Posted tagged ‘Strategy’

Securing Early Wins

January 28, 2009

While it is important to secure early wins, it is equally important to avoid early losses. Common causes of early losses include the following:

  • Failing to focus. This appears as having too many initiatives. Identify the moist promising opportunities and concentrate on them
  • Not taking the business situation into account. What constitutes an early win in one situation can be a waste of time in another. See the table above regarding examples for each type of situation.
  • Not adjusting for the culture. Leaders who come from outside the organization naturally assume their old culture is in existence. Be sure to understand what the organization considers a win.
  • Failing to get wins that matter to your boss. Addressing problems that your boss cares about will go a long way toward building credibility and cementing access to resources.
  • Letting your means undermine your ends. Process matters. The early win must be accomplished in a manner that exemplifies the behavior you hope to instill in the organization.

Studies show that successful change is implemented in “waves” with distinct phases. These phases include acclimatization, change, consolidation, and deeper learning so people can catch their breaths. What follow are deeper and more thorough structural changes. The final wave is focused on fine-tuning to maximize performance.

Each wave ought to consist of distinct phases.

  • Learning
  • Designing the changes
  • Building support
  • Implementing the changes
  • Observing results

The goal of the first wave of change is to secure early wins that build personal credibility, establish key relationships, and identify and harvest low-hanging fruits – the highest-potential opportunities for short-term improvements in organizational performance. These targets should be consistent with your A-item business priorities and introduce the new patterns of behaviors that you want to instill in the organization.

A-item priorities should

  • Follow naturally from core problems
  • Be neither too general nor too specific. They must include measures for overall success so that wins may be recognized. In other words establish S-M-A-R-T goals but not goals that result in micro-managing.
  • Offer clear direction yet allow for flexibility when you learn more about the situation. This is an iterative process. Be prepared to test, refine, and restate the goals.

To realize A-item priorities, it is imperative to eliminate dysfunctional behavior. To alter culture, the new leader must define which behaviors are desired and which ones are not. Some organizations refer to this as the creation of a management philosophy but the key element is that the behaviors must be defined. It is also important to note that every culture has good points and faults. It is crucial that the good points are maintained so that people have stability in times of change. Elevate and praise the good points that already exist so that people have a bridge to the future.

In turnaround situations, bringing in new people from the outside and setting up project teams to secure performance improvement initiatives are a good fit. In realignments, it may be well advised to start out with less obvious approaches to behavior changes. The new leader can set the stage for collective visioning by changing performance measures and beginning to benchmark.

Once the A-items have been identified and behaviors have been defined, detailed plans for early wins may be created. During the first 30 days these wins are about building credibility and deciding where you will focus your energy to achieve early performance improvements in the next 60 days. The goal of a second wave of change, once this has been accomplished, is to address more fundamental issues of strategy, structure, systems and skills to reshape the organization. This is when the real gains of organizational performance are achieved.

To build credibility,

  • Determine what you want to get across about whom you are and what you represent.
  • Decide the best way to convey those messages.
  • Identify your key audiences (direct reports, other employees, and key outside constituencies). Craft messages tailored to each focusing on who you are, the values and goals that you represent, your style, and how you plan to conduct business.
  • Think about how you introduce yourself. Should you first meet with your direct reports as a group or individually? Will the meetings be informal get-to-know-you sessions or immediately focus on business and assessment? What other channels such as e-mail or video will you use to reach people? Will you meet people at other locations?
  • Remove minor but persistent irritants to your organization.
  • Focus on strained external relationships and begin to repair them.
  • Cut out redundant meetings, shorten excessively long ones, and improve physical space problems.

Matching Strategy to Situation: The STaRS Model

January 21, 2009

Professor Watkins emphasizes the importance of matching strategy to the situation appropriately. The author says that there are essentially four types of business situations that new leaders must address.

Each business situation has different characteristics, challenges, and opportunities. Yet, every business has a portfolio of situations. A new leader must figure out which situations fall into each category. He calls this the STaRS model.

1)  Start-up: There isn’t much existing infrastructure to build on. The new leader must assemble the capabilities including people, funding and technology to get a project or business off the ground. Among other things, to be successful, he must do things right from the beginning, energize people about the possibilities and focus on learning about the technical issues, products, markets, technologies, projects, and strategies. Early wins are putting the right team together and achieving strategic focus as well as determining what not to do and building discipline within the organization.

2) Turnaround: Like the start-up, there isn’t much existing infrastructure to build on. The new leader should take on a unit or group that is in trouble and get it back on track. She or he accomplishes this by cutting it down to a defendable core fast and then beginning to build it back up. Among other things, to be successful, the focus should be on reenergizing demoralized employees and other stakeholders and handling time pressures in order to make a quick, decisive impact. The leader requires authority, backed by political support, in order to make tough decisions such as painful cuts and difficult personnel choices. In this situation, everyone recognizes that change is necessary, but not what changes may be necessary. Affected constituencies may offer significant support and a little success goes a long way.

3) Realignment: This type of organization has significant strengths as well as serious constraints on what you can and cannot do. Typically, there is some time before making major calls. As a result, you can learn about the culture and politics. The intention is to revitalize a unit, product, or process that is drifting into trouble. The major issue here is that the organization is in denial. It is essential to understand what made the organization successful and why it drifted into trouble. To be successful, the leader must deal with deeply ingrained cultural norms that no longer contribute to high performance and convince employees that change is necessary. The successful leader must secure consistent public backing and support to confront the need for change. The leader must teach people about the problem

4) Sustaining success: The organization has significant strengths and serious constraints on what you can and cannot do. In this situation, the successful leader plays good defense by avoiding decisions that cause problems. He should develop the financial and technical resources to sustain the core business as well as exploit promising new opportunities. He should find ways to take the business to the next level. Typically, there is some time before making major calls. As a result, he can learn about the culture and politics and work to preserve the vitality of a successful organization and take it to the next level. S/he will need to invent the challenge and redirect resources.

It will be interesting to view the actions of President Obama in the context of these models.

A Blueprint for the New Leader to Effect Change

January 18, 2009

The transition from one presidential administration to another is nearly complete and the country is visibly excited.

There is no doubt that part of this excitement stems from public’s sense that Mr. Obama has demonstrated extraordinary effort in planning his presidency. He certainly seems to be working diligently to avoid the consequences of the aphorism, “Failing to plan is planning to fail.” Our country seems to appreciate the efforts of the President-elect and this is reflected in his approval ratings which are remarkably high.

There have been numerous books written on how a new leader should take charge and this seems like a great time to look at how Mr. Obama should be approaching this important initial period. One of my favorite books on this topic is The First 90 Days by Harvard Professor Michael Watkins.

Watkins’ work is instructive for all of us, but in the context of this “new beginning” one can see the areas that Mr. Obama has been addressing and which ones he will likely be focusing on in the days ahead.

Here’s the short list.

1)     Promote Yourself. Psychologically break from your previous role in order to take charge of your new role. You are likely to need new skills to be successful at this new level.

2)     Accelerate Your Learning. Focus on understanding markets, products, technologies, systems, and structures as well as its culture and polities. Do this systematically.

3)     Match Strategy to Solution. Diagnose whether you are in a start-up, turnaround, realignment, or sustaining success situation. Each requires a different strategy. You may have different parts of your organization in different situations.

4)     Secure Early Wins. Early wins build credibility and create momentum.

5)     Negotiate Success. Figure out how to build a productive relationship with your boss and manage his or her expectations. This means critical conversations about the situation, expectations, style, resources, and personal development. Gain consensus on your 90 day plan.

6)     Achieve Alignment. This is a strategic role. The higher that you rise within the organization, the more that you have to play the role of strategic architect. This means evaluating strategy, developing appropriate organizational structures, and developing the systems and skills necessary to realize your strategic intent.

7)     Build Your Team. Inheriting a team frequently means restructuring it to better meet the demands of the situation.

8)     Create Coalitions. Develop supportive alliances, both internal and external. Identify them now as well as ways to line them up on your side.

9)     Keep Your Balance. Develop a network that can advise and counsel you so that you do not lose perspective. It can be difficult to look out from the inside.

10)  Expedite Everyone. Help everyone accelerate their own transitions to their new roles.

This week, we’ll talk more about the bottom half of this list.

* * *

Now some thoughts about President Bush as he leaves office…

Without a doubt, the Bush Administration left us with far too many challenges. We should, however, also acknowledge that there were no further attacks on American soil after 9/11. At that time, we were shaken and disheartened and scared and whether by intention or good fortune, the Bush Administration did keep us safe at home and helped us to reclaim our sense of balance.

We likely will never know if we were safe by design or by the Good Lord watching over us (or, of course, both) nor will we probably ever know how many plots to hurt our fellow citizens were thwarted.

Still, if we choose to discredit this Administration for the financial situation we find ourselves in today and the war in Iran, for our safety after 9/11, we should express our appreciation. The Bush administration also looks to have worked diligently during this transition period and that will, without a doubt, help the new president in moving us forward. Thank you, President Bush.

Let us also take a moment to remember that we are still blessed to live in a country that has the greatest opportunities and the most remarkable freedoms.

And now on to new beginnings and may the best be yet to come.

Growing Locally to Grow Your Business

January 11, 2009

For much of the last decade, we’ve heard about the importance of the global economy. The mantra you may have been reading is something like “grow global or you won’t grow at all.”

The Internet has certainly made that approach more viable but there is an equally meaningful perspective that warrants your consideration.

Seth Godin champions this point-of-view. He’s a best-selling author of about a dozen books on marketing or blogging and he is an original thinker. I subscribe to his blog and I do so because his thinking inspires me or it reinforces or extends my own thinking.

You likely will have noticed that my sales related posts are about becoming more related with your own customers. Seminars and referral meetings are really – at its core – about becoming more related to your own relationships. This is because for many small businesses, going global isn’t an option. They need to be effective in their own zip code.

Today’s blog from Godin presented a new twist on the art of becoming related locally. He suggests that you start your own local “newspaper.”

The way he’d go about it is to briefly interview a local business, a local student or a local political activist by phone. Get 20 households to ‘subscribe’ by giving you their email address and asking for a free subscription. You can use direct contact or flyers or speeches to get your list and then release the newspaper via e-mail twice a week. In no time at all, you’d build a mailing list and if you do it well, in not time, it would be the talk of the town.

More important, for you and your business, you will become related on a very local and personal level. You will know about people and the value they contribute to the community. You will become a source for connecting others. Most important, you will be transformed into a valuable resource associated as the source for learning about all of the wonderful things going on in your own backyard and in your community.

And that sounds like a fantastic position for you to be in and a source of strength for any local business.

What I’m Telling My Clients – Part 2 (or how they can create their own economic stimulus package)

December 18, 2008

As the bailouts and their discussions whirl about us and as the list of companies laying off or employees or shutting down operations grows longer and longer, I began to wonder if there wasn’t a small business version of an economic stimulus package that could be implemented.

And if there was a version of economic an economic stimulus package for small businesses, who could and would provide it?

It appears to me that there is such a “package” out there and the ones that can provide it may be small business themselves.

Arguably the greatest challenge that any business owner confronts, particularly in these testing economic times, is to drive new business to his or her company. Fundamentally speaking, as it always has been, the key to long term growth is to “grow the pie” and attract more business. Provide more appropriate services that make a difference and you will earn more business and a greater share of the customer’s wallet.

Many companies provide services to organizations and businesses that are in related fields. Others provide services to companies in a wide range of industries. What if, each company leveraged its customer list to grow their clients’ businesses?

Imagine, if you will, a meeting of six or seven of your clients who work in one industry but provide different services within that industry. More than likely, each of these clients knows other companies within the particular industry. Because each of these companies is your clients, you are related to them and a reservoir of trust has been established.

Suppose next that each one of your clients attending this meeting was asked to participate with the intention of referring one of its customers to one of the businesses represented in the meeting. The economic impact of these referrals would be profound.

Referring clients to one another would create a reciprocal relationship built on real economic value. Additionally, in effect, because your business would be in the upper parts of the minds of your clients, the number of people selling and promoting your value and services would grow geometrically as the trust that you have demonstrated in them would be returned in their discussions with their clients.

In a short time, you might discover that you have an army of salespeople selling your value.

In the next post, we’ll take a look at the structure of such a meeting and how to make it work for you.

In the meantime, please write and share some innovative ways you are growing or helping others grow their businesses.

A Case Study of the Five Tests of a Sound Strategy

September 26, 2008

A short time ago, there was no such thing as overnight shipping. Then Federal Express, DHL and Airborne Express came upon the scene. At first blush, these three companies appeared to be competitors but upon closer examination, they each passed the five tests of a sound strategy.

DHL staked out in the international shipping arena so if you didn’t need to send something overseas, there was no need to use them. Their value proposition was simple – “DHL ships overseas and the others don’t.” Because of this, they required a different value chain – one that would allow them to take packages, manage them through customs, get them on a plane to some fairway land and then have some method of getting the package from the airport to the intended recipients. Their activities fit together and everyone in the organization knew exactly what the business model was and how to deliver the business’ value. Finally, DHL, for the most part, chose NOT to compete in the domestic market space.

You may recall Federal Express’ initial advertising campaign. It was simply stated as “when it absolutely, positively has to be there overnight.” Their second marketing campaign was built around the slogan “our most important package is yours.”

These two messages are core to understanding the FedEx strategy. The business model was that you could count on your important package being delivered anywhere in the United States by 9:30 am in that particular time zone provide that the package was in a FedEx drop-off box by 7 pm the night before. The second slogan creatively expressed that Federal Express treats all of our packages the same. There is no differentiation based on who sent it or why or even what is inside. Indeed, the most important package that FedEx was delivering was everybody’s.

The FedEx model was pioneering in the overnight shipping industry because their value chain created a standardized way of assuring delivery overnight of any package. This required a value chain that guaranteed and measured the time by which a package was received as well as when it arrived. The company chose not to promise faster delivery of any package – the package would always be delivered by 9:30 the next morning even if the customer was willing to pay more for special treatment. And everyone in the company knew the model.

I remember when the FedEx deliver person would come to pick up a package at our offices. If the package wasn’t ready when the client said it would be, the FedEx employee would become agitated and sometimes even leave the office without the package if the wait was too long. Boy, were they in a hurry! Our staff never even knew the FedEx employee’s name because there was never any time for conversation. Chasing the clock is very intense work.

And then there was Airborne Express…

There aren’t many who remember their advertising slogan because Airborne chose not to advertise. Airborne’s model was built around custom delivery services. They made business deals with companies that required frequent and ongoing shipments that had to arrive before 9:30 am. Some of their customers were companies that supplied parts and needed to have these parts in a technician’s hand before 9:30 am. Airborne would even build warehouses and acquire roadway services if the customer was large enough so that it could adhere to the promise of customized delivery.

Did the shipping customer pay more? Sure. But for those companies who needed to get staff on the road sooner than 9:30 am, the premium was well worth it. The interesting thing was that if there was a package that was not from an elite customer, there was no guarantee that it would arrive on a certain day, let alone by a certain time. Their most important package was the one sent by the special customers who shipped large volumes of packages requiring special care or timing.

Airborne too passed the test of a sound strategy. Unique value proposition? You betcha. Tailored value chain? Check. Choosing what not to do? Absolutely. Activities that reinforce one another? Certainly. Strategic continuity? Without a doubt.

All three companies effectively executed their strategies and also taught us that you can serve the same function and be successful if you implement a sound strategy.

The Five Tests of a Sound Strategy

September 24, 2008

Assuming that we know “what we want to be,” that is, we now have a vision in place, we can begin to immerse ourselves in deciding the best path toward reaching our destination.

Yes, we are finally ready to formalize our business strategy.

Strategy is defined based upon (1) the industry and your position within the industry as well as (2) your position relative to your competitors’ position.

Most people think of strategy as optimizing what they already do and being the best at it, leading them to conclude that there is one, best way to compete. Strategy is really about choosing to differentiate one’s product / services from one’s competitors.

Failing to differentiate one’s products / services from those of one’s competitors – meaning the consumer can’t decide which product is better — creates destructive competition in which the only distinction is price. Price competition is never sustainable and is unwinnable.

Competing effectively means that a company is

  • Exceeding the Industry Average Return
  • Creating a return greater than those of most or all of your competitors

To win, you either have to have a higher price (justified by a differentiation of product / service) or a lower cost (justified by a more efficient value chain). You need to operate from the industry cost vs. your cost and the industry price vs. your price. Regardless, you have to be profitable. After all, you can’t have an army without feeding it…and you can’t have a business without being able to sustain it.

Five Tests of a Sound Strategy

There are five tests of a sound strategy

1.      A unique value proposition compared to competitors

2.      A different, tailored value chain

3.      Clear tradeoffs, and choosing what NOT to do

4.      Activities that fit together and reinforce each other

5.      Strategic continuity (having the strategy permeate throughout the organization)

Defining the Value Proposition

Defining the value proposition means identifying the end users and the channels used to sell to them; understanding the end user’s needs and which products, features, and services will address them; and creating a profitable price at which they will buy. We have already discussed how we can learn more about what our customers are really buying.

According to UCLA Anderson’s School of Management Professor Richard Rummelt, there are two ways to get to a successful value proposition. One, you can invent your way to success. Unfortunately, you can’t count on that. The second path is to exploit some change in your environment – in technology, consumer tastes, laws, resource prices, or competitive behavior – and ride that change with quickness and skill. The key is to take a position while there is uncertainty and ambiguity. Clarity occurs only after a company takes a position. However, by choosing to let another take a position, one loses the opportunity to profit from the knowledge.

The second path is how most successful companies develop their plan. Changes do not come along in nice annual packages, so the need for strategy is episodic, not necessarily annual.

Sustaining Competitive Position – The Role of Tradeoffs

  • Choosing a unique position is necessary but not sufficient to create a sustainable advantage because of the threat of imitation
  • Traditional thinking focuses on competitors’ difficulty or ability to imitate
  • Equally, if not more important, is whether competitors want to imitate
  • Tradeoffs are incompatibilities between strategic positions that create the need for choice
  • Strategic tradeoffs lie at the heart of sustainability
  • An essential part of strategy is choosing what not to do

The takeaway is that as business leaders, we want to encourage choice. In fact, we want to our offering to appeal to our target consumers. We want the service / product to contain exactly what they would like and not have more features than are required, even if they are additional to what the consumer wants. Additional and unnecessary features only drive up our costs and reduce profitability.

In the next post, we’ll talk about companies who employed this approach to great success.