Monthly Archives: February 2016

STRATEGY ISN’T ALWAYS ABOUT VISION

Much of the information that is available, whether printed word or online, to those seeking to learn how to better develop strategies tends to refer to what strategists term, ‘Vision-Based Strategy’ falsely giving the impression that all strategy should be vision based.

If all in the garden is rosy, this might be the case however reality does have a habit of throwing up problems which side-track us from our vision. When this happens, what do we do with strategy?

strategyEver since H. Igor Ansoff’s ‘Corporate Strategy’ (1965) popularised the concept of business strategy to a wider audience, strategy has evolved at an incredible pace with numerous models, theories, versions and methods arriving (and frequently departing).

How many different models of strategy are there? Probably over 1000 and, as in many other areas of life, some are good, many are mediocre, most lag behind or have fallen by the wayside.

It sounds confusing but it doesn’t need to be. Fundamentally nearly all of the successful models fall into one of two camps.

Model One; Vision-Based Strategy (aka Goals-Based Planning)

This will be the more familiar model to most working in and with strategy. It is ‘vision-based’ in that it defines the future before working (planning) back to the present by defining specific objectives that will need to be achieved against a set timescale if the Vision is to become reality.

These objectives will typically be specific (e.g. to increase profit margins on ‘product X’ by 10% by the end of the next four years). Actions will be attached to each goal clarifying the what, when, why, where, who and how to each objective.

A good Vision-Based Strategy will consider both external and internal factors, clearly identify organisational priorities and utilise both historical intelligence and analysis of current factors. In looking to the future, consideration will be given to informed forecasts, intuition and common sense.

Vision-Based Strategy tends to be longer term planning, certainly longer than 3 years with sounder models looking 10-12 years ahead although it should be noted that this will be subdivided into strategic planning cycles (frequently 3-5 years in duration).

Model Two; Issues-Based Strategy

This model will be less familiar to many although that is not to say it doesn’t have its place.

With Issue-Based Strategy we begin with the present and Work (plan) forward to the future. As the name suggests, it is typically used to identify issues faced by the organisation and work them forward toward solutions.

Common practice is to identify issues as questions (e.g. “how will we recruit our Board of Trustees?” or “how will we address the shortfall in expected funding?”) Action plans are then compiled describing the what, when, why, where, who and how required to address each issue.

Although this model can be used to address external factors it is more commonly utilised to focus on internal matters and the establishing of strong internal structures and systems.

Issue-Based Strategy tends to the shorter term, typically one year and never more than three. It is generally beneficial for young organisations, those facing critical current issues and/or those with far less resource (e.g. personnel or funding) than is required for its desired development. Generally, through sound Issue-Based Strategy, once issues have been addressed organisations will emerge stronger and then benefit from more Vision-Based planning.

The Hybrid Model

It is possible for a Vision-Based Strategy to incorporate Issue-Based planning. For example, if short term, unpredicted problems arise while working towards a longer term vision it will make little sense to ‘bin’ a Vision-Based Strategy which is otherwise delivering. Far wiser to incorporate into it Issue-Based planning designed to address and solve the problem so delivery of the longer term vision stays on course.

Don’t overcomplicate it

As stated earlier, since 1965 there have probably been over 1000 different models of strategy of which all of those which have stood any test of time are based on either Vision or Issue.

Regardless of which model you are applying, it is worth remembering that at its most basic, strategy is about identifying and working through the challenges which hinder you from reaching your chosen destination. Challenges that can be predicted should be planned for via ‘Vision-Based’ thinking, those that can’t will likely require ‘Issue-Based’ thinking as and when they arise.

© Jim Cowan, Cowan Global, 2011, 2016

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WHY I DISLIKE MY OWN LINKED IN POST AND WHY YOU SHOULD TOO

I recently wrote a blog titled; ‘Accessibility – What Is It & Is It Worth The Bother?’ Having then also posted it on Linked In, I found myself disliking the finished article. But why?

Linked In QMThe blog (read it here), looked at accessibility and the ‘carrot and stick’ of why businesses and other organisations should be more aware of tackling the issue. The ‘stick’ discussed remaining legally compliant under the Equality Act of 2010 while the ‘carrot’ pointed to the potential for increasing markets by better understanding various groups falling under what are  termed, ‘protected characteristics.’

One of the examples I used was of the difference giving more thought to something as simple as font selection can have; in the UK offering an increased potential market of up to 6 million people. And yes, you read that correctly, 6 million people.

I was happy that I had got my message across and proceeded to publish my blog before then also posting it on Linked In (read the Linked In post here). And this is where things went astray.

I had written an article on accessibility but the font offered by Linked In for posting articles on their site is, you guessed it, for many people, of the inaccessible variety. Hence, although I still posted, I dislike my post as it is hardly an example of good practice, of practising what you preach. It does however, demonstrate how widespread and often invisible the issue of (in)accessibility can be.

It is a far wider issue than many realise. From magazines to book publishers to company websites and more, poor font selection excludes many from reading otherwise great publications, books, websites, marketing materials, even court documents (yes, the very people responsible for upholding the law regularly breach it).

But flip that on its head and spot it for the opportunity it is. Understanding font selection and the many other misunderstood aspects of accessibility could put you ahead of your competition when trying to reach these often ignored sections of our community. On font selection alone, better reaching up to 6 million more people in the UK alone.

The choice is yours. Legally compliant or flouting the law; talking to some or talking to all of your potential market; mediocre and pretending or excelling and doing.

 

(For the record, I have fed back to Linked In on this issue).

© Jim Cowan, Cowan Global, 2016

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DO YOU KNOW WHY THEY ARE YOUR CUSTOMERS?

Regular readers will know the importance of asking the right questions in order to make the intelligence that informs strategy relevant. For example, even if you know who your customers are, if you don’t also understand why they are your customers it won’t only undermine your marketing strategy it will undermine the entire company strategy. How? Read on…..

question-markConsultation is often performed as little more than lip service, as a misunderstood ‘must do but don’t really understand how or why’ exercise before the ‘clever’ people get down to creating the strategy.

And yet, many strategies which look great at first read are doomed before they are even launched because corners were cut during consultation and they fail to understand or reflect reality.

One example is in establishing who your customer is, on the face of it quite a simple thing to research. That extends to who your potential customers are. Again, not exactly a stretch and once known we can plan how to go after them. Not forgetting, as too many do, the retention of your current customers!

Fine. Tick the box. Get on with the strategy.

Wait!

You forgot to find out why they are your customers.

Herb Kelleher

Herb Kelleher

A great example of the value of understanding why they are your customer is frequently relayed by Herb Kelleher, one of the founders of Southwest Airlines in the USA and their former CEO and Chairman. The way he tells the story it is one of knowing who you are in competition with but, as you will see, it is also one of knowing why your customer is your customer.

Southwest Airlines are famous for their really low fares which made Kelleher very popular with travellers but less so with his shareholders. In fact Southwest’s shareholders could not understand why they were only charging $79 for a ticket from Los Angeles to Las Vegas when their nearest rival was charging almost double that.

Those shareholders asked Kelleher to explain why they couldn’t charge $129? They would still be the cheapest available flight but profits would surely be higher?

But Kelleher had done his research; he had consulted properly and had asked the right questions. He knew that such a hike in price could hurt Southwest. How?

When Southwest set their ticket at $79 it was no accident. $79 was the cost of driving from Los Angeles to Las Vegas (factoring in maintenance and the like). Kelleher realised that as well as being in competition with other airlines, if Southwest set their ticket price right, they could also compete with the car. He knew that if they raised their prices they would still be cheaper than other airlines but would no longer be able to compete with the car.

Kelleher saw it as knowing his competition (the car) but it was also knowing why those ticket purchasers were Southwest customers. For many it was because they could fly as cheaply as they could drive. Without knowing that, Southwest might have followed their shareholders wishes and raised prices and then wondered why business had fallen.

Now, take a look at your own strategy. Is it based on the shareholders’ or  your own assumptions or Kelleher’s intelligence? Is it based on sound consultation and research or was one (or more) vital question omitted leaving it standing on foundations of sand?

You cut corners when consulting at your (and your business’s) peril.

 

© Jim Cowan, Cowan Global, 2011, 2016

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ACCESSIBILITY – WHAT IS IT & IS IT WORTH THE BOTHER?

A recent spate of poorly put together marketing emails and post has left me wondering whether business, political parties and others in the UK understand ‘accessibility’ and its value when trying to communicate with others?

inaccessibleAccessibility; in response to the second part of the question I pose in the title for this blog, it’s a bit carrot and stick.

The stick is the law; namely the Equality Act (2010) which expects businesses to make ‘reasonable adjustments’ for those identified as having ‘protected characteristics’ namely; age, disability, sex, religion or belief, race, sexual orientation, gender reassignment, marriage & civil partnership and pregnancy & maternity.

But what is accessibility? It is a good measure for how well you are making those ‘reasonable adjustments’ required by the law – how easily can someone with one or more of the protected characteristics access your products or services? Or even read your marketing materials?

There are the obvious such as do you have accessible toilets (often called disabled toilets) which someone in a wheelchair could actually access. This is not as ‘common sense’ as you may think. In the process of conducting Accessibility Audits* for organisations, I have come across ‘accessible’ toilets that a wheelchair user could enter but not close the door behind his or herself because it opened inwards. Would you want to leave the door open while using the toilet? Is this ‘reasonable?’

Then there are the less obvious barriers to accessibility which I see on a daily basis and which I will come to in a moment.

But, before I do, consider the carrot and stick again. If the law is the stick then the potential for increasing the size of your market is the carrot. For, which sensible business (or other organisation) will not make ‘reasonable adjustments’ if they open up previously ignored demographics?

This is where understanding those less obvious barriers to accessibility become important. Let us take something as seemingly innocent as a font you choose to use on your company website, in your emails, or in other communications. The main driver here is usually the ‘look’ and the overall design yet for an estimated 10% of people the font you choose can be the difference between being easily read, difficult to read and even, for some, near impossible to read.

By understanding which fonts are more (or less) accessible and making those ‘reasonable adjustments’ you make your business more accessible to, potentially, 10% more people. That is over 6 million people in the UK.

There are numerous other ways in which understanding how to make your business more accessible can increase your potential market size by 10, 15, or even 20%; many just as easy as changing a font.

Equality is important and the law is there for a reason but surely, for the sensible business, the carrot is preferable to the stick and the carrot of increasing the number of people you are talking to must be worth some reasonable adjustment. Especially if your competitors are not doing the same!

Is accessibility worth the bother? You tell me.

 

*Drop me a line today to book your Accessibility Audit and start opening the door to your business to more people.

© Jim Cowan, Cowan Global, 2016

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A TRIP TO THE OCEAN

Blue Ocean Strategy is not for everyone, it requires a special set of skills and abilities. But for those who have them, identifying the Blue Ocean and swimming towards it can be great news for business…..

ocean-turtleMuch within corporate strategy hinges on either the development of or the protection of competitive advantage. You have a strategy and the strategy seeks to exploit ways in which you have an advantage over those in the sector with whom you compete

In some sectors this is becoming harder and harder, it is becoming difficult to differentiate in over crowded market places and bland conformity appears to be winning out (or at least that is the impression given).

In 2004 W. Chan Kim and Renee Mauborgne defined this crowded market place as the ‘Red Ocean’ – the known market place, limited and bitterly fought over. Kim and Mauborgne proposed that there is another place in which to do business, the ‘Blue Ocean’ – the unknown and uncontested market space. Blue Ocean Strategy was born.

But the Blue Ocean isn’t for everyone. First and foremost it requires you to be innovative, without innovation you are not going to be able to swim away from the Red Ocean to the clear waters where competition no longer lurks.

What does a successful Blue Ocean Strategy look like? Think of Cirque du Soleil.

Cirque-du-soleil-brandCirque du Soleil was created in 1984, before anyone had even coined the term Blue Ocean Strategy. The circus trade was dying. It couldn’t compete with the growing number of alternative leisure activities available to children and animal rights protesters were beginning to win the battle to ban performing animals.

Competitive advantage was sought by having bigger big tops, more famous clowns, more grandiose shows but the public wasn’t being fooled; it was still the same show in (slightly) different clothes.

It would appear to be an act of lunacy, of corporate suicide, to decide to enter this marketplace but that is what Cirque du Soleil did. However, instead of competing in the overcrowded Red Ocean, they innovated, they created a whole new market for circus performers.

Instead of children they targeted adults, instead of big tops they used theatres and vast indoor venues, instead of being the same as everyone else they found ways not only to differentiate but to operate in new markets. Suddenly adults were queuing up to go to the circus and were happy to pay a lot more money for the privilege!

The key is to mix innovation with the identification of ignored or unchartered waters in the way Cirque du Soleil did. When identifying the Blue Ocean so clearly twenty years after the advent of Cirque du Soleil, Kim and Mauborgne were also kind enough to provide a kind of handbook with four guiding principles:

  1. Reconstruct market boundaries.

It sounds obvious but instead of continuing to hunt in the same crowded waters, look for where the competition isn’t operating. This might be among users in place of purchasers, it might be an ignored demographic, it could even be in service as oppose to product sales. Try anticipating rather than following trends, identify the emotional appeal over the practicality.

  1. Think ‘big picture’.

Yes, (good) strategy should always do this anyway but in reality many corporate strategies have become bogged down in budgets and spreadsheets. They over-rely on historical data and give too little consideration to common sense and intuition. When looking to the future think blank canvas; think what could we do?

  1. Look beyond existing demand.

Don’t only look at existing customers, look at non-customers. How can they become new and repeat customers? Cirque du Soleil did it by taking the circus to adults in adult venues. Calloway Golf found out that many of their ‘non-customers’ didn’t like playing golf because hitting the ball was too difficult and so designed a club with a bigger head.

  1. Get the strategic sequence right.

If the answer to any of the following questions is ‘no’ you need to rethink your strategy:

  • Buyer utility – does your idea offer exceptional buyer utility (not the same as exceptional technology)?
  • Price – does your pricing make you accessible to the mass of buyers?
  • Cost – can you hit your cost target and make a profit at your strategic price?
  • Adoption – Have you identified and are you addressing the hurdles to adoption up front?

The Blue Ocean is not for everyone but for those who are innovative and who can see a big picture it does offer opportunity. A word of warning though, just because your new ocean was blue does not mean it will always stay blue. When Karl Benz invented a replacement for the horse drawn carriage he was swimming from the red ocean to the blue. When Henry Ford saw the opportunity to mass produce and popularise the automobile he was doing the same. But no one today would suggest that either Mercedes Benz or Ford operate in Blue Oceans!

© Jim Cowan, Cowan Global, 2011, 2016

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ADHOCRATIC – WHAT DOES IT MEAN?

I was recently part of a group briefed to come up with some statements for a newly formed group of like-minded individuals and companies who needed to better define why they exist, who they are, what they stand for and where they are going. We were briefed to avoid words like ‘Mission’, ‘Values’ and ‘Vision’ as the group wishes to distance itself from standardised and/or bureaucratic norms. I suggested they might be ‘Adhocratic’ before needing to explain what I meant. The group loved it and have adopted it as part of those over-arching descriptors. However, the initial lack of understanding left me wondering whether it is a term which needs wider understanding……

The Centre for the Study of Adhocracy by Helen Johnson (2006)In short-hand, ‘adhocratic’ is the opposite of bureaucratic. While a good starting point, in long-hand, it is a bit more than that.

Being the opposite of bureaucratic, adhocratic is, in theory at least, unstructured, decentralised and responsive.

The term was first used as long ago as 1968 when Warren G Bennis, a US leadership theorist, proposed that the successful business of the future would rely on nimble and flexible project teams within a structure he called ‘adhocracy’.

Adhocracy then made fleeting appearances in theories ranging from “a new freeform world of kinetic organisations” (Future Shock, Alvin Toffler, 1970) to being one of four organisational structures defined by Henry Mintzberg in The Structure of Organisations (1979).

In my view the best description is “any form of organisation that cuts across normal bureaucratic lines to capture opportunities, solve problems and get results” stated in Robert Waterman’s 1990 book ‘Adhocracy.’

The fact so few have heard of, let alone employed Adhocracy suggests that Bennis read the future wrongly when he was, in part, spot on. However where Bennis suggested that adhocracy was the future for all successful companies, Mintzberg and Waterman saw that it is not a structure suited to many.

Local authorities for example are often slated for being bureaucratic when the truth is, they could not function effectively in any other way. It is when they become over bureaucratic, as they frequently do, that frustration arises.

Where adhocracy has, and continues to, come into its own is in the creative industries, in the new technologies and as creative departments within larger bureaucracies. However, even in those areas it appears ideally suited to, it can soon be the undoing of the organisation concerned if at the very least some form of guiding structure is not in place.

This ‘guiding structure’ creates two forms of adhocracy (sub-divisions):

  • The Operating Adhocracy which innovates and solves problems on behalf of clients (think advertising or software).
  • The Administrative Adhocracy which operates through a managed, project team structure in order to serve itself. NASA would probably not describe itself as adhocratic but in fact comes very close to being an Administrative Adhocracy.

It is often mistakenly thought that to be truly adhocratic the organisation will be so ‘freeform’ that it does not require direction or strategy. This is not the case however successful adhocratic strategy would be far lighter touch and flexible. Think Pareto’s Law as your rule of thumb and apply it to flexibility in strategy; a healthy bureaucracy would be 80% rigid and 20% flexible. Less than 20% and bureaucracy starts creeping into the over bureaucratic referred to above.

A strategy for an adhocracy would be the reverse; 20% rigid and 80% flexible becoming over adhocratic the more it creeps below the 20% ‘guiding’ rigidity.

Adhocracy is not for everyone; neither is bureaucracy and in reality most organisations will be positioned somewhere on a sliding scale between the two. And, as I often state, if strategy is to serve any/all of these organisations to their highest potential it must be highly personalised and avoid ‘templated-thinking’ at all costs.

It is not that adhocracies don’t exist, there are many of them operating extremely successfully in all parts of the world. It is that the term ‘adhocratic’ is poorly understood and therefore rarely applied.

© Jim Cowan, Cowan Global, 2011-2016

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HAVE WE MISSED CHINA’S STEEL DISRUPTION STRATEGY?

Recent news has made bleak reading for the UK’s once proud steel industry but, despite political announcements of support, is the real issue being overlooked?

Pic: The Independent

Pic: The Independent

Over recent days and weeks, the UK media has reported on what may prove to be the beginning of the end for the steel industry in this country.

Much of that media commentary has focused on the need for government to do more without reflecting accurately on what more government can do. For despite grand talk from politicians in Westminster and devolved parliaments alike, the fact is that for the three key problems identified by the UK Steel Summit, their hands are tied.

The UK Steel Summit identified high energy costs, restrictions on state aid, and the Chinese dumping steel on the export market below the cost of production as the three key problems. The first two tie the hands of UK politicians due to EU restrictions and policies while the third, although actionable by the World Trade Organisation (WTO) again ties our politicians’ hands because they need Brussels’ consent before they are permitted to act and take the matter to the WTO.

But, has anyone considered that China is not simply dumping cheap, surplus steel on foreign markets but flooding them to a more defined strategic purpose?

Doesn’t it seem strange that a country recognised for its careful planning of industrial growth should make such an apparent ‘school-boy error’ in this sector?

Our politicians appear to have overlooked the possibility that this is a carefully crafted disruption strategy aimed at securing a huge slice of the world steel market. It certainly shows all the hallmark signs of the classic disruption strategy:

  • Come in at the cheaper, lower quality end of the market
  • Flood the market place of your competitors
  • When your competitors vacate the discount end of the market, increase quality but keep prices artificially low
  • And so on until you dominate the market having squeezed your competitors out or restricted them to lower volume niche markets

Unfortunately, as I have pointed out on numerous occasions in the past, the UK’s politicians are woefully inadequate when it comes to strategy, as are the nation’s media judging by the lack of recognition of this inadequacy.

This presents the twin problem of (1) China’s steel market disruption strategy not being recognised until it is too late and, (2) even if it is recognised in time, those tasked with addressing the issue lacking the competence to come up with a credible counter-strategy.

This is a bold, global strategy from the Chinese, a master stroke worthy of admiration from anyone with an appreciation of things strategic. However it must be countered, and countered soon, if we are not going to hand global dominance of this vital market to a single power.

The clock is ticking, and ticking fast.

 

© Jim Cowan, Cowan Global, 2016

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IMPROVE YOUR PLANNING; LISTEN TO THE CATERPILLAR

Online, in person and in print; there are any number of places you can seek advice on developing sound strategy but in the rush to get on with the planning, don’t overlook the importance of properly defining what it is you are planning for…..

alice-in-wonderland-caterpillar-and-hookahLewis Carroll’s novel ‘Alice’s Adventures in Wonderland’ (commonly called Alice in Wonderland) was first published in 1865. It is generally considered to be one of the best examples of a genre known as ‘literary nonsense.’ And it is probably reasonable to think of it as nonsense as it tells the tale of a girl called Alice who falls down a rabbit hole and who then meets a number of strange anthropomorphic creatures. However, behind its enduring popularity lies Carroll’s ability to use logic to relay significant parts of his tale.

Consider the moment when Alice, lost, comes across a caterpillar:

“Excuse me sir,” Alice enquires, “could you tell me which road to take?”

Wisely the caterpillar asks, “Where are you going?”

Somewhat dismayed, Alice responds, “Oh, I don’t know where I’m going sir.”

“Well,” replies the caterpillar, “if you don’t know where you are going, it really doesn’t matter which road you take.”

The caterpillar imparts sound advice not only for Alice but for anyone involved in strategic planning. The temptation is to rush to the planning, to start describing the journey, the ‘how’ part of reaching the destination.

But pause a moment and consider the sage advice of the caterpillar; if you haven’t taken the time to get a clear picture of what success looks like, to properly define and describe your desired destination, then how can you accurately plan to ensure you arrive at your desired destination?

Having a strategy is not the key to success many think it is; the key lies in having a good strategy. And without a clearly defined destination, no strategy can be considered good.

But don’t take my word for it; ask a caterpillar!

© Jim Cowan, Cowan Global, 2012-2016

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