CubeSense

What is CUBES? The Collaborative for Customer-Based Execution and Strategy

By February 20, 2018 No Comments

Customer-Based Execution and Strategy (CUBES) is research collaborative that helps executives maximize the value of their most precious asset—the company’s customer base.

Collaborative for CUBES is a unique, data-driven approach to developing and executing strategy in a way that helps a company’s initiatives to fully align with customer needs. Using a proprietary survey of customers and state-of-the-art analytics, CUBES can help executives answer critical questions to develop and execute strategy:

  • What are the financial outcomes—sales, margins, EBITDA, stock price—of satisfying customer needs?
  • What key strategic priorities will differentiate you from competitors?
  • Within the key strategic priorities, what execution levers should you pull?

Collaborative for CUBES provides a plan, functioning as a blueprint, to serve as a catalyst for increasing sales, expanding margins, and improving EBITDA. The strategic planning blueprint from CUBES cascades at four levels:

Strategy outcomes (CUBES 100,000)

What are the key benefits—financial and non-financial—that a CEO must deliver to shareholders? CUBES focuses on sales, margins, EBITDA, and stock value. At this level, Collaborative for Cubes provides the CEO with a proprietary model to measure and predict how meeting customer needs is associated with these outcomes. Through predictive analytics, this model enables a CEO to prioritize strategic priorities that will meet customer needs to maximize sales, margins, EBITDA and stock value.

Strategic priorities (CUBES 10,000)

This level hones in on the role of VP’s and executive Vice Presidents responsible for delivering on the strategic priorities. Based on in-depth research and a benchmark survey of over 5,000 managers we have delineated eight strategic priorities such as pricing/billing, safety, communications, product & service quality; others can be found on our website or by engaging directly with Collaborative for CUBES.

Among the eight strategic priorities that any firm can have, CUBES provides the guidance by showing:

  • How potent is each priority in driving financial outcomes through customer needs fulfilment?
  • How, compared to competitors, is each company performing on the strategic priorities?

Execution levers (CUBES 1,000)

After VP’s and EVP’s have defined the strategic priorities of the company, they rely on directors and senior managers to execute them with fidelity. At the 1,000 level, directors and senior managers receive concrete guidance about specific execution levers. CUBES provides guidance by answering questions such as:

  • Which execution lever has the highest potency in moving the needle on a specific strategic priority?
  • How much does the needle have to move to have a specified financial impact?

For example, within pricing should the company focus on having “fair pricing” or “accurate billing?” How much do we need to improve on “fair pricing” or “accurate billing” to deliver on EBITDA or margins? This level of detail, enables specific, precise, and measurable execution that can align with the VP’s and EVP’s strategic priorities. The outcome results with initiatives that are synergistic with the strategic priorities at the 10,000 level.

Ground reality (CUBES 100)

The final level of ground reality relies on directors and senior managers to connect the 1,000-foot level to day-to-day activities, which are performed by employees at the frontline. Collaborative for CUBES provides specific and measurable activities that can be supported by data to assist employees. Thus, our partners may work with a company to develop processes to deliver on “accurate billing” through changes in the accounting system.

CUBES DECK

The different CUBES—100 or 1000, or 10000—represent the different levels of a company at which strategy must be aligned.  Essentially, the CUBES build on top of each other. Ultimately, the ground reality of a business adds up and affects strategy execution, which must support the strategic priorities, and then financial outcomes—sales, margins, EBITDA, and stock price.

When looking at the CUBES provided by our research collaborative, pay attention to the y-axis and the x-axis.  The y-axis represents the potency of specific strategic priorities and execution levers. That is, on a relative basis how potent is each in moving the needle on the desired outcomes. The higher the potency, the more space it is allocated on the y-axis.

The x-axis represents the company’s performance relative to a benchmark. The higher the performance, the closer you are the 100-mark on the right side.

Strategic Planning Using CUBES: A Case Study

B2B customers represent a considerable part of sales for companies like Walmart, Home Depot, Costco, Lowes and Amazon. Informal interviewing showed a perception that the retail business is “commoditized” leaving the companies no choice but to compete on lowest possible pricing.  CUBES results show such an assumption would be inaccurate and misleading for strategy.

Figure 1 shows the CUBES 10,000 for this industry. It displays the key strategic priorities ranked by their potency to affect overall satisfaction and thus, financial outcomes. The y-axis shows the two most crucial strategic priorities include:

  1. Ongoing service and support
  2. Product/service quality

Within ongoing service and support, Lowes performs the best followed by Walmart and Amazon. Within product/service quality, Walmart and Amazon are roughly tied. Interestingly, pricing & billing is ranked fifth right after sustainability and social responsibility.

Figure 1: Key strategic priorities to differentiate from competitors

Next, the VP/SVP responsible for ongoing service and support may seek specific guidance. Figure 2 shows the specific execution levers that will have the highest impact on delivering this strategic priority. These include:

  • Resolves problems quickly and correctly
  • Reliable and timely upgrades as needed
  • Availability of replacement parts and repairs

Each of these execution levers represents an actionable initiative that can be undertaken by a company to differentiate itself from competitors. Among B2B customers, results show that Lowes and Walmart are perceived as being the best in class on resolving problems quickly and correctly.

Figure 2: Execution levers for strategic priority “ongoing service and support”

Conclusion

The process of strategic planning, in many, companies is either a black box or confused with budget planning. The collaborative for CUBES provides a structured, measurable, and repeatable approach to strategic planning and execution that can provide guidance at all levels of a company. Large or small, the CUBES approach can be leveraged by any company willing to take an evidence-based approach to increasing sales, margins, EBITDA and stock price.