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Welcome to Strategy Matters, a quarterly newsletter from Markstein Consulting, LLC, a strategy management firm. We are excited to share with you the first issue of our newsletter, and hope that you will find the series interesting, relevant and informative.

Business challenges can lead to operational opportunities, if they are managed strategically. From our perspective, viable management strategies and proactive attention to each critical business function can minimize the negative impact of potential barriers to success, and often can transform obstacles into opportunities.

We believe that the following three tenets are true:

Strategy management and proper tactical execution are critical to advancing sustainable business success.
An integrated approach to strategy management generates the greatest potential for a positive impact on the bottom line.
The probability of a company's success directly correlates with the executive team's commitment of time and resources to strategy management.

Our newsletter will offer insight into many business issues that drive these tenets. Please contact us if there is a particular issue you would like to see addressed in a future newsletter, or if you have questions about something you read in Strategy Matters.

Best regards,

Danny, Marc and Eileen

Succession plans can sustain success for businesses

During the next decade in the U.S., more than $12 trillion in wealth will be passed from one generation to the next, much of it through the transfer of family businesses. However, many successful and sustainable family-owned companies fail in their second and third generations: 70 percent of first-generation businesses fail to survive the second generation, and only 13 percent of those carry over to the third generation. To ensure the smooth transition in your business' leadership and/or ownership, it's necessary to plan ahead. When succession plans are absent, family businesses face increased risks of faltering.

Succession planning is a valuable defense against business closure, and can also carry positive tax implications. Planning for management succession protects a company's heritage, tradition and financial resources. Businesses controlled by the founding family often have greater value, are operated more efficiently, and carry less debt than other firms.

More than 80 percent of American companies are family-owned, generating 50 percent of our gross domestic product, 60 percent of total employment, 65 percent of all paid wages and 78 percent of job creation. But these businesses are extremely vulnerable during generational transition. The risks are numerous: disruption of continuity, destruction of the family's "fiber," sibling rivalries and personality conflicts.

Some family members may not be best qualified to manage the business, and some decisions will be less than optimal, while other decisions may be better than those that exiting managers would have made. Ultimately, the exiting manager must understand that it is someone else's turn to run the show.

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Danny Markstein

Marc Bromstad

Don't forget to link corporate strategy with execution

Corporate strategy is often perceived as being developed in the executive suite, documented in a 30-page plan and placed on the shelf to collect dust for a year. But while the strategic plan is the logical conclusion in the strategic planning process, it does not end here. And it should not remain on a shelf as a mystery to the employees that will ultimately deliver on and execute against the plan.

Successful companies have placed increasing emphasis on the implementation of their strategic plans and consistent delivery on the activities that will position them to exceed their strategic goals. Execution of the strategic plan requires an understanding of where a company is, where it needs to go, how it will get there and activities that will drive its progress.

Aligning intent and resources
A poorly implemented strategic plan will not result in the long-term success a company desires. Each strategy must be aligned with the company's functional units, as they are responsible for the day-to-day execution of the strategy. The keys to aligning the strategic plan with functional units include:

Operations. Understanding how a company's manufacturing, distribution, information technology and processing activities support your strategic objectives will help you decide where to allocate future resources and attention.

Organizational Dynamics. Employees are a company's greatest assets and hold the keys to delivering on its strategy. They must be empowered to deliver on its objectives by providing the skills, tools, training, resources and encouragement necessary to exceed customers' expectations.

Marketing/communications. Your company should take every step possible to ensure the right corporate and product message gets to the right audience at the right time. Effective alignment of marketing initiatives with corporate goals will result in a strategic outreach program that is best positioned to influence customer buying decisions.

Finance. Frivolous spending on activities not core to the company's strategic intent will destroy value and leave less capital for investing in value added activities. Proper alignment of its budget with its strategic goals will ensure spending is allocated towards those activities that will give the company the best odds of delivering on its strategic intent.

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Does your company deliver on its brand promise?

In today's business environment, we are, in many ways, dealing with brand overload. Brand representation is everywhere you look. Athletes wear brand name shoes and clothing for hefty fees, Web sites barrage you with advertisements and companies spend millions on corporate sponsorships. But before you set about developing or enhancing your company's brand, it is helpful to rethink the concept of branding and how it applies to your business.

It can be argued that a brand exists when consumers purchase a brand regardless of price or convenience, when the brand is recommended by customers to friends, or when an emotional connection deeper than the product function exists with the customer. But what is that connection? And what is the right connection for your brand to make with your business' prospects and its broader audiences? How does that connection get made? Before jumping on the "brandwagon," you must have a strong understanding of the strategic direction in which you wish to take your business.

Building a brand without linking it to your corporate strategy is a common mistake made by organizations big and small, public and private, nonprofit and for-profit. A brand must support your organization's strategy, not define it. It should align the expectations behind the brand experience with delivery of the brand promise.

In this day and age, when everyone suffers from some degree of sensory overload in the marketplace, creating a brand is more important than ever. However, when branding efforts move forward independent of an organization's strategy, or its vision of the future, a disconnect results; and it becomes impossible both to deliver on the brand promise and effectively to accomplish strategic goals.

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Eileen Markstein