S 1,000 songs in your pocket

VS


Information Overload

“Every two days we create as much information as we did from the dawn of civilization up until 2003.”

Eric Schmidt, former CEO of Google, 8/4/2010


Advertisement Stats

Average number of advertisement and brand exposures per day per person:

Average number of “ads only” exposures per day:

Average number of “ads only” noted per day:

Average number of “ads only” that we have some awareness of per day:

Average number of “ads only” that made an impression (engagement):

5,000+3621538612


The average human attention span in 2000 was 12 seconds…

… but by 2013 it was only 8 seconds.


The attention span of goldfish is….

9 seconds.


Coping Mechanism

Create “ladders”in our mind

As a defense against information overload, the mind screens and rejects most of the information offered to it.


The New Paradigm

People research online before buying

People no longer trust company-sponsored

advertisements

Internet is ubiquitous

Company’s don’t control the brand. The people do. Today is the age of the customer.

Owning a ladder in your customer’s mind is more important today than ever before.


How to Balance Strategic Marketing and Tactical Sales

The purpose is to acquire and maintain a customer.“

Let’s examine how most SMEs do it.

”


MARKET

SALES TACTICS


MARKET

SALES TACTICS

Typical approach leading with sales tactics on a one-to-one basis.


SALES TACTICS

Incremental improvement by focusing on market segments, aka “buyer personas.” Some SMEs do this. Many do not.

SEGMENTS


SEGMENTS

Strategic Marketing

Balanced approach by leading with a unified brand experience with your tactics aligned to it. Few SMEs do this.

MARKETING & SALES TACTICS


Designing Your Strategy

How do you build a unified brand experience?

What does a strategic marketing roadmap look like?


The components of strategic marketing are not new intellectual property that we’ve invented. You’ve heard of some or many of these components before. Some have been being used by the big companies for 50 years.

What’s Unique?

What IS new is the roadmap that shows you how they fit together.

I’m going to address the top 10 components for you now.


STRATEGIC MARKETING IS ABOUT SELF DISCOVERY.It takes time.

To do it, first understand how to build the strategy.

Then tackle one element to start, taking things one step at a time.Don’t try to do everything at once.

Beginning the Process


Strategic Marketing Starts With a Vision

TEDIdeas worth spreading

SIMON SINEKhttp://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action?language=en


Every organization on the planet knows WHAT they do. These are products they sell or the services they offer.

Some organizations know HOW they do it. These are the things that make them special or set them apart from their competition.

Very few organizations know WHY they do what they do. WHY is not about making money. That’s a result. It’s a

purpose, cause or belief. It’s the very reason your organization exists.

What

How

Why

WHY

WHAT

HOW

How Most Communicate


Leaders Create a Vision

“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”

Jack Welch


If Apple Communicated from the Outside In

We make great computers. They’re beautifully designed, simple to use and user-friendly. Want to buy one?


Apple’s Actual Communication from the Inside Out

In everything we do, we believe in challenging the status quo. We believe in thinking differently. The way we challenge the status quo is by making our products beautifully designed, simple to use and user friendly. We just happen to make great computers. Want to buy one?


The goal is not to sell people what you have.

The goal is to sell to people who believe what you believe.

WHY

WHAT

HOW


1. Communicating from the “inside out” (from Simon Sinek’s Golden Circle). Start with "why."

2. After communicating your why, add how you do it.

3. End with what you do.


Your organization’s reason for being. An effective purpose reflects people’s idealistic motivations for doing the company’s work. It doesn’t just describe the organization’s output or target customers; it captures the soul of the organization.

This is the main driver of your “why”. It’s timeless and should inspire your market and your team.

PURPOSE


“Visionary companies” who operated from a defined core ideology outperformed the market 15x over a 70-year period.

Jim Collins and Jerry Porras - Built to Last


YOUR PURPOSE SERVE AS YOUR GUIDING LIGHT, helping you to decide what to pursue, but also what not to pursue.

To make people away from home feel they are among friends and really wanted

To experience the emotion of competition, winning, and crushing competitors

To experience the joy of advancing and applying technology for the benefit of the public

To solve unsolved problems innovatively

To make people happy


1. Communicating from the

“inside out” (from Simon Sinek’s

Golden Circle). Start with "why."

2. After communicating your

why, add how you do it.


Your reason for being. Reflects people’s idealistic motivations and captures the soul of the organization.


Core Values

Guiding principles that dictate behavior and action. Core values help people to know what is right from wrong; they can help companies to determine if they are on the right path and fulfilling their business goals.

CORE VALUES


Core Values Alignment

Without this stake firmly in the ground, there can be no effective alignment.

First, you cannot “set” organizational values, you can only discover them. Nor can you “install” new core values into people. Core values are not something people “buy in” to. People must be predisposed to holding them. Executives often ask me, “How do we get people to share our core values?”

You don’t. Instead, the task is to find people who are already predisposed to sharing your core values. You must attract and then retain these people and let those who aren’t predisposed to sharing your core values go elsewhere.


Core Values

Service to the customer above all elseHard work and individual productivityNever being satisfiedExcellence in reputation; being part of something special


Core values help differentiate right from wrong and show people the path to fulfilling business goals.







Your reason for being. Reflects

people’s idealistic motivations

and captures the soul of the

organization.


Buyer Personas

Semi-fictional representations of your typical customers. Describe each and include what inspires them.

When you’re valuable to a single persona, you’re valuable to everyone like him or her.

PERSONAS & THEIR INSPIRATION


“Marketing Mary”


PERSONA-Represents a market segment

INSPIRATION-What inspires them












organization. Core values help

differentiate right from

wrong and show people the

path to fulfilling business

goals.




INSPIRATION-What inspires the


Differentiators that describe how you are definitively better than the other options available in the marketplace.

They’re your strengths that meet or are described using specific criteria.

COMPETITIVE ADVANTAGES


QUANTIFIABLE, not arbitrary

OBJECTIVE AND CREDIBLE – not subjective and vague

Not currently stated by your competitors

CONTRASTING

SELF-CENTERED

Criteria:

1

2

3

4

5



















goals.



How you are

definitively better

than your buyers'

other options in

the marketplace.




What you want the market, or a typical customer, to think of at the simplest and highest level. A single word or short phrase – it’s the impression you want to leave.

DESIRED MINDSHARE


“What space in the mind of your

customer do you currently own?”


“What space in the mind of your

customer do you wish to own in the

future?”


Volvo has long hung its hat on safety, and this focus continues to pay off. In the minds of consumers, there is a single, clear choice. The Swedish brand increased its lead this year, potentially aided by public awareness of advanced safety features in general, and Volvo’s continued efforts to remain on the forefront of safety technology.

Mindshare Owned – Safe Cars?



















goals.



How you are

definitively better

than your buyers'

other options in

the marketplace.



What you want the market, or a typical buyer, to think of

your brand at the simplest and highest level.


The story behind your brand that captures the imagination of your founders, your purpose and makes an emotional connection with your market.

BRAND STORY



















goals.



How you are

definitively better

than your buyers'

other options in

the marketplace.



What you want the market, or a typical buyer,

to think of your brand at the simplest and

highest level.

Allows you to share your passion, differentiate, connect with your audience and be known for that certain something.


Brand Vision

“THE POWER OF THE BHAG IS THAT IT GETS YOU OUT OF THINKING TOO SMALL. A GREAT BHAG CHANGES THE TIME FRAME AND SIMULTANEOUSLY CREATES A SENSE OF URGENCY.

… a really good BHAG probably has a minimum length of about a decade, and many take longer than that. Two decades. Three decades. So time frames extend to where you are no longer managing for the quarter but for the quarter century.

On the other hand, because it’s so big and so audacious and so hairy it increases the sense of urgency. You look at it and say, “Oh my goodness, if we’re going to bring the world into the jet age or transform education or put a computer on every desk, then we have to get to work today with a level of intensity that is unrelenting.

Jim Collins


Brand Vision

WHAT IS THE DIFFERENCE BETWEEN A BAD BHAG AND A GOOD BHAG?

Bad BHAGs are set with bravado; good BHAGs are set with understanding. Indeed, when you combine quiet understanding of the three circles with the audacity of a BHAG you get a powerful, almost magical mix.

Five criteria of a good BHAG:1. Are set with understanding, not bravado.2. Fit squarely in the three circles of your Hedgehog

Concept.3. Have a long time frame—10 to 30 years.4. Are clear, compelling and easy to grasp.5. Directly reflect your core values and core purpose.

Jim Collins


Brand Vision / BHAGs

Enable human exploration and settlement of Mars.



















goals.



How you are

definitively better

than your buyers'

other options in

the marketplace.





highest level.

Allows you to share your

passion, differentiate,

connect with your audience

and be known for that

certain something.

Your audacious 10-year

goal that will inspire your

team and market and

force them to take

notice.


It's what most ambitious agencies and clients strive for when developing their communications platforms.

BIG IDEA


The Most Interesting Man in the World



















goals.



How you are

definitively better

than your buyers'

other options in

the marketplace.





highest level.





certain something.



team and market and

force them to take notice.

A unique positioning

concept that sets you

apart and is the central

focus of your

communications platform.


The experience your customer should have with your brand at each interaction. This is what you’re striving to deliver each time.

BRAND EXPERIENCE


Brand Story

Brand Visual Imagery

Endorsements

Brand Messaging

Expectations

Product / Service

Interaction

Brand Name

Logo & Identity

Brand Experience



















goals.



How you are

definitively better

than your buyers'

other options in

the marketplace.





highest level.





certain something.



team and market and



concept that sets you apart

and is the central focus of

your communications

platform.

The experience your buyer should have with your brand

at each interaction.



















goals.



How you are

definitively better

than your buyers'

other options in

the marketplace.





highest level.





certain something.



team and market and



concept that sets you apart

and is the central focus of

your communications

platform.

The experience your buyer should have

with your brand at each interaction.

The 3 human

personality traits

of your brand.

The 3 things that

your brand

should mean to

your buyer.

For marketing and sales departmentFor marketing and sales department

For marketing and sales department

For marketing and sales departmentFor marketing and sales departmentFor marketing and sales department

25-word

statement that

positions your

brand.


Completing the puzzle of your strategic marketing roadmap is different for every company.


If you do one of these well

If you do a few of them well

If you do all of them well

It’s a journey, not a destination.

you’re probably ahead of your competition.

you’re beating your competition.

you have a strong chance at winning your market.


SalesMarketing


QUESTIONS?


Decision Validation

Gut Feel


Balanced Measurement – “Fiscal Focus”

“Everything that can be counted does not necessarily count;

everything that counts cannot necessarily be

counted.” Albert Einstein.


Traditional Measurement • Traditional financial accounting uses

“double entry bookkeeping” to prepare and present:• Income statement• Balance sheet

• Frequently executives focus on revenue and profit to assess their business health

• RealTime CEO measurement module is “Fiscal Focus®:• translates “Accountanese” into plain

English• breaks away from the restraints of GAAP accounting• develops the conversation beyond the numbers to a conversation that results in progressive ACTIONS.


Go Beyond Traditional GAAP Accounting

Traditional Income Statement

Revenueless COGSGross Profit

less OverheadsNet Profit

Operational Income StatementOperating Revenueless Direct Operating CostsContribution Marginless Indirect Operating CostsReal Operating ProfitLess interestLess owners distribution over commercial salaryNet Profit


Go Beyond Traditional GAAP Accounting

Traditional Income Statement

Revenueless COGSGross Profit

less OverheadsNet Profit

Traditional Balance Sheet

Assets

less Liabilities

Owners Equity

Operational Income StatementOperating Revenueless Direct Operating CostsContribution Marginless Indirect Operating CostsReal Operating ProfitLess interestLess owners distribution over commercial salaryNet Profit

Operational Balance SheetFunding

Own money - Equity Others money - Debt

OperatingAccounts Receivable

Inventory(Accounts Payable)Fixed Assets

Misc Op. assets and (liabs)HOW MUCH INVESTMENT(Pot of Gold)

HOW WE USE the INVESTMENT=


How Much is Invested in Your Business?Assets:Cash 10,000Receivables 500,000Inventory 400,000Fixed Assets 200,000Misc Op Assets 15,000Total Assets 1,125,000

Liabilities:Line of Credit 110,000Payables 300,000Lease payables 50,000Long term debt 500,000Misc Op Liabs 20,000Total Liabilities 980,000Equity:Share capital 100Retained Earnings 144,900Total Equity 145,000

Total Equity 1,125,000and Liability





F

F

F

F

F

FOO

O

O

OO





F

F

F

F

F

FOO

O

O

OO

Operating Assets:Receivables 500,000Inventory 400,000Fixed Assets 200,000Misc Op Assets 15,000Total Op Assets 1,115,000

Operating Liabilities:Payables 300,000Misc Op Liabs 20,000Total Operating Liabs 320,000Net Operating Assets 795,000

Funding – Debt:Cash (10,000)Line of Credit 110,000Lease payables 50,000Long term debt 500,000Funding - Equity:Share capital 100Retained Earnings 144,900Total Funding 795,000


Good Investment is Good Business

• Having quantified how much is invested in our business, lets start developing a narrative and asking some challenging questions:• How many dollars of revenue can I leverage from each dollar of

investment?• How profitable is my revenue?

• Which leads us to the 2 most critical questions every entrepreneur should ask (and be able to answer) are:• Is the return I am earning on my investment commensurate with

the risks I am taking?• Have I generated enough cash flow to survive, thrive and make

future strategic investments?


Fiscal Focus Pyramid2

Fiscal Focus Points:

4 Fiscal Focus Measures:ROO %

Operational Cash % Revenue Leverage Rating

Revenue Profitability Rating

8 Fiscal Focus Levers (At which we target practical ACTIONS):Revenue Collection (AR) Price Strategy Inventory Management Volume Strategy Supply Chain Management (AP) Direct Cost ControlFixed Asset Utilization Indirect Cost Control

Ability to create Revenue Reason for creating Revenueor Input Leverage or Output Leverage

Generate Return

Generate Cash Flow


Fiscal Focus Points - Cash Flow

• Cash flow is the lifeblood of the business• 3 different ways to assess the importance of cash flow:

1. If profit is food to a business, cash flow is oxygen2. Revenue is vanity, profit is sanity, cash flow is reality3. Bankers view: Profit is fantasy, cash flow is reality


Fiscal Focus Points - Cash Flow

Operational Cash Flow 2014Money InRevenue 15,000,000 Change in Accounts Receivable (Give more credit) / Give less Credit (1,200,000)

Total Money In 13,800,000 Direct Money OutDirect Costs (materials,labour and other DC but not non cash items) 10,500,000 Change in Inventory - Hold more inventory / (Hold less inventory) 700,000 Change in Accounts Payable (Take more credit) / Take less Credit (600,000)

Direct Money Out 10,600,000

Cash Contribution Margin 3,200,000

Operational Cash Flow (400,000) Operational Cash Percentage -2.67%

Indirect Money OutIndirect Costs (all indirect costs but not non cash items) 3,600,000 Miscellaneous spending (increase / decrease in Other Operating Assets and Liabilities) -

Income Tax Paid 250,000 Interest Paid 240,000 Dividend Paid 50,000 Net Cash Income (940,000)


Fiscal Focus Points – Return • Fiscal Focus uses Return on Operations (ROO),

a private company derivation of Return on Capital Employed (ROCE)

• ROCE is a highly valuable measure of business operational performance used by many of the world’s biggest public companies

ExxonMobil’s Annual Report:“The corporation has consistently applied its ROCE definition for many years and views it as the best measure of historical capital productivity in our capital intensive long term industry, both to evaluate management’s performance and to demonstrate to shareholders that capital has been used wisely over the long term.”

• So what is ROO in plain English?


ROO% is your Business Interest Rate

What you put in What you get out

Input

Real Operating Profit

Output

Investment

vs

vs

vs

Annual Revenue

Investment

Real Operating Profit

Annual RevenueX


Measures Ability to Generate Revenue

Real ProfitRevenue

XRevenueInvestment

ROO

MeasuresProfitability of Revenue

2 Key Questions to Understand ROO

Revenue Profitability Rating

Revenue Leverage Rating

How much real operating

profit is in each dollar of revenue?

For each dollar of investment

how much revenue is generated each year?

Quality of RevenueQuantity of Revenue


Calculation of ROO%

INPUT $1• Revenue leverage rating

• How many dollars of revenue can be generated each year

• Influenced by:• Accounts receivable• Inventory

• Accounts payable

• Fixed assets• Balance Sheet Levers

• Revenue profitability rating

• How many cents of profit in each dollar of revenue

• Influenced by:

• Pricing strategy

• Volume strategy

• Direct cost control

• Indirect cost control

• Income Statement Levers

OUTPUT 24c

3 8%

$3 Revenue per Year

24%


Fiscal Focus KPIs

Cash flow $ = Realization of Performance

Profit $ = Quantity of Output

ROO % = Quality of Performance

Look beyond the income statement to assess your true business operating performance with:

Look at more than half the picture:

But these measures are not just the 2 best KPIs they also help you make better decisions


KPIs and Better Decision Making

• The majority of mid market decisions are made relying on “gut feel” or “intuition”?

• Can you support your instinct with an effective framework and decision process using relevant data that answers the 2 key questions:

• “Should we do this?”

• “Can we do this?”

“An expert is someone who has succeeded in making decisions and judgements simpler through knowing what to

pay attention to and what to ignore.”Edward De Bono


Decision Making Using “Should We? / Can We?”

Cash flow $ = Can We?Are we able to fund this decision without jeopardizing our future?

ROO% = Should We? Will our “reason for being” be improved?

Each decision in the business can be analyzed using a 2 question approach:

Should we do it? Can we do it?

Imagine the value of having a “crystal ball” that told you the impact of single or multi variable decisions.


Decision “Crystal Ball”

Model changes to the 8 levers…

..and see the impact on the Focus Points. We should if “reason for being” improves and we can if we can fund the additional cash needed.


Gut FeelDecision Validation


QUESTIONS?


Email coming with slides, recording and tools

Contact Nick/Jim

Next Steps


Thank You!

Nick Setchell Jim Sagar

[email protected] [email protected]

CEO Balance - Webinar - 11-13-15 - Marketing MO · 2016-10-10 · strategic marketing and sales in...

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Transcript of CEO Balance - Webinar - 11-13-15 - Marketing MO · 2016-10-10 · strategic marketing and sales in...