Strategy

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How to Increase Return on Your Strategic Planning

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9-July-2010Published in: St. Louis Business Journal Authors: Benjamin Ola. Akande and Chuck Feltz

One of the costliest mistakes leaders make is unknowingly deviating from their core business strategy. Lack of patience, focus and execution create a layering of one strategy atop another before the earlier strategy has proven ineffective. This energy-sapping "Strategic Churn" exhausts organizations, disenfranchises stakeholders and conditions employees to await the next "grand vision" sent down by management.

Many factors derail successful strategy. But the most common are within the control of executive leadership.

Bad Strategy to Begin with

Flawless execution will not overcome flawed strategic assumptions. Underestimating market trends, customer needs or overestimating the organization's abilities to respond to them doom efforts from the start.

Similarly, driving the "old way harder" despite clear evidence of a changing market is a key driver of strategic sub-optimization. Executives must close their planning process by honestly answering the simple question: "What must we believe for this strategy to succeed?"

Confusing Planning With Delivery

Anyone who has experienced the intensity of a strong strategic planning process knows the relief of a successful conclusion. However, in successful organizations, this relief is temporary and management understands that the real work of delivery and execution has just begun. Many organizations mistakenly equate planning with execution and a plan with results. A plan for execution and resource alignment must be the final element to close the loop on a successful strategic planning process. Anything less reduces accountability, focus and success.

It is Disconnected From the Vision

Well-developed strategy answers the question "How will we achieve and monetize our vision?" It is the context for all decision-making and resource allocation. The link between your vision and your strategy must be crystal clear.

Don't have a clear and compelling vision? Get one. There is no more powerful engagement tool to help employees see how their everyday activities connect them to a grander purpose. Vision answers the burning question, "What will it look like when we succeed?" and every employee should expect their leadership to know this answer.

Underestimating the Change Management Aspects of Strategy

Executives are responsible for thinking about the "why and what" of strategy constantly, which is not the case with the rest of the organization whose everyday focus is oriented to how to do the work. As a result, executives are light years ahead of their organizations in understanding what drives the need to change and why the change must occur to remain successful. Ignoring this foundational axiom of change management makes aligning employees and strategy nearly impossible.

Why You Will Win is Implicit; It Must Be Explicit

It's risky to assume employees clairvoyantly understand their leaders' intentions and interpret them clearly. Executives have hundreds of hours of data analysis and knowledge building as a result of the planning process that shapes their understanding of why this strategy is a winner. Employees that are removed from the planning process and don't have this benefit crave their leaders' insight and confidence as to why the company will win.

Strategic Message Dilution

Nothing is more powerful than an organization whose people are laser-focused on driving vision to reality. Unfortunately, leaders assume traditional legacy communication channels are effective in disseminating this critical strategic information.

Every organization has a "strategic dilution point." The Corporate Game of Telephone differs between companies. In our experience it becomes problematic three levels down from the CEO.

The result? More than 80% of employees attempt to carry out strategy with reduced clarity and focus. Companies that avoid this pitfall excel at two things. First, they "empathically engineer" messages to assist managers to deliver communication in their own authentic voices to their audiences while maintaining content integrity and accountability. Second, they create effective channels and venues to deliver this critical communication.

Progress Reviews Are Ineffective and Rare

Effective organizations perform routine strategy self-examinations often in the implementation phase in order to critically assess progress, diagnose issues and make timely adjustments. A strong, ongoing review process is dialog driven and determines: Is accountability in place? Are milestones and metrics being met? Are original assumptions from planning still accurate? What is going well (poorly) and why? How are our competitors reacting to our strategy?

Even a great strategic plan will fail if not implemented as conceived or is not given time to prove its effectiveness. Great leadership devises strategies that are grounded in fact make implementation a priority and inspire confidence in those who carry them out. They put no less priority on execution and alignment than the planning effort itself. In doing so, the plan moves from the theoretical to the practical and from an intensive and resource-consuming event focus to a reflexive and ongoing part of the organizational culture.

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BP, What Went Wrong?

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6-August-2010Published in: CBS News Authors: Benjamin Ola. Akande and Chuck Feltz

We don't know all the details, but when we listened to Tony Hayward as he was grilled in Congress about BP's safety record, he kept saying he was changing things and that since he took over, there was a new focus on safety - more emphasis, more money spent on it, a new director of safety reporting directly to him. All great business schools teach these kinds of responses, but they are not the best in terms of human behavior-changing techniques.

We believe there were five reasons why BP failed in the Gulf of Mexico.

Tony's strategic message was diluted.

He believed safety was paramount, but that message never got to the guys operating the drill bits. Instead, they obviously thought that such things as time-to-production and costs were more important or they would have stopped drilling. Was their bonus plan in sync with the CEO's vision? Hayward's message never got conveyed in the manner it was conceived, yet he certainly felt he had covered it. It appears Hayward was not aware of where his message lost continuity.

Vendors such as Transocean were not true partners that shared the strategic vision.

Rather, it seems like they were adversaries at worst - and, at best - had goals that were poorly aligned with BP's. Did Hayward anticipate the right way to go about making certain his message addressed and was actionable for all key stakeholders? A strong message poorly executed and acted upon is of no value.

BP failed to realize that safety is a competitive advantage and not a cost.

It would seem that safety would be a keystone value or cultural attribute that, at the least, would represent a table stake, if not a direct competitive advantage. How could something so critical to the culture misfire so poorly? Did they really intentionally design their culture and plan to leverage it as an advantage?

First, safety reduces reputation risk; BP’s reputation is likely tarnished permanently with consumers, vendors and employees. Second, better safety reduces real costs in terms of property insurance, health care expense, payroll, regulatory compliance, fines and productivity. Employees who feel safe are better employees.

Obviously, the lack of safety here cost BP $20 billion and threw their years-long growth strategy out the window. BP is an entirely different company now; and worse, they are not calling their own shots.

Hayward thought safety was just about keeping people safe, but deep down, we bet he'd sacrifice a little safety or take some risk for profits. We’re not saying he would lightly see 11 people die, but if safety is viewed as an expense, then a good manager tries to artfully avoid it. If it is part and parcel of your strategic vision, you embrace it and exploit it.

Improperly valuing risk.

We've become so good as managers at mitigating risk that we have begun to put little value on it – much the same way that Wall Street misvalued risk and almost drove the world into depression. When managers are unaccustomed to seeing bad things happen often, they assume that they never will. Planes don't crash very often, but that doesn’t allow airlines to stop giving the safety speech before each flight. The odds of a car crash are small, but most of us still wear our seat belts. Technology has lulled us into a sense of false security about risk. We are so smart that our machines and our models protect us from having to worry about risk – until they fail to do so. They fail us, too, because they are designed by humans. So, you sink 10,000 wells and the worst-case scenario never happens; why should you think it might happen now? Unless your corporate culture is "better safe than sorry," you'll cut a corner if risk is deemed to be low. How many of us have driven to the store without wearing our seat belt? "It's just a few blocks," we say.

Diluting the strategic message.

No organization is more powerful than the one whose people are laser-focused on driving vision to reality. Unfortunately, leaders assume traditional communication channels are effective in disseminating this critical strategic information. However, our research has found that every organization has a "strategic dilution point" where there is degradation in the content and continuity of this message - typically three levels down from the CEO. The result? More than 80 percent of employees attempt to carry out strategy with reduced clarity and focus.

About the authors:

Benjamin Ola. Akande, Ph.D. (akandeb@webster.edu, twitter @Benjamin_Akande), Professor of Economics and Dean, George Herbert Walker School of Business & Technology, Webster University, St. Louis, Mo.

Chuck Feltz (chuck@chuckfeltz.com, @ChuckFeltz) has been the CEO or president of five companies and is a founding partner of Engage Consulting Group. A 1989 graduate of Webster University, he is the co-author of the new book, Never by Chance: Aligning People and Strategy Through Intentional Leadership (Wiley and Sons, February 2010).

Commerce Matters with Benjamin Akande

Source: The Ladue News Review: Getting to Plan B

Date: Thursday, January 21, 2010 11:08 PM CST

Plan B is a place no one wants to go.  In our society, a Plan B isn’t synonymous with success. Even its name comes off as the also-ran, the ‘next best’ thing or the back-up when all else fails. But the truth is, many Plan B’s are better than their alpha predecessors. The smart executive makes sure they are as well-researched and as well-grounded in reality as any of the other plans before them. And as authors John Mullins and Randy Komisar note in their latest bestseller, Getting to Plan B, those ‘also-rans’ could be your answer to beating the odds to succeed.

To prove their point, Mullins and Komisar load their narrative with examples of successes snatched from the jaws of defeat.  To find one of the most striking Cinderella stories, you need to go to Google. No, I don’t mean its search engine.  Look into its business plan.  Google’s original plan was purely academic, with two students at Stanford trying to find a better way of finding information. They did, and by invitation or word-of-mouth, a following was born. But as the demand for Google grew, so did the need for money to maintain its infrastructure. Creators Sergey Brin and Larry Page found themselves in need of revenue.

Brin and Page considered advertising ‘evil,’ so the several Plan Bs that followed focused on investments and licensing. The results were marginal at best, so Google set out to find a better method that wouldn’t fly in the face of their mantra to provide information to all, not just those who can afford it. The answer was paid listings (well separated from Google’s organic searches), and then a cost-per-click model. To this day, no ads are displayed on Google’s home page.

Throughout its evolution, Google’s executives continually identified ‘leaps of faith’ they were making along the way through each of their new plans for revenue.  The reality is that left unguarded, these untested questions (which many businesses bank on) can easily sink a company into failure.  But, according to the authors, Google survived by recognizing them and seeing how they related to the five elements that determine a business model’s viability: revenue, gross margin, operating, working capital and investment models.

As the economy continues its limp out of the recession, more enterprising entrepreneurs will be forced into the world of the self-employed or to take matters into their own hands and start their own business.  For these, the lessons of Getting to Plan B are invaluable.  This is our year to embrace new ideas, to be bold enough to innovate and challenge conventional wisdom. We are all entrepreneurs looking for the next best thing, whether it is a new product or a better way to do things.  All require a solid business plan that is data-driven, strategic, well thought-out and crafted from the lessons learned from other peoples’ mistakes. By heeding the insight in this book, our second plan or backup may turn out to be the best plan of all.

Author offers some tests for nurturing a company

Date: December 14, 2007Publication: ST. Louis Post-Dispatch Section: Business Edition: Five Star Lift Page: B5

Chris Zook, head of Bain and Co.'s global strategy practice, is a seasoned consultant who has dedicated his career to studying why some companies thrive for seemingly an eternity while others fade into oblivion. In his new book, Zook provides a blueprint on how to look deep within organizations to identify hidden or underutilized assets. Zook claims that too many companies are becoming irrelevant and nearing extinction. These companies are unable to find their flaws, and their last resort is based on a hope that their company will become instantly innovative by neutralizing threats without confronting them.

"Unstoppable" boldly predicts that more companies are going to enter a period when their historic core no longer will be sufficient to continue profiting. So how can a company go from unsustainable to unstoppable?

It begins with asking a few simple questions: What is your organization's DNA? What are you really good at? Are you spiraling into crisis? Answering these questions will help define a company's strategic response.

•When followers become leaders. Zook says the best types of followers are those who participate broadly in the market with no differentiation and no sustaining core of their own, followed by those who are brilliant in identifying a growing niche and underserved segment in a market. The third type of followers are new entrants with a unique business model.

•Managing the strategic balance sheet. Zook warns that many companies discover too late that their once-successful growth formula is approaching its limit. Successful companies target new leadership opportunities in the new core instead of chasing hot markets. They seek repeatable formulas for growth and build on hidden assets. Many companies find no viable solution to the collapse of their profit pool, the attack of a disruptive technology or the finality with which their past growth formula suddenly runs out of runway.

•Finding hidden assets. Zook uses the case of the Apple iPod to illustrate how an organization with a declining market presence can be transformed using once-hidden assets. Apple's success came with the launch of the iTunes music store, which, when blended with iPod, enabled iPod sales to take off and attain a 70 percent market share for portable MP3 players, while the iTunes music stores captured 85 percent of the market for download. The combined products and services more than tripled Apple's worth from 2003 to 2006.

Why read "Unstoppable"? I offer four reasons.

•X-ray your organization for hidden assets. The book offers a guide on how to take a closer look at your organization to find your hidden assets.

•Think of capabilities as building blocks for renewal. Leverage your repertoire of hidden assets - undervalued business platforms, unexploited customer assets and underutilized capabilities.

•Give yourself a reality check. Zook claims that knowing where you stand in the market will enable you to find the launch pad for transformation and to appraise the odds of success.

•Don't underestimate the power of focus. Every organization must redefine its business model by moving its strongest capabilities into new markets, being self-aware and demonstrating a willingness to decline attractive opportunities that are traps.

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'Unstoppable; Finding Hidden Assets to Renew the Core and Fuel Profitable Growth'

Chris Zook

Harvard Business School Press, $29.95

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BENJAMIN OLA. AKANDE, IS DEAN OF WEBSTER UNIVERSITY’S SCHOOL OF BUSINESS AND TECHNOLOGY. HIS REVIEW APPEARS ON THE SECOND FRIDAY OF EACH MONTH. READERS ARE INVITED TO JOIN WEBSTER UNIVERSITY’S NEW BIZTALK BOOK CLUB. TO JOIN GO TO WWW.WEBSTER.EDU/SBT/BOOKCLUB.