This is how a good strategy is formulated

Successful companies always have a variety of specialties, and among these, a sound corporate strategy is often essential. It keeps the business on the right path, moving forward at the right pace. In this regard, Emerson is undoubtedly the leader. Emerson is well known to the world for its splendid record of increasing dividends per share for 53 consecutive years. The achievement of this brilliance is due to Emerson's long-term high attention and continuous exploration of corporate strategy formulation.

Everyone Involved in Strategy Development

“It is no coincidence that the record of sustained growth in annual earnings began in the mid-1950s, and it was during that time that Emerson began to really focus on corporate strategy development.” Emerson Charles Knight, the company's former chairman, once said. Obviously, this fact shows that a sound corporate strategy is a golden key to open the door to the healthy development of an enterprise.

However, how can a company ensure that the development strategy it has formulated can really play a role, so as not to work hard and end up with half the effort? Emerson's experience tells us that when developing a corporate strategy, all forces within the enterprise must be involved.

“At Emerson, the strategist is also the executor of the strategy. Everyone has the opportunity to express their opinions in the process of strategy formulation, and can have in-depth discussions on the direction, goals, and ways of achieving the strategy.” Ren Jinhan, former president of Emerson Greater China, told reporters.

At Emerson, the process of corporate strategy formulation is often an interactive process. Whether it is industrial R&D, production, supply chain management, or marketing and sales, everyone can put forward their own ideas. Even front-line operators can come up with their own ideas. Taking Emerson's factory in Jiangmen, Guangdong as an example, when formulating corporate strategies every year, front-line operators will put forward a lot of opinions, of which about 65% will be adopted to varying degrees. Statistics also prove that many of these opinions are adopted. Opinions have played a significant role in reducing costs and improving efficiency. For those employees who actively put forward opinions and make contributions to the enterprise, the company will also give various forms of praise and rewards.

As for Emerson's corporate culture that emphasizes communication, Ren Jinhan further introduced: "Employees are the biggest driving force for the development of the company, and communication with employees is an important part of promoting the development of the company. Emerson will require each supervisor to formulate an annual The annual communication plan ensures that employees can clearly understand the company's situation. When submitting the plan, each supervisor must write clearly which employees have communicated with which aspects of the plan. In Emerson, these are required. In order to I was able to communicate with more employees. At that time, I would find one day a month to have a discussion with the employees, to inform the employees of the company's situation, and to answer various questions raised by the employees. No matter which department or level you are in, Everyone has the opportunity to communicate with me. There were more than 100 employees in the office where I worked, and I communicated with them all."

In addition to the interaction between management and employees, Emerson also attaches great importance to the head office and subsidiaries communication between. When a subsidiary makes its own development plan, the head office will send high-level officials to participate in it to ensure that the plan can achieve better results. The senior management from the head office will question the management team of the subsidiary at the strategic level of the entire group to determine the key problems and challenges faced by the enterprise, and formulate relevant countermeasures to deal with these problems and challenges, so as to ensure the strategic strategy of the subsidiary. Able to align with the strategy of the head office. At the same time, the managers of the subsidiaries can also take this opportunity to communicate directly with the top management of the head office, and transmit various new developments and information about customers, competitors and the market to the highest level of the group, so as to serve the head office level. Strategies to provide reference.

It is worth mentioning that although the tone of the subsidiary planning meetings at Emerson is adversarial, the actual communication style is not as rigid and serious as we imagined. As long as it helps communication, any occasion can Can be a good place to communicate with each other.

"At meetings we have more heated arguments, but not all issues can be resolved there. For example, when I have difficulty exchanging ideas with someone at a meeting, I will spend more time at meals. Take time to talk to him," said Charles Knight.

Good strategy requires good management and control

The good interaction between all levels of the enterprise enables Emerson to brainstorm in the process of formulating the strategy, and finally obtain a set of enterprise development strategies that gather the wisdom of all parties. On this basis, the good execution and timely adjustment of this strategy have finally created the brilliance of Emerson's continuous growth for more than 50 years.

When a strategy is developed, it is followed by control over the execution of that strategy. At Emerson, this action typically begins at the subsidiary level first. Throughout the fiscal year, the presidents of each subsidiary submit a monthly President's Operating Report (POR). The focus of the report is to summarize the subsidiary's achievements for the month and paint a picture of the outlook for the next three months. In addition, the plan for the next six months or even the entire fiscal year will be updated and supplemented.

For many companies, the company budget plan is often stagnant. Once formulated, there are few adjustments. The company's annual performance will also be assessed against this budget plan. But at Emerson, it's a completely different approach. For Emerson, the lifespan of a budget is always only one month. With monthly PORs, businesses continually make adjustments to their budgets. In this regard, Charles Knight explained: "POR gives us a good understanding of how the business evolves each month and reminds us to make changes in time. For example, if we notice a problem with the revenue of a subsidiary or business, we will The original plan will be revised to recover losses in other ways, so that we can still meet the company's EPS commitment."

In addition, at Emerson, each subsidiary will establish its own management committee, which is composed of members. Including the president of the subsidiary and several senior executives of the subsidiary. The committee meets 6 to 8 times a year to evaluate financial performance and review the implementation of the annual strategy, so that the top management of the subsidiary can keep abreast of the risks it faces and the benefits that can be achieved if the strategy is realized.

Monitoring of strategy execution is not limited to internal subsidiaries; Emerson's strong tradition of interactive communication also plays an important role. Each quarter, the presidents and CFOs of each of Emerson's subsidiaries are called to the company's headquarters in St. Louis to meet with business leaders, COOs, CFOs, and other corporate leaders to discuss short-term operating results. “We call such a meeting the President’s Council. The meeting will evaluate the performance of the current quarter and look ahead to the goals and opportunities for the next quarter. The progress of the four or five most important strategic actions in this fiscal year will be Special attention was given to the meeting," explained Charles Knight.

In addition to the quarterly president's meeting, Emerson has established the Office of the Chief Executive Officer (OCE) at the corporate level, consisting of the CEO, president, COO, CFO, and senior executive vice president, which is held annually 10 to 12 meetings, with the help of the president's operation report, the memorandum of the president's meeting, etc., to evaluate the various situations of the subsidiary and the head office in the process of implementing the strategy.

In addition, OCE holds regular conference calls with all of its subsidiaries, again to enhance two-way communication. The executives of the subsidiary can take this opportunity to report to the head office on the implementation of the strategy, including the specific progress, some obstacles and problems encountered in the implementation. At these meetings, the top management of the head office will also share some strategies at the group level with the management of the subsidiary companies on a case-by-case basis.

“It may seem out of place to spend so much time managing strategy, but that’s how we work. revise and adjust the strategy according to the situation,” said John Bella, president of Emerson Process Management.