Archive for June, 2011

To Be Or Not To Be…..In The Room That Is

Tuesday, June 28th, 2011

Should senior management be in the room during a session to identify the company’s strengths and weaknesses? That’s a question we’re asked quite often when we facilitate business planning sessions.

So here’s our point of view – and if you don’t agree with it, feel free to leave some comments telling us why not.

1. It’s an “all or nothing” question.

Regardless of who raises the question – the senior management team or the employees invited to the meeting – it’s often accompanied by the suggestion that management “leave the room at some point”.

That may seem like a fair proposal. But is it? Or is it just a way to make a difficult situation seem better?

How do you decide when management should leave and when they should come back? Because how does leaving and returning address the real issue – which is that the people invited to attend don’t believe they can be frank when the senior management team are present?

Management should either not be there at all or should be there all of the time. And the only way to make that choice is to tackle the real issue.

2. The real issue is………

The question is really about trust. The attendees don’t want to say certain things for fear of either not being understood and/or believed. And yes, there’s also the fear of some form of retribution – from being considered negative to being branded a troublemaker

We usually encounter the question when we work with companies whose revenues and profits have been dropping. They may even be losing money and have been through a period of “right-sizing” (according to management) or “downs-sizing” (according to employees). Or in companies where there has been a change of owner.

Both are examples of situations where change has caused uncertainty or where the management team thought that communication was regular and thorough – but the employees didn’t.

3. So how do you tackle it?

It is best done with a mixture of openness, logic and an outside perspective.

Everyone has to agree that the lack of trust exists.

The management team typically understands the value of the employees input and participation. But they also have to know how to act. They have to listen actively; comment only when appropriate; and watch the tone and language they use when responding to employees’ comments.

The attendees can usually be persuaded to suspend judgement until they are convinced that the management team is listening; not dominating the conversation; and not simply forcing their views on the employees.

If the meeting isn’t managed carefully all input/conversation will die. But if it is, then both the employees and management team will learn and trust will grow. Using an external facilitator can help

Logic and common sense dictate that, regardless of whether senior management attends the session or not, they are going to see the output. And they are unlikely to use it to develop a strategy without editing it. That output will only form a strong foundation for that strategy if everyone is in the room for the discussion and there’s been a frank assessment of the company’s strengths and weaknesses.

As a third party we can, for example, point to the investment being made in the session and that it is the first step in developing a growth strategy to secure the future of the company.

4. Final words.

The management team must be in the room. But they have to understand that when the culture is changing most people are confused and uncertain. And when they’re uncertain they usually avoid anything they consider risky.

The attendees have to understand if they don’t speak up they have to take responsibility for not giving management the chance to act on their thoughts.

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Don’t Shoot Your Strategy In The Foot

Tuesday, June 21st, 2011

1. It’s Still Going On.

What chance does a strategy have if the top people in the business aren’t 100% behind it? Over half of the respondents to a recent Booz and Company survey, quoted in Making Your Strategy More Relevant a recent HBR blog post, said they don’t feel their company’s strategy will lead to success.

How can that be, you might ask? Didn’t they develop the strategy in the first place? Or is it that old argument that things are just changing too fast now for committing to a strategy to be effective.

But some companies have done really well by sticking to their strategy. For example, 2 consumer companies which spring to mind are Alberto Culver, acquired by Unilever earlier this year, and Coca-Cola.

2. How To Do It.

We’ve argued in the past – see Why Strategy Is Still Worth A Business Owner’s Time – that the problem isn’t with strategy or strategic planning processes but with how they are applied. The need to be flexible and adaptive has never been more important.

But, the authors offer another reason for strategies failing – the core strategy has been diffused (and weakened?) over time. Multiple strategic initiatives, each developed with the best of intentions, have resulted in the management team having too many conflicting priorities.

Some examples of those initiatives are – developing a strategy based on the annual budget and not making the long term investments needed for success; setting “stretch” goals while continuing to do things the same old way; and investing in risky new products or markets in order to get growth while neglecting the core business.

One of my own personal favorites – and one we see surprisingly often – is having parts of the company like sales or marketing develop their own strategies without integrating them with the overall priorities.

82% of the survey respondents say that their growth initiatives lead to waste at least some of the time.

3. How To Avoid It.

But it all comes back to a couple of points we made earlier this year – tips 4 and 5 in 6 Tips for Getting Better Results in 2011. Avoid attempting too much and you’re more likely to be able to commit enough resources to each initiative to be successful.

Once again the authors offer an additional insight. Consider what your company does better than anyone else and how you provide value for your chosen customers now, today. Your strategy must then answer 2 questions – how do you expect to create value in the future; and what changes do you need to make, to the company overall, to get there?

4. Last words.

Arguably the business world is more volatile than ever before and growth will always be important. But being reactive in the face of turbulence and the pursuit of growth is not as effective as proactively working on what you do better than any other player to deliver value to customers.

2 Key Questions Every New Product Must Answer

Friday, June 10th, 2011

1. It Failed!

Everyone can think of companies – large and small – that have committed resources and spent money on new products/services only to fail.

Does anyone remember Sony’s Mini-Disc or the Apple Newton? Then there are those high profile classics New Coke and Crystal Pepsi.

How do large, credible organizations make mistakes like these?  And if they can do it, what chance do smaller, owner managed companies, with significantly less resources, stand?

2. Here’s A Reason Why.

One reason for these lapses is that the team members making the key decisions (who often spend most of their time in the company’s offices not in the field) believe passionately that the idea is going to work. That’s because, when you’re close to something it’s easy to become convinced you’re right. And when you feel that way you tend to push on regardless.

Maybe their research was faulty, or maybe they just didn’t do any.

Or maybe they didn’t take the time to take a step back and ask the question “What role can our product/service play in the market?” before committing resources to the initiative.

That’s not just a marketing strategy question – it’s a business strategy question. Because if it’s a bad idea and it fails, money and other resources that could have been deployed elsewhere are wasted. And the reputation of the company as a whole – and the people backing the project – is damaged.

3. Products Have To Earn The Right To Exist.

A company’s new products have to earn the right to exist. They do that when the answers to the following 2 questions are “Yes!”
• Do the products provide value that is perceived to be unique compared current offerings?
• Can they generate sufficient revenue, profit and cash to be sustainable?

As a business owner you can find the answers to the questions in a couple of different ways.

The first is by posing them in the early discussions about the products. Finding the answers will generate a lot of the information that will be required to assess the target market, develop a marketing mix, complete financial forecasts and weave them all together in a business case. So it’s hardly a waste of time!

The second is to wait and look for the answers when the business case has been completed.

4. The Important Thing Is………

Both approaches have their advantages and disadvantages. The important thing is to choose one and use it.

If you proceed without answering the 2 questions then you are taking unnecessary risk with your money and other resources – and your reputation.

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