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A Blueprint for Revenue Growth, Increased Profitability, and Operational Improvement. For more information,visit us at www.zweigwhite.com

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How to Return to Growth in 2010:A Blueprint for Revenue Growth, Increased Profitability, and Operational Improvement

Presented by: John Soter, Principal

ZweigWhite Strategic Advisory Services


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Agenda

  • A framework for business lifecycles

    • Why and How companies evolve, grow, or “age”

    • Attributes and predictable risks at each stage of growth

  • 2010 Outlook – Trends and markets

  • Business Growth Planning Template

    • Revenue? Profitability? Operations?

    • Scenario and contingency planning

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Business Growth and Evolution

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Prime

Stable

Adolescence

Bureaucracy

Growing

Aging

Go-Go

Infancy

Courtship

Death

Business Evolution Model

  • 6 primary stages

  • Not every firm passes through all 6

  • Can go forward or backward, get stuck, or die

  • Predictive model – attributes, needs, risks,

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Growing

Aging

Growing vs. Aging

Balance maintained at Prime

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Leader Attributes

  • To lead = make good decisions, implement effectively

  • 4 leader attributes

    • P – Producing results

    • A – Administrating of the business

    • E – Entrepreneuring the future

    • I – Integrating the efforts

  • Expressed as PAEI, paei, pAeI, P eI, etc

    • capital = dominant, lower case = secondary, = absent

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Leader Attributes

  • A

  • Focus on How – by the book

  • Bureaucrat, compliance & mistakes

  • Arrive on time, leave on time

  • Loves meetings, neat desk

  • “They’re not doing it right”

  • P

  • Focus on What needs to be done

  • Lone ranger, Fire fighter, task at hand

  • Arrives early, Leaves late

  • No meetings, desk is a mess

  • “I don’t have time”

  • E

  • Focus on Why - New Ideas - if it’s exciting

  • Arsonist

  • Arrives & leaves, “Who Knows”

  • Meets if has an idea, no desk

  • “They’re not following my priorities”

  • I

  • Focus on Who – Who said what, what does it mean

  • Politician

  • Arrive and leaves when others do

  • Loves meetings, Desk is large conference table

  • “Tell me where you want to go”

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The Right Blend

  • We are a mix, develop & morph over time

  • PAEI is very rare, textbook manager

    • None are perfect, all are different, pos/neg based on stage need

  • Each growth stage needs unique strengths

  • Management team needs the right balance

  • Solution – work together, find common language

  • “Think Yiddish, act British”, mutual respect

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Polling Question

  • Which styles do you rely on predominantly in your current position?

P

A

E

I

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Growing

Aging

Bureaucracy

pA i

E

Affair

P

Infant Mortality

P E

Founders Trap

Death

Business Evolution Stages

Prime

PAEI

Stable

PAeI

Adolescence

pAEi

Go-Go

PaEi

Infancy

Paei

paEi

Peter Pan

Courtship

paEi

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Normal vs. Abnormal “Growing Pains”

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Acquisition Considerations

  • Acquisitions can fuel growth & replace E

  • Make sure M&A growth fits the plan

    • Due diligence needs to include manager assessment

    • What will combined leaders’ styles look like?

  • How to rapidly blend for success

    • Need to focus on P for clients

    • While combining the A

    • Where is the E, and will it remain?

    • I is critical to effective integration

  • All are necessary for successful integration

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Infancy

Go-Go

Adolescence

Prime

PAEI

Prime

Aging

Growing

Stable

PAeI

Stable

Adolescence

pAEi

Bureaucracy

Bureaucracy

pA i

Go-Go

PaEi

Infancy

Paei

Courtship

paEi

Death

Question

  • At what stage is your firm?

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2010 Consensus Outlook

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2009 & 2010 Revenue Changes

Estimate for firm revenue: 2009 vs. 2008

Estimate for firm revenue in 2010 vs. 2009

6.8%

7.5%

30.3%

7.5%

19.2%

21.9%

5.4%

7.9%

23.3%

9.3%

15.2%

25.8%

19.9%

Source AIA Work-on-the-Boards Survey, November 2009

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Six Trends to Watch in 2010

  • Economic Uncertainty

  • Unemployment and health care

  • ARRA and other government intervention

  • Mixed merger and acquisition activity

  • Globalization

  • Green building

Source: 2010 AEC Industry Outlook

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86% - “2010 economy will not get worse”

52% - “2010 economy will be better”

2010 AEC Outlook by Market

Source: 2010 AEC Industry Outlook

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Business Planning for Growth

“A problem well defined is half solved”

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How to Compete - 2010

  • Deliver highest possible quality & client satisfaction at the lowest practical cost

    • Balance expense management with revenue pursuit

  • Position for advantage

    • New products & services, delivery capability

  • Plan paths to growth

    • Markets, partners, M&A

“You can’t change the wind, you can only change the sail”

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Potential

Current Markets

New Products

New Markets

New Products

Products

Current Products

and Markets

Current Products

New Markets

Current

Potential

Markets

Keys to Planning for 2010 and Beyond

  • Build muscle – effectiveness and efficiency

  • Possible & probable scenarios with contingency plans

  • Strengthen and manage tactical implementation

2010 AEC Outlook Business Trends Survey

New Services to existing markets = 76%

Pursue more public work = 72%

Teaming = 67%

New markets = 59%

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4 Step Business Growth Planning Process

  • Accumulate data

  • Deliberate and refine into information

  • Accommodate to generate knowledge

  • Finalize for wisdom

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Step 1 – Accumulate

  • Establish your baselines honestly & objectively

    • What would a buyer think?

  • Include gap between you & peer best

    • Benchmarks (Growth, Profit, Util, Overhead, DSO)

    • and $ potential

  • Include client/market study

  • Include employee input

Measure Twice, Cut Once

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Operating Gap Analysis

Peer group benchmark analysis shows magnitude of potential opportunity

Figures are for illustrative purposes only, based on a $10MM Firm

A

B

C

(One time savings)

D

* Top Quartile from 2009

ZW Financial Performance Survey

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KPI Peer Comparison

Top Quartile from 2009

ZW Financial Performance Survey

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Client Input

  • Clients can help, and they will if you ask

  • Market study reveals how you are perceived

  • Segment customers

    • Where are emerging & expansion opportunities

    • May not be able to continue with some existing clients

Who are Customers

  • Capability matches customer need – our bread and butter

  • Customer needs not currently satisfied

  • Emerging markets

  • Not our business

4

2

1

3

4

ID by Needs

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Employee Input

  • Involve entire firm, solicit input, gain insights

  • Use survey, focus groups, open polling box…

  • Communicate purpose to gather contributions

  • Craft questions to support assessment

  • 2 functions

    • Generate ideas and get points of view

    • Energize employees for new strategy, prepare for participation

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Scenario Planning

  • Brainstorm probabilities, best case, worst case for drivers

    • Economy’s impact on clients

    • Emerging markets

    • Severe downturn in business, pipeline forecasts

    • Key personnel staffing / competency challenges

    • Cash Management and credit lines

  • Think through and create contingency plans

  • Set trigger points for key actions

  • Establish calibration cycles within Strategic window

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Stay the

Course

Growth Planning –Phase 1

Base Case

External Opportunity $

(New Markets + Expand Markets)

Delivery Opportunity $

(New Products + New Services)

Required Investment $

Strategic Agenda

Risk Assessment

& Contingencies

Operational Improvement $

(Productivity + Cost Savings)

Net $ Impact

Strategic Direction

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Step 2 - Deliberate

  • Individual review by team members

  • Review market & operational findings

  • Follow up as needed for clarification

  • Digest and prepare for team discussion

  • Refines scenario and contingency plans

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Step 3 - Accommodate

  • Review Phase 1 findings

  • Assess scenario plans

    • Risk assessment, success probability, expected impact

    • Rank scenarios and prioritize risks

    • Outline contingency plans

  • Craft direction statement

  • Create Strategic Agenda items

  • Raise & address individual concerns and P.O.V.

  • Reach binding consensus

  • And commitment to direction and main agenda items

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Step 4 – Finalize The Plan

  • Set driver goals for new strategy

  • Create implementation WBS, assign key tasks

  • Design accountability process

    • Tied to compensation

  • Design communication and roll out plan

  • Create management process

    • Key measures, Key check points

    • Recognition and recourse plans

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Customers

Stakeholders

Expectations

Vision

Strategic Direction

Tactical Plans

SMART Goals

Capabilities

Process Design

Use of Technology

Training

Structure

Mgmt Process

Reward & Recognition

Income & Security

Challenge & Growth

Participation

Retention

Incentives & Rewards

Implementation

  • Implementation must address tactical means and ends

  • Communicate strategy and company driver goals

  • Create the strategic performance environment

    • “Translate” Expectations, engage vs. impose

    • Address Capability gaps & required investments

    • Align reward and recognition practices

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Vision

5

4

Value Potential

2

3

1

Value Delivery

Business Growth Plan Components

  • Internal & Market Analysis

  • Vision and Mission

  • Driver Goals

  • Marketing Plan

  • Financial Plan

  • Operational Plan

  • Key activity accountability

  • Communication Plan

  • Implementation schedule

  • 1 Assessment:

  • Internal opportunities

  • Market Opportunities

  • 3 Align the company

  • Translate, engage, involve

4 Implement

  • 2 Strategic Direction:

  • Consensus on Agenda

  • High level Action plans

5 Achieve Vision

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Summary

  • Where is your firm on Grow – Age cycle?

    • Assess leader attributes

  • 2010 Trends and market forecasts

    • Moderate growth prospects, good not great

  • Growth and Planning Template

    • Benchmark to ID gaps / opportunities to build/refine capabilities

    • Create scenarios for economic & market opportunities

      • Growth areas, investments, teaming, M&A

    • Set Strategic Direction with strong tactical focus

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Closing Thoughts

  • Start or re-visit planning routines

  • Assess your firm’s Growth stage

    • How balanced is your team?

  • ID & Capture internal opportunities

    • Benchmark, grow operational capabilities

  • Look ahead to get to next stage

    • Markets, services, regions, international, teaming, M&A

  • Planning is journey, not event

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Growing

Aging

Submitted Questions

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Contact Information

John Soter

(508) 651-1559 Ext 211

[email protected]

Click on the below link to purchase this webinar:

http://www.zweigwhite.com/p-886-how-to-return-to-growth-in-2010-a-blueprint-for-profitability-improvement.aspx

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