Goodbye to strategic planning. Hello to ‘agile’ strategy!

Traditional strategic planning is dying.  In today’s dynamic world fewer and fewer organisations practise the conventional process of ‘forecast ahead, prepare 3-year plan, then get staff to implement’.  This rigid, top-down approach is in complete contrast to the approach used today by, for instance, leading tech companies where, using the context of a visionary framework they have defined, goals and actions are decided and reviewed every few months for staff teams, and strategy emerges from their ongoing innovations and tactical decisions.  In effect, strategy merges with tactics.

This is ‘agile’ strategy.  It echoes the now well-established agile approach to software development and now being used for wider IT, operational and organisational innovation and change projects.  But what exactly does the agile strategy process involve?  How is it   different from traditional strategy?  And is it really right for every organisation?

Agile strategy avoids trying to pre-design and map out the future in detail – like traditional strategy tries to – and instead is very much a continuous, osmotic process that involves trying out different tactics and ideas all the time to serve customers/stakeholders better and ensuring the organisation responds fast and effectively.  In contrast, traditional strategy tends to be a periodic exercise and be more of an analytical and linear process with change mostly happening in ‘fits and starts’.

However, agile strategy still needs to start with the established notions of ‘purpose’ and (medium-term) ‘vision’ – in order to provide a fundamental anchor to guide ongoing decisions and tactics.  A purpose statement is needed to answer such questions as ‘how do we fit into the wider world?’, ‘how fundamentally do we make our customers’ lives better?’, and ‘what space in the market can we make uniquely ours?’  And having a specific aspirational vision/sense of direction for the next few years ahead is important too – ideally with a few definite goals or broad priorities – to inspire and galvanize people.  Without carefully defined purpose and vision statements, agile strategy would result in chaos and totally un-coordinated decision-making!

Once purpose and vision have been defined, the crux of the agile strategy process involves following a regular and frequent cycle of setting very short-term strategic/output goals (typically for 3 or 4 months ahead) for every team in the organisation and then reviewing their implementation 3 or 4 months later, making any adjustments or adding new goals to suit the latest performance results, match people’s latest ideas, or better suit the latest changes in the environment.  In setting everyone’s 90-day goals/outputs, it is important, obviously, that all functions in the organisation are well aligned.

The traditional annual operating plan goes out of the window.  However, there’s still a need for an annual, overall financial budget – to act as a framework for the quarterly performance plans.  From a governance point of view, just having quarterly budgets with no attempt at thinking further ahead at all about future resourcing needs would not be prudent.  However, with agile strategy, the annual budget does not act as the dominant yardstick and focus for senior managers:  the conventional, overriding focus of hitting a set of annual ‘figures’ does not apply.  Instead, the budget becomes more of a guide simply for co-ordinating forward resource thinking.

The other key feature of the agile strategy process is a performance measurement system that matches the quarterly goal-setting/review cycle of the organisation and includes a rounded/holistic set of success measures.  The familiar concept of the ‘balanced scorecard’ is relevant here, but with less stress on sales or financial metrics and more on customer-centred metrics (particularly customer satisfaction e.g. Net Promoter Score), people management metrics (e.g. employee retention, employee satisfaction) and  practices that foster good organisational health (e.g. flexible job roles, good internal communications, a learning culture, wide use of coaching by managers, and performance data shared fully across all staff).

Agile strategy involves a shift in approach in several aspects compared to traditional strategy.  Here’s a summary of eleven key ways:

a. From reliance on long-term forecasting  …… to …… ongoing wide market-scanning + (collective) intelligence/feedback.                                                                                                      b. From ‘wait and react’ to customer changes …… to ……  deep customer understanding and close involvement of customers, allowing proactive creativity.                                           c. From annual analysis/planning exercise ……. to …… a continuous process of experiment and change.                                                                                                                                             d. From developed at the top of the organisation …… to …… full staff involvement:  both top-down / bottom-up.                                                                                                                         e. From innovation occurs irregularly / in pockets ……. to ……. continuous / proactive innovation and across the organisation.                                                                                            f. From short-term performance/results focus  ………  to …….. both long-term + short-term thinking                                                                                                                                                    g. Gap between strategy making and execution ………. to ……… strategy making and execution are intertwined/happen together                                                                                     h. Focus on financial returns/shareholders ………. to ………..   focus on customers/wider stakeholders                                                                                                                                             i. Pursuit of long-term competitive advantage ……… to ……. pursuit of multiple, transient advantages                                                                                                                                               j. Employees and suppliers treated as resources ……… to ……… all treated as partners        k. Slow, linear approach to adopting changes ……….  to ………… fast, flexible, mixed-team approach to development

A matching (but not always fully suitable) part of the overall agile strategy process is to use an agile-type methodology for tackling and progressing individual projects and initiatives involved in or arising from the organisation’s strategy.  In particular, for example, an agile method can be used to help the development of new or improved products, services, or operational processes, or to develop sales/marketing initiatives, or to solve problems or plan changes concerning internal management systems or policies.  There are a few different versions of what is meant by an agile project (e.g. lean development, which focuses on the continual elimination of waste, and kanban, which focuses on reducing lead times and the amount of work in process), but the most common variant goes by the name of ‘scrum‘ which emphasizes the uses of adaptive teamwork to tackle challenges.

The typical, core features of a scrum-type project include appointing a dedicated and cross-functional team (of 3-9) individuals to work together full-time (or most full-time);  setting an overall goal but not having any detailed or fixed start-to-finish work plan;  working towards the goal in incremental steps involving short ‘sprints‘ of work;  daily short meetings of all team members to update each other and discuss ideas/solutions together; prompt testing/trialling of the outputs from each sprint with active input from the customer;  and the team itself deciding what outputs from each sprint should be taken as the starting basis of the next sprint to advance things further.  A series of sprints adds up to an ‘iteration’, at the end of which either a usable new/improved product or service or  process is presented to the intended customer, or a following major milestone is set if the project is part of a very large or complex development/initiative.

The key benefits/advantages of agile strategy – compared to traditional strategy – include:   i) an organisation is able to respond faster to environmental change and achieve more rapid innovation;  ii) avoidance of trying to predict/forecast the future and of the use of lengthy planning documents;  iii) increased staff engagement and motivation and minimal silo-thinking, as agile strategy involves almost everyone in an organisation;  and  iv) more opportunity for staff to use intuition and creativity to contribute to innovation, not just rely on the customer.

Further benefits brought by agile strategy are:  v) the value and productivity of individuals’ work is higher as there is rapid testing and feedback of their outputs;  vi) overall work is simplified and overall risk is reduced on account of the short, rapid bursts of work and the prompt feedback received;  vii) relationships with customers and suppliers are closer and more dynamic, as they are treated as co-creators/partners in the development process; viii) higher customer satisfaction, thanks to the early and regular feedback on delivered outputs;  ix) by the use of self-managing teams, senior management is freed of micro-managing projects and able to focus on higher-value duties (e.g. selecting strategic priorities and coaching staff);  and  x) the use of cross-functional teams broadens organisational experience for staff and builds mutual trust and cohesiveness.

However, an agile approach to strategic projects is not always appropriate.  There are a number of key issues to consider.  Perhaps most importantly, how suited is the organisation’s culture and management style to deal with decentralized decision-making and ‘loose’ innovation and change?   If the culture is hierarchical and not very empowering (e.g. staff are not well trained or coached by managers), a classic strategic planning approach is likely to be more apt.  Equally crucial, how suitably skilled, confident and experienced in acting as a self-managing team will the people working on the project be?  The lower the level of skills, the more supervision will be required and a less agile approach will be necessary.

Other key factors to consider include:  i) How stable and uniform/fixed are the company’s operating conditions or future customer requirements?   The less stable things are and the more opportunity there is to achieve some product/service differentiation in the marketplace, the more an agile approach will be useful;   ii) How easy/feasible is it to achieve prompt and specific feedback from customers after each sprint?  If it’s not easy, an agile approach is unlikely to work well.   iii) How large or complex is the overall project requirement?   When there are a small number of complex, major projects underway, the discipline of a plan-driven approach is usually a sensible choice.   iv) How risky or time-critical is the overall project?  If a very high level of assurance is needed, a traditional plan-based approach is likely to be best.  v) How many people are needed to complete the project?   A team of 10 can be agile, but a team of a few hundred cannot.

So, overall, agile strategy and traditional strategy both have circumstances when they are more suitable than the other.  But the distinctions between the two approaches are likely to increasingly blur, as the new digital landscape and fast-changing competitive conditions increasingly characterise all markets and sectors everywhere.  For the next few years, though, except for markets that are extremely fast-moving like high tech, I think agile is likely to be used more for handling individual strategic projects rather than totally transforming companies’ overall strategy process:  truly agile strategy requires a very supportive and empowering organisational culture which many senior managers will simply find far too daunting and difficult!   In the longer-term, though, – say within 5 years – agile strategy is likely to have transformed the vast majority of organisations’ total approach to strategic development.  The degree of adjustment needed will be huge and quite painful for many organisations, but the unstoppable pace of change around us will demand it!

As ever, if I can assist your organisation with any of the issues arising in this article, do get in touch.

Mike Owen.       E:   mpo@owenmorrispartnershp.com        T: 01886 881092

Copyright of Owen Morris Partnership

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Keeping a senior team on course: what can cause a poorly-working team and how a simple, facilitated approach can help

As the Captain of your ship, you know that your senior crew need to work well together to be sure of getting to your target destination.  Through both difficult seas or calm seas, if your crew aren’t pulling together, looking out for one another, or responding to challenges as one, then you won’t reach your destination – on time or at all.

Few teams function as well as they could.  But the stakes get higher, of course, with senior leadership teams:  dysfunctional ones can slow down, derail or even bring down a whole organisation.  The danger signs are all too obvious:  individuals not speaking to each other, off-the-cuff jibes or insults, lack of agreement on crucial decisions, weak co-ordination of cross-functional projects, a tense atmosphere amongst the rest of the staff ….. and so on.

A key issue, of course, is that senior teams are commonly made up of a mix of strong, confident personalities.  Many executives have probably tried one or two ‘personality profiling’ tools in their career and know that they are a Myers Briggs ‘ENTJ’ or a Belbin ‘resource investigator’ or other such category description!  These profiles are certainly useful for helping team members to understand each other better but too often little action is taken in response.  Also, of course, for identifying ways to boost a team’s effectiveness, a wider set of issues needs to be considered beyond just team members’ personalities.

A simple approach that we use as consultants/facilitators centres not on looking at profiles but encouraging team members to open-up and talk freely about overall team issues, firstly in a 1:1 confidential discussion and then in a group workshop that we facilitate.  The aim, crucially, is that team members are helped to self-reflect, surface their feelings, raise questions of each other, and build up trust and willingness to resolve team issues together as a group.  The team itself can normally readily recognise and propose what needs to be done to boost team effectiveness:  there typically just needs to be a gentle dose of skilled, external coaching support!

So, what are some of the main causes of a poorly-working senior team?   Here’s a brief list of some of the main types of issue we often come across:

-The role, focus or powers of the team are not clear or fully understood.  Many senior teams, for example, don’t keep enough of a focus on strategic or cross-functional topics and get bogged down on issues that should be delegated elsewhere.

-The team is too small or too large or doesn’t have the right individuals on it in terms of a balance of skills, experience, ways of thinking or personalities.

-There is a basic lack of clarity or agreement in the team about the organisation’s strategic direction.  This could concern the company’s purpose, vision, values, future goals, specific strategies, or order of strategic priorities, for example.

-Responsibilities between team members have not been effectively organised or aligned.

-Not enough attention has been paid to defining and agreeing particular values, standards and behaviours (‘norms’) and practices for the team to follow.

-The ‘dynamics’ i.e. relationships between team members are poor.  This is a common problem and includes such issues as how individuals feel towards each other and how they interact together e.g: respect, trust, confidence, openness, willingness to disagree.

-The team does not have the right support or back-up to do its job  e.g: poor quality performance reports, poorly prepared business cases received for new proposals, lack of adequate specialist or advisory support, or poor action follow-up of the team’s decisions.

-The team does not have an effective leader – for instance, he/she is poor at inspiring, showing empathy, or acting as a role model.

-The team does not focus its time on the right issues or work efficiently when it meets.

-The system of incentives used for team members is not effectively aligned to encourage a team focus or reward collective performance.

-Team members don’t spend enough time reviewing/reflecting how well they’re working together and discussing ways of how they can improve.

Such a list can be seen like a ‘menu’ of issues to think about when considering how well a team is working.  The two most basic elements for a strong team are having the right people in the right roles and ensuring there is a strong and clear purpose and set of goals to work to.  Many CEOs see to this ‘structuring’ part of their job quite well but then focus the rest of their time managing operational issues and carrying out external duties like meeting clients.  However, they neglect at their peril the crucial ‘soft‘ issues also involved in team leadership:  in particular, establishing strong ‘norms’ for team members to follow, building trust and harmony between team members, and supporting/coaching individual team members.

Trust and openness in a team are particularly vital to boosting senior-level relationships.  Without it you have protectionism and lip service.  All the personality/behavioural profiles in the world won’t, in themselves, lead to this trust and openness.

If you aren’t familiar with these profiles, the most commonly used ones include:

Belbin:  Focuses on defining a range of particular ‘roles’ that people can adopt in a team e.g: plants, shapers, completer-finishers.   Originally introduced in the early 1980s.              –Myers-Briggs:  An in-depth personality profile which focuses on how we perceive the world and respond to it.  Done properly it involves a questionnaire and interpretive interview, although more recently an online version has been introduced.                               –DISC:  This looks at individual behaviour traits in terms of four categories – Dominance, Influence, Steadiness, and Conscientiousness – and also team dynamics.  The latest version of the model is one of the new kids on the block.                                                                      –NBI Brain Profile:  Also known as Whole Brain Thinking.  Gives a profile of how we and others think, and can be used in a variety of scenarios to improve relationships.

Such profiles themselves are not the problem.  It is rather that very often the findings are noted with interest – even fascination sometimes – by individual team members but then too often no changes are actually implemented at the team level and the questionnaires simply gather dust on a shelf!   In our experience, behavioural profiles are rarely embraced as a way of judging the optimum mix of roles and personalities required to make the team effective and then actually going on to apply that assessment in terms of assembling or adjusting the overall team to match.

And there’s another hidden consequence of these profiles:  they can sometimes constrain an individual’s thinking and performance.  They pigeon-hole.  An individual may believe that being a Belbin ‘resource investigator’ is all they are capable of.  Or they may believe they can only ever be a ‘Left Brain’.  And, worse than that, these profiles can become part of a person’s identity such that it constrains them from trying different ways of working:  “I’ll be no good at that because I’m a completer-finisher …..”

And none of that helps build trust.  What’s needed, instead, is a pragmatic approach that involves 1:1 face-to-face discussion and then coming together of the whole team to jointly discuss issues.  Trust is created by team members when they know and are true to themselves, their actions match their words, they are sincere about their reactions, they are open to feedback, and they accept their colleagues as (valued) individuals.

Our approach aims to develop this trust.  Some might say we’ve gone back to basics.  Rather than eliciting information about team members through the use of profiling, we meet each team member individually, on their territory, for a confidential 1:1 discussion.  We build rapport and develop a dialogue.  We create trust.  We establish what’s important to them, how they work, what they find challenging, what they think of their colleagues, what they’d like to say to their colleagues but don’t feel able to, what their understanding of the common purpose is.

And we obtain their permission to share this information at a follow-up workshop for the whole team, with the intention of creating openness, honesty, dialogue and trust within the team.  In this group workshop, the aim is to establish a fresh, reinvigorated sense of shared purpose and unity for the whole team.  It can often work well to do this as part of a wider strategic away-day or business planning/problem-solving programme – where the team needs to engage and discuss things together and agree a way forward.  The facilitator will be able to apply a careful range of tools and collaborative techniques to support the process.  Tools like De Bono’s ‘Six Thinking Hats’ – which you may know – to help ensure all the issues are put on the table early on:  getting all the barnacles off the boat first will reduce resistance, create speed and make the ship easier to steer!

The most successful team-building events that we’ve participated in have been ones where trust is created in the room and barriers come down.  Protectionist behaviour is replaced by supportive behaviour.  This creates a platform where the most common team-working issues highlighted above can be discussed openly, and then a shared vision can be agreed and embedded.  The environment is one where individuals let go of their own agenda because they understand that their success comes from the whole rather than the individual.  This leads to more effective performance and greater success.

To return finally to our maritime metaphor – when the wind changes direction and the ship has to respond carefully, having a crew that hoists the main sail together is likely to determine whether you harness the wind and speed ahead, or capsize!

If you are interested in strengthening trust and enhancing performance in your senior team, we’d love to hear from you.  Contact us for a complimentary ‘discovery session’ and we’ll talk to you about how the power of 1:1 and group facilitation could make a powerful contribution to putting some fresh wind into your organisation’s sails!

Written by Mike Owen, CEO at Owen Morris Partnership, together with my colleague Meriel Swain, executive coach at Sweet Success Coaching.

Contact for Owen Morris Partnership:

Tel:  01886 881092    Email Mike at:  mpo@owenmorrispartnership.com

 

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Leading an organisation with Purpose: is this the new route to success?

Purpose seems to be the new mantra for organisational success.  This urges that, whether you are a business, non-profit or public-sector body, you should fundamentally think of your organisation as existing to help people live better lives or improve society at large – rather than focusing on the narrow, internal interests of your organisation.  For commercial organisations, that means putting purpose before and beyond profit.  But what’s the evidence for this argument?  And how does the concept of purpose link to such issues as strategy, brand, leadership, and organisational culture?

Purpose seeks to go to the heart of what an organisation is about:  it addresses the fundamental question of Why an organisation exists …. what it brings to this world.   Purpose seeks to define a long-term, societally-based cause or aspiration to relate to and serve, rather than just serve a profit goal or other internal interest of an organisation.  The idea is to have an appeal across many stakeholders, not just one stakeholder group.  Of course, organisations can still have a range of motives like profit and customer satisfaction, but they are supplementary to the core primary driver of purpose.

What does a statement of purpose look like?   As the concept is still evolving, there’s not yet a wide field to point to and the traditional ‘mission’ and/or ‘vision’ statement still mostly prevail (for example, Oxfam: “a just world without poverty”).  But a few examples of some leading companies’ declared ‘purpose statements’ are:  Google:  “To organise the world’s information and make it universally accessible and useful”;  Telecom O2: “To connect customers with the people and things they want”;  Procter & Gamble:  “To touch and improve more consumers’ lives … everyday”;  Diageo (global drinks firm):  “To celebrate life, everyday, everywhere”.

These are helpful but, sadly, I think they are still more like slogans:  something as important as a purpose needs a fuller statement to be fully understood:  use a summary slogan, yes, but back it up with at least half a dozen sentences to explain it.  Point to one or two driving beliefs you have about how people’s lives and/or society can be improved and, secondly, what role or product/service you can offer to help bring about that improvement.  Companies can perhaps learn something in this regard from charities.

Purpose is not a wholly new idea, of course:  many charity and community-based organisations have existed since Victorian days and earlier that put social need at their core.  But what is new – in the last 15 years or so – is the wider belief, particularly amongst younger people, that businesses should also be more transparent, accountable and socially-focused.  This attitude has been driven a lot, of course, by increased popular criticism of Western economies’ failure to produce more equality of wealth and the many bank and corporate scandals (e.g. PPI mis-selling) over recent years.  But, interestingly, more businesses themselves have taken to putting social purpose at the heart of what they do (not just random ‘corporate social responsibility’ acts to look good) as they have found doing so actually helps their own performance.

So, what are the benefits of being ‘purpose-driven’?  Supporters claim several advantages:

Firstly, purpose engages employees extremely well:  people who work for organisations have an innate desire to contribute to something bigger, to find meaning in their lives and in their work, and working to help other people is particularly motivating.  Secondly, purpose gives an organisation’s external stakeholders – particularly customers, suppliers and partner organisations – a connection to the organisation and encourages support and collaboration.  Thirdly, when focused on a compelling bigger picture, purpose encourages innovation, agility and change inside organisations, as employees and others are less likely to focus on short-term considerations and defend the status-quo.

Two other advantages:  Purpose goes a long way to helping businesses build and improve trust perceived by their stakeholders, including regulators.  Also, in strategy terms, purpose encourages an organisation to think ‘big’, outwardly and with a more rounded mind-set, rather than just thinking about beating their direct competitors.

So, what is the evidence to justify the new talk about purpose?  To begin with, there’s some strong scientific backing.  Secondly, there have been some noteable academic studies on the subject, together with some empirical research.

Firstly, the science (which I quite like!).  Modern understanding of the brain reveals that it has two key areas:  the neocortex area which is responsible for our rational and analytical thought and language, and the limbic brain which is responsible for all our emotions/feelings and all our decision-making and behaviour.  If leaders lead by relying just on rational argument or giving facts and data, they are not appealing to the second area of the brain.  However, if leaders focus on presenting a Why for doing things (as opposed to just saying what is to be done or how) – as Purpose does – they appeal to humans’ emotional side and their leadership efforts will be more effective.  This subject was well set out by author Simon Sinek in his classic book ‘Start with why’.

Related findings from recent neuroscience studies indicate that providing people with a clear and attractive sense of direction and meaning for what they are doing – especially if it involves doing things for others – changes the chemistry inside people’s brains by releasing ‘positive’ chemicals like oxytocin.  This is the effect that Purpose has on people – especially when combined with social interaction between people.  The positive feelings produced can lead to an impressive mix of psychological and behavioural effects, including less anxiety, increased motivation, more willingness to get involved, better able to learn and concentrate, more creativity, and higher productivity.

Two noteable individuals who have written about purpose are former Chief Marketing Officer at Procter & Gamble, Jim Stengel, and Harvard Professor Michael Porter.  Stengel, in his 2011 book ‘Grow – How ideals power growth’, reviewed a 10-year study he carried out of more than 50,000 companies around the world and he concluded that companies that had based what they did on closely connecting with fundamental human emotions, values and greater purposes ended up out-performing their peers by a huge margin.  Porter’s contribution – also in 2011 – was his famous article that defined the core concept of ‘shared value’ and how it can work.  More recently, consultant authors include Kevin Murray, whose very recent book ‘People with Purpose’  (2017)  examined the subject well.

But the amount of actual empirical data proving the worth of purpose in terms of business performance is rather limited to-date, it seems.  The CIPD (Chartered Institute of Personnel & Development) did a survey back in 2010 of 2,000 employees entitled ‘Shared Purpose, The Golden Thread’:  it found that workplaces that had a sense of shared purpose rather than just a profit-based purpose did have better organisational performance overall – on both hard (e.g. profit) and soft measures (e.g. employee engagement).  Another survey was carried out by the EY Beacon Institute (with the Said Business School) a few years ago – The state of the debate on purpose in business:  that was more of a qualitative review of leaders’ attitudes to purpose and what benefits and challenges they saw in applying the concept, but the overall finding was that more and more CEOs are definitely taking up the purpose concept.

The CIPD research stressed that, to be most effective, the key issue is to make sure an organisation’s purpose is strongly aligned with its values, vision and strategic goals.  The four make up what could be termed the ‘leadership compass’ for an organisation and, actually, this alignment was found in the research to be more important than the specific purpose chosen.  Ideally, the aim is that everyone in an organisation should understand and be committed to what their organisation is about and they see what they do day-to-day (in their job) connects with that bigger picture.  That’s what shared purpose means.

Values, as all leaders know, are the driving beliefs, attitudes or principles that guide how an organisation should be run.  Common values are words like integrity, teamwork, customer-focus, respect, innovative and professional.  The problem, of course, is that often organisations don’t give much thought to their choice of values and leave them as a generic set of rather bland words that could almost apply to any organisation and without any supportive explanation of each value with examples of specific behaviours expected.

Vision can mean different things to different organisations, unfortunately.  Generally, though it means a picture of how an organisation would like to see things looking – for itself or change in the external world – at some point in the medium-term future – usually 3 or 5 years ahead.  Vision statements can sometimes be confused with mission (role) statements and I certainly don’t think an organisation needs both as well as a new ‘purpose’ statement!   So, I would advise combining the ‘traditional’ mission statement into a fuller Purpose statement (to describe the long-term, socially-based cause the organisation is concerned with + what sort of role/contribution it is making to help address that cause ) and have alongside that simply a Vision statement (to identify a more precise desired state of progress/development in the medium-term).  For both statements, summary statements are helpful, but they should be backed-up with fuller explanations.

Strategic goals –  These are the set of specific high-level, priority areas of action that an organisation will adopt over the next few years to achieve its defined Vision.  They will typically include a mix of some specific functional priorities (e.g. build up a better balance sheet and cost base) and a few general (enterprise-wide) themes e.g. increase productivity, become more customer-centred).  Together, they define the essence of the organisation’s overall strategy for the coming few years.

What else is important to get right to support a purpose-based organisation?  The issues of culture, brand, leadership style, employee management, customer service, innovation and performance are worth highlighting briefly:

Culture, of course, is very close and actually embraces values, but it also includes ‘the look, feel and how we do things around here’ in an organisation.  So, it covers areas like the physical environment in which employees work, technology and systems used, and working procedures.  All these areas must be aligned to support the organisation’s defined purpose.  For example, Transport for London (TfL) has over the last few years removed staff from behind glass screens at many stations to enable them to be more visible and available to help customers better:  this supports their aim to be more customer-focused.

An organisation’s branding must be right to match an organisation’s purpose.  This includes brand identify and communication style/tone but also, significantly, the particular messages and promises highlighted and promoted with the brand.

Leadership style and employee/HR management must, of course, support organisational purpose and values.  Suitable practices, policies and processes need to be defined and followed by all managers.  For example, if an organisation’s purpose centres around providing s high level of tailored advice and service to customers, an ’empowering’ leadership style is likely to be needed, supported by HR policies that include lots of training.  For all organisations, policies that ensure strong communication with and close monitoring of employees’ views and levels of motivation are vital.

Customer engagement – as with engagement with all stakeholders – is a key area to get right.  Providing a quality, reliable product/service is a basic, but the greater issue is to really understand customers’ needs, ensure strong communication with them, and increasingly, to provide a memorable service experience for them.  Offering 24/7 service across different channels is also increasingly expected.

Innovation needs to be driven by organisational purpose to focus on the right product, service and operational areas to improve and develop.  Successful, sustained delivery of purpose also needs matching innovation.

Finally, performance reporting.  In this area, traditional reporting focused just on a narrow set of targets/measures is inadequate.  What’s needed is a wider, more integrated reporting system that tracks not just progress towards your key ‘hard’ goals (e.g. revenue or number of clients) but also how you are managing the ‘softer’/intangible issues that influence purpose – including, notably, levels of engagement among employees, satisfaction amongst your customers, relationships with key suppliers/partners, your brand/company image and reputation, and your innovation performance.

Overall, my take on the above is that the move to purpose-driven leadership is here to stay and more and more organisations will embrace it.   In the short-term, I think the impetus will come mostly from the moral, normative argument and how citizens everywhere will increasingly demand businesses to be more socially-minded – and to demonstrate how they are so.  I think the empirical evidence base in terms of proven better business performance will take more time to build up, but in the meantime I hope the growing evidence from neuroscience will be noted more widely.  Anyway, for the foreseeable future, there will be enough of a challenge inside organisations in terms of learning how to integrate effectively all the different issues involved in purpose-led leadership.  Not easy!

As ever, if I can assist with any of the above issues, do get in touch!

Written by Mike Owen, CEO at Owen Morris Partnership.

Contact Mike at:   mpo@owenmorrispartnership.com   OR   Tel:   01886 881092

Copyright of Owen Morris Partnership

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How to avoid the problem of ‘group-think’ in your boardroom. But also how to deal with ‘hazy-think’!

Most leaders today are aware of the problem of group-think:  when the pressure for group consensus and cohesion overrides individuals’ readiness to speak up, critique a position or express a different opinion.  When it occurs in the boardroom it can be a major liability, effectively driving out good decision-making and problem-solving.  It can make group members blind to risks, bad ideas and flawed decisions.  In my years as a director and facilitator, I have seen it across every type of organisation and sector I’ve worked in.

But before I suggest a range of ways for limiting the effects of group-think, do you recognise the opposite form of group bias?  It doesn’t seem to be written about so much or even have a recognised label:  I call it ‘hazy-think’.  It’s when a group has no defined sense of direction or there is a muddled, incoherent position on an issue with a significant lack of harmony amongst group members.  The obvious result for senior teams is that their leadership is seen as weak, ineffectual, and often fractious.  In the UK’s political sphere, just think of the state today of PM Theresa May’s leadership on Brexit and the clear disharmony amongst her leading ministers!

In organisations, at board/senior level, the problem of hazy-think applies often with regard to what are the organisation’s key elements of strategic direction:  purpose, vision, goals, strategy, operating model and values.  Such things may well be written down in a carefully-drafted document approved by the board, but typically if you were to ask in any organisation each member of the top-team to spell out what exactly they understood such elements to be, the chances are there would be some worrying inconsistency or misalignment across the views expressed.  It can cause real confusion amongst executive managers in terms of how they should deal with some operating decisions, as they try to read the different signals from board members.

An obvious thought for how leaders can avoid either group-think or hazy-think is to get all members of their team or group altogether and thrash/iron out collectively the issues at hand and define actual consensus in clear detail – backed up ideally by an inspiring leadership style from the leader him/herself and with a readiness, if needed, to invoke sanctions against any team member who ‘steps out of line’ too much.

Of course, leadership get-togethers like this are often best supported by a neutral facilitator:  I do a lot of such work.  But dealing with the problems of groups really needs a much wider range of measures.  So, here are some particular measures I suggest to try and limit the bad effects of group-think, plus a few more actions specifically to deal with its opposite form.

a) The best starting point is to know how to recognise some of the chief signs of group-think, as you can then proceed to plan ways to mitigate its effects.  Firstly, look at the composition of the group itself:  if the background of group members is very similar or there has been no change in membership for a long period, those are danger signs.  So are the following signs in terms of how the group behaves:  a very dominant or over-persuasive group leader;  group discussion is short, rushed or narrow in terms of alternatives considered or how issues are assessed;  some team members avoid speaking at all;  some group members criticise or rebuke a colleague for giving  a minority view;  team members show little concern for contrary facts or views from people outside the group; and the group becomes complacent in thinking any decision it takes must be correct.

b) Value and increase diversity.  The more diverse your board/senior team is in terms of its composition, the stronger force you will have against group-think, because diversity sharpens all team members’ thinking as well as producing more varied perspectives.  Diversity should, of course, not just be in terms of socio-demographics like gender, age, occupational background and education level but, ideally, wider variables like cultural background, thinking style, ideas and social attitudes.  Boards with a mix of executive and non-executive directors should help to boost diversity – but only if the non-execs are recruited from a wider pool than where the executive directors themselves come from!

c)  Change and vary dedicated roles on the leadership group.  To help vary and widen board members’ thinking, ensure every member has a particular aspect / area of the organisation to focus on or champion (e.g. audit committee or champion for innovation) alongside their general role as a director.  However, try to avoid group members retaining any key, specific/allocated roles (e.g. board chair, treasurer, committee chair) for excessively long periods because this can lead to entrenched positions and views and a lack of fresh thinking in those roles.  Use fixed term limits for the chair and other senior roles.  Rotate certain roles periodically between different group members to widen individuals’ perspectives and experience.  Don’t allow the chair to pick his/her own vice-chair and be sure to have board members vote in secret, where needed, for key roles (not simply by raising hands in an open meeting, as I have seen often!).  Ensure also new non-execs receive comprehensive induction training to enable them to contribute well in their role.

d) Inform and support board discussions well with hard, objective data.  This is an obvious but vital step to reducing group-think.  Of course, all decisions involve people using some degree of subjectivity/judgement in the end and using data and analysis brings its own risks of bias like ‘confirmation bias’ (interpreting data in a way that does not upset existing beliefs) and ‘framing bias’ (presenting a string of data in a slanted or false way to create a desired narrative).  However, do what you can to bring in as much factual data as possible to the table to guide key decisions:  doing so will often disarm individuals who have unfounded, extreme or obviously biased positions.

e) Ensure board members are widely informed & exposed to diverse/external views.     To help stimulate wider thinking, management should provide directors with regular briefings and updates about what is happening inside the organisation (e.g. financials, operations, customer research, new product details) and outside (e.g. market trends, competitor news, new technologies).  External experts/specialists should be invited to present on key topics at board meetings to help contribute to discussions or reviews of key strategic issues.  Directors should meet often with customers and other stakeholders, backing up periodic formal survey research to track stakeholders’ views.  Also, look at establishing one or two ‘advisory’ boards/panels – for example, of clients or suppliers – to boost external input and provide for dedicated/extended consultation on issues.

f) Help board members to get to know each other and build team relations.  As well as formal board meetings, be sure to provide regular opportunities for members to socialise together and have time to get to know each other well at an individual level.  This is vital to help members develop mutual trust, confidence and respect – which in turn will encourage them to speak up and share different ideas and views in board meetings.

g) Define and promote an open ‘team’ ethos/culture for the board.   Like for any team, it’s a good idea if board members agree and follow a defined ‘code’ of expected behaviour and practice to guide how they will conduct their meetings and ongoing working relations.  This code should stress values like respect for openness, the right to hold different views, regard for new ideas/innovation, as well as guiding how members are to handle differences in opinion, make decisions and resolve conflict when it occurs.

h) Ensure there is a defined process and set of criteria for guiding decision-making.  To help avoid group-think, it is vital to have in place an objective, well-defined process for how proposals are to be made, how issues and alternatives are to be evaluated, and how decisions/choices are to be made by the board.  For example, it should be defined what minimum background data and risk factors need to be included in proposals and what sort of financial criteria should be applied to assess new investment proposals.  Such measures will go a long way to reduce subjectivity and bias in group decision-making.

i) Make use of suitable group-thinking/decision support techniques – to help open-up and structure your team’s discussions and their assessment of ideas/options.  Examples of common tools include brainstorming, force-field analysis. six thinking hats, fishbone diagrams, designating one or two individuals to play ‘devil’s advocate’ and the Delphi technique.  With any group discussion, though, from my facilitation experience, I would always urge group members – if time allows – first to work alone to think about the issue at hand and then come together for a group discussion:  group-thinking actually tends to come up with fewer ideas than individuals working alone, but a group is the best place for then evaluating ideas and converging on an agreed position.

j) Ensure your chair facilitates discussions in a neutral and fair way.  This critically includes defining the problem to be discussed at the start in a way that objectively addresses the core issue and avoids any implied type of solution;  the chair avoiding giving his/her own opinion on an issue at the start of a discussion or railroading or skewing the debate in a particular way;  preventing over-confident individuals from having too much ‘air-time’;  and reading people’s non-verbal behaviour during discussions to know when to prompt particular individuals to speak up.  A good chair will also hold over a group discussion if he/she can see that not enough ideas or alternatives have been raised or where further data or perspectives are needed to test or confirm positions taken in the meeting.  Of course, for discussions that can be expected to be contentious or complex or where the chair lacks facilitation skills or is known to have a strong opinion on the issue at hand, it’s best to ask another board member to act as chair – or use an external facilitator.

k) Promote general bias-consciousness amongst board members.   A healthy and effective board will have all members aware of the dangers of biased thinking and biased group decision-making and all will be on the proactive look-out for possible signs during their discussions, so the group can try and limit any serious bias taking effect.  Of course, this is a bit idealistic – one can’t prevent politics completely on boards – but it is worth taking action like providing some training on cognitive biases; the chair (with vice chair and/or company secretary) going through meeting agendas in advance to think of any particular biases that might arise for items;  and including ‘bias-free’ behaviour in individual directors’ role descriptions and performance reviews.  Of course, where non-exec directors are appointed to represent a particular shareholder or stakeholder constituency, expecting them to be fully bias-free is unrealistic:  in this case the company needs to rely more on having strong, objective processes and criteria for governing board decision-making.

And finally, how to deal with that notion of ‘hazy-think’ I mentioned – where your top team has no clear or agreed position on an issue or overall direction.  Of course, again, the most obvious answer is to get all group members concerned into the same room and thrash out  a consensus via a rigorous, well-facilitated discussion (or a number of discussions).  And, if necessary the chair must assert his/her position and declare what will be the final position.  But here are a few quick, specific suggestions to go with that basic approach:

-Where there is a wide mix of views across group members, it’s essential that everyone is given a full and equal opportunity to express their views and that extra time be afforded for the fullest, open discussion.  If necessary, divide up the topic or problem into separate sub-issues and hold a dedicated meeting for each of those topics.  For big/complex topics, it can also be a good idea to separate out the stage of thinking of ideas/alternatives from the stage of evaluating/making a choice and planning implementation.

-Don’t worry about not achieving 100% consensus i.e. everyone agrees on everything.  Life is not like that!  Most group members can live with a group decision they may disagree with partly (or even largely) as long as they feel they have been given a fair chance to input their view and make comment on others’ views.

-As referred to above, make strong use of hard data and evidence to inform your discussions, together with reference to views from relevant outsiders.  Neutral, factual information can go a long way to guiding and aligning group members’ final views.

-Ensure your board has a well-considered, balanced/varied topic agenda plan for future board meetings – what company secretaries call a ‘forward’ work-plan – so board members know there will be definite, upcoming slots when particular issues will be discussed.  In this way, directors will be less frustrated and contentious because they know they will have dedicated ‘air-time’ in future to give their opinions on topics they are keenest on.

-Ensure your board takes time at regular intervals to look back and assess the soundness of major, past decisions it took.  Again, this will help avoid frustration building up amongst individual directors as they can see that the organisation won’t be ‘locked-in’ forever to previous positions.

-Your board chair should ideally have a leadership style that is both inspiring and democratic – meaning he/she is concerned that all team members are listened to but equally he/she has the force of both vision and personality to influence the whole group in the most appropriate direction and limit disharmony.

-Check your company’s senior executive incentives and reward policies are working appropriately to foster co-operative team-working, rather than excessively emphasizing individual director performance.

Altogether, if not dealt with proactively, group-think and what I call ‘hazy-link’ can be serious impediments to sound decision-making on any board.  To deal with the two forms of group bias, it’s not adequate simply to make board members aware of such biases and expect them to adapt their behaviour because – as with cognitive biases generally and as I have described in other blog posts here – individuals are so largely unconscious of what drives much of their thinking and behaviour.  Rather, organisations need to design-in and require the use by executives of a range of objective decision-making processes and deliberate organisational policies that help mitigate for group bias.  I hope the above, specific suggestions are helpful in this regard.

If I can help your board or top-team with a review or improvement of how it deals with group-think and other forms of decision-making bias, do get in touch.

Mike Owen, CEO & Principal Consultant.    Owen Morris Strategic Partnership.

T:  01886 881092                E:  mpo@owenmorrispartnership.com

Copyright of Owen Morris Partnership, UK, August  2017

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Getting strategic change right: how to win support, re-organise well and be a great transformational leader!

Success today requires organisations to be strategically-flexible and effective at change.  Successful change often requires re-organisation, sometimes major transformation, and always sensitive management of people.  On these issues, three recent publications in the leadership field caught my eye.

The first is a recently published book: ‘Stragility:  Excelling at Strategic Changes’  by academics/consultants Professor Ellen Auster and Lisa Hillenbrand.  Although it lacks a full or original model on the subject, the book has attracted attention – not least, I suspect, because of its clever, one-word title – and it does contain some wise nuggets.  Its central argument is that too many leaders:  fail to update their strategies regularly enough in response to external change;  they don’t manage strategy and change in an integrated way;  they don’t manage change enough as a people-centred process;  and they tend to see change as top-management pushing action ‘down’ the organisation.

The authors urge leaders to develop four “critical” skills.  Firstly, rather than see business strategy as fixed and set for years at a time, leaders should instead follow a continual ‘sense and shift’ approach that focuses on closely monitoring what’s happening in the external world and then update/refine their organisation’s strategy in response.  Not exactly a novel view on strategy, but a welcome reminder.

Secondly, leaders should face up to, rather than ignore, the politics that inevitably exist in any change programme by building support proactively across stakeholder groups.  The authors suggest a five step process:  i) map the ‘political’ landscape;  ii) identify the key ‘influencers’ within each stakeholder group;  iii) assess influencers’ receptiveness to the planned change;  iv) mobilise influential ‘sponsors’ and ‘promoters’;  and v) engage influential ‘positive’ and ‘negative’ sceptics.  This is the best and most original part of the book (but a better explanation of these ideas was given in a previous article by Auster a few years ago – see my blog post of August 2013 here on Stratminder reviewing that article).

The third skill that leaders should develop is ‘inspire and engage’ rather than the more usual ‘tell and sell’ approach to change.  This means taking time at the start of a change project to communicate with people who are going to be affected by the change and, in particular, explaining ‘why‘ the change is needed and exciting people about a future vision based on appealing to their emotions, not just presenting facts.  It also means leaders helping people to understand, asking for their ideas and input (to develop a feeling of ownership of the change) and working through their concerns.  Where change requires a move from a current state which is settled but not stable or viable long-term, leaders need to persuade people by presenting fresh facts about the current state to show how continuing with the status quo is not acceptable/desirable.

The final skill is creating ‘change fitness’ – helping people to cope with the almost continual level of change seen in organisations nowadays by using efficient project management practices.   Tactics the authors prescribe include:  reduce the total number of change projects happening at any one time by bundling related projects together;  prioritising projects well;  and using limited-life task-forces rather than open-ended projects.  Other tactics suggested include:  make extensive use of pilots and prototypes before rolling out initiatives; ensure projects have contingency back-up plans;  ensure project plans have some early quick-wins and have frequent milestones;  and take time to look back at completed projects and learn what went well or not so well.  All good stuff, even if not new thinking.

The next, recent publication I liked on change dealt with the subject of re-organisations:  it was entitled ‘Restructure or Reconfigure?’ by strategy professors Stephanie Girod and Samina Karim in the March/April issue of HBR.  Based on research and experience looking at re-organisations over the last couple of decades, the authors propose some very useful and clear guidance on how to re-organise well.

Their starting point, though, is to distinguish between two different types of re-organisation (or ‘re-org’).  A ‘re-structuring’ involves changing the core structure around which resources and activities are grouped and co-ordinated:  companies commonly organise around function, product line, customer segment, technology platform, distribution channel, geography or perhaps a matrix combination of these.   In contrast, a ‘re-configuration’ involves adding, splitting, transferring, combining or dissolving organisational or business units without modifying an organisation’s core structure.

The goals for both types of re-org are often basically the same:  to improve operating performance, customer satisfaction or innovation.  Furthermore, the authors urge that companies need to use both types, rather than choose one or the other.  But the key is to use each at the right time, depending on the specific circumstances facing the company.

More specifically, if a company is operating in a fast-moving, quite open or turbulent marketplace, it’s best to go for regular re-configurations – involving reasonably quick, easy-to-implement, small-scale changes which can put the organisation in a better position to seize ad-hoc opportunities:  a re-structuring in this situation would be too slow and cumbersome.

However, if your market is facing a big disruption and a big shift in strategy is called for, piecemeal re-configurations are not sufficient and re-structuring should be used.  If your industry is generally quite stable and predictable, re-structuring is also more appropriate.  But don’t use restructurings too often, though, as they can cause a lot of turmoil and tension and – importantly – they usually need at least three to four years to bear fruit.  The general, overall rule should be: re-structure sparingly but be ready to re-configure more often in between restructurings (but not so often that chaos or change fatigue set in).

Both restructurings and reconfigurations work best when they are explicitly designed to build on an organisation’s competitive strengths or increase differentiation against competitors.  It’s also important to remember, of course, that with either type of re-org, when activities are re-organised, the resources needed to support them must follow.  But with a restructuring, additionally, many other aspects of the overall organisation should be changed too – and quickly – to avoid dysfunction:  these include management processes, IT systems, culture, leadership styles and people incentives/rewards.

The final, recent publication that caught my eye was an article in the HBR May 2017 issue entitled ‘What the Best Transformational Leaders Do’, written by two strategy writers/consultants S. Anthony and E. Schwartz.  They did a study of S & P and Global 500 companies and found that the leaders who achieved the most successful transformations – those involving creating new product/service offerings and business models to push into new growth markets – shared some revealing, common characteristics and a similar approach in how they led their transformation.

Such studies, of course, always need to be taken with a good pinch of salt because they involve wide, qualitative judgements, but I noted in this case the assessment was done by a combination of desk analysis of companies’ performance and then using a panel of ‘expert’ judges including luminaries like former CEO of Procter & Gamble, A.G. Lafley.  Their ‘top 10’ transforming companies included a cross-sector mix, ranging from stars like Amazon, Netflix and Microsoft to less obvious names like Danone and ThyssenKrupp.

But more interesting than such details are the general, five recommended principles and practices that the authors propose arising from the study:

The first principle is that the most successful transformational leaders tend to be individuals who are what the authors term “insider-outsiders” – that is leaders who have both some relevant, transferable experience from another sector or field as well as some knowledge/experience in their current organisation or its sector.  Furthermore, these leaders maintain an outsider/external perspective throughout the transformation journey they manage.  That perspective helps them see and explore paths to growth or improved success without being constrained by yesterday’s success formula.

The second principle is that successful transformation requires a “dual process” of two separate but simultaneous journeys:  one is developing and repositioning an organisation’s existing, core business, whilst the second involves actively investing in and nurturing the new growth business.  The classic exemplar here is Apple:  all those years ago Steve Jobbs launched a radically new type of consumer product cum content eco-system involving iPod and iTunes, but at the same time, whilst he nurtured that new growth engine, he reinvigorated the core Mackintosh business by injecting a new sense of thinking and design for what computers could be used for in the age of the internet.

The next principle is that successful transformational leaders actively use culture and values to help drive engagement amongst employees and create the best, supportive environment to favour the desired change.  For example, at Microsoft, in the first four years with Satya Nadella in charge as CEO, he converted a traditionally cautious, insular culture that involved large teams working for years on a major new version of a program into a new culture where dozens of new features and improvements were introduced every month (and no one would fully know ahead of time what they were).

Another principle is that leaders should develop and communicate a powerful story / narrative about the future.  The leader needs to present a stark but realistic assessment of why the status quo cannot continue and then build a picture of a fresh, exciting new vision of a better future and explain the path of how to get there.  Leaders should tell the story repeatedly, consistently, and persistently, telling different aspects of the same story to suit the different groups of people affected by the change.

The fifth and final principle recommended by Anthony and Schwartz is that transformational leaders should note that transformations typically need several years before their full aims are realized, so leaders should develop a long-term road-map for handling the journey and get started as soon as possible on the journey.  In this way, when likely difficulties or disruption do occur down the line, leaders will be more prepared and in a stronger position because they will have pushed forward more of the planned changes by that time and their planning well-ahead will help them deal with and move on from the disruption when they see it.

Altogether, I think the book and the two articles outlined here present a practical and valuable pot of good ideas and recommended practices to help with the leadership of strategic change.  They don’t give an exhaustive list of good practices, but they do show, in particular, that change is a complex, multi-faceted challenge that demands proactive and thoughtful management of both ‘hard ‘ aspects of change (e.g. structure) and ‘soft’ aspects e.g. people and communication.

As always, if I can be of assistance with change in your organisation, do get in touch.

Mike Owen

E:  mpo@owenmorrispartnership.com         T:  01886 881092

Copyright of Owen Morris Partnership

May 2017

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What does it mean to be a good ‘strategic thinker’? And how can leaders best encourage more strategic thinking across their organisations?

How good are you at strategic thinking?  Certainly, it’s a skill referred to in most job descriptions for senior execs.  But whilst much has been written about how to do strategic planning, I am always surprised by how there is relatively little guidance (books, courses etc.) on how to ‘be strategic’.  This is despite the fact that strategic planning typically happens only once or twice a year in organisations, whilst a true strategic leader needs to act strategically almost everyday.  So, what does it mean to be strategic and what can be done to foster more strategic thinking across an organisation?

The critical need for strategic skills has been highlighted by several research studies over recent years.  For example, in 2013 the Management Research Group completed a large-scale global survey amongst 60,000 managers in 140 countries regarding their views of effective leadership and it found that a ‘strategic’ approach to leadership was considered on average 10 times more important than any other behaviours (e.g. communication).  In 2015 a study by PWC of 6,000 senior executives similarly enquired about leadership practices and attitudes and revealed that only 8% – yes 8% – of the executives could be considered as ‘strategic leaders’ or capable of leading a transformation at their company.

It seems, then, that many organisations have leaders whose primary skills are focused just on running things operationally and essentially maintaining the status quo.  But, of course, in today’s turbulent and uncertain world organisations need leaders who have the know-how, experience and confidence to tackle ‘big’ and difficult strategic challenges.

Strategic thinking is one of the key ‘executive’ skills needed today by senior leaders and, actually, in my view, it is the primary, driving skill behind all the others (thinking drives choices, which drive actions, which lead to outcomes!).  Leadership studies suggest that those other skills include several that deal with getting things done through other people, viz:  setting a vision and direction;  leadership/strategy execution;  communication and influencing skills;  team/relationship/collaborative skills;  and change management.

Two other skills are technical skills:  firstly, there is ability/knowledge in one (or ideally several) functions of business e.g. finance, marketing;  and, secondly, knowledge/skills relating to technology/IT/digital/social media.  Another skill category includes general cognitive skills (e.g. computational ability, ability to deal with ambiguity) and key personal traits (e.g. integrity, level of drive/energy, courage, ability to handle stress, ability to prioritise).  A final category – which I think is more vital than ever – is a wider, multi-sector/external outlook based on experience beyond just an executive’s current organisation (including, ideally, some international/cross-cultural experience).

Strategic thinking itself is often simply taken to mean stopping to think about an issue (or situation) carefully or perhaps with a longer-term perspective.  But actually there’s more to it:  strategic thinking means viewing an issue with a multi-perspective mindset  i.e. from a range of different angles and reaching a decision or conclusion by following a considered, systematic approach.  It’s half perspective, half process.  More specifically, but briefly, the main component skills involved in strategic thinking include:

Analytical thinking:  breaking down the issue in greater detail to see things in greater depth and discern patterns and connections between the different aspects.               –Holistic thinking:  looking at a situation with a broad lens – not narrowly – to see things ‘in the round’ and identify the whole/big picture.                                                                           –Contextual thinking:  looking at the ‘edges’ of the situation, seeking to see how it connects with related or adjoining issues/people/factors.                                         –Future/longer-term thinking:  predicting future trends / considering how the issue today may look from a future perspective, not just how it looks here and now.                     –Creative thinking:  devising novel ways to view or develop the current issue or situation.  –Intuitive thinking:  perceiving a situation by drawing on insight, experience or feelings from inside oneself.                                                                                                                     –Multi-lateral thinking:  considering how other specific groups of people (stakeholders)may view the issue.                                                                                                                     –Ethical thinking:  considering what ought to be the case – from a moral, legal or regulatory case, for example.                                                                                                                  –Evaluative thinking:  interpreting everything gathered about the issue and judging/assessing overall what are the appropriate implications/conclusions to be drawn

Of course, not all these different types of thinking need to be called upon each time – which is a relief! – but they form a ‘menu’ for a leader to choose from depending on how much time is available and how important/complex the issue is.  Use of more thinking types will result in a richer canvass of perspectives and increase the chances of a more original or appropriate decision.  However, no executive is blessed with all these skills or all possible perspectives, so often strategic thinking is best done by a group.  Many tools and techniques exist to help each area of thinking and an external facilitator can be useful too.

Often strategic thinking is linked to making a decision and this is where adopting a  systematic approach comes in.  We all know what such a thing involves, but an example of a suitable process could be the following steps:   define the issue clearly;  identify the key background goals;  define some criteria for making a decision;  develop a range of options;  collect data for each option;  analyse and appraise;  select preferred option;  get approval/buy-in; and implement.  The above types of thinking particularly kick in for defining the focal issue, developing options and analysing/appraising those options.

Being systematic with strategic thinking also particularly means trying to prevent, or at least limit, the influence of a range of potential human cognitive biases that can (quite naturally) skew and distort a person’s approach to a situation or problem – very often without the person being aware of such influence.  Examples of major biases which you’ll know of include:  confirmation bias (the tendency to interpret information in a way that does not upset existing beliefs);  ‘groupthink‘ – where everyone in a group aligns their opinions with the perceived majority view to avoid being seen as the misfit;  framing bias – assembling a number of unconnected elements falsely in order to present an appealing but false narrative;  availability bias – creating a picture of the world by paying attention only to things that most easily come to mind;  and information bias – the delusion that more information always guarantees better decisions!

Several personal traits and behaviours are very helpful for good strategic thinking.  These include, for example:  a sense of curiosity; an ability to be open-minded;  an ability to cope with partial information and uncertainty;  an ability to deal with ambiguity;  flexibility;  patience; a positive and ambitious outlook;  an ability to be sometime playful/childlike in terms of experimenting with ideas;  a readiness to be bold and challenging;  and a concern for keep broadening and developing one’s own knowledge and experiences.

It’s important to see strategic thinking as a skill-set and approach that everyone in an organisation – not just senior managers – can practice and apply to help how they do their job and improve the decisions and choices they need to make.  Being strategic is not just about business or organisational-level strategy – making high-level choices about how to compete or major operating decisions – despite what the mountains of published books on ‘strategy’ might suggest!  Leaders of organisations need middle and junior managers to be strategically-minded just as much as themselves – in order to achieve high levels of collective performance.

So, what can leaders do to foster widespread strategic thinking in their organisations?  Here is a quick list of several measures I would suggest, for example:

Communicate and promote your organisation’s vision, mission and goals strongly across the organisation:-  Individuals and departments need to understand the broader organisational strategy in order to have a context for their own plans and actions.  –Distribute responsibility down and across your organisation:-  Senior leaders should push power downward, across the organisation, empowering people at all levels to make decisions.  Doing this gives managers the opportunity – and increased confidence – to develop their strategic skills and take risks.                                                                                  –Be generous and open in distributing information across the organisation:-  One of the major prerequisites of strategic leadership is having relevant and broad business information that helps managers elevate their thinking beyond the day-to-day.  So, not only should leaders keep staff informed of what is happening internally but they need also to provide regular news and information on external things like markets, regulations, competitors, new technologies etc.                                                                                        –Provide multiple paths and opportunities in the organisation for staff to raise and test ideas (rather than insisting on a person’s line-manager’s first approve!):  For example, a  suggestions board on the staff intranet and a monthly ideas incentive scheme for staff.     –Provide extensive opportunities for managers to meet each other – to share/discuss ideas and work together on cross-functional task-groups that look at company-level issues  –Encourage managers to plan regular time slots for reflecting and local strategic thinking with their teams.  Allow meetings sometimes away from the office:  thinking is helped by having fresh surroundings.

Promote a culture that values strategic thinking –  refer to in staff job descriptions, train people how to think strategically and recognise /reward people for evidence of good thinking (rather than just reacting to events).                                                                                  –Promote a culture that values learning, performance and innovation:- this includes a well-defined and motivational ‘performance management’ system for all staff.  Ensure the culture ‘allows’ people to make mistakes.                                                                                       –Ensure Board meetings include dedicated time to discuss strategic issues and opportunities – and invite senior and middle managers to join often to contribute ideas and solutions.                                                                                                                                   –Rotate managers at intervals around different departments and functions.                 -Ensure all directors and senior/middle managers meet regularly with customers and other stakeholders  – either external visits or at open-invite meetings at the company        –Keep your organisation’s operational systems and processes flexible and agile as much as possible – if not, managers will soon lose interest in thinking of new ideas!             –Connect (high potential) managers with a ‘strategic’ mentor/coach and encourage them to mix with peers in other organisations.  Encourage perhaps some to become a trustee of a charity.

Overall, strategic thinking is not a simple skill/process and that, of course, goes a long way to explain why it is in short supply in most organisations!   Sadly, too often organisational politics, culture, poor top-leadership or inappropriate policies get in the way and serious strategic thinking and change do not happen until either there is a crisis or an outsider CEO is appointed.  Short of such a radical situation, though, of course, an external consultant/facilitator can often play a vital role in helping the organisation to gain fresh thinking and change.  At the end of the day, however, organisations need themselves to cultivate internally amongst their own ranks more strategic thinkers.

I wish you well with strategic thinking in your organisation.  If I can help, do let me know.

Mike Owen    (E:  mpo@owenmorrispartnership.com    T:  01886 881092)

Copyright of Owen Morris Strategic Partnership.  January 2017

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How to create value for customers? A new model gives useful pointers and adds to existing insights about customer value marketing

To survive, the idea of ensuring ‘customer value’ is important for every organisation – whether you are a business or a non-profit.  Amongst many existing views and approaches on the topic, a new model caught my eye in a recent issue of HBR (Sep 2016).  Two of my clients also immediately liked it when I mentioned it last week.  It’s called the “Elements of Value” model, developed by consultants at Bain & Co (E. Almquist, J. Senior & N.Bloch).

Briefly, first, though, it’s useful to check what is meant by ‘value‘ and the related phrase ‘value proposition’, as the words often seem to be bandied about inconsistently.  In my view, ‘value’ refers to the range of potential benefits customers appreciate about a type of product/service (less costs incurred in obtaining that product).  And a ‘value proposition’ is the particular set of benefits designed by a specific provider aimed at a defined target market and presented with a distinctive appeal or approach (using appropriate branding and pricing).  In today’s competitive world, life is about designing attractive value propositions and then delivering via a suitable, cost-effective business model.

The new Bain model offers a framework to guide the search for customer value.  Based on research looking at 10,000 US consumers’ perceptions of 50 well-known US companies and then assessing the recent trading performance of those companies, the model breaks down customer value into 30 fundamental, generic parts, which it calls “elements“.  Inspired by the classic Abraham Maslow’s ‘hierarchy’ of human needs, the authors arranged these elements in a pyramid of increasing levels of impact on customers.  At the bottom are “functional” elements, such as quality and saves time;  above that are “emotional” elements like well-being and fun;  and then two further ‘higher-order’ categories.  Here’s the full list of the thirty elements:

i)Functional benefits:   reduces effort, avoids hassles, reduces cost, quality, variety, sensory appeal, informs, saves time, simplifies, makes money, reduces risk, organises, integrates, connects

ii)Emotional benefits:  wellness, therapeutic value, fun/entertainment, attractiveness, provides access, reduces anxiety, rewards me, nostalgia, design/aesthetics, badge value

iii) Life-changing:  motivation, investment for the future, affiliation/belonging, provides hope, self-actualization

iv) Social impact:  self-transcendence

The study found that companies that appeal to more elements tended to perform better (in terms of higher customer loyalty and faster revenue growth).  But they also found that the most powerful forms of value are the emotional, life-changing and social impact elements, with companies that appeal more on those types of element (particularly emotional benefits) doing better than those companies which appeal strongly just on functional benefits alone.  Furthermore, companies need to first satisfy on functional elements before they can win appeal on the other, ‘higher impact’ value categories.

Interestingly, of all the thirty, individual value elements, perceived quality was consistently found to be the top-ranking factor influencing customer satisfaction and loyalty.  Products and services must attain a certain minimum level on this front and no other elements can make up for a significant shortfall on that issue.  After quality, the most critical elements were found to depend on the industry sector.

The authors believe their model can help organisations to identify and explore better the true, underlying benefits of their products/services rather than just accept the immediate ‘on the surface’ descriptions customers might use.  For example, when someone says his bank is “convenient”, more precisely, this is likely to mean that value comes from a combination of the functional elements saves time, avoids hassle, simplifies and reduces effort.  For a professional association, the value of “networking” might be better understood as a combination of the elements connects, fun/entertainment, provides access, and affiliation/belonging.

The model can play a valuable role in helping companies to identify and explore which value elements are the most and least important for their industry and, from there, to identify how they stack up on those elements relative to competitors.  In terms of innovation, the model can guide companies in their thinking of new ways to develop, improve or differentiate their value propositions more strongly.  In particular, it prompts companies to consider opportunities to add new sources of value to offer to customers.

I like this model because it is simple and practical.  But, actually, it is just one of several approaches or perspectives that have been proposed over recent years on the topic of customer value.  To mention just a few noteable examples, briefly:

i)‘”Jobs to be done” approach:  Developed in the early 2000’s (Harvard’s C.M. Christensen et al), this urges companies to understand what customers want not (as was often the case traditionally) in terms of simply looking at their socio-demographic characteristics and direct purchase behaviour but, instead, by examining their surrounding context and, in particular, uncovering their ‘below the surface’ wider goals or ‘jobs to be achieved’.  The focus is on trying to understand what are the core, driving, benefits the customer is trying to gain or what pains/problems he/she is seeking to avoid.

ii)”Transient” competitive advantages:  Popularised by Columbia Business School Professor Rita McGrath in her book ‘The End of Competitive Advantage’, this approach argues that, given the pace of change in today’s world, traditional ‘long-term’ competitive advantages are no longer sustainable.  Instead, companies must develop the ability to rapidly and continuously address new, ad-hoc opportunities as they come across them and seek only “transient” (i.e. short-term) advantages.

iii)”Long tail” value marketing:  Originated by IT writer, Chris Anderson, this now well-known concept says that, given the extremely low marginal costs of selling on the internet, companies can profitability offer products/services which have value appeal to only tiny-volume, niche customer bases rather than only consider products which are going to be big-volume ‘hits’.

iv) “Freemium” products:  Also based on the same cost features offered by the internet, this approach from the last decade says that companies can afford to provide completely free – or for a very small charge – an initial ‘layer’ of benefits in the expectation that some customers will be attracted to go on to demand chargeable (very profitable) ‘higher value’ benefits separately available in the overall product/service offer.

v)”Minimum Viable Product”/Lean Development:   Based on the “Lean Start-Up” approach developed by Eric Ries, the idea here is to avoid the normally high degree of uncertainty, risk and slack that comes from developing a fully-formed and finished new product at first launch by, instead, launching and testing initially only a ‘basic feature’ product version and from there developing and testing progressive iterations of the product based on learning from direct customer feedback after each version.  It’s close to a concept called “design thinking” and definitely is part of the current wave of what’s called “agile” approaches to innovation and management.

vi) Service and brand experience:   This perspective argues that it is the intangible features/benefits that are most significant for any product/service offer nowadays, as opposed to any physical properties.  For service-based organisations, in particular, the stress should be on designing customer-centred service processes that run day-to-day with seamless and consistent quality across multiple touchpoints.  Equally, a company should promote a brand image based on emotional-type ideas and benefits to customers to counter the fact that physical product dimensions can be easier to copy by rivals and it can be hard to maintain a performance edge based just on periodic product innovation.

vii) Socially-based value:  This approach from the last eight years or so (e.g. “Shared value”, an article by Harvard Prof Michael Porter in the HBR Jan/Feb 2011 – see my post on this blog of May 2012 entitled ‘Think Purpose to drive your organisation forward’) urges companies to put benefits in their products/services which are useful to their wider communities and stakeholders, not just to satisfy their immediate customers and their own direct, financial interests.

There are several other perspectives too  – for example, the ‘customer big-data’ approach which stresses finding value propositions through deep analysis of customer data;  the notion of ‘social-media based value’ whereby customers show a great deal of concern about the social communities attached to a brand and what messages/ideas interactions between brand followers are revealing;  and the idea of ‘value co-creation’ where companies work closely in partnership with particular customers and/or even competitors to design and/or deliver value together.

And just one more, to finish – as, in my view, it is probably one of the biggest ‘game-changers’ in business over the next few years.  It’s how value creation will be crucially influenced by and will need to work with the ‘internet of things’ and the spread of ‘smart, connected products’.  An arresting fact, for instance, will be how companies will be able to change the functional performance or suitability of an existing product/service already provided to a customer via direct, web-based ‘re-programming’ of that same product based on direct feedback up to then from the product itself, rather than having to re-sell a whole, new product to that customer.

Altogether, then, I hope you’ll agree that, whilst the new “elements of value” model I have outlined above is a welcome, very helpful framework, it is but one of the many concepts and approaches around that touch on the subject of how to create and develop customer value.  Which reflects the key point, of course – which I make regularly in my posts – that strategy is not an exact science and much more a matter of original thinking and applied judgement!   I wish you well with strategic value creation in your own organisation!

As ever, if I can be of assistance, please do get in touch!

Mike Owen

Copyright of Owen Morris Strategic Partnership.

November 2016

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How to choose a strategic planning facilitator. The key qualities and skills to look for and the benefits of a professional/external facilitator

A skilled, external facilitator can provide heaps of value and support to an organisation’s strategic planning process.  More and more Boards and CEOs now use one.  But what benefits does such a facilitator provide and what are the key skills and characteristics that make a good strategic facilitator?

Firstly, a few pointers as to what role a strategy facilitator can serve.

At the very start, a strategic facilitator can provide expert guidance on the overall strategy process (approach, steps, timings etc.) and range of methods and techniques to use:  strategy is much more than just a single Board workshop!  He/she can help a CEO/leadership team identify and seek out the appropriate range of data, clarify particular issues that need to be dealt with, and confirm what outcomes need to be achieved.  He/she can also assist in planning how the right people will be involved/consulted (both internal and external people) and how their necessary commitment can be secured.

Most people, of course, see the value of a facilitator during strategy discussions once the process is underway.  Key benefits include making sure that everyone has an open and fair opportunity to give their views, that discussions flow and progress well, that connections or gaps between different views are raised, that a measure is reached of the strength or popularity of certain opinions, and that there are regular review and decision points that ensure the overall agenda is achieved.  After a discussion/workshop, of course, the facilitator can bring all the strands together and prepare an overall, factual write-up.

But, a strategy facilitator’s value shouldn’t end there.  Crucially, he/she should be able to work with, guide and assist the executive team in drawing out and translating outputs from strategy sessions into firmer options, evaluating possible courses of action, and then developing and defining particular strategies and plans.

Other examples of a potentially wider contribution include:  conducting consultation meetings with certain stakeholder groups or organisations;  helping individual executives or task-groups look at delegated topics in between the main strategy group meetings;  acting as ‘project manager’ for some or all of the overall strategy process;  briefing and co-ordinating other third-party professional experts needed along the process e.g. accountants, HR advisers;  facilitating supportive sessions of the executive team to help with its own effectiveness or development; and perhaps providing confidential 1:1 advice to the CEO or Board chair on delicate re-organisational issues.

So, what are the key characteristics and skills of a good strategic facilitator?   I would advise the following, which I have always emphasized to my clients:

a) Strong general management experience/qualifications: –  avoid using just a generalist HR consultant/trainer, a person who has a very narrow functional background (e.g. financial accountant or IT developer), or someone who only runs general workshops:  a strategic facilitator needs a much wider knowledge of organisations, business functions and general management/leadership.  This is because the process of strategy itself is cross-functional and broad.  Furthermore, it’s best to go for a facilitator who has worked in a range of different sectors and types/sizes of organisation, as he/she will bring a much wider perspective and be able to suggest helpful ideas and good practice from wider afield.

b) Deep knowledge of strategy and associated tools/techniques, plus the ability to advise you on the right approach to suit your organisation:-  of course, you need a facilitator who knows all about the process and tools involved in strategic management (from market appraisal to change planning) but avoid a person who only offers you a ‘fixed template’ solution or who thinks strategy can be done simply in a single half-day workshop or such like!   Every organisation is unique – not least the range of issues it faces and the type of people and culture it has – so the strategy process must be tailored to match too.  So, be sure your potential facilitator takes the time and effort to get to know you and understand your organisation and then proposes a process that feels appropriate.

c) Deep knowledge and experience in a wide range of thinking and discussion styles/tools/methods:-  A good strategy facilitator needs to have expertise in a host of different approaches and methods for handling thinking, deliberation and evaluation by groups.  In particular, he/she needs a detailed grasp of a core range of different divergent and convergent thinking methods and tools and when it is appropriate to use which.

d) Deep knowledge of personality/group theory and group decision-making:-  A good strategy facilitator needs a sound understanding of relevant areas of individual and group psychology, so that he/she can manage well the dynamics and deliberations of groups that are typically involved in a strategy process.  Such knowledge will enable the facilitator to know, for example, how to avoid and manage any conflict between group members and mitigate for major types of group cognitive bias that inevitably afflict group work (e.g. groupthink, confirmation bias, authority bias).  Equally important is knowing how to lead groups effectively to reach consensus, decisions, and alignment, and how to ensure commitment and plan actions effectively.

e) Superb skills in listening, reflecting back and asking questions:-  Strategy facilitation requires hearing a lot of ideas, comment and opinions and strong skills are needed in drawing out what people are thinking, active listening, reflecting back what is said, and rapid connecting and building on different points to make conversations progress well.

f) Confident, assured manner but also friendly, relaxed and very sensitive/tactful:-  A facilitator must be able to look, sound and act as a credible and capable professional who is ‘accepted’ by participants with the ‘right’ to ask them questions and challenge them on some points as may be needed.  To help achieve this, a facilitator must have an amicable and open style and also be very sensitive to picking up signals (from non-verbal cues, not just what is said!) from people and addressing their points in a tactful/respectful way.

g) Neutral, independent, transparent and fair/honest:-  It is absolutely crucial that a facilitator stays objective and detached whilst managing discussions and decision-making involved in a strategy process:  he/she is there to focus on guiding and managing the overall process and not to influence or steer the content of participants’ views or decisions (unless the client specifically asks for his/her direct advice).  Beyond this, he/she must, of course, treat everyone fairly and equally throughout and do as much as possible to prevent any obvious bias or private agendas distorting proceedings.

h) Strong integrative and ‘helicopter’ ability:-  This refers to two related skills:  firstly, the ability to rapidly see and make connections and links between different points/ideas/issues and, secondly, the ability to move easily and quickly between seeing the ‘big picture’ in a situation and drilling down to the finer detail of the same situation.

i) Structured, systematic and focused:-  A strategy facilitator must be a clear thinker who naturally structures and organises well (from ideas to processes).  Equally, having defined structure in a situation, he/she must be able to be disciplined and focused to keep people always on he right agenda topic and seeking to achieve the overall aim set.

j) Some supportive ability/experience in consulting and coaching:-  Some skills in the related activities of consulting (diagnosing issues and giving appropriate advice) and coaching (assisting others to learn/self-develop) are very good for a strategic facilitator to have because they very often fit in very well to strengthen and support certain parts of the strategy process (e.g. identifying early-on with the client what strategic issues need to be tackled).  But beware of a facilitator who looks too ready to be a consultant rather than mainly a facilitator, as he/she will strongly risk losing the vital quality of appearing neutral and objective in the eyes of people involved in the strategy process.

k) A range of supporting character traits and behaviours:-  There are several other very useful personal traits that make a skilled facilitator:  nobody can be expected to be blessed with all of them, but I would suggest, in particular:   a natural sense of curiosity and interest in the views of others;  an ability to think easily in abstract, conceptual terms but to convert thoughts quickly into simpler terms;  an ability to hold several thoughts in his/her mind at the same time;  an ability to be flexible and adaptable e.g. shift ideas when new information suggests the need to do so;  an ability to deal with partial information and ambiguity;  an ability to think positively of others;  and the ability not to take negative or critical comments personally.

Finally, it is important to appreciate why an external facilitator is so much better than an internal facilitator for Board/organisational-level strategic work.  There are at least four key reasons:

Firstly – and most crucially – an external facilitator brings a fresh, external ‘outside-in’, wide-eyed lens and external perspective, together with experience and knowledge of other sectors and organisational contexts.  He/she does not come with the inevitable pre-conceived views and internal ‘baggage’ that internal individuals would suffer from!

Secondly, he/she comes with the ‘permission’ and inclination to challenge company executives – in terms of their assumptions, beliefs and attitudes.  He/she can ask searching and awkward questions, pose fresh ideas and options, and play ‘devil’s advocate’ – without worrying about internal company politics or damaging their job promotion prospects!

Thirdly, his/her position as a neutral, detached ‘change agent’ means the CEO or chairman can have a trusted, independent ‘confidant’ to share and discuss sensitive change issues with and bounce ideas off confidentially, rather than having to risk favouring a senior colleague or have nobody at all to do this with.

Fourthly, an outside facilitator typically provides additional expertise and resource to carry out a vital short-term project – a round of fresh strategic planning – for which an organisation often does not have adequately qualified or available senior staff to carry out internally.  With senior executives being so busy with their ‘day job’ it can be very sensible to delegate a lot of a strategic planning project to an external facilitator – provided, though, there is a senior executive who acts an internal ‘sponsor/lead contact’ for the project and there is a wider planning ‘project steering ‘team (including the CEO) working with the facilitator.

Altogether, an external strategic facilitator can play a hugely valuable role for any organisation.  But it needs the right (and rare) type of person who has a very wide and distinctive set of skills and characteristics.  So, choose your facilitator well!

If you’d like to talk to us – at Owen Morris – about being a facilitator for a future strategic or management meeting at your organisation, do get in touch.  We would be delighted to assist.

Contact Mike:         Tel:  01886 881092.        E:   mpo@owenmorrispartnershp.com

/Written by Mike Owen,

Copyright of Owen Morris Strategic Partnership

 

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Coping with Brexit-like change: how to plan and steer an organisation in response to uncertainty

The UK’s unexpected recent vote in favour of ‘Brexit’ was a strong example of how unexpected events can occur and how the world can be a volatile, uncertain, complex and ambiguous place (the US Army coined the acronym VUCA).  So, the obvious question arises, how can organisations today best cope and deal with such an environment – and indeed not just survive but flourish and grow?

I was interested to see what recent management literature advised on the subject, so checked out, amongst others, a few HBR articles from this year (see footnote below).  Added to my own experience, here are a dozen or so pointers that I then put together:

The traditional approach taken by organisations to deal with uncertainty and volatility is to try to improve their market analysis and forecasting and shape a more carefully considered vision, market positioning and detailed plan.  But, of course, in times of rapid change, forecasts and detailed plans become obsolete almost immediately.  Relying on analysis – including traditional ‘risk register’ analysis – has also been criticised in recent years for focusing too much on events and trends that are predictable – and ignoring exceptional, huge-impact but hard-to-predict events (so-called ‘black swan’ events).

Extreme opposite approaches to dealing with uncertainty are to abandon analysis altogether and base strategic decisions on essentially gut instinct OR to focus on creating an organisation which has maximum ‘agility’ and simply responds to market signals as they happen.  But relying on gut instinct is highly risky and seeking perfect agility and flexibility is likely to be very costly and hugely difficult to achieve.  Instead, what’s needed is a more balanced set of measures.

The starting strategic approach in the face of uncertainty is to think about what are the ‘key success factors’ and key external assumptions (e.g. economic growth rate, level of price inflation) on which your organisation depends and then collate and analyse as much ‘hard’ data as you can assemble about those factors – including historic data, current data, and, crucially, any decent future forecasts.  Use both internal sources (e.g. sales records, customer surveys) and relevant/expert external sources (e.g. trade associations, professional advisers, government agencies).  Obviously, the more data you have to guide you what is likely to happen in the future, the stronger basis you have for shaping future strategies for your organisation.

However, of course, most organisations nowadays will face some significant factors about which they cannot make a confident future prediction.  Sometimes the uncertainty may be mostly around the detail of a change rather than doubt about the change itself happening e.g. exact exclusions to apply in a new regulation.  Other times, the uncertainty may be more general e.g. the multi-faceted uncertainty around entering a new market overseas.

In these circumstances, accepted wisdom is to do some ‘scenario thinking’: in other words, define a range of alternative, distinct perspectives of the future (based around your most important key success factors or external assumptions) and see how well alternative future strategies for your organisation’s future ‘hold up’ against each of the scenarios.  It’s best to limit the number of scenarios to about half a dozen which collectively cover the most probable range of futures and also include some variables in scenarios that can be quantified to some extent to help overall comparative assessment.

This process, however – which is mostly practiced today just by larger organisations – is altogether an art rather than a science and can be unwieldy and is mostly best suited just to periodic, major strategic reviews (say, every couple of years).  Instead, the preference nowadays, given the sheer pace of external change nowadays, is to use a wider set of more dynamic and organisationally-centred measures, with a more active/continuous process of strategic monitoring and change – and flexibility and responsiveness as key watch-words.

So, what other approaches or measures did those recent articles I looked at suggest?  Firstly, I noted a set of pointers about how managers can go about identifying and responding to changes:

Identify and capture ‘weak signals’:-  The idea behind this practice is that, whilst we cannot precisely predict the future, we can watch out for and monitor early-warning signals and detect patterns of change and then use them to deduce likely or possible important changes that may follow.  Organisations can then take action to prepare in good time to exploit desirable signals or minimise/avoid undesirable ones.  It is particularly wise to monitor the periphery of an industry, as it is there that change often comes.

Question current assumptions and challenge how things are done today:-  Like scenario-thinking, this approach is about taking a more proactive and creative approach to identifying possible future changes.  It involves applying critical and creative thinking to how an organisation currently operates (including what products/services it offers) and how the wider industry/sector operates, with the aim of stimulating ideas for innovative change for the future.  It can be particularly effective to use cross-functional teams together with wide involvement of customers and other external stakeholders.  Also, using a skilled external facilitator to run workshops is wise.

Run low-cost, low-risk experiments:-  The simple idea here is that an organisation should periodically select and work up some of its creative ideas to development stage and then actually trial some of them as experiments to see how they perform in reality.  However, ideas taken forward should, as far as possible, be relatively low-risk, low-cost, so that the organisation does not excessively divert its attention or resources from current mainstream activities.

Secure strategic options and take pre-emptive measures: –  This classic and often vital approach involves seeking ways to help protect your competitive position by the advance securing of some major favourable rights/options or the proactive taking of specific actions which will help obviate future threats.  Buying/reserving the future rights to a newly discovered drug or gaining a unique right to be a potential distributor for a new product would be examples of a strategic option:  you might not actually take up the rights but you gain the strategic flexibility to do so.  Bringing forward a planned marketing campaign in the face of a major move expected by a rival would be an example of a pre-emptive strategic measure.

Enter into low-risk joint ventures or make small acquisitions:-  This is a particular variant of the latter two measures and involves an organisation seeking out collaborative or merger opportunities with the aim of proactively strengthening its competitive position (e.g. accessing new skills or widening its service offer) or pre-empting wider threats.

Alongside these measures, here’s a list of another half-a-dozen, suggested measures that deal more with appropriate features to develop for your organisation itself, based too on my own management and consulting experience:

-Ensure your organisation has strong feedback, learning and adaptive systems:-  The essential idea here is that you have effective intelligence tools/systems for monitoring what’s going on in and outside your organisation (e.g. regular surveys of customers and close tracking of emerging technologies in your sector),  good processes for ensuring staff continually learn and improve their knowledge and skills,  and effective processes whereby the organisation adapts and responds quickly and smoothly to fresh changes it faces.

-Maintain a high degree of organisational diversity (heterogeneity):-  Viewed in biological terms, organisations can be seen very much as ‘complex adaptive systems’, so they need to have adequate variety in terms of their characteristics to match and respond to the degree of external variety and change they face.  In particular, you should make sure your organisation maintains diversity in terms of people (e.g. personality types, backgrounds, working styles), thinking, ideas, how things are done, and innovations.

-Have an organisation which has a high degree of ‘modularity’:-  This means deliberately maintaining some barriers and loose connections between the different parts of your organisation, which will help to impede the spread of shocks from one part to the next and thus making the overall organisation more robust.

-Maintain a degree of duplication and slack resources in your organisation:-  The idea is that having some duplication and level of redundancy in your resources and processes creates a vital buffering capacity and makes it easier to cope when there is a problem in one particular part of the organisation or extra capacity/flexibility is needed quickly to respond to changes.  It has to be balanced, of course, against the traditional emphasis in business on maximising short-term efficiency.

Temporary organisations / factories / facilities: –  This idea is about setting up short-term, dedicated organisational units or operations to pursue specific new, short-term or uncertain opportunities rather than diverting or disrupting an organisation’s current mainstream activities and people.

Foster a culture of trust and co-operation: –  When individuals prioritise too much their own self interests in an organisation, the system overall becomes weaker, and everyone suffers.  So, this means that organisations should take deliberate steps to create adequate feelings of connectedness, co-operation, trust and mutual support between all employees.  Obvious tactics range from wide staff involvement in company strategy development to a good staff newsletter/intranet.   It is, to an extent, the opposite aim of a modular organisation, so there’s a need to strike a suitable balance between the two measures.

Whilst all the above is not meant to be an exhaustive list of ways of how to deal with  uncertainty, I would especially add another approach which I think is vital to support all the suggestions made.   This is the notion that organisations should avoid treating strategic/business planning as something they do only at a fixed point once a year and that strategy is a fixed, laid-down plan.  Instead, strategy should be treated as a medium-term flexible directional framework, not a fixed master-plan (see my dedicated post on this blog of April 2016 on this subject).  In other words, let organisations evolve through the pattern of separate, short-term tactical decisions/projects/experiments they implement in response to ad-hoc opportunities/changes in their environment, BUT ensure there is a driving framework to give an overall shape and cohesion to those decisions.

Such an approach to strategic planning matches the flexible, ongoing ‘sense, learn, and adapt’ stance that is behind most of the above pointers.  Together they reflect how coping with uncertainty needs a holistic combination of different types of measure – particularly involving organisational measures, not just planning approaches.  Also, they indicate how the future and change do not occur at a far-off point but happen continually – every day. Dealing with uncertainty very much needs a continual process of measures, not one-off, ad-hoc measures!

Written by Mike Owen, Managing Partner at Owen Morris Strategic Partnership

If you have any comments or thoughts on the above topic, do share them.

If you’d like to discuss with Mike how he might be of assistance to your organisation, please do get in touch.   E:  mpo@owenmorrispartnership.com  or telephone the Owen Morris Partnership office on  01886 881092.

 

* Three HBR articles referred to:  i) How to hedge your strategic bets.  G.Stalk & A Iyer of Boston Consulting Gr (BCG).  May 2016.;   ii) Planned Opportunism.  Prof V. Govindarajan, Tuck School of Business & Harvard Business School.  May 2016;   and       iii) The Biology of Corporate Survival.  M. Reeves, S. Levin, D. Ueda. BCG & Princeton Uni.  Jan/Feb 2016.

Copyright of Owen Morris Partnership.  August 2016.

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Positioning a charity / non-profit Board for effective strategic leadership: 9 essentials to get right

Strategic leadership needs to be a concern for any board, but in charities and other non-profits it can sometimes be quite a weakness.  It doesn’t help, of course, that in very many  charities trustees often have limited knowledge of and training in governance and strategy and typically trustees (who are usually unpaid volunteers, of course) meet together infrequently for just a few hours each time.  Nor does it help that a typical charity’s staff have very limited time to think about the niceties of board governance.  But for a non-profit to succeed, it must not only have a board that is passionately committed to its mission but one that is well organised and skilled for strategic leadership.

So, what are some of the key problems that can hold back a non-profit’s strategic leadership effectiveness – and what are some appropriate measures trustee boards can take?  Here are nine factors I suggest for a start – based not least on my own experience as a board trustee/non-exec, CEO and professional strategic consultant-facilitator with several non-profits/charities over recent years:

  1. Failure to see strategy as the board’s primary governance responsibility:-  Sometimes non-profit boards assume that it’s the job of their CEO and employed managers to look after strategy.  Actually, while a board should rightly expect executive staff to be strategic in their thinking, it is the board that has legal liability and responsibility for overall strategic leadership and so can’t abdicate this.  The right approach is for board members and senior staff to work together collaboratively to review/discuss/shape overall strategy, let the executive team develop and propose more detailed options and proposals, then the board settles what is to happen, and from there monitors/oversees ongoing implementation by the staff.  Critically, at the end of the day, it is the board’s role to decide what are to be the organisation’s goals and initiatives and to challenge executives to re-work proposals it considers inadequate.

2.   Not having the right composition or structure of people on the board:-  Like for any leadership team, a non-profit board needs to have the right balance and diversity of people to form it.  Most directors/trustees should have a decent level of knowledge of or affinity with the sector/profession in which the organisation is operating, but it is wise to have a few directors who also have much broader, external knowledge/experience beyond the immediate sector, so that the board has a rounder perspective and avoids becoming insular in its thinking (this can be a big problem, for example – often not recognised – with membership bodies).  It is often a good idea for one or two members to be representatives from key stakeholder groups – for example, a disability charity’s board should certainly include some individuals who have the disability in question.  Crucially, at the same time, though, there should be an appropriate mix of people in terms of demographics – particularly gender and age – and relevant professional and cognitive skills.  With a suitably composed board in place, there is then a need to align the board’s structure with its decision-making responsibilities:  there need to be core/standing committees covering familiar areas like finance but also look at setting up other committees/task groups to give focused attention to strategic priorities or projects for the coming year.

3. Board meetings that focus on too much micro-management:-  Boards must leave the daily management of the organisation to their CEO/executive director and avoid any tendency to micro-manage.  Instead, beyond ensuring that management is running things dilligently, board members must focus on the ‘bigger picture’ issues.  This doesn’t mean the board dealing with strategic things just at the usual, once-a-year strategy ‘away-day’, but rather making sure every board meeting includes some consideration of strategic issues.  Examples of some good practices to consider:  design board meeting agendas to focus attention on governance and strategic topics rather than on routine topics; time-plan all of a board meeting’s agenda with set limits for each topic which the chair should enforce; avoid executives giving every board paper/report an oral summary at the meeting; and regard each board paper as automatically approved unless, by exception, a board member raises a specific question.

4. The board lacking a concise performance reporting/scorecard system:-  Some CEOs forget that their board members are usually busy people and will have difficulty finding time to read a lot of material in between board meetings.  So, it’s important that information shared with the board is focused on key issues, concise and well summarised, as well as timely and clear.  In particular, performance reporting to board members should focus on overviewing a limited  but balanced set of ‘key performance indicators’ together with short updates on key projects/initiatives set out in the organisation’s strategic/business plan.  Without such a summary ‘scorecard’ (dashboard), board members will find it harder to monitor and manage the organisation strategically.

5.  Poor team spirit or deficient team leadership by chair:- Despite meeting infrequently, a board needs to feel and work as a team as much as possible to help it fulfil its leadership role.  Like for any group, team spirit and cohesiveness are fostered by a set of key measures, including:  spending adequate time together informally to get to know each other personally; developing and committing to a vision together;  developing respect and trust for each other;  being able to accept and handle differences of opinion between each other;  treating everyone equally and fairly;  and avoiding letting individuals’ personal egos or narrow-thinking get in the way of what is right for the organisation.  Of course, a non-profit board’s chair has a major responsibility for ensuring such measures, but recruiting the right person to do this role can be a major challenge for a non-profit – especially finding a leader who is able and willing to make the extra time commitment needed usually with no payment.

6.  Too much hanging on to the past or avoidance of risk-taking:-  To respond to today’s pressures and challenges, non-profits need to be ready to be innovative and creative and this means their boards must be willing to take chances, to try new things, and to take risks.  Unfortunately, this does not come easily to many boards, as it is naturally easier for a mixed group of people to prefer and stick with the status quo.  But, of course, sticking with the status quo can sometimes be a greater risk than trying something new.  For many non-profit boards it can be a challenge, for example, thinking/acting commercially or collaborating or merging with other non-profits (for fear of their own charity closing).

7. Board members not keeping in touch enough with external changes or changing needs of customers and other stakeholders:-  To help them fulfil their strategic role, board members need to keep in touch with and think about ongoing changes in their organisation’s environment.  However, without the organisation helping them, the board can easily fail in this area of responsibility.  So, examples of helpful measures are:  include with regular board papers a news update on the latest external developments;  schedule time during board meetings for discussion about selected external changes;  periodically send board members copies of media articles that cover relevant issues/trends; and invite expert individuals from external organisations to speak at a board meeting on a topical issue.  Specifically to help board members keep in touch with stakeholders’ views, two obvious examples of helpful measures are:  directors going out to visit and meet individual, key customers/stakeholders and arranging regular ‘open/consultation  forums’ around the country for directors to meet different people.

8.  The chair / board members not promoting the organisation’s vision or strategy enough:-  An organisation’s vision and strategy mean nothing if they’re kept on the shelf as words, so directors should actively refer to them, explain them, and reinforce them in their various conversations and meetings with different people associated with the organisation – from staff to service users to external partners, the community and even the media.  In dealing with emerging issues and challenges that come up, the board’s chair must particularly ensure the vision and strategy are used as a reference frame to guide and steer appropriate action planning and responses by the organisation.  Supporting its vision statement a non-profit usually defines some values / guiding principles it seeks to uphold, so directors also need to ensure their own personal behaviour and conduct always reflect and support those beliefs:  such things are readily watched by staff members!

9.  The Board not reviewing or developing itself well as a governing body:-  Like for any team, it is important for a board to manage its own effectiveness well, it if is to do its job well.  Unfortunately, this is a weakness of very many non-profits.  Some particular practices worth following:  ensure all board roles have good descriptions/skill profiles and all committees have good terms of reference;  ensure good induction programmes for all new board members when they start;  have all board members each year think about how well the board itself has worked (and also with the CEO/executive team) over the preceding period and then discuss together opportunities for improving effectiveness (including the effectiveness of the chair and committee heads);  and ask board members individually each year to suggest areas where they feel they could use some development support to enhance their own skill or knowledge.  Overall, boards should seek to foster a continuous learning culture for all its members (and the executive team).  Use an external facilitator or HR expert possibly to help the review where useful.

Altogether, ensuring effective strategic leadership for a non-profit/charity is a challenging process, but a very important requirement.  I hope the above points, including some  suggested measures, are relevant and helpful.

If I can be of any help or support to your organisation, do let me know.  As a strategic facilitator-consultant, specialising in non-profits and my firm working closely with our associate team of charity/governance lawyers – I would be pleased to help.

Mike P. Owen,  CEO & Principal Consultant at Owen Morris Strategic Partnership.

W:  http://www.owenmorrispartnership.com

E:  mpo@owenmorrispartnership.com                 T:  01886 881092

Copyright of Owen Morris Partnership

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