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The One-Page Strategy Guide

The strategic-planning summary that helps one company decide which market opportunities to pursue.

The strategic-planning summary that helps Cin-Made decidewhich market opportunities to pursue

To hear CEO Bob Frey talk about his small-company experience, you'd think he'd completed a 12-step program for Mom'n'Pops Anonymous: "I had worked for a big consumer-products company most of my career and had been known as an excellent strategic planner. Yet here I was, a failure. The problem was, I was sick of bureaucracy, so when I bought my own company, I started keeping things in my head. I lost sight of some valuable disciplinary techniques."

Before Frey decided to take control of the destiny of Cin-Made, a Cincinnati-based maker of paper and cardboard packaging he purchased in 1984, he was a man without a plan. His company bumbled through the marketplace, barely able to cope with change. He finally stood up and took notice when the company's margins dwindled to paper-thin proportions, in 1987. Five years later Cin-Made is reaping the rewards of a textbook-perfect strategic plan. Pretax profit margins, once spotty, have increased by a factor of five. And two substantial products are ready to spring from the company's research-and-development lab, which could potentially double 1991 revenues of $3.4 million.

What happened? "When motor-oil cans went to plastic [from paper], our industry was rocked. I was flailing about trying to find some way for our company to survive." Unlike many of his competitors, Frey found that, with a small capital investment, his machinery could be used to make chemical canisters. He decided to pursue that application, and the company's size and market share doubled.

For the first time, Frey really looked at the packaging market and his company's relationship to it. Those new chemical-canister customers requested custom-designed features, and when Frey was able to deliver, the customers didn't blink at the higher prices. That contrasted starkly with Cin-Made's traditional line of tubular-packaging products, for which price was a haggling point and competitors were everywhere. That new kind of reaction from customers convinced Frey that his overall strategy should be to transform Cin-Made from a price-driven commodity player to a specialty-niche marketer.

Cin-Made began to devote much of its energy to finding new applications to meet customers' special packaging needs -- needs that me-too packagers would not have the wherewithal to provide. Cin-Made's R&D efforts are now focused on keeping one step ahead of the packaging trends, so the company won't get caught short as it had in the past.

After spending a couple of years trying to make its regular tubular-product line profitable, Frey decided to just let it wither and sink a substantial capital investment into custom-built machinery.

"To properly exploit our premium-niche strategy, we have to plow more into R&D," Frey says. "That yields products with higher price tags to reflect that investment. The more things we try out, the better our chances of success. We are going out and seeing what prospects' needs are and trying to design something for them."

Out of that strategy, Frey developed a highly specific one-page summary that effectively guides the company's operations. The snapshot shows what products Cin-Made is currently committed to harvesting, growing, or developing, and details how those aims can be achieved. The summary is so easy to absorb that everybody, from machine operators to members of the board, could use it when deciding how to put the company's resources to best use.

Frey updates the summary at least monthly -- sometimes weekly -- but it encapsulates a five-year strategy. On this and the following page he explains the kind of thinking that goes into the summary and how it guides all his decisions. "There are so many opportunities out there that seem appealing," he says. "This helps me know when to say no."

"I wanted a sequence of single words to categorize the steps of arriving at a strategic plan for a product and to outline how we were going to implement that plan." For example:

* * *

Market Future

Down. "We measured competition, prices, volume, margins, and market opportunities and concluded that there's a lot of volume in these low-speed tubular products -- such as mailing tubes, for example -- but the buyers aren't loyal. The low-speed machinery is older, and there are price wars going on." Besides listening to industry scuttlebutt at trade-association meetings and hobnobbing with customers, Frey also pulls Dun & Bradstreet reports on his 10 biggest competitors and plots their progress on the walls of his office.

Market Strategy

Harvest. "We aren't going to compete on price. That undercuts the fundamental value-added niche strategy of the company. We have a relatively high-overhead organization that isn't put to good use by selling low-margin products like these. Many customers have been with us a long time, and we get a steady stream of orders, but the volume decreases every year. That means our margins are excellent and our prices are too high for us to actively solicit business. When I decided to harvest this line, I also had plans for others to grow and take its place."

Management Attention
Decrease. "It wasn't immediately obvious that the low-speed business wasn't the way to go. Now that I've got it sorted out and have decided to harvest it, I can spend my time more productively growing other product lines."

Price Strategy

Value. "If you don't commit to a price strategy, you can find yourself getting seduced into price wars that won't be good for your business in the long run. We've chosen not to try to take business away from competitors. We won't price competitively; we'll price for value. We'd rather make money than push volume through."

Capital Strategy
None. "It's much easier to decide where to make capital improvements if you know which products show the most promise for the future. To beat leading players in the low-speed-tube market would require a half-million-dollar investment on our part. But maybe we can leapfrog past them and become a fairly significant player in the new-style-can market, if we invest in that newer, more promising technology."

Quality Strategy

None. "There is no formal quality strategy for this line. We've gone back to our old system of operators sorting good tubes from bad ones as they come off the line. We've shifted the quality resources to products that require child-resistant caps, where producing flawless products is more important."

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