Business Strategy Navigation 2009 – Part 5
July 29, 2009
Welcome Back. We've got lots of in depth business strategy to share with you today.The Ride, Part I: The future trends and strategy
Magellan’s strategy was clear and simple: reach the Spice Islands via circumnavigation in order to secure spice trade for Spain and adventure for himself. His plan? Sail west, with prevailing winds. Seek (by trial and error) a channel through the enormous roadblock known as South America. Maintain knowledge of present position and plan for future direction.
It is safe to assume that during the two-year trip, Magellan and his crew constantly assessed this plan’s rationality and feasibility. It is also safe to assume that Magellan did not need a wide-ranging measurement rubric to track each strategic move. Here lies the difference between the Renaissance explorer and the Information Age manager.
To develop a business strategy, corporate leaders must identify and understand the future trends in their industry that will impact the demand for their products and services. The leaders need to create a database of activities. The Trends Analysis should result in a grouping of converging trends. These are the opportunities for future growth.
So how do the leaders drive the organization to succeed. They create a competition strategy. Michael Porter defined competitive strategy in 1996.
“Competitive strategy is about being different. It means… choosing to perform activities differently or to perform different activities than rivals.” “Strategy is making tradeoffs in competing. The essence of strategy is choosing what not to do.”
Further strategy is a unique way of creating and delivering value that pervades the entire organization. It is your enduring reason for being that makes your customers want you to flourish and thrive. It is what you do that creates value and makes you hard for others to imitate.
My definition of business strategy … an integrated and align set of strategic initiatives (tactics) all working together to create unique customer value and thereby unique customer perception.
Once armed with a well-framed strategy statement, a business must hit the road. Beat the pavement. Spend deserved time and resources creating a detailed, albeit flexible, roadmap that takes you from here (current reality) to there (objectives).
Again, commitment to adaptability is vital. Strategy, write Kaplan and Norton, “must reflect the structure of the organization for which [it] has been formulated.”
Both-the structure and the strategy-must be persistent but flexible enough to facilitate innovation and market adaptation. A strategy designed to propel a company toward an ambitious goal cannot be represented by a stodgy table or bar graph. The strategy map’s structured chaos perfectly captures the paradox of direction and flexibility that characterizes successful strategy. For this reason, Strategy International consultants help businesses create execution plans, aphoristic visual representations of the whole strategy process from confronted reality to trends, objective to initiative.
Tomorrow we’ll continue this discussion with part 2 of “The Ride: Implementation.”
Strategically Yours,
Bob
Business Strategy Navigation 2009 – Part 4
July 28, 2009
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: Current Reality Assessment
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 current reality assessment include:
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Determine the key performance metrics
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Determine where business performance is weak.
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Assess where you are strong.
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.
