Strategic planning is a structured approach to anticipating the future and “exploiting the inevitable” . The strategic plan charts a path for both your internal management and competitive actions in key markets or divisions. Application of this process might take the form of a plan to maintain leadership in an important or growing category over the next five years. Strategic planning for start-ups is a process for ensuring that the budget dollars follow the plan rather than vice versa. (Paris, 2003) For start-ups, planning is not just following their business plan for growth and expansion. The strategic plan often guides retrenchment and reallocation since many external factors shift and market conditions change when competitors make investments, innovation or strategic moves.

Strategic plans make the case for resource allocation in an environment of scarcity. The strategic planning process helps your venture determine which products or programs are exemplary or offer the greatest opportunity. Ultimately, strategy is about differentiation . Differentiating your product mix is critical. However it is a more difficult task than most companies believe since they are modeled after top national or regional competitors. Ironically, most marketing material could be used by direct competitors by simply changing out the logo, colors, and tagline.  Companies who do not strategically plan, fall into the trap of simply following the leader’s well-known program.

Two well-known models in use for  strategic planning have their roots from the Harvard Business School. The analysis of strengths, weaknesses, opportunities and threats (SWOT) was a popular Harvard model from the early 1980’s and Michael Porter’s Five Forces is another model by which institutions can analyze their market position. The Five Forces model goes beyond the typical Strengths, Weaknesses, Opportunities and Threats analysis. It forces institutions to predict or explore substitutes for their product or service. Porter’s thesis with Five Forces is that the level of competitive rivalry is paramount to how to best strategically plan.

 With the Michael Porter’s Five Forces model, outside influences such as buyer’s power (in higher education it might be student options/choice to obtain an MBA instead of continuing to be underemployed), are considered along with other key questions not included in a SWOT analysis. Porter, from the Harvard Business School, first developed the Five Forces Theory as part of his strategy treatise, “The Competitive Advantages of Nations (1986).  Porter’s Five Forces theory provided an alternative framework to analyze markets beyond the strengths, weaknesses, opportunities and threats paradigm.

 Since there are so many competing theories on strategy and competitive analysis many entrepreneurs legitimately ask if this analysis is applicable to their specific market. Questions such as: “Why use business analysis tools if we already have a strategic plan or few competitors? Or What tools are essential for my challenges?” . It takes time, skill, and practice to use business tools like SWOT, Five Forces, Blue Ocean, BSG Product Mix, Value Chain for competitive analysis. It requires agonizing discussions on priorities, and creates potential winners and losers in your current product mix. Despite that, there were few entrepreneurs that did not at least acknowledge the value of managing their venture with employees that can analyze their data, market, and use these business tools.

It is one reason I am here at Monmouth College. To help would be entrepreneurs apply these tools.

It may seem strange to even mention the blue ocean while seated in the middle of the great American Midwest. But one lens by which an entrepreneur can look for new opportunities and find strategic advantages is to do frequent analysis and mystery shopping yourself for your products and your competitors. Additionally, some self introspection would not hurt either. Who are your ideal customers? Other than your own venture, what competitors are knocking on the same doors for business?

Your small company can view itself through an analysis process developed in 1981 at the Harvard Business School called strengths, weaknesses, opportunities, and threat analysis ( or SWOT). 

Another helpful model is the Blue Ocean Strategy. The Blue Ocean marketplace is a relatively new marketing strategy (Kim 2005). Blue Ocean is a “marketplace focused strategy” that is created by identifying an un-served set of prospects or customers, then delivering them a compelling, new value proposition. Blue Ocean Strategy was first published in 2005 by researchers W. Chan Kim and Renée Mauborgne at The INSEAD Business School in Paris, France. The authors believe the high growth and revenues for a venture are generated by creating new demand in an uncontested market space, or a “Blue Ocean”, rather than by competing head-to-head with in the same market with known customers. Red Ocean is markets were all major competitors discount or compete by cut-throat tactics. (Mauborgne, 2005)

Looking for new, untapped markets for customers is analgous taking a dip in the blue ocean. The waves may be scary, but the ride can be worthwhile. I highly recommend trying it.

Peter Senge in The Fifth Discipline explained that academia as the classic example for how difficult it is for organization to manage the process by which change is introduced and sold in to the organization. (Senge, 1990) Senge is best known for stressing the importance of cross department communication and alignment of goals across department lines (Senge, 1990). Higher education tends to function as a disparate group of independent departments and individual contractors. Change becomes a difficult process because there is limited line management outside of the Provost, Dean and department chairs. But without an awareness of the competitive factors and changes in market for college graduates, institutions are walking in darkness at noon day. That is why Senge, George Keller (1983), and others believe strategic planning and alignment is so critical

Senge sees academic departments as the classic silo within the larger university setting. By design at the vast majority of colleges , disciplines are fiercely independent and fight to establish a culture of superiority in order to compete for limited resourses with  other departments and gain the approval of the outside world.

Unfortunately that silo mentality is usually damaging to the organization as a whole. Competing against other departments for resources happens everywhere. But how do they compete? Departments compete for scarce resources, notoriety, students, and presidential attention by advancing their personal goals and agenda and not for the overal good of the university according to Senge.  

Most universities had over 100 of these departments/divisions operating semi-autonomously with their own set of rules and distinctive culture. It was the classic fiefdom of  chairs who have ruled their department for 10+ years with little or no input from busy Deans or Provosts. Does it have to work that way?

The way faculty are evaluated gives us a clue. Peer review, research and teaching expectations, incentive compensation, and culture are by definition defined by the chair and key members of the department as opposed to the Dean. Usually the key members of a department are senior faculty who are tenured. Faculty promotions, tenure and raises are primarily determined by the department chair and these senior faculty in a peer review process.

 According to Senge, the faculty who work in these silos have “blinders on” and cannot meet the needs of the institution when their goals are not aligned with the college’s. These faculty members will not sacrifice or even empathize for the goals of the entire institution if it conflicts with their professional goals or conflicts with the discipline specific work related to achieving tenure or recognition (Senge, 1990). This means most department members are walking in darkness at noon day” in terms of the overall objectives and goals of the institution. When these institutions get “out of alignment” in terms of their department goals versus the entire institution, any change acceptance process is hindered too. 

 Often the institutional department or administrator responsible for implementing change, say the Dean or Provost must exhibitan authoritative style to get things done in this environment. When problems arise, the dysfunctional behavior of chairs will rule the day because faculty won’t understand or agree with the need for change. These cultural fights for institution wide initiatives such as changes in general education requirements, or greater inter-disciplinary integration become a battlefield for the heart of the institution.

Why does this happen? Answer: The institution’s goal of student success runs out of alignment with department goals or expectations for graduates. Senge believes this is not necessary and advocates leaders who can bring departments into line with the overall good of the university.

Everything Monmouth College invests in is driven by how it can help our students succeed. Our students did not believe you could learn advanced entrepreneurism from a text so we found 21 entrepreneurs to come and speak to our class. Each entrepreneur, student, family, and culture had a different definition of success. To one person the pursuit of financial rewards was synonymous with seeking success. Others may see the development of admirable qualities such as curiosity, honesty, empathy, and ethical behavior to be preeminent in their definition of success. Monmouth developed its own unique approach to higher education and this course was a good example of how education can change lives.

Monmouth’s approach was designed to impact the wellness of each person–intellectually, physically, and socially by challenging them intellectually and helping students develop admirable qualities. It prepares them for successful lives—whatever their definition. Monmouth’s secret ingredient is integrating learning from science, business, international culture, the arts, and classic philosophy. Check out the comments to most of theses posts and you will be impressed with what our students learned from a few guest speakers.

Integrated learning is Monmouth’s philosophical approach to how knowledge is created, disseminated and best understood. My colleague Michael Connell recently said “To understand anything fully one must consider the history and culture that created it, the science it is based upon, its ethical, moral and political implications, its economic and social manifestations, and the changes it will produce. It is the recognition that facts, theories and ideas do not exist in isolation, but in context.

For our faculty, it is a commitment to a pedagogy based on the principle that knowledge is meaningful only in relationship to other knowledge. To impart these broader insights, we require our students to take courses in global perspectives, personal reflection and community citizenship. It is our intention to explore the inter-relationships between different fields of study in each and every course we teach. The integration of knowledge is a life-skill that allows individuals to understand better the world in which they live, to contribute more effectively to society, and to enjoy a more meaningful life.”

I think that sums it up quite nicely.

Thanks to the 21 Entrepreneurs who participated by coming to campus, hosting us at their place of business, or talking to us by conference phone. Some even commented and corresponded with student participants via this blog. It has been a great Spring and we look forward to continuing Midwest Entrepreneurs Spring of 2012.

The CEO of General Grind along with finance director and alum Michael Vipond 03′ will speak today at Midwest Entrepreneurs at 4pm. General Grind is an amazing success story. Its a company that just a few years ago had 15 employeees. General Grind has grown to 400 employees as a world class machine parts company.

THE SPEAKER:  The Midwest Entrepreneurs speaker on Thursday April 14th was Professor Mike Connell.    His topic was approaches to keep a struggling small business open and his example was small town country clubs.  He has been the President of Board of the Monmouth Country Club (MCC) for six years.  He discussed the changing business model of country clubs.   Like many country clubs, MCC is a non-profit organization owned by the members. 

THE OLD BUSINESS MODEL:  Professor Connell started by reviewing the business model of the standard American country club that was developed in the 1930’s, 40’s and 50’s.  Membership was limited and there were often waitlists to join.  Would-be members had to be sponsored by existing members and there was membership committee that investigated and voted on new members – membership votes were not always positive (the black pea).  The new member paid an initiation fee for the privilege of joining the elite and elitist organization.  In additional to the initiation fee, members paid annual or monthly membership dues.  Most country clubs included services such as: a private golf course, a swimming pool, upscale dining services, tennis courts and a sauna.  There were regular social functions including card groups, dances and other parties.  Members were expected to eat at the club several times a month (minimum monthly food purchases); at many clubs members were sent bills if they did not patronize the restaurant frequently enough (charging people money for food that they did not eat is not an attractive business feature).  If the club had an operating loss for the year (which they frequently did), each member was sent an additional “year end assessment” to cover the operating losses — unexpected large year-end fees are another unattractive feature of this business model.  Club membership was often expensive and beyond the reach of most American households.  But many country clubs flourished because they were the best golf course in town, the best dining, and an essential place to make business contacts.  Small town social life and business deals often revolved around the local country club. 

A CHANGING ENVIRONMENT:  Over the years, American culture and the business environment of country clubs changed – especially in small towns.  Nice public golf courses were built.  Good restaurants opened.  Television and other entertainment options evolved to compete for limited entertainment dollars.  Local businesses were driven out of the market by malls and big-box stores — local business owners were usually country club members.  The population became more mobile and small town ways died.  Many country clubs including Monmouth Country Club struggled financially and some went bankrupt.  Most responded by raising dues and prices.  These price increases further reduced membership and revenues hastening the downward spiral. 

A NEW BUSINESS MODEL IS DEVELOPED:  Around 1998, MCC faced a financial crisis.  The operating loan was so large that the local banks could not allow the debt to increase further.  Foreclosing on a golf course is not a pleasant option for a local bank – the market of potential buyers is small.  Given the financial crisis, the MCC board concluded that the old full service, high dues, elitist model was outdated and doomed to failure in Monmouth, IL.  The MCC board decided to pursue a different market niche.  MCC concluded that it could not compete with local public course as the for the competitive golf dollar.  The board also realized that it did not have the power to force people to patronize the dining room and that the entertainment market was crowded.  First the MCC board lowered the dues and began to sell a new product service mix.  MCC began to focus on “family golf” — an uncrowded place where women golfers and children were welcome.  Pleasant evenings of family golf were the rule.  Many couples golfed at a leisurely pace.  Parents and children golfed together as a group.  Unaccompanied children were welcome during the day.  Membership at modest prices increased.  Expensive labor was eliminated in the pro shop and the dining room.  All food minimums and assessments were eliminated.  The restaurant was leased to private operators and the dining room was opened to the public.  At first, the pro shop was staffed with volunteer labor and later operated on the “honor system” with members voluntarily paying for the items they purchased or writing up tickets to be billed later.  A retired member acted as the business manager for a salary of $1.00 a year and another member kept the books without compensation.  While the new system did not earn high profits, it did allow MCC to maintain a private golf course, a private pool, and an on-site dining option.  Under this system, the operating loan was paid down but not eliminated. 

REFINING THE BUSINESS MODEL:  A year ago and additional tweak was made to the business model.  A local caterer began to operate out of the MCC kitchen facilities with food sales to members on three nights a week only.  MCC began to advertise that the clubhouse as available for rent to both members and the general public.  The clubhouse was open for weddings, class reunions, birthday parties, wedding anniversaries and private parties.  The board realized that the MCC atmosphere and convenience are its most marketable assets.  It has a pleasant atmosphere with a scenic view and a private bar and convenient handicap-accessible parking.  MCC invested in capital improvements to make MCC more attractive as a rental facility – new tables, additional chairs, dishes, linens, new restrooms, and a private dining room.  The business model is still evolving but early results are promising.  MCC has an affordable private, family friendly golf course and pool, and a limited social calendar of adult parties.  For the first time in fifty years, it appears that the dining room, clubhouse and bar could generate positive net revenue for golf course operations.  While some country clubs still flourish with an exclusive, high priced model, other small town country clubs have gone bankrupt and closed.  MCC has found a middle road.  While it is not flourishing as high-end golf and dining experience, it is open and viable in a different market niche – private family golf, private swimming pool and clubhouse rentals including bar sales.  

BUSINESS LESSONS FOR CLASS:  The world is a dynamic place.  Businesses must constantly adapt to remain viable.  New products and new strategies are often essential. Darwin said that his theory was misstated. It is not “the survival of the fittest” — it is “the survival of the quickest to adapt.”  Small town country clubs are not viable in a modern world of competitive entertainment choices.  The primary function of every business manager is to keep the door open by providing a service at a price that customers are willing to pay for — change is the only constant.

Midwest Entrepreneurs traveled to Burlington, Iowa  to the headquarters of Winegard Industries. Randy Winegard is widely regarded as the premier entrepreneur is Southeast Iowa. He successfully grew a television antenna company his father started into a leader in satellite technology/receiving equipment, launched a successful golf course, numerous real estate developments, restaurants, hotels, entertainment venues such as Fun City, Catfish Bend Casino and many other companies. He believes a leader is someone who is humble, teachable, a good listener, and fair. He believes in rewarding his best people and trusting in good management. “I do not pretend to do all of our major deals or reinvent our manufacturing processes, but I believe in making steady improvement and rewarding those who do”.

Randy took great interest in the entrepreneurs in our class including Will Zimmerman. He asked Will to provide him with his contact information because he wanted to visit his new Grain Bin operation in Avon, Illinois.

Randy has been the President and CEO of Winegard Inc. for over 30 years, after taking the riens from his father when he was 29 years old. “I was given authority over the hotel complex next door after graduating from University of Iowa. I made a lot of mistakes. I did not know a lot but I listen to good people and I learned a lot. I continued that listening and learning into my ventures in other industries. I do not think I have had to go to work a single day in my life. I am passionate about what I do and showing up was never a chore.”

Randy provide a copy of Out of the Crisis to each student. Mr. Winegard believed Deming was brillant and inspirational to him in how to run his company. It changed the course of his life. He went to a seminar in 1984 with W. Edwards Deming. “I became passionate about the process and innovation connected with manufacturing. I do not believe America cannot compete with lower wage nations.  It is our job to find a way to reduce the cost or improve the process or product in order to compete.”

Check out the link for more information on Winegard Industries:

http://www.winegard.com/about/index.php

Kevin Goodwin-Life Sciences CEO shared his story in Midwest Entrepreneurs class in the Library’s Barnes Electronic Classroom.  He also spoke in Dahl Chapel. Below is the review of his speech by Barry McNamara:

After hearing the Whiteman Lecture delivered by 1980 graduate Kevin Goodwin, perhaps Monmouth College marketing officials should borrow heavily from Motel 6 and use a “We’ll turn the light on for you” advertising campaign.

Goodwin, the president and CEO of SonoSite, Inc., a medical technology company in Washington, said a light came on for him during his sophomore year on campus, and he could even pinpoint the place.

“It’s been a long-held dream of mine to come back to Monmouth College to explain what happened to me here,” he told a large crowd in the Dahl Chapel and Auditorium. “Years ago, I had a CEO mentor tell me that what separated me from others was my curiosity. Sitting in that office, I thought, ‘Now where did that start?’”

The title of one his slides – “It all began at Monmouth” – answered that question. Come to think of it, that might be an even better idea for the college’s slogan.

“I was in ‘Intermediate Price Theory’ with Professor (Rod) Lemon,” Goodwin said. “We were learning how to manage a company. Up to that point, I’d been a pretty mediocre student. It occurred to me in that class that I didn’t want to be mediocre.”

Goodwin’s metamorphosis was immediate, and the effects ongoing.

“I got an A in that class, which started a run of 18 As and one B for the rest of my classes at Monmouth,” he said. “And since that time, I’ve never stopped looking to learn.”

Not only has Goodwin enhanced his business administration degree by learning even more about mathematics and economics, he has even studied Brazilian Portuguese because of the vast possibilities he sees in the South American country.

“My curiosity has continued to open doors for me,” he said. “I’ve had epiphany after epiphany.”

One of those epiphanies came while he was still at Monmouth, during his senior year. A member of the Fighting Scots baseball team, Goodwin had the opportunity to attend a lecture at Knox College with Professor Lemon, or to take batting practice with coach Terry Glasgow.

“I told Dr. Glasgow that I was going to attend the lecture, and he was very supportive of my decision,” said Goodwin.

Many good decisions have followed, including a conscious effort by Goodwin’s company “to specialize, to take care of its customers and to keep it simple.” The specialization, Goodwin explained, is in “point of care” ultrasound.

“We ‘democratized’ ultrasound and brought it to everyone,” he said.

The ultrasound industry experienced a positive shift in the 1980s, with the technology increasing to a high level. But there were still problems. Ultrasound machines were large (300 pounds), expensive ($200,000) and slow, requiring two to 10 minutes to boot up. When used in conjunction with emergency medicine, every second counts, and SonoSite’s seven-pound portable ultrasound machines boot up in just 13 seconds, at only one-fourth the cost.

Count the doctors on “ER” among the impressed. Goodwin showed a clip from the popular TV show’s 2005-06 season of medical staff struggling to treat a patient. The doctor played by John Leguizamo “saves the day” with a diagnosis from a portable ultrasound machine, causing Parminder Nagra’s character to simply say, “That’s very cool.”

“Think about careers in the life sciences,” Goodwin told the students in attendance. “It’s an industry with growth promise that is unstoppable.”

He also told them that “this is a great time to be an undergraduate,” and offered the students several tips, including:

• “Find out what you’re passionate about. That stems from curiosity.”
• “The tendency to be ‘always connected’ can actually detach you from reality. Be careful how you let technology use you.”
• “You have to understand data. … Data’s driving everything. You have to be able to take data, make meaning of it and be able to say, ‘Here’s what the facts say.’ You’ve got to be comfortable with statistics.”

Goodwin, who was cited in the introduction as proof that business and science go hand in hand, said that Monmouth College is definitely on the right track with its emphasis on bringing those large disciplines together.

“Integrated learning is where it is going,” he told the students. “Intersecting business and science in your education is a great idea.”

Jump-started by a class he took in 1978, Goodwin’s battery has not had to be recharged.

“I still get up in the morning very excited to go to work,” said Goodwin, whose April 7 lecture coincided with the first day of his company’s 15th year. “It started here. I was vulnerable; as a student, I could have gone either way. I can’t say enough about the Monmouth College experience.”