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Tom Devane is a consultant, author, and co-author of provocative bestselling books on achieving extraordinary results using methods that systematically engage people in organizations and communities.
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    The Change Handbook

    Over 60 methods that engage groups quickly and produce extraordinary results.

     

     

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    Integrating Lean Six Sigma and High Performance Organizations

    A leader's guide to blending technical and people aspects of performance improvement.

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    Entries in Strategy (9)

    Sunday
    Jan152012

    Don’t Forget the Power of “Not” in Visioning and Strategy Sessions

     

    As part of my consulting work I’m asked to review a lot of vision statements, strategic intent statements, and strategic plans.  Something struck me in my latest review this week, and I’ve found it to be so prevalent that I think sharing this could be very helpful to top leaders and strategic planners as they develop these key corporate direction documents.  So here it is.
     
    And that’s the power of Not.
     
    It’s only natural, from an economic standpoint, that companies would like to sell to as many people as possible.  So we see target niches that include consumers that at all income levels.  And geographic niches that include all regions on the planet.
     
    But targeting to sell to everyone, everywhere has two basic problems.  First is that people, in this day and age, like to think they’re being marketed to for their specific needs.  And second, no one company has the resources to chase all the opportunities on the planet.  There needs to be an allocation of scarce resources, but I often don’t see this in a company’s strategy.  Unfortunately, I typically do see this allocation occurring informally, on an ad hoc basis, at the division or department level at budgeting time, which is definitely too low a place in the organization for this to be happening.
     
    It’s extremely helpful to say Not in strategic documents, and many times also in a company’s vision statement.  A statement like “We’re in the telecommunications space, but we’re NOT going to play in the cable market” helps send a clear message to directors and managers where they should spend their time and efforts. 
     
    In addition to allocating scarce resources, this practice of saying Not also helps focus on key strengths.  I know of one pulp and paper mill company that once diversified by purchasing a cruise line to run as a separate division.  They ended up exiting quickly, as they really didn’t know how to run that business profitably.  And it showed.
     
    So don’t forget the power of Not in your vision and strategy – it can save you a lot of time, money, and workforce confusion about strategic choices.

     

    Thursday
    Dec012011

    Scenario Planning -- An Overview

    No one can predict the future with 100% certainty.  Scenario Planning is a process in which participants develop provocative yet plausible stories about how the future might unfold, so that planners can develop a diverse portfolio of goals and allocations of scarce organizational resources in a way they determine best to go into the future.
     

    Key outcomes 

    • Increased ability for strategic thinking throughout the organization
    • Accelerated collaborative learning about the external environment and how the organization can adapt to, and shape it
    • Bold actions based on a shared understanding of external forces and trends, as well as internal possibilities.

    Sample client uses

    I’ve used Scenario Planning sessions as inputs – in the form of alternative stories that articulate how the future might unfold -- for a variety of planning sessions.  The planning session might be to develop a strategic plan, or to develop a plan to implement an organizational initiative such as Lean Six Sigma, or a plan to enter a new market like China or India.  Since no one can predict the future with 100% certainty, it’s useful in all those situations to have alternative scenarios that might unfold.
     

    Time investment

    Prepration: 1-2 months
    Session time: Actual session time may take 1-3 days, though the explore, synthesize, and act phases may tak 2-4 months -- it becomes a way of thinking throughout the day
    Follow-up: This is an ongoing process.
     

    Number of participants

    15 to 500 
     

    General flow

    In a Scenario Planning session participants identify the driving forces affecting them.  Typically these are at the global, or industry level, and not just the organization’s level.  The top two forces then form the basis for a two-by-two matrix that has four quadrants, each of which will contain a story about how the future could unfold.  As an example, in the health insurance industry the top two driving forces could be “Regulation” and “Use of technology.”  As is the case with most driving forces, on the matrix there will be a “more of”, and “less of” dimension that is indicated on the bottom of the matrix for one of the forces, and on the left side of the matrix for the other force.
     
    Participants in a scenario planning session consider the various stories that could unfold, and then place “strategic bets.”  A strategic bet represents a commitment of resources to a particular goal and course of action within a story.  For example, a pharmaceutical company may develop several possible scenarios for future disease management.  One scenario “story” might contain having less prescription drugs and physician oversight as well as more patient responsibility for outcomes.  This situation might also be accompanied by increasing use of technology for delivery of medical information.   One strategic bet the company might place for this story would be the development of training materials and databases that connect directly with patients so they can manage their health outcomes.
     
    I think it’s important to note here that we don’t assign probabilities to possible scenarios.  Shell Oil Company gives considerable credit for their move from number 6 of the big oil companies to number 1 to the process of scenario planning.  One of their scenarios during the oil boom years was that oil prices might actually fall (which they did) instead of continuing to rise.  If they had regarded this scenario as a low probability they would not have placed strategic bets on the scenario.  Instead, their thought process was that prices (up or down) were a driving force, and they wanted to have goals and commitments toward that scenario as part of their overall portfolio of strategic bets.  And it paid off, big time.

     

    For more information

     Additional information is available in The Change Handbook (Berrett-Koehler, 1999, 2004).  Scenario Planning information can be obtained economically by just purchasing the Scenario Thinking electronic chapter of The Change Handbook.  Other great sources of information: an article in The Economist, the Wikipedia entry, some Monitor Group interviews of Peter Schwarz, and an article in Wired.

     
    This is but one method of several highlighted that provides a template for engaging employees to collectively develop robust, sustainable solutions.  A list of these other methods and an accompanying brief description can be found in this blog entry Excel at employee engagement methods...

     

    Thursday
    Sep292011

    The Value of Not Knowing... IF You Want a High-Performance Organization – Part 1

    Strategy Development

    In this series of three blogs we address critical business areas where that pesky issue of uncertainty raises its ugly head and screams for a specific action inside organizations.  Each blog will contain a vignette that illustrates how high-performing organizations view, and address the ever-present phenomenon of uncertainty.  This first blog talks about strategic planning, the second addresses critical decisions, and the third covers external consultants, as well as draws some common conclusions.

    A large software developer that I worked with to develop a strategy for a new business unit wanted to develop the best strategy for the fledging unit.  But one huge issue they recognized was how fast their market could change, thus making their going-in assumptions and resultant strategy irrelevant.  So, during the middle of an intensive 2 ½ day strategy building session, they took time to develop four scenarios of what the world who consumed their products could like over the next five years. 

    This exercise wasn’t performed merely to rank the most likely to least likely, as that also would have demonstrated some organizational hubris that suggested the company might know what would happen.  Instead, the four scenarios merely told alternative stories about how the world and the rapidly-changing software industry might evolve.  It then became the task of those in the session to determine in which scenario(s) they wanted to place strategic bets, and to craft what those bets would look like (along with accompanying goals to set direction and measure progress).

    This scenario planning process, popularized by Shell years ago, acknowledges that no one can really predict with 100% accuracy what the future will be.  So it’s best to have options for different world stories that unfold.   High-performance organizations understand this concept, and use it to get ahead of the competition.

    Thursday
    Jun022011

    Why involve a lot of people in developing a vision and strategy?

    A few years back Walter Kiechel of Fortune magazine conducted a poll of consultants. They reported that less than 10% of strategies associated with traditional strategic planning methods are successfully implemented.  When Tom Peters, an ex-McKinsey consultant, heard this number he called it “wildly inflated.” 

    But perhaps the polled consultants and Tom Peters’ samples were biased (because boy, they sure seem low!).  So let’s turn our attention to Henry Mintzberg, a renowned researcher, consultant, and academic in the field of strategic planning.  He’s done extensive research on numerous industries and for different-sized organizations.  Mintzberg’s estimate: only 10-30% of intended strategy is realized.  None of our estimates so far are very cheery, even Mintzberg’s 30% at the upper end of his range. 


    So, as we set out to take a look at improving the stategy-to-execution cycle, one ripe area to explore is that way that we develop strategy.  And how it’s linked upstream to vision, and downstream to executable day-to-day actions.


    A break with historical practices?

    Historically, most organizational visions and strategies have been developed by a handful of people.   Or, in some cases, primarily by one person.  

    These small groups of people are typically the people who head up the key functions at an organization, so it makes sense that they’re involved in the planning since they have the power to command resources to make the strategy happen.  But are those the only people whose involvement would benefit the organization?  Especially with today’s rapid pace of technological and social change, and the multiple generations now in the workforce?

    Many innovative organizations today are starting to say no.  They believe they can gain a competitive edge by inviting more people than usual to participate in defining, and setting a course for the future.  A vision that is compelling – and bought into because many people helped create it – will be more helpful in guiding an organization than a sterile multi-sentence elaboration of top management’s thoughts on a laminated card.  A strategy that a diverse set of people have co-developed will be less likely to be jettisoned in mid-course, simply because the large group already thought of potential problems and addressed them, which is hard for one person or a small group to do.  The laminated vision developed by a few is less likely be to understood and embraced in the formal strategy develop process.

    So now let’s talk about the strategy-to-execution connection.  A large-group of people, comprised with executives and a sprinkling of non-executives, are more likely craft a strategy with pragmatic links to daily actions that would implement the strategy than a small group of just senior people.  The larger, more diverse group, would likely develop language that’s better understood by all, and would also tend to be more implementable in day-to-day operations. 

    Just why does it seem be make sense to make a break with historical visioning and strategy processes?  Because the conversations among diverse perspectives tend to generate robust plans that hold up better in the marketplace, and also create energy for implementation among the participants.

     

    A confluence of three credible idea wellsprings

    Three sources, all operating independently, support the notion that planning for the future with large groups of people can yield better results than with small groups:

    James Surowiecki’s landmark book The Wisdom of Crowds talks about how large groups of people tend to do better at predictions than individuals or small groups of people.  A business columnist for the New Yorker, Surowiecki argues that "under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them."  He supports this claim in a variety of settings in his 336-page book.

    From the social media front, the book Groundswell by two of Forrester Research’s leading analysts Charlene Li and Josh Bernoff, presents an interesting business case. Large numbers of Best Buy employees, connected through the company’s internal social media, consistently produced product forecasts that were much better than retail experts.  And engaging employees in this way has proved to be highly effective at other high-tech and retail firms.

    And from the world of organization development, “group methods” have emerged over the past 15 years that provide convenient templates for success that leaders can use for a variety of purposes, one of which is contributing to the strategic planning process. A “group method” is an agenda with accompanying facilitation principles and target outcomes that makes is possible for groups of people to develop extraordinary outcomes very quickly.  You’ll see more on group methods at the end of this blog.

    What does involving more people get you?

    Here are the major benefits of involving large groups of people -- typically from 25 to 80 -- simultaneously to develop a direction for the future, such as a strategy or a vision.  You get

    • A higher quality product.  You have a robust solution, that’s more creative and bullet-proof, because you’re drawing upon the collective wisdom of different perspectives.
    • A compressed timeframe for a plan.  People in a room together with real-time, back-and-forth exchanges of information, yield a high quality product faster than conducting a series of smaller review meetings, or sequential comments attached to an e-mailed draft plan that is circulated among the executives.
    • High quality, specific links from strategy to action.  Engaging top, middle, and sometimes front-line levels of an organization in developing a plan help ensure its understandability and connections to day-to-day actions. People are energized to implement the plan.  People tend to own what they help create, and this ownership creates energy for implementation.

     

    Moving forward

    For many, this concept of engaging many people in charting a course for the future is quite new.  Some will embrace it immediately because it seems to make sense at a “gut level.”  Others may have some doubts.  If your doubts currently are overpowering your inclinations to do something like this, you might want to check out the blog, “Four major ‘but what ifs’ for group-based strategic planning.”

    Other leaders may think the concept looks promising, but that it seems like too high a risk to do right now, especially if the company hasn’t done one before.  If you’re in this camp, you may want to take a look at  the blog post “Group Methods for Strategic Planning and Visioning, ” which provides some examples of how innovation-based companies like Microsoft, Whole Foods Market, and Hunter-Douglas are engaging groups of people using group methods (standard templates that can save your time and improve output quality) to chart a course for the future.

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