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The Critical Gap in Business Strategy Execution: Insights from Feb 2024

Reflecting on 2023, I made a startling discovery about business strategy!

I analysed* thousands of projects on StratNavApp.com during 2023. I found that of those that got as far as setting strategic goals and/or strategic initiatives:

  • Fewer than 25% got as far as setting KPIs.**
  • Fewer than 20% actually tracked those KPIs.

That means that more than 80% of those strategies never progress beyond being a theoretical assumption about what should work. Even if they're executed, there is no way of knowing if they're producing the intended outcomes or not. They're flying blind!🚫👀

I challenge these organisations to:

  1. Break your strategic goals down into SMART objectives.🎯

    SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound.

  2. Establish clear Key Performance Indicators (KPIs) for tracking each of them.🔍

    Together, these objectives and KPIs are often called Objectives and Key Results (OKRs).

  3. Regularly track actual performance against them.

  4. Analyse your performance against expectations.📊

    It's important to set expectations in advance, otherwise you risk simply settling for whatever results you get.

  5. Make appropriate adjustments to your strategy if the results aren't what you'd anticipated.🔄

    There is no point in just carrying on with your strategy if it is not producing the intended results.

  6. Keep repeating as you watch your business flourish.🌱

Fortunately, StratNavApp.com provides you with all the tools you need to do this in one convenient place. It even uses AI to help break through any barriers you might encounter. You can learn more about how it does this at Goals, Objectives, KPIs, Targets, Initiatives and Actions and Creating a Strategy Scorecard.

If you need more help than that, please contact me.

But don't hesitate. The sooner you start the sooner you can start enjoying a more successful 2024!

Share your thoughts and questions in the comments below.👇

Notes:

* NB: StratNavApp.com provides the ability to do this kind of analysis without ever looking at what your strategy actually is. Your strategy is always confidential to only you and those you choose to share it with.

** The actual figures are 23.9% set KPIs and 19.1% tracked them.

*** Some strategies built in StratNavApp.com may have built and tracked their KPIs on another platform. We estimate this number to be small as a virtue of StratNavApp.com is that it provides an integrated platform for strategy development and execution.

See also:

Strategy: More Than Just an Annual Ritual - It's a Continuous Discipline

It's very important that your business complies with the law.

You need to enter into contracts with employees, suppliers, distributors, and customers. You need to make sure that those contracts are fit for purposes, and that both you and your counterparties comply with their terms.

One way to ensure your business remains legally compliant is to take your top leadership team on an Annual Legal Retreat. Over the course of 1-3 days, you can discuss all of the legal issues that might apply to your business, update yourselves on recent legal developments, and make all the decisions you need to make until next year's Legal Retreat.

And since your organisation's leaders are your top employees in disciplines like operations, marketing, human resources, and finance, they should have no problem covering the full gamut of the law in just a few days once a year.

I am, of course, joking! That would be absurd!

We don't expect to handle everything to do with the law - or with financial management, human resources, marketing, operations - in a short off-site once a year.

So why do so many organisations think that they can get away with doing that with strategy?

Is having - and successfully executing - a sound strategy less important than any of those other things?

You don't go on an annual marketing retreat, you hire a CMO or a marketing consultant. You don't go on an annual HR retreat, your hire a head of HR or an HR consultant. You don't go on an annual legal retreat, you hire a lawyer or engage a law firm. You don't... you get the picture.

Like all those other disciplines:

  1. strategy is a unique discipline requiring specialised skills and experience.
  2. effective strategy demands year-round attention, not just an annual review.
  3. modern strategy needs tools - which in today's world means software like StratNavApp.com - which are fit for purpose.
Your strategy is executed in everything you do - in every decision you make - every day. And it is impacted by and may need to be adjusted in the face of external market events which can arise at any time. This can't be handled on a 2-day offsite once a year.

Your options are:

  1. Hire someone: You can hire a Chief Strategy Officer (CSO) with the right skills and experience in doing business strategy and give them a seat at the top table, just as you're hire a Chief Financial Officer (CFO), Chief Marketing Officer (CMO), HR Officer (HRO), etc.
    or

  2. Use external consultants: If you're a smaller organisation and can't afford permanent dedicated resource, or even if you just need some extra lifting power from time to time, you can hire experienced and expert strategy consultants (like Chris C Fox Consulting!) to help,
    and

  3. Use purpose-built software: Both of the above approaches are significantly enhanced by using dedicated software, like StratNavApp.com, for strategy development and execution, just like you probably use dedicated accounting software, marketing tools and an HR Management System (HRMS). This will ensure that your strategy is both soundly formulated and executed with discipline.

Share your thoughts in the comments below: Does your organisation take strategy seriously enough? Or does it pay lip-service to strategy once a year and then hope for the best? Let's discuss how we can shift the narrative from strategy as an annual event to a continuous discipline.

If you need help with you business strategy or any related issues, contact me for a no-obligation consultation.

P.S. Remember, strategy is not just an annual checkbox. It's the guiding force that drives your business forward every single day. 🚀

Navigating the Shift: Balancing Self-Service Tech and Human Interaction in the Age of AI

Since the birth of the internet we've been grappling with the balance between online self-service and service delivered by real human people.

The historic context

To date, interacting with computers has been fairly restricted. Computers relied on structured input and relatively simply choices. Online self-service has largely relied on menus (for choices) and forms (for structured inputs). These were not always intuitive to use - especially for customers. User Experience (UX) and User Interface (UI) Design developed as complex specialities within digital transformation to try to over come these difficulties.

But for many users, this was still simply too difficult. And so they continued to rely on speaking to real human people.

Call centres grew in response to this demand. Operators either did things for customers in the first place, acting as an organic interface between the customers and the systems they were unable to interact with on their own, or a trouble-shooters helping customers to figure out how to interact with the computers or correct the errors they'd made.

The net effect was that we paid call centre operators to act as intermediaries between customers and computer systems because the computer systems were too difficult for the customers to use themselves.

(I am not ignoring the fact that some customer simply prefer to talk to real people. But I question how much of that preference is driven by the fact that it is too difficult to do things any other way?)

Using call centre operators as intermediaries brought its own challenges. It's obviously more expensive to pay operators to act as intermediaries than not to (all other things being equal). The work itself is often very repetitive and not very engaging, leading to high turnover rates and high recruitment and training costs.

And, for customers, it leads to long call-waiting queues, being passed from one operator to another, and dealing with sometimes under-trained operators.

Attempts to relieve some of the pressure, like Interactive Voice Response (IVR) and chatbots were relatively primitive and often only served to increase customers' frustrations.

Much of this cost and frustration can be attributed to Failure Demand*. That is costs incurred because the customer didn't get what they wanted without it. (*As opposed to Value Demand, which is the demand for what customers actually want.)

So what is changing?

In 2023, the capability balance between online self-service and service delivered by real human people shifted dramatically.

This change is being powered by the development of Large Language Models (LLM) and Transformers (like Generative Pre-trained Transformers or GPTs) coupled with improvements in Natural Language Processing (NLP) as exemplified by OpenAI's ChatGPT, Google's Bard and many others.

Intelligent agents are now able to deliver a much more personal and human-like interaction than ever before.

Chatbots and IVRs are progressing from being frustrating barriers to getting through to a real person to being really useful agents that can solve problems quickly, consistently and efficiently.

They can receive information in natural language, respond in natural language, and carry the context through the multiple interactions which make up a typical conversation.

These conversations can be text-based (typed and read) or, using text-to-voice and voice-to-text converters, they can be auditory (spoken and heard). It will become harder and harder to determine whether the voice on the other end of the line is human or automated (or whether it is a person or a computer responding to your chat or email messages).

Such systems will start to replace many traditional menu and form-based computer interfaces with natural language interfaces. AI in customer service will enable more customers to self-serve more, more easily, more effectively and more pleasantly. But it could also have similar impacts on internal systems and interactions with suppliers, distributors and other business partners.

And as such processes become more automated, it will become easier to ensure they are compliant with both internal policies and external regulations.

This will inevitably start with the very simplest of interactions only, but will gradually spread to more and more complex interactions as the technology improves and proves itself.

Conclusions

Just as the internet, and then mobile devices, changed customers' expectations of convenience, so too will this new age of intelligent agents transform the future of customer interaction.

Businesses that don't respond will soon find they are getting left behind.

It is important to start engaging and experimenting now, even if it is only with relative simple and non-core processes.

In order to reduce and better manage the inevitable risks of change, organisations could, for example:

  1. start experimenting with internal processes such as human resources and IT support, and then distributor and supplier facing processes, before extending this to customer-facing processes.
  2. start experimenting with a "human in the loop", like letting AI prepare email responses (or parts thereof) but still having a human read and amend them (if necessary) before sending them.

How is your business rising to this challenge?

If you need support, reach out to me for a conversation on navigating this evolving landscape.📞

See also:



Getting the most out of Generative AI

Are you getting the most out of Generative AI?

Unlocking the full potential of Generative AI (like ChatGPT) can revolutionize your workflow, your business and your strategy.💡

But did you know there are 6 key levels and 4 sub-levels to master?🚀

Picking the right one(s) can dramatically improve your results.✨

Level 1: Using the original ChatGPT Interface

You can, of course, still using the original ChatGPT chat interface as it was launched on 30 November 2022 to ask it simple questions.

Most people have tried this. And it turns out that ChatGPT is great when used in this way to, for example "write a poem about business strategy in the style of Dr Seuss" or "explain the causes of the first world war."

That in itself was revolutionary. For the first time we have a computer system where we could ask questions in  natural English, get answers in natural English and then ask follow up questions and have those answered within the context of the conversation thus far.

But it quickly emerged that, to get it to do anything more useful required more careful thought.

The original ChatGPT prompt interface allowed from prompts of up 4,000 characters. Simplistic prompts of c.100 characters were significantly underutilising this new technology.

And so the idea of "Prompt Engineering" arose.

Prompt Engineering is the science of providing Generative AI systems with more detailed and thoughtfully framed prompts to perform more complex and useful functions.

Boffins at places like MIT jumped on the bandwagon and produced longer and more complex prompts. They made them available for free or for a small fee. People started collecting prompts in documents from where they could cut and paste them into the ChatGPT interface and customise them as required.

It worked, but all the copying and pasting got a little tedious.

Level 2: Uploading Files

One of the first improvements was the ability to upload and query files.

The could be PDF or Excel files. (It turns out that ChatGPT is particularly good at analysing the data in Excel files.

Initially, this required plugins. But these capabilities were eventually built into the core product.

Level 2: Adding Custom Instructions

The addition of custom instructions reduced some of the tedious copying and pasting.

Custom instructions allowed you to provide some context which it would apply to all future conversations. 

For example, I could tell it "You are a business strategy consultant", "You use British English", "You communicate in a professional but friendly tone tone and don't use unnecessary adjectives."

This can improve your responses quite dramatically.

But you can only have one set of custom instructions, and that means you can only have one "persona" with ChatGPT. 

That's where GPTs come in (see level 4).

But first...

Level 4: Accessing the Internet

One of the biggest shortcoming of ChatGPT when it first came out was the fact that it was training on historic data only. This was less of a problem on the paid version of ChatGPT, but even that was always a few months behind the times.

That all changed with the integration of Bing. You can now ask ChatGPT to access a specific web page, or to search the Internet for specific information from which to provide responses. So, more or less, it it is on the Internet, and especially if Bing can find it, you can operate ChatGPT on it.

Level 5: Custom GPTs

Level 5a: Multiple Custom Instructions

Custom GPTs were a huge step forward. At their most basic, they allow you to create multiple sets of Custom Instructions. So you can create multiple personas trained on different instructions and switch between them with ease.

I've already built about 10 of these.

For example, I trained one on my tone of voice and preferred marketing channels to help me to develop and enhance marketing messages. I trained another on my professional track record and business offering to help me together consulting proposals. I trained a third to know what technology stack StratNavApp.com is built on so that it can help me with coding and technical trouble-shooting. And I trained a fourth on how search the Internet to support commercial due diligence on organisations I am looking at.

Level 5b: Uploading Knowledge

In addition to Custom Instructions, GPTs allow you to upload documents containing knowledge. The GPT can then use that knowledge in performing tasks for you.

For example, I uploaded a document summarising my consulting experience as well as client endorsements to my GPT for writing consulting proposals. The GPT can then extract the most relevant examples from that to use in its responses.

It would be easy to upload staff manuals, customer instruction manuals, contracts and agreements and all manner of other content and then to build GPTs around them to allow people to work with the information more intuitively.

Level 5c: Integrating APIs

The ability to upload static knowledge documents is powerful enough. But ChatGPT also allows you to integrate with systems via standard APIs. So you could build a GPT which now only knows the specs of all of the products in your product catalogue but can also tell you whether they're in stock at your local store.

Of course, APIs don't just provide information, they can also take in, store and act on it. So you could train a GPT on your product support manual, but also enable it to log a support ticket in your ticket tracking systems if it can't answer your support query. Or you could have it place an order for a product once it has confirmed stock levels and prices.

This means that GPTs can operate as 'intelligent agents', taking care of tasks for us.

Level 5d: The GPT Market Place

If writing prompts was complex, writing GPTs can be even more so. Just like we have experts engineering prompts that users can cut and paste into the chat interface (see level 1), expert GPT builders can also build and share GPTs with other users.

At the time of writing this, OpenAI have not yet released their official GPT marketplace, although they've promised it before the end of January 2024. I imagine this will operate much like the iOS and Android app stores, with GPTs available for free or at a charge.

In the mean time, it is still possible to share GPTs, as long as you know where to find them (or someone shares a link with you).

Level 6: Using ChatGPT's APIs

ChatGPT's API provide the final level of flexibility and control. You can embed Generative API into your existing applications or Low-Code/No-Code solutions.

If expect that this is where the most powerful applications of Generative AI will emerge. At the same time, the technology will disappear from view, working tireless and yet unseen in the background like electricity and Wi-Fi already do.

StratNavApp.com already uses the ChatGPT API to perform a number of tasks related to developing and executing business strategy. Of course, the users don't see the prompts or the responses passed between StratNavApp.com and ChatGPT. They only experience the results without having to worry about the behind the scenes complexities. (Although we do tell them when we're using ChatGPT for transparency's sake!)

More and more applications are embedding Generative AI in similar ways. In fact you may already be using several without knowing it!

Chat GPT versions

Chat GPT is available in a number of versions: the free version, the paid retail version, the enterprise version and the APIs. Various of the features mentioned above are only available on some of these versions. In addition, each version comes with different levels of privacy and security, as well as underlying LLM models with different strengths, weaknesses and currency levels.

A full discussion of these versions and their implications is beyond the scope of this post, but important to understand as you plan your adoption strategy.

In conclusion

If you're an individual, you should be working your way up to level 4b. If you're an organization, you should be working your way up to level 6. You should be providing your staff and customers with solutions which harness Generative AI enhance their experience.

If you're still stuck on level 1, you're missing out on most of what the Generative AI revolution has to offer.❌

I spend most of my time at level 5, getting fantastic results. And, of course, StratNavApp.com is investing heavily at level 6 and getting even better results!

What level(s) are you working at? How is it going for you?

Are you using Generative AI like ChatGPT effectively in your business?

Contact me for help.

See also:

6 Levels as a pyramid

The Myth of One-Size-Fits-All Strategy: Beyond Simplistic Advice

The Limitations of Simplistic Strategy Quotes

I've always been fond of insightful #strategyQuotes that distil some element of wisdom into a single line.

You can see some of my favourite quotes about business strategy here. I also frequently post to #strategyQuotes on LinkedIn.

But real strategy and leadership are far more intricate than any single quote can convey.

Soundbites - no matter how appealing - are not enough!

Soundbites Are Not Enough for Real Strategy

It's easy to get drawn to the allure of simple solutions.

Phrases like "the one thing you need to know," "the only advice you need," or "the ultimate answer to success" are not just oversimplifications; they can be downright misleading.

The real world of business strategy is seldom that straightforward.

Beware the Snake Oil Salesmen

When encountering recommendations that sound too good to be true, remember that they often are. 

Even straightforward directives such as "do this" or "don't do that" should be approached with caution unless they're grounded in a thorough analysis of your unique and current situation.

The Wisdom of Thomas Aquinas

An early mentor of mine often cited Thomas Aquinas, who warned, "Beware the man of one book." 

This is a valuable reminder in the context of strategy and leadership. There is no single method, tool, technique, or piece of advice that works universally. Each situation demands a bespoke approach.

The Diverse Toolbox of the Leader

Effective leaders and strategists understand the importance of a diverse set of insights and methods. The skill lies not just in having these tools but in knowing when and how to apply them.

See also: Essential Tools for Strategy Analysis

Beyond Magic Beans: The Need for Tailored Approaches

The notion of easy routes to success belongs in fairy tales like Jack and the Beanstalk, and has no place in business. In the real world, we need more than magic beans; success requires strategies that are tailored to our specific circumstances and executed with discipline.

If you need help finding the right strategy for your business, contact me for a free no-obligation consultation.

Poets versus Quants: the battle lines of business strategy

When I did my MBA, it was fashionable to describe students as either Poets or Quants. 

What does this mean? And what are the implications for developing and executing business strategy?

Understanding the Dichotomy

The distinction between poets and quants revolves around their approach to problem-solving.

Quants are the data-driven analysts who thrive on precision. They develop models for virtually every scenario, dissecting problems into quantifiable pieces. Quants view the world through a numerical lens, seeking patterns and trends in raw data. They tend to prefer structured, data-driven approaches and objective reasoning.

They're more likely to have backgrounds in STEM subjects (Science, Technology, Engineering and Mathematics).

Poets, on the other hand, are more disposed towards qualitative analysis. They possess an uncanny ability to read between the lines, discerning the broader implications of events or news. For poets, intuition and narrative are paramount. They tap into the pulse of the market, often discerning opportunities where others see none. They're more likely to be comfortable with ambiguity, narrative and subjectivity.

They're more likely to have backgrounds the humanities and the arts.

In summary:

Poets Quants
Intuitive and qualitative approach Data-driven and quantitative approach
Ability to read between the lines Precision in analysis through models
Discern broader implications of events or news View the world through a numerical lens
Rely on narrative and subjectivity Prefer structured and objective reasoning
Comfortable with ambiguity Thrive on identifying patterns and trends in raw data
Often discern opportunities where others see none Break down problems into quantifiable pieces
Backgrounds in humanities and arts, offering diverse views Backgrounds in STEM, emphasizing logical analysis
Tap into the pulse of the market Use mathematical models for scenarios and predictions
Value intuition, gut feelings, and experience Rely on empirical evidence and data validation
Embrace narrative to communicate and persuade Use data visualization and statistics for communication
Able to grasp cultural, social, and emotional nuances Strong in algorithmic thinking and systematic processes

The "Billions" exemplar

The tension between poets and quants is epitomised in the hit TV show "Billions".

Protagonist and poet Bobby "Axe" Axelrod, founder of Axe Capital, is an intuitive trader with an uncanny ability to read situations, understand the broader implications of news or events, and act on gut feelings.

But he is wise enough to employ plenty of quants on his team.

Most of the time, this works well, with the poets and quants bring different perspectives which either corroborate or disprove each others' hypotheses.

But it also leads to conflict, resulting, in the end, in quant Taylor Mason leaving Axe Capital to set up a rival firm. And so, the battle lines between the poets and the quants are drawn in even sharper relief.

This is, of course, just a TV show, and dramatised for entertainment.

But people familiar with trading floors around the world assure me that this dynamic plays out in real life on an ongoing basis. The quants built ever more sophisticated models to eke out ever small margins at ever larger volumes. The poets spot real-world events and intuitively understand their implications.

The Interplay of Skill Sets

While it's tempting to pit poets against quants, the reality is more nuanced. Good strategy requires both. 

The best strategists can seamlessly blend quantitative analysis with intuitive insights. For those who don't possess this both skills, it's crucial to have a mix of both types on their team.

However, this blend is not without its challenges. Poets and quants can often find it challenging to communicate with each other, given their distinct approaches. It's almost like they're speaking two different languages.

But it's precisely this diversity of thought that can lead to ground-breaking strategies.

Developing more rounded perspectives

Interestingly, it seems easier to introduce a liberal arts major to the world of basic mathematics than to immerse a math major in the world of liberal arts.

In his book "Innumeracy", John Allen Paulos defines innumeracy as the mathematical equivalent of illiteracy. He goes on to argue that innumeracy is much more widespread that illiteracy. He points out that it's socially acceptable to admit to being bad at math, but it remains taboo to admit to being illiterate, despite the fact that both have similar real-world consequences.

Paulos attributes this problem to the way maths is taught at schools. The suggestion is that can easily be corrected through improved maths education.

Teaching quants to be more like poets is a harder problem because it requires them to change the way they see and interact with the world.  Because a well-entrenched quant perspective is very structured, it offers fewer gaps into which alternative viewpoints can be introduced from outside of the frame of reference.

As the world becomes increasingly driven by data, innumeracy will become an increasing problem.

Bridging the gap

Aswath Damodaran is a renowned professor of finance at the Stern School of Business at New York University. He is best known for his work on valuation, corporate finance, and investment strategies. One of Damodaran's unique contributions to the field of finance is his emphasis on the interplay between numbers (quantitative data) and narratives (stories).

He argues that purely quantitative models often miss the bigger picture of the context in which a business operates. Conversely, a story without number can be too vague, or baseless. The best understanding comes from a compelling narrative that is backed and illustrated by data.

To work, the narrative and the numbers must be consistent. For example, if the narrative is one of growth, then the numbers should reflect this. Equally, if the numbers reflect growth, there must be a narrative which backs this up.

The narrative should, for example, explain where the growth would come from. Is it driven by changing customer behaviours, a technological breakthrough, or by expansion into a new market?

Narratives are a great way of dealing with uncertainty. For example, the narrative could explain growth if some future event comes to pass, but decline if it does not. This might even lead to two different sets of forecasts with narrative explanations of the difference between the two. This has far more explanatory power than a purely quantitative model, even one using sophisticated methods like monte carlo analysis.

And finally, narratives are easier to adjust when new information comes to light. Of course, when the narrative does change, it is imperative that you adjust the numbers that support it.

The objective, whether you use narrative or quantitative methods, is the same - to make a decision. And any decision about the future will also entail an element of risk. But, combining that narrative (poet) and quant perspectives in this way, can significant increase clarity and confidence in decision-making.

Conclusion

The world of business strategy is vast and multifaceted. While poets and quants may represent two ends of a spectrum, the future belongs to those who can navigate both realms with agility. In the dance of numbers and narratives, the key is to strike the right balance and integrate the two perspectives.

Next Steps

  1. Consider where you personally fall on the continuum between poet and quant.
  2. Consider where each of your team members fall on the continuum between poet and quant.
  3. Consider whether you processes for developing and executing strategy are weighted towards quantitative or qualitative perspectives.
  4. Take steps to include additional people or change your processes to increase the degree of balance between and better integrate the poet and quant perspectives.

See also:

Strategic Inception

Most of the best strategies I've encountered hinge on a single strategic insight.

Or, perhaps, a very small number of them.

Peter Compo, author of "The Emergent Approach to Strategy" calls this The Bottleneck. Richard Rumelt, author of "Good Strategy, Bad Strategy" calls it The Crux. Military historians talk about Napoleon's Glance.

Even better is when that single strategic insight is so compelling it one cannot fail to act on it. When it is so elegantly simple that, once seen, it cannot be unseen.

In one client I worked with, it was the realisation that customers who exhibited a certain behaviour were over 4 times more likely to purchase their product than those that did not. In another, it was understanding how their sales teams actually spent their time, given that they lacked the data and support which would enable them to act more effectively. (Apologies that confidentiality requires me to be a little vague about the details! In both cases, of course, the context is vital.)

Leonardo DiCaprio in the firm Inception
Leonardo DiCaprio in Inception
In the film "Inception", the character played by Leonardo DiCaprio says "Once and ideas has taken hold of the brain, it's almost impossible to eradicate."

In that film, the protagonists have access to fantastical technology for embedding ideas in people's brains in a process they call Inception.

Sadly (or perhaps gladly, when you see how the film turns out), we don't have access to that.

And so our work is:

  1. to keep delving until we uncover that single strategic insight that compels action, leaving no stone unturned until you have the Eureka! moment,
  2. to embed it throughout the organisation through regular repetition of an elegantly simple explanation of that insight,
  3. without becoming so beholden to it, that we fail to notice and adjust when the circumstances around us change.

We can, of course, settle for less. There are plenty of strategies which are "good enough". But if we want truly great strategies, then that is the task we must set ourselves.