Scenarios for all
McKinsey’s Charles Roxburgh offers nicely practical advice on the use and abuse of scenarios. In the process he points out that the latest crisis many firms find themselves in, like previous ones, was foreseeable and even preventable if management had done this work professionally. And remember scenarios are not just useful for the big firms – any competent management team should be asking itself what range of things could happen, both to exploit incipient opportunities and anticipate new challenges.
Green Recovery
Just been alerted to Green Recovery, another debunking of assertions that it is too costly to tackle environmental damage [notably carbon emissions]. This follows a session I saw from John Sterman of MIT and the Sustainability Institute, which reported McKinsey data showing 10 giga-tons per year [!!] of CO2 abatement potential that is financially profitable to undertake right now. John went on to describe the huge economic dividend to be had by tackling carbon emissions - will feature more on this in a future post.
Skills and capabilities
Capabilities clearly enable performance – if your organization can do key tasks, faster, cheaper or better than others, then you will develop stronger resources in a more powerful system than they can. But academic strategy articles on the topic are mostly too abstract to connect with the practical appraisal of skills and capabilities in organizations. So it’s good to see a down-to-earth approach to assessing skills from McKinsey – asking people to evaluate their own needs. But there’s more to a team’s or organization’s capabilities than just the sum of individuals’ skills, so could the same approach work for self-assessment of team capabilities?
If such capabilities consist of Read more
McKinsey ‘business system’
McK gives useful short videos in its ‘enduring ideas’ series. The latest I’ve viewed on the business system is a helpful reminder of the old value-chain concept, though it is disappointingly qualitative, even in the ‘How to conduct a good analysis’ section. In fact, value-chain is a better term for what the video describes. Read more
Successful transformation
Readers will know I’m no fan of the obsession with ‘transformation’ in strategy, but it’s sometimes essential or advanageous. In Corporate Transformation under Pressure, McKinsey report a less than 40% overall success rate, especially when used in an effort to get out of trouble – as they say, “this finding seems to contradict the common wisdom that it is hardest to transform a company when it lacks an acute and apparent need for change“. As I’ve said in previous posts, when you are in trouble is a bad time to reinvent yourself – most often better to focus on getting back to the basic, core business model that works.
Helpfully, the article goes on to offer tactics that, when used together, seem to make transformations more successful, depending on the purpose of the effort.
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More items on strategy in the crisis
Amongst the continuing stream of articles on this, some good ones [I've left out some bad or downright dangerous ones] include: Read more
How good leaders make bad decisions
… and right after the McKinsey survey, HBR has an article by Andrew Campbell, Jo Whitehead (Ashridge) and Sydney Finkelstein (Dartmouth) on neuroscience revelations about how leaders’ judgment gets distorted. It seems we have systematic biases, then land on initial conclusions we are reluctant to change, and the article offers a ‘red flag’ process for guarding against the dangers.
How companies make good decisions
McKinsey asked senior managers in companies that made good and bad decisions about their decision-making processes: who was involved, what drove the decisions, the analysis done, role of politics etc. Good to hear that hard benefits – like profits! – featured in successful decision-making disciplines. Article. More support for evidence-based management I guess.
Other consultants’ warnings on the downturn
I realise I’ve focused on what McKinsey has had to say on the downturn, and especially on the failure to warn of the subprime nonsense, so thought I should check out the other big consulting firms. Not so easy, as they mostly don’t publish their own views quite so firmly or accessibly as happens with the McK Quarterly.
Why am I banging on about this? If those advisors had been urging caution when it was obvious trouble could be building, and their clients had listened and acted, then much of the over-commitment that made the boom-to-bust so serious would never have occurred. What, for example, would have happened had these firms all blown the whistle on the subprime bubble early in 2006? The world might have been a very different and happier place than it now is. So what did the consultants have to say on this and the impending downturn generally?
When is a customer ‘lost’? – Segmenting by activity rate.
Central to the principles of strategy dynamics is knowing how quickly resources are being won and lost. This is easy enough for most – you know when you close capacity, hire or lose staff, or discontinue products – but can be surprisingly tricky with customers. You would imagine that banks or telecoms firms, for example, know exactly when a customer is lost because that’s when they close their account – not so! Read more