The MD's / CEO's Handbook Pt.2: Strategy

You have got to know where you are heading or you will never arrive.

That's my simple take. How you are going to get there can change with the waves but however small your business you need a basic strategic grip on the wheel. This may mean at a very basic level having a clear idea what you will do and what you will not.

You don't need a mission statement.

DO NOT outsource this to consultants.

Work it out for yourself: Where is your business going to be in 3 Years? What will it look like? Which roads are going to get you there? Read some books. Read HBR. But keep it as simple as you can.

For us day one it was both complicated and simple. We bought out of a bust plc. and were in too many markets that we simply did not have the right assets or competencies to succeed in.

But there was a distinct difference between the tactical swerves and pure fire fighting that was needed to get us through the first nine stormy months and the strategic moves that trimmed the company down, focused it on three core markets, and more importantly made it cash positive and profitable.

We walked out of the biggest volume market for one of our technologies. Sold some assets.

We even gently eased our biggest customer towards the door! It was just the right thing to do. As I explained to Alex Bellinger a few weeks back, the complexities of our day one financing meant that every time we shipped a truck load of goods to these guys our cash position worsened. Ouch.

So getting off them and on to new business that was a) in the markets we had defined as core b) at better margins than the out going market/customer combination and c) on better payment terms allowed a wave of cash to wash in three months after the final shipment. This was a fundamental chess move in the turnaround plan.

For Severn Delta the churn factor is key. Easing under performing products and customers out the door as newer better performers come in.

We don't always get it right. We got a lot wrong last year to be sure but we always knew which way were heading and this made the corrective actions all the easier to identify and to execute. As a result T/O is up 6.5% yr on yr. YTD PBT significantly more so.

As the MD/CEO of a SME the trick is to keep half my mind on the strategic horizon which sits 18 months away and the other half on the day to day demands of the business.

I am in the process of steering us through another re-focus at the moment. I know what the 2008 results should look like if we just keep doing what we do best and I have a plan of 2009 that gives me a projection of how we will look post re-focus. There are some big plays to be executed to get this right but I have this firmly in my sights.

I know where we are going.

I have a plan for how we will get there.

Everything else is detail and execution.