Jan 262013
 

My motto is, “If you don’t make a difference, you don’t matter.”

Business competitiveness is all about making a difference. So key questions in strategy are: “What is our difference?” “Why does it matter?” and “How will we deliver?”

Any firm wanting to be successful has to be able to do some thing exceptionally well. Innovation, for example. Or operating across borders. Or recruiting and managing people with rare skills. Or developing alliances, design, manufacturing, marketing, service—or any of the many other activities that add up to the production of value.

That thing must set the firm apart from competitors and offer unique value to customers especially, but also to various other stakeholders. It must be durable and defendable. And most importantly, it must have “multiplier potential” so that excelling in it today will enable delivery of further value in the future.

Experts on business have been telling us this for ages, using terms like “core competence” or “core capabilities.” Most executives understand it well and will swear they’re driven by it—though in most companies there’s a surprising lack of focus on actually making a difference. Rather, it’s one of those taken-for-granted notions that hovers in the background but is not the central and explicit issue in every conversation or decision. I’ve sat in countless management discussions where no one mentions it at all.

What’s even more of a surprise is that strategy itself isn’t seen as a capability worthy of special focus or mastery. Almost everyone agrees it’s important and knows you have to have one, so you have to “do it.” But get it out of the way, and you can get on with making and selling stuff and making a profit.

Why do I say this? Here are some reasons, gleaned from my own 25-plus years of consulting as well as lots of research by others:

1. Just about every manager you talk to in any company—let alone across firms—has a different take on what strategy is about. They’re all over the place when it comes to why it matters, what it should do, or how to make and execute it. They’ve all read strategy books and attended courses, but they’re unclear about why one approach to strategy works while another is less satisfactory. So ask six senior people about this and you’ll likely get six different opinions. Ask the same questions outside the C-suite, and you can expect blank looks.

2. Few companies have a consistent approach to strategy. They bounce from this concept to that, switching tools and techniques on a whim. They don’t have a “strategy language” that their people understand and that anchors their discussions. As a result, their strategic conversations are poorly framed and conducting them over time is ineffective. A process that should cut through complexity, clarify priorities, and focus resources and efforts has the unintended consequence of constantly adding confusion.

3. They chop and change consultants as if whom they work with doesn’t matter. (Why don’t they do the same with their auditors or lawyers?) They think that outsiders can add value to a strategy process, but are careless about choosing them, often leaving it to some low-level, uninformed person to call around or do a Google search for someone new. They’re not fussy about whether the latest “guru” is really a strategy expert—or a sales trainer or retired factory manager hungry for a new assignment. So the value of the advice they get is spotty, and they’re jerked this way and that by it.

4. They fail to look back and learn, and to use each strategy discussion as a building block for the next one. Amazingly, there’s evidence that only a few firms systematically review their strategies or keep building on them. They make one, get on with life… make a new one… get on with life… and so on. Equally amazing, they rarely review their approach to strategy, asking whether it’s the best they can do or needs to be changed, or debating how to improve it.

5. Strategy is seen as a parallel activity to “real work,” not as real work. And certainly not as the most important of all real work. It’s not woven into the everyday agenda. It isn’t seen as the over-arching issue in business, or as something that concerns literally every person in an organization. It’s a task that has to be dealt with. It gets the spotlight from time to time, and then only a privileged few people get involved with it.

Competing in the future will be quite unlike competing in the past. Things will be much, much tougher. Firms will have to be cleverer and quicker in dealing with the challenges they’ll face. Making strategy “on the fly” will be increasingly necessary. Strategy smarts will matter more and more.

So if there’s one deep competence companies need to develop, strategy is it. The ability to craft and conduct strategic conversation —to design and execute effective strategy—will be the skill that “makes the difference that matters.”

Nothing else—not financial wizardry, innovation, collaboration, “human capital” management, technology, or whatever—counts as much. For without strategy, nothing else will get companies the results they want. And the difference between good strategy and bad strategy will count as never before.

MAKING STRATEGY MATTER
  1. Make building the strongest possible strategy capability an explicit goal and a priority—”Topic #1″ in your company. And involve everyone.
  2. Taking into account your specific needs, choose one approach to strategy and stick to it. Communicate it widely and constantly within your organisation. 
  3. Use a few tools and learn to use them well. Keep checking that they’re working for you (but beware of dumping them too readily). 
  4. Develop a “strategy language” so people talk about things the same way. 
  5. If you need help, pick your advisors carefully. Make it clear to them that while you want their outsider’s views and expert knowledge, you aim to develop a consistent process and to develop the strategic IQ of your team. Make sure that what they’ll bring to the party will be additive and not blow holes in your approach or take you in a totally different direction.
  6. Constantly review with your team what new knowledge and insights about strategy they may have picked up, and rigorously debate whether or not to integrate them into your approach. If you really think they have merit, plug them in carefully.
  7. Always review your current strategy before moving on. It’s tempting to race forward, especially when you face new challenges, but that can hurt programmes and initiatives already in place.
  8. Practice! Practice! Practice! Create opportunities to talk strategy. Begin every strategy discussion with the intention that it will be a building block for the next one. Keep asking, “Why is this working for us?” “How can we do it better?”
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  •  26/01/2013
Dec 012012
 

Disruption must surely be the hottest strategy concept of the past decade. But it is less of a breakthrough than it’s made out to be. And it may unnecessarily impede your strategic thinking.

The idea grew out of a study by Joseph Bower and Clayton Christensen, both professors at Harvard Business School, which saw light in a 1995 Harvard Business Review article titled “Disruptive Technologies, Catching The Wave.” It was subsequently moulded into a theory by Christensen, making him a superstar and spawning many books and articles by him and others. Thanks to determined promotion, it’s now a term you hear in almost every management discussion—though it’s seldom used as precisely as Christensen proposes.

The gospel according to Christensen goes like this:

In their quest for the most profitable customers, companies innovate and improve aggressively—and give customers more than they need or will pay for. And the more intently they listen to their customers, the more they up their game and sustain that gap.

While they focus on the next-generation performance needs of the most attractive customers, guerilla competitors sneak in under their price umbrella and target less attractive customers who’re being overlooked, ignored or under-served. The upstarts ask, “Who is not getting attention?” “What is value to those customers?”

The customers they aim at aren’t in the market for state-of-the-art products. So these firms can ditch the bells and whistles and keep costs and prices low.

Initially, the leaders don’t see a threat. The challengers are of no appeal to their best customers and aren’t chasing them anyway. Those customers they do lure are likely to be ones who always want a deal, are satisfied with “good enough” offerings, and won’t be missed.

But this is just a lull before the storm. Quite soon, more mainstream customers are tempted by the no-frills competitors. They need to forego some of the “value” they’ve grown used to, but what they get does the job—plus it’s easier to use, more convenient, and more affordable. So it offers them value, albeit not the kind they’ve been used to.

Many established players have been hurt this way—think clothing, airlines, steel, medical devices, consumer electronics, autos, and so on. But then they make things worse for themselves.

In an effort to counter competitors who won’t play by their rules, they typically race even faster up the value path. They invest even more in innovation and pile on features and benefits. But in their efforts to stay ahead of their enemies, they also stay ahead of their customers; and the cost of their overkill forces them to keep hiking their prices.

Some customers stick with them because they don’t mind paying more for products that they perceive to be at the leading edge. But the pool gets smaller. And the harder these firms try to hang on to their traditional business, the more they lock themselves into their “superior” strategy—and the worse things get for them.

FEW OPTIONS

If the leader wishes to retain its low-end customers, it has three options:

  1. Pump up its promotional activities, to hopefully persuade those customers to stay loyal.
  2. Keep offering the same products, but at a lower price.
  3. Eliminate some features and benefits, and cut prices.

The problem with Option 1 is that if customers learn that a competitor’s low-end offering is OK and costs less, some will leave. No amount of hype will convince them to keep paying top dollar for “value” they don’t need.

Option 2 may keep customers coming back, but margins will take a hit and buyers who’d paid the higher price will feel they ‘d been screwed.

Option 3 will result in the loss of top-end customers. The company will cannibalize itself. By offering less and tacitly admitting to customers that they’ve been paying too much, it’ll drive them into the arms of cheaper competitors.

Faced with these unpalatable choices, and trying desperately to evade the pesky newcomers, firms tend to even more doggedly pursue their current customers—whose numbers keep shrinking. Meanwhile, their low-priced competitors improve their offerings, hone their processes, and become more and more dangerous. And as their sales and profits grow, they can afford to intensify their advance.

Market-leading firms attained their dominance by focusing on an attractive target market and working furiously to satisfy it. They have a lot invested in their current strategy—money, resources, capabilities, relationships, processes—and are weighed down by these sunk costs. But even more by their mindset. So they can’t suddenly or easily change. Newcomers, on the other hand, have little baggage and can switch tack with relative ease.

OLD INSIGHTS REPACKAGED

Following Christensen’s thinking over the years, it’s hard to avoid a sense of deja vu. Even a quick glance back into the history of management thought makes it hard not to conclude that much of his “theory” is to be found in Marketing 101 and Strategy 101. And that it’s not all it’s cracked up to be.

Take, for example, the notion of “the job to be done”—a Christensen favourite that’s sure to crop up in any discussion about disruption. This is, in fact, one of the oldest ideas in the marketing playbook.

So old, in fact, that it’s impossible to pin down its origin. But I suspect it gained explicit understanding in the 1930s, thanks to a famous American sales trainer named Elmer Wheeler who coined the phrase, “Don’t sell the steak—sell the sizzle.” His point was that it’s not a chunk of meat that customers want, it’s the pleasure that goes with it: the sizzle and aroma from the barbecue, companionship and fun with family and friends, and so on. This lesson has been drummed into copywriters and sales people for years.

In “Marketing Myopia,” a HBR article that won the 1960 McKinsey Award, Ted Levitt made the then-provocative case that too many companies limited their growth by defining their industries too narrowly, and by being more concerned with what their products could do than what their customers want done. Discussing the oil industry, for example, he noted: “People do not buy gasoline. They cannot see it, taste it, feel it, appreciate it, or really test it. What they buy is the right to continue driving their cars.”

Peter Drucker told us in his 1973 book Management: Tasks, Responsibilities, Practices:“The customer never buys a product. By definition the customer buys the satisfaction of a want.”

Levitt echoed this in his 1983 book The Marketing Imagination, writing that “people don’t buy things but buy solutions.” To illustrate his point, he recycled a quote from one Leo McGinneva, who’d said that when people buy a quarter-inch drill, “they don’t want quarter-inch bits; they want quarter-inch holes.” (Something another marketing guru, Philip Kotler, had said in 1980.) Levitt also observed that “The customer may actually want and expect less.” (My italics.)

Within months of his book appearing, Levitt also published an article in HBR titled “The Globalization of Markets.” The basic argument was that by stripping away the features and benefits that made products particularly appropriate for particular markets, firms could sell them to many more customers across the world. Citing the example of Japanese firms, he said: “They have discovered the one great thing all markets have in common—an overwhelming desire for dependable, world-standard modernity in all things, at aggressively low prices. In response, they deliver irresistible value everywhere, attracting people with products that market-research technocrats described with superficial certainty as being unsuitable and uncompetitive….”

And what about Christensen’s observation that the more closely firms listen to customers, and the harder they work to deliver what those customers say they’d like, the more likely they are to offer too much? Or that to compete with disruptors, the leader should spin off a totally separate business unit?

Nothing new here, either. This, and much else that he says, has been written about for decades. That disruption, as described by Christensen, has become such a fetish is a sad indictment of academic thought and management practice.

DEFINE “DISRUPTION” WITH CARE

The theory of disruptive strategy that so many people swoon over offers a very narrow view of how market disruption may occur, which firms are disruptors, or what disruptive strategy might be.

Can you possibly argue that Apple, say, is not a disrupter, because it sells beautiful, innovative products at high-end prices? (No “good enough” thinking here!)

And what would you say about Elon Musk’s award-winning Tesla S car? Or Woolworths, Nando’s peri-peri chicken, Discovery Health’s Vitality programme, Emirates airline, or Reckitt and Coleman’s household products?

By Christensen’s criteria, none of these deserves to be called “disruptor.” These products are all excellent, and priced accordingly. Their target market is not the “bottom of the pyramid.” Cheaper, “good enough” options are available from other firms.

But all have challenged convention and redefined their categories. And surely, that’s what disruption means.

The fact that some of these big names may face competitors who offer “good enough” products doesn’t shift the disruptor label from them to those upstarts. To split hairs about an arbitrary interpretation of what a word means is ridiculous.

Christensen has chosen one interpretation of what disruption means, and made it his own. He has focused on one strategic formula which highlights a very serious threat to market leaders, and also offers challengers a way to take them on. But no established firm should imagine it’ll be bulletproof if it follows his advice exclusively. Neither should any ambitious attacker close off strategic possibilities. Most managers would do better with a broader definition.

To disrupt something is to overturn the order of things. So how could you do that? Surely, not only by offering cheaper but “good enough” products to customers who’ve previously been ignored or overlooked.

The reality is that, in most markets, there are many ways to compete, many ways to upend convention. So strategic thinking should be about creating possibilities, not shutting them down. It should be about understanding the many ways you could be toppled, not just one.

If there’s one important thing all the chatter about disruption has achieved, it’s to focus managers’ attention on the three most critical strategy questions: who is your customer, what is value to them, and how will you deliver it? (Though you have to ask what else they’ve been thinking about!)

And yes, Christensen has added many examples of why this matters and some advice on making the most of your answers.

But three, five, or 25 years from now, will we look back on the Christensen era as a disruptive one in the annals of strategic thought, or one in which we woke up and went back to basics?

As Levitt said, “Man lives not by bread alone, but mostly by catchwords.” So it’s important to pick those catchwords with care, and to be clear about what they mean and how they might be applied.

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  •  01/12/2012
Jul 252012
 

No doubt about it: an outside expert can help you bring your strategic conversation to life, refocus your efforts, introduce useful concepts and fresh ways of thinking to your firm … and shift your strategy from good to great.

So surely if you’re going to take time out for this vital discussion with your top team—and spend whatever it takes—it’s worth getting the pivotal element right. In other words, your facilitator.

All too often, though, organizations leave this critical decision to last. They block time in their executives’ diaries and book flights, venues, meals, and even magicians and comedians … and only then wake up and think about a facilitator.

Result: while they want someone with an “outsider’s perspective” and experience—someone who can challenge, provoke, inform, and advise them—they all too often wind up with a mere “meeting manager.”

But that’s not all. They also give their facilitator too little time to prepare well—to learn about the company and its needs, think about the specific challenge and how it should be dealt with, and prepare any materials that may be necessary.

Choosing the right person to help you craft your strategy is a lot more important than choosing a venue, agreeing on tea-times, or deciding whether to include a round of golf. It’s a make-or-break decision that should be made early and with great care. The job is not for fad-merchants or amateurs. Don’t expect a motivational speaker to morph into a strategy guru, or a sales trainer to make the high-level inputs you need!

If you want real impact, be sure to get someone with 1) the ability to cut to the core of complex issues and identify the few drivers of your success, 2) in-depth understanding of the latest thinking on strategy design and implementation, leadership, and change management, 3) loads of experience with major organizations in virtually every sector, and—oh, yes—4) professional facilitation skill too!

IN OTHER WORDS, HIRE A HEAVYWEIGHT STRATEGIST WHO WILL PROVIDE REAL MEAT TO GET THE MOST OUT OF YOUR TEAM … NOT A LIGHTWEIGHT WHO MAY KEEP TIME AND TAKE NOTES BUT IS OUT OF HIS OR HER DEPTH WHEN IT COMES TO OFFERING INPUT OF ANY SUBSTANCE.

It may cost you more, but having a pro help you design and run your strategy workshop takes you a big step closer to getting the results you want.

What are your objectives for the meeting—i.e., what do you want to walk away with? What preparation is necessary? What should the process look like (presentations, discussions, frameworks, concepts, etc)? What should be on the agenda, and how should it flow? And most importantly, what comes next, when everyone is back at work?

Get this stuff wrong, and you’ll be sure to head down the wrong path. Get it right, and your time, effort, and money will be well spent. But make no mistake: this is where you need real competence.

And by the way, you may think you can facilitate your own meeting, but that’s seldom the best path. When you’re part of a team, it’s hard to stand outside of it; when you’ve been party to decisions and you’re involved in the politics of corporate life, you can’t easily be as objective as you should—and anyway, no one will believe you are.

So hire someone you can trust, brief them thoroughly—and early—and watch the meeting work!

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  •  25/07/2012
May 272012
 

It goes without saying that leaders are driven to succeed—to do the best they can for both themselves and their organizations.

It also goes without saying that they expect their people to succeed—to do well in the jobs they’re paid for, meet and exceed targets, handle projects effectively, produce new ideas, create constructive relationships with colleagues and business partners, develop the people around them, reach their own potential, and so on.

Yet all too often, leaders set themselves and others up to fail. They “throw sand in the gears” of their organizations, by creating conditions in which under-performance is guaranteed.

That’s a hell of an indictment, so let me explain it.

For more than a decade, I’ve encouraged my clients to reduce all their strategies to a few goals and a series of 30-day action plans with specific people responsible for each result. This has four critical benefits:

  1. It forces people to break work down into “do-able” chunks, and to focus on the few things that really matter rather than the many which otherwise crowd their agendas.
  2. It puts immense pressure into an organization, as 30 days isn’t long and there’s no time for wheelspin. When it’s clear exactly what needs to happen, by when, and whose name will be called, people have to put their heads down and get moving.
  3. It enables you to see, very quickly, whether your strategy is on track or needs fine-tuning, and how the people responsible for various actions are doing. Fast feedback and accelerated learning let you deal with problems and opportunities in as close to “real-time” as possible.
  4. It enables you to quickly praise or reward people for a job well done, or guide, sanction, or replace those who don’t deliver. So the very process of driving your strategy becomes a powerful performance management process. And because success does lead to more success, celebrating some quick wins provides important motivation.

Making plans and assigning work is the easy bit. The hard part comes when you start reviewing progress. For that’s when things either get a boost or fall apart.

Every time you bring your team together, you have an opportunity to either turn them on or turn them off. The way you craft and conduct your conversations will either bring out the best in them or the worst.

Review meetings need to be both respectful and robust. So on the one hand, people must be treated decently. They must be listened to and given the sense that they are valued and their ideas count. But on the other hand, they need to know that your purpose is not to create a “social club” or win a popularity contest.

This is about work and results and progress. Everyone must know that they’re expected to deal in facts and well thought-through opinions, and that there’s zero tolerance for blaming, bluster, bullshit, or excuses.

I’ve sat through any number of these review sessions, in companies of many types. Some leaders get things right: people come well prepared, the conversation is informative and constructive, and they leave feeling positive and knowing exactly what they need to do next. But often, things break down quite quickly.

Typically, everyone pitches for the first meeting. The first few people to report back do it well. Mike, Sue, and Dumesani seem to have a grip on things and achieved what they had agreed to. And they’ve thought about what they need to do in the next 30 days. They get a “thank you” and a pat on the back. Smiles all around.

But then there’s a hiccup. Damien couldn’t do what he should have because he was still waiting for budget approval. Or a supplier had let him down. Or he’d had to deal with some emergency or other. Or he hadn’t been able to recruit a key person because the headhunters hadn’t come back to him. Or the IT guys hadn’t delivered. Or Jeff or Derek or Sam or whoever had been away for much of the month and hadn’t been available to discuss certain issues. Or…

What the leader should do when this happens is come down hard on the individual, question each of his “reasons” and make him explain why he couldn’t do something about them, demand that he take his plan for the next 30 days 100% seriously, and make it clear to everyone that such behavior is not acceptable. In other words, the “rules of the game” must be firmly established right from the get go.

What the leader actually does when she gets the ducking and diving is say, “Oh, OK. Thanks, Damien. Well, do try to sort those things out and get things moving before the next session. Now, let’s move on. Who’s next?”

In that moment, the leader has done two extremely dumb things: first, she has taught Damien that not meeting commitments is acceptable, that non-performance doesn’t matter. (And she has thanked him for letting the team down!) But even worse, she has taught the whole team the same thing. So her very first review session has set the tone for trouble.

When the next meeting comes around, one or two people don’t show up and more of them report that they haven’t done what they promised. Even fewer pitch for the third meeting and there’s a longer list of excuses. Meeting four gets called off because too many call in to say they can’t make it. Meeting five gets rescheduled a few times, but then doesn’t happen at all.

Game over!

Strategy reviews are, in effect, training sessions. You can make them work for you or against you. Clients who use my 30-day planning process say it’s the best thing they’ve ever done. The pity is that things so often start with a bang but end with a whimper. And that clever executives keep wondering why executing strategy is so hard, when it’s they who enthusiastically agree to a sensible way of working then show they didn’t really mean it.

Effective leadership requires tough love. Leaders need to show empathy, foster teamwork, and be unfailingly polite to their people. But they also need to instill discipline, enforce compliance with agreed procedures, and show courage in handling those who play fast and loose with their organization’s future.

Notions like “servant leadership, “principled leadership,” and “values-driven leadership” are all popular. However, if they’re not leavened with firmness, they cannot possibly drive performance and results. Being nice is no substitute for managing. Empowering people does not mean simply letting them loose and leaving them free to do or not do whatever they choose.

The buck stops on the leader’s desk. He owes it to himself to use the power of his position to make things happen. If he doesn’t, he’ll undermine himself because his people will know in a flash and lose respect for him.

If bad habits are allowed to creep into a business, it’s hard to get them out. Only the leader can stop them in their tracks. And strategy review sessions offer the ideal forum for doing it, because they usually involve senior people who, in turn, teach the rest.

Of course, virtually any other get-together—even those chance encounters in the passage where people share ideas or update each other  about projects—provides a similar opportunity. But the discipline, structure, and status of a 30-day review makes it special. Not to be wasted.

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Apr 032012
 

Harvard Business School recently announced a stand-alone course on Strategic IQ that “examines the essential concepts and practices that will help you make your organization more agile and better equipped to prosper in a changing marketplace.” This is good news, and it’s sure to be an excellent programme—but why has it taken so long? Why is strategic IQ not as big a deal for business schools, academics, authors, consultants, and conference organizers as emotional intelligence? Why has so little been said about it?

As I’ve pointed out for as long as I can remember, in articles, books, talks, business school lectures, and conversations with clients, strategic IQ is not just an essential factor in any company’s competitiveness, it’s the essential factor.

To survive and thrive in a rapidly-changing world, you need people who can think and act strategically—not just efficient drones who’re oblivious to their environment, mindlessly take orders, and just do as they’re told. But while much has been said about the importance of people, teams, empowerment, “virtual organizations,” “organizational learning,” “emergent strategy,” “the wisdom of crowds,” innovation, and so on, one key point is glossed over: without a particular set of intelligences, no one will ever be worth of the label “strategist.” And which company do you know where there is a deliberate, systematic effort to develop strategic capabilities outside of the executive ranks?

In my 1988 book The New Age Strategist, I wrote:

“…while the ‘strategist’ might be one person, or even a small team, strategy formulation is not the strict preserve of that person or group—and certainly not of top management. The fact is, because so many of a firm’s people might set off a response to environmental changes, strategic management is a task almost everyone must be involved in.”

Then, in a 1997 article titled “Questions of strategy,” I said:

“Business strategy, like every journey through life, is a learning process. The first goal of every organisation should be to raise its “strategic IQ”—the ability of every person to participate to the best of their ability in scanning the environment, providing new insights, applying their imagination, and exploring the bounds of what’s possible.”

But this led to two questions: 1) what capabilities did an individual need to be able to participate that way? and 2) how to develop them?

These were questions I wrestled with for a long time. For answers, I dug into books and journals on management, psychology, and education, talked to leaders about their growth experiences, and watched people making decisions at work. And the more I read, saw, and heard, and the more deeply I reflected on it, the more convinced I became that the answer was, in fact, both clear and simple—and right under our noses.

It lay in strategic conversation.

After pointing out, in my 2001 book, Making Sense of Strategy, that “The ‘strategic IQ’ of your firm is, literally, a life and death factor,” I went on to say:

“Most valuable human development takes place in”the school of hard knocks, not in the classroom. Most people’s growth and inspiration results from their day-to-day activities and interactions. The conversations they’re involved in shape their attitudes and aspirations, and impact on their capabilities. Yet, common practices ensure that too many individuals are constrained rather than liberated, and that only a few are able to think and act strategically.

“… In effect, people are forced to short-change their companies, because their companies cut them out of the conversational loop and limit what they can do and what they can become.

“While the ‘heavies’ engage in a ‘big conversation’ about the firm’s context, its challenges, its strategy, and so on, the majority of employees are allowed to take part only in a ‘small conversation’ which focuses narrowly on their jobs, their specific tasks, the methods they use, and the results they must get.

The strategic IQ of most firms is pathetically low—because of the way they make strategy. But you can change that fast, by immediately involving as many people as possible in your company’s ‘big conversation.’ This single step will do more than anything else to align and motivate your team, and to empower them to conquer tomorrow.”

Harvard’s new programme focuses on four intelligences:

  1. Rational
  2. Creative
  3. Emotional
  4. Social

These are undoubtedly important, but I have a different take on the matter. Let me explain it like this:

Assume you’re about to hire a consultant to help you with your strategy. You obviously want the best strategy you can get. What mental skills would you expect of the person you’re about to rely on? Surely they’d be these:

  1. Foresight—the ability to look ahead into the future and anticipate what lies ahead, what’s likely to happen, and how things are likely to unfold.
  2. Insight—the ability to cut through clutter and complexity and to understand things incisively and in a new way.
  3. Analysis—the ability to collect information, decipher and make sense of it, and make it useful.
  4. Imagination—the ability to see what others have not seen, to think “what could be” where others are content with what is.
  5. Synthesis—the ability to connect disparate snippets of information, different sensations and perceptions, and unrelated ideas, to give them new meaning.
  6. Judgment—the ability to weigh up situations, facts, feelings, opinions, and so on, and to make choices about what must be done in a way that best balances risk and reward and leads to the most desirable outcomes possible.

Now, if these are the traits you’d want in a consultant, what about the people on your own team? What should you seek in them? What should you strive to develop in them? Other capabilities? Or these ones?

Answer: these ones.

This isn’t a contest between Harvard’s list and mine. In fact, there’s a strong case for putting them together, for they work as one. But it is important to recognize that strategic thinking skills are quite different from equally critical social and emotional skills.

What happened to creative IQ, you might ask? And the answer is, it’s a product of all the six elements in my model. Creativity is a complex process. It’s not just about wacky ideas.

And rational IQ? Same thing: if the term refers to the ability to confront and deal with reality, to keep a cool head under pressure, and to make well-reasoned decisions, all of those come from the capabilities in my model. Couple those strategic thinking skills with social and emotional skills, and everything is covered.

The fact that strategic IQ has made it as a Harvard Business School course is an important breakthrough. Now, watch the “thought leadership” mob leap onto the bandwagon.

Thanks, Harvard!

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  •  03/04/2012
Mar 052012
 

Most companies have a strategy, but the quality of those strategies varies greatly. Not all are equally sound. A lot are utterly useless. And all too often, even the best of strategies won’t get turned into action because of organizational weaknesses.

You might wonder if strategy really is necessary in today’s environment of extreme uncertainty, roller-coaster volatility, resource constraints, and rising competitive hostility. The answer: unequivocally yes! In fact, right now, strategy matters more than ever. Precisely because the world is so hard to understand and there are so many surprises, you need a strategy in order to give you the best possible chance of defining your own future.

This is no time to be careless or vague, to bet on yesterday’s strategy taking you into the future, or to bank on your competitors being idiots. A carefully thought-through, robust strategy is essential for riding the “white waters” we’re in, and that in turn requires a systematic, disciplined strategy process. Now, more than ever, you need to subject your strategy—and the way you made it—to tough, dispassionate review.

No doubt you and your colleagues have put a lot of effort into your strategy. You’ve probably thought long and hard about the best process to use, what it should address, what you should finally say, and how you should communicate the outcome. But before you rush ahead with implementation, pause for a moment. Stand back and take another long, hard look a what you’ve decided. Use this checklist to stress-test your strategy. These 20 questions may highlight weaknesses, trigger new insights, or lead to new decisions.

One set of questions helps you evaluate your overall strategy:

  1. Is your strategy based on specific and sound assumptions?
  2. Is it based on adequate and accurate information—most importantly, about customers, competitors, your operating context, and your own capabilities?
  3. Does it address all the key issues facing your company, or have you overlooked some or skirted around the tricky ones?
  4. Are you clear about the results you want, and will it raise your chances of delivering them?
  5. Will it give you a meaningful advantage over competitors, and can you capture the value of that edge?
  6. Have you made the right trade-offs, or are you making too many compromises?
  7. Do you have what it takes to make it work—resources, capabilities, attitude, stakeholder support, etc?
  8. Will it be sufficiently hard for competitors to understand, copy, or nullify?
  9. Will important competitors worry about it, and wish they’d thought of it first?
  10. Does it lock you into a particular course, or will you be able to change direction when you need to?
  11. Is this strategy unquestionably the best you can do given your current circumstances?
  12. Does it have legs – i.e., will it give you the results you want for long enough to make it pay off?

A second set of questions looks at your chances of making your strategy work:

  1. Is your strategy simple, clear, and specific (i.e., will it be easy to explain, will it make sense, and will you be able to stay “on message”)?
  2. Does it have just a few (3-5) key goals that are unquestionably the priorities, and will achieving them get you where you want to go?
  3. Are those goals followed by (3-5) well-defined actions, and are specific individuals responsible for those actions within specified time-frames?
  4. Do you have the right people in all functions, and are they excited about your strategy and aligned behind it?
  5. Do the “pivotal people” on your team (the few who are the most critical “gears in the system”) have the skills and clout they need to make things happen?
  6. Do they have the information, resources, and support they need, and will they continue to get it?
  7. Will your organizational arrangements (structure, processes, systems, culture, incentives, etc.) support your strategy?
  8. Do you understand the risks that lie ahead, and do you have plans to deal with them?

All of these appear to be quite simple questions. But they may be tougher than you imagine. Getting to the answers may be painful, and you and your colleagues may not like them.

But remember, strategy is not just about logic, analysis, and hard decisions. It’s also a highly-charged social, political, and emotional subject. If you don’t start out with that understanding, and if you fail to confront reality while you craft your strategy, don’t expect great results. The world is just too tough for that, and it’s getting tougher.

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  •  05/03/2012