Monday, June 25, 2012
Valuing Innovative Thinking
Whether you are competing for customers, staff or resources, innovation is the key to competitive advantage. Your capacity to innovate (rather than any particular innovation) is a "strategic asset". This capability is unique to your organization and cannot be bought or copied by competitors. Innovative thinking keeps a business vibrant, adaptive and thriving. It's a survival skill for business.
However, in a recent global study*, only half of the executives surveyed said that their corporate culture robustly supported their innovation strategy. The research showed that companies with unsupportive cultures significantly underperformed their competitors.
Our society struggles with the tension between traditional methods of management and the type of leadership which is required in order to develop a culture of innovation.
CPA Australia (NT) recently invited me to Darwin, Australia, to address its members (certified practising accountants) and local business leaders on the topic "Valuing Innovation". A lively discussion followed the presentation.
In the lead-up to the event I wrote a paper on this subject.
You can download the paper here
If you'd like me to present on this topic for your organization or association, please call me to discuss.
Tuesday, May 8, 2012
Strategy Doesn't Shout
The purpose of your Strategy is to achieve a competitive advantage.
Have you ever thought about the idea that the simple act of reviewing your strategy could in itself confer competitive advantage?
Most people think short-term, which is the enemy of strategy. "Last year, plus a bit" isn't a strategy.
To work on your strategy requires taking time out from "business as usual" to review your position in the market, even if all seems to be going smoothly.
Competitive advantage evaporates over time. Suddenly you find that a competitor has changed the game, or that customer demand has moved in a different direction. For example Blackberry has discovered that it is losing its customers to the Apple i-phone. It didn't really happen suddenly, but they hadn't noticed what was going on.
Reacting to the actions of a competitor does not produce good strategy, because it allows your competitor to set the agenda, instead of competing on your own terms.
Reviewing your strategy means making a decision to spend time on something that isn't currently causing a problem. The willingness to do this could become a source of competitive advantage.
Strategy is never urgent until there is a crisis, and then suddenly it becomes a matter of survival.
Much of our time at work is taken up with things that shout for our attention, even if they are comparatively unimportant.
Steven Covey, in his book "The Seven Habits of Highly Effective People, says that to get ahead, we need to make time for the things that are "non-urgent" but "important". Strategy is one of those things. Covey writes "We react to urgent matters. Important matters that are not urgent require more initiative, more proactivity. We must act to seize opportunity, to make things happen. If we don't … have a clear idea of what is important, of the results we desire in our lives, we are easily diverted into responding to the urgent.
Covey tells a story about a professor who fills a big jar, first with rocks, then with gravel, then with sand and finally with water. At each stage, he asks the students "Is the jar full?" At the end of the demonstration, he asks the students "What is the point of this illustration?" One student responded, "No matter how full your schedule is, if you try really hard, you can always fit some more things into it!" The professor said "No, the point is that if you don't put the big rocks in first, you'll never get them in at all."
Strategy is one of those "big rocks" - it sets the criteria for all your business decisions. It doesn't shout for attention - you have to make time for it.
Monday, April 9, 2012
Leadership traits drive strategy development
In 1955, the IBM Executive School undertook research to identify the skills and knowledge that make great leaders, with a view to teaching these to IBM employees. The skills and knowledge of great leaders turned out to be extremely diverse. However, they were found to share some specific values and attitudes.
Some of the findings* were:
• Great leaders thrive on ambiguity. They are able to turn apparent contradictions and paradoxes into innovative ideas.
• Great leaders love blank sheets of paper. Rather than seeking “a plan that reduces their job to filling in the blanks”, leaders create the “blanks” that managers fill in. “Every great leader relishes the opportunity to ‘think things through’ from scratch”.
• Great leaders stick their necks out. Rather than avoiding individual accountability, “Great leaders want to be measured and evaluated”. They are willing to take risks and accept the blame when they are wrong or fail to deliver.
• Great leaders are deep thinkers. “Managers get things done. Executives must decide on the things that are worth doing in the first place….They know that the answers they are seeking will probably emerge from outside business and from disciplines that may seem utterly unrelated.”
These are all traits required for developing innovative competitive strategy:
• The world is complex. There are no simple answers, and innovative solutions are often counter-intuitive.
• A blank sheet of paper is the best starting point. Templates, or your existing strategy document, will confine your thinking.
• Developing a strategy is an exercise in creating the future. By definition, it should be a path not previously travelled. To suggest a new approach means taking the risk that others will judge you adversely.
• To produce original strategy requires moving beyond the obvious. Superficial thinking will only produce words, not meaningful differentiation.
The leader sets the tone for a strategy discussion. People look to the leader for clues about how to approach the exercise and how to behave in the discussion. If you're the leader, exercise leadership. If you're a facilitator, encourage the leader to exercise leadership. If you're neither, you can still exercise some leadership by demonstrating these traits.
* http://www.forbes.com/sites/augustturak/2012/03/02/10-leadership-lessons-from-the-ibm-executive-school/
Some of the findings* were:
• Great leaders thrive on ambiguity. They are able to turn apparent contradictions and paradoxes into innovative ideas.
• Great leaders love blank sheets of paper. Rather than seeking “a plan that reduces their job to filling in the blanks”, leaders create the “blanks” that managers fill in. “Every great leader relishes the opportunity to ‘think things through’ from scratch”.
• Great leaders stick their necks out. Rather than avoiding individual accountability, “Great leaders want to be measured and evaluated”. They are willing to take risks and accept the blame when they are wrong or fail to deliver.
• Great leaders are deep thinkers. “Managers get things done. Executives must decide on the things that are worth doing in the first place….They know that the answers they are seeking will probably emerge from outside business and from disciplines that may seem utterly unrelated.”
These are all traits required for developing innovative competitive strategy:
• The world is complex. There are no simple answers, and innovative solutions are often counter-intuitive.
• A blank sheet of paper is the best starting point. Templates, or your existing strategy document, will confine your thinking.
• Developing a strategy is an exercise in creating the future. By definition, it should be a path not previously travelled. To suggest a new approach means taking the risk that others will judge you adversely.
• To produce original strategy requires moving beyond the obvious. Superficial thinking will only produce words, not meaningful differentiation.
The leader sets the tone for a strategy discussion. People look to the leader for clues about how to approach the exercise and how to behave in the discussion. If you're the leader, exercise leadership. If you're a facilitator, encourage the leader to exercise leadership. If you're neither, you can still exercise some leadership by demonstrating these traits.
* http://www.forbes.com/sites/augustturak/2012/03/02/10-leadership-lessons-from-the-ibm-executive-school/
Wednesday, February 22, 2012
Strategy Sets the Agenda
Your competitive strategy determines what you
will do and what you won't do, and how you will
focus your efforts and resources.
It sets the agenda for all the decisions which
will be made in the course of business. The
question should always be asked "Does this fit
with our strategy?"
Innovation is good - if it's strategic. There's
no point coming up with lots of random ideas -
innovation needs to be in pursuance of the
strategy.
A recent article in Strategy + Business
magazine*, reported that, in a survey of 600
companies globally, about half reported that
their innovation strategy was inadequately
aligned to their overall corporate strategy.
The study found that companies with poor
strategic alignment significantly underperform
their competitors.
Here's an important distinction - "innovation
strategy" is not the same as "competitive
strategy":
• Your competitive strategy is the choice of how
and where to compete, in order to achieve
competitive advantage - choice of markets, how
you will serve those markets differently from
your competitors, and what will enable you to
compete on that basis.
• Your innovation strategy is the choice of how
to innovate in order to carry out the competitive
strategy. The article identified three types of
innovation strategy - "Need Seekers", "Market
Readers" and "Technology Drivers".
The study found no relationship between financial
performance and innovation spending. Success
depended more on how the money was spent.
For innovation to be "strategic", your
competitive strategy must be clear, easy for
everyone to understand and frequently
communicated.
Strategy sets the agenda.
* _The Global Innovation 1000: Why Culture Is
Key_ by Barry Jaruzelski, John Loehr and
Richard Holman, October 25, 2011/Winter
2011/Issue 65
will do and what you won't do, and how you will
focus your efforts and resources.
It sets the agenda for all the decisions which
will be made in the course of business. The
question should always be asked "Does this fit
with our strategy?"
Innovation is good - if it's strategic. There's
no point coming up with lots of random ideas -
innovation needs to be in pursuance of the
strategy.
A recent article in Strategy + Business
magazine*, reported that, in a survey of 600
companies globally, about half reported that
their innovation strategy was inadequately
aligned to their overall corporate strategy.
The study found that companies with poor
strategic alignment significantly underperform
their competitors.
Here's an important distinction - "innovation
strategy" is not the same as "competitive
strategy":
• Your competitive strategy is the choice of how
and where to compete, in order to achieve
competitive advantage - choice of markets, how
you will serve those markets differently from
your competitors, and what will enable you to
compete on that basis.
• Your innovation strategy is the choice of how
to innovate in order to carry out the competitive
strategy. The article identified three types of
innovation strategy - "Need Seekers", "Market
Readers" and "Technology Drivers".
The study found no relationship between financial
performance and innovation spending. Success
depended more on how the money was spent.
For innovation to be "strategic", your
competitive strategy must be clear, easy for
everyone to understand and frequently
communicated.
Strategy sets the agenda.
* _The Global Innovation 1000: Why Culture Is
Key_ by Barry Jaruzelski, John Loehr and
Richard Holman, October 25, 2011/Winter
2011/Issue 65
Monday, November 21, 2011
The Power of Conviction
People often say "The missing link in strategy is implementation". What they mean is that the new strategy simply sits on the shelf and nothing changes.
I have always found this to be most intriguing. I would have thought that people in organizations would be particularly strong on implementation. Entrepreneurs tend to be "doers". They employ smart people with practical skills. They pay these employees to do what they are asked to do, and if they don't do it, they are at risk of being fired. There are plenty of project managers who have the skills to plan and manage the implementation of projects.
If you are going to install a new computer system, you tell all your employees what they are required to do. If they don't do it, they are in trouble. No one has a choice. Everyone has their own part to play, to reach the point where the new system is functioning properly.
So, when it comes to strategy, why is implementation such a problem?
For one thing, a strategy is not an action plan. First you have to define the strategy. Then you work out a plan to achieve it.
Secondly, it's been said that a failure to execute is always due to one of three things:
1. You don't know what to do,
2. You don't know how to do it, or
3. Someone or something is standing in the way.
I believe that with strategy, the first point is usually the main problem. If your strategy is empty rhetoric; just fine-sounding words, it won't have any substance and won't generate any action. If, however, you have a clear conviction that you've come up with the right strategy, you will know what you have to do. You will work out how to do it. Nothing and no one will stand in the way. But if you're not entirely sure about the strategy you've formulated, if you haven't developed a clear vision, if you haven't thought deeply enough about your specific value proposition and how you will differentiate, you won't have sufficient drive to mobilise the people around you to take action on it. You'll have a nagging concern that something's not quite right. A strategy has to feel right. It's partly a logical and partly intuitive decision.
If the thinking is done thoroughly and well, then the doing will follow easily.
Without strong conviction, you're just stuck in precedent.
I have always found this to be most intriguing. I would have thought that people in organizations would be particularly strong on implementation. Entrepreneurs tend to be "doers". They employ smart people with practical skills. They pay these employees to do what they are asked to do, and if they don't do it, they are at risk of being fired. There are plenty of project managers who have the skills to plan and manage the implementation of projects.
If you are going to install a new computer system, you tell all your employees what they are required to do. If they don't do it, they are in trouble. No one has a choice. Everyone has their own part to play, to reach the point where the new system is functioning properly.
So, when it comes to strategy, why is implementation such a problem?
For one thing, a strategy is not an action plan. First you have to define the strategy. Then you work out a plan to achieve it.
Secondly, it's been said that a failure to execute is always due to one of three things:
1. You don't know what to do,
2. You don't know how to do it, or
3. Someone or something is standing in the way.
I believe that with strategy, the first point is usually the main problem. If your strategy is empty rhetoric; just fine-sounding words, it won't have any substance and won't generate any action. If, however, you have a clear conviction that you've come up with the right strategy, you will know what you have to do. You will work out how to do it. Nothing and no one will stand in the way. But if you're not entirely sure about the strategy you've formulated, if you haven't developed a clear vision, if you haven't thought deeply enough about your specific value proposition and how you will differentiate, you won't have sufficient drive to mobilise the people around you to take action on it. You'll have a nagging concern that something's not quite right. A strategy has to feel right. It's partly a logical and partly intuitive decision.
If the thinking is done thoroughly and well, then the doing will follow easily.
Without strong conviction, you're just stuck in precedent.
Wednesday, September 21, 2011
Let it bubble
Creating a new strategy requires original thinking. It requires new perspectives on the environment in which the business currently operates, the resources of the business, the needs that the business can serve, ways in which the business can out-perform its competitors, and future trends. Without reconceptualising one or more of these elements, you will end up with a strategy of "last year, plus a bit".
Ordered, disciplined thinking is not usually enough to achieve such a reconceptualization. You also need to harness the power of unconscious thought processes. To produce new insights, the brain needs time to reflect.
Developing new ways of thinking requires breaking with habitual ways of thinking, and this is what happens during sleep. You've probably had the experience of having a difficult problem to solve, you thrash at it during the day, your thoughts continue to bubble around, and in the morning you discover a fresh perspective on the issue. Sleep allows previously unconnected thoughts to come together to produce new insights. The same thing can happen while you are thinking about issues unrelated to the problem to be solved.
As Louis Pasteur said "Fortune favours the prepared mind". First, work on the problem consciously, then keep it in your mind so that unconscious processes can do their work. History is full of discoveries which appeared as "flashes of insight" - but only because the discoverer had been agitating the problem.
One of my favourite books is "The Act of Creation" by Arthur Koestler (1964). I regard him as the true pioneer of creative thinking skills, pre-dating Edward De Bono. He discusses the story of Archimedes, who was asked by the King to assess the gold content of an intricately-worked crown. Archimedes knew he needed to measure the volume of the crown, but could not think of a way to do this without melting it down (which clearly was not an option). Then one day as he climbed into his bath, he noticed that the water level rose, displacing the volume of his body. In his famous "Eureka!" moment, he connected the two ideas and solved the problem. Koestler points out that Archimedes would have seen the water level rise every time he had a bath, but would not have taken any notice of it unless he was agitating the problem of the crown.
Companies differ widely in the processes they use to develop strategy. Some spend half a day; others work on it for many months. Whatever the scale of your process, you can utilize the power of unconscious thought. New insights on an issue are unlikely to be appear during a single session. Leave the question open and come back to it, and see what new thinking has emerged. If you are holding only a half-day session, send out a questionnaire beforehand, to get people thinking about key issues in the lead-up to the discussion. If you have a two-day event, canvas as many issues as possible on the first day, so sleep can do its work overnight.
To get an innovative strategy, let it bubble.
Ordered, disciplined thinking is not usually enough to achieve such a reconceptualization. You also need to harness the power of unconscious thought processes. To produce new insights, the brain needs time to reflect.
Developing new ways of thinking requires breaking with habitual ways of thinking, and this is what happens during sleep. You've probably had the experience of having a difficult problem to solve, you thrash at it during the day, your thoughts continue to bubble around, and in the morning you discover a fresh perspective on the issue. Sleep allows previously unconnected thoughts to come together to produce new insights. The same thing can happen while you are thinking about issues unrelated to the problem to be solved.
As Louis Pasteur said "Fortune favours the prepared mind". First, work on the problem consciously, then keep it in your mind so that unconscious processes can do their work. History is full of discoveries which appeared as "flashes of insight" - but only because the discoverer had been agitating the problem.
One of my favourite books is "The Act of Creation" by Arthur Koestler (1964). I regard him as the true pioneer of creative thinking skills, pre-dating Edward De Bono. He discusses the story of Archimedes, who was asked by the King to assess the gold content of an intricately-worked crown. Archimedes knew he needed to measure the volume of the crown, but could not think of a way to do this without melting it down (which clearly was not an option). Then one day as he climbed into his bath, he noticed that the water level rose, displacing the volume of his body. In his famous "Eureka!" moment, he connected the two ideas and solved the problem. Koestler points out that Archimedes would have seen the water level rise every time he had a bath, but would not have taken any notice of it unless he was agitating the problem of the crown.
Companies differ widely in the processes they use to develop strategy. Some spend half a day; others work on it for many months. Whatever the scale of your process, you can utilize the power of unconscious thought. New insights on an issue are unlikely to be appear during a single session. Leave the question open and come back to it, and see what new thinking has emerged. If you are holding only a half-day session, send out a questionnaire beforehand, to get people thinking about key issues in the lead-up to the discussion. If you have a two-day event, canvas as many issues as possible on the first day, so sleep can do its work overnight.
To get an innovative strategy, let it bubble.
Monday, August 22, 2011
Ingredients for Strategy Pie
When you're developing your competitive strategy, it's important to make sure you have all the ingredients in the mix. Omitting one of them would be like putting your cake in the oven and then finding the requisite cup of sugar still on the counter (which is something that has actually happened to me).
Here's what you need to bake Strategy Pie:
Ingredients
Definition of your industry and market
Strategic assets, e.g core competencies
SWOT analysis (Strengths, Weaknesses, Opportunities and Threats)
Environmental scan - global, national, local
Competitor analysis
Customer base, segmented
Method
Slice and dice the customer base to produce additional segments.
Layer the competitor analysis over the SWOT, so you can see how your strengths and weaknesses compare with those of your competitor.
Add all the other ingredients.
Leave to bubble in cauldron.
Shake and stir with questions.
Leaven with laughter.
Allow to rise.
Chill for a while.
Find the sweet spot where you can work in your strengths and create maximum value for your target market.
Bake.
Feel free to vary your method, but make sure you don't leave out any of the ingredients.
Here's what you need to bake Strategy Pie:
Ingredients
Definition of your industry and market
Strategic assets, e.g core competencies
SWOT analysis (Strengths, Weaknesses, Opportunities and Threats)
Environmental scan - global, national, local
Competitor analysis
Customer base, segmented
Method
Slice and dice the customer base to produce additional segments.
Layer the competitor analysis over the SWOT, so you can see how your strengths and weaknesses compare with those of your competitor.
Add all the other ingredients.
Leave to bubble in cauldron.
Shake and stir with questions.
Leaven with laughter.
Allow to rise.
Chill for a while.
Find the sweet spot where you can work in your strengths and create maximum value for your target market.
Bake.
Feel free to vary your method, but make sure you don't leave out any of the ingredients.
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