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.
Oct 28, 2020 | Governance, Leadership
Over 25 years of consulting, the second most common problem I see being faced by SME’s, after managing their cash, is to attract and retain talented people.
Many managers do not put enough time, thought and energy into their personnel roster, as they do not have the time to do so.
So they think.
The hidden costs of just keeping a seat warm by substandard recruiting outcomes are huge. Not only does recruiting consume time and money, you then have to train and manage a series of new employees as the poor decisions come home to roost. As with a customer, spend the effort to ensure they are the one you want, invest in them to ensure they stay with you, and over time the investment will deliver a great return.
Some of the things I have seen work over my 45 years of commercial life are as follows:
Pay over the odds.
This is not to encourage a culture of greed or entitlement, it is simply to make sure that really good people do not have remuneration as a reason to go elsewhere. You will always lose employees from time to time, but ensuring good pay removes one reason for them to leave. It is also a great way to ensure former employees have nothing bad to say about you, which in turn, makes recruiting easier.
Recognition.
People love to be recognised for doing a good job, for delivering over and above. Recognition of a good employee makes them want to come to work. Some just want the one on one recognition, others need the public affirmation of their good job by the boss. Be sensitive to which an individual might prefer, and deliver as appropriate. I have never yet seen a situation where someone was uncomfortable because they were recognised too much!
Have a clear strategic framework.
Employees like to know why they are there, other than to pay the rent and feed the kids, and what roles they play in achieving an outcome for the enterprise. Having in place a robust and transparent strategic framework not only provides the foundation of decision making at all levels, it enables people to articulate the role they play in success.
Do not micro-manage.
Micro-managing someone implies that you do not have the confidence in them to let them do the job they were hired to do. The usual outcome is that they do not do it, and they go elsewhere, or are at best, are disinterested and therefore sub-optimal employees.
Manage good people by the outcomes they achieve, not by the detail of the means by which they are achieved.
Play to the strengths of good people
Nobody is perfect, and no one person is perfect for any specific job. When you have someone good, rather than try and change them to address the gaps they leave, find ways to fill in around them so that their strengths can be developed and leveraged.
Have a significant ‘onboarding’ process
First impressions count, and you can only make them once. Making a new employee feel welcome, valued, important to the whole group is easy if you think about it. Rather than just having them turn up, almost unannounced, to a desk covered with the detritus of the previous incumbent, make a show of welcoming them, ensure they are introduced to everyone, specifically including the big bosses. A drowning person can often drag others under in their efforts to swim. It is no different with a new employee, far better to spend a bit of time and effort teaching them to swim than to deal with the consequences of discovering they cannot, or that they do breaststroke when freestyle is required.
Role clarity
Every person needs to understand their own role, and that of those around them, particularly those that are impacted by their performance.
Treat people as people, not resources.
Total transparency will go a long way towards this outcome. Good people react very positively to honesty, and non-judgmental feedback on their performance.
As a reminder, the biggest problem most businesses have, and particularly SME’s is cash. Generating, collecting and managing it.
When you need an old experienced hand, give me a call.
Oct 14, 2020 | Governance, Leadership, Management
A key part of managing activity is to record it as necessary to be done, check it off when done, and make any observation necessary for next time.
This holds true from the development of a strategy down to the daily activities on the shop floor, and everything in between. The only difference is the scale of the things that are being recorded, discussed, and allocated to a responsible person, and perhaps the time between reconciliations.
Years ago I obtained a private pilots licence. An essential part of the training was to have a list of items to be checked off prior to take-off. In that case, it was not a written checklist, as when you are filling in a written checklist yourself, it is too easy to just run down the list and tick all the items as done. In that case the list was physical: my hand went to the item being checked off in the plane ‘walk-around’, and then in the cockpit, touching the item concerned. This addition of the physical to the memorised and written list ensured it was done. In the cockpit of a commercial airliner, where there is a co-pilot, the co-pilot has the written checklist, which he reads out to the captain, who checks the status and reports back for recording by the co-pilot.
Checklists serve a number of purposes:
- They serve as a specific reminder, as our memories are faulty, and prone to taking the easy way out.
- Repeating a list builds memory and habit, and when a habit is broken, we become uncomfortable, our ‘survival’ 6th sense kicks in.
- It provides assurance that the item has been done in an accountable manner.
- It provides the opportunity for specific feedback and immediate remedial action. In a factory this may be to complete an unfinished run from the previous shift, deliver preventative maintenance to a piece of machinery, and a thousand other things.
- It acts as a training profile to be followed by newcomers. Theoretically this should enable someone with no knowledge of the specific process to be able to complete it, simply by following the checklist.
- It allocates responsibility for actions to be done. During the resurrection of Ford by Alan Mulally, he had a daily meeting with his direct reports, in which they reported on the activities they had been allocated from the previous day. Clearly this process is not just for the factory floor.
- During those meetings Mulally also had the daily Ford cash balance calculated and shown, which underlined the importance of cash to the business during a time when they were losing money at a huge rate.
- Lists enable the allocation of priorities, so that resources can be allocated in the most impactful manner.
- Lists act as ‘grease’ for collaboration
Have you ever noticed that those who have the discipline to do daily and weekly checklists for themselves, and stick to them, appear more productive than their peers?
That is generally because they are.
Header photo credit: NASA
