Page 50 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

36 The Complete Guide to Executive Compensation

Community Product/service
partnership innovation

Operational Employee
optimization intimacy

Shareholder Customer
return satisfaction
Figure 1-11. Strategy focus

Most companies engage in at least several of these business strategies. In designing an
executive incentive plan, it is important to prioritize and weight their respective importance,
recognizing that some are more in conflict than complementary—a fact that will become
obvious later in the book when reviewing design of incentive plans.
It can be argued that the flowchart for business success often begins with a product or
service followed by a review of potential market and customers. Prototypes are then tested
and refined. This is illustrated in Figure 1-12.

Product/ Market Prototype Process/
service identified to customer product refined
Figure 1-12. Product seeking a customer model

Figure 1-13 illustrates how major business strategies can support desired outcomes
resulting from market analysis.

Market Develop Produce Customer
analysis product and deliver evaluation

Business Product Operational Customer
strategy innovation optimization satisfaction
Figure 1-13. Business strategies supporting major actions

Aids to product planning can be developed based on market and financial factors. A sim-
ple version of this is shown in Figure 1-14. The two criteria are “dollar return” and “market
performance.”
Obviously, the grid could be more refined; however, even this simple version shows
where a combination calls for certain actions:

• Combination A: This ideal situation is a prime candidate for additional investment,
assuming industry is in the threshold or growth stage.