Define your strengths
When you’re creating a strategic plan, you want to bring in people from different sectors of the business so that you don’t miss potential opportunities — or pitfalls. Hensler gathers Horsehead’s top 20 to 25 leaders and takes them off-site for the strategic planning process.
“It’s good to get away from the distractions that you’re dealing with on a day-to-day basis and try to take some time to focus in on one subject, try to hold everyone’s attention on that,” he says. “It’s hard to do that if you’re in your work environment.”
You can’t underestimate the value of involving a broad cross section of management in the conversation. You’ll get more out of the process if you have an agenda going on that allows everyone time to share ideas. It’s like with dinner guests: If you’re going to invite them to the table, you have to engage them in discussion.
“We try to structure it in such a way that each area has a role to play and a part on the agenda for the meeting we’re involved with, so as part of that process we get input from most people,” Hensler says.
Some aspects of Horsehead’s strategic planning process are fairly traditional. There’s time to review customer, market, product and competitor data. A second aspect includes breaking into small groups to allow for brainstorming and identifying strategic paths for the business that are then analyzed by the entire group.
Hensler says if you’re looking to grow, there really needs to be one focus during the discussion. The main question you must answer is: What are you good at? Ask yourself: What are your core strengths?
“It’s really sort of stepping back with the management team and discussing what is the value generating the work that we do in the business,” he says. “When you say, ‘What is your unit of competitive advantage of the business? What are the things that really make a difference?’ — it’s not a very long list. In most companies it’s only a couple of things. It’s identifying and having that conversation with the management team that identifies what those things are.”
Those questions can be answered through the typical analysis of your strengths and weaknesses. Closely look at your current focus, where your resources are and what areas of the company create the most value for your business.
Hensler and his team looked at their list and asked themselves: What will be the most profitable aspect of the company in the long term? Can we expand our level of activity there? Are our management, processes and procedures strong in that area?
While Horsehead is the largest zinc producer in the U.S., it’s also the largest recycler of hazardous waste, an industry from which many shy away. Trying to move away from zinc’s price fluctuation, recycling became a clear area to diversify. The decision allowed Horsehead to broaden its range of environmental services beyond zinc recycling, which it did with the acquisition of The International Metals Reclamation Co. Inc. (INMETCO), a recycling business focused on nickel.
“When you look at that and say those are really the core strengths you’ve got, now you start looking at businesses that match up against those strengths,” Hensler says. “Also, look at businesses that not only match up against those strengths but provide diversity.”
Your strategic plan is your map for growth, so it must identify the ways in which you hope to grow either organically or through acquisitions. Horsehead’s main goal is growth through acquisitions, so its strategic plan explicitly identifies potential companies to acquire.
“Part of our strategic planning process is to be identifying target opportunities like that so that when the time is right you’re not just then starting to think about those things,” Hensler says. “You want to be more proactive about it.”
No matter how you plan to diversify, you need to come into the planning process well researched. Hensler uses a combination of experience, external resources and networking, when identifying companies that might be opportunities for acquisitions. He relies on his more than 30 years in the metals industry, his placement on national and international boards and the networking of his management team to keep ears on possible future company matches.
“The other thing we do, though, as part of our strategic planning process, we commission third parties and investment bankers to do studies for us, and in some cases, ideas flow out of that,” he says.
As ideas are shared among your staff throughout the strategic planning process, certain themes will become clear to include in the final version of your plan. You need someone who can take those themes and develop a direction that is then placed in written form. Hensler takes charge of the process.
“Usually, I’ll take a first stab at listening to what I heard and putting together a plan based upon that, sort of setting down some guidelines as to how we would move forward,” he says. “You start out getting a lot of input, you try to condense that down into the key things that are going to be part of your strategic plan … and then you bounce that back to people in the organization.
“It’s a bit of an iterative process until you get agreement that says, ‘This is the way we’re going to move forward.’”
