Strategy Snippets

Is it that the machines are getting smarter … or that people are getting dumber?

(Yes America: I’m looking at you).

We’re worried that the machines might become self-aware.

Are we completely sure that, umm, people are self-aware?

Oh, and Yes: the accompanying picture was generated by a machine.

The key to wrangling a project, to making it tractable, is to ensure you can get your head around the length and breadth of it. Here are three aids to doing that:

1. Ensure there is a place to park new or unresolved issues – such as a Parking Bay or Issues Log – to ensure these don’t get lost before they find a home. And then make sure you have a mechanism, such as a regular project or working group meeting, to review and allocate them, and track their resolution
2. Ensure there is a specific means of identifying, capturing and managing risks. This should sit across the project plan so that factors which might hinder the accomplishment of project milestones are flagged, with sufficient time for them to be addressed
3. Communicate … even when there is no change. An absence of communication is not the same as a communication of ‘no change’ or ‘no progress’. It’s still important for people to hear ‘Nothing to report’ if that is the accurate project status update. Ensure a constant flow of communication up, down and across all participants and stakeholders … and don’t confuse a message of ‘No change’ … with no message.

Although tangled and messy, the Redback Spider’s web functions in three dimensions rather than the two dimensions of the typical spider web.

Does your organisation’s or division’s strategy operate in two dimensions, or three? Are there mutually reinforcing facets: think of the way Walt Disney’s TV appearances in the 1950s fed awareness of and interest in the newly built Disneyland, which in turn prolonged and reinforced Disney characters and films. Or do they only operate only on a single plane? Are your operational and risk management systems multi-faceted enough to function three-dimensionally or are they merely ‘flat-file’?

Next time you see a spider web, let it prompt you (as you're reaching for the pest spray) to think about the depth and breadth of your strategy.

I’ve had clients ask me how to transmit a vision through the organisation: how do you establish a clear line of sight from high-level mission through to implementation and execution?

The truth is: there is no secret to this, no arcane management methodology is required. There is only:

1. collaborative clarity
2. a structure by which to hold people accountable for results and timeframes, and
3. relentless follow-up.

That’s pretty much it.

1. The ℎ𝑜𝑙𝑑𝑖𝑛𝑔 𝑟𝑒𝑝𝑙𝑦 – a valuable means – in the age of digital communication – of letting people know you’ve received their email or voice message … but don’t have the time to properly respond just yet
2. The 𝑚𝑒𝑒𝑡𝑖𝑛𝑔 𝑎𝑔𝑒𝑛𝑑𝑎 – an agenda sent out to participants in advance of a meeting is (along with the work that happens between meetings) likely the key success factor of any meeting
3. The 𝑖𝑠𝑠𝑢𝑒𝑠 𝑙𝑜𝑔 – for capturing and holding important issues that require resolution … without having to detour from immediate priorities
4. The 𝑟𝑖𝑠𝑘 𝑟𝑒𝑔𝑖𝑠𝑡𝑒𝑟 – not just for review at Board Risk Committees, but also a vital input to regular management deliberation … and strategy development efforts (in particular the Threats section of a SWOT analysis)

Here are my top four change management tips, culled from the literature and validated by years of work in the field:

1. Focus on real business problems (reducing operating costs, improving customer response times) rather than abstractions (‘participation’)
2. The single biggest cause of failure of any change effort is absence of senior management support
3. People support what they help to create
4. People don’t resist change; they resist ambiguity

Need to garner support for a corporate initiative? Here are my top three tips on how to do it.

1. Crystallise the benefits of your initiative for the major players: the key here is to make the benefits *tangible* (as distinct from *large*)
2. Meet the players face-to-face: get in front of them and give them a chance to have their say (and outline the benefits for them – see point above). There’s something compelling about being face-to-face with people which is not as strong with other forms of communication
3. Create a bandwagon that has such momentum that it’s a no-brainer that people would get behind it. Senior leaders have to bang the drum for an initiative loudly and constantly, publicising exemplars and providing plaudits for early followers: be loud and proud.

• ‘The best predictor of the success of a meeting may be a written agenda distributed in advance’ (Romano & Nunamaker) … even a regular weekly stand-up meeting should have an agenda.
• In a meeting, follow the thread of the conversation, and if it gets off track, bring it back on course.
• If there are important issues which need attention, but risk derailing other items, put them on a parking bay and assign them to someone to progress and report back at a future meeting.
• Debussy said ‘Music is the space between the notes’; the value of a meeting depends on what happens between meetings (follow-up, implementation). Meetings are to share information, coordinate players, make decisions and track results: they are to progress action, not avoid it.

The ancient Roman army was so well organised that it had to be attacked three times before it was defeated.

The Romans’ battle formations were such that if the tightly packed vanguard were driven back, it would interlock with the second line of defence to create a larger body which provided a fresh onslaught. If that unit in turn were repelled, the rear guard would receive that unit as a whole: all three units then combined to create a single body to re-enter the battle.

The Romans were able to successively regroup in battle and had to be beaten three times before they were properly defeated; with this ability facilitated by progressively looser configurations.

The punchline: risk management systems should allow for multiple challenges, and successive mitigations should become progressively more flexible.

The first type of change metric is for the change effort itself; typical metrics here include:

• frequency of communication
• percentage of business units with change champions embedded
• actual versus scheduled timeline for change project.

The second is for business-as-usual KPIs which reflect a demonstrable difference in results as a result of the change effort. Examples might include:

• unit costs
• customer satisfaction
• defect rates.

The two types are shown in the graphic, using a change effort aimed at reducing average costs as an example.

1. The title or subject should encapsulate the issue being addressed. Be on point, not oblique
2. Crystallise the key points so the issues are succinctly spelt out on the cover sheet, and the reader/approver can ‘get’ the issue within a minute or two
3. Use the logic of the briefing note structure (Issue, Background, Current Position, Recommendation, or similar) to take the approver on a ‘journey’ that guides them where you need them to be
4. Don’t ramble. Apply Occam’s Razor
5. Include an action which lets the approver know what they need to do. If the purpose is to inform them, then the recommendation is ‘For information’
6. Relegate large sources or technical material to an appendix. The cover sheet should stand on its own and reference any appendices.

Many organisations have to comply with requirements imposed on them by a central office. There may be mandatory strategy sessions, or plans that have to be submitted.

These are typically seen as burdens to be completed as painlessly as possible to get ‘corporate off our back’. But there are more strategic ways of viewing them. Fulsomely meeting the requirements of a parent organisation is an opportunity to demonstrate competence, and gain favour with a stakeholder who can make funding available or open doors.

Your contribution may also shape central office’s agenda: if you have to prepare risk management plans you can use your plan to shape the conglomerate’s approach to risk.

Rather than complaining about the inevitable, why not leverage it?

1. Analyse web-captured free text customer feedback to source good news stories and identify areas of risk or dissatisfaction
2. Analyse KPI results to determine which KPIs drive others, and which are lead indicators; use this to go behind traffic light indicators to unpack the *drivers* of performance
3. Benchmark offices or service outlets against each other to find best/worst performers; use this as a prompt to find the sources of high performance
4. Derive regional or area structure based on spatial distribution of clients
5. Derive whole-of-life cost estimates for hard assets/infrastructure. Model the impact on asset condition of various maintenance regimes over the expected life of the asset
6. Check for irregularities to supplement exception reporting and assure probity of accounts payable processes for internal audit, Auditor-General etc.

1. Analytics techniques can be used to 𝑠𝑖𝑚𝑢𝑙𝑎𝑡𝑒 𝑎𝑛𝑑 𝑝𝑟𝑒𝑑𝑖𝑐𝑡 𝑡ℎ𝑒 𝑟𝑎𝑛𝑔𝑒 𝑜𝑓 𝑝𝑜𝑠𝑠𝑖𝑏𝑙𝑒 𝑜𝑢𝑡𝑐𝑜𝑚𝑒𝑠 𝑓𝑜𝑟 𝑝𝑟𝑜𝑝𝑒𝑟𝑡𝑦 𝑑𝑒𝑣𝑒𝑙𝑜𝑝𝑚𝑒𝑛𝑡𝑠 𝑜𝑟 𝑙𝑎𝑛𝑑 𝑟𝑒𝑐𝑙𝑎𝑚𝑎𝑡𝑖𝑜𝑛 𝑒𝑓𝑓𝑜𝑟𝑡𝑠
2. Asset and facility managers can use analytics to model maintenance expenditure to 𝑠𝑡𝑟𝑖𝑘𝑒 𝑡ℎ𝑒 𝑏𝑒𝑠𝑡 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 𝑜𝑓 𝑚𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑐𝑜𝑠𝑡 𝑣𝑖𝑠-à-𝑣𝑖𝑠 𝑎𝑠𝑠𝑒𝑡 𝑐𝑜𝑛𝑑𝑖𝑡𝑖𝑜𝑛 𝑜𝑣𝑒𝑟 𝑡𝑖𝑚𝑒
3. Where large-scaled, detailed data for a given property market is available, analytics can be used to sift through the array of property attributes to potentially 𝑖𝑑𝑒𝑛𝑡𝑖𝑓𝑦 𝑢𝑛𝑑𝑒𝑟-𝑣𝑎𝑙𝑢𝑒𝑑 𝑝𝑟𝑜𝑝𝑒𝑟𝑡𝑖𝑒𝑠
4. For owners with multiple holdings, analytics can be used to help 𝑚𝑎𝑘𝑒 ‘𝑠𝑒𝑙𝑙-𝑣𝑒𝑟𝑠𝑢𝑠-𝑟𝑒𝑡𝑎𝑖𝑛’ 𝑑𝑒𝑐𝑖𝑠𝑖𝑜𝑛𝑠
5. Analytics techniques can be used to 𝑠𝑒𝑔𝑚𝑒𝑛𝑡 𝑏𝑢𝑦𝑒𝑟 𝑚𝑎𝑟𝑘𝑒𝑡𝑠 to break them down into discrete groups 𝑡𝑜 𝑤ℎ𝑖𝑐ℎ 𝑡𝑎𝑟𝑔𝑒𝑡𝑒𝑑 𝑎𝑝𝑝𝑟𝑜𝑎𝑐ℎ𝑒𝑠 𝑐𝑎𝑛 𝑏𝑒 𝑚𝑎𝑑𝑒 𝑏𝑦 𝑣𝑒𝑛𝑑𝑜𝑟𝑠 𝑜𝑟 𝑡ℎ𝑒𝑖𝑟 𝑎𝑔𝑒𝑛𝑡𝑠.

This is the first in a series of Strategy Snippets® to help managers deal with risk and uncertainty. Decision trees are based on a left-to-right branching logic in which a sequence of chance events are articulated and ‘unfold’ into a range of possible outcomes.

The attached graphic shows a hypothetical decision tree for a construction company deciding whether to proceed with a particular project, with all combinations of possible outcomes. Each has its own ‘pathway’; options for action by management (recruit more staff? defer marketing? etc.) could also be added, so that the decision tree captures both events outside the organisation’s control, and those within it.

Even a simple decision tree like the one shown can help give management a clear pathway forward in an uncertain environment.

Many managers overlook the foundation when setting goals and priorities: taking stock of previous 𝘱𝘦𝘳𝘧𝘰𝘳𝘮𝘢𝘯𝘤𝘦; specifically, how performance 𝘤𝘰𝘮𝘱𝘢𝘳𝘦𝘥 𝘵𝘰 𝘭𝘢𝘴𝘵 𝘺𝘦𝘢𝘳’𝘴 𝘨𝘰𝘢𝘭𝘴.

This oversight means you don’t gain insight into your ability to produce results, or what has and has not worked for the organisation, and why ... all of which are critical to managing risk.

Knowing strengths and weaknesses is critical to responding to a changing environment … and a review of past performance highlights those strengths and weaknesses.

The attached graphic, with a worked hypothetical example, uses a template you can adapt for your own review.

So: revisit last year’s goals, and how you performed against them. Then do a strategic scan of your environment. 𝘛𝘩𝘦𝘯 set your goals and do your risk management planning for this year.

There is so much uncertainty in management and business: what will happen to prices, take-up rates, or funding? Typically such uncertainty is dealt with via sensitivity analyses, but so often there are multiple variables with multiple uncertainties!

Computer simulations are a powerful means of dealing with this: all the different possibilities can be input to one big mash-up. The computer can then generate thousands of scenarios using random generated numbers, providing a full spectrum of results … and 𝘩𝘰𝘸 𝘭𝘪𝘬𝘦𝘭𝘺 each is to eventuate.

This form of analysis, known as Monte Carlo simulation (because of the use of random numbers, as at a casino) is a powerful, but under-utilised, risk management technique.

Small-scale pilots and business experiments are great ways to collect information, iron out bugs and manage down risks

My three key observations on pilots and tests are these…

1. Pilots and tests are easier to implement than most people think, and are massively under-utilised
2. They are best used in operational and tactical contexts: it is generally not feasible to test a major change in strategic direction or a merger or acquisition ahead of time
3. When running a pilot or test, always ensure that the results can be compared to a pre-defined baseline or control group.