Business Strategy Navigation 2009 - Part 4
July 28, 2009
Welcome Back. We've got lots of in depth business strategy to share with you today.Set objectives
Having adequately assessed the present, embark on the adventure of the future. The most unpredictable and chaotic market environment is navigable with skill and control. A clear vision of your ideal future allows for well-defined, progressive movement.
The elements of a proactive future focus are simple:
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Purpose. In general terms, the purpose of any business is to satisfy its stakeholders (this group includes shareholders, customers, executives/ partners, and the community).
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Mission. Your business’ mission is its objective goal, the peak toward which you propel yourself. A mission may be purely financial (”we will achieve billion-dollar annual sales”), product-oriented (”we will develop the most fuel efficient compact car on the market”), or customer-focused (”we will attain 99% customer retention”). If purpose is your reason for existing in your eyes, mission is your reason for existing in consumers’ eyes.
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Vision. A vision is exactly as it sounds: a mental picture of the way your business will look, feel, and appear once you have fulfilled your mission.
A caveat: Though definition of these terms is necessary, the key to successful navigation of an unpredictable environment is adaptability. Vision can easily change since, as part of the system, it is largely subject to the whims of the environment. According to the Columbia School of Business, strategy should actually serve to “build flexibility into your system…some way of keeping uncertainty alive and kicking.” This requires creativity: the vision must entail and encourage originality.
Tomorrow we’ll begin part one of “The Ride: The future trends and strategy”
Strategically Yours,
Bob
Strategic Planning Harnessing Chaos - Part 3
July 28, 2009
What you should do about chaos
Number one: recognize that it exists. Every mom has said it: life isn’t fair, and it’s not controllable. Expecting the business environment to be anything but haphazard is foolhardy. But for all their randomness, state theorists, complex systems don’t spontaneously combust. This fact inspires our trust in gravity; it should also inspire a loosened grip on your company. A little chaos breeds creative results beyond the scope of any corporate control.
Number two: become strategically adaptive. McKinsey’s Eric D. Beinhocker asserts that “to prosper in the long run, a company must adapt as readily as its market, or more so.i As previously observed, a market is by nature highly adaptable. How to beat the market at its own game? Foster and Kaplan, critics of “cultural lock-in,” suggest supplementing convergent thought with divergent thought, which encourages a culture of inquisitiveness. Divergent and convergent thought work in synergy, turning basic business questions into opportunities for creativity. Chaos does not have to imply anarchy; the most useful chaos is planned.
Number three: create a positive corporate culture. Intentionally focus on market-reflective flexibility. This strategy positions your company to innovate or jump onto the newest innovation. During the 1988 wars among computer operating systems, Microsoft kept a finger in every OS pie—UNIX, DOS, OS/2—until a clear winner emerged. If Windows hadn’t become the new industry standard, Microsoft still wouldn’t have lost ground.
“In the face of uncertain markets,” writes Beinhocker, “Microsoft followed the only robust strategy: betting on every horse.”
Number four: pursue an internally chaotic culture. Eschew micromanagement in favor of self-organization, creativity, and innovation. Foster and Kaplan urge managers to “control what you must, not what you can; control when you must, not when you can. If a control procedure is not essential, eliminate it. Measure less; shorten the time, and the number of intermediaries, between measurement and action, and increase the speed with which you receive feedback.” The ultimate rationale behind this methodology? “The point is to let the market control wherever possible.”
Number five: be sincere. Too many employees drown in kitchy corporate slogans. The edict “Be creative!” is worthless if not backed by actual company policy. Prioritizing schedule and bottom line is any company’s default mode; continuing in that mindset while claiming innovation is not only deceitful but lethal to actual creativity. When a midlevel manager lamented that “‘Dilbert’ isn’t far off,” he spoke for all smart, stifled employees: prescribed processes and empty encouragement strangle any complex system. Genuine, chaotic creativity keeps it thriving.
Next week we’ll wrap chaos with “The Edge of Chaos.”
Strategically Yours,
Bob
Business Strategy Navigation 2009 - Part 3
July 23, 2009
Right Now: Confront Reality
As Magellan gazed at the mouth of the waterway to bear his name, he had a choice. He could worry himself blind about the future; turn left and take the (safe bet) long route; stab blindly into potentially vicious waters; or take stock of his situation and make an educated guess. Fortunately, he chose the last. The first step in business strategy is similar: confront reality. Kaplan and Norton say it well: “Merely slapping performance measures on existing processes may drive local improvement but is unlikely to lead to breakthrough performance for the entire organization.” Your “existing processes,” mindsets, and goals must be assessed before strategy can begin. Without knowledge of your company’s present situation (or “current reality”), movement from that situation is arduous, if not impossible.
Elements to consider in your confronting reality assessment include:
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Determine the key performance metrics, knowing if you are ahead of or behind.
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Determine where business performance is worrisome.
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Assess where you are strong.
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Appraise your competitive position.
Tomorrow we’ll continue this discussion with Setting Objectives.
Strategically Yours,
Bob
Strategic Planning Harnessing Chaos - Part 2
July 21, 2009
What most companies do about chaos
Scientific “chaos” doesn’t refer to everyday mayhem. Executives, though, tend to attack the chaos in their companies as they do the chaos in their hall closets: through desperate attempts to order it. Traditional management logic emphasizes corporate control and convergent thinking. Goals are set, problems articulated, solutions presented and undertaken—all under one pre-formed philosophical roof titled “business as usual.” In this framework, commotion must be kept at a minimum: it strains managers, wastes time and resources, and wrecks any bottom-line predictability. The only way to prevent workplace disorder is top-down management that sets guidelines and deadlines all the way to the front lines.
Some companies—the lucky ones—escape the mayhem by hiding: they burrow into a comfortable niche, undaunted by the competition scurrying above them. Unfortunately, “creating a niche” is far too often synonymous with what Foster and Kaplan call “cultural lock-in.” The stages of a business’ development resemble the common shape of human life: youthful vision and excitement yield to the narrow-minded—albeit successful—tedium of old age. Niche-oriented companies pour resources into predictive strategies, and so drain any creative preparation for the future.
The result? Most companies are unable to adapt when the “outside world” crashes down on their heads—when a perky startup explodes the market; when stock prices unexpectedly plummet; or when innovation changes an entire industry. Next week I’ll share with you what should do about chaos.
Business Strategy Navigation 2009 - Part 2
July 9, 2009
The State of the Environment
It hardly takes a rocket scientist to point out the economy’s unpredictability. It is painted vividly all over business today: the Herculean rise and Icarean fall of dot.coms; the ever-present fear of “getting Amazoned” by the newest phenom; fickle and unrepresentative market data; a “winner takes all economy” that rewards aerodynamic little prodigies with world-power status; and heavy dependence on intangible assets. This—an environment stocked with and characterized by uncertainty—is the market we inherit. Our only hope of navigation is strategy—the sort that flooded the explorers with both order and industrious creativity.
Getting Started: The Need for Strategic planning
Unpredictability offers managers three options: to idly float with the environment’s current and winds; to drop anchor and cling to the present (albeit mediocre) position; or to harness the currents and charge ahead. The first two represent stasis and, therefore, death. To survive, an organization must be dynamic. Does your company exhibit “a sense of urgency, or complacency?” If you recognize the urgency of the present, be proactive and commit to strategy. If complacency defines you, move.
What I do with my organization, Strategy International, is partner with companies to develop business strategy according to a time-tested, proprietary strategy design: a choice blend of plan and action that has produced visible change for clients in a range of industries. In our experience, the process of designing a strategy (defined by CEO Bob Jonas as “a plan for the skillful conduct of a large field of operations towards the achievement of a known goal”) consists of seven elements:
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Confront reality
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Set objectives
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Anticipate demand
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Set strategy
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Invent
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Plan Execution
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Implement
All of these, by necessity, happen in the market environment. The secret is to create a competitive advantage strategy that both adapts to and controls that unpredictable medium.
Next week we’ll continue this discussion with the first element: Confront Reality.
Strategically Yours,
Bob
