Understand why strategy is important

In their book Strategic Planning: A Practical Guide, Peter Rea, Ph.D. and Harold Kernzer, Ph.D. note that no strategic approach fits all situations, and as a result “contingency theory rules the day” (2). What is equally true, the authors say, is that all strategies require good sense and judgment. Further, while there is no singular school of thought on strategic planning all definitions speak to these concepts:

• Formulation of long-term goals and allocation of resources
• Serves as a “vision of success” and how to achieve it
• Necessity of free will and intentional design (qtd. in Rea and Kerzner 2)

Strategic planning sets the course for your organization’s future and as a result impacts not just the organization as a whole but each team and employee as well. Strategic planning, say Rea and Kerzner, “must function beyond an office of well-educated executives who are insulated from those who make the organization work” (3).

Strategic planning determines your organization’s direction, and a lack of focus leads to an erratic, uncontrolled lurching into tomorrow.

Formulate a strategic plan when conditions are right

If your organization has skills, resources, and the commitment of key decision makers then creating an implementing a strategic plan will serve you well (qtd. in Rea and Kerzner 9). Without this trifecta that forms a stable foundation, though, any plan you make will not endure. Further, your strategic plan must head in a direction that others are willing to follow (Rea and Kerzner 9); this may mean initially making decisions and changes that are agreeable to most everyone, and once those pay off push a bit further with more innovative plans.

Strategic Planning offers several questions to use as a basic framework for any organization’s strategy:

• Strategic issues
• Competitive advantages
• Compatibility of products/services and customers
• Innovation and growth
• Stakeholders’ satisfaction
• Strategy integration/measurement (Rea and Kerzner 11-12).

Think about the many ways your organization can grow

Insight has identified 44 diverse ways to grow – from sales to profit to people. Specific examples include ideas like branching into e-commerce or licensing, diversifying offerings, empowering employees as experts, and implementing a performance management system enables management to track progress. We encourage you to review the 44 strategies for yourself by downloading the PDF.

Get ready to make your organization BLOOM®

Our proprietary performance management system, BLOOM®, enables administrators, managers, and employees to form the big picture – the strategic plan – organize it into meaningful goals and milestones and then into actionable tasks, and see where each employee fits into the overall plan. Administrators provide the vision, managers provide the necessary notes and resources (e.g. spreadsheets and PDF files), and employees help carry out the plan to reach the goal. Because BLOOM® includes timelines and due dates anyone can see when a milestone has been completed and what’s past-due. Contact us for more information or to schedule a demo of BLOOM®.

Written by Paul J. H. Schoemaker, Profiting from Uncertainty: Strategies for Succeeding No Matter What the Future Brings, paints a clear picture of how responses to uncertainty can make or break a company.

In this post we offer a taste of the first chapter, “Embracing Uncertainty,” because it addresses many of the concepts that Insight does when we work with clients to grow and transform their businesses.

Embracing Uncertainty: An Overview

There is no sure-fire way to plan for the unknown, but let’s be clear: risk is not the unknown. Risk is calculated by identifying known contributors and variables; uncertainty is the space outside of risk. It is the unknowable. “The most challenging uncertainties that managers face,” says Schoemaker, “are those they haven’t a clue about – when they wake up one day to find that the Berlin Wall has crashed to the ground or to recognize that the Internet has merged or faded as a powerful new market space” (2).

Why should managers focus on something so unpredictable as uncertainty?

“Firm-specific actions account for just over half the value of a firm,” and the remainder is attributable to external forces that cannot be controlled, but that a company can prepare for through scenario planning (Schoemaker 6).

A few reasons to give uncertainty due consideration:

• Uncertainty affects the external environment
• The level of uncertainty appears to be increasing significantly
• Humans have inherent limitations in dealing with uncertainty 
(Schoemaker 5).

It is also, says Schoemaker, the only source of superior profits (3). A brief look at past examples reveals that stakes are high and that a future that managers fail to see is the one they failed to prepare for (Schoemaker 3-5).

Why is uncertainty increasing?

There are innumerable factors that contribute to uncertainty. A few that are easily identifiable include:

• More complex socioeconomic systems
• New technologies
• Demographic changes
• Changing values
  (Schoemaker 7)

Discomfort with uncertainty is a human response

Humans prefer the predictable. We have myopic eyes that limit our range of sight and timid souls that miss the bigger picture (13). We tend to trust our instincts, but the inherent problem is that instincts develop from past experiences, and uncertainty assumes that the future will differ greatly from the past (Schoemaker 14-15).

Uncertainty = opportunity

You can profit from uncertainties if you’re prepared, and you can prepare with scenario planning. “The less ambiguity we experience, the more we feel a problem can be structured, managed, planned for, and controlled. But competitors can do this as well, so the opportunity for advantage is diminished. We must learn how to welcome and indeed embrace ambiguity” (Schoemaker 10).

Schoemaker’s book includes a number of approaches that help prepare for uncertainty:

• Scenario planning
• Key success factors
• Robustness analysis
• Strategic vision
• Options thinking
• Dynamic monitoring (17)

Schoemaker, Paul J.H. Profiting from Uncertainty: Strategies for Succeeding No Matter What the Future Brings. New York: The Free Press, 2002.

8 building blocks that support an innovation mindset

To achieve a true mindset of innovation takes commitment. Kuczmarski submits that eight building blocks that rest on three interconnected platforms:

1. Planning for innovation
2. Defining the innovation process
3. Crafting a holistic innovation organization

Platform One: Planning for Innovation

Building Block #1: Create an innovation vision and blueprint

A vision enables you to see beyond what you’re currently doing to what you want to become (Kuczmarski 126). Kuczmarski says that, while related to the corporate vision, an innovation vision more specifically:

• Highlights the role that new elements will play
• Describes mission and purpose
• Examines how strategic direction is effected by innovation (128)

Give the innovation vision some parameters and structure by developing an innovation blueprint to guide the way.

Building Block #2: Develop an innovation strategy

To set the vision in motion you need more than a blueprint: you need a plan to implement what the blueprint outlines. That plan is innovation strategy, and it clarifies expectations and defines:

• Financial growth gaps that will be filled
• Financial objectives to meet
• Strategic roles

Building Block #3: Design a technology and innovation portfolio

“Aligned to each strategic role should be an identification of the core technologies or technical expertise areas that you anticipate will be necessary for developing new products” (Kuczmarski 136). In other words, what core technologies do you already have that you can (and will) use to develop new products? Using existing technologies will give you a leg up on your competition.

Platform Two: Defining the Development Process

Building Block #4: Design a staged development process

To transition from a concept to a tangible product your innovation team (see block #5 below) will need a process to follow. Such a process, says Kuczmarski, will:

• Provide a logical approach and system
• Articulate the required approvals
• Offer a framework to manage multiple new concepts (137)

Platform Three: Crafting a Holistic Innovation Organization

Building Block #5: Form innovation teams

To be effective you need a team effort, and the team should consider itself committed for the long haul. When forming an innovation team include these components:

• Cross-functional representation, including expertise, perspective, and experience (140)
• Full-time, dedicated leaders who can motivate, communicate, and solve problems (142)
• Performance-based rewards to motivate team members and recognize a job well done (e.g. peer recognition and career advancement) (145)
• Regular meetings

Building Block #6: Establish reward systems

Rewards do not have to be financial, but they do have to motivate. Particularly for an innovation team whose objective inherently involves taking big risks there is opportunity for big reward, which may come in the form of career advancement, option to buy stock, or some other form of compensation.

Building Block #7: Measure progress and returns

Because the members of innovation teams are pushing boundaries and working to expand the company in new directions they are taking risks. This puts them in a different position than other employees who are supporting the current product and service lines. For the innovation team evaluate members with company-wide, team innovation, and individual innovation measures; having a unique evaluation format further signals a commitment to innovation and cultivates that mindset in the innovation team (151).

Building Block #8: Infuse innovation norms and values

Norms and values, while somewhat informal, help a team establish a sense of community because they form a common set of standards and expectations. When the team members understand the ground rules, there’s no need for rules or regulations (Kuczmarski 153).

Kuczmarski, Thomas D. Innovation: leadership strategies for the competitive edge. Chicago: NTC Business Books, 1996.

8 Steps of Leading Change

1. Establish a sense of urgency

True change takes a lot of effort by a lot of people. If you don’t have buy-in and support from at least 25% of your workforce then road is going to be even more perilous.

To generate support and gain momentum you need a sense of urgency – if you don’t have one then create one. Urgency leads to cooperation to accomplish the goal. If there’s no sense of urgency then there’s likely a high rate of complacency, which becomes a huge obstacle from the onset. Complacency results from sources like low performance standards, senior management communicating exclusively optimistic messages, and “the absence of a major and visible crisis” (Kotter 40).

Three Ways to Counter Complacency

• Set higher standards
• Change internal measurement systems that focus on the wrong indexes
• Reward honest conversation and a willingness to confront problems

Three Ways to Increase the Sense of Urgency

Kotter identifies a number of ways to increase the sense of urgency, among them are to:

• Eliminate obvious excesses
• Require employees to regularly talk with unsatisfied customers
• Highlight opportunities that exist that the company cannot yet pursue

2. Create the guiding coalition

As noted above, you need support to effect change. You also need strong leadership that identifies the goal, sets the course, and guides the way.

Rather than one person who thinks and acts in isolation you need a group that brings a wealth of knowledge. The group, or guiding coalition, must have the right composition, a high level of trust, and a shared objective (Kotter 53). Members must have positions of power, expertise, credibility, and leadership in order to move the organization forward (Kotter 57).

3. Develop a vision and strategy

“Vision refers to a picture of the future with some implicit or explicit commentary on why people should strive to create that future” (Kotter 68).

Kotter outlines three purposes of a good vision for change:

• To clarify the general direction of change
• To motivate people to take action
• To help coordinate action (69)

4. Communicate the change vision

For your employees to understand impending change and its necessity, you must communicate with them. It’s that simple. How you communicate depends somewhat on your company’s structure, but the basic premise is that you must use focused, simple language so that it is easy to understand and sticks in people’s minds. Kotter recommends simplicity, repetition, various forums (e.g. meetings and information conversations), and leading by example (93).

5. Empower employees for broad-based action

If your employees feel powerless then they won’t see the important role they play. Barriers to empowerment that Kotter identifies include formal structures and a lack of needed skills (102). Enable people to take the necessary action.

6. Generate short-term wins

When your employees see evidence that changes are making positive impacts, they see the value and may get a clearer view of the overall vision. If it’s visible, unambiguous, and “clearly related to the change effort” then it’s a short-term win (Kotter 122).

7. Consolidate gains and produce more change

In leading a successful change effort you’ll see more help, support from senior management, and fewer unnecessary interdependencies (Kotter 143). It’s valuable to look to short-term wins to maintain momentum, but be wary of over-celebration that can derail plans you’ve set in motion and completely hijack your vision for change.

8. Anchoring new approaches in the culture

Once you’ve achieved the desired change and experienced positive results it may be tempting to sit back and admire your work. Don’t. The philosophies, norms, and approaches adopted to effect change must be ingrained in the culture in order for them to take hold and sustain themselves. If one person or team was the glue that held everything together, as soon as they’re gone old habits may return if the culture hasn’t fully embraced the changes (Kotter 157).

Kotter, John P. Leading Change. United States: Harvard Business School Press, 1996.

In his November 2009 article “The use and abuse of scenarios,” Charles Roxburgh discusses the ways that scenario planning helps leaders to identify extreme events and their potential outcomes and responses. He notes four features that lead to understanding uncertainty and developing strategy:

• Expand your thinking. “You will think more broadly if you develop a range of possible outcomes, each backed by the sequence of events that would lead to them.”
• Uncover inevitable or near-inevitable futures. “As the analysis underlying each scenario proceeds, you often identify some particularly powerful drivers of change. These drivers result in outcomes that are the inevitable consequence of events that have already happened, or of trends that are already well developed.”
• Protect against “groupthink.” “Often, the power structure within companies inhibits the free flow of debate. People in meetings typically agree with whatever the most senior person in the room says.”
• Allow people to challenge conventional wisdom. “Scenarios provide a less threatening way to lay out alternative futures in which these assumptions may no longer be true.”

He also offers some good rules of thumb:

• Always develop at least four scenarios
• “Crunch” the quadrants
• There should always be a base or central case
• Scenarios must have catchy names to make it part of your organization
• Learn from being totally wrong
• Listen to the contrary voices
• Even modest environmental changes can have enormous impact

We highly recommend that you read the article to get a stronger sense of what we’ve summarized here.

In December of 2008 McKinsey & Company published an interview with Hugh Courtney, an associate dean of executive programs and professor of strategy at the University of Maryland’s Rober H. Smith School of Business, who had recently published a book entitled 20/20 Foresight: Crafting Strategy in an Uncertain World.

Highlights from the Interview

Courtney developed a four-part framework to help managers think about the level of uncertainly that surrounds strategic decisions:

• Level 1: a clear, single view of the future
• Level 2: a limited set of possible future outcomes
• Level 3: a range of possible future outcomes
• Level 4: a limitless range of possible future outcomes

Following the September 11 attacks and then the financial crisis, Courtney identifies the shift not in the uncertainties that exist, but in the human perception of them:

The financial crisis has actually brought greater clarity because it has forced us to recognize that we have a lot more level three and level four situations than we would have admitted a few months ago. They probably were there all along, yet the bias was toward thinking that issues were more at level one and level two. Specifically, we have learned how interdependent our financial markets are and how systemic failure in any important node of the network can work very rapidly through the system and bring liquidity to a halt. So our scenarios about the availability of capital around the world have changed significantly.

Where to go from here?

Courtney says to rethink your planning process and we at Insight agree as we assist organizations with this process:

Have you been doing strategic planning on an annual basis as a paper-pushing exercise? That will have to change. In the months to come, you’re going to have to make decisions very quickly on fundamental opportunities that may drive your earnings performance for the next decade or more, and you’ve got to be prepared to make these decisions in real time.

When it comes to your organization’s future, scenario planning is one of the tools you must regularly sharpen in order to adapt as necessary. Contact us for more information or to schedule a consultation.

Tom Coughlin. Bobby Knight. Both are names you might recognize; they’re coaches whose unique — even controversial — coaching styles have led to great success.

Coach Coughlin adapted to team needs

Coughlin is known for his “if you’re not five minutes early you’re already late” and “no white socks with dress slacks” rules for his professional football teams. His traditional style challenged his team to change and adapt their ways to his norm, yet his disciplinarian style left him disconnected from his 2006-2007 team and caused discontent among the players. Given another year to turn the team around, Coughlin made some key modifications:

• He listened to the feedback and intentionally became more approachable, forming a team leadership council to get input from players. The council gave players insight into what the coach was thinking and why, and it gave them a sense of involvement that led to buy-in.
• He began to look like he enjoyed his job – even smiling more often. In press conferences he used words like “fun” and “enjoy. ” He took the team bowling during the preseason.

Coughlin’s changes were not extreme, yet they changed the team’s dynamic to one of high morale and unity.

Coach Knight put his beliefs into practice

Volumes have been written on Bobby Knight’s leadership style, though two key points stand high above the rest:

1. Knight has led by his values: discipline, effort, execution, and dedication. He lives what he believes. His dedication extends to his players past and present, which his record of a 98% graduation rate among his four-year players demonstrates.
2. Knight is loyal. His loyalties include his inner circle of friends, past players, and causes he believes in. When coaching at Indiana University, Knight was known to show up in the children’s wards of the local hospitals to spend time with kids and their families.

What their examples show us

Coughlin coached the New York Giants well enough for the team to turn its mediocre season into a 2008 Super Bowl victory over the New England Patriots. Knight is the winningest men’s coach in NCAA basketball history. Both men are leaders. Both men are intense, no-nonsense individuals. Both have earned reputations for their firebrand, disciplinarian, and controlling coaching styles.

Both are also examples that teach us about personal uniqueness and leadership:

• Good leaders are never too old to learn, to listen to feedback, to be introspective, and to adapt in order to best lead.
• Leadership involves buy-in. If you’re leading and no one is following, then you’re not actually leading. You need involvement and interaction. Be a strong leader, but be human.
• There is no cookie cutter leadership style. Authentic leadership must be a reflection of who we truly are – and that style must also be able to adapt to the team’s needs.
• Leadership involves loyalty and care.

What are some effective leaders or style you’ve found helpful? What are some ways you’ve adjusted your own leadership approach to better lead your team?

4 reasons why it’s lonely at the top

A variety of unique factors contribute to a CEOs’ isolation from employees, organizations, and their own emotional needs and desires:

1. The nature of their responsibilities and duties can alienate CEOs from other executives and employees. CEOs are privy to highly confidential information that cannot usually be shared with former coworkers and advisors. As a result, “colleagues who were once peers and confidants may no longer be accessible because of confidentiality requirements. What once could be discussed with coworkers is now private, inside information. Social support is often diminished or even becomes non-existent.”
2. CEOs hold positions of power and authority that can lead to their real or felt sense of alienation. While good news can quickly rise to the top, bad news moves at an exponentially slower vertical rate. Jack Welch observes that “bad news festers in the trenches where those who possess it hope they can make it go away before anyone notices.” With lower-level employees guarding higher-ups from bad news, CEOs can find themselves increasingly insulated.
3. CEOs may emotionally isolate themselves to maintain an appearance of confidence. While this tactic may sustain overall morale, CEOs then pay a great emotional and relational cost to keep up the facade. As a result they may experience isolation to do the pervasive but false perception that it is an admission of weakness for leaders to ask questions or to see outside help.
4. Some CEOs struggle with feelings of insecurity, others with their own inflated egos. Some may surround themselves with “yes people” whose constant affirmation may lead a CEO to develop a distorted sense of themselves and the business; such unchecked egos overpower good business sense and jeopardize the organization’s health.

The solution to loneliness and alienation lies in peer groups

Rather than turning to friends or family members for support, CEOs can turn to peers in business who can fully appreciate the situation and provide truly informed empathy.

When considering potential confidants, it’s important for a leader to seek honest opinions and perspectives and to avoid constant reassurance, information isolation, and undermining intentions.

Peer Pressure, Peer Support

Peer groups can provide informed empathy for the isolated CEO that is likely not being provided by other relationships. CEO peer groups are informal gatherings where leaders from non-competing industries meet on a regular basis to discuss their business and personal struggles, share and receive practical advice, network, and generally socialize among equals. They provide a safe forum for CEOs to express their fears and anxieties without risking their business interests or reputations. By expressing their fears in conversation rather than suppressing or denying them, group members can acknowledge their fears as legitimate and appropriate feelings, but also place them in proper scope and context. Not all conversations must be about crisis – nearly any topic is appropriate.

Many such groups require members to sign non-disclosure agreements, thus formalizing a social contract of confidentiality. In the case of publicly traded companies, these groups often prohibit their members from trading in each other’s stock.

Insight facilitates a peer group for CEOs of privately held companies that functions in many ways like an informal board of advisers. “I use Insight’s Chief Executive Series like a board of directors,” comments Jim Abbott, CEO of Nimet Industries, Inc. “Every meeting has new, valuable information, and it has never been a waste of my time. I call the CEO members when I have a problem to solve and need advice. It can be lonely at the top, and it has been great to have this group for support.”

Peer groups constitute a valuable resource of knowledge and experience; CEOs can gain advice from other seasoned businesspeople that have likely faced similarly challenging circumstances. Listening to how a peer solved a particular problem might spark fresh thoughts on a variety of topics. Additionally, the direction of the global business market toward horizontal relationships highlights the importance of the ability to network resources and collaboratively outsource, or “growthsource” non-core needs to the expertise of business partners.

With peer groups comes accountability

Peer groups can provide CEOs, who are often answer to very few individuals, social accountability for constructively dealing with specific problems they’ve shared during group meetings. Although this kind of accountability is informal, it’s invaluable. In sharing his experience in a CEO peer group based in Bend, Oregon, one member shared that “one of our group members knew he had to make a termination . . . At the next meeting the first thing his peers asked was, ‘Well, did you do it?’ The group forces you to take actions you don’t always want to take.” This informal accountability can help motivate CEOs whose energy, motivation levels, and general focus have decreased due to the lack of accountability at the highest level of leadership.

By definition, a team is a group of people that has a common purpose, mission, or goal. Its members are interdependent, and they agree that they must work together and collaborate to effectively reach their goal.

Characteristics of successful teams

Regardless of whether we’re talking about the Indianapolis Colts or the editorial department of the Indianapolis Star, there are a number of characteristics common to successful teams:

• Clear goals
• Clear roles
• Clear communication
• Beneficial team behaviors
• Well-defined decision procedures
• A plan for improvement
• Balanced participation
• Established norms and ground rules
• Awareness of the team process
• Scientific approaches

There are a number of types of teams, and they are generally distinguished by three key points: their purpose; their duration (permanent or ad hoc); and their membership (functional or cross-functional). Five types of teams generally seen in the business sector are:

1. Natural work groups: groups composed of people who work together every day
2. Business teams: groups of people who come together for a specific task.
3. Management teams: groups of people, usually peer managers, who come together to coordinate actions of the entire organization.
4. Problem-solving teams: groups of people who come together for a specific period to analyze a situation and suggest working alternatives.
5. New product/service teams: groups of people who come together to design or redesign a product or service.

To be effective, teams have a number of needs that must be met, including:

• Clearly defined purposes and goals that serve the organization
• Clearly defined parameters
• Ability to communicate within the organization
• People with the necessary knowledge and skills to accomplish their tasks.
• Knowledge of how they are going to accomplish their tasks.

How teams operate

To accomplish their purpose and mission, teams must collaborate effectively. Teams that follow a proven process often achieve their goals. An effective process includes:

• Identify the clear purpose, problem, or issue the team will address
• Determine a problem-solving process
• Hold effective meetings (e.g. agendas, ground rules, and established roles)
• Conclude collaborations (e.g. summarize decisions, review action items, and evaluate meetings)
• Follow up (e.g. distribute notes and complete assignments)

In summary, businesses often say they have “great teamwork” but the proof is in the process and the results.