Showing posts with label business strategy. Show all posts
Showing posts with label business strategy. Show all posts

Monday, 21 November 2016

Strategic Vision Drives Organisations Success

Drive Your Vision or Amlessly Drift 



In today’s world, driving your business vision is the only way to ensure you stay focused on where you want to go and not pulled by short-term fads and fashions. 
The words strategic planning used to mean a once a year offsite discussion about where the organisation is headed. That thinking would be turned into an updated business plan with expectations and outcomes to be delivered over that next year. That type of strategic planning the corporate away-day provide very little in the way of strategic thinking and subsequently provided no or very little strategic value. Corporate away days became more a morale booster, with team building and bonding as the only measure of development. The reason why was very simple, if there is no strategic intent, no strategic review or re-evaluation them there will be no strategic outcomes.   




Strategic thinking is more vital today for leaders of organisation than ever before. The need for organisations of any shape and size to be able to determine why they exist and where they intend to exist in their market has never ben stronger. Whether it is new players finding their first footing in their market, through to established players redefining where they are within their sector, the need for leaders to define their vision and validate their strategy to achieve that vision has become more critical than ever. The drivers of urgency are not just those of ever more powerful stakeholder expectation, but more demonstrably the globalisation of every market sector and the transparency of strategy in what it delivers to business. 


Problems with Strategic Thinking

The problem building a long-term strategic plan, the traditional cycle of business planning is that it is too long and therefore slow to react to rapidly changing business environments; particularly the slow speed of implementing traditional business plans, which has damaged the reputation and credibility of strategy. 

The slow pace of organizational change driven by traditional strategic business planning results in strategies which are out-of-date before they ready to deploy. 

The net result of this process is that organizations are sluggish to respond in fast-changing markets, left wrong-footed by new entrants in dynamic, high-growth markets leaving leaders frustrated and impotent in competing with agile, new entrants. In an technology driven world where disruptive online behaviours enable markets and customers to change overnight, thinking strategically can seen to be an outdated way of thinking.     
Developing effective strategies is vitally important because without them organisations become inward looking, focusing on efficiency at the expense of growth opportunity. Without strategic thinking leadership teams becomes operationally efficiency driven rather than customer focused.  

The key element of strategic thinking is the ability of leadership teams to look at what is driving change within any sector. Inspiring vision is about drawing intelligence from scratchy, vague or even 'invisible' data to make informed decisions about tomorrow's market and develop an aspirational strategy to achieve that vision.




Planning for Tomorrow

What do we know about what tomorrow will look like and what opportunities it will offer? Here are my five defining statements about the need for strategic thinking:- 
  1. It will happen whether we like it or not.
  2. Markets are always changing, new opportunities are always arising.
  3. If organisations strategically plan ahead they can successfully compete, rather than just survive by being a me too player.
  4. Strategic thinking has to be achieved and implemented faster than a market is developing if players wish to stay or move into more profitable, growing and sustainable market segments.
  5.  Without strategic thinking every organisation will go backwards in its market.


The Strategy Gap

The strategy gap: the lack of proactive strategic thinking is most often blamed on the lack of hard data 'facts' as the basis of making defined decisions. This has always been a factor in undermining the confidence leaders have in making plans for the future. 

As a result, strategic planning often focused on predicting the future based on historic trend lines, over-invest in gathering all available data, and produced a small number of safe directives often focused around the very near future, for the rest of the organization to execute.
This safety first approach to strategic planning leads to little steps, but is not really strategic thinking.  

"Genuine strategic thinking requires leaders to think of the future not based upon the past, but based upon the future market potential".   

With the advent of the internet there is now huge amounts of easily accessible affordable good data which is instantly and cheap to acquire. The world today has become a turbulent place, speed of change is no longer slowly evolutionary, but has become rapidly revolutionary in virtually every market. 

This has left the traditional strategic planning process with a fundamental problem, since the trusted, traditional and slow approach to strategic planning is based on assumptions that no longer hold. The static strategic plan is dead.

So why do strategy at all?  

Strategy is therefore under pressure as a process unlike never before.  If the outputs from traditional strategy, a traditional business plan with incremental evolution are no longer valued, then the value of strategy is being rightly questioned.  

The reason why strategy is not dead is that the strategic process, the way strategy is developed is essential in learning what is ‘right’, what is the future in a business sector.  This strategic approach to step out of your organisation and look at the market, defining internal aspirations and building the steps through experimental activity and forward pattern development enables shift culture to occur enabling agile strategy to be deployed. 


There are many renaming ceremonies for today's strategy process, all focusing on the move to redefine the strategic planning process, away from the traditional top-down long-term evolutionary strategic planning process to quicker, dynamic and responsive strategic thinking culture. This systematic and seismic shift in thinking away from process driven top down command and control process to one of continual strategic thinking culture. 


To make this shift to modern strategic thinking, leaders need to move away from traditional predictive planning to rapid prototyping supported by multifaceted experimenting.     


The second shift is that of 'frontline first' where leaders must enable the frontline with real decision-making authority. Successful strategic thinking requires objective and direction setting with a whole team focus.  Instead of a plan, the planning process is about whole team involvement in the mindset of goal achievement.              

The third and final major shift leaders need to focus on where the organisation is adding value to customers. As markets and customers rapidly change, who would have thought Google, the online search engine would be producing driverless cars, or Apple the IT company is managing middle-class health. 


What value any organisation customers value and are looking for is one of the major shifts which today's digital age is driving.   








Tuesday, 1 December 2015

Strategy V Culture - They Aren't Opposites

Strategy v Culture – They Aren't Opposites 





The Solution

Fundamentally leadership is about driving change, and that can only come from the leadership themselves.  You can't  delegate strategy or structural change, you have to own it live, believe it and drive it relentlessly until it achieves not a paper model but a realisation in achieving tangible outcomes towards strategic goals. Building the 'strategic model' is not strategic leadership, that is just dreaming it, it is the  'built it and they will come' approach to strategy.     

Having a great strategy is only a small part of the real challenge which leaders face. Being able to execute their entire plan, requires the ability to visualise their strategy as the big picture for the business and being able to communicate it to all levels of stakeholder with personal conviction which creates and sustains the momentum you need for your strategy to succeed. That means by beginning with the end in mind, that clear strategic objectives which fit into the future which the leadership team must believe in and focus on with ambitious and measurable goals.

Successful leadership must engage all the people throughout their organisation, so that hey all understand the strategic drivers that are creating and driving the market within which they operate. Only through open and frank discussion can leadership teams enable employees to understand the drivers and implications of change within the organisation will they be able to carry people through the change process successfully.



Summary
It is not the case of culture eats strategy, if you look at successful businesses and organisations around the world, a great strategy, well thought out resourced, driven and supported will deliver bottomline results. Great strategic thinking, creates, nurtures and sustains dynamic cultures within organisations, which in turn drive strategic thinking to new heights, creating brand leaders in every sector of industry. But short-term thinking and a lack of investing in leadership skills, robust strategic thinking processes and people investment will continue to hamper the success of strategy in business today.

Learn more at www.cowdenconsulting.com

   

Monday, 6 July 2015

Managing Strategic Risk

When leaders think about risk management in business they are too often talking about legal compliance.  This is a common misunderstanding of risk by leaders, not seeing risk as primarily a strategic issue in business. This view of risk misses the strategic elements of risk, which leaders need to consider in defining their business model and in making strategic decisions. From start-up to exit risk is a strategic issue, which should underpin all strategic thinking.  

Developing leadership risk skills is an important element for leaders to understand that their approach to risk defines how the lead and what they lead. Strategic risk defines the type of business model that leaders develop through to which markets and where in them they choose to operate. 



Drawing up lots of rules and making sure that all employees follow them on the other hand can solve operational risk. Many such rules, of course, are sensible and do reduce some risks that could severely damage a company. But rules-based risk management focuses on legal requirements, not complete risk management. 

Understanding strategic risk and learning to how to manage key business risks throughout your business is an important skill set for leaders to develop in establishing their judgment in risk considerations and ensure they are integrated into strategic thinking.  There are two parts to risk, firstly identifying your strategic risk and then secondly how to actively manage the identified risks, which this article covers. If you would like to know more about strategic business planning then click this link here.

Here are some key questions to consider in identifying strategic risk:  

1. Risk Appetite 

The first stage in managing risk is to look at the leadership team and its surrounding stakeholders, both formal (Board, NED, shareholders) and informal (employees, advisors, channel partners) to map out the appetite to risk. The leaderships' risk appetite determines the overall approach the business will take to risk. Risk is always directly linked to reward, take no risk and you take no reward. Conversely take high risk and you could achieve high reward, but equally high failure. The more the leadership diversifies from its core skill sets it also increases the risk it takes. So risk is linked to the sector you are operating in, established and known is lower risk than emerging and unknown.       


2. How well is your strategy defined? 

Without a strategy your business is at high risk. If the leadership does not have a clear and articulated strategy, which is shared and owned, then the business is vulnerable to strategic drift, living in a dream and is without clarity and purpose. Having a strategy in place, provides the context of the business, with strategic goals, intent in positioning and outcomes defined which enable the business to drive forward. To learn more about strategy click here.

3. Strategic Risk Analysis

A business strategy must define the risk environment within which it operates. Strategic risk starts by looking at the risk of entering a market compared to the risk of not entering a market. Strategic risk management should compare not only the risks of the strategy but the reverse risks of not doing the strategy, the gap risk of missing the opportunity.

Strategic risk also covers risk analysis of the leadership and its approach to risk, how comfortable it is with risk reflects in how leadership teams actively manage risk which reflects its established risk skill set and appetite to risk across the board.

4. Strategic Risk Assessment

Risk, any risk is defined by the potential impact of the consequences from it. The manifestation of its likelihood of occurring is the assessment which must be undertaken, this is often scrutinized by undertaking scenario analysis (driven by board, NED and expert support and advisors) will encourage the leadership to consider a range of scenarios that can result in significant adverse consequences for the business and assist the leadership to make sure full width and depth analysis of strategic risk is undertaken.

This assessment provides the basis of mapping the risk and determining the investment in mitigation required to reduce or remove that risk.

5. Strategic Risk Mapping

The
leaders must see risk in the context of how shareholders or stakeholders measure value in the organization. This essential mapping of risk enables the leadership to articulate to stakeholders how the risks they are taking or the risks the business is exposed to may affect the organization’s ability to realize its strategic goals. By identifying common metrics for risk and performance also allows the leadership to define the priorities of risk management activities and focus on the mitigation of relevant and important and decision defining risks the board.



The second step, in creating an effective strategic risk management system is to understand the qualitative distinctions among the types of risks that a business could face and determining how to actively manage those risk. Risks typically fall into one of three categories and here's how leaders should be managing them:


1. Managing: Strategic risks.

The leadership having determined the level of risk it is willing to take in order to generate the returns from its strategy, its risk and reward profile, leaders must then develop appropriate channel partners to achieve that strategy. From its bankers credit risk, its strategy of launching new products through to its channel partner selection, all these decisions impact upon the strategic risk strategy. 

Strategic risks are quite different from operational risks because they are not inherently undesirable; they are quite the reverse they are deliberately accepted as part of operating within that industry. A strategy with high returns requires the business to take on higher risks, and actively managing those risks is a key driver in achieving those potential gains.

Strategic risks cannot be managed through a rules-based control models, such as compliance to legislation. Instead, the leadership must install a risk-management system designed to reduce the probability that the assumed risks actually materialize and to improve the company’s ability to manage or contain the risk events should they occur. Such systems enable companies to take on higher-risk, higher-reward ventures by identifying drivers of strategic risk, most often these are identified through 5 Forces analysis within markets and systems usually include primary (and secondary fallback) detailed objectives which must be achieved which underpin the strategy to actively manage the strategic risks.    


2. Managing: External risk factors

Certain strategic risks arise from events outside the company and are beyond its influence or control, often identified through PESTLE analysis. These major macroeconomic risks are outside the market but directly influence it. PESTLE identification and analysis enable leaders to manage the external risks effectively, through proactive identification and mitigation of their impact. For example changing economic conditions may raise global interest rates, which put pressures on even successful businesses, which impacts upon costs and profits.

Businesses need to build a defined risk management processes to these different PESTLE categories. By identifying key drivers of external change leaders can devise stress testing through scenario planning and devise alternative strategic options should external risk factors come into play.

3. Managing: Preventable internal risks. 

Conversely internal risks, arising from within the organization, that are controllable and ought to be eliminated or avoided. Businesses should have well defined internal risk systems in place which includes a tolerance level, such as 95% of all calls must be answered within 3 calls, in other areas health and safety for example mandatory 100% requirements for the use of PPE and operating systems must always be in place.  

Businesses should seek to eliminate these risks since they get no strategic benefits from taking them on. This risk category is managed through active prevention by monitoring operational processes and guiding people’s behaviors and decisions toward desired norms.

Identifying and managing preventable risks is about good management of existing best practices within the legal and industry best practice.  Companies cannot anticipate every circumstance or conflict of interest that an employee might encounter, so ensuring that risk is talked about, reviewed and assessed against best practice. 


Managing Risk effectively

Risk is a difficult subject for leaders, precisely because it is seen as an operational detail rather than strategic in nature. Business planning sets over optimistic forecasts, from unrealistic timescales to launch new products and services through over inflated revenue streams.  This form of linear extrapolations, how leaders have done it before will be immediately repeatable with something new is compounded by the use of conformation bias, selectively picking supportive data and ignoring unsupportive data. This form of groupthink often limits the risk discussion by narrowing the discussion down to it will happen rather than taking a holistic approach to risk.

Other key drivers of strategic risk failure come from leaders ignoring industry activity, how fast and quickly competitors will react to any new strategic initiatives to minimize their impact upon the status quo and how channel partners and customers will sound supportive but will measure the risk to them and mitigate it by limiting their exposure to risk. How industries react to change is one important consideration from an effective 5 forces analysis of any market. How do they players react to change is often analyzed by war-gaming with scenarios played out in theoretical games to see the impact of industry competition.

By strategy mapping your business leaders can often assess all risks linked to objective setting, looking at risk events associated with each objective and generate a risk profile for each risk and associated mitigation strategy.

Recently the adoption of the balanced scorecard has become a major way of mitigating risk, by linking mitigation to performance driver indicators of behavior within the organization. This highly effective risk management tool enables companies to engineer risk out of departments through positive mitigation strategies.  

For areas of risk which cannot be mitigated from within the company, such as natural disasters or acts of terrorism, then developing contingency plans act as mitigation to unforeseeable external risks. Not putting all leaders on the same plane is a simple example of contingency planning as is having secondary operational site, should your primary site be unusable from either natural causes such as flooding or from acts of terrorism.

Like to know more about strategic business planning then learn more through my video course on strategic business planning, which will reduce your risk in succeeding within your market, then click this link.


Richard Gourlay, how to take the guess work out of your business success

Good leaders embrace risk, they do not avoid it and investing time and skills into understanding and actively managing risk is an important element of leadership.  Good strategic planning encompasses strategic risk assessment and leadership teams need to invest in understanding their risk if they wish to succeed in their market.  

Wednesday, 28 January 2015

What Great Leaders DO Differently

Peter Drucker's iconic quote above defines the need for leadership, but what makes a great leader? Is the question which people placed in any position of authority, want to know. 


Leadership is often described in terms of being the figurehead, the ultimate power and the final authority.  

While there are many excellent qualities which people can identify in good leaders, these traits are the outcome of leaders being bale to work well with people inside their business. What makes the exceptional leaders is not people doing all of them better than average, but being able to do a few of these core skills to an outstanding standard, making them great leaders. Great leaders play to their strengths, not trying to do everything, just the things that matter, those which make a real bottomline difference in performance. 

Leadership skills, those personal attributes which people recognise as able to inspire others, are always built upon the ability to motivate other people. All leaders must be able to inspire, to keep people driven and focused on their goals. 

There are a number of ways in motivating people, for some using their charisma and energy can be great motivators, their personality drives people to follow them. This type of charisma leadership is often focused around the culture of the personality, the successful sales person, the inspiring leader, using their relationships with staff and often key customers, they lead through the force of their personality.   

For others their technical knowledge and expertise within their field provides the inspiration for others to follow. Their ability to foresee and create products and services which meet target customers needs and exceed expectations open up markets and generates business through the leaders insight and forethought. This type of leadership, the technical leader, relies more upon their ability to achieve results rather than to personally motivate.   

Being a leader, either by be placed in a position of leadership or by the accident of assuming the role, either as the inspirational or technical leader within an organisation, puts pressure on leaders to perform. Being the focus of attention, the decision maker, requires leaders to develop a range of skills to lead in a number of situations and to lead different types of people.  

There are no definite way of stating 'do this to be a great leader', everyone can be a leader, it all depends upon the circumstances, but what makes great leadership, is not just the ability to take decisions,  but a few specific factors often grouped into three areas which separate great leaders from the rest. So here's what I see great leaders do differently.  

The first thing great leaders do differently is create diverse and strong networks of contacts. If you always listen to the same people you will always be limited to their views. Most leaders listen and make decisions based on a small group of trusted advisors. 

The weakness for leaders of always listening to the same inner group is that as change happens to our business, as it grows, as change impacts on our markets this inner circle becomes outdated, not fit for purpose. Those people that leaders listen to when they are starting out, for example you first accountant, maybe a compliance account (keeps you legal) as your business grows you need new services and expertise (expansion funding, tax advice, etc) outside that persons skill set. Great leaders recognise they need to add to their advice panel, good leaders often don't.

Investing in your trust network is a core skill which great leads do, they sharpen the saw as Stephen Covey phrases it. Always be learning, sharpening your skills by working with the right mix of people who you trust to take advice from. This investment by great leaders is about having a diverse set of trusted advisors who provide the balance and foresight which great leaders need to think ahead with the right sources of information. The great leaders I have seen often introduce Non-Executive Directors, new experienced people from different industries and widening the trust network with greater diversity of views.

The second thing great leaders always do is the ability to stand back and see the big picture of your industry. The role of being the general commanding your resources. Great leaders not only command today's activities, as the ultimate controller, but are always looking at develop fresh understanding what is driving your industry, the change making factors. 

"Where you are is not as important as knowing where you are going and why." Great leadership is about creating the tomorrow you want to achieve.  It is looking for the drivers of change within your business.  It is one of the hardest skills which great leaders have to master. It takes time, effort and resources, often with blind alleys and a high degree of uncertainty. 

The struggle for busy leaders is to value doing enough of the right research to create clarity in an unclear future, which changes matter and what impact do they make on the future of your market, your customer and your future as a organisation? These are the most important and valuable questions any leader can and must answer. 

The importance of understanding the impact change and using it to create your forward strategy is one of the defining characteristics of great leaders. Great leadership is about focusing on what you can change the future, not fire-fighting todays problems. Not only is it more productive but it is also the only way to be effective as a great leader. 

The third and vital attribute of great leaders is that they make change happen. Sometimes seen as being ruthless to make change happen, great leaders are proactive in making change happen. This pro-activeness in making change happen, can see to others as utter ruthlessness, because great leaders can see why the change is needed, while those elsewhere in the organisation see the change but not the drivers of why leaders are making that change happen then and there.

Great leaders are not frightened of change and when I say change, I do not mean evolutionary or organic changes, but revolutionary changes.  Great leaders make bold changes at the optimum point for sustainable success, when do we need to make the change to succeed in the long-term. 

Good leaders make changes, but often only when they have few other options, or are forced into making that change, they are often reactive change, Great leaders on the other hand make proactive revolutionary changes because they can see the long-term benefit.

Each of these three great leader attributes support and drive all those other skills which good leaders often portray, and this is what makes some leaders great at leading their people and their organisations. 

By creating diverse trust networks it enables leaders to find better information about the future and the changes they need to make. This virtuous cycle is what makes some leaders great and very different from those who rely upon gut feel and reactive enforced decision making.   

If you would like to know more about what makes a great leader, you can read more about my work in working with great leaders or click the link below to see my free video on How to take the guess work out of your business success:-









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