Business musings

Articles and thoughts about Strategic Planning

12
Sep
Posted by Debbie Stocker, stored in: Innovation  Our News  Strategic Planning  

Our Agile Strategy Planner is a brand new tool that enables you to create a dynamic strategy. We’ve been using it in our work with clients for just over a year now and thought that it was about time to release it into the wild!

The Planner acts as a bridge between strategic intent—that is, your vision, strategic priorities and core objectives—and detailed implementation. It allows you to take your intentions and to rapidly prototype what these might look like in reality. As you visualise how one objective impacts another, you’ll quickly be able to see whether your strategy is realistic and if you need to scale back your plans or can in fact afford to be even more ambitious.

Well documented strategic plans are important but there’s a danger that they become a weighty tome sitting on a shelf gathering dust. Their relevance can also be fleeting for those firms that operate in fast-moving, unpredictable markets. We wanted to create an approach that was different. As a tool, the Agile Strategy Planner is flexible, collaborative, transparent, easy to use and visual. It’s also suitable for all kinds of organisations—from software to services, corporates to charities, and everything in-between.

We’ve released the Agile Strategy Planner under Creative Commons so it’s free to use and adapt, even commercially. The only requirements are that you share alike under the same license and that you give appropriate credit to us, the Planner’s original creators.

We’ll be sharing more of the thinking behind the design of the Agile Strategy Planner soon but in the meantime, find out more by viewing the SlideShare below—the short guide has all the lowdown you need to get started. Free downloads for both the 3-year and 5-year planner are also included or simply download now.


 
If you use the Agile Strategy Planner in your organisation, if you have thoughts, feedback or ideas that you’d like to share, or if you progress our work under creative commons, we’d love to hear all about it! Do drop us a line and feel free to share on Twitter #AgileStrategyPlan

10
May

Our work with Lucid Computer Solutions has been featured in the May/June edition of C&W In Business:

Licensed to SPRINGup PR, Lucid Computer Solutions, and Stocker Partnership for free use PR and advertising purposes. Photo by Tony Charnock www.tonycharnock.co.uk 07770 48 48 88

Local IT support company, Lucid Computer Solutions, has flourished despite the economic climate achieving 30 per cent growth year-on-year.

With support from independent business advisor, Matt Stocker, a focus on strategic thinking and development has been key, says the company.

It was founded four years ago and, in the midst of a severe financial crisis and recession, it has overcome the challenges of growing from a small start-up to become an established company.

The local IT support business was started by Managing Director, Gavin Moorhouse, in 2008. It now employs a team of five, who look after over 150 clients from sectors as diverse as recruitment, law, accountancy and retail.

Lucid Computer Solutions has also achieved 30 per cent year-on-year growth over four years and has doubled its annual turnover in the last three years.

Gavin attributes the company’s success to focused strategic thinking, with which he has been assisted by independent business advisor, Matt Stocker. They have met monthly since 2009 to work on the strategy and development of the company, which could otherwise have been overlooked in the day-to-day running of the operation.

Gavin now sets aside one morning each week to focus on developing the business while his team handle ongoing business activities. As a result, Gavin has been able to plan and implement the development of a scalable business that maintains great customer service.

Gavin said: “Taking time to focus on strategy has paid huge dividends, especially in a downturn. I started this company because I love working with customers to provide a solution that is tailored for them. At the same time I know how vital it is that I think strategically about where my company is going.

“Working with Matt Stocker has been key to plotting a path to success for Lucid. Matt’s business mentoring has provided the incisive vision that was needed. I now feel confident that we can make this business a long-term regional success story.”

Matt said: “Gavin has successfully made the shift from technical specialist to IT company Managing Director. He has scaled his business better than most and the results are clear to see in the growth of his business.

“Not taking time to focus on strategic work means companies remain on tick-over and do not develop. It takes work to innovate and improve, without which companies can end up in ‘fire-fighting’ mode, responding reactively only after problems arise.

“Lucid Computer Solutions proves that strategic thinking, hard work and innovation can achieve growth despite an economic downturn.”

This article originally appeared in the May/June edition of C&W In Business, Coventry & Warwickshire Chamber’s official magazine. Photo by Tony Charnock, licensed to Matt Stocker Ltd and Lucid Computer Solutions.

Photograph of two information leaflets from WaterAid. One is almost A4 in size, the other is approximately the size of a DL envelope. Both are plain blue in colour with white writing that reads first in big lettering, "Fifty two million pounds a month," then in smaller lettering underneath, "We're going to keep asking until every household does it."£52 million a month—that’s not a small figure by any standard. And yet, as stated on a couple of leaflets that have dropped through our door during the last year or so, that’s the figure that WaterAid are aiming to raise.

This figure is even bigger when you consider that for the last financial year (2011/12), WaterAid raised £55.8 million in income—for the whole year! This target moves that figure to every single month.

You may remember that I’ve previously written about Jim Collins and Jerry Porras’ concept of BHAGs (Big, Hairy, Audacious Goals). Well, WaterAid, this goal is certainly Big, Hairy and Audacious. And I commend you for it.

Big, hairy, audacious—and achievable

Although big, hairy and audacious, it is also somewhat brilliant in its simplicity. Reading the leaflets that bear this slogan, we discover that WaterAid are not looking to raise this figure in large, one-off, lump sums but rather they are looking for every household in the country to give just £2 a month. £2 a month—that’s not a lot to ask. And, on it’s own, this goal wouldn’t be that ambitious. But getting every single household in the country to donate, now that’s a different ball game. And yet, for every additional household that does donate, WaterAid gets a little bit closer to their goal.

The charity’s audaciousness does not end at their fundraising either. Their overall vision is…

…of a world where everyone has access to safe water and sanitation.

At present, “one in eight people do not have access to safe drinking water and two in five people do not have adequate sanitation”—there’s still a long way to go.

But WaterAid have a plan. In their 2009-2015 Global Strategy, they explain their ambition as follows:

…by 2015 a further 25 million people will have access to safe water, improved hygiene and sanitation as a direct result of our work; and…by influencing the policies and practices of governments and service providers we will have reached a further 100 million people.

Match this against figures from their annual reports and we discover that, although there is still some way to go to fulfil this ambition, WaterAid is in fact well on their way.

In 2009/2010, Wateraid reached 940,000 people with safe water and 1.24 million people with sanitation. In 2010/11, these figures grew to 1.5 million and 1.6 million people respectively. And in 2011/12, they reached 1.6 million people with safe water and 1.9 million people with sanitation. That’s a total of 8.78 million people over three years.

Assuming the same performance again over the next three years, WaterAid will reach 17.56 million people by 2015. Admittedly that’s somewhat shy of their goal of 25 million people but given growth in their figures of somewhere between 7% and 60% each year, it’s seems safe to assume that such growth will continue. Reaching 25 million people therefore no longer looks that unachievable.

What can we learn?

Such figures continue to support Collins and Porras’ original assertion that organisations who set themselves big, hairy, audacious goals go on to achieve them on a surprisingly consistent basis.

It can be daunting to set such ambitious goals, especially publicly. What if we don’t achieve them? What if we embarrass ourselves? What will everyone say? As organisations, we fear our failure and fear the repercussions of falling short of our self-imposed mark. And yet, we need to dare to fail in order to succeed.

Unlike commercial organisations who often intentionally withhold their vision due to its commercially sensitive nature, charities frequently declare their intentions publicly for an effective charity is “accountable to the public and others with an interest in the charity in a way that is transparent and understandable.” Typically, this means that charities publish both their vision and their strategy in the public domain.

For non-profit organisations, such public declarations are, in many ways, imperative. Charities cannot succeed without funding and funding cannot be obtained without demonstration of impact and ambition. Vision supports both. Necessarily, charities must be ambitious in both the work they do and the funds they raise. WaterAid epitomises this behaviour and demonstrates that it works.

In the same way as WaterAid’s impact has grown over the last three years, so also has their income. Total income has steadily increased from £45.6 million in 2009/10 to £55.8 million in 2011/12. That’s an increase of almost £10 million annually in the midst of an economic downturn. And it isn’t all due to increased grants—donations and gifts have also increased from £32 million to £35.9 million annually over the last three years.

WaterAid shows us that vision provides motivation, structure and the drive to achieve. They may not achieve their goal of getting every household in the country to donate £2 a month but how much more will they accomplish than if they never asked?

Similarly, it is hard today to conceive of a world in which absolutely everyone has access to safe water and sanitation but shouldn’t this be something toward which we all strive nonetheless?

As one of our clients once said, “Vision enables you to aim for the stars and clear the fence.” I wholeheartedly agree with this perspective. And, as I’ve said before, by aiming for the stars, I believe that whether you reach them or not, you will certainly clear a fence or three along the way—fences that you may not otherwise have cleared had you not created a vision in the first place.

Vision also cascades to create strategic alignment. As we see from WaterAid’s 2009-2015 Global Strategy, their vision has clearly informed their four aims for 2015. Rather than continually having to ask, “What are we trying to achieve?” the presence of a long-term vision has ensured the only question that remained was, “How are we going to achieve it?” And with their six year strategy, WaterAid have ensured that even this question has been answered. Every single person in the organisation is therefore able to go about their work knowing that, with each and every action, they are taking one step closer to the stars.

I’m confident that WaterAid’s overall vision is unlikely to change but I also hope that, having publicly declared the objective, they continue to pursue their fundraising ambitions too. £52 million a month is not a small figure and it is no small task to encourage every household to donate. But WaterAid boldly declared that, “We’re going to keep asking until every household does it,” and I hope that they do.

I worry the campaign may be a marketing slogan—yet another way to spin regular giving—but I hope it is not. WaterAid have already proven that they’re both ambitious and capable of achieving their goals. This is a culture to be proud of and one to nurture. With the drive and ongoing determination to actively pursue goals such as these, WaterAid will continue to make a difference every single day.

WaterAid and its partners use practical solutions to provide safe water, effective sanitation and hygiene education to the world’s poorest people. They also seek to influence policy at national and international levels. To find out more about the charity, visit www.wateraid.org

In February 1991, when British Rail claimed “the wrong kind of snow” was to blame for disruption to their services, the UK media had a field day! Surely snow was just snow? From an engineering perspective however, British Rail had a point—not all snow is created equal.

This snow was light, fluffy, and apparently entirely unsuitable for our rail system. It wasn’t deep enough for snow ploughs and it got in places that it shouldn’t, resulting in jammed mechanisms and shorted circuits. Emergency timetables were put in place and long delays on the rail network were the order of the day.

All time is not created equal

When it comes to strategic development and building tomorrow’s success, not all time is created equal either. Too much of the wrong kind of time is likely to stop an organisation in its strategic development tracks, resulting in long delays and a failure to create tomorrow’s business.

Many organisations run primarily on maintenance time, responding to what is required right now. Their focus is on today: what needs doing, who needs responding to, and where the next sale is coming from. Head down, just get on with it. Although such time is necessary for day-to-day operations, when it comes to strategic development, maintenance time is the wrong kind of time.

With maintenance time, strategic development just will not happen. Something more important, more urgent, more now will always appear. And the more your organisation only runs on maintenance time, the more urgent everything will become! Maintenance time will, at best, result in small, incremental improvements; more often than not, it just maintains the status quo. Longer term, operating only on this kind of time will certainly result in strategic neglect.

A different kind of time

Strategic development needs a different kind of time. It can’t run on urgent, ‘now’ time. It needs a calmer, ‘development’ kind of time. It needs the kind of time that enables you to calmly look ahead and to see beyond what exists at this instant. To look towards what might exist or what could be created in the future, without worrying about that urgent email or phonecall. It steps away from today to look at how best to build your organisation and its capabilities for tomorrow.

Development time won’t happen by accident and it won’t just magically appear some day. You need to create it. Shut the door on everything else and focus. You need to extricate yourself from the urgent and look around. As a business, you need to take time out to reconsider and examine where you are headed, your broader environment, your competitors, your processes, your business model.

Become self-aware and mindful. Where do you want to be and how would you like to get there? What needs creating that doesn’t currently exist? What could be done better? What needs to go? What needs to be developed? You need to encourage your staff to ask the same questions. To ask, “Is this the best way of doing this?” To take time out. To step away for a moment to spend time on tomorrow.

In doing this, you will develop an organisation that takes responsibility for actively creating tomorrow and that is not just maintaining today. An organisation that has a strategic capability. A conqueror instead of a zombie.

How and when you decide to take this time is up to you but it does need to happen. Dare to escape the office. To turn off your phone. To leave your emails for another day. And please don’t leave this time until it’s urgent, because by then you may find that it’s just too late!

I’m constantly amazed by the lack of focus that many organisations and managers have on the future. ‘Now’ seems to be such a pressing priority that it is often the only thing thing that really seems to matter. To survive and thrive in the long term however, organisations need to be ambidextrous: able to exploit the now while simultaneously exploring and adapting to the future.

From a human perspective, the Oxford Dictionary defines ambidextrous as being “able to use the right and left hands equally well.” Natural ambidexterity is rare: one study of just under 8,000 children found that only 1.1% were reported as being mixed-handed. However, ambidexterity can confer certain advantages and to be highly skilled in some activities—such as touch typing and playing the piano—it is vital.

Within organisations the situation is not dissimilar. The term organisational ambidexterity was first coined by Professor Robert Duncan in 1976. Typically, organisational ambidexterity refers to the ability of an organisation to balance exploration and exploitation equally well. Again, this is not an easy skill to master—tension exists between these two “fundamentally different learning activities” and each places different demands upon an organisation. (more…)

24
Aug
Posted by Matt Stocker, stored in: Leadership  Strategic Planning  Technology & Web  

Earlier this month, I was contacted by Yisi Lu, a Masters student in MSc Marketing & Strategy at Warwick Business School. For her dissertation, Yisi is considering design thinking and, in particular, its role in education. She asked me some very interesting questions and I would love to share my answers with you today.

To explain a little of my own interest in design thinking…

I tend to live with one foot firmly in both business and design. For those of you who know me, you’ll know that my graduate studies first began at Coventry University where I completed the first year of an M/Des BSc in Industrial Product Design. While I love design, I gradually realised that what really interested me was the strategic management and business of design.  In 2001, I therefore transferred to Warwick Business School to study their BSc Hons in Management Sciences (now known as Management).

Both business and design remain my passions. Much of my spare time is spent reading technical and design blogs. An A3 pad is a firm fixture in my note-taking armoury and something with which clients will be familiar. I was privileged to attend the 2012 Design Summit earlier this year. I’m a strong advocate of the collaboration between the Design Council and WBS. And, on a lighter note, Debbie will happily recount times that she has lost me in a store only to find me looking at the construction of their shelves!

All in all, Debbie and I work hard to integrate design and business throughout our approach to consultancy. We believe that, particularly in this day and age, the two are firmly intertwined and an integrated approach offers much greater value than one or other alone.

Question One

What do you think is the essence of “design thinking” and how does it lead to better education?

For me, there is not one single thing that defines or is design thinking. Certainly, design thinking is about creation and it always involves a symbiotic relationship between problem and solution. However, part of the essence of design thinking is its synthesis of a multitude of elements; you could say that design thinking is many or all of the following things…

A solutions-based process. Creative. Iterative. Agile. Responsive. Holistic. Needs focused. User focused. Visual. It employs feedback loops, prototyping and testing. It involves creative synthesis. Design thinking holds all elements and ideas in creative tension before a solution emerges. It is about broadening out and narrowing down; zooming in and zooming out. Design thinking ‘stores’ work and solutions visually whilst they are in process to ensure that previous iterations can be referred back to, learned from, revised and improved. People who employ design thinking are not afraid of failure or mistakes—they will often do something deliberately ‘wrong’ to find what could be right; they accept that solutions rarely emerge ‘right first time’. Design thinking explores the whole system and encourages people to step outside of the ‘problem’ in order to discover whether the broader environment is the real source of the issue. It encourages people to look at the bigger picture. It handles complexity without drowning; synthesizes knowledge and understanding; and looks for patterns and links between non-related elements. It frequently employs ideas from other sources, cultures and disciplines. Design thinking is playful and curious. It actively involves people and stakeholders; it is a collaborative process that looks both out and in. Design thinking always demands a clear brief.

With regard to education, design thinking moves people away from a narrow view that is based on their existing knowledge and personal opinions, toward a more expansive, curious, multidisciplinary perspective. It allows people to create and form ideas and solutions in a more creative and flexible way. Design thinking encourages students to look at the world differently. It helps them to understand that, with a defined brief, it is almost always possible to discover an effective solution, even if that solution takes time and numerous ‘failed’ attempts. It moves students away from a linear, analytical, detail-oriented approach toward a more creative, open perspective—away from believing “We first need to know everything about this problem to find an answer” to asking “How do we create a solution, even in the midst of ambiguity?” For me, this is more representative of situations within real-life organisations: often problems and solutions emerge together; the implementation of interventions informs both a further understanding of the problem and its solution; more often than not problems and solutions are continually being worked on in parallel. Design thinking enables students to better listen and engage with those around them. It teaches them to be creative in thought: by learning how to visually represent thoughts and ideas, students add another dimension to their problem solving approach. Many problems, models and ideas are not linear and do not lend themselves to being defined with the lined notepaper approach. Similarly, complex situations often involve many interdependent problems that cannot be solved individually. Use of visual tools enables a shared understanding to be created; it draws people together to debate and create solutions or outcomes that otherwise would remain opaque and poorly understood.

If I had to sum it up more succinctly, design thinking in education is about equipping students with an array of tools that enable them to deal much more effectively with complex situations; teaching them to embrace curiosity and failure; and opening their minds to new ways of thinking and doing.

Question Two

What do you think is the nature of a design thinking process?

There are many potential processes and theories that could be used to define the nature of the design thinking process; however, to get to hung up on defining the process itself is to miss the point.

A design thinking process is about creation. Making and doing. Testing and breaking. Seeing and responding.

Designers have done it for centuries. It starts with an idea, a brief, a desired outcome. The designer then starts to create and, in order to do so, they must pull together ideas and get a better understanding of the challenges that stand in their way. They must implement ideas to see if they work and, also, to discover if they and others like them.

The designer is happy with uncertainty because the process of creation is often messy, unpredictable and, at times, frustrating. However, they drive through towards their goal. They like an idea but then find it doesn’t work. They do more research; they look at other options; they push boundaries. The designer turns around and examines those problems that stand in their way—they look at them from a different perspective; they need to find out if the problems vanish or change when viewed from a different standpoint.

During the process, the designer will sometimes work on their own; at other times, they will open up the process to others—to users, to staff, to colleagues, to the people around them.

Sometimes gradually, sometimes suddenly, the designer will arrive at a solution, the end outcome. The solution may be an amalgamation of a number of ideas. Sometimes, a single moment of insight may finally bring the answer.

And yet, however good the outcome, however great, it could be better. The designer may need materials or technology to catch up with what is in their mind’s eye—their ideas are not yet possible with today’s tools. Or, they may learn everything they should do or should have done differently once their completed piece ends up in the marketplace.

All in all, the design thinking process is about a journey from start to finish; from problem to solution; from idea to implementation. But this journey is not linear. It is iterative, recursive and looping. It could take hours or it could take years. But it is always a journey toward a desired objective, travelled with grit, determination and an open mind.

Question Three

What do you think is the best way for universities to teach design? (Should design schools create more business-focused creatives, or should business schools foster creative thinking in their MBAs?)

Ultimately, design thinking is about creation—of ideas, of products, of solutions, of outcomes. And yet, much of the university or business school approach is about the opposite—breaking things down, taking them apart, analysing, critiquing. Always the critic, never the creator.

I am a strong advocate of critical thinking and would never negate its value. However, while theoretical and case-based learning are a vital part of the business school education, I have noticed that students are often not very good at creating. There is a disconnect between their role and that of others—creating is left to ‘the creatives’. Students have rarely experienced the design process for themselves. Few students have ever created a brand; designed a website; designed or created a product, service or a building; created something out of nothing. And yet, in business, the only way that an organisation exists and survives is if it actually creates value; creates a product or a service; creates a market; creates demand. We teach students how to get the most out of what they have but never really to create something new. We leave that to chance, hoping that their innate creativity and drive will enable them to do this on their own. In this sense, we let both our students and their future employers down.

Design schools themselves are however often no better. They teach their students how to create but not how to truly exploit their creations. Creatives and designers can often be left floundering in a business world they do not really understand. They lack the management skills to bring their creations to life and to capitalise upon the value they know their creations contain. They do not know how to build a business structure around their creative process.

The obvious solution would be to bring business people and creatives together. However, with both failing to understand the other, tension begins to emerge. Designers and creatives are reluctant to relinquish business control for fear of what will happen to their creative direction; business people are unable to truly support a creative process they do not fully understand.

This is compounded by the fact that neither business nor design schools teach their students how to manage others in the creation/design process and how to get the best out of those who may ultimately work for them. Gerry McGovern (Design Director of Land Rover) has strong views on this and believes that nobody teaches either business people or designers how to manage other designers and creatives to get the best out of the creative process. Similarly, creatives are rarely taught how to manage their commercial employees to best capitalise upon their creative ideas.

So, in the middle exists this divide. With business people having little or no design, creative and visual literacy, and designers having little or no business literacy, there is a missed opportunity to create real value.

Thinking about organisational ambidexterity, it seems that we find ourselves in a situation in which design schools are teaching their students to explore, whilst business schools are teaching their students to exploit. In reality, as is the case in organisations, students must have the ability to do both—to explore and exploit—for real, long-term value to be released.

Ultimately, I believe it is the responsibility of both design schools and business schools to bridge this divide. Business schools should be embracing design thinking across their programmes, not only at MBA level, but also within their Undergraduate and Masters courses. Design schools should similarly be teaching their students (at all levels) about the commercialisation process and how to exploit the value within their creations.

Question Four

What do you think is the future of design thinking?

I believe there is a strong future for design thinking. With the recent and continuing economic environment, along with the diminished reputations of those who helped create it, the analytical approach has been shown to have significant weaknesses when it comes to solving global issues and discovering appropriate answers. As a result, we are seeing a move toward different approaches, both in how to create real value and also in solving problems. The Singularity University is one such example of how to embrace a multidisciplinary, creative approach. Although design thinking is certainly not the only alternative approach, I believe it is gaining increasing awareness, in part through those higher educational establishments that teach it.

Interestingly, within consultancy, clients also seem to be realising the limitations of the analytical approach and are increasingly resistant to, and jaded by, consultancies that charge high fees, do a lot of analysis, but, at the end of the day, fail to deliver effective solutions and outcomes that create real, practical value where it matters, on the ground. As a result, clients seem to be particularly open to value-based pricing, where the outcomes are clear and the costs are fixed. We ourselves have found that such an approach is hugely effective in facilitating design thinking and a solutions-led approach. As the objectives are clearly defined (the brief), along with measures of success and the value that the outcomes will bring, there is a clarity that rarely exists otherwise. There is also significant flexibility to embrace the complexity and creativity needed to solve the trickiest problems, without worrying about day rates or utilisation. The end outcome: fair compensation for the consultant and a great outcome for the client.

Similarly, in our own experience, design thinking opens up solutions to a multitude of problems that seem intractable with traditional business approaches. Visual problem solving and creative thinking enables simplicity to emerge beyond complexity and solutions to be found.

Moreover, while scientific and theoretical breakthroughs will continue to drive change, many of the most influential breakthroughs of the last century have been design-oriented in nature. Think the automobile, the home computer, mobile phones, the iPod, iPad, and more. Design is literally changing our lives, the way we think and the way we live. Many of the most influential and successful businesses in the world today have, at their heart, design. Their success is not due to either design or business alone but a healthy symbiosis of the two. People are increasingly recognising the power of design and embracing its success. This year alone within Britain, the Design Council hosted the Design Summit 2012; The Founders Forum hosted the Creative Industries reception; the British Business Embassy hosted the Global Business Summit (focused on creative services); various UK Trade & Investment regions hosted Creative Services Summits; the Olympics showcased British creativity and design; and MADE Entrepreneur Festival is focusing on businesses made in Britain, many of which are creative. There seems to be an increasing move toward supporting creative and design-led businesses and design thinking is fundamental to this future.

That said, for design thinking to be truly embraced in academia, I believe there needs to be a change in attitudes. Design thinking by its very nature is often very accessible and can be easily embraced by the populace. It also tends to dislike words. Historically, academia has tended to shun that which appears simplistic, even if at its heart it is rooted in research and grounded in experience. Similarly, design itself has not traditionally had a strong relationship with peer-reviewed journals nor has it taught or encouraged a critical, scientific approach. Gradually both sides of this situation are changing and multidisciplinary approaches are being embraced but such change will need to continue if there is to be a true meeting of minds between business and design.

 

Cartoon of a business plan with the text "Tim was proud of his full colour, fully bound business plan - after all, it held the key to his success, his future and his millions. He was certainly glad that everything would happen as it was written..."

Cartoon drawing of four people paddling in a boat on a river. Just ahead of them is a waterfall that their boat is about to drop over. The caption reads, “As a management team, they’d always kept their heads down and just got on with the work at hand.”

“Your business model has a limited shelf life and you’d better start looking at alternatives if you still want to be in business in 10 years time!”

Have you ever heard those words and would you ever wish to hear them? Would you actively seek out conversations with people likely to utter words to that effect? My guess is that your answer would be a resounding “No!” on all counts.

Seeking out conversations with people who are likely to challenge your organisation, your ideas and your plans may seem like a strange and slightly masochistic way to spend your time. As a leader however, you have a responsibility to look ahead and to find approaches that ensure the continuing success of your business. This responsibility includes reaching out to, and gaining insight from, those who see the world from a different perspective to both yourself and your leadership team.

Rita McGrath, author of the paper Business Models: A Discovery Driven Approach, raises the importance of what she has coined “critical conversations”:

There is a human dimension to competing on new business models that we are…beginning to understand. Encouraging leaders to question the viability of a business model, and to have the right conversations with those who might challenge it, will become increasingly important.

While McGrath’s paper is focused solely on business modelling, I believe the idea of critical conversations can be more broadly applied.

What are critical conversations?

The word ‘critical’ has a number of quite different definitions. Whilst McGrath does not explore in detail the nature of such conversations and it is difficult to elicit the exact definition that she is using, I believe that, in this context, critical can be understood in almost all senses of the word. According to several dictionary sources, critical can variously mean:

Characterised by skillful judgment and careful evaluation
Involving an analysis of the merits and faults of a given work
Incorporating a detailed and scholarly analysis and commentary
Of or pertaining to critics or criticism
Expressing adverse or disapproving comments or judgements
Forming or having the nature of a turning-point, transition or important juncture
Being in or verging on a state of crisis or emergency
Urgently needed
Having decisive or crucial importance in the success or failure of something
Absolutely necessary, indispensable or vital

Seeking out conversations that embody and embrace all of these ideas brings an interesting and challenging richness. In essence, critical conversations should give you insight into:

  • Factors that could cause your business to succeed or fail
  • The merits and faults of your organisation, business model and strategy
  • Key threats to your business
  • Opportunities for your organisation
  • Emergent factors that have the potential to disrupt the status quo
  • Situations that could become disastrous

Ignore them at your peril

Critical conversations have the potential to be deeply uncomfortable and challenging, so why on earth would you want to put yourself through them?! Like it or not, the fact that they are uncomfortable, difficult to hear, and challenging is precisely the point!

As humans, we naturally seek out those who have similar views, interests and beliefs to us and this is no different in business. Information, beliefs, attitudes and behaviours that are inconsistent or that do not fit together create an unpleasant state of psychological tension known by psychologists as ‘cognitive dissonance’. Because we dislike how dissonance feels, we naturally seek to minimise our experience of it by reducing inconsistency; Dieter Frey and Marita Rosch (creators of the selective exposure hypothesis) even found that we will deliberately and selectively avoid exposure to information that could cause dissonance.

As a result, we develop blind spots—factors that are obvious to others become seemingly invisible to us. Organisations are no different. Think the Global Financial Crisis for a perfect example.

Critical conversations are about minimising your blindspots. Although these conversations are likely to cause tension and discomfort (at least in the short term), they are all about enabling you to anticipate the black swans of this world, to discover the unknown and to better understand both the present and the future by viewing it through the eyes of others.

A lesson from the high seas

Allow me to illustrate with a story. My family are avid sailors. I grew up learning to sail and am a qualified sailing instructor. Whilst Debbie and I have been somewhat spoiled by the fair seas and blue skies of the Mediterranean, my brother is currently sailing across the Atlantic and my parents regularly skipper their own yacht.

When you’re out sailing, you can only see as far as the horizon. There are some sailors who believe this information is all they need to stay safe—let’s just say that I’d rather not be on a boat with them! Yes, these sailors can monitor the wellbeing of their crew; assess their clothing, waterproof and safety equipment requirements; decide how much to reef the sails given the current conditions; steer their boat; and monitor the horizon. But if that’s all they’re doing, they’re a danger to themselves and their crew! (I hasten to add at this point that none of my family would fall into this category.)

Weather can change quickly and things can appear over the horizon remarkably rapidly. Using only visual clues gives a sailor little in the way of warning time—a couple of hours at best.

In addition to visual monitoring, an experienced sailor will also use their charts and maps to guide them; check tide tables, GPS and radar; monitor wind speed and direction, atmospheric pressure, cloud formation, and wave structure; listen to regular weather forecasts; and monitor the radio for coastguard announcements and distress calls.

Together, these factors come together to enable a sailor to predict—with reasonable certainty—what is going to happen over the next 12, 24 or 48 hours, if not longer. Rather than finding themselves at panic stations, with no time to turn back, when they spot a major storm on the way, an experienced sailor has already made allowances. They may even have set off early for a different port. By the time the storm hits, they’re already tucked up in harbour. In contrast, the sailor who relied only on their view of the horizon may already be lost at sea.

For me, this is a lesson for both life and for our businesses. Critical conversations are much like tide tables, radar, weather forecasts, cloud formations and radio announcements. They enable you to see what someone else sees and to spot both trouble and opportunities before it’s too late to adjust your course. Although these conversations can be easy to avoid and ignore, particularly when you already have a strategy in place and a destination in mind, seeking out critical conversations will hopefully ensure that you never hear, “I could have told you so!”

So who should you converse with?

The short answer? Those who see further ahead or who see the world from a different perspective to yourself.

More practically, McGrath suggests there are three types of people with whom conversations are likely to yield valuable insights:

  • Leading technologists within your firm or those working on designing next generation concepts. It is their job to be gazing into the future and to tease out and develop future concepts. More often than not, technologists will realise future possibilities well before you do—they may see existing markets disappearing before their eyes or new markets emerging. However, as McGrath points out, technologists and designers often do not actively share what their insights mean for your business, so you will need to seek them out and ask critical questions.
  • People who are knowledgable about oblique competitors and substitutes. McGrath cites the example of an entertainment company—typically, entertainment requires that customers spend their time in a particular way and anything else that consumes their time will compete for their attention and therefore for sales. By understanding those competitors and substitutes that do not compete head-to-head with your organisation but nonetheless have the potential to unseat your influence gives you a much broader perspective and places you in a much stronger position.
  • People who aren’t your customers today but could be yours or someone else’s tomorrow. According to McGrath, these are generally customers who are “too poor to afford your offer, or who are geographically remote or otherwise somehow not in [your] firm’s immediate line of sight”. Although these people do not directly influence your organisation today, this does not mean that they will not influence it in the future. Understanding their needs and opinions may also offer a valuable learning opportunity for today.

I’d like to add several other sources:

  • Your employees. Although many employees are not paid to give their opinions, they are nonetheless likely to hold them. Those employees who interact with your customers every day probably know your customers far better than you do. New graduates and recruits often have an uncoloured and excited view of the future. Many of these people are able to offer a different and important perspective.
  • Relevant bloggers and thought leaders. Reticent and retiring these people are not. They spend vast swathes of time reading, learning and looking at things from a bird’s eye perspective. It is their job to develop opinions and they usually don’t mind sharing them. In some cases, they may know more about where your business is headed and customer opinion than you. At other times, they will be able to see and anticipate unexpected trends, events and factors long before they begin to have a noticeable effect.
  • Futurists and futurologists. Futurology is defined as “the science and study of sociological and technological developments, values and trends, with a view to planning for the future” and Wikipedia observes that it is often concerned with the three P’s and a W: Possible, Probable, and Preferable futures, plus Wildcards. Whilst it can be expensive to hire futurists, many organisations and individuals publish books, reports, blogs and other insights—although not conversational these can certainly serve as sources of insight. Conferences and events, such as those held by TED, are also a great place to meet and converse with people looking to the future.
  • Experts in industries that are not directly related to your own. It may sound like a strange idea to deliberately look to industries that, on the surface, appear to be largely irrelevant to your own. However, by keeping an eye out for disruptive innovations that have the power to change the way we all work or to directly impact your own industry, you ensure that you stay ahead of the game. Not only that but even unlikely industries can have shared characteristics and yield valuable insights.

How should you hold a critical conversation?

To hold a decent critical conversation requires emotional and intellectual maturity. Your aim is to question, listen and hear with an open mind. It really doesn’t matter at this stage if you agree or disagree with the responses. Even opinions with which you vehemently disagree can be an important window on the future—they may even turn out to be right. Treat the person you’re talking to a little like a mystic or oracle—although you may not always understand the relevance of what they are saying, stay open-minded and take the time to work out what it means for you.

Ask open and challenging questions. Ask dangerous questions. Ask questions that challenge the status quo. Ask questions about the future.

You are looking for the unknowns. Factors that are almost imperceptible but vital to your success. Just because something is out of sight for you, doesn’t mean it is for others—you only have to consider Blockbuster versus Lovefilm, or Kodak versus digital, for practical examples of this in action.

After your conversations, take time to reflect, filter and understand. Engage with their content wisely. Not all critical conversations will be right and not all of them will agree with one another. Remember your lessons from GCSE history—assess your source! Consider every insight and learn from those opinions you believe are relevant. Discuss the insights with your management team and encourage them to engage in their own critical conversations.

Turning insight into action

If a conversation is truly critical, it will inevitably require both change and action. As a team, you will need to decide what the insights mean for your organisation:

  • What changes do you need to make?
  • What does it mean for your strategy?
  • What does it mean for your business model?
  • Do the insights change your goals/markets/products/services/people/partners?
  • How does what you’ve learned translate into action?
  • How are you going to implement change?

The true value of critical conversations lies not in their insights but in the impact of the resulting action that is taken.

Interestingly, action brings us full circle to the main focus of McGrath’s paper: using a discovery driven (rather than analytical) approach—one that involves “significant experimentation and learning”. It’s likely that your critical conversations will raise many questions and there will still be many unknowns—taking action is not about knowing the right answer or getting your implementation and ideas right first time. Instead, move forward with a discovery driven approach: develop assumptions, prototype and test, rework and rebuild until your organisation and your business model work. And then do it all over again.

And for those of you who like the research…

McGrath, R. (2010). Business models: a discovery driven approach. Long Range Planning. (43) 247-261.

 

20
Jan
Posted by Matt Stocker, stored in: Cartoons & Illustrations  Strategic Planning  

Cartoon drawing of a man standing at the foot of a road that winds through the middle of hills into the blazing sun. The caption reads, "He didn't have any form of... *Succession plan *Disaster recovery plan *Keyman insurance. He had always been a lucky man. He was sure he'd never need them."