Quick takes

Citation

Gorrell, C. (2009), "Quick takes", Strategy & Leadership, Vol. 37 No. 3. https://doi.org/10.1108/sl.2009.26137cae.001

Quick takes

Article Type: Quick takes From: Strategy & Leadership, Volume 37, Issue 3

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

Marketing in the Great Recession: an executive guideKenneth Alan Grossberg

The world economy is likely to worsen because of the consumer’s fears created by a cascade of financial and business catastrophes. Whether the fear and extreme reaction of consumers is justified or not, we are witnessing a sea change in the attitudes of individual customers that we have not seen since the middle of the last century.

The American Marketing Association believes we have entered a period of austerity marketing, which is defined as marketing to consumers who don’t want to spend. This involves creating incentives (beyond the discounts and coupons) and making very clear to the consumer why offerings are worth the money and how they are relevant to the purchaser’s needs or desires. Austerity marketing has to reconcile consumers’ fear, their aspirations for comfort, and their new reluctance to flaunt extravagance. Marketers will have to include reassurance as part of their appeal.

Alternative marketing approaches?

“Everybody is paralyzed wondering what people want, what they’re willing to spend, what’s going to dazzle them into not being able to live without certain items … It’s all going to be very Darwinian.”

Some businesses think that the fail safe approach is to emphasize great value, but this will require them to understand their evolving customers’ value system better than ever in order to sell to them successfully; in particular their need for self-respect, status and self-fulfillment.

Overt snob appeal has lost its power over the majority and will not soon dazzle consumers as it did during the past decade. Excellent quality will still be able to capture customer loyalty sometimes, though even here there will be an erosion of dependable and loyal brand groupies.

Indulgent parsimony: the new future of marketing

In the consumer markets of the United States, Japan and Europe, one new marketing approach that addresses consumers’ higher needs is that of indulgent parsimony, or frugal indulgence. The theory is that recession-shocked consumers are shopping for less costly goods and services but nonetheless want their purchases to provide comfort and relief from stress.

For the next few years, the objective should be to encourage guilt-free (and altruistic) gratification by customers. A potentially successful marketing approach could articulate this customer mindset: “I’m worth it … because I’ve examined all the alternatives and this one gives me the best value for something I really do need”. Indulgent parsimony – offering reassurance, value and self-esteem at bargain – may prove most effective.

How to cut costs in a recession – with help from employeesJon Katzenbach and Paul Bromfield

The economic downturn requires prudent cost reductions. Yet only 10 percent of companies sustain cost reductions after three years. What do they do differently? The answer: engage their workforce to embrace both the rational and emotional arguments for taking action and to focus on what the company is and will become.

The task of securing employee commitment to cost reductions is not easy, and requires paying close attention to six principles. Here they are referred to as the Motivating Cost Discipline (MCD) approach.

1. 1.

   Institute a fair process based upon shared values. Cost-reduction initiatives have a simple four-step process at heart. The MCD approach is in concert with the steps. Specific actions are cited.

2. 2.

   Establish leadership cohesion and commitment. Use a set of values so employees hear the same message from leaders. Value examples: absolute integrity, collaboration-support-respect, open-honest-frequent communication.

3. 3.

   Create the emotional as well as the rational business case. That is to say, employees need a more motivating objective than merely lower costs. Examples of rational and emotional arguments are cited. This is the time for employees and leaders to rally around the company and each other.

4. 4.

   Enlist the help of frontline motivators. These are the ‘pride-builders’ because they are masters at making people feel proud of what they have to do every day. The “Top Ten” leadership actions to motivate low cost behavior are cited.

5. 5.

   Involve the organization in considering costs from all four angles: product support level, organization efficiency, people productivity, and external opportunities to do activity more cost effectively.

6. 6.

   Implement organizational solutions that create lasting behavior change. As a new best practice, the employees set targets to cut costs now and to improve the business over the longer term. They are committing to making the necessary decisions and behavior changes to move to what the company can become.

Outcome

In the example application of the MCD approach, costs were cut by thirty percent with employee satisfaction and price lifted twenty percent. This shows that beyond the mandate to an immediately lower cost structure, it is also possible to motivate people in positive ways that produce emotional as well as rational commitment. Yes, it is possible to get more costs out sooner and realize benefits that are more lasting; the secret is fully engaging employees in the cost cutting process.

The strategic development of high potential leadersRobert M. Fulmer, Stephen A. Stumpf and Jared Bleak

In the current stressful recessionary period, the need for extraordinary managers who can skillfully direct strategic initiatives increases. It more important than ever to study the succession planning and leadership training of best-practice firms to learn better ways to develop high potential leaders. Here is a summary of some of these best practices.

1. 1.

   To ensure that the talent pool supports the company’s overall strategy, the abilities of the high potential individuals should be shaped to correspond with the emerging leadership needs of the next decade. For example, a Caterpillar, effective talent selection alone is not the sole success factor for businesses of the future. The company’s entire succession planning process began with a definition of a future leader. This definition was achieved through the identification of leadership competences for vision, execution, or legacy for managers and executives.

2. 2.

   Organizations cannot develop tomorrow’s leaders with a fragmented approach. It must be an integrated leadership initiative. Employees with high leadership potential need to be systematically identified and tracked by line managers as part of an overall strategic succession planning process. Success in developing the next generation of leaders requires creating a talent management system in which selection, development, performance management, succession and career management are aligned, reviewed and supported by senior management.

3. 3.

   The best talent development systems underscore the important role played by senior leadership as vital to developing the next generation.

4. 4.

   A disciplined succession management program needs to reflect both empirical data on performance and the organization’s ideological criteria and vision.

5. 5.

   The “best firms for leaders” are typically twice as likely to use a variety of developmental techniques for their “best and brightest.” What these firms do isn’t particularly unique. They just do more of it and do it more consistently.

6. 6.

   Some of the more cost- and resource-efficient practices for implementing a successful early-stage high-potential program include:

   • •

     A special learning and development track for the high potentials.

   • •

     Rotation of managers across disciplines-divisions- geographies.

   • •

     Technology based learning.

   • •

     Action learning.

   • •

     Coaching/mentoring (internal and external) programs.

Case studyStrategic renewal: how an organization realigned structure with strategyDale E. Zand

There are two core questions to address when considering the decision of whether it’s time to renew a corporate strategy. They are: 1) does the strategy truly fit the current business environment? and 2) is a change in the organizational structure required to fit the intended strategy? This case of a disguised division of a Fortune 500 company illustrates how answering these questions enabled the unit to achieve a successful strategic renewal.

Case study overview

The “Wyler Company” is a business that was lulled into complacency by prospects of seemingly steady growth. Initially, management only sought to determine how to operate more efficiently and minimize duplication of costly services. But, upon a further assessment, the core issue was reframed to be: was the firm’s structure aligned with leadership’s intended strategy? A self-directed study process revealed that the intended strategy had been gradually subverted as the organization grew in complexity and specialization. Management quickly developed a consensus that favored a dramatic change in the organization’s structure.

Lessons offered

Top management’s need to analyze whether the operating structure is aligned with its intended strategy for a dynamic business environment is not an unusual problem. When competition increases, many firms change their structure to concentrate on a few profitable activities. This response, though, can inadvertently subvert their intended strategy.

Four important lessons emerge from the Wyler case:

1. 1.

   Strategic renewal requires moving from a narrow focus on operations and structure to a comprehensive view of alignment.

2. 2.

   Management needs to continually monitor the gap between implemented and intended strategy, which often increases as the organization evolves a specialized structure to primarily pursue near-term gains. Extensive feedback of data for management’s analysis so there is a rational basis for alignment decision.

3. 3.

   Management needs to periodically modify structure to keep the gap between implemented and intended strategy within reasonable bounds.

4. 4.

   In order to rapidly and effectively modify a company’s structure to align with its intended strategy, management needs to foster a culture of willing, constructive collaboration. This includes doing effective start-up work when there is a radical change in firm structure. It is essential that key managers create collaborative working relationships, and together identify and develop solutions to anticipated problems before they implement the change.

Leveraging women’s networks for strategic valueAnne Donnellon and Nan Langowitz

Best-practice organizations are continually improving the quality of their essential people resources: the leaders and doers that drive success. Beyond the answer of enhancing high potential leader programs, is the best practice of harnessing your internal social networks, and in particular, tapping into your underutilized women’s talent pool. And, yes, just as with every customer segment, a tailored approach results in greater rewards.

In recent years, women’s networks have experienced a boom. As the race for talent accelerated around the world, executives increasingly asked how they could leverage their women’s networks to attract and retain promising women recruits. Indeed in some companies, these networks are now seen as an overlooked tool not only for winning the competition for scarce talent, but also for enhancing business opportunity.

Dissecting to understand

Use two key dimensions for understanding how to develop and benefit from successful women’s networks. The graphic “Strategic intent map for women’s networks” shows how women’s networks can be mapped by their intended business leverage (a combination of their underlying business rationale and expected business outcome) and the degree to which the networks are embedded in a firm. Use this map to assess the position of a women’s network to optimally reposition the network initiative and make investments of leadership attention and company resources.

Leveraging networks for strategic value: advice for leaders

Forward-thinking companies are using women’s networks to achieve real strategic advantage. There are eight essential steps/components cited for businesses to take. The number one is support! The volunteers who run these networks are effectively working a second shift to create value for the firm. Without the resources to support volunteer leadership initiative and without clear communication to managers at all levels that the network is important – such networks are not creating much value for individuals or the firm.

Bottom-line

According to a senior manager in a best-practice firm, “the value of the women’s initiative is so well-understood here that we are no longer ask internally to calculate the return on investment in it. For us, the real business case is that we can’t grow without it.”

Women’s networks could well be pivotal to your success in the competition for talent and for business.

Roundtable: how decision analytics help leaders compete

The Accenture Institute for High Performance Business brought together a group of distinguished thinkers and practitioners from several disciplines for a roundtable discussion about “decisions analytics.” At the center of the discussion was how to make better decisions using creative analysis in this period of ever increasing data volume, and with that, be more competitive.

Moderator: What does it mean to compete on analytics?

Analytics is not a new idea. It’s using quantitative, statistical analysis to make decisions. But organizations have taken it from the backroom into the boardroom. Companies have decided that they’re going to compete on the basis of their analytical capabilities. They’re going to use complex mathematical and statistical analyses to make decisions, build those decisions into their operations, manage their relationships with customers, and even start assessing what kinds of people to hire. The evidence suggests that we make better decisions when we use facts and data and analysis than when we just use our intuition. But analytical competitors have taken it to an extreme, for a good result.

Moderator: Are companies getting more value out of the data they’re collecting?

There are certainly examples of organizations that are making better decisions about which customers to offer certain promotions to, or which people to hire, or how much inventory they should have on hand. But despite all the information that we’ve generated, we’re still not very good at tying it to specific decisions in most businesses. This is the last untouched frontier.

Moderator: How important is simplicity of information in decision-making?

When you bring something down to a simple level, it helps you make a decision.

With analytics, there’s collecting the data, and there’s mining it, predictive modeling it, decision supporting it. You can slice and dice the data whichever way you want. But it’s giving you a huge abundance of information that you have to synthesize to get very specific, actionable points.

It’s not good enough to give someone a bunch of data and say, “Go make your practice better”. The next thing is, “Let me tell you what you need to do”. Then I’ve got to make sure you do it, because otherwise the right care to the right patient, at the right time, doesn’t happen.

Other questions asked and answered include:

• •

  Should we be gathering data on behavior instead of on outcomes?

• •

  What should be done about hard-to-quantify performance criteria?

• •

  How can we determine which data to consider while making a specific type of decision?

Catherine GorrellCatherine Gorrell is president of Formac, Inc. a Dallas-based strategy consulting organization (mcgorrell@sbcglobal.net) and a contributing editor of Strategy & Leadership.