Sunday, June 26, 2016

Bringing Science to the Art of Government Strategy

So often, local governments are subjected to the question: are we delivering services at the lowest possible cost? Strategy exercises are led by consultants who present deep financial and time analysis, and ways to simply make the status quo cheaper. Or worse, they propose scaled back services. Residents, on the other hand, tend to want better services.

Instead of approaching reforms based purely on cost data, local governments AND residents would be well-served by using the approach outlined in “Bringing Science to the Art of Strategy.” By running strategy ideas through the steps of identifying conditions for success, and then identifying barriers to choice, local leaders can truly understand which ideas will be acceptable to the public. Moreover, by identifying a savings goal, and seeking ideas from staff throughout the organization, leaders might find acceptable ideas that do not impact public-facing services.

Let’s say the goal is to save $100,000 per year within City Parks. Very obvious options might include closing a public pool or reducing recreation center hours. For those to be truly excellent options, they must save City Parks the $100,000. They may very well do that, but there is a major barrier to choice, and that is that residents may not be willing to accept a pool closure or fewer hours for exercise and programs. The City would be well served to ask those questions to residents in the form of a poll or focus groups. Having that conversation would benefit the City, as well as the community. Such transparency helps people understand the true cost of services. It combats the pervasive “magical thinking” of wanting more for less. Ultimately, I do not think that closing a pool or reducing recreation center hours would be acceptable to the public.

However, by soliciting ideas from staff, City Parks may be able to find cost savings in internal processes or staffing in a way that does not impact the public. One example might be to improve procurement practices and contracting to save money on building and pool maintenance. Or, staff might suggest that the City seek foundation or corporate grants to supplement critical recreation center programs. From a cursory glance, these options have far fewer barriers to choice, and could achieve the stated goal of saving money.

The “possibilities” process outlined in “Bringing Science to the Art of Strategy” would be an incredibly beneficial tool for local governments looking to save money, without compromising services to the taxpayers.

Strategy Development in Practice

Often, I've found that the best of intentions to do things the "right" way can get lost in translation once the theory meets practice. Although high level think pieces are helpful in terms of setting the tone and overall concept, I find that practical advice it equally essential to really deriving the value from an intellectual approach. Often, folks are too easily tempted to say, "Well yeah, that's how it is done in books, or at big companies or [insert excuse here] but we can't do it that way here" or, "there's not enough time to do it that way here." Translating strategic thinking into something actionable is actually quite hard (as there is some amount of guesswork involved), and it is always quite helpful if you have logical tests or evidence that you can leverage to back up your thinking and bring others along with your vision. 

"Bringing Science to The Art of Strategy" provides a sorely needed framework for both formulating and testing strategy. This approach brings strategic planning out of the rarified air it often resides in and makes it practical and testable, thus making it less of a navel gazing exercise for the executive elite and more a labor of practical planning that everyone should be involved in. It allows naysayers to let their inner pessimist run wild, resulting in a darwinian approach that produces a strategy with proven (initial) results. The trick remains in coming up with "possibilities" and tests that are relevant to your industry. After following this approach, it would be hard for a naysayer to claim that the strategy "isn't realistic" or "couldn't work here" or "doesn't take into the consideration the realities of our industry." 

However, most organizations I've been involved with haven't used such a logical approach. I was excited to take this course because we are currently kicking off the formation of a new three year plan. Although I am fairly new to the organization, in reviewing the last three year plan, I was impressed with how much had actually been accomplished. This is not an organization that keeps a strategic plan on the shelf and never looks at it. I relished the opportunity to bring my expertise to bear on this forward looking effort. However, as we start this process, I can already see some areas of potential problems if we don't correct quickly.

Initially, we were not told to do anything in preparation for the first planing meeting. So we were not going in with "prepared minds." I was happy to see that our Directors had already spent considerable time crafting a list of core values. The mission statement and vision were basically recycled from the previous round of planning. These were presented to us as a document for our input, and we'll be addressing some minor tweaks in a meeting next week. The vision is uninspiring and dated, in desperate need of a refresh. However, the Directors had already started to plan out some objectives, which will also presented to us, essentially fully formed, although our CIO wanted input and questions from the group. I have little confidence that any major changes will result from our feedback. A notable absence, especially in light of the article "Can You Say What Your Strategy Is?" is the lack of a competitive game plan - the very essence of strategy. Perhaps this is hinted at with our mission and vision, but while the Directors had thought about objectives for their areas, they were not really tied explicitly to scope or advantage. It was more a collection of things we want to do or we know we should do in the next three years. One could argue that as a higher education institution (and just a single department in that institution at that), competitive advantage is not really something we should be thinking about. However, I think ignoring it completely is flawed. Does this mean that it is a bad strategy? Perhaps not. But it's definitely a less organized, less logical and less ambitious one than it could have been. And yet, it seems that this is how most organizations attack their strategic planning. However, ours is not yet carved in stone (thankfully). I'll be sending "Can You Say What Your Strategy Is?" to group and we'll see if that prompts some re-thinking of this approach. However, I think many will feel we've already put too much work into the planning for any radical change. It's interesting how much organizations fall back on top-down approaches that slavishly follow their organizational structures than leveraging the mission and values they purport to adhere to mind a true competitive advantage.

Monday, June 20, 2016

What is your Company’s Strategy…Can you clearly state it?

I enjoyed reading the article “Can You Say What Your Strategy Is? (Collis and Rukstad) this week.  The authors claim that it is a dirty little secret that most executives do not know all of the elements that make up their own corporate strategy which in turn makes it very difficult to effectively execute in their positions due this lack of awareness and alignment.  Rukstad states that a good strategy is made up of three critical components to include: objective, scope, and advantage – and that executives need to internalize these components and translate them into a clear and simple statement.

Objective:  Many companies do not get this one write and confuse their strategy statement as linked to their mission or value statement.  The right approach is suggested as defining a strategic objective that can be specific, measurable, and time-bound.  My personal experience with this is found in the corporate performance objectives.  Our performance objectives should map to the strategic statements related to the SMART guidelines (Specific, Measurable,
Attainable, Realistic, and Time bound).  I have found this process to be effective as it quantifies and qualifies the objectives to ensure there is good alignment.

Scope: This component defines the boundaries that allows managers to focus time and resources on the right strategic elements.  Clarifying who the target customers are helps with this alignment but also allows experimentation within the boundaries as to not suppress creativity or overlook opportunity.  I have seen this in practice and can appreciate a more general approach or scope statement that allows flexibility to achieve objectives – and it may not be in a straight line.

Advantage: Sustainable competitive advantage carries the heaviest weight in a company’s strategic statement.  We have learned how important it is to differentiate from the competition by defining what is most distinctive about a product or service in the marketplace.  How a value proposition is presented to customer’s is very important and from my experience, it ties directly to advantage and customer satisfaction.  If a customer clearly understands this, it can set the foundation to build upon in the other strategic areas as well.

The takeaway from this article sums up the process of creating an effective strategy statement by incorporating the three components mentioned above in addition to finding the ‘sweet spot’ in the marketplace.  This ‘sweet spot’ is the central focus of the strategic statement and optimal blend of a company’s capabilities and value proposition.  All of this should be captured in a 35-word statement which serves as the elevator pitch and can be easily internalized and communicated to many internal and external stakeholders.

The Art of Strategy and Verizon in 2011

The Art of Strategy and Verizon in 2011

Under the framework described in the article, "Bringing Science to the Art of Strategy," I analyzed how Verizon started as a survivor of the regulated monopoly known as Bell System to the company it is today. The article, "Transforming Verizon: A Platform of Change," discusses how Verizon had to change its culture to move forward.  Prior to 2011, Verizon was a company of two faces.  It held the regulatory legacy of the telecommunications industry mired in the formerly monopolistic wireline business.  It was known for being slower, more bureaucratic and less customer-centric.  The other wireless face was more flexible, faster and more entrepreneurial.

The two sides unfortunately didn't play well with each other.  As the revenue mix changed from mostly wireline revenue in 2001 to mostly wireless revenue by 2010, the divide between the two grew.  The wireline business was quickly dying.  Verizon addressed this by building FiOS, a fiber-optic broadband network connecting directly to customers' homes.  The problem was how the company would use the innovation across the enterprise to benefit one Verizon.  Verizon's COO McAdam launched his vision of One Verizon.  He rolled out a company-wide "credo" statement.  He even followed up with an employee survey to validate the rollout's effectiveness.  98 percent were aware of the credo, 96 percent said they were accountable for demonstrating it in their daily work, and 91 percent believed the credo will deliver superior customer service.  The company even established, "Credo Awards" to drive home its new ethos.  McAdam was able to identify the problem and made intentional choices to remove barriers.  He believed that wireless and wireline employees would learn how to collaborate better if the emphasis was more on action or process.  

Sunday, June 19, 2016

Infusing Strategic Planning with Science (7 Simple Steps)

Of the papers that we read this week, by far the Bringing Science to the Art of Strategy document resonated best with me.  The publication is founded on 7 key steps that can be used as a framework for guiding the strategic planning process.  Furthermore, the authors make a number of contentions.  A few of their salient points are as follows: far-reaching / “out of the box thinking” may result in plans that cannot be executed; the status quo---rather than innovation---is supported by the strategic planning process; and that managers dread the annual strategic planning process.

While I do think that many of the steps in the suggested framework would not be considered as earth-shattering to the would-be strategist, I think that the document still serves as an excellent refresher.  For example, the approaches in steps 2 and 3 (Generating Strategic Possibilities and Specifying Conditions for Success) have several excellent tips for managing through these two critical phases.  Specifically, not shooting down ideas early in the process as well as re-packaging potential deal-breakers for a possibility into a conditional statement.  I also enjoyed the concept of re-visiting conditionals, trimming off overly-ambitious "nice to haves" and ending with a crisp list of “must haves.”

I personally found the article to be a timely read given that I will be walking into a strategic planning session this upcoming week.  The client that I will be assisting in this process manages by consensus and has a highly inclusive culture.  In my mind’s eye, I can see many cases where applying these techniques will help move manage dissonance, keep folks engaged, and move the ball forward.  Wish us luck!


Unclear Strategy Statement - my "Aha Moment."

The article "Can You Say What Your Strategy Is?" explains my work-life. 

I’ve got my objective: to be a regional tourism destination. Great. Now how do I get us there?  

The analogy of the metal shavings haphazardly lying about, then the magnet passes over, now they’re all standing at attention - in alignment – really spoke to me.  

This is my experience in my current position.  I’ve been struggling to get all my ‘rowers’ going in the same direction.   Over the past year or so, I’ve had moments where I seriously questioned what some of my staff and board members were thinking.   Now, to be fair, after consideration, I usually find it’s my fault: I’m not as clear as I think I am.  It was recently brought to my attention that, in fact, most people cannot read my mind.  And as frustrating as that is to acknowledge, I recognize the need to better clarify the message to ensure understanding. 

This, in the famous words of Oprah, was my “aha” moment.  I have my Objective, my BHAG.  I refer to my BHAG often.  But I have yet to develop the second and third aspects of my strategy statement – the Scope, and the Advantage.  I’ve got a nice swirly grey brain-cloud regarding the scope and the advantage, but I realize a big reason for my ‘angst and struggle’ with focused alignment stems from not clearly defining these other two crucial parts of the plan.  And I’m completely guilty of not simply, clearly, and succinctly communicating that strategy to my team – both Board and staffers. 

I find that when reading a particularly insightful HBR article I scribble notes on how I can internalize then apply that insight in my current position.  This is one of those articles.

Below are some of my scribbled questions that popped up from these article:
  • ·      Can scope be considered a description of what my objective looks like - as in a list of things that will help attain the Objective? And I feel like I should convert these ‘what this looks like’ into SMarT goals – The Edward Jones example was crystal clear with the SMT.  

  • ·      In my particular situation, I run two businesses, a for-profit (the Distillery), and a non-profit that encompasses three different-yet-integrated departments to manage:  The Museum (which comes with so many ethical obligations), the facility rentals – and the Village shops.  From a visitor’s perspective, the all departments as well as the distillery will be experienced as a whole – I’m betting on the Gestalt theory for the Advantage.  Is that enough?  I’m a bit confused as to how to frame the value proposition for this.   

  • ·      And back to my Objective - the article speaks to making a choice between growth or profit – with regard to my particular situation, I need both growth and profit: growth from the Non-Profit and profit from the Distillery.  How to reconcile this?


The Art of Strategy and PBR

Strategy is not a specific science. It is an art and it differs for every product, organization or industry. Obviously, research and history of an organization or sales of a product is considered when establishing a strategy. Just like Proctor & Gamble had to strategize it’s marketing plan and compete against new up and coming facial products for the younger generation for Olay, Pabst Ribbon Blue (PBR) has done the same.  However, their approach in competing against other breweries and giant beer conglomerates was different. In the US where craft brews and IPA’s have become all the rage, PBR remains a popular beer and here’s why. PBR decided to take on an unconventional, anti-marketing approach. Pabst turned down endorsements from celebrities and built it’s brand on basically not giving a damn. They opted to maintain their authenticity. A trend that is very popular with millennials, more so specifically with the hipsters. Now PBR has become a trend and has resurfaced as a popular beer.

PBR’s strategy would not have worked for Olay. Even though both products have been around for a long time, Olay had established a reputation for being an “old woman” cream. Their audience was literally dying and other companies like Covergirl utilized celebrities and models to advertise their products that enticed a new generation. They began using a new strategy of “fighting the signs of aging” to attract the younger audience. PBR has been known as a “working-class” beer and affordable. PBR on the other hand avoided the advertising and marketing strategy which attracted their younger following. It is “cool” to go against the grain and be authentic. PBR is still one of the cheapest beers on the market. PBR had a choice, they chose the strategy that kept them original since 1844. However, in their efforts to refuse marketing and changing, they’re brand has evolved from just a “working class” beer but also to a “young, hipster, college age” beer. 

The art comes from the ability of these companies to make the decision to take the route they took. Each brand manager could have made the decision for Olay to remain the same, or PBR to take the celebrity endorsement, however, this could have changed the face of the product and consumer. By combining the creative strategy with the facts and figures, this allowed the companies to become successful and enhance their brand.