MARATHON READY

MARATHON READY

As The Strategy Guy, I believe that successful businesses in the coming months and years will be the ones that play the percentages and are ready for a marathon.

Today, I want to share three ideas around costs.

1. ABC

More than ever, business owners need to adopt Activity Based Costing (ABC). ABC ensures alignment between our cost base and our value-driven activities. ABC requires us to apportion percentages of our fixed and variable costs to the value-adding aspects of our business that incur them.

Using ABC means some parts of your business may die and other parts will thrive. Ongoing payment for resources, subscriptions, services and supplies must be justified. Costs are incurred for value-driven activities. Costs are switched off when they no longer add to the bottom line.

 

2. War Chests

It’s never too late to start creating a War Chest for your business. If this pandemic becomes protracted, many bets will be off and cash will be king.

 

3. R&D Investment

If you can, avoid reducing the percentage of your earnings invested in R&D and innovation.

A marathon runner always drinks and eats a little during a race.

The most profitable businesses in the world invest 10% to 20% of their earnings in R&D. During times of reduced earnings, keep these percentages alive or allocate a higher % to R&D. And of course, make sure you manage this investment well.

Stay tuned for more on marathons and percentages from me next week. I will be sharing more on managing the mix of people, cash and innovation plus covering the critical topic of decision making in times of uncertainty.

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About BLOG Author | John Hale – Strategic Futurist Speaker

John Hale is the founder of Hale Consulting Group and author of The Strategy Book. John has worked as an early stage investor and advisor for over twenty-years. He has worked with leaders from Fortune 500 and mid-sized companies to start-ups and public sector organisations. John has been a Visiting and Adjunct Professor teaching strategy, entrepreneurship, project management and ethics at various institutions including Singapore Management University, Bond University and Melbourne Business School.

John’s popular conference talks include:

Future-Proof – Create a strategic mindset
Future Customer – Shift loyalty to your brand
Future Culture – Nurture workforce talent
Digital Futures – Grow digital wings

If you feel it may be time change your strategic approach, contact me at john@halecg.com, to schedule a free thirty-minute phone call, to help map out your next steps.

2020-04-02T13:18:50+11:00Categories: Events, Strategic Planning, Strategy|

HORIZON ONE STRATEGY

WHAT IS AN HORIZON ONE STRATEGY?

Horizon One Strategy is about taking care of and leveraging the core business.

The Strategy Book (available at halecg.com) contains 18 strategic planning tools to help you cultivate a strategic mindset and future proof your business.

One of the 18 tools is the Three Horizons Framework by McKinsey & Co.

Every forward-looking business needs to consider three future horizons. For many businesses right now, Horizon One Strategy is consuming all their energy.

HORIZON ONE STRATEGY

Horizon One Strategy is about taking care of and leveraging the core business. 

To do this well, we need to understand the importance of things like cash flow, asset performance and profitability. 

Indeed, maximising performance from our core business helps us build cash reserves and a beautiful war chest, in case something expected or unexpected comes flying in over the horizon.

QANTAS (QAN) HORIZON ONE STRATEGY

As I start to open my war chest and begin inspecting the emptying tide and plethora of buy options on global stock markets, I dropped QAN into one of my watch lists.

On 19 Dec 2019, QAN Shares were $7.40

Today QAN went to $2.05.

With cash reserves of around $100M and share-value now falling from $2B to $1B, Qantas must navigate cash flow, asset performance and profitability very carefully. 

QAN earnings (EBIT) last year were a handsome 8% and excellent for their industry. I expect that many airlines will go belly up in the coming year and a quick inspection of the most recent QAN Financial Statements is encouraging. 

A shock such as this pandemic has been part of QAN past risk scenario work, and the flying kangaroo has been quick to pivot, by reducing overheads, variable costs and workers, and carefully storing surplus aircraft and keeping engines operational. 

What future scenarios exist for your business?  

How will you pivot?

How has the recent royal commission, bushfires, drought, floods and pandemic impacted your industry?

What is your Horizon One Strategy?

 

About BLOG Author | John Hale – Strategic Futurist Speaker

John Hale is the founder of Hale Consulting Group and author of The Strategy Book. John has worked as an early stage investor and advisor for over twenty-years. He has worked with leaders from Fortune 500 and mid-sized companies to start-ups and public sector organisations. John has been a Visiting and Adjunct Professor teaching strategy, entrepreneurship, project management and ethics at various institutions including Singapore Management University, Bond University and Melbourne Business School.

John’s popular conference talks include:

Future-Proof – Create a strategic mindset
Future Customer – Shift loyalty to your brand
Future Culture – Nurture workforce talent
Digital Futures – Grow digital wings

If you feel it may be time change your strategic approach, contact me at john@halecg.com, to schedule a free thirty-minute phone call, to help map out your next steps.

2020-03-24T13:28:22+11:00Categories: Events, Strategic Planning, Strategy|

SPEAKING | INDUSTRY ATTRACTIVENESS

The Strategy Book contains 18 strategic planning tools to help you cultivate a Strategic Mindset and future proof your business.

One of the 18 tools is the Industry Attractiveness Model by Harvard Professor Michael Porter.

From time to time every business needs to review the attractiveness of the industry in which they are operating. The various forces that make up an industry change over time. When all the lights are green, industry profitability is high. When all the lights are red, profitability disappears.

A quick snapshot of the Professional Speaking industry at the moment reveals that due to a number of factors, including the travel restrictions around the coronavirus, personal speaking is not as attractive as it was 12 months ago.

How has the recent royal commission, bushfires, drought, floods and pandemic impacted your industry?

 

About BLOG Author | John Hale – Strategic Futurist Speaker

John Hale is the founder of Hale Consulting Group and author of The Strategy Book. John has worked as an early stage investor and advisor for over twenty-years. He has worked with leaders from Fortune 500 and mid-sized companies to start-ups and public sector organisations. John has been a Visiting and Adjunct Professor teaching strategy, entrepreneurship, project management and ethics at various institutions including Singapore Management University, Bond University and Melbourne Business School.

John’s popular conference talks include:

Future-Proof – Create a strategic mindset
Future Customer – Shift loyalty to your brand
Future Culture – Nurture workforce talent
Digital Futures – Grow digital wings

If you feel it may be time change your strategic approach, contact me at john@halecg.com, to schedule a free thirty-minute phone call, to help map out your next steps.

2020-03-24T12:58:32+11:00Categories: Events, Strategic Planning, Strategy|Tags: |