CSSP - Course and Direction

Can you describe the current strategic situation in the automation industry?

In the industry as a whole, orders are off overall by a little over 35% from 2001, which was already a down year.

Customers have found that being bigger gives one great leverage in purchasing, so we find that consolidation of our customer base has been a key issue for us. This has led to quite a bit of commoditization of some product areas that were novel and high-tech a short time ago.

There has been some consolidation in the supplier base as well, but more importantly, much Machine tool business has left the USA in the last 15-20 years. Much of the machine tool work we saw in the US in 1970 has gone to Japan and Germany, and overall ownership of the manufacturing supplier base has shifted to those countries as well.

Finally, basic manufacturing technologies such as grinding, milling and turning have been somewhat displaced by new processes like laser, EDM, and water jet cutting.

Automation is a fairly broad field. How do you avoid trying to be all things to all people?

You almost need to suffer from something cataclysmic to drive you to think strategically. Once you start thinking strategically, you can see the benefit of focusing your business on leveraging technology and capabilities that will allow you to dominate the marketplace. It will also drive you to opportunities that are less fraught with me-too competition and commoditization, which drives better margins. We found in our analysis of our strategic planning homework that we just didn't belong in some markets.

How has Simplified Strategic Planning changed your company?

We are capable today of walking away from a business opportunity that doesn't fit our strategic focus.

It has taken some time, but we have gotten to the point where we recognize that our profitability is highest when we focus on our competencies. Once we understood this, it was pretty straightforward for our strategic planning to identify the markets, processes and technologies that are most beneficial to the company, and then for marketing to process all of the opportunities so that the resulting list of contacts represents real opportunities for our business. This is very different from the way we used to do business, which was to take any business that came our way. Today we proactively target chunks of business that we know will fit our strategic competencies, and have a much more efficient and effective sales process as a result.

Is there one part of the process that you have found particularly valuable?

Strategic focus has been very important to us, but the entire approach, as defined by CSSP, appeals to the engineering mind because it uses a well-structured process to drive towards a conclusion that takes all of the available data on markets, competition, and your company into account. We have gotten tremendous benefit from examining how our customers and market segments relate to our unique capabilities and areas where we get higher margins. This has really given us a fantastic blueprint for "What you should do more and less of".

Some of the segments you participate in have changed dramatically in a very short time. Do you find that planning helps you to deal with really rapid change?

There are places where you want to go (are well suited to go), and some places where you don't want to go. The simplified strategic planning process gives you mile markers that you can use as guides in unforeseen eventualities. After 9/11, our plans clearly had to change, and the structure of the simplified strategic planning process made that change much easier.

How has the process changed for you in subsequent cycles of planning?

We've gotten a lot better at it because planning is becoming less of a drill and more of an understood process. We really understand what we are doing, and we aren't just checking off the boxes in the process. We spend more time reviewing our strategies and objectives in between planning meetings because we find it's really useful to remind yourself about why you are doing things rather than just focusing on the action plan. This shift in attitude has led to much better implementation of our strategic objectives.

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