Feb 17, 2021 | Governance, Strategy
The key difference between a successful strategy, and an unsuccessful one, is that the former is implemented.
That simplistic statement does little to acknowledge the challenges in the implementation process.
The purpose of this post is to offer a few observations and recommendations that come from extensive experience, and the mistakes that go with that experience for you to consider.
Two essentials for a successful implementation.
- What and Why. What you are doing and why, should be clear to everyone at every level in the organisation. When the bottom of the organisational pyramid has no idea of the role they play, and how that role fits in and complements others, the strategy is doomed.
- Performance management. Performance feedback loops at all levels and importantly across functions are essential. This requires both good communication, and the processes by which the people in the organisation can learn from mistakes, and adjust processes to avoid repeating the same ones.
In addition, following are 4 observations that may be useful, in no particular order.
- Sunk cost avoidance. Being prepared to recognise early when something is not working, being willing and able to acknowledge the misstep, and back away is a key component to the process of improving the productivity of the resources deployed. This is equally applicable to the detailed operational levels as it is to the executive suite, and requires that ego be left at the door. I have seen this called a ‘batwing’ mentality, like the batwing doors in a western saloon. When you walk through and it is welcoming, keep walking, but when it seems to be filled with gun fighters, back out quickly. Such a culture enables experimentation, and the devolution of decision making to those on the ‘front line’ of any decision, enabling a positive and productive work environment.
- Matryoshka doll. Implementing strategy successfully always reminds me of those Russian dolls that fit inside each other, smallest to the largest. Successful strategy implementation similarly has smaller pieces fitting progressively inside the larger, next level up. While it does not cover the cross functional requirement for strategic success, it has proven to be a useful metaphor.
- Rolling performance management. It is getting harder and harder to forecast anything, the longer the time frame, the more suspect any forecast becomes. The answer is to be focused on the strategic objective, while managing progress towards that objective on a rolling basis, making tactical adjustments based on the context and learning that happens on a continuous basis. This runs counter to the prevailing practise of managing to annual budgets, so creates the need for leadership in the place of management.
- People. Finally, while we are running businesses, the real game is all about people. The way to engage with people is with stories, so ensure that your story is clear, engaging, and known by all employees so they can repeat it, with commitment, at every opportunity.
How can I bring the experience of the years to your challenges? Just give me a call.
Header credit: Tom Fishburne at Marketoonist.com. Again.
Jan 25, 2021 | Governance, Strategy
Well, tomorrow we will have made it to January 26, 2021. Phew!
As I have for the decade of this blog, I have tried to distil the murky water around us into a few points that I think are worth the consideration of Australians.
2020 was a year in which collectively, the world stared into the abyss, and perhaps the abyss is still coming for us, but we seem to have survived reasonably intact, so far. However, the impact will be long term, and predicting the future usually carries a high failure rate.
2020 has highlighted the binary nature of the political processes around the world. To varying degrees, the nature of global politics has shifted, losing sight of the common good in favour of the good to ‘our side’. This is not just a function of 2020, it has been happening for some time, it is just that ‘The Bug’ of 2020 acted as a catalyst to turbo charge its growth.
It is not as malignant in this country as it has been in the US, and Britain, nevertheless, in our political lives, ‘Binary’, between the various political parties, within the parties, in between states in the Federation, has become entrenched. You are either with me or against me. This ensures that differences are personal, the root causes of problems are not even identified let alone examined, and that experimentation is never done, as failure of any kind brings derision, blame, and personal risk.
Australia has done well by world standards fighting the ‘Bug’ by locking down, largely at the insistence of the state premiers. As a result, we will come out quicker and earlier than most, but travel will remain a dream for a long time, as evidenced by the chaos around the Australian open in Melbourne. A few more days and I might have a chance to get into the main draw as more players are quarantined.
Meanwhile, we gear up for an election, due for some time from August this year. My guess is that it will be early 2022, as that gives the Morrison government more time to dish out the pork, disguised as Corona led recovery investments in infrastructure and ‘community’. The opportunity to push out money to buy votes will not be missed by this bunch of pork addicted hypocrites. However, should the other lot be in government, we are assured by no less than the NSW premier, previously an icon of rectitude, that they would be doing the same thing, ‘Everyone does it’.
The vaccine seems to be around the corner, although believing the press releases of pharmaceutical companies and politicians under pressure is not usually recommended. However, the scientists seem to be reasonably confident it is close, taking advantage of the opportunity to build credibility, after being side-lined in the ‘climate debate’ by vested interests for the last 30 years. The ‘no vaccers’ are out in force, a movement that should be confined to small rooms in nut houses. In Australia they seem to be yelping just on the fringes, but elsewhere in the world, have a real voice that may compromise the value of any vaccine, particularly invigorated by the emergence of data recording challenging side effects in the frail, and otherwise compromised recipients, in addition to emerging evidence that this thing can mutate at an astonishing rate.
The Chinese pachyderm trampling our economy from the back of the room seems out of control, and there seems to be no easy antidote to be administered. The new trade minister has blathered about a ‘pivot’ to India, as if by a few press releases, India will come running to help us as brothers in cricket, or something. He must be ‘dreamin’ or perhaps doing something else best done in private.
Meanwhile, last week there was a couple of cyclones causing damage in QLD and WA. Two, at the same time, nothing to do with climate change. I remain amused, or perhaps disgusted, recalling that idiot Craig Kelly calling a British meteorologist with a PhD, an ‘ignorant pommy weather girl’. This is, however, serious stuff, and decisions that affect us, and our children, are being made by this standard of ignorance displayed by Kelly.
With the inauguration of the new Biden administration in the US last Wednesday, perhaps we can hope for some level of sane government from them, although the wounds are unlikely to heal quickly. It seems to me however, that the change will have little impact on our current domestic and export challenges. We still must navigate the delicate balance between the alliance with the US, and the simple fact that China is the local ‘bother boy’ throwing their increasing weight around with little regard beyond some soothing rhetoric, for those who might get caught in the crossfire.
The general concern about the size of the debt run up in response to Covid, offers an unprecedented opportunity for the Government to take some steps towards sensible tax reform. Unfortunately, I am not able to definitively argue that the rich have got richer over the past 12 months, but those in full time work, in enterprises that have not felt the hammer of Covid (including all the public servants around) are in a pretty good place. They have cash coming in, and interest rates are the lowest in living memory, so there is a lot of demand for items not denied by Covid, like a nicer house in place of the trip to Alaska.
A good place to start would be to dust off the now over a decade old Henry tax review, and the ‘short term’ grandfather provisions to ease the change to a new regulatory regime brought in by the Keating government, and still in force despite several efforts to dump it. Michael West media has been doing a terrific job in highlighting just how effective this 35-year-old ‘short term’ grandfathering clause has been in giving billionaires a leg up.
The government has taken a step towards limiting the reach of Digital platforms by proposing they pay a royalty to analogue media for copy they post on their sites. While this may be well intentioned, similar regulation has failed in Europe, and the cynic in me screams that the hand of Mr Murdoch is up the back of the government. Legacy news organisations missed the emergence of the net, and have been sidelined, and sadly largely disappeared, replaced by a different model. The sight of the Murdoch and Nine group which now includes the remains of the once mighty Fairfax group holding out the begging bowl is not pretty. Emerging is a small group of online journals that do deliver balanced and deep reporting, eschewing the clickbait driven models of many of the remaining legacy media. Organisations such as Medium, The Guardian, Michael West, and several domain focussed journals are carving out a business model that appears sustainable. Also, we still have the ABC, potentially compromised as it may be by the need to please the government of the day, but doing in my mind, a great job.
Let us hope the new acceptance of the value of science generated by the Bug, carries on to other domains, such as Climate change. However, while idiots like Craig Kelly, pollute the federal parliament, and the forces against change that protect the interests of the few, can assemble the resources and dole them out to political parties with no transparency, I fear little will change. There should be no impediment to real time declaration of direct, and indirect donations to political parties and individual politicians. On a similar line, while lobbyists outnumber pollies by 10:1, and have their pockets stuffed with largess, the pollies will be reluctant to take them on.
We have seen the power of social platforms at work over the last year, for good and bad. The good is great, families isolated by Covid can see and talk to each other in ways inconceivable beyond science fiction just a generation ago. Also, on display has been the dark side. Extremist views given the oxygen to spread via social, led by the platforms own algorithms to places of extreme ideas they would never have found without that algorithmic hand holding. This is in the name of free speech, giving people what they want to see, and of course, then selling those eyeballs to advertisers, and in the process, enabling huge levels of ad fraud.
Where do we draw the line between free speech and the ability of tech platforms to put limits on it? The banning by Facebook and Twitter of the last bellows of the Trump presidency has been applauded by most as too little too late. However, it begs the question of where is the line between the individual’s right to communicate and a platforms ability to censor? This is a wider debate than just what should be done about Trump and offensive posts. How do we manage the power of the state to censor intelligent and robust debate? Hong Kong media is slowly being strangled by Beijing, to bring it into line with the rest of China. How should the platforms, who want to be engaged in the Chinese market respond?
There are several key domestic debates, about real issues we need to have. Perhaps I am just old, but I am cynical about the willingness of the institutions involved to debate on the facts, and deep analysis, rather than in sound bites that selectively support their preferred position, irrespective of the wider impact. Several are noted following:
- The debate will be about the increase in compulsory super due to rise from the current 9.5% to 10% on July 1, then progressively increase to 12% from July 1, 2025. Will it, or will it not go ahead? The pandemic has provided a reason to delay once again, as businesses recover. However, the hip pocket nerve will be engaged. The added 0.5% is in effect a pay rise workers will not get, so the individual worker might be unhappy. The opposition seems committed to the rise.
- The proposed changes to the IR laws that the government dropped on the table after parliament had closed shop in December 2020. The guts of the amendments to the existing Fair Work act revolve around the definitions of casual employment, the mechanisms by which enterprise agreements can be reached, award simplification, and the entitlements of those workers in so called casual employment. At the core of the public spat will be the ‘BOOT’ (Better Off Overall Test) provisions. There are serious questions here that impact people’s lives, and superficial sound bite debate is simply not good enough.
- Energy policy, and the attitude of the government to the questions around climate change. It is obvious that private capital is bolting from investment in fossil fuel sources at the rate of knots, but the government seems wedded to the notion that this is a bad thing. The energy companies have a powerful grip on the government, and no doubt the opposition, but common sense, as well as the science indicates this country should be doubling down on renewables.
- Tax reform. Here I go again. Dust off the Henry review and remove some of the more obvious rorts highlighted in the report, and since. In any change to the tax system there will be winners and losers. You can expect the losers to scream loudly, and apply as much pressure as they can, which will be a lot. For the stability of the economy and the society we want to be, a tax system that reflects the long-term national interest rather than sectional financial interests is essential.
- Transparency of politics, and specifically the transparency of political donations needs a radical overhaul. It is an absolute nonsense that donations are not published as they happen, and that so many loopholes are available. We will never get rid of the cash in Aldi bags, unfortunately, until we rid ourselves of political processes infested with people with interests focussed on narrow and too often personal outcomes. However, we must make a start. Similar transparency needs to be in place so we can see the pork as it is dished out. Often money spent in electorates is well deserved, needed, and has considerable community value, and it is the role of members to address as many of the local issues as they can, that is what they are elected to do. However, the blatant pork barrelling that has been going on is a disgrace to us all, and a blight on our community values.
- Manufacturing matters. The disruption of supply chains brought about by Covid, Brexit, and the Chinese pachyderm have, or should have, focussed our collective minds on the value of a robust domestic manufacturing capability. We have become rich and lazy digging great big holes and farming broad acres to flog off commodities. This has given us a false sense of security, a belief that the world needs our coal, iron ore, wheat, and barley. The world can exist without us, and we seem surprised. We are in desperate need for manufacturing value adding and have left it late to come to that recognition. Sadly, this need may not yet have dawned on those elected to look after our long-term prosperity.
- It is of little value to bleat about the lack of manufacturing, when we have not educated our kids to believe there is a great life to be lived with a technical and STEM education. The gutting of our technical capability has been progressing incrementally over the last 30 years, and will not be addressed by simple Band-Aids and press releases. Investment in education is a fundamental pillar of long-term prosperity, and we need desperately to get on with it. As a side benefit, this will also serve to moderate the increasing polarisation of wealth in the community, but again, a long-term outcome.
- Let us not forget the catastrophe that enveloped the east coast in flames a year ago, catching us short in preparation. As a principle, it is hard to invest today in measures to mitigate something that that may, or may not happen. It is hard to quantify the risk and rewards of such investment. However, if we have learnt anything from the past year, it is that we must be prepared. We do that by listening to the science and acting in anticipation. Our grandchildren will thank us, whereas I suspect if we continue as we are, they will be cursing us.
Thanks to those who comment, share, and otherwise find value in my musings.
Have a successful and disaster free 2021.
Allen
Jan 22, 2021 | Governance, Strategy
Our world is as volatile now as it has ever been.
Planning assumes some level of predictability, sufficient to make resource allocation decisions that will drive activity in the future, even if that future is next week.
Planning in this environment, much beyond lunch tomorrow is challenging, and long-term planning in the manner most are used to, downright dangerous.
Instead, we need to focus on probabilities of outcomes, and plan for them, recognising there will be inconsistencies and unanticipated things happening around us every day.
Never has that old chestnut ‘Plan for the worst, hope for the best‘ been more relevant. However, hoping is not a strategy, so it pays to plan with probabilities and the attendant risks in mind.
Thinking creatively and delivering three scenarios greatly assists the process:
The best outcome.
The worst outcome.
The predicted outcome.
This should not be a probability of 33% each, but a more nuanced assessment of the probability of outcomes given a variable set of assumed circumstances.
Inherent in planning to achieve a future outcome is the risk assessment process.
It is all too easy to use a spreadsheet to extrapolate, but spreadsheets cannot think, weigh up probabilities, and make qualitative assessments, all of which are necessary in any sensible risk assessment. To comprehensively assess the risks in a plan, you need to look at the components of the plan, and at least acknowledge the impact of unplanned events on the overall plan.
You need to weight the probabilities of happening with the impact if, and when, they do!!!!
Risk = probability + impact.
How do you assess the probability?
The world is not a binary place, good and bad, black, and white, there are always shades. In assessing the probability of an occurrence, it pays to consider the scenarios from a range of different perspectives, mental models if you like.
This consideration is the most challenging part of the process. You must assume the future is different from the past, and the current, and for most people and institutions, that is extremely difficult. We shy away from uncertainty and ambiguity, tending to fall back on the known and understood, where we have a playbook that we know has worked.
Pity the playbook of the past will not tell us much about the future.
Need assistance thinking about this challenging stuff? Call someone who has done it successfully many times.
Header is from the StrategyAudit ideas bank.
Jan 19, 2021 | Collaboration, Governance, Leadership
As we come to grips with remote working, we will also have to come to grips with the central challenge, of how do you create the sense of community and teamwork that requires face to face but is not as present in remote work.
More particularly, remote working groups that have a changing membership, often a rapidly changing membership.
Great sporting teams win because they have the right blend of talent to get the job done, then they practise and practice, and practice. What happens when the membership is not stable, when practice is not possible, simply because you cannot predict what it is that you need to be practising, and with whom.
Google has spent years and millions of dollars examining the characteristics that make groups successful. The starting point is that no Google employee is short of intelligence, otherwise, you simply do not work there, but some groups are extremely effective, and others are failures, when on paper, the group members appear remarkably similar.
They called it ‘Project Aristotle‘.
Google, if it has what we might call a core competence, it would be finding patterns in data. They have large data sets of the teams in their business, their makeup, demographically, ethnographically, education, experience, and so on, but they could find no correlation between all these variables, and the quality of the team output. It seemed almost random.
The problem was to identify how individual intelligence translated into group intelligence.
We seem to accept that teams that were working well are more productive, creative, and harmonious than those that do not, but we do not really recognise the drivers of those outcomes.
Eventually, an unexpected pattern emerged, that discriminated between high performing teams, and the others. The pattern had two characteristics of the interactions that occurred in the teams, that explained the performance differences.
Those behavioural patterns are:
Equality of conversational turn-taking.
When everyone in the team has the opportunity to speak, and is encouraged to take it, and the result is that team members hold the floor for roughly the same amount of time, the team works. It does not mean that everyone takes turns, it does mean that the culture and often unspoken norms of the group are that everyone is respected, and has value to be added to the conversation, and is therefore listened to equally.
Ostentatious listening.
Just speaking in roughly the same amount is not enough. Others in the group must be overtly and ostentatiously listening, taking in what is being said, and giving it the attention and thought it deserves. This particularly applies to the team leader.
Together, these two behavioural norms together create what risks becoming a cliché: ‘Psychological Safety’.
This is the willingness of team members to speak their mind, express opinions, and ideas, knowing that they will not be judged, that the group welcomes the views, even when they are against the ‘run of play’ or the expected. Psychological safety is the single greatest correlate with a group’s success. When team members have that safety, it unlocks their best ideas, their ability to collaborate meaningfully, and innovate creatively.
Contributing to the success of a team, on top of the two core drivers that deliver psychological safety, and contributing to them in meaningful ways, are 4 supporting behaviours.
- Team members get things done on time, and meet their obligations, in a manner that enables the team to perform its tasks to at least the standard they expect.
- Structure and clarity. Individual’s in the team have clear roles, plans and goals, and the decision-making processes the team uses are clear. When an individual’s goals and plans are aligned with those of the team, the impact is magnified.
- The work being done by the team is important to team members.
- Team members believe their work matters, and that it will create positive change.
Taking up the hard-won lessons from Google seems to make great sense to me.
How well do your processes to manage and leverage the intellectual capital, represented by your employees, work in the evolving working environments inspired by ‘The Bug?
Header credit: My thanks again to Scott Adams and his mate Dilbert.
Jan 11, 2021 | Governance, Management, Strategy
It is January, and looming in many organisations is the annual, calendar driven budgeting exercise.
In more normal times, the strategic planning update would have been done in September or October last year, but that went out the window, along with the comparisons of performance to budget that are usually the basis for an extrapolative budgeting process.
Never has there been a better time to revisit the whole process, as it is clearly no longer fit for purpose.
There are better ways.
Top-down mandated budgets designed to give senior management the appearance of control and foresight have been on the slippery slide for some time. The ‘Bug’ should have been the terminal injection of reality.
Constant and unforecastable crisis does not lend itself to a process that purports to predict the future 18 months to 5 years out.
Given that background, how should management be thinking about the planning process?
My advice is that the process should be one of rolling planning, that accommodates information as it emerges, and rolls it into the action programs, while retaining the necessary strategic consistency and functional alignment.
What constitutes strategic success?
Strategic success is not about the money, profits, or shareholder dividends, although sometimes you might wonder. Strategic success is a function of the choices made, the distribution channels opened, customer lifetime value and share of wallet, the innovation pipeline, and capability development that will enable commercial sustainability. These are all things, amongst many others, that are enabled by the tactical choices being made. While the costs and returns are important considerations in these choices, they are just the simplest but often misleadingly one-dimensional means by which they are measured.
How does this impact the planning process?
Planning is vital, as the absence of a clear destination means any road can be taken. However, the process must be way more agile than has been the norm, while not losing sight of the objective. This requires a clearly articulated and understood strategic framework within which the ongoing tactical decisions can be made. At every point of choice, the question should be asked:
‘Does this choice add to the achievement of the strategy?
Strategic priorities can be broken down into operational and tactical choices across and within functional responsibilities. These choices can then be reviewed and updated regularly as information is received and absorbed.
The ideal outcome is that there is regular communication, and by regular, I mean daily, weekly, monthly, and so on, where information is absorbed into the decision processes and used to adjust on the run. Rolling planning at every level can be ‘rolled up’ (pardon the pun) into the longer-term processes ensuring strategic consistency and alignment.
In effect you are matching the tempo and type of decision making to the level most appropriate for that decision to be taken, with those in whatever ‘front line’ is engaged, taking the responsibility and accountability for the decision.
I refer to it as ‘Nested Planning’.
Each stage builds on the former, becoming increasingly less tactical but more strategic in its nature. The most visible metaphor is the Russian wooden dolls that progressively fit inside each other.
Abandon the immoveable budget that becomes set in stone, and replace it with rolling forecasts that track the progress of the resource allocation choices at every level, towards the strategic outcome agreed.
Header credit: ‘mountaineer’ via Flikr.
Jan 1, 2021 | Governance, rant, Strategy
Well, we made it through the most disruptive year in the last 50. As I reflect, it was the last gasps of the war in Vietnam and Australia’s involvement that even comes close to the disruption of 2020.
However, sitting in the epicentre of the Corona ‘Croydon Cluster’, 2021 looks pretty sad. Unlike a year ago looking forward to 2020 with optimism, despite the fires that had been lingering around, about to break out into the inferno that started 2020 on such a bad footing.
As the year progressed, downwards, we had now forgotten floods right after the fires that destroyed communities and took lives, then the Corona bug caused an economic and social lockdown which continues.
Our PM started the year very badly, hiding in Hawaii, then trying to find a hand to shake in the ashes of Cobargo, but learnt his lesson and did a surprisingly good job of leading into the corona crisis, bringing the state Premiers and unions into a collaborative forum which for a few months looked like having a lasting benefit. Then the urge for political and partisan chicanery took hold across federal and state jurisdictions, and the year ended in a dogfight over proposed IR changes that will be central to the 2021 destruction of any remaining urge to collaborate across party and philosophical lines.
On top of the chicanery, we had the NSW premier, perhaps the (formerly) most respected political leader in the country, first fess up to a relationship with a disgraced former parliamentarian who had clearly used the premier in more ways than one for personal gain at the expense of the taxpayers. Then followed her admission that pork barrelling was a normal part of the political process. While we all knew that is the case, the evidence over a long period is unequivocal, it is just that hearing it said, so explicitly, was shocking.
Then China decided Australia needed a kick up the backside, and progressively closed off their economy to Australian exports, a process still evolving, although apart from iron ore, there seems little left to ban. We represent only a tiny fraction of China’s imports, but they represent almost 40% of our exports, and 27% of our imports. This is a dislocation of our economy that will have severe long-term consequences, and the best we can do is have a new minister with no diplomatic chops at all, blathering about a pivot to India. To be fair, it is not an easy problem to solve, but politicians grandstanding and publicly shooting their mouths off are unlikely to help much.
We have become hooked on Government stimulus spending, what happens when it is turned off? This is uncharted territory as private investment has been booted in the belly, despite the lowest interest rates in my lifetime, and households are deleveraging as fast as possible given the uncertainty.
Stimulus investment has been more about mitigating the negative impact of Corona, than it has been about putting in place the drivers of future growth. This is understandable, and has been commendable, but we must recognise that it is a tactical response to the crisis, not a strategic one with long term outcomes of growth as the objective.
Politically, we have no confidence in the collective leadership to address the problems in creative and constructive ways, but we assume the pollies will make sure they are OK. We simply do not trust them any more, the old adage that if a pollies mouth is open, they must be lying, is sadly more current than ever.
Underlaying all this we had the spectacle of many politicians who for unfathomable reasons continue to have power, resolutely refusing to accept the overwhelming science surrounding climate change for the last 30 years, jump in the ‘believe the science’ bandwagon in relation to the virus. This level of obstinate hypocrisy is dazzling in its depth.
We might hope that the collective ‘We’ have learnt a lot from this year but suspect that we have not. With a federal election coming any time from August this year, strap in for more piles of rhetoric, lies and pork barrelling, laced with sweet smelling perfume trying to hide the stench of the bullshit. That will be piled on top of a now highly partisan media that has replaced fact with opinion and populism, largely controlled by a former Australian octogenarian billionaire living in New York. No independent thinking and reporting there, so we will have to dig harder than ever to see the truth in whatever ‘mainstream’ media feeds us.
As a final note, most people are thinking about how to make 2021 better, they are making resolutions, usually big things, outcomes. Something like ‘I will lose 20kg‘. 99.9% of these resolutions made in the depths of new year celebrations, go out the window by the second or third week of January. Instead, decide to make some small changes that will lead to the outcome. We all know that small changes in behaviour both compound and lead to the opportunity to make bigger changes later, so resolve to make a couple of small, easy to maintain changes to your behaviour that will contribute to achieving the objective. This is basic management, do not focus on the objective without recognising that changes must happen if you are to get a different outcome from that which you are trying to move away from.
Look out and stay safe.
