(This article written by Scott Nelson appeared on Equipment Finance Advisor Oct 28, 2021)

In addition to colorful foliage, fall is the strategic planning season. Most companies operate on a calendar fiscal year so now is the time to revisit or engage strategic planning in anticipation of creating and approving an Annual Operating Plan (AOP) for the next year. They have to figure out which initiatives they are going to engage to win new customers or grow their business with existing customers. Most importantly, they have to plan how they are going to allocate scarce resources – people and dollars – to succeed with those initiatives.

Sounds routine on the surface – review previous year performance and update goals for the coming year. But if you look deeper – behind the financials – at the factors that are influencing trends and transforming industry economics, strategic planning is much more than updating last year’s AOP. Strategic planning should be a roadmap for a company’s future. Compound this with the fact that today this planning is being done in the midst of two major generational transformations – one demographic and one technologic – and the effort can be intimidating. Both transformations are driving change in the equipment finance industry. They are disruptors that must be factored into your strategic planning process immediately.

Demographics – numbers of people – define the size of the markets to be served as well as the human capital needed. The next generation of employees and customers – Gen Y or Millennials – is the largest generation ever at 88 million in the U.S. They are the first generation to grow up connected to an ever-present and ever-expanding digital ecosystem. This technology that Gen Y lives in – an ecosystem known as the Fourth Industrial Revolution or Internet of Things (IoT) – is the first generation of technology that connects everything to everybody and generates data at never seen rates with never before imagined diversity. This generation of technology is exponential in both speed and scale and must be considered by any business that wants to survive.

Gen Y and the digital ecosystem they drive are at the center of an expanding data universe that strategic planners must accommodate and leverage. How does one leverage data? You ask it questions. Data has no value if you don’t ask questions and those who do ask questions of data are the ones who find innovation; the ones who disrupt.

Digital strategic planning is all about asking the data questions; questions about everyone and everything. And there are no “stupid questions.”

Start with the Fundamentals

I was exposed to strategic planning my first year at Honeywell. I was fortunate to work in an entrepreneurial organization of the company that had a strategic mission – develop new technologies for the different Honeywell divisions. After experiencing a variety of strategic planning approaches from leaders across Honeywell, I was again fortunate when my next stop was a product development consultancy led by designers. Designers are inherently strategic thinkers because they’re design thinkers – focused on users and demographics. So I was again living in a strategy-centric culture practicing a variety of methods with many customers.

After all this on-the-job training, using a wide range of planning methodologies, I came to understand that the strategic planning process is not as important as the fundamentals. All good strategic planning is grounded in the mission, vision and values of the company, but after that the strategic planning process must address three fundamental questions:

  1. Who are the customers/markets we serve and what do they need?
  2. What is our competitive positioning?
  3. What culture do we need to succeed?

As a student of strategy, I have learned to answer these fundamental questions with the guidance of seminal strategic thinkers. Their insights help me focus on what matters in strategy – kind of like Newton’s Laws define how things move in classical mechanics. More importantly, they provide a context within which additional questions can be asked of the data that is now part of every business.

Essential Data Strategy Questions
Competitive Positioning
  1. Which of our offerings are most profitable? Which are least?
  2. Which of our offerings are growing? Which are not?
  3. Which offerings have the least churn? Which is the highest?
  4. Where do we lose more than we win?
Customers / Markets
  1. What did our Net New Customers buy last year?
  2. Which of our industries have the highest margins? Are they growing?
  3. How much does it cost us to get a new customer?
  4. In which industries do we have the most Net New Customers? Are they growing?
  1. How do we measure productivity? Did it improve last year?
  2. How much revenue do we get from products/offerings we released in the past 18 months?
  3. How fast do our people advance to the next level in their line of work?
  4. What is our employee churn?
  5. How much does it cost us to get a new employee?

Competitive Positioning

“The essence of strategy is knowing what not to do.” – Michael Porter

Knowing what not to do can be tough to embrace, particularly for sales-lead organizations. But not all revenue is equal and not all customers are equal when it comes to strategy. Fortunately, most of the data needed to answer the relevant questions is found internally within existing operational data streams from the Lease Origination System (LOS), the Customer Resource Management (CRM) system, and results within the Contract Management System (CMS). Most equipment finance companies and banks have tremendous amounts of dark data in these systems – data they own and store but do not analyze. This data can answer questions about growth, profit and customer demand. Companies that diligently document their wins and losses also gather information on competitors and may know more about how the competition is performing than they realize. If they ask, their data will tell them what not to do.

“Don’t compete with rivals. Make them irrelevant” – Kim and Maurborge: Blue Ocean Strategy

Being different and making rivals irrelevant are introspective objectives that require critical thinking. But, again, internal data can shed light on differentiation. Differentiation creates margin - constrained supply can charge higher prices. High churn on an offering usually indicates easy alternatives or lack of differentiation – as with commodities. External data often provides information the competition wants you to have, but good CRM discipline can include a wealth of competitive information on why the deal was won or lost, who else bid and surprises that should not have occurred.

Customers and Markets

“The purpose of a business is to create and keep a customer.” – Peter Drucker

Making and keeping customers is a continuous endeavor. But often the approaches are tactical rather than strategic. Leads are followed and deals proposed. Equipment finance tends to be a high turn business. Some companies may propose hundreds of deals every week. This is good because high turn generates tremendous amounts of data about both customers and their view of the company offerings. Marketing-led companies are constantly sampling the customer space effectively running experiments on whether their offerings are attractive. Past data contains trends that can inform strategy – particularly when combined with technology, market and economic data. This data shows where the company is making new customers and where it is pursuing customers it should not – see “knowing what not to do.”

“Value is not determined by those who set the price. Value is determined by those who pay it.” – Simon Sinek

Creating customer value is a design-centric process. The business must understand customer needs and solve customer problems. Empathy is the operative word. Today data is a tool for empathy, a tool for understanding customers and what they value. Margin is the best measure of both the value of the offering and its differentiation. Indeed, when a business has a very successful, high-margin offering competitors will usually come running with alternatives or lower priced versions. The supplier with the most insight, the most data, on customer needs prevails.

Churn is one of the best measures of the activities of competitors because it measures when a customer finds those alternatives equal or better. Consider an offering that seems to be working because it has a high number of net new customers, but then also has a high churn – a low renewal rate. This is a sign of commoditization; customers clearly have many alternatives and switching costs are low. A high new-customer, high-churn business is one that warrants consideration for “what not to do.”


“Culture eats strategy for breakfast.” – Peter Drucker

“People don’t buy what you do, they buy why you do it. And what you do simply proves what you believe.” – Simon Sinek

“The only sustainable competitive advantage is an organization’s ability to learn faster than the competition.” – Peter Senge

Culture deserves three quotes because it is both complex and the most important factor in strategic execution as Drucker so concisely states. Culture is an intrinsic characteristic of a company so it should not be surprising that internal data from operations holds the answers to most culture questions. Of course, the organization must be interested in its culture and gather the data that measures its outcomes. Mission, why you do what you do, should drive employee engagement which in turn will drive customer engagement. If your organization has a business intelligence framework, which it must, how much time is spent using it? Business intelligence is created by asking questions of operational data. A learning culture – a sustained competitive culture – covets data and the questions it can answer. Innovation in the form of new product sales, increased workflow productivity and employee satisfaction are all measures of culture. Of course, any company that measures culture also encourages it.

Lord Kelvin (1870s) preceded Peter Drucker (1950s) with one of the most important axioms in business – “If you can’t measure it, you can’t improve it.” The good thing about a digital business is that we can measure almost anything. Measures, metrics if you will, are data’s answer to the question “how is that function performing.” Traditionally Drucker’s advice has been adopted and used by business operations leaders. Traditional metrics are tactical. But no more.

Today we have enough data to measure strategy.

Written by

Scott Nelson

President & Chief Technology Officer, Board Member

Scott Nelson is the president and chief technology officer of Tamarack Technology. He has more than 30 years of strategic technology development, deployment and design thinking experience working with both entrepreneurs and Fortune 500 companies. Nelson is a sought-after speaker and contributor on topics related to IoT and digital health. His involvement in technology in the local and national technology community reflects an ongoing and outstanding commitment to technology development and innovation.


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