Monthly Archives: February 2018

Strategies for Growth and Moving Beyond The Status Quo

One of the biggest dangers for companies is to believe that their success means they are doing things right and keep on doing them that way. We have all heard the story of a dominant company that lost its way by not embracing change, or, by going about it the wrong way.

Taking a classic case in point, the Kodak example who at one time was the biggest photo printing company in the world. But, fearing that photography going digital would undercut its wildly profitable film business, executives buried the digital camera technology they had developed in 1980’s for fear of cannibalising its all-important film business. In contrast, Fujifilm who envisaged the disruption of digital and the decline of the traditional film took a more flexible approach to executing its strategy – by getting as much money out of the film business as possible, preparing for the switch to digital and developing new business lines. In response Fujifilm developed in-house skills and new digital product lines whereas, Kodak took the easy route to milk its wildly profitable film business and partner or, buy its way into new markets as digital took off.

Today Kodak share is only 15% versus Fujifilm who controls 40% of the photofinishing market and should serve as a warning about the danger of relying on market position and status quo over embracing change.

Balance your strategy framework to focus on your needs of today with the future state of your business

For the most part, change is uncomfortable for companies, particularly when things are going well. Most organisations want growth and acknowledge that innovation is a critical component of achieving that growth. Yet so many of them do not grow or, innovate past a certain point. One of the most common reasons for this is the perceived gap between the innovation of tomorrow versus the reality of running the business today. 

If you feel as though your organisation is mired in ‘chugging along’ delivering business as usual here are few pointers to ensure you execute the right strategy to grow and innovate to survive. It is different for every company and depends on the industry. Here are a few questions to consider when creating stepping stones between running your business profitably today and growing it for the future.

1. Are you asking ‘Why’ 

Companies must change their own thinking about long-held business habits to successfully anticipate market trends to create new businesses and Why is a great question to start transforming your mindset! It can be easy for companies to get complacent and comfortable in their success. One way to avoid this is to think about what you would do if you were starting the company from scratch today. Often, new employees ask these questions naturally. Consultants can help because they ask these questions to better understand how to help. Why do you do it this way? What would you do differently? What would you do the same? Are there things you used to do well that have been lost as you have grown? Asking yourself these questions can help you narrow your business innovation focus.

2.  What amount of risk is smart?

The introduction of change brings risk and defining the risk versus reward of a potential opportunity guides how much risk is worthwhile to determine the right changes to pursue.  For example, if a new product could increase your market by 10% but, you would sacrifice 50% of your revenue to get there, it may not worth it. Diverting all your research and development resources to new products may accelerate new revenue but, if recurring revenue from existing customers is at risk, this may be shortsighted. The answer is usually less dramatic than this example.

More often than not, the biggest risk in the change journey is a distraction from regular operations and unforeseen challenges. If uncertainty and speedbumps are anticipated as a normal part of the process, you can more easily deal with them. That is why sports teams have backup plans and substitute players on the bench and so, too must companies when assessing change with a long-range view and the confidence that the risk of the change effort is worthwhile.

3.  Are your growth and change execution strategies looking far enough into the future?

Many companies seeking change falter because they do not dedicate the time to assess market trends and changes with the longer view in mind. Drawn to the immediate payoff of a quick-win, instead, many companies focus on the core business rather than those macro changes 3 to 5 years into the future that will impact the market you serve. This is particularly perilous for fast-moving industries like tech when executing strategies for growth.  There are three key premises companies should consider when implementing their growth strategies.

(i) Maintain and improve your core products or, services. Get as much money existing products or, services to milk your current revenue by reducing costs and increasing efficiencies.

What can you change and improve to add revenue by attracting new customers and increasing the loyalty of customer base? Now, imagine that you lost them entirely. Imagine that you’re Kodak and customers refuse to buy photo film anymore in preference for the digital alternative. You would move straight to growth strategy (iii) create new business(es) – as did Salesforce when creating CRM as a cloud offering, for example.

(ii) Expand into new markets and nurture emerging business. Taking what you already have, and extending it into new areas of revenue-driving activity. Innovate products and services that extend, expand and enhance your existing portfolio but, do not yet produce revenue. 

There may be an initial cost associated with developing new go to market products and strategies, but these investments are a well-proven way most companies increase addressable markets and revenue but, stop here. Examples of this could include launching new product lines or, expanding your business geographically or into new markets. With the necessity to keep ahead of the competition, companies must also embrace what we call innovation the third growth path rule.  

(iii) Create New Business(es). Introduce entirely new elements to your business that don’t exist today by investing in transformative initiatives that look to create new products and services.

They may not produce any real returns for several years out but, could potentially double or, triple your addressable markets and, or, represents an entirely new way of solving the problems you solve today. Innovating and preparing to switch to new markets and trends happening in the industry gives any business the best chance for sustainable growth.

A standout case in point is Salesforce, they did not really create the CRM business, the leader in that sector was Seibel Systems. But, Salesforce determined that CRM users were likely ready to use a CRM solution that was not necessarily managed and implemented by its own IT department. A bold idea at the time and, as we all know how they were absolutely correct. At Salesforce, it became clear the normal enterprise IT department at customer companies had little resources to satisfy the new application demands of its lines of business. By offering its technology via cloud customers could build its own applications using business analysts and project managers rather than programmers from the IT department? Might have been a different story if, Seibel had anticipated customers preference and prepared to offer its CRM IT service via the cloud?

Practice the 70 / 20 / 10 rule for your strategic plan

As a rough rule of thumb try to ensure that around 70% of your activity is focused on (i) maintaining and improving your core products and services.  After all, you need to survive and thrive today to have any chance of succeeding tomorrow.  Allocate around 20% of your effort to focus on (ii) nurturing emerging business and R&DLeaving 10% of your overall effort. focused on research and experimentation (iii) to create future new in-house businesses and diversification of your portfolio.

How close are you to the 70 / 20 / 10 rule? Do you have a clear understanding of your current reasons for success? Do you have a plan for if they were to be taken away from you? Did you find this article helpful?

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How To Build A Business Change Roadmap For Effective Change Planning

How many of us in the profession can truly say we have been taught to develop, refine, and deliver a professional roadmap based on a sound method with consistent repeatable results?  Have been in project and change environments for years, and still astonished at the wide variety of quality in the results I have experienced over the years – and it is not getting any better. Not sure I can identify why this is so, maybe it is the consolidation and changes in the traditional consulting business or, the depreciation of the craft itself among our peers. And then again, maybe sound planning went out of style and I did not get the memo. No matter what the root cause(s) is I want to take a little time and share some (not all) of what has worked for me with great success over the years and may make your next roadmap better.

I’m no genius, but, investing in structured thinking, communication skills, and just plain good old analytic skills over the years has made the difference.  Why there is not more of this kind of investment is truly troubling.

What I’m going to share works well across most transformation programs. You will struggle to find this in the one place (I have looked, maybe not hard enough). You will most likely find something similar to this in the best and brightest organisations who have adopted an optimised way to think about how to guide their organisations to perform as expected (some of us call this experience).

High-Level Business Change Roadmap Stages

At the risk of over-simplifying things, here is the overall pattern all business transformation roadmaps should follow:

1) Develop a clear and unambiguous understanding of the current state
– Business Objectives (not just strategy or goals, real quantifiable objectives)
– Functional needs
– High impact business processes or, cycles
– Organization (current operating model)
– Cost and complexity drivers
– Business and technical artefacts

2) Define desired end state
First, (I know this is obvious right) what are trying to accomplish? Is there an existing goal-driven strategy clearly articulated into quantifiable objectives? Sounds obvious, yet many companies set out on their change program without a strategic plan or, an implementation strategy to track their progress getting there. Where it does exist in other cases business does not know about it or, cannot clearly make out what the end game means in terms of their objectives.

This could be a well-guarded secret. Or, what is more, common the line of sight from executive leadership down to the front lines is broken, where no one knows what the true goals are or, cares (it’s just a job after all) becomes an annual charade of managing by objectives with no real understanding.

Some better examples I would expect include:
– Balanced Scorecard Performance targets linked to strategy
– Operating Model Improvements
– Guiding principles

3) Conduct Gap Analysis
Okay, now this is where the true fun starts! Once here we can begin to evaluate the DELTA between who we really are, and what we truly want to become. Armed with a clear understanding of where we are and where we want to be, the actionable activities begin to fall out and become evident.

Gap closure strategies can then begin to be discussed, shared, and resolved into any number of possibilities usually involving the following initiatives:

– Organisational
– Process
– Architectural (technology)

The DELTA, in this case, represents the recommended Gap Closure Strategy between current and desired end states. Or put simply, the changes we need to execute to close the gap between where are, and where we want to be.

4) Prioritise
Now that we have the list of changes it is time to prioritise what is front of us. This is usually driven by a roadmap by evaluating the relative business value AND the complexity, plotting the risk and reward to determine if, the change is worthwhile.

It is critical here that the stakeholders are engaged in the collection of the data points and they are keenly aware of what they are scoring. At the end of the day, what we are doing here is IDENTIFYING what is feasible and what has the highest business value. I know, I know this sounds obvious, and you would be astonished by how often this does not occur.

5) Discover the Optimum Sequence For Your Portfolio of Changes
Okay, now we have the initiatives, the prioritisation, how about order by which one delivers the portfolio of agreed changes? In other words are there things we have to get accomplished first, before others? Are there dependencies we have identified that need to be satisfied before moving forward? This sounds foolish as well, and we sometimes we need to learn how to crawl, walk, run, ride a bike, and then drive a motor vehicle.

What about the readiness of an organisation to take on change? Not to be overlooked, this is where a clear understanding of the organisational change dynamics is critical (see step number 1, this is why we need to truly understand where we are). Remember culture eats strategies and plans for breakfast, dinner and tea!

6) Develop and Communicate the Road Map To The Impacted Stakeholder Groups
Now we are ready to develop the roadmap. Armed with the DELTA (current versus desired end state), the prioritisation effort (what should be done), and the optimum sequence (in what order) we can begin to assemble a sensible, defensible roadmap describing what should be done in what order. How this is communicated is critical now.

We have the facts, we have the path outlined, and we have a defensible position to share with our peers. We have the details readily available to support our position. Now the really difficult exercise rears its ugly head. Somehow, we need to craft a simple yet compelling vision of how we will transform the business, or enable new technology to accomplish what is needed.

Do not underestimate this task, after all the hard work put into an exercise like this, the last thing we need to do is to confuse our stakeholders with mind-numbing detail.

So, this is the basic pattern describing how a robust roadmap should be developed for any organisation across any discipline (business or, technology) to ensure an effective planning effort. Wanted to share this with you to help you with your own work, this is usually not an exercise to be taken lightly.

We are after all discussing some real-world impacts to many, all the while understanding the laws of unintended consequences, to come up with a set of actionable steps to take along the way that just makes sense. This method has worked for me time after time. I think this may just work for you as well.

What do you think? Is this helpful? Happy to discuss these points with you to see what is really relevant.

 

 

 

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