Posts on Dec 2020

The One Year, Thirty Minute Challenge :: Week 52 :: Strategic Planning :: Competitive Landscape

In an earlier One Year, Thirty Minute Challenge, I encouraged you to survey your industry landscape using Porter’s Five Forces plus one more (you can read that here). It’s a valuable exercise because it requires you to zoom out and look at the environment in which you compete from 10,000 feet. For this week’s One Year, Thirty Minute Challenge, we’re again going to survey the environment in which you compete, but this time, it won’t be from 10,000 feet. Instead, we’ll be in the trenches looking at specific competitors, vendors, and distributors with specific actions in mind.

This differs from other challenges where the endgame was evolutionary – changes in the attitudes and actions of leadership, a change in processes, or a change in a specific discipline in the organization. The changes emerging from this challenge can be revolutionary. Executed well, they can return 3x, 5x, or 10x growth. Executed poorly, they can decimate the organization’s reputation and finances. In other words – big risk and big rewards.

Let’s jump in –

  • Identify competitors that you admire. They might be local, regional, national, or online. Why do you admire them? Do they have a fanatical customer base that keeps buying and singing their praises while they do it? Do they have robust processes for delivering their products and services? Is their messaging engaging? Do they have a readily recognizable brand? Do they have a uniquely talented staff that is driving their organization ahead?
  • With that competitor in mind –
    • Can you emulate any of the things you admire? Strategists discuss “absorptive capacity” – the ability to observe the value drivers in a competitor’s product or delivery, internalize them, remake them (taking into account your company’s unique personality), and redeploy them to eradicate the other company’s advantage. Is this a possibility for any of the things you admire in your competitors? Keep in mind, if you do this, it must make economic sense and any imitation must still be consistent with your brand, values, and culture.
    • Would it make any sense to pursue a merger or acquisition? You never know what might be going on inside that organization. You might have an owner eager to sell his/her company or one that’s looking to acquire a company like yours. Horizontal integration immediately increases market share (by eliminating a competitor and capturing their customers as your own) and cuts unit costs (by spreading fixed costs over more sales volume). Typically in a merger or acquisition, the new enterprise eliminates redundancy (you don’t need two finance departments, two HR departments, etc), while retaining newly acquired product or service offerings. Be warned however, integrating two organizations is extremely difficult. It must be done well to realize the full financial benefit of the merger or acquisition. Read more about mergers and acquisitions here.
    • Would it make any sense to pursue a strategic alliance or joint venture? Collaboration among competitors can make sense when each one has unique products, delivery methodologies, or competencies from which the other could benefit. You can offer your customers additional products or services (originating from the competitor) and still keep them in the fold. Your strategic alliance partner can offer their customers products and services provided by you. Additionally, both of you can learn from the other. Neither party is likely to expose or unfairly leverage newly learned trade secrets since the other party could do likewise in retaliation. Read more about alliances here.
  • Are there any suppliers that it might make sense to acquire? Moving upstream in the value creation chain sometimes makes sense. Could you more effectively create value for customers if you had complete control over a particular supplier? Could you benefit from the additional margin now taken by the supplier or could you benefit from prioritizing your own delivery of their product or service? While these are certainly two benefits you could derive from acquiring an upstream supplier, there are plenty of potential downsides to consider –
    • Do you have sufficient knowledge to operate in that industry?
    • Are you comfortable selling to your competitors? (It’s unlikely that you consume all of the product coming from that supplier. The supplier probably sells to your competitors also.)
    • If you were to buy the company, are your competitors OK with buying from you?
    • If a new technology emerges that makes the products you purchase from that supplier available at a greatly reduced price, you can easily switch to the new, cheaper supplier. However, if you’ve purchased that current supplier and the new technology emerges, you’re stuck with a company whose customer base is fleeing to the new, cheaper supplier – and, depending on the circumstances, you might be stuck using your own more expensive supply while your competitors cut their cost of goods sold. Plus, you might be stuck with a company whose value is plummeting as their product falls out of favor with the market.
  • Are there any distributors that it might make sense to acquire? Moving downstream in the value creation chain can make sense also. It gets you closer to the customer and allows you to capture the margin now going to the downstream distributor. This interaction with downstream parties can help you become more innovative as you more intimately understand problems that you can solve with new products and delivery mechanisms. You might up your “creative destruction” game significantly. You also have the ability to exercise more control over the customer’s experience with your product or service. However, just like moving upstream, moving downstream has some risk. More interaction requires more resources – people, communication infrastructure, and customer facing tech just to name a few.

 

Many of the One Year, Thirty Minute Challenges have much shorter runways and yield their fruit quickly – even days or weeks. This one is decidedly different. You won’t see the full financial impact of these initiatives for years. Confer with trusted advisors and make haste slowly. If you forge ahead with one or more of these, do it well. Get help if you need to. Stakes are high, screw ups are expensive, but rewards are huge.

The One Year, Thirty Minute Challenge :: Week 51 :: Governance :: Execution Framework

Over the course of the One Year, Thirty Minute Challenge, we’ve talked about dozens of responsibilities that fall to you as a leader in your organization, but there’s a common thread that weaves its way through all of them. You’ve got to “get stuff done”. Every company I work with has its own unique challenges with “getting stuff done”. In every case, there’s never a shortage of inspiration, good ideas, and plans, but the organization fails, in varying degrees, in execution.

Your company will never carry out its mission or move closer to its vision without a robust execution framework. There are already excellent execution frameworks out there. I like OKR (Objectives and Key Results), 4DX (The Four Disciplines of Execution), and EOS (Entrepreneur Operating System). I also have my own that’s part of my Business Framework. In this week’s One Year, Thirty Minute Challenge, I don’t want to advocate for one of these and ask you to select it by the end of the exercise. Instead, I want to communicate the essential elements of an execution framework, explain why they’re necessary, and ask you to assess your organization. Identify – 1) where your organization is most deficient in execution disciplines, 2) how that deficiency impacts your ability to get stuff done, and 3) what changes need to be made in the organization to correct the deficiency. With that knowledge, you’ll be able to select the execution framework that’s best suited for your company.

Here are the crucial elements in an Execution Framework

  • It makes you connect the dots between the task to be executed and “bigger ideas” in the company – the mission, vision, or an important strategic objective. If the task doesn’t roll up to one of those, why do it?
  • It enforces “cascading”. A big strategic objective involves everyone in the company. Those people work in multiple departments and have very disparate responsibilities. A robust execution framework will allow you to create tasks and sub-tasks, all rolling up to the big strategic objective.
  • It creates staff alignment. Everyone in the organization will be able to see how their task traces back to the big strategic objective and how their task complements and enables others in the organization to execute their tasks. Competition and conflict may not be eliminated but they become subservient to the overarching objective.
  • It pivots on a Responsible Person. Each task (and cascading subtask) is ultimately “owned” by someone. He/she is the sole possessor of the “The buck stops here” sign for that task. As the Responsible Person, they bear the weight of coordinating the people, resources, and time to bring their particular task to a successful completion.
  • It has mechanisms that create accountability. As former IBM CEO Louis Gerstner reminded us, “People don’t do what you expect, but what you inspect.” Depending on the framework, you’ll see daily check-in meetings, weekly written reports, intranet dashboards, and several other tools that give responsible parties the opportunity to check progress, learn about emerging roadblocks, and congratulate success.
  • It promotes transparency and communication. The larger the organization, the more important this becomes. When each team member in the organization can see what the other team members are working on, the opportunity to collaborate (and to reduce redundant work) increases dramatically. Team members can also share what they’ve discovered during the course of the initiative. This can flatten the learning curve for the organization at large.
  • It provides focus. The biggest detriment to “getting stuff done” is the press of regular, daily tasks. The unhappy customer, underperforming vendor, or disgruntled employee provide plenty of distractions. A good execution framework, with its ever-present accountability, rescues team members from “urgent” tasks and returns them to “important” tasks.
  • It tracks resources. Not only does the framework give visibility into the work of other team members, it makes the resources produced by those team members available to everyone else. If a new dataset is created from customer purchase transactions, a new software tool is obtained, or a piece of equipment is purchased, that can be reported on the framework so it can be leveraged across the organization.
  • It forces prioritization. No matter how dedicated, talented, and brilliant we might think we are, we can’t do more than one or two big strategic initiatives at a time. The discipline required to flesh out an initiative with this degree of detail and push it down through the organization makes you choose just the one or two things that will have the biggest impact on the organization.
  • It utilizes timelines and milestones. We all know how to eat an elephant – one bite at a time. A good execution framework will help you track tasks as you break them into doable, measurable, and time-appropriate chunks.
  • It makes you pinpoint the right magnitude. Jim Collins introduced us to “BHAGs” – Big, Hairy, Audacious Goals. Goals that, if you reached them, would make you feel proud and accomplished. Equally, looking at them before the work starts, they are scary – you’re not sure you can pull them off. The one or two initiatives in play in your execution framework and the subsequent breakdown of those initiatives into tasks and subtasks ought to cause you some discomfort. If they generate a couple of sleepless nights and a bit of indigestion, you’ve probably settled in on the right magnitude. If they’re a slam dunk, neither you nor your organization are going to grow. If they’re too hard, you and your team will get discouraged and give up. Make sure the metrics you use to gauge your success make you stretch to the limit without breaking. The discipline of using a robust framework that requires you to break initiatives into subtasks, assign those tasks to people, and marshal the resources to make the initiatives happen will help you right-size each ability-stretching piece.
  • It’s user-friendly. To maximize its effectiveness, the execution framework must be easy to understand, easy to operate, and easy to access. There should be simple dashboards that show the status of overarching initiatives and drill downs that show progress on subtasks and team member’s personal performances. If it’s a hassle to enter information or consume information, it will quickly fall into disuse.

 

I’m guessing it’s obvious at this point that the homework for this week’s exercise will push you past thirty minutes, but I’m not feeling that sorry. The benefit from finding and implementing the right execution framework for your business will far exceed the investment of extra time. If you’re ready to dig deeper, these links will get you more info on the execution frameworks I mentioned earlier.

OKR – https://www.amazon.com/Measure-What-Matters-Google-Foundation/dp/0525536221/

4DX – https://www.amazon.com/Disciplines-Execution-Achieving-Wildly-Important/dp/1451627068/

EOS – https://www.amazon.com/Traction-Get-Grip-Your-Business/dp/1936661837/

Business Framework (see the seventh discipline) – https://clearvision.consulting/wp-content/uploads/2020/12/BusinessFrameworkOutline.pdf

 

The One Year, Thirty Minute Challenge :: Week 50 :: Strategic Planning :: Industry Life Cycle

The “Industry Life Cycle” concept has been around for decades. It traces the progression of an industry through four stages – introduction, growth, maturity, and decline – each with unique characteristics and implications for the companies in that industry. I’ve found it attributed to several different business thinkers, so I can’t give you the exact originator, but I can tell you, it’s important and it’s the topic of this week’s One Year, Thirty Minute Challenge.

Industry Life Cycle differs from Product Life Cycle. Product Life Cycle traces the progression of a particular product through (depending on what you’re reading) four or five stages – development (the fifth that is sometimes added), introduction, growth, maturity (or saturation), and decline. Let’s illustrate the difference.

If we were to trace the industry life cycle of home video entertainment in the US, the introduction stage would commence with television and broadcast TV programming in the late 1940s (9% of households had a TV in 1950), the growth stage would progress through the 1950s and probably transition to the maturity stage in the late 1950s (85% of households had a TV in 1960). Household penetration hit almost 99% by 2009. I’m not sure about you, but at this point, I’m not sure I can identify a potential time when home video entertainment will move into the decline stage – perhaps at some point, home video entertainment will decline as people shift the bulk of their viewing to personal, portable screens. During this industry life cycle, we’ve seen dozens of home video related products move through their own individual product life cycle – black and white tube TVs, color tube TVs, cable programming, satellite, laser discs, VCRs, DVD players, flat screen plasma TVs and more have yielded to the current crop of OLED TVs, BluRay players, streaming boxes and streaming services (each of which is in its own place in the product life cycle).

So, what does this have to do with you? It’s critical that each person reading this week’s post determine where their industry is in the industry life cycle. Each stage dictates specific action and specific investment. I spent the formative years of my business life in a declining industry. They turned “whistling while you walk through the graveyard” into an art form, ignoring the signs that would signal upcoming losses in market share, revenue, and profitability. Any corrections were too little and too late. I left the industry 14 years ago, but the final trajectory was already apparent.

Let’s jump into this week’s exercise. If there’s ever been a One Year, Thirty Minute Challenge that requires you to “confront the brutal facts”, this is it. If you do this exercise alone, be honest with yourself. If you do this with other team members, there can’t be any reprisals for those who express opinions that make you or other coworkers uncomfortable. This is the time for, as Ray Dalio would say in Principles, “radical truth and radical transparency”.

Let’s define the four stages of the industry life cycle and the implications for each industry member in that stage.

Introduction – The products ushering in a new industry are often the creation of a new company. So, not only are the products new, the purveyors of the product might have non-existent or immature processes, less-than foolproof manufacturing, and unsophisticated marketing. Investment priorities for those launching in a new industry include research and development, talent acquisition (plugging talent holes not represented in the launch team) and marketing. And not just any marketing, but marketing that resonates with early adopters. Early adopters are those people who most likely share a passion for the field (food, tech, pets, health, etc). Their passion supersedes their need for a “perfect” product. Instead, they see the promise of the new industry and want to be pioneers along with the purveyor of the product. If they believe the product has promise, they become advocates for the industry in general and for the purveyor of the product in particular.

Growth – When it’s clear that early products have “legs”, you’re here. Customers who buy early in this stage take their cue from the early adopters in the previous stage. Once the early adopters “kick the tires” and explain the value of the products to those they influence, sales to the “early majority” begin. These are enthusiastic buyers who want to be first to enjoy the benefits of new, proven products. Investment priorities for industry participants at this stage include efficiently scaling up production (driving unit costs down and volume up), building a robust distribution network, and marketing to broader audiences who’ve shown interest in the industry. Larger “fast followers” from adjacent industries might enter the market via product development or acquisition. As the products constituting the industry become more mainstream and prices go down, the late majority purchase the products, deeming them “safe” and not a fad.

Maturity – At this point, the products constituting the industry have saturated the market. “Everyone” has one. A shakeout occurs. Producers merge, most times, better producers gobbling up lesser ones. Unit prices continue down and products become commodities. Investment priorities include acquisitions, efficiency, and most importantly, while you’re flush with cash and if it hasn’t surfaced already, looking for the successor product that will perpetuate and strengthen the industry (for example, flip phone to smartphone).

Decline – The products constituting the industry reach the end of their useful life. It becomes apparent that another industry will ultimately consume the same dollars (horse drawn carriages vs automobiles). Successor products are now preferred by at least the early adopters and early majority. Sales continue to fall with no chance for recovery. Assets used to produce the product might become worthless (if they are useful only for producing that product). Industry members must choose an exit methodology. Depending on the velocity of the decline, one of those can be “the last man standing”, but clearly that has a limited lifespan. Ideally, participants would have already moved on to successor products and disposed of any specialized assets.

With this backdrop, look critically at your industry. Do your activities and investments mirror the right actions for where you are in the industry life cycle? If the industry is in the growth or maturity stages, are you managing individual product life cycles – creating, promoting, and retiring products – so that you always have the product(s) that delivers optimum value for your customers and target customers?

If you don’t engage in continually reinventing your value creation activities, current and potential competitors will – seeking to capture the money you’re making now. This part of the exercise is so important it got its own One Year, Thirty Minute Challenge earlier this year. You can read about creative destruction here.

The real deliverable from this week’s exercise is a set of actions to take into your next strategic planning workshop. You might intensify your R&D activities, reorder your financial priorities, consider your first venture into mergers or acquisitions, focus more attention on operational efficiencies, or contemplate important shifts in messaging – all driven by where you are in the industry life cycle.

The One Year, Thirty Minute Challenge :: Week 49 :: Leadership :: New Supervisors

Some of the most important work in your company is the work that happens on the front line – when your team members interact with customers. That work drives lifetime customer value – the total revenue available from a customer over the course of their relationship with your company – plus the referrals they provide. Many times, you entrust that work to the lowest-paid person in your company. Someone with the least amount of experience, the least amount of training, and sometimes, the least amount of problem-solving skills.

That’s what makes your front-line supervisors so important. They schedule, train, and manage these key players in creating value for your customers. Many times, these are folks who have been promoted to supervise their former front-line coworkers. They’ve distinguished themselves by selling more, building greater rapport with customers, and/or solving problem better than their peers.

This week’s One Year, Thirty Minute Challenge is devoted to crafting a framework that will maximize their effectiveness in their first supervisory role. If your company is committed to promoting from within, this is the feeder system for your future leadership team.

I want you to craft a plan that equips your newly minted supervisor for success. It needs to strike the right balance between developing supervisory skills and mastering new operational details required for their increased responsibilities.

For this week’s exercise, I’d grab the people to whom your front-line supervisors report. Depending on the size of your organization those could be your executive team or they could be lower-level managers. Spend the thirty-minute exercise focusing on three essential skills for new supervisors – personal growth, position mastery, and employee development.

Personal Growth – It might seem a bit daunting after being promoted to their first supervisory role, but lead the new supervisor to, as Stephen Covey reminded us, “begin with the end in mind”. Here are some questions to answer (in no particular order).

  • What will the exit from this supervisory role look like? What is the typical career path next step for someone in this supervisory position?
  • What skills will the new supervisor need to access those future opportunities?
  • How will their supervisor help them transition into this new position, hone the skills needed for the position, and build skills for future positions?
  • How will their performance be measured in this position?
  • How will the new supervisor identify and develop candidates that will ultimately become their replacement?
  • What existing skills can they leverage and grow?
  • What existing weaknesses can they shore up?
  • How can they get sufficient knowledge in areas in which they are deficient – maybe not resulting in mastery, but at least in becoming “BS-proof”?
  • If your organization has an employee development program (which I believe every organization should), much of this should be included there. Use the link above to see the One Year, Thirty Minute Challenge devoted to employee development programs. However, the development of new supervisors deserves special attention in the organization.

 

Position Mastery – If there’s one activity that consumes a front-line supervisor, it’s problem solving. So equipping them to become better problem solvers automatically makes them better at their job and move valuable to the organization. Effective problem solving involves empathy, knowledge, creativity, and authority.

  • Give your new supervisors policies that empower them. Front line employees without the authority to solve problems frustrate customers. Supervisors without the authority to solve problems frustrate them even more. If you don’t give your employees and supervisors the ability to solve problems, the problems are going to land on your desk. If that’s happening, what exactly are you paying those employees for? Good policies are like guardrails on a highway. Your employees are on safe ground using their creativity to solve problems as long as the solution is anywhere between the guardrails.
  • Give your new supervisor principles that keep them focused on the outcomes you want. What does the ideal customer experience look like? How can they engineer a resolution that delivers that outcome? What communication would be consistent with the company’s brand promise? How can the resolution of a problem help execute the company’s mission? How can the resolution of problem help the organization reach their vision?
  • Help your new supervisor gain a bigger perspective. Front-line employees almost exclusively work “in the business”. An employee’s first supervisory role might represent their first opportunity to work “on the business” albeit in a very limited way. Help them tie their new supervisory responsibilities to bigger ideas like lifetime customer value, employee development, teamwork, organizational health, and value creation. Some employees will “get it” immediately. For others you might have to connect the dots. For example, explaining how taking an extra 5 minutes to email a customer a summary of the steps you took to replace their faulty, but technically out of warranty, widget will result in boosting their lifetime customer value because they’ll be more likely to purchase from you in the future – and encouraging them to do similar things with their new direct reports.

 

Employee Development – For some of your new supervisors, they’ll be “boss” to the people with whom they used to work shoulder-to-shoulder. Some of those people might have been up for the same position and were passed over. And those passed over might still be convinced they were the most deserving candidate. It’s a transition that a lot of new supervisors struggle with. There’s not a magic bullet that causes the disappoints to subside and harmony to magically return. Some sage advice from Zig Ziglar applies here, “You can have everything in life you want, if you will just help other people get what they want.” Instead of turning his/her attention to “bossing”, I’d suggest the new supervisor turn their attention to employee development. Early and often, they should demonstrate their commitment to growing that staff and you should help them do it.

  • If your company has a formal employee development plan, get the new supervisor up to speed on how to utilize it as a supervisor (they should already understand how it works as a subordinate). Have them review the already-in-place plans for the staff they are now supervising. If your company does not have an employee development plan, work with the new supervisor to create a framework the supervisor can use to document the goals of their subordinates, the milestones to reach those goals (with timeframes), and the steps to reach those milestones.
  • By your example and by specific instruction, show the new supervisor how to explain the “why” behind company policies. Employees who understand the “why” make better decisions and talk more intelligently with customers than those who repeat policies by rote with no understanding of the underlying reasoning. Let the supervisor know it takes longer but returns outsized rewards.
  • Help the new supervisor build a unified team with a solid operational framework. Tools like 4DX, OKRs, EOS or my Business Framework, get teams aligned, pulling together, and tied to overarching company initiatives.

 

Of all the things that go on inside an organization, very few, if any, are more important that employee development and very few employees have a more pivotal role in value creation than front-line supervisors.

As you work through this week’s exercise, identify the activities that are most applicable in your organization. You might end up with a couple of variations based on the departments or divisions where the new supervisors are working. Then work to flesh out the framework with tools, checklists, and activities.