Big business appears to favour big change

Big business appears to favour big change - that is, big initiatives, organising lots of people with large budgets, culminating in big announcements. I think that this is partly because bigger initiatives with bigger budgets look better on CVs.

But smaller incremental changes may produce better results:

1. They start to earn a return sooner.
2. The get customer feedback sooner - allowing you to change, speed up, slow down or even abandon programmes of change.
3. They needs less, if any, financing.
4. They are easier to project manage.
5. They allow you to try more alternatives, abandoning directions that don't seem promising and continuing with those that deliver results.

Success can then be measured in terms of outcomes, not initiatives - in terms of measures like customer acquisition, satisfaction and retention rates, operational efficiency, costs and revenues, rather than in terms of projects delivered (whether or not they delivered any actual benefits).

I think it is time big business started seeing change as a continuous process, an element of culture, rather than a series of events. Almost any project can be broken up into a series of smaller changes. As a rule of thumb, I believe that, projects should be broken up into the smallest separately deliverable changes possible.

We do it every day, but do we do it well?

Strategy is something we all engage in every day. We set goals, and we decide what to do to achieve them. We may do it consciously or unconsciously. Our resulting strategy may be to sit back and see what happens, or it may be to proactively take actions we think will get us what we want. We may reason our actions through carefully, or we may make decisions on the fly. Our decision and actions may take us closer to our goals or they may not.

All of this is in the nature of doing strategy.

However we do it, there is no way to avoid it. So the only choice we have is about how well we do it.

The maxim:

An unexamined life is not worth living

might have been written about strategy. In a commercial context we might paraphrase this as "an unexamined business is not worth leading".

If we are going to do strategy well, we must think about 

1. how we examine our circumstances - are we truthful with ourselves or do we foster comfortable and familiar delusions,
2. how we make decisions - are we rational or do we let negative emotions and whims get in the way,
3. how we act - do we prepare appropriately and are we willing to make the effort and persevere, and
4. how we reflect - do we take the time to reflect on how we'll we've done on steps (1) to (3) and whether we're in fact achieving our goals and that they're satisfying us?

Strategy Risk: The Importance - Attention Matrix

One of the biggest strategy problems is to fail to pay attention to the right things.

If you map the relative importance of issues to your strategy against the relative amount of attention they receive in the organisation, as shown to the right, you get three outcomes:

1. Risk arises where issues which are strategically important receive inadequate attention
2. Waste arises where issues which are not strategically important receive too much attention
3. Performance occurs where all aspects of your strategy receive the right amount of attention, be that a lot or a little.

Consider the situation encountered in many mature organisations. The accountants take over, and financial matters get more attention than they need (sometime resulting in financial over-engineering problems and financial risks). In the meantime, in those organisations, customer issues often get very little attention, even as the organisation's customers' start to look elsewhere, exposing the business to strategic risk.

On the other hand, in entrepreneurial startup organisations, the organisation often focuses overly much on customer related issues, with inadequate attention to financial issues, and so runs into cash flow or debt issues. Alternatively they fail to pay sufficient attention to process, and run into problems with scalability once the business takes off.

Part of a strategists role is draw people's attention to the right balance of what requires attention. Unfortunately this often means calling attention to future challenges while the present seems very rosy. This can lead to the Cassandra effect - where your attempts to look to what is important for the future are doomed to be ignored in favour of what is currently attracting attention. In these circumstances, careful stakeholder management is required to take key stakeholders on a journey from what they're currently paying attention to to what they should be paying attention to.

The World Economic Forum's Global Risk 2013 report

photo credit: World Economic Forum via photopin cc

The World Economic Forum released their 8th Annual Global Risks report this week.

The executive summary outlines 3 key global risk scenarios, which I've paraphrased here:

1. Testing Economic and Environmental Resilience: We continue to push our economic systems and the environment to its limits. A simultaneous shock to both could create the perfect storm and overwhelm both.
2. Digital Wildfires in a Hyperconnected World: The rapid and widespread dissemination  of misinformation could result in a global panic - the dark side of the rapid growth of social media and the democratisation of mass communications.
3. The Dangers of Hubris on Human Health: Recent advances in healthcare may have lulled us into a false sense of security, even as we approach the limits of our existing approaches to combating ever mutating threats.

How much attention you should pay to global threats of this nature depends on what kind of organisation you are. Clearly, if you're a global bank, insurer or health care concern, these should be near the top of your agenda. However, if you're a corner fish and chip shop, there is probably not much you can do about these issues and so there is not point in wasting too much time worrying about them. For most of us, the challenge is working out where we fit between those two extremes.

How could Jessops have avoided administration?

UK high street camera retailer Jessops became the first high profile UK business to go into administration during 2013.

Fundamentally, what happened was its customers' habits changed, leaving the retailer stranded: the lower end of its market abandoned the stand-alone camera as the cameras bundled into their mobile phones became more than adequate for their needs in terms of quality, and much more convenient, whilst the higher end of their market found they could get larger product ranges at cheaper prices from a large number of niche online retailers.

What could Jessops have done? I think there are broadly three strategies it could have considered:

1. It could have followed the lower end of its market into the mobile phone market. This would have taken it directly into the existing and cut throat mobile phone retailing market and it is questionable whether its retail foot print would have been big enough to succeed in this strategy.
2. It could have followed its high end customers into the specialist arena. To succeed here it would have had to identify an edge it had over the many niche providers. Probably it would have had to rely more on online distribution and to close all but a few flagship physical retail outlets.
3. It could have moved beyond product (i.e. cameras) to purpose (e.g. images), perhaps by providing facilities for in-store novelty gift creation directly off customer's mobile phones. I am thinking of small runs or even single items of key-rings, mugs, phone covers, etc. with customers photographs and mess ages printed on them.

Perhaps Jessops had considered these options and had been unable to get any of them to work. I don't know. What I do know is that sticking to its existing strategy while its customers' behaviours changed had clearly not worked, and now it is for the administrators rather than management to find a solution.

What else do you think they could have considered? Please leave your comments below.