How to Conduct an Effective Strategy Session for a Shoe Business?

Every business owner imagines a cloudless future for their company something like this: high profits, ideal employees, loyal customers, competitors biting their elbows, and market conditions that are favorable specifically for their company. Want to get closer to your dreams? Turn them into goals, says fashion business management and development expert and regular SR contributor Maria Gerasimenko. And achieving any goals requires developing a strategy. Today, it is important to understand that strategy is vital for any business - from microenterprises to large holdings.

Maria Gerasimenko -

CEO of Fashion Advisers and the first online school for fashion business Fashion Advisers School, expert in business management and development, business coach. Fashion business management experience - more than 12 years. Successfully defended 2 MBA dissertations (Mirbi International Higher School of Economics, Russia, Moscow, 2013) and London Metropolitan University (Great Britain, London, 2017)

Main areas of activity: strategic and anti-crisis management of the shoe business, assortment matrix management, development of motivation programs, conducting trainings in the field of management, service and sales. Clients include: Unichel, Tamaris, s'Oliver, Kotofey, Rieker, Sinta Gamma, Helly Hansen, Rusocks and others.

A goal differs from a dream in that it is measurable and time-bound. To achieve a goal, you will need a strategy.

It is the strategy that answers the main question: “How, by what deadline and at what expense will we achieve the goal?”

It is important to understand that strategy is vital for any business: from micro-enterprises to large holdings.
Strategy - a plan for the long-term development of a business with a planning horizon of 3-5 years, which should lead the company to significant success, that is, to its qualitatively new state in relation to its role and place in the balance of power in the market at the present time.

Lesser known definitions of strategy:

1. A bold and ambitious super-task with a 3-5 year horizon.
2. The leap that a company intends (or is forced) to make in order to take its business to a qualitatively new level.
3. A way to solve an existing problem of the company or an impending but not yet identified problem of the company.
4. A method of increasing the capital of owners or ensuring its stabilization and preservation.
5. Strategy is three components: where we are going, where we are not going, what we are stopping doing (this is often the most difficult). Check your strategy for triviality - is it possible to make an alternative through "not", for example: "Our company must provide the best service - this is not a strategy, we have no alternative." A more correct formulation for strategy is: "Our company cannot not provide the best service in order to achieve the set goal."

The strategy includes:

• Point A: Analysis of the performance indicators of the current state of the business.
• Point B: A measurable goal or state that the company is striving to achieve.
• Resources, deadlines, ways and means of transitioning the company to the desired new state.

The main indicator of the effectiveness of a strategy is the value of the company.

Why is this indicator so important, even if no one is going to sell the business? The reasons are as follows:

• The owner has invested money and wants to know how it works (whether it brings the expected profit).
• The owner wants to be seen as a reliable and long-term partner.
• The owner does not want to lose the competition to attract capital in a rapidly growing market.
• The owner, in order not to miss out on worthy managers, wants to use options.

How to calculate the value of a business?

There are different schemes for calculating the value of a business. I will tell you about the method that is more suitable than others for assessing the effectiveness of business management. This is the direct capitalization method, taking into account the company's growth rate. With positive growth, profit, like the value of the company, will grow, with negative growth, it will decrease.

Business Value = Company Revenue / Capitalization Rate

In this formula, the company's income can be represented by the company's net annual profit.
The capitalization rate is calculated as follows:
Capitalization Rate = Discount Rate – Projected Earnings Growth Rate

The discount rate is a forecasting tool that allows you to estimate the profitability of future investments and consists of 3 elements:

• Risk-free rate - interest rates on instruments with a minimum level of risk: rates on bonds, deposits of systemically important banks, or the key rate of the Central Bank. At the time of writing (June 18, 2024), it was 16%.
• Inflation. In June, according to official data from the Central Bank of the Russian Federation, it was 7,4%.
• Risk premiums are add-ons to the level of risk-free rates. These can include factors such as country risk premium, industry risk premium, and individual risk premium.

In addition to the value of the business, the strategy may have other measurable performance indicators:

- Traffic; 

- Unit per transaction (UPT);

Advertising

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 - Average purchase value (APV); 

- Conversion (CR – conversion rate);

 - Mystery shopper assessment; 

- Customer loyalty index (NPS – net promoter score).

How does the team help develop and implement strategy?

A strategic session is the most effective option for preparing, developing and implementing a strategy. This format of work helps to engage the team, interest them in the company's changes and motivate them to make efforts to achieve the desired results.
This is a teamwork format for key managers, specialists and the owner, aimed at developing a development plan for the organization for the next 1-3 years. Conducting strategy sessions is especially relevant for companies that have encountered uncertainty in the market: the target audience, consumer behavior, market conditions are changing, new competitors, technologies or business models are emerging.

Objectives of the strategic session:

1. Identify opportunities for business development based on an analysis of the company's internal indicators, market conditions, current trends and the collective thinking of the team.
2. Formulate the vision and strategic goals of the company for the next 1-3 years.
3. Confirm strategic goals within the management team.
4. Review and approve key decisions, such as: changing the business model, expanding into new markets, expanding the product range, opening new outlets and changing marketing policy.
5. Attract key employees and make them co-authors of significant changes in the company.

Preparing for a strategic session

Before the session, it is necessary to conduct an internal analysis of performance indicators and collect current data on competitors and the market. Analysis of company metrics will give the company a powerful incentive and resource to motivate the team to make changes.

The minimum set of analytics should include:

1. Current business performance indicators in all areas of activity.
2. From the owners: vision and strategy map (filled out jointly with the consultant).
3. Strategic objectives of the company in the area of ​​management, competition, consumer trends.
4. Worksheets.

You should also prepare data on the market, target audience and competitors. It is best if some of the data is prepared by key employees who will take part in the strategy session - this will increase their involvement and confidence in the reliability of the information.
All analytical data should be visualized (graphs, diagrams) to facilitate perception. The architecture of the strategic session is built on the basis of the prepared analytics.

Conducting a strategic session

The important principles for conducting the session are:

1. Mandatory participation of business owners.
2. Understanding the company's current problems. Identifying the problem area and determining the relationship between problems.
3. Building a program based on the desired result.
4. Careful preparation and analytical work of the team 3-5 weeks before the strategic session.
5. The process of preparing analytical reports takes place with the support of an external consultant (strategy session leader).

A strategic session usually lasts 2-3 days (20-30 hours). The first day is devoted to summing up and strategic analysis based on the prepared reports.

The second day is about agreeing on a vision of the future, goals, defining a strategy for achieving goals and an action plan for the next 1-3 years.
After the session, it is important to systematize the solutions developed and plan their implementation. Changes will be required in the management system, business processes, reporting system, remuneration system and the system of regular meetings to track the achievement of goals. It is also recommended that the business owner be accompanied by an external consultant to solve problems that arise during the implementation stage.

To sum it up, I would like to emphasize that a strategic session is an effective but complex tool that requires careful preparation and professional implementation. By following the recommendations in this article, you will be able to use the resource of a strategic session for your business in the most efficient way.