Jump-Start Strategy By Jumping Straight to the Middle of the Process

July 17, 2009 By Leave a Comment

Note from Art: this post was prompted based on my general rankling at the annual migration of corporate teams to strategy offsites.  There are more effective ways to get organizations focused and moving than this traditionally dysfunctional, low-outcome event, and the process that I outline below is one of those.

Both consultants and clients are all too guilty of massacring the strategy process inside organizations. Clients often treat strategy as an “event” with the expectation that there will be some meetings, some form of Ah-Ha type enlightenment and then some new initiatives. Involvement is grudging and political.

Consultants are often all-too-happy to enable the “strategy as event” process by facilitating a series of naval-gazing and Hubble-viewing sessions that while in isolation are appropriate, don’t really do much to improve anything about the organization’s ability to create value for customers and stakeholders.

An alternative to the tired approaches that start with retreats and end with lengthy power-point decks and feelings of relief that we can now get back to work, is to skip the S.W.O.T. and jump into the middle of the organization’s processes around activity/project/investment selection.

Now I have to offer a quick caveat for all of the process purists that will rake me over the coals for talking about strategic issues without the appropriate amount of market scanning, forces assessment and capabilities/mission/vision fit scrutiny. I get it and I’ll get there…just in different order than starting from the painful beginning.

How Do We Know What Investments Are Right?

At any point in time a firm faces a variety of core activity and investment choices. These can include infrastructure investments, new product/service development opportunities and potential new partnering arrangements. Invariably, each option has its own advocates and of course every advocate views his/her program as a must-do. Many firms default on making a tough call here because they lack the necessary strategic filters and they simply line the projects up.

One approach that I’ve both observed and ultimately used to great success has been to challenge teams to attack the selection process by creating a mechanism to evaluate options in as close of an apples to apples comparison as possible. This “Strategic Choice Analysis” can be implemented quickly and serve as a means of both near-term and long-term improvement for decision-making.  The short form on the process:

Establish core criteria about What’s Important:

Key stakeholders (does not have to be senior management…can be project teams or functional teams, depending upon how decentralized decision making is within the firm) work to establish the core criteria by which activity/investment choices must be scrutinized. Examples might include: directly improves the customer’s experience; impacts near-term sales; fits with our vision of the future; adversely impacts competitors to our benefit; reduces costs; critical to our long-term vision.

The process of vetting and reducing to 5 or 6 absolutely core criteria for evaluating and comparing choices is difficult at best.

If the team is taking things seriously, the criteria will be hotly debated with questions raised about importance to customers, impact on costs and revenues and impact on competitors. I advise using an external facilitator for this process.

The great news is you will find that deciding on “what is important” drives widespread discussion about the hard questions of performance and impact. It also begins the process of creating filters on “what not to do,” something that is often missing from a firm’s strategic discussions. Last and not least, establishing the criteria and the next step, creating weightings for each criterion beg tough questions and drive relevant data gathering as part of the fleshing out process.

Establish Weightings for Each Criterion:

Once a manageable number of criteria have been established, the painful but important process of weighting begins. Each criterion must be evaluated in isolation for its relative importance to the firm and ultimately to investment selection. The use of an objective facilitator will shave days off of the debate. I use a simple 1-5 scale, and of course, there is some subjectivity in defining the relative difference between a 3 or a 4, but that is healthy discussion, as long as it is resolved, captured and a mechanism created for understanding it.

Evaluate Investment Choices Against Each Criterion

The fun continues, but the dividends are huge as teams begin for the first time looking at an investment choice against the established criteria. If done right, the criteria are great equalizers, where infrastructure improvements and new product investments are compared and evaluated against what is most important to the firm. We already weighted the overall criterion based on relevance to the firm (1-5 for this macro weighting), now each project must be rated according to its fit for each criterion. I use a 1-10 rating scale here, and again, there is some significant background work to get people on the same page about the meanings of the relative rankings.

Compare Investment Options:

At the end of the day, you should end up with a series of projects or investment choices that have been evaluated and ranked for each criterion. A simple math exercise…multiply the criterion ranking (the 1-5 number) times the project/criterion rating (the 1-10) number, sum the numbers for each project and compare.

A Health Warning and Some Encouragement

There is no magical number, you should not blindly trust the output and remember that the process is highly subjective. However, it is less subjective than endless debate or the political decision-making that guides many choices.

The first few times through are rugged, but the process demands discussion of the relevant strategic topics. Does this project really help our customers or our ability to serve customers or beat competitors? Does it do it better than other alternatives where we could invest our time and money? Does it fit with our view of the future? Does it take into account the prevailing market forces? All of these are the questions that I want my teams debating, and we got there without saying S.W.O.T. even once.

The Bottom Line:

Get your team talking about the right topics and get them focused on assessing and comparing based on the criteria that are the most important to your success. Skip the summer strategy offsite and start the dialogue on determining what’s truly important, and you’ll find yourself and your organization moving and working the right things faster than you might imagine.

And remember that this is a process that screams for continuous improvement. You’ll get better, the strategic awareness will improve and the teams will make process improvements every time through it.

Filed Under: Decision-Making, Leadership, Leading Change, Management Innovation, Performance, Product Management, Project Management, Strategy Tagged With: , , , , , , , , , , , , , ,

From Strategic Planning to Strategic Conversations

April 16, 2009 By 3 Comments

The McKinsey Quarterly (subscription required) just released the results of its latest survey on corporate strategic planning activities in an article entitled: Strategic Planning: Three tips for 2009. 

Key results include:

  • 47% of executives surveyed indicated that their strategic planning practices will be different this year than in prior years.  34% indicated that the activities would be “extremely different.”
  • The differences tend to focus on increased emphasis on scenario planning, conducting a broader range of analyses, and as you might expect, focusing on more of a short time horizon.
  • In what is likely good news for the malady that I described in my recent post, “Too many projects chasing too few resources,” one of the more widely reported changes for this period is an increase in the rigor of evaluating and approving capital projects.
  • As for monitoring execution, 50% of respondents plan on scrutinizing their firm’s/unit’s performance against the plan somewhere between weekly and monthly. 

The survey’s conclusion offers a cautionary tale on the potential for too much short-term focus, with the following:

“Important as these adjustments may be, their nature also raise a major question in the minds of many strategists: is the crisis atmosphere undermining focus on all but the immediate future? More than 50 percent of executives, in fact, express worry about not striking the right balance between near-term challenges and long-term strategic priorities. The perennial challenge of striking this balance has become particularly acute this year.”

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From Planning to Conversations

You can set your watch by the fact that just as opening day in baseball rolls around, the articles on strategic planning start appearing.  I continue to rail at the notion that this is a seasonal activity, and am actually encouraged by the large number of firms that are planning on evaluating performance against plan monthly.  Hopefully, this evaluation is more than a distribution of reports, and involves opportunities to truly gauge progress, capture lessons-learned and make real-time adjustments.

While there is no doubt that strategic planning done right is a valuable management process and tool, in my opinion, we need to change both the vernacular and the approaches to move from strategic planning to conducting strategic conversations.  Frankly, I want everyone in my firm thinking, talking and relating their work activities to the firm’s strategies for creating customer value and thumping competitors. 

There are many potential pitfalls and poor practices that can derail even the best of intentions for strategic planning, and one of the most fatal is restricting the involvement in this process to a select few. 

And while I am neither naïve enough or idealistic enough to think that it is practical to have everyone actively involved in all planning sessions, I do believe that good leadership practices open up multi-directional dialogue about strategy and performance.

The best run companies that I’ve worked around ensure that employees pass the “Walk In the Door” test…they can connect their priorities to the firm’s priorities every day that they walk in the door.  They also ensure that there are ample opportunities for employees to share ideas, capture lessons-learned, reflect on Voice of Customer and suggest adjustments to execution or even to strategy. 

The people in these environments engage in strategic conversations that ensure that the emperor knows if he has no clothes on and that challenge potentially bone-headed ideas or the poor execution practices that derail good ideas. 

Charan and Bossidy call this Robust Dialogue.  I describe it as a healthy feedback culture, filled with leaders at all levels that get the fact that their chances of success are enhanced if they park their egos at the door and promote and encourage widespread involvement.

Realizing a culture where strategic conversations are prevalent and effective takes hard work on the part of those that lead.  Of course, no one said that being a good leader was easy. 

How healthy and frequent are the strategic conversations in your firm?

Filed Under: Decision-Making, Leadership, Performance, Strategy Tagged With: , , , , , , , , , , , , , ,

Too Many Projects Chasing Too Few People-It’s Time to Learn to Say No!

March 3, 2009 By 2 Comments

One of the themes that I hear consistently in workshops and in discussions with the professionals in my MBA classes is frustration over the propensity of a firm’s leaders to never say “No” to a project. 

Lacking a viable mechanism to compare, evaluate and select and reject projects, decisions are made based on politics, gut feel and the squeaky customer wheel. 

The net result of this lack of discipline is that the people doing the work end up overloaded and overwhelmed.  They operate in compliance mode, focusing on surviving until the next deadline and adding little creative value or innovation to their activities.

This is a perfect formula to waste money, squander creative energy and decimate morale.  This “we never met a project we didn’t like” approach is also the antithesis of the formula for performance excellence.

The current economic pressures amplify the need to create better screening mechanisms and to truly manage your investment in projects with rigor and discipline.  You need to deliver the right projects effectively, and you need to learn to say “No” to some that seemed like a good idea last year and many that will jump out at you during the next year. 

Take a look at the portfolio of projects that you and your colleagues are engaged with today and make each of these projects earn their way back into the portfolio.  It’s OK and even healthy to challenge yesterday’s priorities as they bury people in today’s work. 

Use these filters:

  • Why are we doing this project? What are the assumptions that made it seem like a good idea before and are they still valid?
  • Is it a must-do or compliance initiative?
  • Is it strategic?  If yes, you should bounce it up against the current-state strategy and determine whether it is still relevant today.  If not, kill it.
  • Is it an operational improvement?  If yes, can you connect the operational improvements to something that impacts strategy and customers…even through one or two degrees of separation?  If you cannot connect it to something that allows you to serve customers (internal or external) more effectively, consider killing it.
  • Do we have the right balance of strategic and operational initiatives?
  • Are we evaluating projects based on a combination of objectively developed financial and non-financial criteria?  Does our evaluation approach allow for reasonable comparison of alternatives? 

If you struggle to answer these questions because your strategy is vague or out of date, you’ve got another problem that needs to be fixed.  While some decry the usefulness of strategy in a time of crisis, I would argue that now more than ever is the time to create a robust, dynamic strategy and execution program.  Instead of wandering aimlessly through the minefield of the economy, I want a team that is opportunistic, experimental and focused on finding and exploiting gaps and ignoring distractions.  This is strategy. 

The bottom-line:

Your organization executes strategy one project at a time.  Too many leaders fail to support the creation of processes that effectively evaluate and manage the nearly endless list of options to work on.  Start the process by refreshing on strategy and then work unceasingly to manage and cull the portfolio in support of the strategy.  Learn to say, “No” and you’ll be shocked at how much great work your team will complete.  You might even find them smiling as they work.  

Filed Under: Decision-Making, Leadership, Performance, Product Management, Project Management, Strategy Tagged With: , , , , , , , , , , , ,

Redefining Your Industry Landscape in an Economic Hurricane

December 16, 2008 By 1 Comment

The good professionals at Booz&Co (publishers of Strategy+Business) joined the long list of organizations offering guidance on how to cope with the current economic uncertainties, in: Rethink Your Strategy: An Urgent Memo to the CEO.

A number of the recent articles I’ve reviewed offered a fair amount of board up the windows, grab the food and flashlights and head for cover type of advice.  Rethink Your Strategy offers just a bit of that along with a good deal of practical advice on reviewing your business portfolio, shedding bad businesses and remembering that R+D and Capital expenditures are more strategic than ever.

In an interesting article offering sound guidance, I particularly enjoyed the segment on anticipating your future industry structure.  This is a key strategic topic that merits a great deal of consideration in your organization.

“This downturn is a once-in-a-century opportunity to redefine your competitive position. If there are five main players in your industry today, should there be three tomorrow? What role should you play in the consolidation? Can and should you push a competitor to the brink? Alternatively, should you sell your business even though you may be a strong player? You need to create an industry road map and then decide where your position lies in the terrain.”

As companies teeter or plunge over the brink, you will be faced with a host of remarkable opportunities and complex decisions.  One of the greatest opportunities is for you to develop programs to capture the nervous customers of your competitors, who are most concerned about continuity in their supply/service chains.

A solid company with good financials, healthy R+D pipelines and good customer service track records should run, not walk to emphasize their strengths, their stability and their desire to welcome new clients.  While the marketers (of which I am one) will have many ideas on promoting your strength and stability, I encourage top executives to make calls on your competitor’s customers at the executive level and begin forging relationships that will improve their switching comfort.  When the time comes for this client to pull the trigger and fire your competitor, the personal contact will pay ample dividends.

If you have the misfortune of playing for one of the companies teetering on the brink, an option is to consider gaining help from your clients. In industries where switching costs are high and loyalty a factor (they are out there), it’s not unheard of for customers to band together to help support suppliers or at least key units of suppliers.  I’ve watched as customers in a heavily regulated industry actually banded together to save a software supplier.  While this is not an easy path to walk, it may merit exploration depending upon your situation.

The Bottom-Line for Now:

Spend part of your time examining opportunities in this time of crisis and chaos.  While it may sound heartless to prosper at another firm’s failure, I call it capitalism.  It’s much more fun and profitable to be on the side defining the new industry rules and structure.

Filed Under: Crisis Leadership, Strategy Tagged With: , , , , , , ,