Spreadsheets no good for strategy
This blog post from HBS starts well, but ends in the wrong place, saying we shouldn’t try to quantify intangible issues. We do know how to deal quantitatively with such factors. We can handle both tangible qualities that differ between people, such as differing customer sales rates, and also intangible states-of-mind. A bank tracks ‘miserable moments’ their customers experience and knows well how recent history of those problems affects the likelihood of customers leaving. Call center companies know how workload pressures affect staff morale, productivity and turnover, and so on. Applying ‘artistry’ to the issue, as argued in this article, is not the answer. It is right, though, that you can’t do this with spreadsheet analysis – it can’t handle the interdependencies. The basics are explained in summaries from my book on attributes and state-of-mind intangibles. I can also recommend How to Measure Anything by Douglas Hubbard.
More at www.strategydynamics.com and strategy dynamics on LinkedIn.
Why Most CEOs Are Bad at Strategy
A blog post by Roger Martin* makes a good case that CEOs find it hard to simultaneously make a good choice of where to play and how to win. He concludes they need to go beyond these basics and ‘creatively integrate’ these two views. True enough if performance were all about formulating strategy, but it forgets that order-of-magnitude differences in performance more often arise from relentless expert management of strategy, than from unique choices of where+how to play.
He also claims that we do not have the tools to integrate these perspectives – which is not true, of course, because that’s what strategy dynamics does.
* Dean of the Rotman School of Management
Dubai strategy disaster
Strategy is not solely of concern to firms of course, but to public services, voluntary organisations and others [though you would hardly know it to read the strategy textbooks and journals, which largely ignore these vast sections of the modern economy]. The collapse of Dubai is a spectacular case of strategic incompetence, but also throws up an issue of wider importance.
Strategy error at Shell
Sad to see Shell cutting 5000 jobs, making staff re-apply for 15,000 jobs, and aggressively driving down suppliers’ prices in an effort to cut its debt. This just 4 years after desperate efforts to hire 1,000 experienced oil engineers due to past failures to develop enough of these key staff. I guess Shell’s Annual Report will not be declaring staff to be ’our most important asset’, but it’s still shocking to see the massive damage firms and even entire industries can inflict on themselves with this kind of mistake – see an extract on long-run staff dynamics from chapter 6 of Strategic Management Dynamics from Amazon UK, US. It’s worth contrasting this approach to staff with the approach of firms like Infosys.
Balanced Scorecard is not Strategy
Harvard Business Publishing is again pushing its balanced scorecard stuff, but under the misleading strap-line Strategy has never been more important. Don’t get me wrong - BSC is a much better tool for on-going performance management or for strategic initiatives than the crude finance-only metrics that too often dominate, but it’s a very long way short of being a strategic management. A few shortcomings: Read more
More ‘transformation’ hype
Just had to pour some cooling water over another bit of hype on this issue. Harvard Business Publishing just promoted ‘Constant Transformation Is the New Normal‘ by Scott Anthony. See below for my reponse: Read more
Strategic project mgmt worth $1.3bn
For construction contractors like Fluor Corp running major projects well is of strategic importance. So good to hear they saved over $1.3 in less than 3 years Read more
The Growth/Share matrix lives!
Offspring of the BCG matrix [and McKinsey/GE versions] are alive and well it seems – over 60% of top global companies actively use such tools, though not quite as in the 70s. Read more
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.
Don’t wait for recovery: focus and drive forward
When will the business climate improve? – wrong question! I’m not usually a fan of Fortune – too focused on personalities, rather than what actually gets done and works – but great item by Ram Charan explains with some good examples [GE and environment services group Nalco] that strong companies are looking to drive forward, rather than hunkering down and hoping. Yes, they have cut costs and conserved cash, but refocused to position themselves for growth.
One intriguing piece of Nalco’s response was a deep review of their product range, leading to them ‘blowing up’ hundreds of under-performing products. I’ve noted before that over-extension is a common route into trouble – adding too many products, chasing too many new markets and small customers, starting too many initiatives etc just to be seen to be delivering growth. So a question for Nalco might be ‘If you just killed hundreds of poor products, how come you didn’t do that years ago?’
Later in the same issue, Fortune reports on Pfizer’s re-worked drug development process which includes an interesting slogan – ‘Kill early and often’. Focus does seem to keep reappearing as a feature of strategically successful organizations.