Archive for January, 2014

Is Strategy Static or Variable?

Tuesday, January 28th, 2014

This week’s guest is Dick Albu, the founder and president of Albu Consulting, a strategy management consulting firm focused on engaging and energizing leadership teams of middle market private and family business to formulate robust business strategies and follow through on execution of key strategic initiatives.

 

 

In last month’s issue of AlbuonStrategy we discussed three reasons why strategy fails (3 Reasons Strategy Fails).  I would like to follow up on that conversation with a question—is strategy static or variable?  From our own client experience, we believe there is both confusion and difference of opinion about the answer to this question.

Would you agree that strategy is a dynamic, continuous and adaptive process and it needs to be managed over the long term?   Let’s be honest, as sound as you might feel your strategy is today, you should never stop questioning it.  Strategy is simply a bet on the perceived future.  No one has yet found a way to predict all that will happen in the future. Rather, we accept a forecast of the future based on our current knowledge and past experiences for our business and industry.

Think about the surprises you have encountered in your business:  Technology changes, departure of key employees, competitors gaining advantages, loss of a major customer, etc., etc.  These are just a few examples of disruptions that might cause a change of course at any point during the implementation of your strategy.   In our experience, we have seen how effective this “variable” mindset can be.  The bottom line is if you accept and operate under the concept that strategy is dynamic, continuous and adaptive, you will develop a heightened awareness of internal or external changes that might impact your strategy and be better prepared to deal with these challenges in a deliberate manner.

So are all elements of your strategy variable?  No.  While your strategy needs to be dynamic, continuous and adaptive, the strategy’s foundation should be static.  The strategy’s foundation defines the way you play and win in the market. Think of it as the way you create value for your business and the capabilities that support your advantages.  Not to say that the strategy’s foundation cannot change, because it can, but it usually takes a commitment of time and resources over the long term.  This is why a client of ours decided to limit the product categories they participate in, or another international business restricted itself to operate in only a few select countries.

What are the differentiating capabilities that support your strategy’s foundation?  How do these capabilities define what business you are in and how you do business with your customers?   If you are clear about what comprises your strengths and capabilities, you will make better strategic decisions more often and with more confidence.

Your strategy needs to be variable to deal realistically with the unpredictable and stay relevant in the fast changing business world we live in.  At the same time, the foundation of your strategy needs to remain constant so that short term strategic decisions build off your value proposition and differentiating capabilities.  Are you prepared to manage this paradox?

Dick can be reached at 203-321-2147 or RAlbu@albuconsulting.com. For more information on Albu Consulting visit www.albuconsulting.com.

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3 Techniques For Removing Bias From The Big Decisions

Tuesday, January 21st, 2014

Much has been written over the last year about the biases that get in the way of decision-making.3 practical ways to prevent bias affecting strategy decisions

Many of the articles or posts describe, and provide examples of, these biases. But they’re often short on how to avoid them.

So, when I saw one that provided 3 very practical ways to prevent bias affecting strategy decisions, it quickly got my attention.

I disagree with some of the points made – for example, I don’t discount the value of intuition or your gut.

In fact, we tell the business owners we work with never to ignore them. But we also say that, rather than base a critical decision solely on those alone, they must be supported by objective analysis and data.

I do, however, like the 3 techniques.

1.   Make decision rules before you’re faced with the decision. It’s much easier to be objective when the decision that has to be made is still an intellectual concept. For example, Intel devised a rule for allocating their limited production capacity. Its use by the production team meant that successful new generation products were automatically allocated more capacity than maturing products. This happened regardless of senior management’s bias toward the mature products because they helped build the company.

2.   Use the collective wisdom of the team. This is a variation of the adage “2 heads are better than 1” and using decision rules. It is most effectively used with decisions which will have a major negative impact on the company if they are wrong. For example, investing a large amount of money to manufacture or otherwise support a new product or market or making an acquisition. Using a process to draw input from the members of the team, from all areas of the company, with most direct, relevant experience lifts the burden from the shoulders solely of the owner or the management team.

3.   The revolving door. A variation of the “Man from Mars” approach, this technique asks the question “If we were replaced by new owners, or a new management team, what would they do?” Figure out the answer, and then figuratively go out through the revolving door, come back in, and do that.

It’s really hard to keep emotion and your personal preferences out of decisions. We all subconsciously allow them to creep in – we wouldn’t be human if we didn’t. You can read the full article here.

If you enjoyed this post you’ll also enjoy Focus, Simplicity and Common Sense…...

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

To Grow or Not To Grow – That Is The Question

Tuesday, January 14th, 2014

Our business is all about helping companies grow.To grow or not to grow your business

But there are owners who deliberately keep their companies at around the same size, year after year.

And I don’t think that’s wrong. There are good reasons to support this point of view.

At the other end of the spectrum are the owners who blindly pursue growth.

That can be wrong. Edward Abbey, an American essayist, said, “growth for the sake of growth is the ideology of the cancer cell.”

So where’s the middle ground? What is right?

The answer is, it’s what’s right for each individual.

We’re all different. So, I’d define what’s right as pursuing and reaching the goals each individual sets for him or her self. And, of course, being satisfied with that.

Coming back to Abbey’s point, owners who grow their companies successfully usually have a reason for doing so.

It can be to invent or improve something that will give consumers (or businesses) more quality of life. Some examples that spring to mind are a different way to access music (Apple); air travel at affordable prices (Southwest); a new way to share information (Facebook).

The reason is rarely to make pots of money. That can be the result of growth. But if that’s the only purpose for trying to grow, it won’t work.

Assuming you have the “right” motivation for pursuing growth, how do you do it?

A good place to start is to remember 2 sayings. Never confuse success with a growth market and you can’t cost cut your way to long-term success.

Some companies make the second mistake as a result of making the first.

Then, assuming you’ve got at least one clear advantage over the competition, follow this well-proven formula.

•  First, expand your existing business i.e. sell more of what you have
•  Then take opportunities related directly to your existing business – introduce complimentary products, move into new markets or find new distribution channels.
•  Only after fully exploiting those two, consider moving into new businesses.

Despite what we read in the press, books or on the Internet, some things don’t change. The pace at which we have to adjust and adapt has definitely changed, as have the ways in which we can do that.

But the fundamental, common sense concepts haven’t.

And that’s true of everything in life.

If you enjoyed this post you’ll also enjoy 2 Key Questions Every New Product Must Answer.

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Top Ten In 2013……

Tuesday, January 7th, 2014

The votes (page views) have been counted; the results can be announced!

Our top 10 blog posts in 2013 were:

1.   6 Challenges Fast Growing Companies Face, which won by a good margin, discusses the 6 challenges of execution which, if not dealt with, could prove fatal.

2.   10 Tips To Improve Your Public Speaking Body Language, written by Mark Bowden of TruthPlane, is the first of our guest posts to make the list.

3.   The Difference Between A Strategy And A Plan talks about the difference between strategy and planning and why it’s important to understand what these terms mean.

4.   6 Ways A Business Owner Can Influence Culture looks at the ways a business owner can develop a culture which will help increase operating profits and build shareholder value.

5.   Adaptive Strategy – A Way To Profits In The New Normal? looks at an alternative strategy that is built on the 3 R’s (Responsiveness, Resilience, Readiness) required in a changing environment.

6.   3 Times When You May Need To Change Your Strategy explains when a company should review its strategy and what makes that review and any subsequent actions necessary.

7.   6 Things We Can All Learn From Family-Owned Business puts forward 6 simple things business owners can implement to achieve better long-term financial performances.

8.   Strategy, Culture and Leadership deals with how these 3 things affect the development and the execution of strategy.

9.   10 Commandments of Business Development are the basic, common sense principles every business owner can apply to their business development efforts.

10.  How To Keep Control When You Work With Consultants provides steps business owners can take to maintain control when they work with consultants.

If you haven’t seen them before, here’s your opportunity!

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