Strategic planning is an annual exercise at most successful organizations. This process is essential to discovering new areas of growth and establishing a road map for future development. Consumer demands are changing every day – often fed by rapidly evolving technologies. Keeping up with these changes is essential, but often difficult while immersed in day to day operations.
One way to keep current with the changing landscape and infuse new thinking into strategic planning is to start with an analysis of best practices. I recently completed a benchmarking and best practices analysis for a Fortune 100 company eager to improve their performance in customer service. We worked together for several months completing a robust assessment that resulted in new inspiration for the department with clear takeaways to apply to their own business.
Understanding best practices is important because it can help catapult performance to another level – if applied appropriately to an organization.
Key elements to conducting a successful best practices analysis include:
1. Verify the Leaders – Begin by identifying the leaders in the chosen space. Make a list of those companies admired both inside and outside of the relevant industry. Verify the leaders by searching for those companies who have won awards for best performance, or who are consistently ranked as best in class. Check with publications like Fortune, Forbes and Tech Crunch, or industry research groups like J.D. Power and Gartner.
2. Collect the Data – Begin researching the identified leaders in the field. Read articles, examine annual reports and record available information about how they pushed to the top of the heap. There will be important similarities between the leaders and key differences. Analyze the trends. If possible, work with an expert network like GLG to quickly access relevant professionals and set up conversations to gain more knowledge. Make a list of best practices, which companies embrace them and how these practices drive results.
3. Measure Your Performance – Establish metrics to measure your company performance and compare to the leaders. Data is sometimes hard to find, but there are resources to help such as: Similar Web to compare website traffic, NPS Benchmarks to compare Net Promoter Score, and data from annual reports of public companies to compare financial and other performance ratios.
4. Identify Gaps – Compare the approach and performance of the leaders to your company. Realistically identify the best practices that could be applied. Make a list of quick wins and longer-term aspirational goals.
5. Make it Yours – Each company culture is unique. Share the best practice research with your team and begin discussions about how to adjust and apply these practices. Armed with this research, the team will enter the strategic planning process sharper and more focused on what will drive innovation and results.
Taking time to reflect on past results and plan for the future is critical for all companies. Starting the planning process with an analysis of best practices will inspire the team with new ideas and a fresh perspective on growth.
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The burning question for many private-equity investors is - "How big is the market?" In an era where entrepreneurs are breaking ground in new markets daily, this question is difficult, but not impossible to answer.
Experts are predicting some of the hottest tech trends for 2017 will be
As an example, the Internet of Things promises to materially disrupt our economy with the connectivity of everyday devices, allowing them to send and receive data. Private-equity companies and others are investing heavily in promising IoT technologies. Business Insider predicts that nearly $6 trillion will be spent on IoT solutions over the next five years. The overall market size will be large with McKinsey estimating the total IoT market to grow from $900 million in 2015 to $3.7 billion in 2020 (33% CAGR).
Although the research powerhouses have analyzed the overall market size and provide credible direction for growth, there is little published on niche markets within IoT. For example, how about the size of IoT analytics in a specific vertical like vineyard management? Traditional analytics vendors like IBM, SAP and Microsoft, or cloud service providers like AWS may try to enter this space; however, upstart pure-play vendors may be able to quickly capture market share. What are the opportunities in this market? Does it make sense to enter - organically or through acquisition? The market must be properly sized to answer these questions.
Calculating the Total Addressable Market (TAM) for niche, new, or relatively unknown markets is always challenging. However, it must be done with a degree of precision to understand value and opportunity. We broke the process down into five steps:
1. Compile Existing Secondary Market Research - Although these markets are new, pull all surrounding data. It helps to know the size of adjacent markets, the trends in adjacent markets and perspective on influencing factors. We start with Forrester Research, due to the breadth and credibility of their analysis. A new favorite research tool is Statista, not as comprehensive, but very quick and easy to use.
2. Analyze Top-Down - This takes us back to our McKinsey/BCG consulting interviews with questions like, "How many telephone poles are there in North America?" Start with a verified macro number, like population, then segment the market. Who uses the product? How often? At what price? Provide a source for every assumption you make. For example, if trying to calculate the market for IoT analytics within the agricultural vertical - vineyard management specifically - one approach might be to start with the overall value of IoT in agriculture. Determine the relative percentage that vineyard management represents. Triangulate this with the number of connected devices - total revenue per connected device in total, for agriculture and again for vineyards. Calculate the number of vineyards who could be customers. Apply a price. Are analytics sold per connected device? Price times volume equals revenue. Work on credible estimates for both sides of the equation.
3. Analyze Bottom-Up - This approach is usually more detailed than the top-down. Determine specifics of production and then calculate this number across the market. For example, if trying to calculate the market for IoT analytics at vineyards, you could start with one vineyard. Understand the economics for IoT analytics within a single market. Annual reports of public companies are usually a wealth of information for this analysis; websites and press releases of private companies often include one or two key pieces of data helpful for market sizing and benchmarking. Call vendors to check pricing. Build up the market size piece by piece and then triangulate with your other sources. Is it in the same ballpark as your top-down analysis? Does it make sense given the size of the macro or adjacent markets from the secondary research findings?
4. Verify with the Experts - As much as possible, reach out to experts in the market. Sense check your assumptions. Trade Associations are often incredibly helpful. Always be mindful and specific that you are not looking for confidential information. When working with GLG Strategic Projects, we utilize the GLG expert network to reach out to leaders in their field to verify assumptions and learn more. GLG is a fantastic resource for connecting quickly and professionally with experts. If you are not a client, you can utilize your own LinkedIn network, or make contacts directly.
5. Calculate Sensitivities - Markets are always changing. New markets are especially sensitive to growth assumptions and pricing projections. How do your numbers look if growth happens earlier, or later than expected? What if the market growth and opportunity attracts large entrants that drive prices down? Calculate (and graph) a market range based on the key variables that will impact value.
Entrepreneurs are pushing boundaries on new markets every day. As you look at these opportunities, make sure that market value is calculated with a detailed, analytical and credible approach. There probably isn't a research report available for most of these new, niche markets, but even if there is, it's important to understand and verify the assumptions that drive the calculations to truly understand the market opportunity.
What an honor to be a part of this year's Healthy Lunchtime Challenge, a unique initiative spearheaded by Michelle Obama through her Let's Move Campaign. My daughter Hannah was Oregon's winner of the recipe contest - selected from over 1,200 recipes nationwide.
All Kale Caesar (click here for the recipe, featured in The Oregonian) was Hannah's golden ticket - inspired by her love for Caesar salad and her hungry belly.
We had an amazing trip and learned a lot in the process.
1. The Community Cares
In the barrage of news about shaky political campaigns, terrorist attacks and general atrocities, we were impressed that our community took a moment and promoted an issue important to families nationwide - healthy kids! One in three kids in America is either overweight or obese. We have to get moving (and eating properly) to reverse this trend.
Thank you to all who jumped on board this initiative and gave voice to some of the solutions that can make a healthy difference.
Special thanks to KPTV Fox 12, Good Day Oregon, Senator Jeff Merkley, Dave's Killer Bread, KATU, AMNW, The Oregonian and the Portland Tribune for your coverage (click links to view). The feedback we've received from our community is inspirational. Let's get healthy!!
2. Corporations Count
The Healthy Lunchtime Challenge could not have happened without the support of its sponsors. Thank you to United, The Westin, Newman's Own Foundation, Rachel Ray's Yumm-O and more. We so appreciate your commitment to improving the lives of our children - one healthy lunch at a time.
Sara Conte is a frequent contributor to online discussions about strategy, branding and entrepreneurship.