288: Kenya Moses Explains How to Create a Strategic Plan Using the X-Matrix

Transcript

Imagine you’ve got an idea to not just grow but scale your business. You’re excited. You’re ready to get to work and make that idea a reality. But how will you implement it? What resources do you need? How much will it cost? How long will it take? Having a validated idea that solves a real problem for a sizeable market is one thing, but implementing it is another. It requires thought. It requires ingenuity. It requires…a strategy.

This is the Business Infrastructure Podcast – the show where we share operational tips, tactics, and strategies to help you cure any back-office blues you might be experiencing.

In the last two episodes, you learned about Lean Canvas, a tool for vetting and validating your business growth ideas. Now it’s time to develop a strategy around that idea. One that will give your team the direction needed to implement your idea. And we have just the person to help facilitate that.

This subject matter expert is no stranger to strategic planning. He’s a seasoned corporate executive with years of experience in operations, finance, and strategy.

This is Ep. 288: Kenya Moses Explains How to Create a Strategic Plan Using the XMatrix

It’s always fun whenever I can interview my friends on the show. So it’s with great pleasure that I introduce my friend of 30 years, Mr. Kenya Moses. He’s an operations executive at NSI Industries, a manufacturing company with locations across the U.S. Kenya, welcome! How are you doing?

When you say 30 years, wow. It’s a big number!

It is a big number indeed! And over that time, I’ve seen you blossom from an industrial engineering student at Louisiana State University into a budding leader at various positions in different manufacturing companies and landing where you are now, as an executive leader at NSI Industries. If Kenya’s voice sounds familiar its because he’s also dabbled in some voiceover work here on this show as well. So, you’re a man of many talents!

When I graduated from LSU, went to work for a company called Cooper Industries, based in Houston, Texas. And I was hired into their operations leadership program, where you do four assignments over two years in two different divisions. And you’re talking about a career trajectory change because the experiences I got in two years were phenomenal compared to someone exiting college and having one particular job.

Worked for Cooper for about five years before I was hired by a company called Colfax. And that’s really where I started my lean journey. I was there for ten years. And you learn everything from five best bigger management to Hoshin Kanri, I took several other roles at various other companies, where I was vice president operations, as well as had a product management stint, ultimately to Assa Abloy, where I was general manager of the Norton Door Controls Group. Got a lot of experience with innovation there. And then finally, my current role, an executive here at NSI Industries.

In his book, “The E-Myth,” author Michael Gerber talks about the importance of business owners moving from technicians to true entrepreneurs. That means focusing on the bigger picture. The strategy. Kenya, being that you’ve successfully transitioned from a junior engineer to an executive, you’ve told me how it was even challenging for you at first to stop doing all the technician work and focus more on strategy.

From our past conversations I know you often credit the X-matrix as the one tool that can help an organization achieve breakthrough financial results. Can you describe what an X-matrix is and the strategic planning process known as Hoshin Kanri?

Absolutely! If I had to boil that down, in layman’s term, the phrase I use, “It links strategy with execution.” It is the one tool I’ve used in my career that links to both. A lot of times, companies have strategy planning sessions. And once that session is over, there really
haven’t been that mechanism to link the execution piece of it. Hoshin Kanri or the X-Matrix solves that problem.

And what typically happens is you have the normal budgeting process at a company. We want to grow 3% revenue, so on and so forth. However, for companies that really want to have a breakthrough strategy, it is typically separate from the day-to-day budget. So, for example, let’s say a company is $25 million. But they want to grow to $50. Okay, how are you going to do that? And typically, with the X-matrix, you lay out a one, two and three-year process to get you to that ultimate goal of going from $25 million in revenue to $50 million in revenue.

Is there a certain time of year you recommend business owners and leaders start looking at their organization’s strategic growth plan?

If you’re on a January to December fiscal year, I recommend at least Q3 prior to the beginning of the next year, at a minimum. That way you have time to get the pieces in place to start executing that goal for the following year.

Okay, so that means starting as early as August or September. And then what? From a business infrastructure perspective, if we’re talking about the people, processes, and tools required to develop this strategic plan, who ideally should participate?

For a small business, typically, you would want the founder, the owner, the CEO of that small business involved, key people from a sales, operations standpoint, finance standpoint, those are the minimal amount of heads I would say you would need from a small business standpoint just to get the process started.

So, if a small business is fortunate to have more than just a CEO in the C-suite, I would imagine those people would also participate.

Yes. CEO, CFO, COO, marketing as well. Those are the figureheads because when you look at this process, it’s typically a breakthrough strategy. And typically, it’s not a strategy that’s going to get implemented at the floor level. It’s a strategy that the toplevel heads are thinking three years down the road, Here’s where we want to be. When you’re in the shop, your goal is to get that order out so that customer isn’t calling mad at you. You’re not thinking about strategy a lot. So typically it’s the C-suite, putting this breakthrough strategy together.

We don’t want to alarm anyone who may be listening, thinking, “Gosh, my business is incredibly small – we don’t have people in those roles.” But as I often remind my fellow entrepreneurs in this position, you can still have access to people who can function in these roles by outsourcing a Chief Financial Officer or Chief Operations Officer.

Yes, fractional CFOs and COOs are common these days. And for a small business, it’s a great way of filling that void without having to have that expense year-round. And so, fractional CEOs, I’ve seen those work very well in small businesses. And fractional CFOs,
they can come in and help assist, especially if they have experience with the process. And then also what I’ve seen be effective is those monthly check ins to help guide the founder or the owner throughout the year versus having a resource there full time.

Is it possible to have too many people involved in developing the strategy?

Yeah, 20 people in the room. That’s entirely too much. Because when you’re changing the strategy or creating a breakthrough strategy, typically those are the leaders of the company, and you don’t want to have too many people in a room. It can start shifting
the conversation. Doubt can come in. It has to be the people that really can make the decisions and get the resources needed to execute that strategy. I would caution, although we want to be collaborative and communicate an organization for this process,
you really want the figureheads that can really justify and execute this strategy and get the resources needed to support it.

What does the X-Matrix look like?

It’s typically an Excel file. There’s software out there available. But I recommend starting with Excel to grasp the concept of the X-matrix. I’m looking at it in my mind, Alicia, but basically it’s a simple way of capturing your company’s vision over the next three years
in one visual chart. That’s simply what the X-matrix is. And without the viewers having the ability to look at it on the screen, basically it’s an Excel file, X in the center. And the closest the measurement or the item is to the X-matrix, the more important it is within
the X-matrix. So, it lists your goals to get to that three-year goal, it lists your one year goal, then it lists how you’re going to do it, and then how you’re going to track yourself, and then finally the resources needed to support the overall X-matrix. That’s the Xmatrix in a nutshell.

And now that you’ve explained what it looks like Kenya, let’s move on to the good stuff – actually completing an X-matrix. Earlier you mentioned an example of a company going from $25 M to $50 M USD. As you describe how to use the X-matrix, can you use an example with smaller numbers to make it more relatable to our audience? Let’s say, there’s a small business that wants to develop a breakthrough strategy for going from half a million in revenue to one million in three years starting in 2025.

So it’s 2025 and by 2028 we want to go from half a million to a million dollars in sales. Typically, what you would do is that would be at the…and I’m going to use clock positions…at the 6:00 position of the X-matrix, you would go grow from $500,000 to $1 million. And that would be your three-year breakthrough objective for revenue. And let’s just focus on revenue. There’s several other items you can list there as well. But we’ll start with revenue in the 6:00 position.

Well, with the X-matrix, when you come around to the 9:00 position. What are you going to do in 2025 to get you to that million? So you may say, I want to go from half a million to $750,000 in sales. All right, so that is your one-year goal. To go from $500,000 to $750,000. So that’s a $250,000 increase. That’s great. All right. Now, how are you going to do that?

That’s when we come up to the 12:00 position to list your targeted improvement ideas. And what that is, is you have to now say, to do that incremental $250,000, we’re going to reach new markets we’ve never been in, develop new products. Or if we offer a service, we want to target two new municipalities to offer service. Whatever your business is, you have to say what you want to do to get you that incremental $250,000.

And it’s typically an action where it’s something new you have to do versus something you’re already doing. Let’s say you’re a Southeast distributor or Southeast service provider and you’re saturated in that market. Well, part of that growth strategy may be we want to move to the southwest. We want to develop new clients and markets in Alabama, Texas, Louisiana, Mississippi. It may be even be in your same city, you may be a regional player within your own city and you want to expand in the city. So, it depends on the business. It depends on the products you offer, the services you offer. But then now you have to track that, and that’s when you come to the 03:00 position, and that is where you list the discrete objectives you’re going to implement to reach that goal.

Kenya, as you described the different positions moving clockwise around the X-matrix, you mentioned that as items are listed in each position that the closer something is to the X in the center of the matrix, the more important it is. I can imagine that this could potentially lead to conflict because people might have different opinions about the degree of importance. This is why having an outside facilitator is so valuable. Can you talk a little more about that?

For a small business, I recommend bringing in someone to help facilitate. When you’re in that room, you want everyone to have the ability to have a say versus someone to have final power. So, I recommend a facilitator. And the reason why, if they’re a facilitator, they’ve been through these strategy sessions before.

They know how to keep the meeting moving along. They know how to handle disputes, and then finally, they know how to keep the team flowing. So by the end of that session, you have a completed X-matrix to roll out to the organization. Now, larger companies
have facilitators. Like this company I work for has internal facilitators. But for small business owner, I recommend outsourcing that activity.

Kenya, as a facilitator of these strategic planning sessions, what do you recommend doing to resolve conflicting or competing interests? Because I’m sure conflict happens, right?

Absolutely! Before you get started, you talk to the leadership team. You find out ultimately what are the goals for the company in a more anecdotal, communicative session. But then, as you get to a dispute, is this the most important item for the company? Will this get the company to its goal faster? It’s rare you can’t get that team to come with a number one, two, and three.

I have not seen it where you can’t resolve that conflict. And then once you resolve it, you move on from it. But that’s why it’s important to have an external, for a small business, external facilitator, because they can help facilitate those potentially heated discussions
because people get passionate about this. You’re talking about the future of the company, the strategy of the company. And people are passionate because they want to make sure they chart the right course.

Well, that makes sense. How long does an X-matrix strategic planning session usually last?

It could take a two-day session because it’s a lot of communication, a lot of understanding. But then it’s a lot of development. But not two eight-hour sessions. It could be four-hour session one day, you come back and finish it up the next day.

But that’s just time required to complete the one-page X-matrix that summarizes the goals, objectives, and metrics, right? Now there’s another section that requires more thought since it gets more granular in detail about the specific actions to take. Can you talk about that?

Once you complete that X-matrix, now you have metrics that you can put on the next tab, called the “bowler chart”. Just imagine a chart that has January through December. You have individual goals within those months that you can track the progress of those
metrics that you’re tracking from the X-matrix.

Once you complete the X-matrix, you typically don’t change it. It’s set in stone. After that is set, typically the work is looked at as the Bowler Chart, which I just described but then finally, what is called an action plan for that particular item on a Bowler Chart. So it
may be, if I go back to an early example, increased market penetration in the southwest. Well, that action plan, it may list items such as identify potential customers in Texas, do a sales blitz over a three-month period to identify, sign up, and gain new customers,
something to that effect.

But you list that in detail on that action plan, and that’s typically where you spend a lot of your time throughout the years looking at that action plan. Understand if it’s developing the results that you expected it to, and then you track yourself every month by looking at the Bowler Chart. Did we hit our goal? If not, why not? What can we do to change course?

And just to set expectations for those listening – it’s the development of these different action plans that can really take some time. Is that correct?

That is correct. That’s why I recommend starting no later than Q3 because once you set the X-matrix and identify your metrics, you have to develop those action plans, because that’s really where a lot of strategy starts to fall down. It’s always that big question, how
are we going to implement it? And so with the X-matrix, it forces you to develop that action plan. You have to tell yourself how you’re going to do it, and that is what takes the longest.

So, if you have four action plans, I recommend setting aside at least two, maybe three days max for each action plan so you can really think it through and put good action plan development in place to achieve your goal. And the companies that really buy into it and execute that action plan, those are the ones that have great success with these breakthrough strategies.

Kenya, at this time I’d like to remind people of the business infrastructure behind everything you’ve just described. For those who are unfamiliar with what business infrastructure is, it’s a system for linking people, processes, and tools so that growth happens in a repeatable, profitable and sustainable way. At this point, you’ve described the Hoshin Kanri strategic planning process and its flagship tool which is the X-matrix.

You’ve also talked about the ideal people who should participate in the process. Speaking of the process, once the X-matrix and its associated action plans are completed, are there checkpoints to monitor the progress of the implementation of those action plans?

Yes. That’s when you will have the monthly check-in. For a company that’s starting this out in the beginning with that facilitator, you may start in January, every couple of weeks you’re checking in with the leadership team, making sure the sessions are going very well, because the monthly check-ins are typically with the executive team. However, they may have other resources down in the organization helping to execute this plan. And so starting out, you may want to check in a little more frequently than once a month, but typically it’s monthly.

This all begs the question – what do you do once the three-year goal is achieved (or maybe isn’t achieved)?

It’s typically an annual process because you reassess. So, for example, I’ve seen companies hit their three-year goals in two years. And what I’ve noticed then, let’s say that half a million to a million, they hit that million in year two, they reassess and say, we want to go now from a million-dollar organization to a $3 million organization from a revenue standpoint. So, you tweak it every year. Once you hit that target, you just don’t stop.

And the reason why I say that if you look at a company like Danaher, they’ve been doing Hoshin Kanri for decades. Danaher was a $4 billion company, and now they’re greater than $20 billion because they use this process, and I use them as an example because they don’t stop. They kept refining that plan every year, and once they hit that goal, they set their sights on a new goal. So that’s the power of the tool. Now, you can stop if you want to. If that’s the level that you want to maintain the company, that’s fine. However, if you want to continue to grow at a breakthrough level, it’s an annual process.

So, don’t rest on your laurels…unless you want to. Back to the actual Hoshin Kanri process. Once you develop the strategy and the action plans, how do you communicate the strategy so that it’s permeated throughout your organization?

You can use the action plan in meetings with those people. Also, I’ve seen companies, and I’ve done this before, where parts of that plan are given to people as annual goals within their own annual review process. So, for example, you may pick a sales territory
manager and say, “Hey, we want you to double your business in three years. In year one, here’s what we want to do”. And within that action plan, they have to go and find new customers or grow their territory within that 2025 timing frame.

So that’s typically how you permeate it down to the people who are actually doing the work. However, one thing I want to make sure is people realize the X-matrix is breakthrough. It isn’t growing your business from that sales manager going from $50,000 in sales to $55. It is breakthrough. And what I want to caution is sometimes that means resources. Sometimes that means they need something that they don’t have right now. It’s not status quo. And so, if you’re really serious about it, you got to be serious about giving the team the tools or the resources they need to execute that strategy.

And that might require an extra little creativity for us smaller businesses when it comes procuring the resources needed to execute our strategies. One more thing I just thought of, which might be a good way to end this session, is about sharing the details of your X-matrix. Do you recommend doing that or maybe masking it and giving it a clever name that people can rally around?

That depends on the company because I know small business owners may or may not want that line worker knowing the profitability of the company or something to that effect. Because sometimes people see that, Now I want more money, pay-me-more type thing. It depends on the owner or the founder if they’re willing at a minimal, the executive team plus one level down, potentially. But I’ll leave that to the owner if they feel comfortable sharing that entire information sometimes I’ve seen them replace dollars with percentages. So, we want to grow the company 50% versus putting a dollar amount. I’ve seen that be effective as well.

In the next episode, I’m going to share the X-matrix you helped my team and I create for our strategy. That’s one resource to share with our listeners but do you have any others? How can people contact you if they’d like your help facilitating a session?

I can be reached on LinkedIn with no problem. I’m passionate about Hoshin Kanri and the X-matrix. I’ve seen the benefit. Also, there’s a company I’ve used in the past, Next Level Partners. Eric Lussier – he’s a principal there. I recommend reaching out to Eric.
He’s very passionate about Hoshin Kanri as well. There are books out there. But for me, it was on the job training. That’s really where I learned.

I didn’t read a book. I learned on the job and got a lot of experience around it. So there may be books out there. I don’t have any I can recommend at the moment. However, myself. Eric, at Next Level Partners, are two resources I would utilize. Just reach out. We can chat for a little bit online, maybe have a phone conversation. Really see if this is something you’re passionate about and want to implement.

And I encourage you, the person listening to this right now to take Kenya up on his offer. This isn’t just for large enterprises. It absolutely applies to small businesses as you’ll hear in the next episode. Kenya, thank you so much for stopping by to share more about the X-matrix with us! I really appreciate it.

If you’re passionate about growing your business as an entrepreneur or a business owner. This process can work for you. It just formalizes a lot of what you may be thinking. And it helped guide yourself and other team members for you to achieve that goal. So, give it a chance. I look forward to hearing from any small business owners.

Alicia, thank you.

Thank you for listening! If you’d like to connect with Kenya, then go to BusinessInfrastructure.TV. There you’ll find a link to his LinkedIn profile as well as a free X-matrix that you can download to use in your strategic planning process. Again, you can find this information in the show notes at BusinessInfrastructure.TV.

If you enjoyed this episode, then please subscribe, give us a five-star rating and leave us a review.

Now that you have a validated idea that you can use in your strategic growth plan, it’s time to develop your X-matrix and action plans! Join me in the next episode where I’ll share how we worked with Kenya to develop an X-matrix around our idea to create an online course.

Be sure to come back to the place wherever you’re listening so you don’t miss this next episode! Until then, remember to stay focused and be encouraged. This entrepreneurial journey is a marathon and not a sprint

This podcast episode was written and produced by me, Alicia Butler Pierre. Audio editing by Olanrewaju Adeyemo. Original score and sound design by Sabor! Music Enterprises. Video editing by Gladiola Films. A special thank you to our sponsor, Equilibria, Inc., and to Grant Revilla for creating the show notes.

his is the Business Infrastructure – Curing Back-Office Blues podcast.