Tag Archives: strategy

advantage at the fringe

Colored sphere explosion

In today’s business environment, competitive advantages rapidly erode. Entire industries are transforming and being overwhelmed by new developments.

The internet is shifting power from companies to consumers.

Product and strategy life cycles are shrinking.

Deregulation and globalization are opening up entire industries to an onslaught of nimble low-cost competitors.

The fact is organizations using yesterday’s rigid management principles are not adaptable or creative enough to handle these challenges.

The problem is innovation is stifled by the norms of organizational structures. Individuals who deviate from this structure are identified as renegades and discouraged from contributing.

The outcome is organizations deal with change in a traumatic fashion. They aren’t nimble, they aren’t creative and they aren’t proactive.

The solution is management innovation. For far too long companies stuck to the same corporate regime. Products and branding are refreshed regularly, but the process by which we organize resources, plan and aggregate effort has remained untouched.

What kinds of questions should you be asking within your organization to foster innovation and management change? How many of these questions are being asked by your executive and management teams on a regular basis?

What can we do to encourage more open exchange? (creating a democracy of ideas)

What are we doing to make our employees innovators? (amplifying human imagination)

How are we allocating our experimental capital? (reallocating resources for adaptability)

How are we tapping into the intelligence of all of our employees? (aggregating wisdom)

Is our decision-making determined by foresight or the past? (minimizing the influence of old paradigms)

Can people choose where to make their best contributions in our organization? (allowing everyone to participate)

insiders versus outsiders in CEO succession

insiders versus outsiders in CEO succession

Whether you agree or disagree with the premise, the title of a recent Fortune Magazine article is certainly an attention grabber. It is by Noel Tichy and entitled “J. C. Penney and the terrible costs of hiring an outsider CEO.” In the article, Tichy reviews J.C. Penney’s decision to hire Ron Johnson (who had previously enjoyed great success at Apple and Target), and the dismal failure that ensued.

While I am a person of strongly held views, I can see both sides of the insider versus outsider debate when it comes to CEO succession. Tichy presents several very strong arguments from the insider camp, where he seems to be firmly entrenched. When transformation is required, however, a strong case can also be made for bringing in a change agent.

Click on the picture image to read the entire article.

The Art of Strategic Thinking

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By Harrell Kerkhoff
Maintenance Sales News Editor

In today’s business climate, the old way of doing things to stay relevant as a company is antiquated. Incremental change is no longer good enough to survive, let along thrive.
This has required leaders to radically shift their thinking, according to The Beacon Group President & CEO R. Douglas Williamson, who presented “The Art of Strategic Thinking” during an educational session at the recent ISSA/INTERCLEAN® North America 2014 in Orlando, FL.
Williamson discussed how company leaders can combine their strategic intelligence, with their contextual intelligence, in a suite of leadership competencies that will position them to be front-runners in today’s new order of business.
This “new order,” in large part, was brought about by the Great Recession that started in 2007.
“Business always has been, and will continue to be, about choices. Sometimes we make good choices, sometimes we make bad choices. Prior to 2007, you could pretty much get away with making (average) choices. Now, the quality of your choices needs to be better,” Williamson said. “The tolerance margin for error is less, and the stakes are higher.”
For business leaders, today’s strategic thinking process is different, and far more critical, than strategic planning. In fact, due to an uncertain business climate, many strategic plans are useless.
“It’s important to think about the way you need to run an organization, and the way you need to think about strategy, given the world that we are living in today. We have never seen this world before,” Williamson said. “If you are leading an enterprise, or putting together a sales or business plan, you have to do a better job at the input end of the equation in order to remain relevant in this world. The input end centers around how best to imagine and think about your business and opportunities.
“Ask yourself, ‘At this moment in time, do I need more planning or do I need more thinking?’ Do you honestly believe that you can plan the future when the future is as uncertain and turbulent in business as it is right now? I will argue that planning is NOT what you need. Planning is a science in a predictable world. Strategic thinking is more art; and the environment that we are working in today requires you to become an artist.”

It’s A Different World
When it comes to today’s business, the old adage is true — life used to be simpler. However, according to Williamson, when looking at the long economic and business history of North America and around the world, “The train is going in one particular direction. There is no reason to believe that this train is going to do a u-turn and return to the old ways.”
Williamson discussed the evolution of business reality, stating that the way of conducting business from the end of World War II through the 1960s was quite simple.
“There was a more rationale environment in place back in those days. Business remained pretty predictable through the 1970s, when you could still use a ‘sane’ business plan,” he said. “The complexity started in the 1980s to the point where we are now, in 2014 — a very irrational market with tons of ambiguity.
“If this premise is correct, and everything you have learned about how to run your business in previous eras is outdated, you need to ask: ‘What does this crazy world look like? And, what is the appropriate response given this crazy world?’”
To thrive in today’s business climate, it’s more important to improvise, according to Williamson, such as what great jazz artists do, compared to the go-by-the-book philosophy found with classical musicians performing a piece written by Ludwig van Beethoven.
“Look at the business environment that we are all now in. It’s important to adjust. You may not like it, or be able to master it, or be comfortable with it, but the current environment dictates the music (jazz) — in this case, the music of business,” Williamson said. “This is one way to understand the difference between strategic thinking (jazz) and strategic planning (classical music).”
When it comes to today’s business climate, dealing with complexity is a way of life. This brings several truisms to contemplate: The world is not a simple place; no one wants to be led by the simple minded; turbulence is a permanent new reality; and, leaders must be able to make sense of things.
“Complexity is going to remain with us. If you are not able to think in laser beam clear terms through all of the complexity, you are not likely to be able to make good choices and decisions. You will make bad decisions slowly, rather than brilliant decisions quickly,” Williamson said. “It’s important, however, to not get freaked out by the complexity from a mental standpoint, but be able to simplify what you see around you and create a story that is digestible.”
In today’s uncertain and ambiguous business climate, he added, it makes no sense to spend a lot of time collecting facts to prove a particular point, when the uncertainity around any particular point is so huge.
“You can spend 40 hours next week trying to build the perfect plan, or the perfect business case, and collect all the facts you think you need to support your argument. In reality, all you have done is waste at least half your time,” Williamson said. “Now, I understand that is scary, because it’s not the world that most of us grew up in. But, you have to understand the context of our times.”
He added it’s impossible, when running a business today, to lock down absolute perfection.
“If being right is what you are all about, than being right is a prison. It’s a prison of the mind. You can’t operate a business in an ambiguous market when you have to be right all of the time. You will lock yourself into a mental model that is a prison,” Williamsons said. “We now live in a business world that has evolved. The new mind-set venturing forth goes into uncharted territory.”
The classic breakdowns in business occur when there is a breakdown in skills, processes, structure and/or strategy, Williamson said. However, the biggest failure in business comes when the quality of the thinking about a proposition is not good.
“In today’s market, where everybody can find free information over the Internet, hire good people and buy blueprints, the one area that you can control the most, over your competitors, in your market space regards the quality of your original thinking. The rest of these are commodities,” Williamson said. “Thinking is not a commodity. It’s the one area where you still have room to create unique advantages for your business.”
According to Williamson, breakdowns in strategic thinking occur when a company sets its hurdles too low, when the point of view about an opportunity and the competition is too narrow, when the scope of ambition is too cautious, and/or when the nature of change is incremental or transactional.
“You could survive in the 1950s through the 1980s by setting low hurdles, but this is not the world we operate in today,” he said. “When your hurdles are set high, your point of view is wide, your scope is ambitious and the nature of your changes is transformational — all of sudden different options present themselves.”
He added, “The most important part of strategic thinking is how to best frame opportunities that are in front of you. If your frame is too small, then all of the potential opportunities outside of that frame aren’t even in your wheelhouse. If you frame it larger, then all of sudden more opportunities emerge. It’s true that these opportunities may come from the fringe and bring with them additional risks, but they can also bring more reward.
“Shrinking ambition in order to better digest it is a tendency among many business people. Unfortunately, every time we shrink ambition, we lose something in terms of the upside,” Williamson said.

A Brawl Is Brewing
As different economies continue to come out of the Great Recession, which Williamson said brought unparalleled pain and destruction for many small- and medium-size companies, a “brawl” is brewing among survivors in the global business world.
“Do not assume that a return to growth in the economy means things quiet down. In fact, it’s the opposite,” Williamson said. “The minute confidence goes back into the economy, we are going to see unbelievable turbulence in the corporate and business environment.
“Why? Too many businesses have to make up for too much lost time. It’s going to be a foot race among those who can quickly seize new opportunities. This is a premise, and I don’t have a crystal ball, but it’s a point of view.”
He added that the best time to plan for war is during peace.
“There is a saying in my field, ‘You pick up bad habits in good times and good habits in bad times.’ So, the question for business people is, ‘What have you learned, and how has it altered your thinking?’”
Williamson compared the upcoming business landscape to the “hurry-up offense” in football.
“The really dominate players in every sector — from jan/san to high-tech to health care — are going to be running this type of offense. That is why planning isn’t as important as having a quarterback and wide receivers who are able to improvise at the line of scrimmage,” he said.
According to Williamson, he is not alone in this way of thinking about the future. There are major organizations that see similar challenges and opportunities ahead.
“Are (these organizations) going to be 100 percent right on everything? No. Are they going to be 80 percent right? Yes. Are they going to be directionally perfect? Probably,” he said. “The great businesses of the future will suck up all the intelligence they can find about the external environment, because that is what they need to ensure they will remain relevant. If your company fails, God forbid, it will be because you didn’t think about your business in the right way.
“The bottom line is, the future just doesn’t happen to us. All of that mess (from the Great Recession) was predictable. If you had looked at basic economic trends, you would have known things were over-heated. The very few people who said, ‘Be careful,’ didn’t get listened to. This failure led to carnage.”

The Generalist Is Back
In today’s complex business world, there is strength in numbers. However, those numbers must include the right kind of thinkers.
“The world has changed. It is no longer about the depth of a person’s experience. Rather, it’s all about the breadth and diversity of his/her experience,” Williamson said.
He added that the shelf life of a specialist is getting shorter. When building a winning team in business, it’s more important to find people who possess “an experience repertoire.” This is going to be of more value to a company than someone who has a deep resume of just selling certain products or doing certain things.
“The good news is, the generalist is coming back. Having those broad generalists onboard is now more important,” Williamson said, “This should be to the advantage of small and medium-size businesses. Most people in these companies are, by nature, generalists. This is only good, however, if they can properly think about the future.”
According to Williamson, there are certain forces and pressures in place that can influence a business. This includes new and existing competitors, customers, suppliers and companies that serve as complementors. One of the greatest forces and pressures placed on a business, however, is what he referred to as “organizational blinders.”
“Be wary of the things you believe to be true. Be wary of traditional thinking. Be wary of the ‘yes’ people in your organization. Be wary of anything that looks like a blinder, because there could be one or more people out there who have a different view,” Williamson said. “The way to navigate turbulence today is different than in the past. The old approach to weathering a storm will not work.
“There is an evolution in thinking. For example, the traditional business view is to not attack your enemy, while the new view is to attack your enemy and go right into its wheelhouse. Be brave enough to knock them off their pedestal. Do not, for a minute, believe you can defend your space (in business). What you can do, however, after properly thinking it through, is become hyper-competitive and go right into the face of your competition.”
He added the new view of business also states:
n Everything is in motion and flux;
n Learn to take advantage by moving quickly;
n Embrace full frontal hyper-competition; and,
n Create disequilibrium and change.
In running a business, Williamson said both operational and strategic leaders are needed. Operational leaders are skilled at managing currently invested resources to help gain market share and profit. Strategic leaders, on the other hand, are skilled at identifying and selecting future markets in which to invest resources for future growth.
“Being an excellent operator will not create the same advantages as 10 years ago. The real differentiating advantage comes from the strategic side of the equation,” Williamson said.
He added that those who follow the “strategic planning” path to the future are taking the stance that they are smart enough to figure the future out. Meanwhile, business people on the “strategic thinking” path recognize that they can’t figure it all out and admit their imperfections. To compensate, “they must operate more like a jazz quartet.”
This involves a new way of thinking about business, and not being afraid to disrupt the marketplace.
“If you can put the ball into play when your competitors least expect it, you will then have an advantage. You can either play on the defensive side of the field, or go to the offensive side with the hurry-up offense,” Williamson said. “Ask yourself, ‘What does the environment require of us as an appropriate response. Can we project into the future? Can we connect the dots? Can we get to the opportunities first? Can we overcome the hurdles?’
“The biggest hurdle you, as a business person, have to overcome is cognitive. Don’t become an organization wedded to the status quo. Find ways to outthink your competitors.”
To help with this, it all goes back to business leaders surrounding themselves with the right kind of thinkers.
“Old-way thinkers aren’t going to help you today. You need some really ‘off the wall’ thinkers to at least test your way of doing things,” Williamson said. “Remember, you can have a real brave idea and then taper it back, or you can have a pipsqueak idea that doesn’t go anywhere. I would ask you to think big, go crazy, and then taper it back if you must. You are still ahead of the alternative.”
Williamson recognizes the fact that it’s hard for a lot of small- and medium-size business owners to have a wealth of advisors. However, there are still people to be found who can help a company make “strategic thinking” businesses decisions.
“It’s possible to have an advisory council in place. This can be a loose network of people who are able to help you think about the future. If nothing else, spend two hours on a Sunday researching one of the future society organizations that can be found on the Internet, or start reading a different magazine or website to exercise your brain. This can all help improve fresh thinking.”
Thinking differently about business, for example, can lead to significant changes when putting together an annual sales plan.
“I think there is a series of metrics that we tend to use too much when it comes to something like a sales plan. This includes market share, which I feel is retrospective,” Williamson said. “What is new in business is predictive metrics. If you read about data mining and analytics, it’s all centered on predictive information. Instead of focusing only on share of market and year-over-year sales growth, what business people should be more interested in concerns their share of opportunities.”
As for the years ahead, Williamson sees a period of great ambiguity and uncertainty in the business world. Victory, he said, will go to those who can think about, reimagine and redefine the scope of future opportunities.
“I choose to see this as an unbelievably exciting time to be in business. I can’t imagine a more opportunistic time, provided that companies are built for the kind of ‘white water’ that is ahead.”

The Beacon Group is a Canadian-based leadership and strategy development firm. It has clients spanning a cross section of industries and geographies.
Visit www.thebeacongroup.ca for more information.

Mastering Intelligent Opportunism

There is a distinct emotion that accompanies the arrival of a great business opportunity. It is part adrenaline, part fear and part excitement. It is the same emotional high that comes with being close to inevitable victory in a season ending hockey game. It is the point at which everything around slows down, your vision becomes crystal clear and things seem to be effortless, because you can taste victory. In business, moments like these are all too rare. They may be found, from time to time, in the thrill of concluding an acquisition, the inauguration of a new manufacturing plant, the opening of a new store, (or a Game 7 overtime win) but seldom are they part of an organization’s day-to-day experience.

Seismic Shifts

One of the many transformational leadership competencies required to successfully navigate the future is contextual intelligence. Contextual Intelligence is the ability to sense subtle shifts in the environment, to become aware of those changes before anyone else and to predict their likely implications going forward. It is the ability to put things into crystal clear perspective and then accurately frame the picture so others can understand it. Naturally, there is then the need to communicate the picture in a way that others can grasp and comfortably relate to.

Personal Credibility & Trusted Judgement

Decision Making Intelligence is the second credibility builder and it is the ability to solve problems, resolve issues and come to conclusions that satisfy the various stakeholders and leave them feeling fully and clearly committed to the decision. It is about personal credibility and trusted judgment. In order to be credible, leaders must combine their Emotional Intelligence with a proven track record of superior decision making under a wide variety of circumstances and across a wide portfolio of business matters.

A leader must have the ability to understand and master the complex elements involved in the decision-making process, including the rational and interpersonal components, as well as the divergent and convergent phases. These abilities embody the essence of decision making within what is known as the field of Behavioural Economics. Our current understanding of this science comes from a growing pool of notable experts, such as Daniel Kahneman and Daniel Ariely, who have helped us better understand the mechanics of decision making and the phases we go through as we make business decisions in particular

Together, the powerful combination of Emotional Intelligence and Decision making Intelligence represent the fundamental building blocks upon which leaders develop their legitimacy. In other words, as Barbara Kellerman points out in her book Followership, leaders will not able to lead effectively unless their followers have determined them to be worthy. Legitimacy, defined in this way, is something granted to the leader by their followers. As such, it could be argued it actually puts the followers in control.

Understanding the Future: Bold Imagination

The innovation we need to transform our organizations is not developed by digging for the provable facts and empirical evidence hidden deep in the well of our retrospective data banks. It is not the deep analytical source of insight that will somehow help us make sense of the future. It is quite the opposite. Our ability to understand the future will come from the more intuitive, fluid, experimental process of looking forward, visualizing and anticipating the many changes that are just out of sight, around the corner and over the horizon.

Transformational leaders have a certain bold imagination that fuels their creative genius and combines it with a distinctive flair and a rebellious, revolutionary zeal to make something different, and to do so on their own terms. These are the types of leaders who reorder and reshape the pieces of the puzzle to arrive at solutions the rest of us hold in awe and envy. These are the leaders who violently shake the Etch A Sketch® to clear the old image and then proceed to draw a new one.

Navigating Direction : Mastering Pivot Points

Throughout history, the truly great leaders have known when and how to pivot when the situation and the context change. They seem to have a sixth sense and know exactly the right moment at which to abandon what is no longer working and comfortably embrace new tools more suited to the conditions they find themselves in. It is part experience, part intuition and part luck, but successfully identifying and then navigating these crucial inflection points is the responsibility of leaders. The average leader can perhaps do a respectable enough job when conditions are normal, but it takes an exceptional leader to navigate confidently in uncertain, uncharted and turbulent waters.

It seems as though the dangerous, pivotal moments of transformational change have been presenting themselves with increasing frequency in recent years. The more interconnected global economy, rapid technological advances and constantly evolving social, political and demographic changes have all come together to alter the once reliable maps we used to guide us in the post-WWII period. The question that should concern and even haunt us all is why, in the face of these changes, so many leaders, organizations and nations have not been brave enough, vigilant enough or just plain smart enough to switch tack from what may have been right and relevant in one set of circumstances to a new course, better suited to the changing conditions of the future.

Lies We Tell Ourselves

A common and all too often fatal flaw business leaders fall victim to is the tendency to focus on the immediate rather than the important. This is especially true when it comes to the really big things and the truly difficult problems in our lives or businesses. Unfortunately, the hidden costs, consequences and risks of distortion, denial and misalignment are like those of an iceberg. They can be ignored or underestimated for a short period of time, but if they aren’t dealt with, the risks will inevitably appear as if out of nowhere and overwhelm even the hardest working, most charismatic and most determined leader.

In organizational life, the leader of a huge multinational or a small independent business has the same set of responsibilities to their customers, employees and community. A major responsibility is to face up to, and deal directly with, the misalignments and gaps that conspire against the ability of the organization to perform at the highest level. Leaders must make it their absolute priority to constantly be on the lookout for the discordant signs and troubling signals that reveal things are not exactly as they should be. This requires a strong inner resolve, confidence and a balanced emotional temperament as find a way to run toward those situations with a solution in hand, not away from them in an effort to avoid conflict.