Strategy for Unpredictable Times

Virgil Carter

A traditional approach for organizational strategy is based on the view that with sufficient analysis, organizations can make reasonable assumptions about their markets, financial and human resources, technology and customer services, and be successful.  Any unforeseen elements can be addressed through strategy adjustments every few years.  Said differently, strategy for many organizations may be based on internal decisions about what the external world looks like.

But what if the future is unpredictable?  What if an organization’s internal views and preferences just don’t align with the external environment in which the organization finds itself?

Author Lowell L. Bryan, in an article in a recent McKinsey Quarterly, “Just-in-time Strategy for a Turbulent World”, points out that “…globalization and technology are sweeping away the market and industry structures that have historically defined the nature of competition… (making it) impossible to predict, with any confidence, which markets a company will be serving or how its industry will be structured—even in a few years hence”.

Bryan suggests an alternative to traditional organizational strategy:  a “portfolio of initiatives” intended to achieve favorable outcomes for the entire enterprise”.  He writes “usually, these initiatives will be organized around themes focused on achieving particular aspirations, such as increasing the reach of the enterprise, entering a new but related industry, or achieving the greater efficiencies.  Portfolio effects increase the likelihood that some of these aspirations will be achieved even if many others fail”.

According to the author, a successful portfolio-of-initiatives strategy involves “creating enough initiatives offering high returns relative to the risks taken to enable a company to meet its aspirations and outperform the expectations of the markets.  The process requires the CEO and management team to “keep an open mind about where the company may be headed”.  Inherent in this approach is the understanding that “future decisions and future outcomes are likely to vary enormously from initial hypotheses”.  Bryan concludes his article by noting that “Most of the critical decisions involve subjective judgments that, unlike those generated by more deterministic strategies, will be informed by not just the highest-quality staff work but also the knowledge gained as time passes”.

Are you operating in unpredictable times?  Perhaps a portfolio-of-initiative strategy is for you!

No Charge for Membership!

Steven Worth

This is the catchy opening phrase of a products and services pamphlet published by a nonprofit, member-based organization; and it struck me, could this be a harbinger of what is to come in the association world?

Such a statement can only be made by a membership organization that is so confident of the value and quality of the products and services it is offering that they don’t want or need your membership dues to help cover their overhead expenses.  Presumably they keep membership data to better track evolving trends, to market their products and services, and to measure effectiveness, but they have an operational structure with cutting edge IP that does not depend on dues-based income at all….. 

Wow.

Three Steps to a Better Top Team

Virgil Carter

Does your top executive team function as well as it could?  Few teams do, according to authors Michiel Kruyt, Judy Malan and Rachel Tuffield, writing in a recent McKinsey Quarterly article.  “In our work with top teams at more than 100 leading multinational companies…we’ve identified three crucial priorities for constructing and managing effective top teams”, the authors write.  Here are the author’s findings:

·          Get the right people on the team…and the wrong ones off:  More than one-third of the executives surveyed said their top teams did not have the right people and capabilities—surprising since the membership of a top team is the CEO’s responsibility.  The key to getting a top team’s composition right is “deciding what contributions the team as a whole, and its members as individuals, must make to achieve an organization’s performance aspirations…”  Achieving this “typically requires conscious attention and courage from the CEO; otherwise the top team can under deliver for an extended period of time.

·          Make sure the top team does just the work only it can do:  Many top teams struggle to find purpose and focus.  “Only 38 percent of the executives we surveyed said their teams focused on work that truly benefited from a top-team perspective”, according to the researchers.  Top teams often fail to distinguish between topics they must act on collectively and those they should merely monitor.  The result can be jam-packed agendas and energy-sapping meetings that drag on far too long and don’t engage the team.  CEOs need to act when such dysfunctions arise, since “it’s unlikely that the senior team members will be able to sort out a coherent set of collective top-team priorities without a concerted effort”.

·          Address team dynamics and processes:  “Among the top teams we studied, members reported that only about 30 percent of their time was spent in “productive collaboration” –a figure that dropped even more when teams dealt with high-stakes topics where members had differing, entrenched interests”.  CEOs may take several steps to remedy problems with team dynamics.  The first is to develop a common, objective understanding of why its members aren’t collaborating effectively.  Another step is “for the top team to take ownership of the changes in the company’s performance and culture and to hold one another accountable for living up to this commitment”.  Finally, most “teams need to change their support systems or processes to catalyze and embed change”.  Correcting dysfunctional dynamics requires focused attention and interventions by the CEO.  Often more than a single intervention is needed.

Each top team is different and “every CEO will need to address a unique combination of challenges” to develop and sustain a highly effective top team.  For the full article, go here:  https://www.mckinseyquarterly.com/Organization/Talent/Three_steps_to_building_a_better_top_team_2743

What Business Are You In?

Virgil Carter

Non-profit organizations and for-profit corporations share at least one trait:  they are often one company, but three businesses!  Beneath the surface of many companies are three kinds of businesses:  1) a customer relationship business; 2) a product innovation business; and 3) an infrastructure business.  Every non-profit organization CEO understands these three kinds of businesses and the challenges they pose.  “Although organizationally intertwined, these businesses differ a great deal”, writes authors John Hagel III and Marc Singer in a recent McKinsey Quarterly article.

“These three businesses rarely map neatly to a corporation’s organizational structure.  Rather they correspond to what are popularly called “core processes”—the cross functional work flows that stretch from suppliers to customers and, in combination, define a company’s identity”, the authors note.  Almost a century of economic theory underpins the conventional wisdom that the management of customers, innovation and infrastructure must be combined within a single company.  “If those activities were dispersed to separate companies, the thinking goes, the interaction costs required to coordinate them would be too great”.

“Sooner or later, companies come up against a cold fact:  the economics governing the three core processes conflict!”  The authors write that, “Bundling them into a single corporation inevitably forces management to compromise the performance of each process in ways that no amount of reengineering can overcome.”

To see into the future of business organizations, “you only need to look at how Internet companies are organizing today”, the authors say.  “Portal companies such as Yahoo! Increasingly focus on managing customer relationships, relying on other companies to provide innovative products and services based on the World Wide Web, on the one hand, and infrastructure management, on the other.”  Many people will think of Yahoo! as a search engine, but in fact its searching product is provided by another company!  And Yahoo! has created business relations with large Internet access providers to manage a large portion of the Internet’s infrastructure.  The result is that Yahoo! can thus concentrate on a single core activity—attracting customers, gathering data on them and connecting them with both advertisers and merchants.

“The secret of success…is not just to unbundle but unbundle and then rebundle, creating a new organization with the capabilities and size needed to win”, say the authors.  What business is your organization in?

The Sweat, Character and Hard Thinking Behind Success

by Steven M. Worth

President, Plexus Consulting Group, LLC

“There is a tide in the affairs of men.  Which, taken at the flood, leads on to fortune…” as Shakespeare noted nearly four hundred years ago; and this has been a popular theme throughout the ages in both popular fiction as well as, in recent years, business management books.  In his book Outliers, Malcolm Gladwell points out the interesting statistics behind most outstanding success stories.  His thesis is so compelling that one might be tempted to conclude that “success” is an odds game—the result of being in the right place at the right time and putting in the right amount of prep time—much like the Peter Seller’s movie “Being There” or the Tom Hanks movie ‘Forrest Gump” in which the leading characters of both movies achieve astounding success in life due to well-placed values and being in the right place at the right time.  Cinderella-tales are comforting.  We see justice rendered in otherwise hopeless situations—the way we rejoice in the news of jackpot lottery winners, imagining that with luck this might one day be us….

We see less of this magic in our work as management consultants.  What we see more often is the truism that successful people and organizations are those who do what the less successful don’t do.  By this I mean they do market research, they develop strategic partnerships with outside groups and organizations, they take calculated risks and encourage innovative thinking, they retire programs and organizational structures that have outlived their usefulness, and they focus their resources with laser-like intensity on those programs and projects that are designed to meet current and future market needs.  We also see the hard work, the agony of failure along with the courage to get up and go at it again, and the humility in knowing that no one can do it all or know it all and that success comes in working in harness with others who share your vision.

What we sometimes fail to see behind the news coverage and trappings of success are what Winston Churchill in another time called the “blood, toil, sweat and tears” of success.  This is unfortunate, because so many are ready to throw in the towel at the first sign of an obstacle.  The late psychiatrist and best-selling author Scott Peck noted in his book The Road Less Travelled that the majority of his patients were people who felt they were failures, or who built their lives around avoiding failure without realizing how much easier it would be if they just recognized that difficulty and uncertainty are not signs of failure but rather normal and expected challenges on the path of success.   

Strategic planning consists in part of recognizing which aspects of your environment you control and which represent external trends over which you have no control but which can present opportunities or threats that you should take into account in your planning processes.  As can be seen in our firm’s recent management survey (to be discussed in our two leadership training sessions that we will be offering through CESSE this year), increasing numbers of managers are using strategic planning as a tool for planning their organization’s success—a tool that is only useful if it is fact-based and backed by a business plan that focuses resources and sets long term and short term measurable goals.  It works, but it does require work and risk and letting go of preconceived notions.  This is the furious peddling that goes on under the graceful swan’s seemingly effortless glide through the water.   

    

Seven Steps to Better Brainstorming

By Virgil Carter

Organizations thrive on good ideas.  Yet many attempts at brainstorming are unsuccessful.  You can boost the odds that your organization will generate better ideas—and act on them—by asking better questions.

Kevin Coyne and Shawn Coyne write on brainstorming in a recent McKinsey Quarterly issue.  “Brainsteering” is their term for improving on brainstorming, which seems to be so difficult in so many organizations.  Here are their “Brainsteering” criteria:

Know your organization’s decision-making criteria:  One reason good ideas hatched in corporate brainstorming sessions often go nowhere is that they are beyond the scope of what the organization would ever be willing to consider.  Managers hoping to spark creative thinking in their teams should therefore start by understanding the real criteria the company will use to make decisions about the resulting ideas.  The goal is a “fistful of ideas that are practical, affordable and profitable within one fiscal year” is an example of specific real criteria.

Ask the right questions:  Decades of academic research shows that traditional, loosely structured brainstorming techniques are inferior to approaches that provide more structure.  “The best way we’ve found to provide it is to use questions as the platform for idea generation”, the authors note.  In practice this means building your workshop around a series of “right questions” that your team will explore in small groups.

Choose the right people:  This rule is simple:  pick people who can answer the question you’re asking.  Choose people with firsthand, “in the trenches: knowledge.

Divide and conquer:  To ensure fruitful discussions, don’t have your participants hold one continuous, rambling discussion among the entire group for several hours.  Instead, have them conduct multiple, discrete, highly focused idea generation sessions among subgroups of 3-5 people, focusing on a single question for 30 minutes.  Isolate the “idea crushers” in their own subgroup.  Take the 15-20 questions you prepared earlier and divide them among the subgroups, about 5 question each.

Ready, set, go:  Before dividing into subgroups, orient them about expectations about what they will—and won’t—accomplish.  Thoughtfully consider and discuss a single question for 30 minutes.  Prepare your groups for the likelihood that when a subgroup attacks a question, it might generate only 2-3 worthy ideas.  Urge your participants to preserve through the initial 5 minutes and get past the “typical brainstorming” reactions.

Wrap it up:  By day’s end, a typical subgroup has produced perhaps 15 interesting ideas.  Don’t have the full group choose “best ideas” from the pile.  Instead, have each group privately narrow its own list of ideas to a top few and share all the leading ideas with the full group to motivate and inspire participants.  Don’t try to pick a winner!  Close with a description of what steps will be taken to choose winning ideas and how they will learn of final decisions.

Follow up quickly:  Decisions and follow-up activities should be quick and thorough.  Close the loop with participants and make sure to communicate the results of the decisions quickly to everyone involved, even when an idea was rejected. 

“Scrap traditional brainstorming techniques,” urge the authors, and “use more focused, question-based approaches”, enabling senior managers to consistently coax better ideas from their teams.