Tag Archives: Corporate Strategy

DOES THE TABLE IN YOUR BOARDROOM HAVE FOUR CORNERS?

In small to medium sized businesses there is often a missing corner or two on the boardroom table and, increasingly, the same is now true of larger companies.

What are these corners and what purpose do they serve?

Boardroom TableThe smaller the business the more likely that it is run by people who think in similar ways. For start-ups that friendship, that ‘likeness of mind’ is often a key component in getting from concept to reality but at that point it can become something that hinders the unsuspecting company.

The ‘Board’ (or those running the company) becomes a couple of people or a group of people who think and act the same. They lack the diversity that is required to drive the kind of growth which delivers on early potential. The business reaches a critical size and growth ceases or, if they are fortunate, slows.

In the larger company the situation is different but generates the same problem. There are a number of people around the boardroom table, often very diverse in specialism, experience and knowledge. And because of that diversity, a dangerous assumption is made – that the necessary range of skills, knowledge and experience are assembled.

In both cases, a reality check is needed. That check involves ensuring that four vital specialisms are assembled; the four key corners of any boardroom table. But what are these four key specialisms?

  1. The Strategist. This specialism is the most easily and most frequently overlooked. The board assume strategy to be a generalist skill which they can all handle between them and any ensuing strategy ends up being a hotch-potch of generalist ideas lacking proper direction and cohesion. And responsibility for strategy (in other words the company’s future) is shared, the buck does not stop anywhere and over time the strategy becomes a vague notion or is discussed in terms of aims and objectives with few (if any) clearly defined actions worth having.
  2. The Money Man. Of the four, this is the specialism least likely to be omitted in larger companies (there will usually be a Financial Director) but in the smaller companies is an assumed presence which doesn’t really exist. It is assumed because books are kept and the accountant checks them over every quarter (if lucky) or annually (more commonly).
  3. The Manager. Of bureaucratic mind-set, the Manager is the ‘husbander of resources’ essential to any organisation to ensure the economical use of those resources and to the eradication of waste. Unwatched the Manager can become caught up in his/her own bureaucratic processes and start overlooking the very waste he/she despises because the processes appear to be working. Focus is on the job of management not the future of the organisation.
  4. The Leader. Often, wrongly, assumed to be the same person as the manager, the Leader tends to the less bureaucratic and more to the adhocratic. The Leader’s role is to take people with them on the journey. Of course, without a dedicated Strategist the journey is often ill-defined and the Leader, being of adhocratic mind-set will lead wherever people will follow but not necessarily in the right, planned direction best for the company.

Put together the four might seem a strange group to be working together but it is their diversity which gives them their strength. The Money Man and the Manager tend to be data driven, needing historical information to inform any decision making. The Strategist and the Leader tend to the visionary, preferring to look to the future in preference to the past.

The mix is further diversified when considering where they sit on the continuum between bureaucratic and adhocratic. The Manager tends to be highly bureaucratic, the system and the process are everything and ease the job of management. The Money Man and the Strategist sit nearer the middle of the continuum, the data driven Money Man tending to (but not driven by) the bureaucratic and the future driven Strategist tending to (but not driven by) the adhocratic. The Leader tends to be more highly adhocratic wanting everyone pulling together regardless of direction.

None of these definitions are absolutes. There are certainly Strategists who favour historical data and putting a strategy in place requires a healthy dollop of bureaucracy if it is to be cohesive and executable.

The key to the four corners is that they balance each other. Bureaucracy and adhocracy are not natural bed fellows but are both important components of a healthy board. Data driven and future driven mind-sets are more likely to get along (but not always).

Most boards will feature a nominal leader in the CEO however the reality is that individual could be from any of the four corners but tend to be either the Manager or the Money Man. Companies are run sensibly, conservatively but are resistant to change. This is all very safe unless change is required (think of the recent spate of closures on the High Street).

There is nothing wrong with the CEO being Manager or Money Man so long as the board is balanced, that all four corners are occupied. However, most likely to be absent from the board room are the Strategist and the Leader which can undermine future planning and the spotting and seizing of opportunities to diversify and realise attractive directions in which to move and grow.

The healthy board will ensure the four corners are filled before adding other seats around the table. But how many actually do and how does yours shape up?

 

© Jim Cowan, 2013-2016

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THATCHER; A LEARNING OPPORTUNITY MISSED?

Three years on from Margaret Thatcher’s passing I am left wondering whether one of the most important lessons from her time as Prime Minister has been missed. To those with right leaning tendencies she appears unable to have ever done wrong while those to the left insist she could do no right.

Right or left, those who do not learn the lessons of history are doomed to repeat them, something politicians of all hues have been doing since she left office and, no doubt will continue to do into the future.

Pic: The Guardian

Pic: The Guardian

Whichever space on the political spectrum your views occupy, there was one thing about Margaret Thatcher and her time as Prime Minister everyone appears to agree on; she polarised views. However the problem with such polarised views, such extremes of adoration and hatred, is that they get in the way of reasonable analysis.

That same thing; reasonable analysis of the available data, should be at the heart of the development of any kind of quality strategy and its absence from the politics of the Thatcher era (and, indeed, since) has seriously undermined the quality of strategy coming from government then and since. Then and now we are served a diet of initiative-led rather than strategy led policy delivery and that can only serve up problems for the future.

To explain what I mean, I will use two of Mrs Thatcher’s flagship policies as examples and explain how delivering them as single initiatives rather than integrating them into longer term strategy has led to some of the problems we face today. I should emphasise that this is a modern-day cross-party problem, not simply a ‘throw-back’ to a bygone era.

The first of those policies was that of allowing social housing tenants to buy their homes. Surely, not a bad thing and, at the time, a very popular initiative. Unfortunately, in implementing the initiative little consideration was given to cause and effect. The policy was not examined in terms of what else needed to happen for it to prove successful in the medium to long-term and hence no strategy integrating the servicing of all requirements was developed. Reasonable analysis was absent.

Cause and effect? Today we have a massive housing crisis in the UK. Social housing stock was sold off and never replaced. Those who purchased their homes in the 80s and 90s have seen the value increase enormously while those now looking for a home either cannot afford their own home or struggle to pay private rents and have little or no hope of ever finding social housing. More over 30s live at home with their parents than at any time in history.

The second policy which seemingly made sense at the time was the wholesale privatisation of energy and utility companies (denationalisation). The thinking was that the State was poor at running them properly and that private companies would do a far better job. The public liked the idea and hundreds of thousands of people bought shares in the newly privatised companies.

Cause and effect? One of the primary responsibilities of the Board of any private company is to their shareholders. Profit is king. Although few have joined the dots from privatisation to where we are today, the result is energy companies seeking profits and customers far from happy with ever-increasing bills. A very popular initiative/policy had failed to look to an inevitable future. Reasonable analysis was absent.

I am not suggesting that either policy was right or wrong. What I am suggesting is that a lack of good strategy, of analysis of cause and effect on future generations and national need meant that the policy/initiative of eighties contributed to the issues of today.

We cannot change the past but we can learn its lessons. Primary among those lessons is the importance of politicians thinking beyond the initiative of now and applying sound long-term strategy to their policies. Had that happened in the eighties the housing crisis might have been averted and household energy bills might be more manageable.

Unfortunately politicians of all parties have continued to put initiative led policy before policy led by sound strategy. They put aside or ignore that reasonable analysis of history’s lessons and of likely cause and effect to which I referred above.

Regardless of your personal political beliefs, perhaps we should agree that the most beneficial legacy left by the Iron Lady would be if our current day and future politicians learned a little more about cause and effect and the value of good strategy.

The lessons are there to be learned if any of them care to look.

 

© Jim Cowan, 2013, 2016

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CAUSING DISRUPTION – A VIABLE STRATEGY?

Not so long ago, I looked at the steel crisis here in the UK and questioned whether China was executing a dedicated ‘Disruption Strategy’ rather than simply ‘dumping’ cheap steel onto the world market?

With steel and, especially, Chinese steel in the news again with the threat it has created to the UK steel industry, I thought I would take a closer look at what exactly a ‘Disruption Strategy’ is and how such strategies, when well executed,  provide a proven, viable way of launching new products into already crowded markets.

disruption1For some, seeking to launch a new or replica version of an existing product into a crowded market might seem like lunacy yet, over the years many companies have managed to do just that by the intelligent application of Disruption Strategy. And how such disruption strategies work should be a lesson to those already occupying space in the crowded market for if they aren’t paying attention it is they who might end up getting squeezed out!

How does the Disruption Strategy work?

Let’s take as our example the Japanese car industry. When firms such as Toyota, Datsun (the original name of today’s Nissan) and Honda wanted to enter US and European markets in the sixties they were faced with a number of challenges. Primary among these challenges were that they were perceived to be already overcrowded markets and that Japanese build quality was thought to be inferior.

In a nutshell, the Japanese manufacturers’ strategy was to attack the ‘discount’ end of the market with lower priced cars that had higher spec as standard than the western competition. This disrupted the accepted ‘norm’ and car buyers, liking the added, higher spec option, slowly started buying the new products. Some of those buyers were from the traditional discount end of the market but some were also people seeing a like for like product with the more expensive, higher specification models they had been purchasing. Gradually, this gained the Japanese a foothold, the big US and European manufacturers happy to concede a little ground at that end of the market to a ‘discount’ brand.

But having conceded that ground they opened the whole market to their new competitor. The market was disrupted and the western ‘big boys’ struggled to recognise what was happening. The Japanese companies slowly started competing higher up the quality/price chain, the western manufacturers conceded more ground although now it was not quite so voluntary but the initial damage had been done.

In the UK, it was British Leyland’s build quality that started to be questioned; “not as good as the Japanese” according the buying public. They couldn’t respond and a slow death began.

Meanwhile the Japanese continued to gradually disrupt the previously accepted way of doing things until they reached a point where market share and their own size allowed them to compete not just as equals but in many cases as superior products. The battle for a significant share of the market had been won.

Today, the Japanese are the world’s largest manufacturer of cars. The British automobile industry has been decimated; the US is still struggling to come to terms with the new reality and European companies like Saab have disappeared. The German auto industry reacted both the fastest and the best and now has a reputation for extremely high build quality which has allowed it to survive and thrive in a market redefined by the Japanese.

Elsewhere, the Korean manufacturers have studied, learned and then employed an almost carbon disruption strategy to that of their Asian neighbours 40+ years ago.

In the last decade or so we have witnessed the ultimate triumph of the disruption strategy which enters at the discount end of a market with its arrival as a luxury brand. Back in the sixties and seventies they would never have believed you had you told them how prestigious Toyota (as Lexus) and Datsun/Nissan (as Infiniti) would be in the 21st century.

 

© Jim Cowan, Cowan Global, 2011, 2016

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CORPORATE STRATEGY – NOT A NEW IDEA BUT NOT AS OLD AS YOU THOUGHT

At a recent speaking engagement I was comparing how new Corporate Strategy is when compared to Military Strategy or the strategy of training for performance sport. I was later asked if I could write a short piece about the birth of Corporate Strategy. Happy to oblige, here it is.

corporate-strategyStrategy as a concept has been around for centuries, for millennia. The first published thoughts on strategy are commonly believed to be the works of Sun Tzu and Wu Tzu from 2500 years ago. Sun Tzu’s ‘The Art of War’ is still essential reading in military academies around the world and should probably be required reading for business leaders too.

For 2300 years the principles of strategy, of formally identifying what success looks like and planning a route to achieve it was left to the military. That is until the early 1800s when ‘pedestrianists’ – early race walkers – took to planning their training, albeit in somewhat basic format. In the late 19th century athletes took up formal planning and gradually the idea of developing strategies for the training of sportspeople evolved and developed into the science (and art) of today.

Meanwhile, the post-industrial revolution world awaited ‘strategy’ in any formal sense. Managers and leaders thought and planned after a fashion but with little genuine cohesion and it was not until the 1950s that the term ‘strategy’ was regularly applied in a business context.

Then, in 1965, along came H Igor Ansoff and the business world would never be the same again. Ansoff’s publication ‘Corporate Strategy’ introduced the term, new thinking and the formulation and implementation of ‘strategic management’ and suddenly corporate strategy became a requirement for all businesses, large and small.

Ansoff stated that strategy was, ‘a rule for making decisions.’ He distinguished between objectives, which set the goals, and strategy, which set the path to the goals; something many modern businesses have forgotten. ‘Corporate Strategy’ also stated firmly that ‘structure follows strategy’ – something else a significant minority (majority?) of modern managers and leaders overlook.

Ansoff flagged up the important issue that has troubled formulation of strategy ever since; most decisions are made inside a framework of limited resources. Whatever size the company is, strategic decisions mean making choices between alternative resource commitments.

The process defined by Ansoff typically unfolds thus:

  • Mission Statement and Objectives – describe the company’s mission, vision and values and define measurable strategic (and financial) objectives.
  • Environmental scanning – the gathering of internal and external information analysing the company, its industry and the wider environment (e.g. the 5 Forces of Competition, SWOT and PEST analyses, etc.).
  • Strategy formulation – competitive advantage, core competence, corporate thinking, ‘inside out and outside in’.
  • Strategy implementation – communicating the strategy, organising resources and motivating teams to deliver.
  • Evaluation and control – measure, compare, adjust.

Since Ansoff, writing about Corporate Strategy has grown to become an industry all of its own and, like all industries, it is populated by the good, the bad and the indifferent. The growth of the internet has seen a boom in ‘off the shelf’ strategy templates for business. For the individual seeking text books on the topic it is now a case of caveat emptor. For the businessman seeking a quick fix download it is a world populated with poor options and little else.

Strategy should be personal; borrowed templates will never deliver quality. There are no short cuts; getting strategy right and, beyond that, of quality, is hard work.

But then, it was ever so. As Sun Tzu wrote 2500 years ago; “Strategy is the great work of the organisation.”

 

© Jim Cowan, Cowan Global, 2016

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VISIONLESS STRATEGY – DESTINATION UNKNOWN

Not too long ago the importance of establishing your Vision prior to developing your strategy was accepted practice. Increasingly however a school of thought is emerging which suggests that strategy does not require vision.

Far from being good advice, visionless strategy is a shortcut to…..destination unknown.

VisionlessThe purpose of Vision is to provide your strategy with direction. In the same way that you can better plan a car journey if you know the destination, so you can better plan your business strategy (or any other strategy) if you know where it is you intend to get to.

Good Vision is a bit more than that; good vision answers the question; ‘what does success look like?’ To continue the car journey analogy, vision might give you a destination of ‘London’ – okay for planning in general terms but a bit vague. Good vision would be more specific; ‘the Lyric Theatre in Hammersmith W6 in time for a theatre show at 8.00pm.’

The problem with most businesses is that they simply do not understand strategy (McKinsey, 2011). This extends to the Vision which drives strategy too.

A couple of years ago I spoke at an event at which I was sharing the platform with Microsoft. The theme of my talk was creating good Vision. In preparing my talk I researched those I was sharing the platform with in the hope I could use them as good examples. Unfortunately, while researching Microsoft’s Vision I came across a great example of how not to do it!

I can hear you now; “hang on Jim, Microsoft. Are you sure? They are a pretty successful company!” Let me explain.

The Vision was; ‘A PC on every desk.’

Having found this poor example of Vision, rather than avoid it I phoned up my contact at Microsoft and explained what I had found and asked if they minded if I used it as an example of how not to do it. His reaction surprised me; he laughed. After he stopped laughing he invited me to go ahead before letting me know how relieved Microsoft were to have caught how bad that Vision was in time.

He explained; had Microsoft continued to blindly follow this Vision for much longer the smart phone, tablet, and mobile working tools revolution might have passed them by completely. Now, although they are playing catch up, at least they are in the game.

‘A PC on every desk’ was a Vision in the ‘destination London’ bracket. It gave a vague direction but failed to describe what success looked like and, worse, offered no deadline. To those peddling the idea of visionless strategy Microsoft’s poor ‘PC on every desk’ would be cited as evidence that Vision doesn’t work whereas the truth is that the Vision itself was poor.

Another reason for poor Vision, one I come across on an almost daily basis, is that of confusing Vision with Mission. Put very simply and in short, your Vision is where you are going, your Mission is why you exist. The two are often linked but not the same. The Girl Scouts used to cite their Vision as ‘help a girl reach her highest potential.’ This is a great example of an organisation mistaking what they do with where they are going; their Mission and their Vision. If applied properly as Vision, to drive strategy it is unlikely to prove successful. The visionless strategy peddlers will use this as an example of why vision doesn’t work, why it is unnecessary. The truth is that it is just poor vision.

The third group of visionless strategists have existed for far longer; they are that group who rather than figure direction prefer the idea of “just getting on with it.” They are easy to spot, they are often the people who seem permanently busy but generate little forward momentum other than by chance.

Their hero might even be Lao Tzu*; he who is mistakenly and frequently quoted as stating “a journey of a thousand miles begins with a single step,” (The more literal translation is, “a journey of a thousand miles begins beneath one’s feet”).

The ‘just get on with it’ brigade would start walking, literally taking the first step. However, more sensible first step might lie in first determining your destination. To return to the car journey analogy the person (business) who paused to first define what success looks like will arrive at the Lyric Theatre (and on time), those who just got on with it could well be……..….well……..…anywhere!

To put it in real terms, let’s say our Mission was to conquer space. What are our options when we come to our Vision?

  1. We don’t need a vision to give us direction, let’s just get on with it.
  2. “We are going to outer space.”
  3. “This nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.” (John F Kennedy, 25th May 1961).

Whose Vision (or lack of) will give their strategy the sharper focus, the higher chance of success?

Who is your money on?

 

*To put Lao Tzu’s oft quoted words in perspective it should be noted he also said, “a good traveller has no fixed plans, and is not intent on arriving.” Indeed Lao Tzu, although frequently quoted in business, was not a strategist but a philosopher and writer who marvelled in the journey of life. He should not be confused with Sun Tzu, the Godfather of everything we define as strategy today.

© Jim Cowan, Cowan Global, 2012, 2016.

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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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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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DOES YOUR STRATEGY ECHO THAT OF WINNIE THE POOH?

christopher robin and edward bearIt is probably not something that has occurred to many business owners and executives but, nonetheless, it is fair to say that when it comes to strategic planning, the vast majority are mimicking Winnie the Pooh and Christopher Robin.

Let me explain…..

But, before I do, a quick history of strategy. 2500 years ago Sun Tzu wrote about the concept and application of military strategy in ‘The Art of War.’ Then, for 2300 years or so strategy developed almost exclusively as a military tool. In the 19th Century sports people recognised the value of planned training and started exploring the concept of strategic planning, developing into the finely honed tool it has become for today’s world class performers.

Nineteenth and Twentieth Century businesses dabbled with planning and the mid-20th Century business even employed an early form of ‘strategic management’ however it was not until the release of H. Igor Ansoff’s ‘Corporate Strategy’ in 1965 than business began to properly embrace strategy.

Since then, many business owners and executives have developed and delivered strategy but have failed to grasp one of, if not the, primary reason(s) for having strategy. Strategy should be about the art/science of seeking and gaining a competitive advantage.

The military recognise this. Leading sports performers and their coaches recognise this. The majority in business either do not recognise or choose to ignore this.*

Instead they prefer to employ the ‘Insanity Planning’  method of developing strategy. And gaining competitive advantage means avoiding the insane.

  • Insanity Planning is doing the same thing today and tomorrow that you did yesterday and expecting a different result.
  • Insanity Planning is doing the same thing as your competition and expecting to beat them.
  • Insanity Planning assumes the competitive environment does not change and expects the plans of yesterday will yield the same results tomorrow.

And modern business loves Insanity Planning. Businesses seek templates of strategies developed by others; copy the plans of others expecting different results. Such insanity should have no place in the seeking of competitive advantage; of excellence; of high performance.

Quality strategy was, is and always will be personalised. Having the same (or similar) strategy as everyone else will not deliver competitive advantage.

Of course, historically, there have been times when the military have forgotten this important point in much the same way as business has. It usually takes a leader to come along and put in place strategy which avoids the insane to change thinking and remind people of the insanity of what they were doing. In hindsight, the new strategy might even look like common sense.

Such a leader was Horatio Nelson. In 1805, in the build up to the Battle of Trafalgar he recognised Insanity Planning for what it was (is). Had he not, I might be writing this article in French or Spanish.

Battle_of_Trafalgar_Poster_1805At the Battle of Trafalgar, Nelson’s fleet of 27 ships came up against a superior combined French and Spanish fleet of 33. The conventional, accepted strategy of the day was to line the ships of the two opposing forces up parallel to each other and, effectively, start shooting until a winner emerged.

Outgunned, Nelson recognised this template for strategy employed by everyone else for the insanity it was. He knew that if he engaged the opposition in this way the odds of winning were extremely long. Insanely long.

So he chose to employ a personalised strategy which would give his fleet competitive advantage; which avoided the insane. As the enemy lined up according to the accepted, shared, strategy template of the day, Nelson chose to sail towards them in single file and at right angles to their straight line. He evened the odds, caused confusion amongst his foe and the rest, as they say, is history.

Nelson recognised the need to personalise the strategy to HIS goal; HIS resources; HIS (and his sailors’) skills and abilities; HIS definition of success. In doing so, he gained competitive advantage.

But, I hear you ask, what does any of this have to do with Christopher Robin and Winnie the Pooh?

To explain that, I will quote Winnie the Pooh author AA Milne:

“Here is Edward Bear, coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin. It is, as far as he knows, the only way of coming downstairs, but sometimes he feels that there really is another way, if only he could stop bumping for a moment and think of it.”

When it comes to strategic planning for business who do you mirror?

Are you an Admiral Lord Viscount Nelson or a Winnie the Pooh?

*Just a small selection of the research to support this statement:

  • 84% of a sample of 3543 companies confuse Mission and Vision. 64% thought Mission and Vision are the same thing. 91% lacked concise Vision. (Forbes 2009).
  • 61% of CEOs believe inflexible corporate structure hampers successful delivery of strategy. 82% of companies design structure ahead of strategy. (Forbes 2009).
  • 47% of CEOs say their strategies are better described as matching industry best practices and delivering operational imperatives; in other words, just playing along. (McKinsey 2011)
  • 87% of companies plan strategy using only intelligence that they share with their competitors. (McKinsey 2011).
  • 79% of Company Executives do not understand the language of strategy yet still use it. (Business Review 2007).

Article first published July 2013.

© Jim Cowan, Cowan Global, 2013, 2016

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