Tag Archive for strategy

A Tale of Two Decision-Makers, or How Self-Reflection Leads to Self-Preservation

Among factors influencing the decision-making of a leader are the people and groups involved in the process and their levels of influence on the final decision.

You may have worked in organizations where decision-making is well-and-truly top-down. I’ve done work for two of them, both in need of transformation for various reasons (including rapid, technological changes in their industries and a need for succession planning).

The way the patriarchal leaders of these two organizations reflect on their decision-making vis-à-vis their advisors and staff will play a big part in their ability to transform their organizations.

In Organization 1—a publishing company—decisions come from the leader alone, with some information and suggestions provided by a small, trusted advisory group or sometimes just one lieutenant—workers are expected to accept the decision or leave. In Organization 2—a logistics company—the chief executive also makes autocratic decisions, but tellingly he struggles with whether or not his ideas will be accepted by his staff.

Incidentally, the Vroom/Yetton Normative Decision Model is often used to define the alternatives available for a leader when making decisions:

• A leader may make simple decisions with no assistance, using whatever information is available.

• He or she may obtain information from staff or consultants. (The leader may also decide not to reveal the reason for requesting information, and the information supplier may or may not have influence over the decisions.)

• Or the leader may decide to involve a group in the process, delegate the decision, and so on.

Decision quality often is affected by impersonal aspects (I’m paraphrasing management theorist NF Maier here) and is driven by three types of outcomes: 1) quality/rationality; 2) acceptance or commitment by individuals and teams; and, 3) the amount of time available to make the decision.

Any time a decision can be made without involving others is ideal; however, consideration must be made as to whether the organization supports the approach.

In Organization 2, when the chief executive attempts to make even the simplest decisions without consulting his team, he is often met with resistance. The reason for this brings up possibilities for managerial improvement—the executive rarely communicates clearly with his organization, and he is not aware of, or sensitive to, his staff’s ability to execute his decisions.

The logistics industry, you see, is one where workers typically are only trained on specific tasks, and often they do not know how to perform outside them. Although the chief is somewhat aware of this, he still allows his staff to think outside their tasks. Unfortunately, they have no training along these lines, and failures to properly execute diminish their trust in their leader and their willingness to commit to more of his decisions.

Organization 1 is solely led by its chairman’s decisions alone, or with input from a very small group of executives who are not involved in production. In this case, workers are freely told how the chairman makes decisions and that they are expected to execute them without resistance. The organization is very polite about all this, although resistance to decisions is not tolerated and resistors are removed.

Helpfully, the human resources manager has an open-door policy. In this office concerns and ideas can be shared, although this openness is a method to identify resistors. While this type of organization may not appeal to many professionals, it has been successful in achieving its goals, partly by strictly controlling its decisions.

In recent years the firm has had to grow by acquisition to maintain the same revenue base. Despite these acquisitions the chairman has successfully maintained his strategy because the creativity that comes with open participation, devil’s advocacy, and autonomous teams is not to be found.

The company acknowledges that creative individuals will not tolerate the atmosphere, but its planned approach maintains equilibrium and steady revenue generation. Creative talents have ideas that can lead to risk and the company is risk adverse. Additionally, the company makes money on labor hours, and “steady grunts” billing by the hour are more profitable.

However, Organization 1’s chairman, his second-in-command, and members of the board are aging, and there is no apparent succession planning in place. The organization therefore needs to aggressively plan its future strategy in order to remain relevant. In fact, more pressingly than succession planning, the firm must address how to innovate in the rapidly changing publishing world. Since there is little creativity in-house, strategic re-orientation may have to come from outside, a prospect that may be difficult to accept.

Reviewing both cases as a consultant, the greater opportunity for transformation lies with Organization 2.

That’s because its chief executive realizes his business environment has become too complex to manage autocratically. Importantly, he’s seeking assistance to determine what the organization needs to look like in order to get decisions accepted and to learn how to innovate in order to remain relevant in a virtual economy. Such honesty and self-reflection has yet to be found in Organization 1!

I have recommended the culture change theories of John Kotter to the chief executive of Organization 2. In fact, he knows Kotter’s theories, and although he is suspicious of theories in general, he appears to accept Kotter due to his consulting background.

Furthermore, Kotter’s steps are easy to understand and use as a framework. The primary ways to create a culture change, according to Kotter, is to speed up decision-making and reduce bureaucracy, while empowering workers to make more decisions.

 

The Ant and the Grasshopper: Continuity Planning & Situation Awareness

Success in projects large and small often relies on a great deal of “situation awareness”—the awareness of dynamic factors integral to and surrounding a project and of the extent to which a change in one variable affects the whole.

Some of the most critical variables in any project are, of course, humans.

Situation awareness must always include an assessment of the human environment within which a project is taking place, and if you are the leader (an executive or project manager), you must be prepared to adjust your style and approach based on the personalities, power relationships, motivations, and intentions you encounter.

If that sounds multi-layered and complex, it is. The human brain is still the most powerful and creative computer we know of, but all that grey matter comes with baggage. Even before actual work ever gets done, leaders must seek common understanding and trust—and appropriate boundaries. There are no true cookie cutter management applications or algorithms—we always have to make adjustments.

A Modern Fable

To illustrate, let me tell you a story from my past experience—a kind of modern version of “The Ant and the Grasshopper!”

At the beginning of the last decade, I was consulting with a multi-national corporation when continuity planning became a hot topic. It was a sidebar to the Y2K debacle, when companies were forced to make adjustments based on short-sighted computer programming that had not provided for the switch from “1999” to “2000.”

As 2000 approached our organization realized that anything programmed with dates—security systems, printers, engineering controllers—might not work if relying on date-driven information. (In a related example, when I was working for a very large media company, a building security system was tested for the year 2000; it locked all the doors in corporate headquarters and would not be opened without being completely dismantled!)

“What Are Your Priorities?”

As information officer, responsibility for continuity planning fell on me and my staff. Since we were a federal contractor, we used the methodology prescribed by the General Accounting Office (GAO), and we hired a “Big Five” consulting firm to perform third party validation.

These two decisions created pressure for buy-in by the organization to participate. Additionally, we didn’t just make this a Y2K exercise, but a business continuity exercise, posing the general question, “How long can you afford to not do business, and what are the priorities to maintain minimal operations?”

The study became an exercise in situation awareness within a complex system, conducted over six months.

It produced an inventory of facilities and IT systems—essentially anything that had a controller in it, including lowly stamp machines. Items were rated for effect on mission critical operations. Scenarios were examined for contractual, political, and natural incidents that could cause disruptions. These were run through multifunctional teams for review, testing, and prioritizing. We created emergency plans, maps, and communication trees that included meet-up locations, service level agreements from providers, and alternative phone systems.

A Natural Disaster

Every office participated, but one. And sure enough, a disaster struck that office causing a continuity crisis—its facility’s roof was ripped off in a hurricane. Because there was no continuity plan in place, this subsidiary and the project office were unable to meet contractual requirements, and they both went out of business.

Meanwhile, through advance testing, every system but one mail machine in the corporate office had been addressed prior to Y2K and coped with the date change just fine. And when the Sept. 11, 2001 attacks happened, the same plan was used and the organization quickly locked down project areas that were considered susceptible to terrorist strikes.

The teamwork and collaboration involved in this project must be noted. Due to the complexity of the organization and the services rendered, there was no reliance on an individual—or, to allude to another fable, on the boy with a finger in the dyke.

Teams were important and players had to be able to assume each other’s roles. For example, when the voice-over IP communications lines went down briefly during the Sept. 11, 2011 attacks, two remote engineers stepped in for the IT people, who were busy being safety marshals.

By referring to the Emergency Manual, individuals in Alabama and North Dakota were able to reroute communications lines through emergency dial up connections that the organization maintained for critical connectivity. Not only was safety ensured—and calm maintained—but investor and public relations kept communications channels open, even as some larger companies were affected by leaks and improper information disclosure by employees in the midst of that crisis.

Managing Chaos, or Predicting the Unpredictable

If you want to observe the role of chaos in management theory, help run a sports program! A hockey player, I have helped run a few over the years. Yes, there’s lots about these programs that’s very orderly and top-down, with one exception.

Messy Humans

Typically, hockey programs run on predictable schedules that are the same year-in, year-out. Decision-making is usually fact-based and easy to implement, with clear delegation to a hierarchy of coaches, managers, and staff. But there is always one factor that adds a dose of chaos—the human factor.

A committee might not have proper authority to make decisions; individuals have personal agendas; parents intervene; “referees suck;” and there’s always inappropriate personal relationships, feuds, and ill discipline.

Humans are messy—but in a sports program, authority tends to rest on the shoulders of a director. As long as everyone respects authority, he or she is able to decisively move forward on any issue, either by reference to policy, or experience, or industry standards.

However, according to management philosopher Meg Wheatley, “If you’re interested in creating sustainable growth, sustainable productivity, sustainable morale, you can’t do that through autocracy.”

Document Everything

Simply dictating behavior and outcomes doesn’t work in most cases these days. Well, maybe it does in a hockey program—but Wheatley says you’ll be surprised how self-correcting and complexly adaptable the Army is!

In this interview, Wheatley discusses chaos management theory. Of course, she doesn’t mean that sustainable organizations are anarchic; rather, they have the ability to turn seemingly random events (i.e. the human factor) into patterns that can help them learn and predict outcomes. The Army, notes Wheately, “studies history carefully” and “documents everything.”

But is this approach good for all businesses? Once a hockey coach introduced a new training regimen to my program—small group games—bringing to bear his experience and learning. Other coaches were easy to win over. But parents are results-oriented. They wanted full scrimmages, goals, wins. They resisted, until a collaborative approach was taken and the “whys” and “wherefores” were shared—opening up the learning experience to the parents, who self-corrected and adapted.

Disruptive Change

However, most organizations have more moving parts than a hockey program. And many have much less tolerance for risk and much greater need for process stability—think hospitals or nuclear power plants. Creating a chaotic state might guarantee change; however, its direction cannot be guaranteed.

On the other hand, organizations that thrive on creativity may be better suited for chaos management. Technology firms, for instance, may benefit from disruptive change because they require constant innovation to stay competitive.

And traditional companies may at times benefit from disruptive change for the sake of survival. The print industry is shrinking due to the adoption of dynamic media such as websites, and Kodak’s recent bankruptcy is an example of a print industry firm that failed because its change management was perhaps not disruptive enough.

Pattern Finding

If your change management job is to deliver an expected outcome, perhaps chaos is not the first arrow to reach for. Or it could be if its lessons in pattern-finding are brought to bear. Recall that one discovery of this science is the fractal, the idea that simple, repeatable, mathematical patterns are at the heart of some of nature’s most efficient designs, such as snail shells and leaves.

If chaos management can be used to observe what is occurring as events unfold, and if it can help us react rationally to those unfolding events, then we’re onto something.

Chaos theory also teaches us that events are interconnected, affected by minute external changes—the so-called “butterfly effect.” Perhaps chaos management can help us recognize this interconnectedness and let go of the search for control and certainty, embracing probability, prediction, and forecasting as key management tools.

Leaders, I think, make decisions most successfully when they fully understand the context of the organization—its complexity, risk climate, human behavior, external factors such as politics—and they are even more successful when they monitor responses and act appropriately based on what they learn.

David Beats Goliath with a Rock (Solid Approach to Market Entry)

I recently received some great feedback on my University of Maryland Doctorate of Management paper on “Globalization and the Small-to-Medium Enterprise (SME).”

Despite many challenges, I argue that there remain some tremendous opportunities for SMEs to gain market entry in a global environment through alliances, virtual organizations, and symbiotic relationships with other companies both large and small. At the end of the paper, I included an interview with Ian Bothwell of Rover Technologies, a technology-based SME.

Here’s some of the good advice Ian passed along regarding how to launch technology-based products and services in a global marketplace.

Play the Field: Market in More Than One Segment

“The ability to market your technology to more than one segment is valuable. Multiple segments implies the potential to also scale in a larger market, while the risk of failure is reduced in any one segment. However, switching segments is usually not practical very early in the market entry process, primarily because customer acquisition and product customization costs can be prohibitive.”

Horses for Courses: Find the Right Niche

“A scaling strategy in the face of an established market is extraordinarily difficult, in terms of differentiating oneself and establishing presence and credibility. For SMEs scaling is predicated on finding useful niches and entering with an attractive price/performance and matching customer needs. In Phase Two, upsell the early adopters.”

Jack Be Nimble: Use Size to Your Advantage

“The primary advantage an SME has is its size. There is no market too small or any customer too unattractive. Its agility and willingness to take risks makes it a potent market force. For technology-based products and services, this advantage means being able to adapt to diverse customer needs without incurring significant additional development, testing, or market validation costs. This requires an inherently ‘flexible’ product that can be customized rapidly, easily, and at low ‘delta cost.’”

Pipe Dream: Rapidly Introduce New Products/Upgrades

“In order to scale in a segment, while sustaining first-in-class momentum, you must introduce product improvements in a rapid tempo, usually more than once a year. This calls for a fundamentally superior design concept and flawless execution by the product team. A useful concept here is product line architecture (PLA), which has become the rage with large enterprises in their drive to eke out efficiencies.”

Triumph of the Commons: Design for Rapid Product Evolution

“A well-designed product line embeds a superior design of sufficient abstraction and commonality that it allows for the assembly of a majority of ‘common’ elements along with a small number of unique variations—to yield rapid development of a range of product forms. R&D advances fed into the pipeline allow for variations to take advantage of these technologies first before they are incorporated into the enterprise. This provides a viable implementation framework for a large range of products prior to the market entry of even the first one! Synergistically designed software and hardware provide a powerful foundation for an affordable and efficient PLA to leverage an SME’s agility in order to make a big market impact.”

Fully Baked: Design Agnostic Hardware

“Hardware design needs to be device agnostic to allow for significant upgradeability for emerging technologies that are as yet undefined. Similarly, scalability has to be ‘baked-in’ at the outset, since the PLA supports different products with widely different scaling needs. The use of standard interfaces allows for interoperability of different classes of devices, opening the door to a variety of application concepts with the same hardware framework.”

Reading the Future: Use Services-Based Software

“Software design needs to mirror the abstraction of peripheral devices. Core software design must generalize these device constructs using a meta-framework to define and model them, to allow software to understand device types yet to be developed. A services-based software framework can encapsulate various aspects of product-related functions and allow the development of common and unique services.”

No More Dump ‘n’ Chase!

Dump ‘n’ Chase: An offensive strategy in ice hockey in which a team shoots (or “dumps”) the puck into the attacking zone and aggressively pursues it in hopes of retrieving possession and setting up a scoring chance. Most effective for teams with enough speed and size to force opposing defensemen off the puck. The strategy is often disparaged by broadcasters as lacking in creativity or entertainment value.

Another thought from my doctoral essay analyzing Daniel Bell’s The Coming of the Post-Industrial Society: A Venture in Social Forecasting has to do with how Bell’s grand ideas can be applied at the level of business development and transformation.

Bell’s example teaches us that when dealing with today’s highly complex, highly integrated business and economic issues, we may need to think in terms of ontologies rather than strict categories or taxonomies. I see the grand idea of his book as this—our economy has shifted away from manufacturing (analogous to the mechanical, Newtonian, Euclidean) toward a knowledge economy (ontological, quantum, non-Euclidean) and that we must understand how this shift affects and informs society, business, and ways of thinking.

In his book, Bell shies away from offering a new grand plan for how to operate or think in the knowledge economy. His paradigm shift is actually an invitation to consider new perspectives and to “think outside the box” as the business cliché goes!

An analogy from ice hockey, a sport I have played and coached. There are two prominent team approaches in this sport—systems/tactics and concepts. Those who cannot think in the abstract or lack inherent talent must play using systems/tactics, and the most notorious and artless of these is “dump ‘n’ chase.”

Beyond this tactic, there are complex playbooks that lay out plays to be memorized by a team. During a memorized play, each player is equally important to the team’s success as a whole, and if one player forgets his/her role (“Oh, I was supposed mark THAT player?!”), the model fails and it’s 0-1!

However, teams that play using the concept approach allow the natural ability and communication of the players to set the tone. Skills are still important but they are inherent to these advanced players. There can be components and inconsistencies, but this team is more likely to win because an opposing team that plays by systems/tactics can’t adjust and defend again the unpredictable nature of concepts.

(A colleague tells me there’s a similar analogy for soccer fans. Think “kick ‘n’ rush” tactical soccer found in Europe’s lower divisions versus the “total football” conceptual approach favored by the “soccer is an art form” teams such as Barcelona, Bayern Munich, and Arsenal.)

My point is that those who play by systems alone—whether a hockey or soccer team or a business—will never grow beyond a certain level. Those who use structure as a means to organize but at the same time apply concepts to see the bigger, complex picture use a winning combination for today’s technological environment.