The Three Disciplines of Advanced Strategic Thinking

The inability to elevate thinking in order to set strategic direction can have devastating long-term effects on an organization. Research by The Conference Board has shown that 70 percent of public companies experiencing a revenue stall lose more than half of their market capitalization. Additional research attributes the primary cause of these revenue stalls to poor decisions about strategy.

Rich Horwath, in his book Elevate, points to 10 strategy challenges faced by today’s companies:
1. Time
2. Commitment (buy-in)
3. Lack of Priorities
4. Status Quo
5. Not understanding what strategy is
6. Lack of training/tools for thinking strategically
7. Lack of alignment
8. Firefighting (being reactive)
9. Lack of quality/timely data and information
10. Unclear company direction

One of the key issues Horwath points out as a problem for companies, is their confusion about what strategy really is. There is confusion between Goals, Objectives, Strategy and Tactics. Horwath provides a tool he calls the GOST tool, to help companies clarify what strategy really is, and to separate it from goals, objectives and tactics.

He also provides what he calls the three disciplines of advanced strategic thinking:
• Coalesce: fusing together insights to create an innovative business model.
• Compete: creating a system of strategy to achieve competitive advantage.
• Champion: leading others to think and act strategically to execute strategy.

If your company struggles with strategic thinking, then we invite you to join us and Rich Horwath for our next Soundview Live webinar, The Three Disciplines of Advanced Strategic Thinking, on August 21st. Rich will unpacked these strategy concepts, and take your questions.

The Hurdles for Globalization

THE ROAD TO GLOBAL PROSPERITY

Michael Mandelbaum is an unequivocal supporter of globalization, and in his latest book, The Road to Global Prosperity, he lays out both the advantages and challenges that globalization faces in the coming years.

A leading authority on international affairs, Mandelbaum does not deny that globalization, like any productive economic change, causes some people to be worse off than they were before, at least in one aspect of their lives; but even for them, Mandelbaum notes, globalization has advantages. For example, globalization gives all consumers more product and service choices and better prices.

The political problem, writes Mandelbaum, is that the advantages of globalization are far more long term and subtle than the immediate and wrenching negative consequences. Product choices and better prices evolve over time; the job losses, however, are immediate and unambiguous. And because of the immediacy of the pain, it is the minority of globalization losers, not the majority of winners, who have a greater motivation to try to influence policy. That is why, despite the advantage for the majority, globalization faces an uphill battle in democracies.

In four brilliant chapters, Mandelbaum lays out the political hurdles that globalization must and, he believes, will overcome. In the first chapter he tackles the question of whether the world will continue to “be stable and peaceful enough to permit trade, investment and immigration on a large scale?” Mandelbaum compares global stability and peace to the roof of a house. Without a roof, the residents of that house would spend all their time battling the elements, severely limiting their ability to function productively. National economies also need a roof of security to function effectively, and for many years, he writes, that roof was provided by American military power. Today, however, there are two other sources of security that have made the roof sturdier, according to Mandelbaum: 1) the legitimacy of globalization, or more specifically of market capitalism and cross-border economic transactions, and 2) the new illegitimacy of war.

The second political challenge is the political backlash against cross-border flows. A global economy depends on the cross-border flow of goods, money and people. Unfortunately, as described above, the creative destruction of such a flow — that is, the difficult negative consequences required for a longer-term positive result — can motivate a minority of people to shut the gates. Mandelbaum believes, however, that because globalization makes all countries engaged in it richer, the gates will remain open at least to trade and investment.

The third political challenge comes in the form of global financial crises, such as the 2008 Great Recession in the United States. Mandelbaum turns again to a metaphor as he compares the flow of money across borders as having the attributes of a river: a life-sustaining force when under control, it can lead to widespread destruction when it overflows its banks and floods the land or streets around it. Financial bubbles are the equivalent of floods, and the most recent bubble, combined with the Euro crisis, has both the United States and Europe still trying to recover. Reducing a repeat of shocks in the future is vital to long-term economic growth, Mandelbaum writes.

Finally, he examines the challenges facing the BRICs — Brazil, Russia, India and China. Representing the largest and most powerful countries in four crucial regions of the planet and a total population of 3 billion people, the continued growth of the BRICs’ economies is vital to future prosperity. The Road to Global Prosperity is a tour de force of economic writing: at once brief and comprehensive, it offers an insightful framework that allows readers to grasp the complex political forces that may batter but not sink the global economy.

77 Eye-Opening Ways to Improve Productivity and Profits

LOW-HANGING FRUIT

77 Ways to an Easy Win

Former McKinsey consultant Jeremy Eden and former banker Terri Long, authors of a new book called Low-Hanging Fruit, believe that despite the myriad management theories, concepts, processes, mindsets, frameworks and case studies that have filled the management bookshelves for decades — most companies are not doing even the simplest of actions that could lead to significant improvement in productivity and results. They are, according to Eden and Long, ignoring the “low hanging fruit”: easy, affordable and quick ways to eliminate waste and boost performance. In Low-Hanging Fruit, the authors offer 77 ways to achieve these easy wins.

What’s Wrong With a Big Tomato?

The first step, according to the authors, is to see the fruit that is within easy reach. “Seeing the problem,” they write, “is harder than solving the problem.” For example, the authors describe a food company’s popular and profitable tomato sauce product that features large tomato dices. So where’s the problem? The company eventually discovered that the large tomato dices were clogging their machines, causing several hundred thousand dollars in equipment shutdowns a year. Upon further investigation, they learned that consumers actually preferred smaller pieces of tomato. By replacing large tomato dices with smaller ones, the company saved $500,000 a year — and made customers happier! Just because a product is popular and profitable doesn’t mean that there is not a problem that could be easily resolved.

The food company’s discovery of its big-tomato problem was revealed when it “value engineered” its tomato sauce. Value engineering, the authors explain, “is a powerful process used to discover and eliminate all of the elements in a product or service that customers do not value but that cost the company money.” By searching for an undiagnosed problem, value engineering can lead a company to low-hanging fruit, such as replacing large pieces of tomato with smaller pieces — and it is just one of the authors’ 77 paths to similar low-hanging fruit.

The first 10 of the 77 offer suggestions for discovering problems; in addition to value engineering, these suggestions include asking “why” five times, not accepting guesses as truths, looking at statistics with skepticism, and avoiding benchmarking (a complete waste of time since no company is doing exactly what you are doing, the authors write.) In the remaining 67 short, pithy chapters of the book, the authors focus their low-hanging fruit ideas around key topics such as how to solve problems you’ve uncovered, motivating your team, increasing company-wide collaboration, or keeping everyone accountable.

Saving Time the Easy Way

For example, in a section entitled, “Need More Time? It’s Easier To Find Than You Think!,” the authors suggested that low-hanging fruit actions include:

  • Replacing agendas with game plans. Instead of promises of information (“Marketing is giving us an update on project earnings growth”) or general goals (“We need alignment on a new product launch”), a meeting’s game plan should list specific outcomes expected from the meeting (e.g., make a decision, solve a problem); materials to be prepared and read before the meeting; expected next steps confirmed at the meeting.
  • Ban meeting tourists. Only the right people should be at the meeting. If there are participants with limited roles, their participation should be limited to those roles.
  • Don’t have a 60-minute meeting to do 22 minutes of work. There is no law that meetings need to be in 30-minute increments. Allot the time you need, and not more.
  • The obligation to dissent. If someone has a problem with a decision, they should speak up at the meeting — not in a private meeting with the CEO later. The objection might be valid, which then requires the CEO to revisit the issue… and schedule another meeting.

Eden and Long are not smart book-packagers who have simply aggregated a list of 77 insightful tips and suggestions. As co-CEOs of Harvest Earnings Group, the authors developed the concepts in Low-Hanging Fruit through their work with the CEOs of major companies such as PNC Financial, H.J. Heinz and Manpower. Every manager moving through the many ideas packed into this concise book will no doubt come away with at least a few ideas to implement immediately.

How Leaders Achieve Maximum Results in Minimum Time

Laura Stack makes an amazing claim in her book Execution IS the Strategy. She states that strategy must emerge out of execution, and she provides four premises for this approach.

  1.  Interdependency – strategy and tactics are part of the same over-arching process, with an inherent relationship.
  2. Fluidity – strategy must be more flexible in its tactics now than in the past.
  3. Speed – strategy must be executed more quickly than ever before to be effective.
  4. Validity – strategy must still be appropriate and strong, or none of the first three premises matters.

Laura then provide the 4 keys to efficient strategic execution, which she calls the L-E-A-D Formula:

Leverage – do you have the right people in place to achieve your strategic priorities?

Environment – do you have the organizational atmosphere, practices, and culture that will allow employees to easily support your strategic priorities?

Alignment – do your team members’ daily activities move them toward the accomplishment of the organization’s ultimate goals?

Drive – are your organization’s leaders, teams, and employees agile enough to move quickly once the first three pieces of this list are in place?

To learn more about how execution and strategy interact, and how to apply the L-E-A-D formula to your organization, join us on May 30th for our Soundview Live webinar How Leaders Achieve Maximum Results in Minimum Time with Laura Stack. Bring your questions and fill the room with your team members.

Navigating the ‘Great Deflation’

THE DEMOGRAPHIC CLIFF 

How to Survive and Prosper During the Great Deflation of 2014-2019

Economist Harry Dent was almost a lone voice in the wilderness as he predicted that by the 1990s, Japan’s economy would be in decline rather than conquering the world. Not that Dent is necessarily a doomsayer. He also predicted long before others the burst of U.S. consumer spending from the mid-1980s to the mid-2000s, when most economists saw the U.S. economy in decline.

The secret to Dent’s success is his core belief in the predictability of people’s spending habits as they age. Economists know what people will be buying at age 25, 50 and 75… and 90. This may seem blindingly obvious, and yet it was this simple demographic fact that drove the contrarian burst of consumer spending in the 1990s and 2000s that Dent had predicted. He simply overlaid his data that showed consumer spending peaking at age 46 (expensive house, dependent children with college tuitions) with population statistics, to realize that spending would start rising around 1983 and peak in 2007-2008.

The ‘Great Deflation’

As far as what demographics tell us for the future, one needs to look no further than the title of Dent’s latest book, The Demographic Cliff. The world economy is about to go off a cliff and in fact has already started. Between 2014 and 2019, the bubbles will be bursting around the world, and there will be deflation as never before seen, Dent writes. Again, the core reason is simple: the peaks of boomer generation spending have crested, and it’s downhill from here until 2024 to 2026.

This “Great Deflation” comes as no surprise for Dent, who believes that global economic cycles rotate through four roughly 20-year seasons (or more specifically two 40-year boom and bust cycles). Basing his description on the work of early 20th-century Russian economist Nikolai Kondratieff, Dent describes the four seasons as follows: “a spring boom with mildly rising inflation; a summer recession with inflation rising to a longer-term peak with major wars; a fall boom with falling inflation, powerful new technologies moving into the mainstream, and a credit bubble that leads to high speculation and financial bubbles; and then finally the winter season with the bursting of the bubbles, debt deleveraging, and depression.” For Kondratieff, the seasons occurred in 60-year cycles, but longer life spans and the shift to a mass-consumption consumer society has stretched the cycle to 80 years, Dent writes. The last spring began in 1942 with the growth in spending by what Dent calls the Bob Hope generation. Which means that winter has begun.

The Demographic Cliff, however, is not intended to be just a sky-is-falling book; its subtitle is “How to Survive and Prosper during the Great Deflation.” The second half of the book is filled with how to respond to the Great Deflation. For example, finishing the book in September 2013, Dent writes that his analysis foresees a major stock market correction after the first quarter of 2014. “So you should be looking to sell stocks soon after this book comes out in early January,” Dent writes. For real estate, he suggests that baby boomers will want to buy vacation homes in 2016 or after. Dent follows up his in-depth advice for individuals with equally in-depth advice for businesses and governments — governments that must give up their monetary stimulus “drug” habit.

The Demographic Cliff is not a quick read, but it may be the best investment of time that one could make — before it’s too late. As Dent writes, “If you see the change of season coming, it’s no problem to adapt. If you don’t, you’re in trouble.”