What you will learn from this case study:
- A look into the structure for developing a strategic off site event
- How Strategyzer tools can facilitate productive strategy conversations
- The importance of senior leadership involvement to encourage strategic alignment
- The importance of achieving a shared language and understanding before embarking on strategic business goals
- Leadership is key to participating and endorsing strategic alignment within the company
Aggressive growth targets despite internal & external challenges
In 2012 Toyota Financial Services (TFS), the finance subsidiary of the Toyota Motor Corporation, was under a lot of pressure. The parent company had recently experienced a substantial number of automotive recalls; the external business environment was transforming; and TFS was struggling with internal political and cultural issues. Amongst all of these challenges, TFS CEO George Borst was going to ask the company at an upcoming strategic offsite to double profits in five years without increasing spending.
Ann Bybee, TFS’s Vice President of Strategic Planning, was put in charge of designing a two-and-a-half-day strategic conversation to address the organization’s challenges and objectives. Bybee and her committee wanted the session to be collaborative and engaging but also focused around the goal of increasing profits. The group knew they needed to prepare something that would help participants to both visualize the challenge and equip them to design the business of the future.
There was a curse of knowledge with plans on top of plans, spreadsheets on top of spreadsheets, metrics on top of metrics, scorecards on top of scorecards; a lot of business plans, and everything [had to] come from a trend report.”
In the past, many intelligent people at TFS had tried to take a future focus, but TFS' traditional processes and tools consistently failed them when they tried to come up with new disruptive opportunities. As one person put it, "There was a curse of knowledge with plans on top of plans, spreadsheets on top of spreadsheets, metrics on top of metrics, scorecards on top of scorecards; a lot of business plans, and everything [had to] come from a trend report". The committee knew that TFS' traditional methods of innovation would not be enough to move the company towards its future goal of doubled profits.
Because the organization was so new to the tool and concepts, the committee enlisted outside help from facilitators to ensure success for the task ahead. They brought in Lisa Kay Solomon, a best-selling author and strategy coach who had a long history of working with Toyota Financial Services. The committee also brought in Patrick van der Pijl who had extensive practical experience using the Business Model Canvas, and helped produced Business Model Generation.
Pre-workshop: Executive alignment
The committee, along with Solomon and van der Pijl decided to do a pre-workshop session with a small group of key leaders from a few business units. This would be a test-ground to see whether Strategyzer’s tools would even work with the executive team at the offsite. This small group spent a day and a half creating Business Model and Value Proposition Canvases depicting the current state of TFS and its customers.
Bybee and her committee learned during the pre-workshop session that there was a lack of agreement and understanding of the current business model amongst the leadership. Without this alignment, the executive team would be unable to design a strategy that could move the company forward.
To get creative juices flowing, and to sync the leadership, participants in this session were asked to ideate around ways the executive team could growth the business over the next five years. Bybee’s committee stood up an internal web portal for executives to submit possible ideas around increasing revenues, optimizing resources, and managing costs.
The committee did everything they could to remove barriers and provide incentives for executives to submit objective ideas. Over 60 new ideas surfaced through these discussions which fell into four main themes:
- Refine its insurance offering
- Become the financial brand of choice for consumers
- Cut operational expenditures by half
- Surprise its dealerships with totally new products and services
These four themes would be where the executive could focus its innovation efforts. The committee was now aligned on a strategic vision which helped to bring clarity for the challenges ahead.
Day 1: Current business model alignment
To start, the committee had everyone practice mapping out a business model they were familiar with. This would help the larger group of workshops participants, with no exposure to Strategyzer’s tools, become familiar with how to use them.
Participants were then split into smaller cross functional collaborative teams. Each team had a mixture of executives, management committee members, and employees from different parts of the business ensuring that different perspectives were brought to the table. Each was given a Canvas and was asked to put together a current state business model of TFS. This exercise was done to show that there was a lot of misalignment around the current TFS business model.
The first day was a real eye opener for everybody. As Solomon put it, "There’s nowhere to hide and there is no more lobbying when the facts are on the wall."
The group realized they lacked consensus on who TFS' primary customers were. Sensing that this was an urgent matter, the workshop facilitators used the Value Proposition Canvas to help the group push forward and focus on three specific customers: external dealers and end customers, and the internal Toyota Motor Sales group. The participants were not only starting align around the current TFS business model, they also had clarity on which customers to focus on. This would not have happened without the visual tools forcing the group to ask and respond to the questions presented by the Canvases.
Participants were then shown the 60+ ideas from the ideation portal. They mapped the ideas against the canvas making it very clear to the group that the ideas and initiatives generated fell squarely on the left hand side of the canvas (infrastructure side) but didn't do a whole lot to improve the right hand side (value side) of the canvas. There was too strong of a focus on cost cutting with very little focus on real value creation for customers and for the company. Solomon and van der Pijl also helped the group to visualize the real size of their ideas. The majority of the ideas only resulted in small, incremental improvements having very little impact on revenues or even on costs.
Day 2: Ideate future business models
Workshop teams were guided to generate new business models that would get TFS closer to its goal. Facilitators used a series of "What If" questions as well as the four themes that had emerged from the ideation portal as a foundation for designing the new business models. The teams went through a series of ideation and innovation exercises that challenged teams on their models and encouraged them to think bigger and differently. The teams were also required to make sure that the left and right sides of each of their canvases were more thoughtfully tied together around creating, delivering and capturing value.
Close to the end of the day, each team selected their best idea for a new future business model. Each team then presented their ideas on stage and told their peers what they liked and disliked about the new model that they had created. The audience then had a chance to rate each idea as if they were the CEO allocating funds only to the models that would result in doubling profits.
By the end of the second day the group had conceived four, very concrete models for moving the company forward across the four themes.
Day 3: Action planning for future state business model
On the third day the teams took the outputs from the current and newly formed future state canvases to conduct a simple gap analysis.
At the end of the off-site, everybody from the CEO on down was aligned around their new strategic goal and around their newly conceived plan for getting there.
The canvases illuminated exactly where TFS needed to focus its resources and investments. TFS could now also build the necessary capabilities to close the gaps between current and future state business models. The teams then created actionable execution plans and a three year roadmap for implementing their new strategic plans. Ownership and accountability was also assigned and established for critical executives and managers to take these projects forward after the off-site.
Borst closed up the off-site by endorsing the session and the new tools in a very real way. He emphasized that the off-site was not “pie in the sky” and that this work had to continue on a regular basis in order for TFS to get to where it needed to go. He went on record saying that his job was to enable the executive team and managers to continue doing the work that was done during the off-site as their new day jobs.
Beyond the session: canvases are a reference for all work
With executive level endorsement and participation, the new business models created at the off-site became guiding documents for TFS' other plans and investment roadmaps.
Executives and managers have now aligned different business units to the new models and have aligned other tasks that are going on in the company with certain building blocks in their Canvases. Some executives now require their teams to develop new business strategies and funding requests using the Business Model Canvas as their foundation. The Canvas has also become the basis for conversations between internal business groups and partners as well as for long term business unit planning.
Everybody is now speaking the same language and is socialized around a framework that allows strategic conversations to push forward in a much more effective way. Any member of the executive team can now see a business requirement from the top and visualize how it will be delivered all the way down at the bottom.