Balancing Resources & Priorities
Mike DevereuxPresident & CEO Nature‘s Way Brands
Lunch ‘n LearnGreen Bay, August 26, 2014
About Me
• Grew up in the western suburbs of Chicago in a 3-bedroom, 1-bathroom bungalow.
• Learned how to balance resources and priorities at an early age, while competing with four sisters for the bathroom before school.
Me
Cat“Bark the Wonder Cat”
Nature‘s Way Group
Balancing Resources and Priorities in the context of …
• Why?
• How!
• Does it matter?
Strategic Planning
Why?
“If you don’t know where you are going, any road will take you there.”
R. Rose – My Predecessor
How to Start?
• Diagnostic on today’s business– E.g. SWOT analysis
• Aspiration for the future
• Capabilities to deliver
• Manage the competing agendas
People
$
Management Team
Shareholders
a. Outline of Strategic Plans
• Industry / Business unit / Market context and dynamics– Industry/Business unit/Market overview– Industry/Business unit/Market profitability– Industry/Business unit/Market dynamics– Customer needs
• Competitive assessment– Performance review (Brands, Categories, SKUs (topline, bottom line)– Achievements since last year – Product line assessment (Brands, Categories, SKUs (topline, bottom line)– Competitive assessment (Sales operations/ Channels, Marketing, Etc.)
• Strategic issues (Resulting from Market environment and Competitive assessment)– Where are opportunities and threats?– Where are our competitive strengths and weaknesses?– What are the strategic success factors and with regards to that, where are the strategic gaps?
• Key strategic initiatives (5-10 year) strategic initiatives in detail that describe measures, steps (timeline), investments, structural implications (Resources) and implementation risks
– Financial projections (including scenarios if needed)– Detailed financial projections (cash in and cash out)– Capital plan– NPV
b. Example from Pitman Moore
• Aspiration
• Focus
• Filters also
“what not to do”
Circa 1990
Aspiration
Mission(medium term)
Where to Compete
Create Make SellHow to Compete
Leadinganimal health
and nutrition company
Product categories Species Geographics
Key technologies
• Biologicals• Implants• Ectoparasiticides• Feed• Antimicrobials• Vet specialties
• Cattle• Swine• Poultry• Sheep• Cats and
dogs
• Base: NA, UK, ANZ, Brazil
• Penetration: G, F, SP, I, Mexico
• Beachheads: Korea, China, Japan . . .
• Deletant/ recombinant vaccines
• Controlled release systems
Make food animals more valuable to producers by providing superior disease prevention and rearing
productivity solutions
• No in-house “R”• Strong links to biologicals
science (universities, biotech companies)
• Focus on core categories• Develop world-class biologicals
manufacturing skills
• P-M in-house sales forces• Superior customer service and
technical support• Distributor-only in companion
animals
Profit from the Core
Profit from the Core – Key Points thatlead to Profitable Revenue Growth
•Focus scarce resources on the core of your business if attractive growth opportunities remain – if not, the core needs to be extended.
• Establish a common set of facts and market insights from which impactful growth initiatives can be found.
• Get an “A” on 3 or 4 initiatives rather than a “C” on 10.
• Master the science of making change happen within your organization.
Profit from the CoreKeys to Success:
• Reaching the full potential of the core business.
• Expanding into logical adjacent businesses surrounding the core.
• Pre-emptively redefining the core business in response to market turbulence.
All that . . .“and some luck/good fortune helps.”
Natures Way Example
• Consumer Business
• Professional Business
• Canada
• Export
SpecialtyMassInternet
NaturopathsMD’sChiroOther
SpecialtyMass
AsiaLatin America Europe
% ofTotal Product Line
70% 800 sku’s
10% 400 sku’s
10% 200 sku’s
10% 600 sku’s
100% 2,000 sku’s
The Alchemy of Growth
Planning the future over 3 time horizons
Performance /Profit /Growth
Time
Horizon 1Defend and extendcore businesses
Horizon 2Build emergingbusinesses
Horizon 3Create viableoptions
3 years
Now
Beyond
Nature’s Way Accountabilities and Time Horizons
Performance /Profit /Growth
Time
Horizon 1
Horizon 2
Horizon 3
U.S. Market Potential focus & Maximize existing Brands
Develop International Markets and enter new categories and technologies
Enter New Business models, Mergers & Aquisitions
Get an “A” on 3 to 4 initiatives versus a “C” on 10.
Digital Competency• 50% of population is < 30.
• 53% of Twitter is recommending products via Tweets.
• 93% of buyer decisions are influenced by Social Media.
• 90% trust peer review.
Source: Socialnomics 2014 by Erik Qualman
Nature’s Way Opportunity Becoming much more relevant to the last mile of our customer base. Historically we transact 100% through retailers and practitioners . . . We want to speak directly with the people who buy our supplements.
Digital Examples
Pre-emptively redefining the core businessin response to market turbulence.
Digital Examples
Pre-emptively redefining the core businessin response to market turbulence.
Digital Examples
Pre-emptively redefining the core businessin response to market turbulence.
Digital Examples
Digital Examples – Output Measurement
Key Learnings from Mentors (1)
3 simple rules:
• Focus on your output
• Know your resources
• Be analytical
L. Bernicky – First boss at Arthur Young
Key Learnings from Mentors (2)
“Mike, your biggest strength is also your biggest weakness . . .
… Idealism”
A. Chawla – SVP of Strategic Planningand former boss during the McKinsey project
“Be okay with me accepting 1 or 2 good ideas from you versus your entire agenda”
Key Learnings from Mentors (3)
“When you move into the CEO role, first reset your relationship with all your former peers - …
…You are now their Boss.
T. Flood – CEO Collier Enterprises – former boss at Beatrice Foods
Key Learnings from Mentors (4)“As CEO, you must be able to “create a vision and articulate it verbally with substantive support …
… If you cannot, you don’t belong in the CEO role.”
After that . . .
“Be yourself”
A. Nieto – Former Chairman of Life Fitness,now ALS sufferer
http://www.freep.com/article/20140629/COL01/306290088/augie-nieto-als-mitch-albom
Summary of the Key Learnings that have shaped my thinking
1. Bernicky – The Fundamentals
2. Chawla – Pick and choose based on substance
3. Flood - Lead
4. Nieto – “Be you”
Inputs
The Output ! ! !
Does it Matter?
CAGR 2010-2013: 17% CAGR 2010-2013: 44%
Summary
Balancing Resources and Priorities in the context of Strategic Planning
You know where you are going the strategic map takes you there!
Why?Good luck
How!
Does it matter?
Post Mortem• Quote from C. Jennings – Nature’s Way gummy vitamin supplier:
“The most impressive thing about your facility tour is your People.”
• Come on, let me give your minds a ride.
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