Monday, 24 April 2017

Agility needs a strategy

Agility is another idea frequently posited as being superior to strategy.

The argument goes that the world is changing too quickly for long-term plans and strategy to add value, and that firms should instead just focus on being agile and quick to respond to change.

Once again, I think that this presents a false dichotomy. (See also False dichotomies and the noise before defeat.)

Agility is not an alternative to strategy. In fact, as a goal, agility itself requires a strategy:
  1. What should firms do in order to become (more) agile?
  2. How should firms avoid the pitfalls of agility?
  3. How do firms decide where to pivot and where to stick? etc.
Agility is a fairly well-developed concept in the field of software engineering and development. A cursory review of the literature will reveal how many different approaches and methodologies for agility there are. Each has pros and cons and is likely to be relatively more or less suitable under different circumstances. That same literature is also full of cautionary tales of firms who have failed to implement these approaches well.

Strategy itself is not only about the long term. Strategy should also be about the here and now. In fact, one of the advantages of a solid strategy process is that it ensure that the myriad decisions that firms face on a daily basis can more easily be made in a way which aligns towards a common goal.

Strategy facilitates agility. When faced with an unforeseen event, stakeholders can more quickly agree which responses most closely align with the strategy and respond more quickly and with greater confidence and alignment. Contrast this with a firm which makes each and every decision independently - decisions will likely take longer, and may involve frequent changes of direction and even reversals.

However, agility often conceals strategy. Commentators easily observe apparently agile changes without appreciating the underlying strategy which guides them. As Sun Tzu said:

All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.

Monday, 10 April 2017

The digital spiral towards innovation at the core

The nature of what the digital revolution means is evolving as organisations adopt digital in more mature and fundamental ways.

It started at the edge of the organisation, where the organisation touches its customers and has evolved ever deeper into the organisation to where it now enables completely new ways of creating and delivering value.

Although this evolution is a continuum of change, I find it helpful to divide it into four distinct phases.

1. E-commerce


The first phase allowed businesses to market and sell their (existing) products and services to more customers more easily over digital channels. It started with marketing, using informational websites, email and social media to reach customers, and gradually grew to include selling, and eventually servicing.

During this first wave of e-commerce, often referred to as Web 1.0, a myriad of startups flooded the market selling everything from books to pet food, whilst established pre-e-commerce business struggled to keep up. The inevitable bust which followed the boom left a much smaller number of massive winners (think Amazon.com), a much larger number of failures (think Pets.com) and that almost no businesses exist today without a web-site.

E-commerce had more fundamental impacts on business strategy, though. Most importantly it exposed how a lack of integration within the organisation and its system made it difficult if not impossible to deliver coherent DIY and self-service solutions to the end customers. From this, the concept of customer-centricity was born. (Although I believe this term has now taken on a life of its own and been widely misappropriated.)

2. Supply chain automation


Whilst the focus of this first phase of e-commerce was on end consumers, the second phase tackled the B2B relationship between corporate buyers and their suppliers. B2B e-commerce sites quickly evolved to provide more direct integration between buyer and supplier systems. Standards, such as XML quickly evolved to facilitate this.

Supply chain automation can be used to make existing exchanges of information more efficient. It can also increase the flow of information. For example, RFID allows retailers, distributors and manufacturers to track stock levels and movement, automating stock management and better integrating with robotics.

Not only did this improve efficiencies, with smaller orders and faster delivery cycles, but it also allowed previously monolithic organisations to disaggregate into networks of smaller interdependent and more specialised suppliers.

McKinsey & Co estimates that whilst 49% of companies invest in E-commerce, only 2% of companies invest in digitalising their supply chain.

3. Workforce automation


With both the customer and supplier ends of the value chain being digitised it was inevitable that digitisation would begin to encroach on the work done by employees in between,

Although we've had expert systems for many years, it is the development of digital customer and supplier interfaces which generate the data required to move them towards true artificial intelligence. For an explanation of this effect, see More data usually beats better algorithms.

Information-based jobs will inevitably be hardest hit first. Think of insurance underwriters and claims managers, fund managers, accountants, etc. But inevitably most jobs with any element of repetition will be impacted. Taxi drivers are at risk from autonomous vehicles, for example, and there is already talk of robots performing some surgeries more accurately than skilled surgeons. There is already evidence that banks are hiring fewer people with finance backgrounds to do the work, and more people with technology skills to automate it.

I prefer to think of workforce automation in terms of augmentation, rather than replacement of people. The industrial revolution provides a well-established narrative of technology replacing labour and yet somehow creating new and different jobs in the process. I think most of us are grateful that we don't have to do the heavy labour now replaced by machines, and I think that future generations will be grateful not to have to do some of the repetitive and uncreative jobs many people do today. (The emerging millennial workforce is already rejecting much of this kind of work.)

It strikes me as anachronistic that organisations are slow to adapt and to provide their employees with the same level of tools to use in their jobs as other companies provide them to use as their customers. Ultimately, this flows through into the customer experience when call centre operators are unable to provide quick and definitive solutions, leaving you with the impression they are still switching between multiple disconnected systems to get answers and process requests.

4. Digitisation


The resulting end-to-end digitisation of the value chain opens up possibilities, not just for delivering existing products and services more effectively, but for creating entirely new products and services.

Again, this started with information-based products: think, for example, of the development of subscription-based streaming media services, compared to purchased physical media or broadcast services. But it is now moving increasingly into physical products as well.

This is enabled by the Internet of Things (IoT), a network of sometimes semi-autonomous things able to sense elements of the real world and communicate with each other and controlling systems. Already we have devices fitted in cars which can collect data about the performance of the car and can communicate this to service technicians and insurance companies. We also have activity trackers which measure things like sleep, activity levels and heart rate on a continuous basis, and upload the data to servers for analysis.

Of course, it is still hard to imagine where this could go. Imagine that your calendar/organiser is able to determine where you are now, where you need to get to for your next meeting, and can arrange for an autonomous vehicle to take you there, all without you needing to do anything.

Note only does digitisation replace or enhance physical products, and create completely new entirely digital products, it also often develops whole new ecosystems of digitally connected organisations, people and devices which collaborate together in previously unimaginable ways.

McKinsey and Co research suggests that 70% of companies approach digitisation without changing their overall strategy, but that the 30% that do, generate 3 times the profit

When I look at offices and factories full of people hunched over keyboards, screens and other equipment, I always get the sense that somehow it is the people working to satisfy the requirements of the machines. I read today a prediction that in 10 years time, most interfaces will not have a screen. I believe that is because the machines will talk to us, as we now talk to each other, and talk to each other silently using some form of wireless protocol. In a fully digitised world with a fully developed IoT, you can imagine that finally, it will be the machines who serve the people, fading into the background as they do.

Lessons


I think there are two key lessons from understanding this evolution of digital strategy:
  1. Organisations who remain focused on e-commerce alone will eventually be outcompeted by those that embrace all four stages of digitisation. All organisations must now look at all four phases of digital in parallel in order to remain competitive.
  2. Organisations where a high proportion of the total labour cost is direct (that is directly proportionate to the volume of products and services provided to customers) rather than indirect (that is devoted to researching and developing new and improved propositions) will fall behind. Employees should be firmly focused on creating new sources of value, and not delivering existing sources of value.

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 StratNavApp.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 StratNavApp (disclaimer: I am the founder of StratNavApp) 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: