Posts Tagged ‘trends’

A Vision – Is It Worth Investing The Time?

Thursday, February 3rd, 2011

1. Yes, and you don’t have to take my word for it.

We are regularly met with a lot of scepticism when we talk to business owners about the need for a vision. But developing one can yield a tremendous return for the time invested.

And you don’t have to believe me.

There’s an article called “Step Into The Future” in the current issue of Inc. magazine written by Ari Weinzweig, a co-founder of Zingerman’s Community of Businesses in Ann Arbor, Michigan.

2. Three reasons why a Vision is worth having.

The original business opened in 1982, almost 30 years ago. Zingerman’s Community of Businesses now has annual revenues of around $37 million, 500 employees and 17 managing partners. They are successful by several different standards of measurement.

“It’s safe to say that we wouldn’t be where we are without visioning” according to Weinzweig.  He’s asked regularly for business advice, often by people looking for the silver bullet. While that doesn’t exist Weinzweig says “There is one thing I wish I had understood more clearly from the get-go – the power of visioning”. And that is one very compelling reason for investing the time.

“When we do effective visioning, we’re moving toward the future we want……..” Weinzweig gives an example of a vision they wrote in 2005 for a new venture that had still to get off the ground. Three years later the successful business actually mirrored the vision in key respects.

Having a vision is fundamental to developing and executing an effective strategy. The vision lays out where the company is going; the strategic plan tells everyone how the company will get there. It also becomes easier to choose which opportunities to pursue when they arise. The first question is always “Will it help us achieve our vision?”

“A great vision is inspiring” and gives everyone a reason to come to work. Weinzweig uses a great analogy. He likens a vision to a cathedral, a lasting monument, the tangible evidence of a group’s dreams and hard work. (Fans of Ken Follett’s book “The Pillars of the Earth” should find it particularly easy to relate.)

3. Three ways to make effective use of the time.

Eight Steps to a Vision is the name Weinzweig gives his process. Three of the steps involve drafting and re-drafting with gathering data and assessing trends etc. saved for strategy development.  So it doesn’t require a lot of time to complete. 

His structure is similar to many others, including our own. Most are easier to use than business owners imagine.

Use questions to get things moving. Asking questions about specific aspects of the future make it more tangible. Weinzweig lists 14 questions covering topics you would expect – such as how to measure success – and some topics you wouldn’t – e.g. what the owner does all day.

In our process, we circulate a few questions to key participants in advance. It helps them feel prepared, which makes it easier for them to participate.

Don’t sweat the details. Inevitably, at some point, the discussion will move to the action steps required to achieve the vision. Save these for the planning session. They’re great input but not required during visioning – which is more about passion than detail.

4. Wrapping it up.

I think one reason for scepticism is that business owners confuse visioning – a process – with the vision – an output. 

And a few years ago developing a Vision was the fashionable thing to do, a fad, a silver bullet. As a result framed Vision Statements, many of them meaningless platitudes, littered reception areas.

But Weinzweig and Zingerman’s are evidence that visioning works and that the ROI on the time can be very satisfying.

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3 Ways To Test Your Strategy

Tuesday, January 18th, 2011

An article I read recently showcases 10 tests of a strategy that apply some of the best thinking that’s been done on the topic.  It was published in the McKinsey Quarterly and is called “Have You Tested Your Strategy Recently”. You have to register to read the full article but it’s worth it.

I want to focus on 3 of the tests which I think are particularly valid for business owners.

The first one asks the question – does your strategy put you ahead of trends? That new trends develop in any market is a fact. The issue is the length of time it takes for them to become apparent. A major technological breakthrough or a significant change in, e.g. the economy/demand or regulations/legislation can drive a rapid transition.

But most trends develop so slowly that business owners only react when their profits are affected. At that point it may be too late to respond effectively (think about the travel agents who ignored the rise of online competitors). The cost of missing a trend can be heavy, but seeing it early can pay off.

So how do you spot new trends? Keep an eye on customers who have been quick to adopt new products in the past. What are they doing? Think about the impact the new trends would have on your financial position – and the decisions you would make if you were certain they would happen. How do the results of those decisions compare with your current priorities?

The second test looks at how well your strategy deals with uncertainty. A challenge for business owners is to know which choices to make now, given that the outcomes will take place in a future they can’t control. The authors suggest breaking uncertainty into 4 levels.

The first gives a reasonably clear view of the future with a range of outcomes tight enough to support a firm decision. At level two, there are a number of identifiable outcomes for which a company should prepare. The possible outcomes in the third level aren’t specific but fall into a range resembling a probability distribution. And level four features total ambiguity, where even the distribution of outcomes is unknown.

Most companies assume they are facing either levels one or four while they are usually dealing with level two or three. The authors suggest quickly ruling out impossible outcomes and then looking for those which are either mutually supportive or which are unlikely because they undermine one another. A tool like scenario analysis can be applied – by the owner, management team or consultants like us – to the remainder.

The third test, asks if the strategy balances commitment and flexibility. Commitment and flexibility are opposites – if you’re very committed to a course of action you may have very little flexibility.

Making the best trade-off between them requires understanding that, of all of the decisions a business owner has to make, only strategic decisions result in commitment – through hard-to-reverse investments in long-lasting, company-specific assets.

But in this world of uncertainty, strategy is not only about where and how to compete, it’s also about when. Committing too early reduces flexibility, leaving it too late can allow competitors to gain advantage.

A market beating strategy will do 3 things. Take big bets, or make commitments aimed at gaining significant long-term competitive advantage; make no-regrets moves, which will pay off whatever happens; and maintain options, that involve relatively low costs now but which can be turned into a higher level of commitment as changing conditions warrant.

Why did I choose these 3 tests? Because they are, I think, the most relevant right now as a result of the fall-out from the financial crisis and recession and the hardest for business owners to deal with. (Although I was tempted by Test #8 – Is your strategy contaminated by bias?)

If you would like someone to talk the tests over with, drop me an e-mail or give me a call. I’d be happy to spend half an hour chewing them over with you

It’s THAT Time of Year Again

Tuesday, October 26th, 2010

The last quarter of the year can be very frustrating. In addition to the “normal” workload, there’s all the seasonal stuff to be done – what should our Holiday card say, what will we give people this year etc.? (O.K. so I am a Grinch.)

Second, the results for 2010 begin to take shape. Hopefully you’ll have a great year, possibly even so good that you’re not keeping up with demand. A less attractive, but still acceptable, alternative is that you’ll make your targets (if only just). The outcome that no one wants is that you’ll fall short of some or all of your goals.

Then, of course, strategic or business planning has started/is starting/should have started for next year. And what is happening in 2010 will affect the “mood” and possibly the approach, to that exercise.

By the way does anyone really enjoy strategic planning? And does it achieve anything in this age of constant change and heightened uncertainty? I saw 2 blog postings over the weekend that argued we can no longer do strategic planning as we’ve always done it.

The first, Time to Retire Strategic Planning and Adopt Innovation Strategy by Kamal Hassan, said that that strategic planning has become too formulaic and we’ve come to rely too much on what has worked in the past. But isn’t that argument rooted in the application of the process rather than the process itself?

Kamal went on to say that we currently study the past to plan the future but that history is no longer the best teacher. However, as someone (I think it was Winston Churchill) said, “If we don’t learn from history then we are doomed to repeat it”.

This posting closed with the comment that inventing the future is better than predicting it. To invent the future we have, amongst other things, to replace historical data with subjective data (customer surveys, competitor strategy, trends, gaps, etc.). But haven’t been doing these things for some time now? I know the companies we work with do.

While saying that attempting to define the business over a 3 or 5 year horizon is probably foolhardy at best, the second post Strategic Planning and Innovation by Jeffrey Phillips, did acknowledge that it is very important to define strategic milestones or goals and determine how the firm arrives at those goals.

Jeffrey thinks that these are more “tactical” activities than pure strategic planning. At the risk of splitting hairs, I’d say they’re more about execution of the strategy.

In closing Jeffrey says that he doubts we’ll ever see the end of “strategic planning” but that what we will see over time is the realization that innovation and trend management is the actionable part of the strategic planning process. And I tend to agree with that.

I was talking to a colleague today who articulated the point I want to make really well. The strategic planning process will always be with us but it must develop, as most things do, with time. However we must adapt the process rather than declare it hopelessly broken and throw every part of it away.

Forecasting several different scenarios, building assumptions on thorough, comprehensive research (formal and informal) and thinking through contingency plans are just some of the things we can – and must – do in this age of fast, unrelenting change. Looking at, and adjusting, our goals more frequently is also, I believe, simply good sense.

So, I think strategic planning is as relevant in this age of constant change and heightened uncertainty as it has always been. And I think it can accomplish as much, or as little, as we allow the links between strategy development and execution to achieve.

But as for enjoying it, well……….

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