Blog #1 Navy vs. CMU, operation efficiency vs. strategy

Blog Post #1

In reading “what is Strategy” it became clear to me that the military focuses on operational efficiency and nothing else. The idea of fit, having each activity compliment the others, is not really in place. All actions do compliment other parts of the mission but because there are no competitors there is no need to carve out a niche. This may have caused the rise in private security firms that can offer military like services faster and at lower cost. In the military, from my experience, cost is not even discussed. Operational efficiency is often talked about though. Not because we are competing for business, but because mission objectives are always time sensitive. So we are constantly striving for speed while maintaining safety. But there is no need for a “competitive advantage” per se because there are no competitors. Because of this the military model is very easy to duplicate, there is no hidden secret to the operating culture.

My work at CMU differs greatly in this respect. I work for University Advancement, fund raising, and there is a constant strive for innovation and “fit” between activities. The idea is to make all activities in the division compliment the goal of gaining donations. The down side of this right now is that we are going through allot of change and it is effecting operational efficiency. Many other Universities are using newer software packages to keep track of donors. In our divisional meetings the practices of other Universities are a big point of discussion and we are attempting to “Straddle” their methods. We are currently going through the process of adopting Excell 4 Apps and Sales Force. The technical difficulties with IT and accounting is destroying efficiency and I am spending allot of time putting out fires and putting out new reports to reconcile new donation accounts. Part of the reason things are so inefficient right now is that we are still using the old system of Advance alongside the new ones. The hope is when we completely switch over things will be easier.

Growth is a big focus in University Advancement, each campaign is bigger and bigger. There is an ever increasing effort to engage with Alumni in the hopes that they will give and give more. The amount of giving challenges, Alumni events, and in-person Gift Officer Engagement has been expanding for several years. The risk that I see is over saturating them with attention and turning them off. However so far there seems to be no lack of prospects. 

Blog #1 : Toys "R" Us Strategy , This time definitely for "Us"

Blog #1 :  Toys "R" Us Strategy , This time definitely for "Us"

As a new mom, I am mostly overwhelmed with making “big” decisions for my daughter right from her birth to each milestone month that passes by. For anything I need I just place orders at Amazon or for in store purchase I go to Target or Walmart. Amidst my trips to Target, I saw an open store space which had a huge note written on it “ SORRY STORE CLOSED”, it was none other than Toys R Us.

After reading “ Your Strategy needs a strategy” I could not stop thinking about how a popular store like TOYS R US lost its presence and is diminished to its current state of bankruptcy. This 70-year-old store was once a one stop shop for all baby related purchases. It was renowned as the center for all toys in the toy industry, but it didn’t live up to this expectation for long. After years of slipping sales and increasing debt, the company filed for bankruptcy in 2017. 

The company belonged to the “Classical” model of strategy planning when they first started but over the years, they made no efforts in updating their strategy and plans with the changing trends of consumer behavior. Toys R Us failed to innovate their business models and a poor shopping/ customer experience in their stores was the key driver of their downfall. After they went private, their debt increased so much that there was no money left to innovate their processes or improve the existing store conditions.

The company started losing business to the sudden rise of retailers like Walmart and Target and it had a huge hit when they lost sales to online giant Amazon. The company did not invest in creating their online presence which would have been a great strategy for them to recover from the losses and increase their presence in the toy industry.

From the article “ Your Strategy needs a strategy” I definitely could see how by not updating one’s strategy with changing times it is nearly impossible to survive forget being profitable.

With a really hard hit, Toys R Us is coming back to existence following the “Adaptive” model of strategy planning. They are now partnering with Target to launch their websites thus working towards building their strong online presence and indirectly work with a well-established competitor to break the market. Learning from their past mistakes, they are working to build stores which will cater to highly engaging retail experience for customers. By proactively trying to fulfill its shortcomings Toys  R Us now sure does look like promising business venture.

Blog # 2: Who Takes Your Profit Away? – The Framework of Five Competitive Forces

Key Takeaways:

1.     The five forces influence the profit of one industry, and companies should make strategic positioning with the five forces in their industries.

2.     Investors can utilize the five force framework to estimate the future growth of a company.

3.     One example: the threat of new entrants sets up an up-limitation for the industry, and the size of the threat of new entrants depends on the entrance barrier.

 

Michael Porter elaborated on the five major competing forces that constitute the basic structure of the industry: the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, the threat of substitute products or services, and rivalry among existing competitors. He pointed out that these five forces have expanded the scope of competition, defined the structure of the industry, and also determined the nature of competitive interaction in an industry. By understanding these competitive forces and their underlying causes, we can discover the source of an industry’s current profitability and can predict and influence the long-term competitive situation and profitability. Understanding the industry structure is also crucial for effective strategic positioning.

 

The intensity analysis of the five major competitive forces shows that the industry structure determines the long-term profit potential of an industry. However, when conducting industry structure analysis, strategists should also avoid a common misunderstanding: mistake some of the significant attributes of the industry as its basic structure. These attributes include industry growth rate, technology, and innovation, government, complementary products, and services.

 

Porter pointed out that understanding the power that determines the competitive status of the industry is the starting point for making a strategy. Every company should know the average profitability of the industry and its long-term changes. The Five Forces model reveals the nature of the industry's profitability. Only after understanding these forces can companies integrate the industry's situation into strategy formulation. The most important thing is, The industry structure can guide managers to effectively take strategic actions. These actions may include: determining the position of the company to better respond to the current competitiveness; predicting and using these power changes; establishing a balance of power and building a Favorable new industry structure. Understanding the industry structure is not only important for managers but also crucial for investors.

 

The Five Forces model can reveal whether an industry is truly attractive, or it can help investors predict positive or negative changes in the industry structure in advance. The Five Forces model can distinguish between short-term changes and structural changes, enabling investors to take advantage of irrational pessimism or optimism in the market. I still remember a story when I interviewed venture capital. After I analyzed the influence of competitors, customers, and suppliers for a company, the interviewer asked me why not analyze substitutes and new entrants. At that time, I deeply realized the power of Porter’s Five Forces.

TESTING

Strategy Must Drive Tactics

“All men can see the tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.” – Sun Tzu, The Art of War

Tactical planning must be adaptive and malleable to realize a strategic plan’s goals. As seen in McKinsey’s Strategy to beat the odds, forecasted growth due to tactical planning is not always achieved; competitors change, markets fluctuate, and unforeseen circumstances throw tactical plans into the dirt. Porter’s five forces are still in play, and tactical plans without agility will garner unfavorable results.

Tactical planning is about confronting the “brutal facts,” as Jim Collin’s Good to Great puts it, and utilize those truths to not only improve but to understand competitor’s potential lines of attack. Professionally, I have seen tactical planning that does not face the facts and is too concrete, ending in a subpar result. For example, one of my previous employer’s strategic goals was to attain operational efficiency to offer customers lower prices. To do this, the company would forecast how many FTEs would be saved if all technology projects were implemented in the coming year. Once the headcount reduction forecast was submitted, managers had to reduce their workforce by that number even if the technology project was not implemented. This company did not consider that if headcount were reduced without new efficiencies, more work would fall upon other employees, causing unpleasantries and more turnover.

Overall, tactical planning that is not agile, does not face the brutal truths, and is too concrete, will end in mediocre results that add no value to strategic goals. Mindfulness of your strategic plan must drive the tactics employed. 

Blog #1: Are You Willing to Walk Away from Your Strategic Plan?

“Don’t cling to a mistake just because you spent a lot of time making it.” — Aubrey De Graf (Seyard 2016)

While the presence of a strategic plan is rarely considered “a mistake”, in this new landscape amidst the COVID-19 pandemic, clinging to a plan that is no longer serving your or your clients is a mistake.  Considering the views offered in the article “The Real Value of Strategic Planning, Kaplan and Beinhocker suggests that “real strategy is made in real time”, and that’s never been more true.  With so many competing variables that affect the timeline of when the world will enter a new normal, organizations need to be honest with where they are now, not where they had hoped to be or had hoped to go.  

Author Trever Cartwright suggests that “every leader will need to step outside of their comfort zones and be willing to walk away from what has been comfortable and known up to this point and take smart steps toward the unknown.” (Cartwright 2020).  He adds that the critical two questions every organization needs to ask themselves now is what activities do they need to stop, and which do they need to start.  In reflecting on a personal example, I received a postcard mailer from a local car dealership, that suggested that “Now [springtime] is the perfect time to buy your new car!”   During a global crisis like this one, applying the same strategy that has worked for you in the past – pushing car sales as winter ends – is at best, seemingly out-of-touch with reality, and at worst, callous and insensitive to the community that you serve.  

Considering the strategic styles outlined in “Your Strategy Needs a New Strategy”, it would be safe to say many organizations are currently working through the exceptional fifth category, the style of “Survival”  (Kaplan 2003).  There will however come an end to this tumultuous time, or at least a time where the world better adjusts itself to the current reality, and leaders need to be thinking ahead to how their strategic plan will also need to be adjusted.  For many of us, this is the first time in our lifetimes where we’ve witnessed this level of destructive power wielded by a force beyond our control.  With newfound respect for the possibility of future global disruptions, most organizations should strongly consider returning to a strategic style other than “Classical”.  With a lack of both predictability and malleability, strategic plans that push more toward the “Adaptive” quadrant may fare better in the future.

Now is a chance for organizations to take a giant step back to revaluate what their vision is for the future of their existence and purpose. It will take more than a solid strategic plan, however. Effective leaders will need to stretch their visions to imaginative limits in considering all of the future scenarios they may face.  They must also be humble enough to acknowledge that being able to change course and redirect their strategies, likely many times, in this new environment, will be a marker of adaptability strength and not a weakness. 

Citations:

Cartwright, Trever. “Five Steps To Consider As You Create Your COVID-19 Recovery Plan.” Forbes, Forbes Magazine, 16 Apr. 2020, www.forbes.com/sites/trevercartwright/2020/04/09/five-steps-to-consider-as-you-create-your-covid-19-recovery-plan/#287c85e01892.

Kaplan, Sarah and Eric D. Beinhocker. “The Real Value of Strategic Planning.” MIT Sloan Management Review, Vol 44, No. 2. Winter 2003, p. 71-76

Martin Reeves, et al. " Your Strategy Needs a Strategy " Harvard Business Review, September 2012, p. 1-9.

Senyard, Daniel. “Don't Cling to a Mistake...” Medium, Medium, 1 Nov. 2016, www.medium.com/@dsenyard/dont-cling-to-a-mistake-34069682ed83

Blog Post #1: Recursive Strategy Collapse: Why Detailed Strategic Planning Fails

Key takeaway: Detailed strategic and business continuity planning cannot account for all scenarios in our quickly changing world. Companies are better suited to adapt succinct guiding principles for uniform decision making combined with maneuver-based tactics.

As we start to see the micro and macro implications of the global 2020 Coronavirus pandemic, which companies will weather the storm and which will collapse? Is it the companies with dozens of pre-prepared presentations adapting their core strategy to various doomsday scenarios (global pandemic, terrorist attack, natural disaster, etc.)? It is befitting of humanity’s hubris and illusion of control to assume that having a prepared response to each scenario will result in corporate stability.

Articles like Your “Strategy Needs a Strategy” (Reeves, Love, and Tillmanns, Harvard Business Review, September 2012) seek to simplify strategic planning under the guise of finding a fool-proof method. In today’s world, any guiding principle that doesn’t fit in a tweet will quickly become obsolete in the face of any number of potential unprecedented global disruptions. These traditional corporate strategies are built on a house of flawed assumption cards about the world we live in, quickly folding in on themselves in a recursive manner when anyone of them changes.

Simpler frameworks like those posed in “Good to Great” (Jim Collins, William Collins, October 2001) based on identifying your hedgehog concept (the thing you do better than anyone else) are most likely to generate uniform decision making aligned to a company’s interests up and down the corporate food chain.

Complex strategic plans often devolve into broken telephone games, with some lines of business communicating clearly through the organizational matrix and other managers hoarding the information. Clear guiding principles, the kind that fit on the electronic bumper sticker that is a tweet, are remembered and can be executed against at all levels of an organization.

If not with extensive strategic plans, how should companies apply their guiding missions? A more flexible approach laid out in “Maneuver Warfare: Can Modern Military Strategy Lead You to Victory?” (Clemons and Santamaria, Harvard Business Review, April 2002) takes tactics published by the US Marine Corps in their manual “Warfighting” (USMC, 1989). It posits that in warfare and capitalism there is an inherent state of disorder, governed by the three principles of friction, fluidity, and uncertainty.

If each of these factors can be evaluated and accounted for, they can be turned into advantages rather than weaknesses as in the example of the Battle of Cannae, where Hannibal of Carthage defeated Roman Generals Paullus and Varo despite being deeply outnumbered.

Whether faced with an emerging technology, new cyber threat, natural disaster, or global pandemic, companies can root their strategy in simple to articulate missions under the framework of the hedgehog concept. Accepting the uncertainty in the environment around you will allow maneuver-based responses, spearheaded by your mission / strategy. 

The inherent disorder of the world around us must be harnessed as part of strategic planning, laying the foundation for how the company operates. The old pedagogy of 10-year strategic plans proposed by Reeves, Love, and Tillmanns for the most stable companies like the oil industry have shown to be only as unsinkable as the Titanic. Shell Oil for example, posted Q1 earnings down 46% year over year (“The oil business may never be the same again, Shell CEO acknowledges” Edwards and Hurst, Fortune, April 2020).

Pair crystal clear strategic direction with using your challenges in your favor, and you are prepared to face whatever disaster opportunity comes next.