Category Archives: Strategy

Thinking Strategically: Designing for Shared Value

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Today I had an epiphany.  At the heart of our greatest companies is innovative design.  Great companies create shared value with society.  Great design leads to shared value.

To explain you’ll need to understand the concept of shared value.  As Michael Porter explains it, shared value is developing products and services that not only benefit the company’s financial stakeholders, but that literally add value to society in some way.  They solve real problems and are not just repackaging solutions or solving contrived needs.  Think: energy management solutions and smart electric grid technology.  The video clip below explains.

Now, what is design thinking.  From the experts at IDEO:

“Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” —Tim Brown, president and CEO

The needs of people.  These people are your customers, clients, and users.  They are also members of society.  Their needs transcend the stated purpose of the product or service.  Great design serves these unstated needs, the ones we didn’t know we had; the needs that impact our world and society.  Great design creates shared value for the company and society.  That’s what capitalism can be.  How you run your company will determine if capitalism makes good on this promise.


Prof. Michael Porter about Creating Shared Value by borisloukanov

From the documentary Objectified, by Gary Hustwit.

Strategy and Culture

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Setting a strategy in motion is not easy.  Often, managers bemoan the company culture as the cause of their failure.  A recent article in HBR discusses the impact of ignoring culture when implementing a new strategy.  Clearly, to accomplish big things you need a good strategy.  But how you communicate it to your team and how you sell it to them is critical.  Yes, you do need to sell it.  Every person has to recognize why the new strategy is good for them and the company.  And every employee must choose to implement the company strategy.

Your best bet at a change in your employees is to help them uncover for themselves why the change is important to them.  Not tell and sell, but rather get people to ask themselves why the change is good for themselves and their company.  One way to help this process is to involve employees in discussions that feed into the strategy creation process.  When people are treated like stakeholders, they begin thinking more like stakeholders.  They’ll be more likely to consider the importance of the strategy and what their role will be in making it successful.

 

Buck the Status Quo

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What’s keeping you from taking action?  Maybe things in your business aren’t great, but they might not be too bad either.  Perhaps sales are flat or growth has just leveled off.  You’d like things to be better, but for some reason you haven’t done anything substantial about it.  Welcome to the status quo, a land where mediocrity rules and where once great businesses go to die.  Okay, maybe I’m being a bit dramatic, but the status quo is a powerful anchor in the human mind.  It keeps us from making decisions when we perceive risks in taking action.  The problem is, inaction has risks too.

An article in McKinsey Quarterly entitled: Hidden Flaws in Strategy1, by Charles Roxburgh discusses 8 common flaws managers make with respect to strategy.  In the article, Roxburgh discusses how the status quo affects decision-making, and the resulting impact on strategy.  I’ve found that one of the most insidious affects of this bias, is that it keeps organizations (and communities) from adapting to a changing world.  When your environment changes you must adapt to compete and thrive.  So how do we break ourselves out of the status quo?

Tim Riesterer wrote a blog post on HBR.org called Stimulate Your Customer’s Lizard Brain to Make a Sale2, that may offer some insight.  Maybe we need to stimulate our own lizard brain, the part of our brain that senses danger.  There is certainly danger in doing nothing to adapt to competition.  The problem is, that danger may not feel real yet.  How do we tap into this instinct to drive action within ourselves?   Humans respond to urgency, its our nature.  To take advantage of this fact, we need to increase the urgency of the needed change to enhance our ability to take action now.

Here’s the trick, once we’ve created urgency for seeking a change we must build our motivation by asking what positive outcomes will come from taking action and why those outcomes are important to us.3  Only by building the whys can we convince ourselves of the positive reasons for change.  The contrast of this positive future versus the urgency and danger of the status quo is what can produce the activation energy needed to break our inertia.

References:

1. Charles Roxburgh, “Hidden Flaws in Strategy: Can insights from behavioral economics explain why good executives back bad strategies?” McKinsey Quarterly, (May 2003), https://www.mckinseyquarterly.com/Strategy/Strategic_Thinking/Hidden_flaws_in_strategy_1288, accessed August 2012.

2. Tim Riesterer, “Stimulate Your Customer’s Lizard Brain to Make a Sale,” HBR Blog Network (blog),July 31, 2012,  http://blogs.hbr.org/cs/2012/07/stimulate_your_customers_lizar.html, accessed August 2012.

3. Michael V. Pantalon, Instant Influence: How to Get Anyone to Do Anything – FAST (New York, NY: Little, Brown and Company, 2011).

Is Strategy Last on Your List?

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It shouldn’t be, but in most small and mid-sized businesses, strategy is last on the list of things to do for business managers.  Why is this?  First, strategy is hard work.  Most managers choose the urgent over the important.  Strategy requires creativity and dealing head on with more questions than you have answers for.  So, it becomes easier to be a doer of tasks than a navigator in uncharted territory.

Second, I think that if you run a business that is surviving (as opposed to thriving), you may become complacent.  Seth Godin had a great blog post on this topic today.  The web has changed the face of competition and lowered barriers to entry that once protected these companies.  If you wait until you start losing business, you’ve already lost the game.

To learn about three reasons why a good strategy is imperative to your business, see the presentation of a talk I gave recently at the Frederick Innovative Technology Center.

Needed: U.S. Leaders + Strategy

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Where did all of our leaders go?  It seems that everywhere you look, from our businesses to our government there is a dearth of true leadership.  If you need help remembering what a real leader looks like, I suggest reading The 21 Irrefutable Laws of Leadership, by John Maxwell.  Harvard Business School recently completed a large survey and study of U.S. Competitiveness.  The findings point to fundamental weaknesses in our approach and actions toward restoring our competitive advantage as a country.  However, what I also took away from the findings was that a combination of educated leadership and cohesive strategy were absolutely required to dig our nation out of its current predicament.

Going beyond ideology and making decisions based on evidence is the mark of a functioning government.  Researchers from Harvard and other top universities who worked on the U.S. Competitiveness study proposed paths forward.  It will take great leadership that is willing to go beyond ideology, and forge a cohesive strategy that cuts across party lines to move our country forward.

How can we all do our part?  Demand more of yourself.  Read the studies and educate yourself from these and other solid research sources.  Reevaluate your ideology in light of these findings and consider this as you elect your leaders.  Demand more of our leaders.  We must hold our leaders accountable for working together to move us forward rather than sitting idle under the cloak of their ideology.

Leverage Analytics in the Frederick News Post

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Last week I gave a talk at the Frederick Innovative Technology Center on the importance of having a good strategy and why strategy is important to business leaders and stakeholders.  The Frederick News Post did piece on the talk: Speaker’s message: Strategy key to success in business.  The turnout was great and the audience was engaged in the topic.  I’ve posted the prezi below and on the strategy page of this website.

Starting and running a small business can be overwhelming, but it is important to be able engage in strategic thinking regularly.  I hope the talk gave attendees an opportunity to think about their business outside of the hustle and bustle of daily activities.  The objective of these talks is to give business leaders a chance to assess why and how they do what they do and create breakthroughs in their thinking.

More Insights Please

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Good business decisions are driven by insight.  Insights come from understanding facts and from assessing situations.  Good strategy grows out of these insights.  The raw ingredient that allows managers to have insights into their business situation is data (the facts) and time to think about, discuss, analyze, and assess the data and its implications.  That is the creative part.  Creative thinking takes time.  It can’t be crammed into a 15 minute break between two meetings.  You have to create an environment where you have the time and the atmosphere to properly sit and think about your situation.  I used to use the 2 hour commute to and from work to do this.  Nothing like two hours in traffic to stimulate thought!

If you are a leader responsible for setting direction for your business or organization, create a time and place for this type of thinking.  In the book, The Power of Focus, authors Canfield, Hansen, and Hewitt discuss the need for this type of reflective thinking.  It is critical to living life on purpose and to taking yourself beyond reactive to proactive.

Who’s Setting Strategy In Your Business?

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Time and again I hear from small business owners that they just don’t have the time to create a strategy for their business.  The question I have to ask in response is, if you aren’t going to invest the time in your business strategy, who is?

Make a list of all the things you do every day.  Next to each task write the name of the person who you would delegate that responsibility to if you were incapacitated tomorrow.  Now, write this down at the top of your list: “Devise Company Strategy and Guide for Next 1-2 Years”.  Would you delegate this task before the others on your list if you could only do one thing?

If the answer is no, then get your act together.  Train you team to handle all the smaller easily delegated urgent but less important matters and start to carve time out to work on strategy and leadership every week.  No excuses.  It’s always easier to focus on small fires than to take on the big challenge of business strategy and leadership, but you need to do it.

Create a Stop Doing List

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When Steve Jobs returned to Apple in 1997 he created a stop doing list.  Under previous leadership the company had become unfocused and lost its edge.  Jobs realized that if the company was to come back it needed to regain its focus.  That meant paring down product offerings, streamlining operations, and killing projects that did not fit the strategy.

This upset a lot of people both inside the company and outside.  But what Jobs knew that these people didn’t understand, was that the company’s future depended on designing a cohesive approach centered around Apple’s core.

In the clip below, Job’s explains a valuable insight that many business managers fail to grasp.  Focus is about applying your resources in a disciplined way to achieve results; focus is about saying no to the things that don’t fit.

Building Business Momentum

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Creating momentum for your business is all about building a series of wins.  Patience and consistent diligence at doing the right things will lead to a steadily increasing list of successes that the company can build upon.   This requires discipline from management.

First, discipline to stick to a plan that is working, and not go off chasing “windfall opportunities” in the hopes of creating booms in performance.  In the book Great by Choice, Jim Collins and Morten Hansen describe how the 10x companies they studied were fanatical about achieving consistent growth, while at the same time restraining growth.  This might seem counter intuitive, but these companies actually tried to limit “booms” in profits.  This resulted in a more stable growth rate and positioned the companies to continue to perform in poor economic times.  The authors named this approach the “20 mile march”.  In their study, the 10x companies outperformed their comparison companies and the general stock market by at least ten times.

Second, firms must be disciplined to foster new opportunities where they can continue to grow when their markets become saturated.  Studies show that firms that find ways to leverage their current market position to open up new growth opportunities in related areas tend to be more profitable than those that diversify into unrelated markets.  Collins and Hansen call this “firing bullets”.  These are small low risk experiments into new opportunities.  Examples include product innovations, changing the way the market consumes their products, etc.  The idea here is to build empirical evidence for a larger investment into the opportunity.  A classic example of this approach is Apple.  Apple has steadily created a position for itself that leverages its brand and products across a number of interfaces creating a “digital hub” for its customers.  This has created tremendous market value and made Apple one of the most valuable technology firms in the world.