Quick takes

Citation

Gorrell, C. (2013), "Quick takes", Strategy & Leadership, Vol. 41 No. 5. https://doi.org/10.1108/SL-06-2013-0046

Quick takes

Article Type: Quick takes From: Strategy & Leadership, Volume 41, Issue 5

These brief summaries highlight the key points and action steps in the feature articles in this issue of Strategy & Leadership.

Masterclass: Where to play and how to win - strategy fundamentals the Proctor & Gamble way Brian Leavy

This masterclass highlights some of the application models in the P&G approach to the practice of strategy. It revolves around five major interrelated questions and the choices that flow from them:

1. What is our winning aspiration?

2. Where will we play?

3. How will we win?

4. What capabilities must be in place?

5. What management systems will be required?

A play-to-win aspiration

The starting point is having a clear aspiration to win. Most great companies develop a motivating sense of mission. But this not enough. "Each company doesn't just want to serve customers: it wants to win with them," and the "single most crucial dimension of a company's aspiration" is that it must "play to win."

*The aspiration to win must be clear to all. "Winning" is the "ultimate criterion of a successful strategy," and once the aspiration to win is clearly established, "the rest of the strategic questions relate directly to finding ways to deliver the win."

* A company that merely "sets out to participate, rather than win," will "fail to make the tough choices and the significant investments" needed to be successful, and "eventually die a death of modest aspirations." Example: GM's Saturn car division.

Where-to-play and how-to-win

Given a play-to-win aspiration, the next two components of P&Gs strategy approach are inter-related. The potential where-to-play options are irrelevant in the absence of a clear how-to-win strategy, and vice versa. An excellent illustration is the example of the Olay product/offering strategy revision.

The core capabilities to deliver the win

A key determinant in searching for the right match between potential where-to-play and how-to-win alternatives is whether and how the combination will draw on a company's unique strengths in a way that competitors will find difficult to replicate or neutralize. P&G's core capabilities operate as a system of reinforcing activities. It is the way they fit together that is the underlying source of P&G's competitive differentiation.

The systems that support strategy development

The fifth choice is the choice of management systems needed to support the company's disciplined approach to strategy. A new strategy logic flow tool was created to organize the overall effort into a meaningful sequence and convert insights into compelling strategies (see exhibit). The choice-making step in possibilities-based strategy "becomes simple, even anticlimactic," because the decision basically "makes itself."

Continuous reconfiguration in the transient economy Rita Gunther McGrath

In the new strategy playbook, the goal of sustainable competitive advantage has been replaced with transient economic advantage. Leaders now need to learn how to transition companies from one advantage to the next by continuously reconfiguring assets, people, and capabilities. How best to do this? A research study of highly successful shape shifter firms offers many insights.

Key practices

* Organizations that have mastered transient-advantage environments:

* Continually free up resources from old advantages in order to fund the development of new ones. Invest in training for new capabilities.

* Manage the resource reconfiguration process on a continuous basis with a remarkable dynamic balance achieved between stability and agility. Change is embedded in their normal routines. They are shape shifting, not dramatically restructuring.

* Manage major resource allocations centrally; resources are not "held hostage" at the divisional or business unit level. Budgeting happens far more in real time than in many organizations.

* Make considerable investments in flexibility, even if this might lead to a small degree of suboptimization.

* Make innovation continuous, mainstream and part of everyone's job.

* Offer stability with values, cultural norms, core strategies, capabilities, customer relationships and leadership that are remarkably consistent over time. Changes are evolutionary and the adaptations rapid and generally modest. Serious investment goes into "soft" factors such as training and reinforcing corporate values, which are backed up by meaningful symbolic actions by leaders.

* Offer agility through continual small changes that refresh the organization and keep it from becoming stale. Continuity of management allows for the formation of informal internal networks, associated with successful innovation. Consistent corporate rhythms and internal practices free up time and energy for doing new things that would otherwise be spent sorting out how old ones should be happening.

Paradoxical combination of stability and agility

Rather than being contradictory, as conventional wisdom might suggest, the twin abilities to maintain coherence and alignment while at the same time innovating and challenging the status quo are deeply interdependent. Too heavy a shift in the direction of innovation, and corporate coherence and the benefits of integration break down. Too heavy a shift in the direction of stability and innovation and change can suffer. A balance is the bedrock for success to cope, even to thrive, within the new transient advantage economy, and to manage the "wave of transient advantage" well, delivering "steady-as-you-go" growth in an increasingly dynamic and uncertain competitive environment.

Masterclass: The management revolution's growing army of rebel voices Stephen Denning

A coherent constellation of fundamentally different principles in leadership and management has emerged that are required for survival in the creative economy. In response to the dynamics of the marketplace, once-sacred and supposedly timeless truths are being labeled obsolete - such as, sustainable competitive advantage, hierarchical management, maximizing shareholder value and large manufacturing off-shoring - to be replaced by a new mental model of how the world works, leading to a different way of thinking, speaking and acting in the workplace.

The new mental model

The new management paradigm is a large idea and different leading thinkers' takes on it can help us get our minds around it. The authors of an exciting set of 18 books have delineated the principles and practices of radical management. Together the offer a new management paradigm - the management revolution - that is essential to the transition happening not just in high tech, but also in manufacturing, books, music, household appliances, automobiles, groceries and clothing. Leaders should recognize that taken together these 18 books represent, not 18 different sets of ideas, but rather one core set of ideas explained in 18 ways.

Common threads

All of the books share a vision of how management can be, and, in some cases already is, different. The books reveal an enhanced array of possible responses to life in the continuous innovation workplace. They all seek in different ways to show the significant possibilities new practices like agile, scrum leaders, leadership conversations and continuous reconfiguration hold for companies that aspire to reach for the exceptional.

The common threads include:

1. Recognize the new paradigm.

2. Coherent principles.

3. Distinguish principles from individuals.

4. Separate principles from practices.

5. Distinguish drivers vs results.

6. Historical vision.

7. Clear break from the past.

8. Point to creative economy vs traditional or financial capitalism economies.

9. Offer passionate view of management's future.

The paradigm shift in leadership and management generates not only dramatic reductions in cost, size and time, and improvements in convenience, reliability and personalization of products and services, but also innovative ways of socializing, new ways of living these possibilities, new meaning in how time is spent and fresh understanding of what it means to be fully alive.

Interview: Michael Watkins on how new leaders can achieve a strategic jumpstart Robert M. Randall

Leadership transitions are critical times. Michael Watkins has updated his book, The First 90 Days, a best-selling guide to taking on new leadership roles and responsibilities, with a decade of additional research and implementation experience. These updates reflect the reality that business is moving at an extraordinary speed and transitions have become virtually continual. The goal for both the transitioning executive and company is the same: speed up the leader's transition (as a new hire, promotion, or lateral move) to effectively answer the business need (startup, turnaround, accelerated growth, restructuring, post-acquisition merger).

Watkin's is a proponent of the idea that "transition acceleration" is a core leadership capability that can be learned, methodically applied and strategically deployed.

Shaping decisions

Executives can use The First 90 Days as a guide to doing due diligence on the corporation they are joining or the new position they are moving to:

* The key is to understand first, "What kind of change leader am I"? Then ask the second big question, "What kind of change does the organization need me to lead?" If there is an obvious gap between what you are good at and love doing, and what you will be asked to do, then you are setting yourself up for failure.

* Fact: the biggest reasons why executives fail after joining new companies are culture and politics, not industry expertise or leadership capability. So it is essential for the company and the new leader to evaluate whether there will be a "fit" into the new culture, especially if the leader is to be a change agent.

Strategic assessment

Making a strategic assessment of the hiring company before accepting a new job is critical. Start with a hypothesis about the challenges facing the company but do not make a premature judgment. Focus on methodically collecting reliable evidence during your transition learning.

Q: How best to systematically define and test hypotheses about the business?

A: Being systematic is critical to triangulate in on the "truth" about the emerging threats and opportunities a firm is facing. The book offers many learning tools, including how to do STARS portfolio analysis, which analyzes which units of the business are in what stages - startup, turnaround, accelerated growth, realignment and sustaining success. This guides a new leader through an initial assessment, helping to prioritize which units or functions need urgent attention.

The First 90 Days offers many learning tools and lessons to speed leaders to the point where they are making informed decisions and their actions are generating value for their company. Its lessons can be applied to non-profits as well as for-profits, to whole teams (see chapter "Accelerating Everyone") as well as to any individual weighing the pros and cons of a career move.

Social media provides a megaphone for organizations intent on shaping the corporate environment Mark R. Kennedy

Business' seldom mentioned stakeholder is the "shapeholder." These are the political, regulatory, media, and activist actors in the firm's operating environment that shape, constrain, or expand a firm's opportunities or raise its risks. Their mission is to be the influencers of the interplay between corporations and society:

* Their voice is amplified by the megaphone of social media and powered by contributions from corporations and online fund raising by interest groups.

* These actors can affect a business' bottom-line and even survival.

* They deserve strategic assessment by top management.

Strategy challenge

Unlike shareholders and employees, shapeholders do not directly depend on the success of their target businesses, but the success of a business can depend on how it deals with them. The key to managing the shapeholder actors and issues that affect a business or market is to be prepared.

Be ready: "7 A's" approach

Offered is a framework of "WinWin Shapeholder Engagement" that takes a long-term view of corporate interests:

* The first set of "A's" - authenticity, anticipation, and assessment - define how to be well positioned with respect to shapeholder actions.

* The second set of "A's" - advance, avert, acquiesce and assemble - explain how to act in response to an attack or opportunity posed by shapeholders.

Preparation

1. To win shapeholders' trust, your company must deserve it. Use the six criteria to assess its authenticity. The bottom line of authenticity is simple: embrace a purpose and make it a central focus.

2. Have scenario plans for nonmarket exigencies and anticipate what shapeholders might be thinking through frequent contact.

3. After anticipating likely shapeholder concerns assess the landscape surrounding each issue. The Bach/Allen model is a good tool.

Responding to attacks

If the shapeholder concerns are legitimate, act to advance mutual interests by creating shared value, or avert unworkable regulations if no reciprocal benefits exist.

If the shapeholder concerns are illegitimate, either assemble a winning strategy if the demands are too onerous and there is a chance of prevailing, or, seek public relations advantage by acquiescing gracefully if the odds of winning are unlikely.

Bottomline

Businesses have both ethical and self-interested reasons to adopt a new, enlightened approach to engaging society and to assertively playing a role in fomenting solutions for issues important to their nation's and to their own economic health.

Converting the nonstop customer into a loyal customer Paul F. Nunes, Olivier Schunck, Joshua Bellin and Ivy Lee

"Your ability as a marketer to control your brand image is significantly less than it was ten years ago [...] you're not the only one who owns the brand image; your customers own it, too. That's the big difference" (JetBlue marketing chief Marty St George).

Customers continue to escape from traditional marketing channels into digital realms where they can become more knowledgeable and empowered than they have been in the past. And, they loudly inform others of their findings.

The linear path to purchase has traditionally been known as the marketing funnel - a customer itinerary that begins with awareness, moves through consideration and evaluation and ends with purchase and use. But this model is losing its relevance. It is too slow, too static and too generic to be used as a foundation for companies' marketing, sales and service strategies and as a guide to their execution. As JetBlue's St. George puts it, marketing has "twisted into a different shape."

Nonstop customer experience model

While other replacements for the funnel have been proposed, the nonstop-customer experience model uniquely places evaluation, not purchase, at its center. Even after a purchase, customers today frequently re-evaluate their decisions, and compare promises made against experiences delivered. With fingertip access to information they can ask, "What if I can find a better deal by checking just one more place?" Or, "I know that the product's in the mail, but now that I've learned about other options, is there still time to cancel?" The ubiquity and accessibility of information today makes it easier for customers to change their minds and cancel a "sale".

Four patterns

The new rule 1 is: know your customer's behavior on their path to purchase ... what causes them to evaluate and re-evaluate, and what keeps them coming back to your brand. Loyalty behaviors can be grouped into four general archetypes: emotional loyalty, inertia-based loyalty, conditional loyalty and true deal chasing (see Exhibit 2). Best marketing plans acknowledge that different categories of behavior demand different responses.

Taking action

The company's customer patterns - when sorted by the four categories of loyalty - offer a navigation tool to evaluate plans, and act to either reinforce customer behaviors and/or redirect them.

Bottomline

Resist the urge to double-down on familiar marketing methods in the face of greater consumer volatility. Understanding the journeys taken by customers facilitates serving the nonstop customer at the right place, at the right time, with the right message. Companies who cannot adapt to the nonstop customer by accounting for different patterns of loyalty will risk seeing their customers escape for good.

Catherine Gorrell

President of Formac, Inc., a Dallas-based strategy consulting organization (formacplus@gmail.com) and a contributing editor of Strategy & Leadership.