Monday, April 30, 2012

Do the Steelers have a strategy?

With the NFL draft weekend coming to a close, I thought it was interesting to see how NFL teams, particularly the Steelers, strategize for their picks.  I was wanted to see if their strategy aligned with The Future of Strategy segment in the article “Should You Build Strategy Like You Build Software?”. 

According to the article “Reviewing the Pittsburgh Steelers’ NFL Draft Strategy”, the Steelers have their own unique approach to strategy, where they use their own judgment in players instead of using that of the rest of the NFL.  It also claims that their strategy is usually unpredictable. Below is how well they adhere to the future of strategy making:

“Start small and iterate from there”
The Steelers create a 150-player draft board, which is considered to be small, for their own specifications.  It is solely based on their own judgment, and they use their needs to strategically pick their players.

“Get something into people’s hands quickly”
 As stated above, the Steelers strategy is typically unpredictable.  They do have their fundamental set of strategic assumptions, which is stated below in meeting their needs and fitting their system.

“Get people to work together”
With the Rooneys, Mike Tomlin, Kevin Colbert, and several other key stakeholders involved in the decision making, the Steelers successfully have both the “thinkers” and “doers” involved in their strategic process.   Having both management and coaching staff involved is key for the process.

“Integrate the best ideas available”
The Steelers are sometimes negatively accused of using a “best players available at positions of need” approach, selecting players who “met their needs and fit their system”.  Other teams who typically pick players who are a sure thing.  However, history shows that this strategy tends to produce “more hits than misses”.

“Debug as you go”
Since the draft is always unpredictable and the Steelers picked late in the rounds, they’re aware of the need to refine and reshape their strategy as the draft proceeds.  They have their ideas together, but need much flexibility as the draft proceeds.



Source:
http://bleacherreport.com/articles/1158021-reviewing-the-pittsburgh-steelers-nfl-draft-strategy


Nestle buys Pfizer's emerging market infant nutrition business

More and more, companies are looking at emerging markets to grow revenues and international brand recognition. I read an article in the news recently, on Nestle's purchase of Pfizer's infant formula business, which is a move to reinforce its emerging markets strategy.

Nestle's main goal is to expand into the fast-growing Asian markets. Nestle has previously defined bottled water and instant formula as 'Popularly Positioned Products' for low-income consumers in emerging markets. Nestle's CEO Paul Bulcke has outlined Nestle's current growth drivers as follows: emerging markets, emerging consumers and premiumization (http://blogs.wsj.com/source/2012/04/23/nestles-pfizer-deal-is-all-about-the-growth/).

In carrying out their growth strategy through acquisition of an established business, Nestle has saved itself the hassle of "spotting institutional voids" (as described in the HBR article "Strategies that Fit Emerging Markets"). Nevertheless, buying Pfizer's infant-nutrition unit, which is mostly active in Asia, is a smart move. Of all the developing regions, Asia (and particularly South-East Asia) probably performs the best on the majority of the five contexts (political/social, openness, product markets, labor markets, capital markets) to consider for business in emerging markets.

Meanwhile, Nestle is retaining its core business proposition even as it adapts its business models: "Infant nutrition has been at the heart of our company since it was founded in 1866" (Nestle CEO, Paul Bulcke). Furthermore, the acquisition will generate annual synergies of around $160 million by combining sales forces and reducing costs.

Bibliography:
http://hbr.org/product/strategies-that-fit-emerging-markets/an/R0506C-PDF-ENG
http://www.huffingtonpost.com/huff-wires/20120423/eu-switzerland-nestle-pfizer/

Saturday, April 28, 2012

How Coca-Cola Manages 90 Emerging Markets

During a 2011 interview with the president of Coca Cola's Eurasia and Africa group, Ahmet Bozer discussed how the company maintains their global brand strategy while individualizing itself to emerging markets. Demonstrated by deriving 80% of their sales outside of the US, Coke is one of the most experienced companies in emerging markets.

In order to "think global, act local"as their company's strategy, Bozer focuses on how Coke must be locally relevant such as having local bottlers. In addition, becoming locally relevant includes investing in the psyche of the local consumer.  In politically chaotic countries such as Egypt, Coke recognizes the country's uncertainty they are going through, but focuses on creating a bright future.

Bozer also states that countries that are going through political and social upheaval do not impact their sales.  For example, Coke has been in Pakistan for over 50 years and have not experienced any problems in running their business and is currently thriving.

As previously discussed, Coke has local bottlers in the markets they are in.  Therefore, there is a variation in degree of sophistication and process within each bottling company and the relationship they have with Coke. In order to be effective with these partnerships, Coke creates a shared vision.  This vision is displayed on a one page road map that identifies a clear long term destination, such as for 2020, that outlines a framework of strategic metrics. This map guides all business planning between each bottling company and Coke.  

Bozer says that without strong leadership, Coke would not have the success it does have in all of its markets. According to Bozer, without their effective leadership as their strongest competency, Coke would not be able to explain the environment of the market, establish a vision for the market, and succeed.

Friday, April 27, 2012

A Really Example on Organizational Effectiveness Analysis

For over one month, I worked in a student organization, preparing for a big event. The articles and the topic for this week recalled all my memory about the preparation. I think it is interesting to use some of the traits of organizational effectiveness to analyze the current situation in our organization. Even though what I discuss here is more like vision or plan execution instead of strategy execution, I think the traits can also apply to our execution.

The event we are preparing is the first CMU Summit (in our area) and it consists of several departments – five panels, Marketing, Operation, Public Relations, showcase, case competition and sponsor team. Last December, when the organization was just set up, it was small and the responsibilities were divided by several people. However, when it grew bigger and had more and more teams, it was very likely that the tasks overlapped. So it works better when everyone has a clear definition of his or her tasks since everyone has a good idea of the decisions and actions for which he or she is responsible. In our operation team, one of my colleagues always would like to help with some trifles instead of taking charging of certain major parts. After she was assigned a big task of registration, she took the leadership and contributed a lot to the whole team with good actions. I think a clear definition of the team tasks can not only facilitate the team work but also let the team members feel valued and motivated them a lot.

It is a difficult task to keep information flowing freely and efficiently across organizational boundaries, especially for a team with part-time team members. I am in charge of the hotel reservation and transportation service for all the speakers who were invited by all the panel leaders. How to keep information flowing quickly from panel leaders to me and then to the hotel remains a big problem. The Communication between me and five panel leaders lowered down the process of hotel reservation and only two days before the check-in date, the information of all the speakers were settled down accurately. I think the moves that a standing performance-management meeting can be placed regularly, which helped create a forum for exchanging and updating information face-to-face and discussing the outstanding issues. And most importantly, their attendance should be strictly required.

The clear decision rights of our organization are worthy mentioned here. All the decisions were made by our president, vice president of speakers and vp of operations. It seemed that they need to made critical decisions every day. However, actually the vice president could easily made decision based on analysis provided by the subordinates and what they need to do is to pick up the one that met their visions.

It will be a lot if I combine the organization status quo with all the traits of organizational effectiveness, so I just listed three of them. And I realized that the traits can be good metrics to measure the performance of the organizations whether they are private companies, nonprofit organziations and even student organizations.

Xin Wan


Wednesday, April 25, 2012

Bulking Up or Slimming Down?

This week's Wall Street Journal article "Fast Food Franchises Bulking Up" echoes a similar sentiment of this week's articles.  Burger King struggling to maintain its footing as a major fast food player is continuing to feel the effects of the economic downturn and is selling many of its company-owned assets (stores) to franchisees.  Coined "refranchising" this is an industry effort to lighten the load as franchisees are likely to run a tighter ship maximizing cost-effectiveness.  While shifting the risk and responsibility to franchisees make appear like an easy quick solution, it can backfire if the brand experience is diluted by poor management.

Portfolio analysis certainly played a role in Burger King's assessment of shifting risk while also staying relevant against competitors and to customers by introducing new menu items like smoothies.  This would likely put their strategy on the lower end of the Business Strength axis and more solidly in the middle of Industry Attractiveness.

Of strategy implementation and universal understanding


"a simple, clear, succinct strategy statement that everyone can internalize and use as a guiding light for making difficult choices"
- Collis and Rukstad, "Can You Say What Your Strategy Is?", Harvard Business Review, April 2008

The concept of strategy implementation as universal understanding of the strategy within the organization struck a cord with me:

I installed GDrive on my Mac laptop today. It wasn't the first time. As the story goes, five years ago,...
"In 2008, GDrive was about to launch under Bradley Horowitz (now a lead on Google+), but Sundar Pichai (now the SVP of Chrome) convinced Google’s top executives not to launch it. The reason? He felt like the concept of a “file” was outdated in the cloud-based universe that Google was trying to build. After some debate, the powers that be at Google agreed and GDrive was shelved, and the team moved over to the Chrome team." (http://techcrunch.com/2011/08/31/gdrive-alive/)

Five years later, the product comes off ice. What is interesting to me about this story is that Google's strategy hasn't really changed in the intervening time, but the understanding of the strategy and how to implement it has evolved. It has evolved differently in different parts of the organization, and probably there is still disagreement about how the various pieces best fit together.
In the intervening time,
 - Google Spreadsheets and Writely got fused at the 'doclist' level
 - Google Docs gained an offline mode, based on Gears
 - Gears was killed
 - Google Docs gained a new offline mode, useable only in Chrome
 - an 'online document viewer' mode became more generalized, for displaying PDFs and Word documents unsuited for complete conversion
 - Google Docs Doclist gained the ability to hold arbitrary files, without direct connection to any of the Google Docs editors
 - App Engine had all the capabilities for 'GDrive'-functionality, except arbitrary restriction on data blobs
- Chromebooks launched, with no local apps, except for offline webapps
- Android took off in a major way
- A Google Docs Android app gave offline access to material in Google Docs
 - Dropbox has become a critical tool for my group workflows and collaboration

By the time GDrive finally officially launched, it is at some level just a slight increment over the Google Docs webapp (Doclist) and Android app as they already exist. But there is finally resignation that webapps are still and for the foreseeable future will still be far from able to take the place of desktop software. And trying to force people into the webapps paradigm when it just isn't ready yet just isn't going to work.

I wonder how people from that team feel, to see their cryogenically-suspended product resuscitated five years later...

Strategic Campaigning

In reading “Can You Say What Your Strategy Is?” by David Collis and Michael Rukstad, I couldn’t help but think of the upcoming presidential election. In light of yesterday’s primary elections, the GOP primary race has been especially intriguing and entertaining. Each of the potential republican candidates has had a particular strategy in going through the primary election. However, I do not think that most candidate supporters (GOP and otherwise) have even the slightest idea about their candidates strategy. Obviously, this is not knowledge needed to vote, but it would be nice if voters had a better understanding of their candidates.

One GOP candidate comes to mind when I think of political campaign strategy. Ron Paul has made it very clear that his strategy is to win over delegates, and that he is not interested in a “popularity contest.” His strategy seems to differ most from the other candidates, and he has made a strong effort to make this clear (when the media has given him the chance). In this case, it is more likely that his supporters understand his strategy in winning the GOP nomination.

Although other candidates, and even the President’s, strategies may not be as evident as Ron Paul’s, it is clear that they are operating with one. One of the figures in this particular reading highlights the “Hierarchy of Company Statements.” This is easily applied to political campaigning as well as corporations. Each candidate has their objective, scope, and advantage. For example, Obama wants to regain the huge interest of the under 30 crowd, some of which he has lost over the past few years. In order to do this, he has strategically focused on talks at college campuses where he has vowed to keep student loan interest rates low. He has also appealed to the younger generation by talking about how he only recently paid of his student debt, and he understands the frustration with the huge amount of student loan debt. Although this is only part of his entire campaign strategy, it is a part that he has made very visible to supporters.

Overall, all politicians campaign with some sort of outlined strategy. Although their end goal of winning the vote is the same, each candidate has their own strategy in getting there. Some candidates have a more obvious strategy to their supporters and the public than others. Although there is not necessarily a correlation between the success of the candidate and the public’s understanding of their strategy as there is with organizations, it is still an interesting concept to examine. I am curious, though, if sticking to one campaign strategy from the beginning of the nomination through the entire election is beneficial. What is important to the public now may not be so important come the election, so it seems like some diversions may need to occur. Also, is it sensible to expect voters to understand a candidate’s strategy when a large amount of voters don’t even fully understand the values on which their candidate is campaigning?

Source: Collins, D. J. & Rukstad, M. G. (2008, April). Can you say what your strategy is? Harvard Business Review.

Do technology companies have good strategy execution?

I found this week's readings very thought provoking, particularly the final article about technical giants today--IBM, Google, Apple and Microsoft.

The article "Secrets to Successful Strategy Execution" details, among other things, the importance of information distribution and responsibilities. As we watch these massive technology companies vie for the top position in emerging markets like mobile phones, I'm left wondering how much each of these companies distributes information and delegates responsibilities. From my experience, Google and Facebook, in particular, are very loose hierarchical companies. I've visited the main campus of Google in California--it's like a massive student union, complete with clubs and greek life (meaning large groups of people hanging out). I know that Google is a massive company, but from an observer's perspective, I'm left wondering if Google has done the things that our articles recommended this week. It seems to me like there isn't enough hierarchy to get things done--how often has Google come out with some new product, only to change it constantly? (Gmail, Google Documents, Google +, etc.) Seems to me like they're not exchanging information enough and just distributing these new interfaces without taking the time to strategically place them, and make sure that everyone knows about it.

And Facebook seems to be in a similar position. Too many times Facebook has changed things, only to cause an uproar from its users. That doesn't sound like good strategy execution to me. It seems that both Google and Facebook (and possibly the other companies mentioned too), are just throwing things out to stay fresh and new, and keep their astronomical climb.

But what happens when things changes? What happens when Weibo (China's main social media network) changes its interface to suit more than just Chinese people, and manages to capture more of the market than ever before? This man not be possible, I don't profess to have a strong knowledge of Weibo, but I hope Facebook is watching its back.

In 2007, when Facebook changed the email requirements to get a Facebook account from a .edu address to any address, Facebook's users increased exponentially. And that happened almost overnight.

With technology changing so quickly, are Google and Facebook prepared for a strong execution of their strategies to continue being the leaders in their respective industries? Will there be something coming, that, thanks to a lack of strong communication channels and some hierarchy, will blindside them?

I'm not sure. But I wonder sometimes how strong these technology behemoths are. And how strong their plans are for executing their ambitious strategies.

Selling Service: The Surprising Core Practice for a Community Service Organization

After reading through Jeffery Immelt's focus on what GE does best in "GE Goes With What It Knows: Making Stuff" and Neilson et al.'s recommendations for strategy implementation in "The Secrets to Successful Strategy Execution," I am reminded heavily about my time as a lowly fundraising chairperson in a large international community service organization. Specifically, the mission of the organization and how the organizational culture affected the executive decision-making process is something that I believe is worth talking about.

"The Secrets to Successful Strategy Execution," as it turns out, has a companion interactive tool that helps you diagnose what "type" of organization yours fits into, and how to put the case study on Goodward Insurance into context. Specifically, they link you to a Booz and Co. organization effectiveness simulator that allows you to test your management methods out based on their responses from thousands of employees in decision-making capacities and their relative successes. While I am usually pretty suspect about the validity of these types of exercises, I typically find them to be fun and thought-provoking (I had a pretty similar situation when I took the Gallup StrengthsFinder test--it was probably akin to palm reading).

Before I engaged in the exercise, I had to diagnose what "type" of entity my community service organization was. Booz and Co. helpfully provides an OrgDNA exercise to help you do just that. While the focus is on business for the most part (questions about profitability didn't apply), the questions about decision-making and organizational norms highlighted what I believed to be the unique aspects of my organization. First and foremost, most of the work performed by the chairpersons (the board members under the executive board--people like me) was highly dependent on having strong trust in others. That is, chairpersons and co-chairpersons had to really rely on each other to divide their workloads, since we hosted community service events every week. This, however, also highlighted a weakness in our organization--although we presumed that our information flows were fair and typically "free" between committee chairpersons leading events (we all took turns heading other committees' events on the day of the event if possible), the strength of communication was not always there because it was assumed that everyone knew when events were happening. In the long term, for events that required planning beyond more than a month, this made things difficult because we simply weren't planning for the future.

I think that the assessment that OrgDNA provided me was fairly accurate. There are seven different organizational types listed:

  • The Passive-Aggressive Organization
  • The Overmanaged Organization
  • The Outgrown Organization
  • The Fits-and-Starts Organization
  • The Just-In-Time Organization
  • The Military Precision Organization
  • The Resilient Organization
While a place like GE under Jeff Immelt would fit into "The Resilient Organization" (described as "as good as it gets"--flexible enough to adapt quickly to external market shifts...and aligned behind a coherent business strategy), my organization was listed as "Just-in-Time." And sadly, that makes a lot of sense. We usually scrambled for deadlines, and, as suggested, we were "inconsistently prepared for change" but could "turn on a dime" if necessary. We weren't necessarily as resilient as GE, with its multiple business lines, but we did have something in common: we had something that we did very well. That something, as it turns out, is not community service.

Many times, we would ask people why they liked being in our organization. Some said it was because of the community involvement opportunities, but the vast majority stated it was because of the organizational culture. People really liked going to service events not necessarily because they thought they were adding a lot of value to the community but also because many of the people they went with were their friends. We lived basically in the present, one event at a time. I know that the executive leadership attempted to foster the same atmosphere for members--come hang out with your friends and do service. We knew how to make people comfortable, and that was our selling point. Trying too hard to be like other service organizations that only offered service events was not our forte. It would be similar to GE focusing its strategy on GE Capital and ignoring its other business units. That's why we were successful (on a side note, it also made for good community service--we won the highest international award for achievement for our organization's size). It was always hard for new boards to live up to this standard because we were "Just-In-Time" and we never really had a long-term strategy (which returned to bite us in the butt over financial issues) but nevertheless we retained the same organizational mindset every year.

Do you think that there is a reasonable correlation between core organizational culture and resilience from the GE example and the underlying theme from my service organization? What kind of organization is your organization according to the Booz and Co., and how does your strategy mesh with your organizational type for organizational effectiveness?

Periodic Strategy Review Sessions

In the “Lesson in Longevity, From I.B.M.”[i], Mr. Yoffie of Harvard Business School mentioned “It’s really hard to move a company when it’s doing well and not facing a crisis” by using I.B.M.’s example. It is absolutely true because people believe their current strategies while they are working. However, the author claims people face the time to change their strategies sooner or later. If so, how will they change their strategy smoothly?

In class, I learned a strategy based on several analyses such as performance evaluation, environmental analysis, industry analysis, and company analysis. These analyses compare past and present, and then set companies’ strategies with future market forecast. Nevertheless, if companies change their strategies dramatically, there is a possibility that they neglect periodic updates of those analyses. Needless to say, market changes from day to day. If executive teams keep their eyes on their market, companies only have to update their strategies a bit.

On the other hand, unexpected innovations make companies change their strategies. Although it seems difficult to assess the impact of the innovation early on, the impact is equal for almost all company except for one company which made it. In other words, new innovation is a dangerous sign for successful companies in the market. Thus, executive teams should share an awareness of the danger of innovations.

Although keeping an eye on the  market and sharing awareness of the danger of innovation are stereotyped phrases, executives fall into a pitfall because they cannot do it easily. One of the ways to avoid the pitfall is scheduling several strategy review sessions during a fiscal year. Leaving a strategy nearly one year might not be enough to survive in this recent rapid changing economy. Periodic strategy review sessions remind executives updating latest market status and the danger of innovations.



[i] Steve Lohr. "Lessons in Longevity, From I.B.M." The New York Times June 2011

Tuesday, April 24, 2012

Rules to Communicate Strategy


In this week's reading, we have read about how to set a strategy statement and the methods for successful strategy execution. For executives to make decisions that are aligned with the strategy of the organization, they first need to know the strategy. From this week’s reading, we have seen that most executives find it hard to summarize the strategy of the organization succinctly. 

In the book “Communicating Strategy” by Phil Jones, he mentions that research suggests that only 5% of the people in the organization understand its strategy. If this is the case then whose strategy are the remaining 95% of the people implementing?

It is very important that the strategy of the organization is communicated to all the employees. From the Article, “Communicating Strategy”1, by Freek Vermeulen, we can see 3 rules to effectively communicate strategy. The first rule is to “Make some genuine, tough choices.”1 He says that the organization’s strategy should be focused. It should be focused at what the organization wants to achieve and not a general and broad strategy. The strategy makers should think long and hard and decide exactly where they want the organization to be, who are their target customers and then coin a focused strategy. The second rule is to keep the strategy brief. The essence of the strategy should be captured in few words. If the strategy is too long, it will be hard to communicate and no one is going to remember it. The third rule is to not only communicate ‘what’ the strategy is but also ‘why’ such a strategy was coined. The reasoning behind this is that if employees know why the strategy was coined, then they can understand the decision making process of the organization and they will be more inclined to corporate with the strategy. It’s also important to explain as to why the strategy was coined so that people who do not agree with it can understand the reasoning behind it and can be convinced.

Just by having a focused and structured strategy but not communicating it well to the employees, can an organization be successful?


References:
[1] http://www.forbes.com/sites/freekvermeulen/2010/11/09/communicating-strategy/


             

Strategy Implementation for the ONAP



The theme for the readings this week was strategy implementation and what are the  necessary steps to ensure successful adoption of a strategy. These steps reminded me of the strategies for addressing health problems in the United States created by not-for-profit or government health organizations that I have been studying extensively in my health policy classes. I was interested in investigating if or how implementing strategy might change if your strategy is not business focused or profit generating but rather a new approach to addressing a specific health problem- like eliminating health disparities. 
Recently the White House Office of National AIDS Policy (ONAP) announced a new strategy for addressing HIV/AIDS in the United States. [1] This new policy focused on a three pronged approach to the problem:
    1. Reducing the number of people who became effected with HIV
    2. Increase access to care and optimize health outcomes for people living with HIV
    3. Reducing HIV- related disparities.
Luckily for me the ONAP also released their federal implementation plan and I was able to see if the organization utilized any of the implementation strategies discussed in our readings or even in our classes like ODI. In the article “The Secrets to Successful Strategy Execution” one of the primary success secrets is considering decision rights and how they will be impacted by a new strategy. The idea behind this step is that by ignoring the former decision rights of your employees you could see the implementation of your strategy grind to a screeching halt as a series of turf wars are waged between your middle managers. In a organization like ONAP this a slightly different situation but the principle remains the same. There are many organizations not formally affiliated to ONAP that due meaningful work addressing HIV. If ONAP was to initiate their strategy without recognizing the jurisdiction (for lack of a better word) of existing organizations it would not only be weakening the effectiveness of their own strategy but missing an critical opportunity for pooling resources and capitalizing on different organizations’ competitive advantage.  Thankfully, ONAP has built this collaborative framework into their implementation strategy by reaching out to other HIV not-for-profit organizations and government organizations. ONAP then created specific roles for federal departments, HHS Office of the Secretary, State/Local Government,  and Nongovernment Partners that includes them in the implementation of their strategy while also preventing future redundancies. 
Another key factor when implementing a new strategy that was discussed in my ODI and Health IS classes was the importance of articulating how to measure success. It is not enough to simply tell people to implement a new strategy and expect motivation and employee buy-in to remain high. Instead organization need to clearly articulate how the company will measure success of the new strategy and set up a series of goals for the organization. This solidifies the nebulous idea of strategy and frames it as a set of goals to be achieved thereby increasing employee motivation. The ONAP has also addressed this by setting a series of targets related to their three primary goals-reducing HIV infection rates, increasing access to care, and addressing HIV related disparities. For example the ONAP has set a goal for 2015 increase the proportion of HIV diagnosed gay and bisexual men with undetectable viral load by 20 percent. This goal is clear cut and concise. By 2015 ONAP and associated organizations will know if they have reached this goal and employees will have that number in their back of the head as they work to implement this new strategy.
After reading the rest of the implementation plan I saw a number of other instances where the ONAP was using techniques for  implementing strategy that were propagated by the private sector. For the sake of brevity I focused on the two discussed above- assigning decision rights and articulating strategy goals- but I think as the implementation plan shows these success steps are transferable across different types of organization with different aims. As we move on to our own jobs we should definitely brainstorm how to adapt these proven strategies to ensure equal success. 
[1] http://www.whitehouse.gov/files/documents/nhas-implementation.pdf

Digging to the roots of the problem with RCA

This week's buzzwords and ideas: constant entrepreneurship, industrial innovation revival, back-to-basics strategy, reordering of the global economy/emerging markets, being nuanced in foreign markets, large-scale entrepreneurship, identifying long-term market shifts, leadership by fiat, technology-led-innovation agenda, necessity of having a simple/clear/succinct strategy statement that everyone can internalize, strategy statement to improve formulation and implementation, 3 critical components of a good strategy statement (objective, scope, advantage), defining the objective/scope/advantage requires trade-offs, if your firm's strategy can be applied to another firm then revise it, setting ambitious growth targets at multiple points, offering distinctive value propositions, strategic sweet spot is where a company meets its customers' needs in a way that rivals can't, clarification of decision rights, ensuring information flows, execution = thousands of decisions made every day by employees acting according to the info they have, 4 building blocks of execution (clarifying decision rights, designing information flows, aligning motivators, making changes to structure), quick information relays, supporting root-cause analysis, blocking info results in poor decisions/limited career dev/reinforcement of structural silos, assess informal networks to understand key decision-making and info-gathering, reach across org boundaries, post-monopoly prosperity, don't away from the past --> build on it, build on legacies by using deep reservoirs and expertise, apply core assets to new markets.

When reading the articles this week, I came upon a phrase which I am not familiar with: "root-cause analysis". According to an article by Gary Neilson et al. entitled "The Secrets to Successful Strategy Execution", a supporting root-cause analysis supplied with regular reports between separate business units is key to getting information flowing freely across organizational boundaries.

The rationale behind root-cause analysis (RCA) is that a lot of times in companies, it is typical for employees to approach a problem at work by glossing over it with a quick-fix solution. If upper management sets a premium on RCA's, the organization can treat the underlying problem at its core. According to Mind Tools, an online career skills website, RCA is a powerful five-step problem-solving process with the following purpose: to determine what happened, why it happened, and how you can reduce the likelihood of it happening again.

RCA investigates interrelated patterns between different causal characteristics. The causes to a problem can be physical (usually material/mechanical items), human, or organizational (i.e. a faulty policy). The five-step process identifies causes at all levels and gets to the root of the problem:
STEP 1: define the problem. Just like in medicine, begin by identifying the symptoms (i.e. Production at the G.E. manufacturing plant has slowed significantly).
STEP 2: collect data. Gather everyone that is affected and/or understands the problem together to better understand what's going on. Look at CATWOE: Customers, Actors (who implement solutions), Transformation process affected, World view, process Owner, and Environmental constraints. (it might be useful here to represent the data visually with interconnected arcs and a color scheme).
STEP 3: identify causal factors. What events and conditions may have led to this state of affairs? It's important to identify a long laundry list of potential causes. There a few tricks to extract every single potential cause from your trouble-shooting staff:

  • ask "So what?" to get to the root of the problem
  • ask "Why?"
  • break down a problem into detailed parts (perhaps by using tree diagrams)
  • cause and effect diagrams (chart of causal factors)
STEP 4: identify root causes. Use the tactics from step 3 to extract the roots of each causal factors. Classify the causes as physical, human, or organizational.
STEP 5: recommend and implement solutions. What steps will you take to stay on a path of prevention and solution implementation? Identify changes needed in various systems and processes. Use Failure Mode and Effects Analysis (FMEA) to identify where a solution could fail (i.e. map out problems before they materialize). Use Impact Analysis to explore positive and negative consequences of change. Finally, Kaizen is another strategy (which we have talked about in class) that prizes continuous improvement.

Source: http://www.mindtools.com/pages/article/newTMC_80.htm

All in all, root-cause-analysis is a methodic way for people close to the problem to identify the root causes of that very problem by bringing in other departments and points of view that they might never have considered before. An RCA should be supplied along with a more positive, optimistic evaluation of the business unit or company (such as quarterly reports).

Implementing Different Strategies in the Smartphone Industry

This week’s articles discussed strategy implementation and the importance of clearly articulating strategy.  In particular, the article “Can You Say What Your Strategy Is?” tells of the importance of having a consistent, unambiguous strategy.[1]  I read an interesting article in the Wall Street Journal today that focused on Apple and Samsung’s rivalry in the smartphone industry.  These two companies are dominating this industry, each with approximately 25% global market share, yet they have two vastly different strategies.  Together, these two companies obtained 91% of operating profits in the industry in fourth quarter last year.[2]
Apple prizes an excellent design for their one and only smartphone model and chose to focus of profitability versus sales.  Samsung takes a very different approach in the smartphone space.  Samsung has chosen to focus on volume and market share.  The company has multiple different smartphone models to meet users’ differing needs.  Samsung controls its own manufacturing, which in turn, enables it to control prices. [2]
This is an interesting example to highlights the fact that companies can have success in the same space while having completely divergent strategies.  It will be interesting to see how the smartphone market evolves.  How do you think other companies in the space will strategically position themselves in order to compete with the two current market giants, Samsung and Apple?  Will Apple be able to maintain its position with its single-product strategy as the smartphone industry continues to grow? 

[1] Collins, D. J. & Rukstad, M. G. (2008, April). Can you say what your strategy is? Harvard Business Review.
[2] Vascellaro, J. E. & Ramstad, E. (2012, Apr 24). The two-horse smartphone race. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052702303978104577362140799316460.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsSecond

Monday, April 23, 2012

The Strategy of Strategy Implementation

The articles for this week made the case that defining the strategy of an organization is only one small step on the road to success.  Apart from the organization’s visionary strategy for its operations, its actual implementation is a separate strategy altogether.  In their article, Neilson et. al outline “fundamental building blocks” that predetermine successful strategy implementation1 and G.E. CEO Jeffrey R. Immelt seconds these building blocks in his comments in Lohr’s 2010 New York Times article.2  In my last blog post, I discussed the strategic planning process of my current workplace, the Greater Pittsburgh Arts Council (GPAC).  My organization also recently restructured staff duties in a way that rings very true to this discussion about the primary components of strategic implementation.

You may recall that I identified GPAC’s strategy as one of differentiation in providing services that arts organizations and individual artists cannot otherwise provide themselves.  To this end, before the restructuring last fall, it had a staff person dedicated to each of the following key functions: grants and consulting; marketing; advocacy and research; development; and general office management.  Of course, the CEO oversaw these efforts and several support staff were interspersed among the operations.  The resignation of the marketing director in August served as a catalyst for a review of the individual workloads, reporting structure, and separation of duties of each staff member.  By the spring, the key functional staff members’ responsibilities had shifted: communications and volunteer programs; grants and professional development; development; artist relations; conference planning; and general office management.  Simultaneously rearranged with the review of the strategic plan, this staffing structure promised the plan’s effective implementation.       

Neilson et. al acknowledge that, like GPAC, “to improve performance, most organizations go right to structural measures,”1 but they recommend examining decision rights as a more long-term solution.  At G.E., Immelt agrees that “his broadest responsibility…is to ‘drive change and develop people,’”2 a responsibility that can only be carried out by affording different people with different decision rights.  I would argue that although GPAC’s restructuring made sense for the organization’s operational strategy, it is experiencing an unnecessarily steep learning curve in strategic implementation because it did not carefully consider the decisions that staff were making in their original roles.  A decision that was previously made by one person could now feasibly be made by three different people in three different ways.  As the organization’s intern and very much at the mercy of upper management’s decisions, I have been caught in the middle of this triangle.  Neilson et. al go further in stating that the lack of decision rights can lead to second-guessing one another,1 and I have experienced this as well.  Like the cited charitable organization (it must be a chronic nonprofit problem), we do “have a series of meetings in which no decision [is] reached.”1  GPAC’s thought process behind the organizational restructuring was noble in its intentions to spread the workload, but it will be some time before the structure allows for the development of its people (a la Immelt).

Neilson et. al and Immelt also agree that the careful alignment of the organizational structure and information flow is key to strategy implementation.  Neilson et. al suggest that in successful companies, “information flows freely across organizational boundaries.”1  At G.E., a large company whose business units could comfortably live in silos, Immelt oversees the activities that “cut across business units – or have no natural home in a business.”2 He views the corporation’s size as an advantage because he can structure its “resources to capitalize on opportunity.”2  At GPAC, the organization was restructured to allow for balanced workloads, strategic plan implementation, and cost- and energy-efficient use of time, but it did not follow the way that information flowed throughout the organization.  To GPAC’s credit, the restructuring did break many of the existing silos, but in the process it created redundancies.  For example, when I received an email with a question from an artist, I forwarded it to two people, who then forwarded it to a third person, and all three had different ideas of how this artist’s question applied to their respective focus areas.  In the meantime, I, the intern, was the pivot point and the person responsible for answering the email.  Of GPAC’s 10 staff members, four of us were preoccupied with this one simple question.  To this day, we have not devised a system for handling information that now overlaps with multiple people’s responsibilities.  This example shows how GPAC’s staff restructuring in fact caused inefficiencies in shaking up the information flow within the organization.  It diverted attention away from activities that would fulfill its strategy to serve a broad array of artists and arts organizations.   

Admittedly, my view of GPAC’s strategy is tainted by the position I hold within the organization, where I am privy to some channels of decision-making and information flow and not to others.  At my very bottom level, however, I might suggest that I am one of the most likely staff members to first recognize this breakdown in strategic implementation as I am directed to perform conflicting duties.  With strategy development so often directed or at least initiated by top management, what can bottom level staff members do to motivate strategic alignment throughout the organization?

1Neilson, Gary L., Karla L. Martin, and Elizabeth Powers. "The Secrets to Successful Strategy Execution." Harvard Business Review June (2008): 3-13. Print.
2Lohr, Steve. "G.E. Goes With What It Knows: Making Stuff." The New York Times [New York] 4 Dec. 2010. Print.

Metro Cash & Carry - Strategy


In 2003, “Metro Cash & Carry” was set up in Bangalore. They were a wholesale retail store. They came in with a low cost leadership strategy. They sold a vast array of products at wholesale prices. When they launched their first retail stores in Bangalore, the question on everyone’s mind was, is this the end for the corner grocery and retail stores?

9 years down the line, both seem to be coexisting. The reason why the corner grocery and retail stores didn’t disappear is that these store have a personal relationship with the customers. For smaller and quicker purchases, customers find it easier to go to the store round the corner. It is more convenient. They could even call the store and get the products delivered to their homes. These stores maintain good customer relationship. The second reason for the survival of the corner stores is that at Metro Cash & Carry, customers have to buy in bulk. Hence for smaller and immediate purchases, customers preferred the corner stores.

Metro Cash & Carry brought the wholesale concept to retail stores. Bangalore had many wholesale markets. These markets sold certain type of goods at wholesale prices. Different markets were there for different products. Metro Cash & Carry brought a wide variety of products under one roof and sold them at wholesale prices. This was the first time a retail store was doing this. It was their Blue Ocean strategy. They sold products at low prices, but customers had to buy in bulk. They made their margins on quantity of product sold. They have a differentiating factor from other retail stores that continue to make them successful.


References:

Distinguishing strategies of top health IT firms

The article “Can You Say What Your Strategy is?” discusses the necessity of companies to be able to summarize their defined strategies as well as keeping it consistent.   As I had mentioned in a previous blog, 15 of us Health Care Policy and Management students attended the HIMSS’12 Annual Conference and Exhibition.  The exhibition part was beyond describable with over 1,100 vendors, and each health IT vendor there wanted to prove to the attendees that they were the best to give us their business.  How do they differentiate themselves to try and prove this?  What unique services do they have to offer? Below are the strategy outlines for 5 of the well-recognized vendors who were at the conference. 

Siemens:
Siemens particularly focuses on products including imaging, therapy systems, and diagnostic services.  Like other health it firms, it “focuses on strategies to increase both efficiencies and quality of care, while simultaneously reducing costs”.  It also has a long-term, sustainability strategy to create established innovative tools.  They repeat several times that they focus on high patient quality and safety.


Allscripts
Allscripts’ approach is “One network, one platform, one patient”.  They focus on a single platform for patient care and records, providing a connected continuum for clinical, financial, and information solutions.  It also claims to encompass the “largest network of clients in healthcare”, with their clients being their number one value.  Outcomes is their number one focus.


Epic
Epic’s approach is “Small client base, huge global impact”.  They focus on easy-to-use, interoperable, customized solutions for their clients.  A distinction about Epic is that they “develop, install and support all our applications in-house”.  They have a variety of skill sets on their leadership team, including clinicians, to make sure they understand the patients’ needs.


Philips
Philips Healthcare has the approach of “People focused. Healthcare simplified.”   They “strive to improve quality of life and create value for individuals, communities and the company”.  Similarly to Siemens, they focus on imaging and quality care as well as home healthcare, but their repetitive tagline is that the people are always its main focus.


 McKesson
McKesson’s mission is “advancing the health of the health care system by advancing the success of our partners”.  It focuses on both pharmaceuticals as well as health information technology.  McKesson is driven by its share principles of integrity, customer-first, accountability, respect, and excellence.   It claims that these “principles unite all employees at McKesson, connecting us across business units, geography and functional areas”.