Strategic risk and strategic risk management (SRM) are hot topics in management these days. The idea of auditing strategic risk was recently proposed in an article by Corporate Executive Board.  Two questions relating to SRM:

1. Can strategic risk be ‘audited’? and
2. If yes, then by whom?

My thoughts are written here but I am interested in other viewpoints so please share.
http://www.edbarrows.com/Resources/newsletter/072010.htm

Strategy Magazine published by the Strategic Planning Society featured an article in June that serves as a coda on recession-based business strategies. In it author Sam Bodley-Scott, global strategy director for consultants Kepner-Tregoe, Inc., presents the findings of a recent survey his firm conducted with 375 respondents from across a wide representation of industries regarding how strategy was changed by the recession. In short, all respondents indicated that in some way strategy needed to change. The changes were grouped into four major categories:

1.Organizations need to improve their ability to respond to external environmental changes. Strategy is based upon a set of assumptions and organizations need to consistently monitor those assumptions and be prepared to change when the assumptions change.

2.Markets and products need to change. Some sectors were hit harder than others but instability in markets has called into question the robustness of product and market strategies.

3.Organizations need to do a better job at differentiating their products. As markets, technology, expectations and competition change so too must the ability to strengthen positioning that is based upon differentiation.

4.Implementation still needs to be improved. Despite the ever growing focus on strategy implementation, 76% of respondents indicated that there is still work to be done in these key areas:

◦Identification of those initiatives that deliver a strategy;

◦Prioritization of key initiatives; and

◦Implementation of key initiatives.

I was recently interviewed by Elaine Profeldt of BNET for her piece “My Biggest Mistake as a Rookie Manager.”  The article contains some useful insights not only for rookies but experienced managers as well.

http://www.bnet.com/2403-13056_23-402198.html

Here’s a short video from Cranfield School of Management’s Thomas Lawton.  In it, he provides thoughts on embedding strategy within an organization versus planning strategy deliberately.   He discusses the concept of consistency as it pertains to vision and differentiation.  He also highlights the need to be adaptive in delivering on that strategy using Ryanair as an example.  Do you agree?

Here’s the link to the Cranfield School of Management video http://www.youtube.com/watch?v=CGbnmfInlao&feature=sub

Here’s the link to Ryanair’s most recent investor day presentation for those not familiar with the company.  http://www.ryanair.com/doc/investor/2009/Investor%20Day%202%20Oct%202009.pdf

Here’s a nice video of Ram Charan discussing his and Larry Bossidy’s Six Building Blocks of Execution.   As you watch this video, consider doing three things:

1. Writing down in your notebook each building block;
2. Rating your team’s performance in each area (1 poor, 2 fair, 3 good, 4 excellent);
3. Listing three actions you can take right away to improve your execution in your weakest area(s).

Ideally this exercise would be done with colleagues.  As Ram points out, none of the six steps is new they simply need to be practiced.  Best of all you don’t need a Harvard PhD to do them.

http://www.youtube.com/watch?v=AEL2Kli_vKk

Over the past several months Boston Consulting Group (BCG) published a series of their white papers known as Perspectives on the future of strategy.  The most recent release highlights what they call signal advantage defined as “the ability to capture, interpret and act upon signals from increasingly rich and dynamic data.”  Signal advantage stems from five sequential activities:

1. Acquire relevant data;
2. Recognize relevant patterns in data;
3. Leverage insights to make operational interventions in real-time;
4. Continuously reinvent the business model;
5. Shape the information landscape.

The article’s authors do a nice job highlighting how organizations like Google and Progressive employ these five activities to actually gain signal advantage. 

Signal advantage matters in today’s information and technology rich environment.  Further, it’s clear that organizations can gain bona fide competitive advantage by implementing systems and practices to identify, capture and, most importantly, interpret signals from their environments.  But a question remains:  How can organizations without out access to the latest technology or volumes of data gain signal advantage?  Hopefully answers exist even for organizations that color themselves ‘technologically challenged’.

Read the BCG report here:  http://www.bcg.com/documents/file39079.pdf

This weekend I was at the bookstore thumbing through a few recently released books on innovation.  As I browsed the pages it got me thinking about innovation as it pertains to the strategic planning process.   I wondered how such a structured and sometimes static set of activities might be looked at from a fresh perspective.   That reasoning led me to this simple question:  “How can organizations improve their strategic planning processes?”  I’ll leave it to the reader to define what the word ‘improve’ means.

To approach this you might apply a technique called SCAMPER I found in a great book on creative thinking techniques called Thinkertoys: a handbook of creative thinking techniques by Michael Michalko.  The SCAMPER technique is essentially a checklist of idea spurring questions that can be applied to virtually any product, service or even process.  With the above question in mind ask yourself the following:

• What part(s) of the strategic planning process can be substituted?
• Which steps or activities can be combined?
• Can something be adapted to it?
• Is any part able to be modified or magnified?
• Can the process in whole or part be put to another use?
• Can elements of it be eliminated?
• Could it be reversed or rearranged in some way?

Attached is a link to the book and a ‘classical’ strategic planning process.  How would you go about improving this decades old planning process that 9 out of 10 organizations use today?

Link to Thinkertoys:  http://www.amazon.com/Thinkertoys-Handbook-Creative-Thinking-Techniques-2nd/dp/1580087736

Indra Nooyi CEO of PepsiCo and one of the world’s most powerful corporate leaders gave an interview to the Telegraph a few days ago from Davos where she discussed PepsiCo’s current success and future strategy.  Today, $10B of PepsiCo’s revenues come from healthy items such as Quaker oats and Tropicana orange juice.  In ten years, Ms. Nooyi wants that number to grow to $30B.  Analysts will wonder if this goal will be reached at the cost of growth and profitability in the core soft drink and snack foods business.  Is this a case of encouraging social value at the price of shareholder value? 

Ms. Nooyi doesn’t think so.  She believes Wall Street’s emphasis on quarterly earnings helps keep businesses ‘in check’; current profitability can and should be delivered in conjunction with growth toward future goals.  She does wonder however if the current measurement practices can accommodate this balancing act.   She states, “[But] everything does have to be reformed. So, what if there was a balanced scorecard which had different metrics? What if there wasn’t quarterly earnings?  And as her interviewer notes, “Ms Nooyi suggests that the balanced scorecard, with longer term measures measuring long-term returns and social impact, could be added to quarterly earnings but, in a world that demands transparency, it would be difficult to move away from regular reporting.”  Difficult indeed if the Balanced Scorecard were used only for quarterly financial reporting.

So here’s the good news for Ms. Nooyi (and she didn’t even have to travel to Davos hear it):  you and your counterparts in the executive suite can put your long-term strategic measures on your Balanced Scorecard starting today.  The Balanced Scorecard is specifically designed to merge your top strategic goals–along with their corresponding measures–in a format that can be reviewed by your senior team regularly.  Moreover, your long-term strategic measures related to your shift toward healthy lifestyle products doesn’t even have to be reported to Wall Street, although reporting them might be a great way to start the reform you’re hoping for.  The reality is the Balanced Scorecard is a tool to actively manage your highest level corporate objectives–not just the ones deemed essential by analysis.  CEOs everywhere might want to keep this in mind when measuring strategic performance.

Read the Telegraph article here:  http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7126037/PepsiCo-chief-executive-Nooyi-brings-in-healthy-profits-in-lean-times.html

I’m a member of several strategy groups on Linked In.  Within one of them–Strategy Professionals Network–a discussion has unfolded over the past several weeks based on the following question:  “What one business strategy book or article would you recommend?”  This is certainly a simple question but one that has many answers.  As for the article, it’s still tough to top Michael Porter’s classic, “What is Strategy?”.  Written in 1996, it stands today as one of Harvard Business Publishing’s most popular downloads.  As far as a single book, that’s a little more challenging.

For those genuinely interested in a tried and true book on strategy, I think Robert Grant’s Contemporary Strategy Analysis (7th edition) is hard to beat.  Filled with examples from sports teams to high technology companies, the book skillfully presents basically everything you need to know about competitive strategy.  It should be in the library of anyone serious about strategy–practitioners especially.  I’ve used and/or reviewed many other texts in my teaching and they don’t manage to measure up to Rob’s book in terms of coverage and, in particular, readability.  Rob—currently a professor at SDA Bocconi–has taught around the globe from Georgetown to London Business School.  He’s on the editorial boards of Strategic Management Journal and Long Range Planning.  It’s safe to say he’s a well-respected scholar with a smart and practical view of strategy.  His book clearly reflects that. 

Here’s a video of Rob talking about the book.  http://www.youtube.com/watch?v=T6uwpSSzHN8

Here’s the book site:  http://www.contemporarystrategyanalysis.com/

Business Week just published an article by John R. Ryan, President of the Center for Creative Leadership (CCL) in which he highlights the results of a two-year global study CCL conducted with 2,000 leaders from 15 companies throughout the U.S., India, and Singapore.  In the study, leaders were asked to do three things:  first, evaluate 20 leadership skills ranging from ‘managing change’ to ‘inspiring commitment’, next, rank them in order of importance as they related to future executive needs and finally, assess their own organization’s proficiency within those critical skill areas.   While seven skills were deemed vital to future executive needs, two topped the list:  leadership and strategic planning.  Ryan goes on to note that these two skills–along with two others–are much underdeveloped in organizations today.

With respect to strategic planning, he offers the following observations: “First, once you have a good strategy, it’s absolutely crucial to share it throughout your organization. If no one understands what you’re trying to achieve, no one will buy in. Executives, to be honest, often struggle with communicating strategy. They tell their management team what needs to be done. They send out a memo or two to the entire organization. Then they assume everything is taken care of. It’s not, of course—which is why so many smart strategies ultimately fail.” 

At a time when many pundits are professing that yesterday’s skills and competencies won’t cut it in tomorrow’s uncertain business world, it’s comforting to know the core skills upon which managers have relied for decades to successfully guide organizations remain safe and sound.    

Read the Business Week article here:  http://www.businessweek.com/managing/content/dec2009/ca20091214_346828.htm

Read the CCL report here:  http://www.ccl.org/leadership/pdf/research/leadershipGap.pdf