The single reason most strategy planning fails

The single reason most strategy planning fails

Nov 12, 2018 | Strategy

We confuse strategic thinking with the execution of an agreed strategy.

They are two entirely different processes, and should not be just lumped together for convenience, which is what most of us do by default.

Thinking the strategy does nothing to execute the strategy.

Effective strategic thinking is an ongoing process, it should always be on the agenda. It is evolutionary, requiring deep consideration, diverse thinking and inputs, creativity, and the ability to see connections and trends missed or ignored by others.

Strategy execution driven by  the deep strategic thinking results in priorities, processes and resource allocation decisions, and timing that can all be managed.

The leadership is in the thinking.

It is not unreasonable while doing the strategy thinking to ask yourself ‘How’, but second guessing the thinking part during execution is a recipe for disaster.

There is however a partial exception. Isn’t there always?

Incorporating new strategic information and insight gained during the execution back into the strategic thinking is essential. Feedback loops provide the opportunity to learn, understand, and adjust, and as such are an essential element of success.

Be very careful you understand which is the cart, which is the horse, and what their differing roles are!

How to swim in the profit pool

How to swim in the profit pool

Nov 5, 2018 | Customers, Strategy

 

Every industry is an amalgam of value chains, demographic, behavioural, and geographic segments of customers and suppliers.

Inevitably, some of these segments are more profitable than others for a range of reasons. Therefore it makes sense to understand where the profits in your target value chain are being made currently, and where those profits may move to in the future.

There are two challenges here, the harder is seeing the future, but the second, identifying where the profits are now, should be easier.

Apply the Pareto principal to all the segments in the whole value chain, and you will inevitably see that at each point, Pareto rules.

It therefore follows that your best strategy is to identify the areas where your value proposition can add value to the 20% that deliver 80% of the profit.

The king of this strategy is Apple, who control about 15% of the volume of mobile phones sold, but accrues 85% of the profit available in the market.

Who are the 5% of customers who truly value something only you can offer?

Find them and you will be swimming in the profit pool, with little opposition.

 

Keep looking for the ‘Big Idea’

Keep looking for the ‘Big Idea’

Oct 29, 2018 | Branding, Communication

 

Following on from my rant about content porn, it seems to me that the real problem has become the immediacy required by the digital age.

You need more stuff, on line, now!

At least, that is the demand, but more stuff is of no value unless it moves someone to an action.

Time is no longer allowed to curate and enable the creative process that can deliver what my old advertising colleagues used to call ‘The big idea’.

Now we just upload any old crap and move on, thinking we have done the job of producing ‘Content’.

So perhaps the problem is not having a framework for  the big idea to emerge?

This is despite the disciplines necessary for effective marketing I have spoken about previously. The persona of the ideal customer, and differentiation, as well as understanding from the  customers perspective what problem you are solving for them, and why they should pay you to solve it.

Setting out to enable the big idea to emerge without having gone through the pain of defining these boundary items first will be in most cases, a waste of time and effort. However, having defined them, there are some simple to say, but very hard to do, steps that you can take that may assist.

Attract  attention.

Unfortunately this is a chicken and egg proposition. To attract attention, you need an idea that resonates with your ideal customer, without which, you will not attract the attention. To resonate, it must solve a problem, often one they did not realise they had, or had just got used to having, so was not a constant itch. The creativity required to see the problem from the perspective of the customer, and frame it in such a way that motivates them to action, is the essence of the process, and is not something that happens quickly, or regularly.

The classic example is Apples ‘big idea’ for the original iPod: ‘A thousand songs in your pocket’

Hold attention.

To hold the attention once passed the huge hurdle of attracting it, the idea must be compelling. Most businesses compete in markets where there is little that is genuinely new, where you have some sort of defensible ‘uniqueness’. Patents are defensible, but the sad reality is that you need very deep pockets, and even then, they are increasingly just a road bump a competitor has to negotiate. Therefore, you need to create some sort of differentiation in the minds of the ideal customer that you can ‘own’. In their minds, it is what you become known for, and is sufficiently compelling that they reach for their wallet. The iPod line achieved this in spades.

If you were in the market for a hard floor covering, and you stumbled across this optical illusion from British tile maker Casa Ceramica, used as the header for this post, you would at least look at them closely.

Have a strategic roadmap

Every idea you generate should be a brick in the road towards your long term strategic goal. You cannot predict the future, but you can define where you want to be, then set out to go there. The route might change, not the goal. You will have challenges and obstacles to overcome on the way that were never envisioned at the outset, but keeping your eyes on the goal provides the framework against which you ask the question ‘Does this idea take a step forward in the journey?‘

This post evolved as a result of seeing the photo in the header on social media somewhere. If you happened to be in the UK midlands, and were thinking of replacing your floors with tiles, you would add this lot to the list to talk to. The aspiration of their website is: ‘We aim to inspire you and help you stand out. We aim to give you the aspirations you need, the innovation of our showroom and knowledge and the dedication you deserve.’  Their mission is all about leading the independent wall and floor tiling industry. This example of a piece of content moves them along towards that goal, and I would suggest, is a great example of the big idea in action.

 

 

 

 

What is your businesses key metric?

What is your businesses key metric?

Oct 22, 2018 | Strategy

Every business has a key strategic metric, one that encapsulates the productivity of the investments made in the business, that can be tracked over time, and broken down progressively as you move into the operational levels of your business.

The metric you choose should reflect the strategic choices you make. It should never be about profit, which is just an outcome, the metric you choose should be the single thing that drives the commercial sustainability of your business. It also acts as a ‘touchstone’ for everyone in the business, from the Directors to the cleaner. Everyone knows, understands, and can relate what they do in some way to  the metric, it removes any confusion about what is important.

I have two acquaintances working in senior roles in large law firms. One is judged on his ‘Billable hours,’ the other on the rolling annual value of the clients he handles. The first  works 70 hours/week, and ensures that every available 10 minute period in his diary is billed to somebody, for something. The other concentrates on the relationships he builds with his clients, setting out to become their legal ‘go- to’ man, providing advice on a range of issues in their businesses, often issues he sees before they do, given the ‘engagement’ he has.  Both manage staff that have similar KPI’s directly feeding into theirs.

Two distinctly different KPI’s in very similar businesses that result in very different outcomes for both the employees and the clients.

Bricks and Mortar retailers all use some variation of the sales or gross margin/square foot of retail space as a key KPI. It may be calculated in slightly different ways, but all use it, and cascade the measure down through their organisations, in both the store management and buying functions. On line retailers  by contrast generally measure the cost of acquisition of a new customer, and their ongoing lifetime value.

What is your key metric, and how does it reflect your strategic choices?

 

 

What is the most universal and useful management tool of all?

What is the most universal and useful management tool of all?

Oct 15, 2018 | Lean, Management, Operations

Easy question. ‘5 whys’.

5 Whys was first articulated by Toyota’s architect of the TPS, Taiichi Ohno in the 50’s, but it was not new.

Anyone who has had children has been on the receiving end of a form of the ‘5 whys’ from about two and a half years old, to 6 or 7, by which time they have learnt  that the question is not always appreciated or answered fully, so they stop asking.

The process is deceptively  simple, keep asking ‘Why’ until you get to the root cause of the problem, well past the symptoms, so it can be fixed, and the problem not recur.

In a previous life managing a manufacturing business, we had a recurring problem with an automatic box erector that seemed intractable despite huge efforts. The whole line stopped every time the erector spat the dummy, causing serious production losses.

While it took months to find the right cause, after chasing a lot of rabbits down holes, we finally nailed it using 5 why.

  1. Why did the erector jam?

One of the arms was out of alignment to the flat box

  1. Why was the arm out of alignment?

One of the flat box ends was slightly crooked

  1. Why was the box end crooked?

The box end was slightly out of specification

  1. Why was the box end out of specification?

The purchasing manager had changed suppliers for a significant saving, and the new suppliers actual operational control allowed variations outside the erectors demanding requirements,  resulting in an occasional  mechanised  ‘dummy-spit’.

This example in fact only took us ‘4 whys,’ but the trick was to ask the right questions  in the first place, in the right sequence. This took us several months and cost a huge amount in lost production, and maintenance resources as we eliminated possible causes of the problem before anyone thought to examine if a 1 mm variation outside the spec of the flat box size was significant.

Once identified that it was, the problem was quickly fixed by moving back to the previous supplier with whom we had encountered  no problems.

Subsequently, we evolved a process that used 5 whys as a matter of course in search of improvements in the factory, and later, admin processes, and found that our problem resolution times dropped dramatically.

The process is pretty simple, just challenging to implement:

  • Institute a ‘5 whys’ meeting in response to a problem.
  • Invite (read insist) everyone involved and/or affected by the problem to attend the meeting.
  • Agree a ‘chairman’ for the problem who will take overall responsibility.
  • Proceed to ask ‘Why’ until you get to the root cause of the issue. It almost never takes more than 5 ‘whys’ hence the name. This step can take time and often takes several meetings as possible answers to the ‘why’ are considered.
  • Assign responsibility to install, test and validate the solution
  • Document and disseminate the solution which has been broken into a written process to ensure compliance, or easier further investigation should a similar problem arise.

The whole objective is to get to the root cause of  the problem, a process that is applicable not just in industry, but in your life, when you think about it.

 

 

 

Diagram courtesy Mindtools.com