Why strategy needs to be specific…

20 09 2011

Today’s Dilbert strip hit on a couple of key thoughts, albeit in traditional Dilbert fashion…

This is a pretty simplistic, yet sadly realistic, manner in which we define corporate agendas.  We lay out a concept and expect the organization to translate our words into action.  What happens is that often the definition is fuzzy, which allows for all sorts of interpretation and a watering down of execution.

While a little nitpicky here, Increasing Market Share is a goal, not a strategy.  Why does this matter?  The primary reason is that we need to teach the organization to think along common lines. We need to communicate specificity – tell people exactly what we want.  The goal is to increase market share by 5%, and we are going to do this by increasing new product revenues by 10% and by $4mil in cross selling opportunities to our customer base.

Additionally, every company is striving for the same four things – Increase Revenues, Improve Profit Margin, Elevate Market Share, and Enhance Financial Health.  It is how we balance these four items that sets us apart from our competition, and how we tell the organization what matters.  Will we sacrifice a launch date and potentially our 3rd quarter revenue goal if a product is offline?  Will we bend over backwards to keep a customer from defecting?  Will we sacrifice margin for a new customer in a new market?  The company must know the trade off equation as most decisions impact something else.  Without understanding this, people make decisions based on what they want, not what the company wants.

Ask yourself how deep your organization understands its goals?  And then compare it to how specific the goals, strategies, and tactics are for the organization? If there is a gap, start somewhere and be very specific of what you want.  Changing the culture to be more specific is not all that difficult.





Strategy & Operational Performance Management Survey

21 07 2011

If you have a moment, take a few seconds to fill out a survey.  I’ll post some of the more relevant survey results here over time. Basically 7 questions and a place to fill in your answer if you want to share more.

Link to survey





Changing Market Place

7 04 2011

Yesterday in the NYTimes was a story about the speed of the changing U.S. race demographic.  As our demographic changes, so will tastes and demand.  Many companies have sat atop their markets feeling they are invincible, yet with these changes many of the companies will find out much too late that they were not as solid as they once felt.

Have you asked yourself any of the following:

  • What percent of our clients come from the majority?
  • Do we have products that meet demands from all sectors?
  • Are we at risk if the legislature, or governing boards, can their ethnicity over time?
  • Where are our biggest threats in this new market?
  • Where are our greatest advantages?
  • What else can we do to capture more in this changing market?
  • Where might new competitors come after our market?

If you are not strategically discussing questions like these, then you elevate your risk of something happening to undermine your position within your market.

 





Wallet Alignment…Life’s Perspective

6 12 2010

We hear and often bemoan comments in many professions, as the judgements often seem settled from the outset. For example, while reviewing an x-ray he took on my first appointment, my chiropractor remarked succinctly, “You are an ideal candidate for chiropractic therapy.”

Surgeons see operations, lawyers see risks, dentists see cavities, policemen see crimes, and consultants see problems.  When you are a hammer, life looks like nails.

One of the core reasons strategy management consulting works well is it trains companies to let strategies align wallets.  All too often we take the advice of the squeaky wheel, or allow personal politics to drive decision making.  Strategy management is about a consistent process geared to drive decisions, fund initiatives, and find those that no longer serve their purpose.

    • How often do you hear employees complain about certain initiatives?
    • How often do feel your organizations fund pet projects?
    • How consistently are decisions based upon closing strategic gaps?
    • What is the process of funding new initiatives?
    • Could you improve on any of these?




      Apple & AT&T – Picking the right partners!

      19 07 2010

      OK, so I upgraded to iPhone 4.  I had to do it…it was like an addiction.  For some reason, the iPhone has a tremendous amount of cache to it.  How do we create brands with this much power?  And how do we use this for our own advantage for the longest time?

      From a Strategy standpoint, we can discuss and debate a great deal about their relationship with AT&T….

      AT&T Exclusive….

      From the very beginning the AT&T thing has been called out and questioned.  Apple has always been about propriety…and while somethings work it is clear that others do not.  I think in the Cell Phone market, this tactic is about to hurt them.  By creating the exclusive arrangement with AT&T Apple created motivated competition.  Verizon, whom most feel is the superior cellular network, was extremely motivated to come up with a competitive plan as was Google who was just entering the mobile market.  It created a substantially sized hole for Google Droid to take advantage of.

      What Apple felt was a compelling advantage with the App Store, is now just a “me too”.  The Android market is coming on fast, and momentum (prior to the iPhone4) was clearly leaning to the Droid.  It is also being argued that the pressure from the Droid momentum had pushed Apple to rush the iPhone 4 to market, thus causing it to make some well known missteps and product issues.

      By making a conscious choice to go with the weaker carrier, it created a vacuum….and in the business world vacuums don’t last long.  Verizon and Google have created a very viable competitive piece to the iPhone legacy.

      Data Hog

      With the iPhone 4 and its video functionality, it is going to need a much better network than AT&T can offer.

      AT&T has already leveraged the iPhone platform to change its terms and conditions which the user community is less than thrilled with at this time.  The first change was the cloaked ‘Smart Phone Cancellation Policy.’  To cancel a smart phone account, the penalty fee has now doubled.

      The second main item was dropping the unlimited data plan.  Users are now going to be hit with overage penalties, though AT%T claims the fees are not going to be excessive.  While AT&T is offering two levels of data plans, one which allows minimal usage (200 MB per month) for $15 and the other which offers 2GBs per month for $25.  The third option is for tethering but is still limited to 2GBs per month.

      While I have been told the fees were primarily geared to get people to be smarter with when they were downloading, this is really a ploy to offload the supply and demand issues that AT&T is having with their cellular network.  This tells me that AT&T expects their dropped call issue to either continue or perhaps get worse.  When you combine this with the unprecedented demand for the data hungry iPhone 4s, I think AT&T is going to have some issues.

      So how does AT&T deal with this mess, they are arguably a year behind in launching their 4G cellular network compared to Verizon.

      I am sure in the end that Apple has to be less than thrilled that their cellular carrier is the weakest link in its product.  It was embarrassed during the iPhone 4 launch when the demo could not find a connection (arguably not an AT&T issue), when a member of the audience responded to Steve Job’s delay in what to do with “try Verizon”.

      So in the end by choosing the weaker of the cellular carriers…

      1.  They created a vaccum which Google Android has exploited extremely well.  Apple iPhone may struggle over the next few years as the Android market continues to expand.

      2.  It created a faulty product due to poor service, and in some ways product and marketing snafus due to the increased competitive pressure around the iPhone 4 launch.

      3.  Strangely they have become what they once fought against – they are the machine (see video below).

      4.  If they Apple iPhone market is over taken by the Droid market in the next couple of years, it is perhaps fair to blame the relationship with AT&T.  If they would have worked with all markets the Droid market would have materialized much slower.

      And for even more entertainment….





      Danger of Leading Indicators

      22 12 2009

      UPDATED 12-23, 2009:  Boston.com story about home sales – seems like we have stories with divergent viewpoints.  Good example of how a single version of the truth depends upon the story teller…

      CNN Opening Paragraph: NEW YORK (CNNMoney.com) — After surging 10% in October, sales of existing homes jumped again in November, growing 7.4% compared with October to an annualized rate of 6.54 million units, according to the National Association of Realtors. (full article)

      Boston Globe Opening Paragraph: WASHINGTON—Sales of new homes plunged unexpectedly last month to the lowest level since April, a sign the housing market recovery will be rocky and heavily dependent on the generosity of Uncle Sam. (full article)

      Read each…Ahh, the politics of spin, or is it the spin of politics of spin.

      November saw a healthy jump in home sales.  The good news is that home sales and housing starts are usually very good leading indicators about the health of the economy.  Yet the bad news, in this case we have a potentially baked number.   The market is being artificially inflated with both lower interest rates and a government subsidy for first time home buyers.  What makes this worse is we have created a situation where we know less – we know a number improved, but we have no understanding if the economy is better.

      CNN Story on November Home Sales

      This is one of the fears about designing the right KPIs.  We want to find the perfect KPI, or create a list that tries to include everything.  What we need are a few KEY indicators to trigger the right conversations about what actions (business levers to pull) to take or not take.   We also need to discuss performance and action in a holistic manner and not get caught in panic mode because one indicator seems to be below expectation.  We also do not want to trigger an action to artificially improve a number.

      For example…Days Sales Outstanding (DSO) can be used as a measure of customer satisfaction.  The interpretation is that people pay the bills of the people they like first.  If you are able to shrink the number, then you at least have an indication that customers are generally happier than they were last month.  If the Marketing VP were compensated on Customer Satisfaction and we used DSO, the VP might change the payment terms.  While we might see improvement in DSO, we are probably not seeing an improvement in Customer Satisfaction, which was the goal when we started.

      As you are designing KPIs:

      • Start with your high level annual goals for the year
      • Build out a system to discuss the implications (don’t just look at the number)
      • Assign someone to write up the implications on a regular basis
      • Create a commonly understood definition of the KPI, and document it where it can be easily accessed




      Predictive Analytics, Business Intelligence, and Strategy Management

      9 12 2009

      I was having a discussion with one of my clients this week and I thought he did a nice job summing up Predicative Analytics.

      So in the World According to Reed (WOTR) – “queries answer questions, analytics creates questions.” My response was “and Strategy Management helps us to focus on which questions to answer.”

      Reed Blalock is exactly right, traditional BI is about answering the questions we know. Analytics is really what we create with data mining – we look for nuances, things that might give us new insight into old problems. We use human intellect to explore and test. And yes, there is a little overlap. But what is really happening is that we have a different level of human interaction with the data.

      BI is about history, analytics attempts to get us to think, to change, and idealistically to act.

      The danger with both of these is that they can be resource intensive. Neither tool, or mindset should be left to their own devices. What is needed is a filter to identify the priority and purpose. This is where strategy management and scorecarding comes into play. We have built out massive informational assets without understanding where, when, and how to use it. We have pushed out enormous reporting structures and said “it’s all there, you can find anything you need” yet we scratch our heads when we see adoptions levels are low.

      What we have typically not done all that well is build out that informational asset by how it helps us be more productive along product lines, divisions, sales region, etc. We have treated all dimensionality the same. Why, because it was easy. The BI tools are tremendous in how quickly you can add any and all dimensions.

      “But because you can, doesn’t mean you should”

      As we built out these data assets, we did not align them to performance themes.  We have gotten better with some key themes, like supply chain management, and human resource management, but what about customer performance?  We might look at sales performance, but that is a completely different lens than customer performance.

      How do we determine which assets to start with…what assets do we need to be successful 3-5 years from now, or what are our biggest gaps to close today.  Think about customer value, or employee satisfaction (and that doesn’t mean more HR assets).  Think about your gaps in Strategy.

      How often do we discuss…

      • Are our customers buying more or less frequently?
      • What are our best, and better customers doing?
      • What are the costs associated with serving our least profitable customers?
      • Where are our biggest holes in understanding?







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