Monday, 27 March 2017

False dichotomies and the noise before defeat

I was reading yet another blog post the other day about how, in today's fast changing world, execution is more important than strategy; that strategy has somehow become irrelevant, even. I find such articles to be about as unhelpful as the similarly argued ones about how culture trumps strategy.

The problem is that they are based on a false dichotomy. That is, they assume that we need to choose strategy OR execution (OR culture). The reality is, we need strategy AND execution (AND culture, etc.) in order to succeed.

Arguing that execution is more important than strategy is like arguing that the heart is more important than the lungs. Without the lungs, the heart would pump unoxygenated blood, and we'd die. Without the heard, the oxygenated blood would not circulate, and we'd die just as quickly.

The film, Titanic, gives a great example of what happens when you focus too much on execution and not enough on strategy. The journey starts off splendidly. So much so, that the captain orders the crew to increase speed so that they can arrive in New York ahead of schedule. Execution was humming. Unfortunately, all that extra speed just meant that they hit that iceberg even harder!

What they lacked was strategy: a process which might have resulted in them identifying and anticipating icebergs earlier, loading more lifeboats, sticking to the planned speed, charting a different course for New York, etc.

Execution without strategy simply take your business in the wrong direction more quickly.

The saying, often misattributed to Sun Tzu, goes:
Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.
Yes, it is true that the world we live in now is quite different to the world in which the authors of the classic texts on strategy lived. But a read of Sun Tzu's 2,500 year old text, The Art of War, shows that many things remain remarkably the same.

One thing that has changed is the very pace of change itself. New ideas spread more rapidly now than they ever have before. But the pace of change has been accelerating since at least the invention of the printing press, and we can only expect that it will continue to accelerate. So, in a sense, even this is nothing new.

Furthermore, the accelerating pace of change makes the importance of strategy even greater than before, and certainly not less. To suggest that we abandon strategy in the face of accelerating change is a folly akin to suggesting a driver closes his eyes whenever the car exceeds a certain speed. Instead, at higher speeds, we need better systems for sensing, anticipating and responding to what is coming. And, as the case with cars illustrates, we need to increasingly rely on technology to do so.

In short, strategy needs to evolve alongside everything else. It should not be abandoned or subjugated.

So, let's be done with the false dichotomies, accept that we need strategy AND execution (AND culture, and a whole host of other things) and redouble our efforts to do develop and execute better strategies even more effectively.

photo credit: 3279461836 via photopin (license)

Monday, 23 January 2017

Experience trumps promotion

Some years ago, I wrote about a positive experience I'd had as a regular flier on British Airways, and how I suspected it had been part of a well-executed campaign. You can read the post here: British Airways just made my day.

More recently, I met a lady who'd worked in British Airways's marketing department around that time, and so I asked her about it. Her response slightly surprised me: "How did you know about that? We didn't really promote that campaign."

In marketing, it is easy to get so caught up in what we tell customers about our company / product / service, that we forget that what matters so much more is what they actually experience.

The holy grail, of course, is for the two to align completely: for the marketing message to help existing customers to better describe the experience they had, and to help new customers look forward to the experience they will have. And we all know what happens when the marketing message promises more than the experience delivers: disappointment and mistrust.

British Airways delivered me an experience that made me feel even better about being a regular customer. That they did it without fanfare probably made the experience feel even better.

photo credit: BriYYZ via photopin cc

Monday, 19 December 2016

Happy Holidays from Chris C Fox Consulting


Merry Christmas and a Happy New Year to all of you who celebrate these happy occasions.

2016 has been a challenging year for decision makers with, amongst other things, the results of the #Brexit Referendum and the US Presidential Election taking many by surprise and increasing uncertainty in business environments.

Of course, this all makes it more important than ever for leaders to develop, communicate and pursue strategies based on rigorous analysis of the competitive, political and regulatory environments, thorough development and evaluation of options and alternatives, and disciplined yet responsive execution of plans.

Unfortunately, recent research conducted by Forrest Consulting shows that half of all organisations continue to skip proven techniques for better generating and assessing strategy options, and that few draw on external support to improve strategic decision making.

The New Year offers all of us a new start. It is a time for reflection and resolutions. However, according to the Guardian, in Britain at least, two-thirds of people had broken their New Years resolutions before February. I believe that part of the reason for this may have been that those resolutions were made too lightly: without careful thought, and without putting in place the conditions and infrastructure for success.

Strategy is the antithesis of this:- based on rigorous analysis and executed with discipline. and conviction.

It goes without saying that, as an experienced independent strategy consultant I'd love to help you to develop, communicate and execute market leading strategies, and I would invite you to contact me for this purpose. Alternatively, I'd like to invite you to start or refresh your own plans using our market-leading collaborative platform for strategy development and execution at StrategicLearningApp.com.

As you're starting to think about 2017, in case you missed any, here is a small sample of topics I've recently written about for your holiday reading list:

Image credit: Designed by Freepik

Wednesday, 14 December 2016

Forced compliance is not the same as strategic alignment

Good strategy can be divisive. Any change results in winners and losers. Some people have a strong preference for the status quo above almost any change.  In fact, it is said that if no-one objects to your strategy, it is probably not a very good strategy.

A common response from strong leaders is to demand compliance. "FIFO!" they declare ("Fit in or F off"). Those who oppose are chastised, marginalised and even dismissed.

Strategy almost always requires people to work together to achieve it - so-called strategic alignment. But strategic alignment cannot be demanded, it must be earned. If those opposed to a strategy don't feel free to voice their concerns, then they will simply go underground, proclaiming their support while subtly working to undermine the strategy.

There is, of course, a middle ground. And it is much better than having a strategy so bland that no-one disagrees, or a culture so based on fear that no-one dares to.

The fact is that every strategy has risks and downsides - the bolder the strategy the greater the risks and downsides invariably are. To pretend otherwise is folly. And to dismiss discussion of them denies you the opportunity to better understand and mitigate them.

A good strategist pursues their strategy relentlessly whilst also remaining acutely aware of and actively mitigating the risks.

The solution is to reframe negative criticism into constructive problem solving. Ask questions like:
  1. "Given your concerns about what could happen if we pursue this strategy, what steps might we take to limit the probability of that happening or to limit the impact if it does happen?"
  2. "If you think it won't work, what would have to happen in order to make it possible?"
  3. "If you think that is not how things work, what would it be like if things did work that way?"
When listening to the answer, listen from a perspective of believing that they really are coming at the problem from the perspective of what they believe to be in the best interests of the business. If you can't find that perspective, probe deeper. Look for shared views, rather than differences of opinion, and then use those shared views as a common platform from which to analyse your differences.

You may never convince them to support your strategy, but you will gain a much deeper understanding of the risks and possible mitigating actions. And people who feel they have been genuinely consulted and listened to are much more likely to give you the benefit of the doubt and support your strategy, even despite their concerns, than those who've been marginalised.

And if you find yourself on the wrong side of your bosses strategy, then even if he or she does not ask you questions like that, then simply expressing your concerns as if they were answers to such questions will make them seem more supportive whilst still voicing them.

Of course, there will come times when you simply cannot agree - when you simply want different things for your futures. Perhaps then it really is time to part company. But it is better to part company as friends than as enemies.

Friday, 18 November 2016

StratML and the StratTech revolution: use cases in the private sector

Sample StratML

What is StratML?

Strategy Markup Language ("StratML") is an XML-based vocabulary and schema for representing the information commonly found in business strategy and performance plans. Part 1 is an ISO Standard (ISO17469-1), whilst Parts 2 and 3 are still under development.

What is StratTech?

Technology has transformed almost every aspect of business: CRM for customer relationship management, ERP for records management, email and social media for communications, etc. by contrast, consultants and strategy departments continue to rely on email, spreadsheets, word processors and presentation tools for developing and executing strategy.

However, new tools, like StrategicLearningApp (disclaimer: I am the founder of StrategicLearningApp) are emerging which use technology to improve collaboration, traceability/auditability, security, and, ultimately, scalability in the processes supporting the development and execution of strategy.

Open standards, like StratML, provide an important foundation on which such StratTech tools can be built.

Use cases for StratML in the private sector

Much of what has been published regarding StratML to date focuses on the public and charity sectors. However, I believe that the implications within the private sector are far more wide-reaching.

I can imagine several use cases for StratML (or future extensions or variations of it) in the private sector.
  • Consolidating strategy and performance plans in large organisations / conglomerates.
  • Submitting strategy and performance plans / prospectuses in the private equity and venture capital sectors.
  • Submitting strategy and performance plans / prospectuses to rating agencies and stock markets.
  • Submitting commercial loan applications.
  • Submitting strategy and performance plans to third-party certification agencies. (Such as Corporate Social Responsibility ("CSR") and other standards bodies.)
  • Submitting fund mandate and performance data to investment platforms.
  • Making strategy and performance plans directly available to fund managers and investment analysts.
Each of these processes requires the creation, transmission and processing of information typically found in strategy and performance plans. As such, StratML could improve them by increasing consistency and making it possible to transmit the information directly from one computer system to another, eliminating the need for people to resort to time-consuming and error-prone cut-and-paste.

StratML remains immature - for now - but should prove to be an important pillar of the StratTech revolution.

I invite you to contact me if you would like to discuss how StratTech and/or StratML could help your business.

See also:

Wednesday, 16 November 2016

Getting the most out of KPIs

There are two old adages, "You can't manage what you can't measure" (from Peter Drucker) and "What gets measured gets done" (provenance unknown) which apply as much to strategy as to most other things.

That is why I always advocate that you articulate your strategy all the way through to measurements (and targets).

A simple wat to do this is to translate your strategy and vision into goals, break those goals down into SMART objectives, and create measurable KPIs and targets to describe those objectives.

What sounds simple in theory can be extremely difficult in practice, and I see a lot of companies give up altogether, or build dashboards out of the data that is readily to hand whether or not it describes their strategy.

Type of KPIs

In addition, not all KPIs are created equal.

For example, you get:
  • Quantitative KPIs: represent things you can measure using some unit of measurement. Examples include Sales (measured in units sold) or Sales Revenue (measured in monetary terms).
    • Synthetic KPIs: are a subset of Quantitative KPIs where instead of measuring something, you create a score which may be a composite of a range of measureable phenomena. For example, Google's PageRank is a synthetic score calculated for a web page based on the PageRank of every page linked to it combined with an authority score for the author of the page. Net Promoter Score (or "NPS") is another example calculated using a defined formula determined from customers' answers to a simple question.
  • Qualitative KPIs: represent things you can categorise and rank. Examples include high, medium and low or variants thereof, or initiatives which are recorded as moving through stages (initiation, analysis, design, development, testing, deployment live, etc.)
  • Binary KPIs: represent things that either are or are not. Examples include initiatives which are shown as being on track (or not), or complete (or not).

Information Content

Different KPIs provide different amounts of information content. Quantitative KPIs, especially very granular ones, tend to have the highest information content. Qualitative KPIs have less information content: if a KPI is high, how high is it? If it still high in the next measurement period, is it higher or lower than it was the previous time? Likewise, if a KPIs shows a stage in a process, how close is it to moving to the next stage? Unidirectional binary KPIs contain the least amount of information: for an example, an initiative is not done, right up until the point it is done, after which it can never be not done again - it will ever only yield exactly one bit of information.

For this reason, I always prefer quantitative KPIs over qualitative KPIs, and I avoid binary KPIs, especially unidirectional binaries, as much as is humanely possible. Invariably, I find that qualitative KPIs and binary KPIs can be translated into quantitative KPIs, but that is perhaps a subject for another post.

Objectivity and verifiability

A second consideration in selecting PKIs is how objective and verifiable they are. For example, quantitative KPIs which come directly from a business's independently audited financial statements tend to be quite objective (although not always very strategic).

Subjective measures can be made more objective (and often more quantitative at the same time) by average the opinions of large numbers of people (this is how Net Promoter Scores work, for example).

Qualitative or binary KPIs based on one person's (or a small group's)  opinion, on the other hand, are much more open to bias. I am sure we have all seen initiatives declared as complete by politically motivated sponsors when everyone knows that key outcomes have not been delivered.

Including projects on strategy scorecards

As a category, KPIs for the completion of projects deserve special mention. I am personally not a fan of including these in strategy scorecards because (1) the usually have low information content (as outlined above), (2) quickly become political and subjective (also as outlined above) and (3) you either clutter your scorecard by including every initiative in the organisation, or are forced to make subjective choices about which to include and which to exclude.

Much better I believe, is to focus the strategy scorecard on the strategic outcomes to be achieved by the projects. This has the added benefit of rewarding agile projects which deliver some benefits early, over higher risk 'big bang' projects which backend all of the benefits and which are problematic in their own right. As a side note, if part of the organisation's strategy is to improve its execution / project delivery capability, then I think there are more than enough quantifiable capability metrics that can be aggregated across all projects.

Conclusion

KPIs are powerful enough to make or break a strategy, and they are notoriously difficult to get right. They can be used to minimise the interference from (corporate) politics, and drive execution. Extreme care and diligence should be applied when setting them.

Thursday, 10 November 2016

How should strategists respond to the US election result?

Yesterday (Wednesday), we learned something very important that we didn't know on Monday. We learned who will be the next resident at the Whitehouse.

You may have hoped for, anticipated, predicted or even expected either this outcome or the alternative outcome, but that is now in the past. Irrelevant. What was a possibility is now a (near) certainty.

As strategists, it is not our job to happy, sad, fearful or even angry at such outcomes. But it is our job to help our clients / employers / stakeholders to understand and respond to such developments in the most constructive way possible.

How can we do that? Here is a 4-step playbook:

Step 1: Update your PESTEL analysis

The first step would be to update your PESTEL analysis, particularly the P element which represents the Political trends, threats and opportunities your business faces (and maybe also the E element which represents the Environmental trends, threats and opportunities).

We know from president-elect Trump's campaign speeches what policies he would like to enact. The probability of those policies being enacted has now increased significantly. Note, that they are still not certain. Trump would not be the first political to fail to deliver on his campaign policy pledges and so our strategies should allow for political failure and compromise. But they are definitely more likely. At the most macro level, these changes are likely to impact free trade, energy and environmental policy, and minority groups' rights / diversity.

Your PESTEL analysis should include the possible macroeconomic consequence of implementing or failing to implement these policies in terms of trade, foreign exchange, GDP growth, employment, interest rates, etc. You should take into account not just direct action by the US government, but also how other US institutions and other nations might respond.

STEP 2: Update your competitor and business model analyses

Having considered these macroeconomic impacts, the second step would be to consider the microeconomic impacts. How might your competitors, suppliers, distributors and customer respond or be impacted by the policies and macroeconomic consequences outlined above. This should cause you to revisit your competitor analysis as well as your business model analysis.

STEP 3: Update your scenarios

Thirdly, your should review your scenario analysis to take into account the macro- and microeconomic insights generated above. It may be that your existing scenarios just need fine-tuning, or you may find that the changes are significant enough to warrant the development of completely new scenarios.

STEP 4: Review your open strategic decisions

The fourth and final step is to re-evaluate, and where necessary change your strategic goals and plans. The plans you have today were based on the analysis you did before this new information became available. It is, therefore appropriate to refresh your decision matrices and re-evaluate your decisions. For example, a European wind-turbine manufacturer with plans to expand into the US may now consider it more prudent to focus its investment elsewhere.

In re-evaluating your strategic goals and plans it is important to consider the sunk costs incurred since the decision was already made. If the European wind-turbine manufacturer has already committed 90% of the investment required to enter the US market, it may still make more economic sense to spend the remaining 10% than to start from scratch in another market.

BONUS: Don't wait for your annual planning cycle

Too much strategic thinking and planning is tethered to organisations' annual planning cycles. You may have just completed yours for 2016. But events of significant strategic importance follow their own timetables. That is why strategy should be a continuous and fluid process. If you wait until your next annual cycle you may find your competitors have stolen a march on you.

The largest economy in the world has elected its next leader. He has made it clear that he plans to change much. This will have consequences for all of us, wherever we are in the world. As strategists, it is our job and our professional responsibility to understand those changes and how to take them into account in helping our clients, employers and other stakeholders. So, let's crack on.

PROMOTION: StrategicLearningApp is designed to make it easier for you to do strategy on a continuous and collaborative basis. If you've not already done so, why not try it now?