At Castle Devices, Strategic Planning can be a painful process. This is not unusual in business. Managers feel threatened as their approach to business processes are openly critiqued. Sales managers especially can get the heebie-jeebies, after all sales efforts are usually the number one initiative supporting revenue growth and are thus subjected to intense scrutiny.
Castle Devices, a nationwide organization with emphasis in the Northeast USA, requires upper level management and key managers to share all the information they can possible gather while conducting a strategic planning project. This planning process assures the company can adjust its overall direction to accommodate current opportunities and avoid future bumps in the road.
Planning in good times can feel just plain wrong. Why fix what’s not broken? But, a leader with clear vision knows good times are always followed by tough times. And it’s that leader’s job to see the company through those bad times, minimizing revenue loss and lowering employment attrition.
Problem: Identify the top three new market opportunities and rearrange legacy sales account relationships and territories to best leverage these new industry opportunities.
Castle devices has always sold a majority of their controls into the paper mill industry. Even as paper production has tapered off and moved overseas, their sales held steady because their control devices tended to require updating regularly and they benefited from constant paper production machine changes. But now sales are tanking in their primary market. Meanwhile new markets are ascending – local breweries, biotech, and alternative energy markets, to name a few. The company must interrupt its sales patterns and refocus the sales team on new markets.
Solution: Create several business maps that define current customers, sales territories and sales associate patterns. Overlay new business opportunities and design sensible strategies to develop those new industry opportunities using the existing sales force.
A successful strategic plan utilizes a variety of tools that combine to identify challenges and suggest solutions. A SWOT analysis is one such tool – a study of internal company Strengths and Weaknesses and a look at external Opportunities and Threats. Other tools might include the technology plan from the IT department, a five years Sales Plan from the sales group, a thorough market analysis, and perhaps a long-term product plan from manufacturing.
Business mapping software as an analysis and planning tool was implemented this year at Castle Devices. Location awareness has not been a primary driver in Castle’s decision making process. But this year, the recently hired Strategy Director had some ideas she wanted explored via a business mapping tool.
Visualizations of the current sales situation quickly established the sales associates who were married to legacy accounts, in danger of tanking over the next six months. Breweries, biotech and alternative energy accounts showed strong growth over three years and were popping up in sales territories around the country. Two sales associates had spent most their time growing these new industries.
Both marketing advertising spend and warehouse inventory investments were weighted in favor of paper accounts where business was dropping off. Turn and earn ratios applied to inventory “A” items, bore this out.
For the next year, the new Strategy Manager would have overall control over sales, marketing and warehousing as the Castle Devices moves to service new markets. Once sales results show a shift to new markets, control will be returned to sales management. In addition to new sales goals and objectives, the key elements in the plan are:
While none of the strategic shifts reviewed by Castle Devices were rocket science, the plan may have saved the company from failure over the next two years – depending upon economic conditions. An economy can go south quickly.
Business mapping tools were instrumental to the visualization of the problem and the development of a strategic plan.
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