Strategy Jumpstart: These Are a Few of My Favourite ... Strategy Frameworks

Welcome to these are a few of my favorite strategy frameworks. Since I was a strategy consultant with Accenture and elsewhere, and spent quite a few years as an entrepreneur, people often ask me, what should be in a strategy report? And how should it be organized, and what should I tell my clients? Well, first of all, I like to organize a strategy report in terms of 3 very simple but very powerful questions. First of all, where are we? Then where do we want to go? And how do we get there? And here's how. First, the where are we section. I like to start with some basics like PESTEL, an overview of the client's environment: political, economic, social, technological, environmental, and legal. It's surprising how often either no one took the time to really look in a detailed manner or, or an organized, disciplined manner at the environment, but the client may have looked at that a long time ago and things have changed, and there may be changes coming down the road. So this can be used not only to map out what's going on today, how it is today, but also some changes that are coming in these various areas that the client needs to know about to prepare for or take advantage of. Another of my very big favorites is Porter's Five Forces. You know, what is your position? What is, what is the strength of your position with your suppliers, with your buyers? Are there substitute products? How hot is the competition? Are there new entrants coming in? So all of these things, again, you may have a picture of today, but also there may be some changes that you anticipate, and your client needs to prepare for those before they become a crisis. Obviously, no 'where are we' section would be complete without some information on your client today. What's on offer and to whom? Who are the customer segments? What about branding? Do they have branding issues? You'll want to provide them with real market and marketing data. And although they don't want to hear all about themselves from you, because they know about themselves, um, you will have to look at pricing, cost, and profitability. And when I present to you a little later the BCG framework, it'll make sense why some of these messages coming from you are important to show— hold up a mirror to them and show them themselves in a way that they may not see themselves. That said, you will want to get a handle on their own perceived threats and opportunities, their strategy and plans, And not only would SWOT and TOES be good here, but Business Model Canvas and Business Analysis Framework are good here, although I'll explain those in the next section. So speaking of SWOT and TOES, just make a simple list of their strengths, weaknesses, opportunities, and threats. This will give you and them an idea of what strengths to leverage, what opportunities and threats are out there that they need to do something about, and key weaknesses and how to handle them. One of the things that you can do is move beyond the SWOT into a TOES matrix. So if you list in the axes your SWOT, then you can put in the inner categories, um, some information on what their options might be. For example, strengths and opportunities, these would be key areas for them to pursue. If there are opportunities but they're kind of weak at that, or partially weak, they may want to partner with someone else or develop themselves so those are no longer weaknesses. If there are threats and they're, they're strong, they have strengths to leverage, then they could attack or defend. Now if there are threats and these are weaknesses, it might be time to divest. You may also like to share with them a view of their own products on the product lifecycle. Over time, products do have an introductory phase in which you spend a lot of money introducing, develop, revi— developing, revising, but there are not many money— there's not a whole lot of sales. Over time, you will reach a point at which the product line grows, but then you hit maturity after a while and sales top off. Now, after then, sales might decline, or you could do a product extension or refresh the product somehow, introduce something new in it— into it and give it a product extension to keep sales growing. I mentioned earlier the BCG matrix. So this is a very simple but very powerful framework. So if an area of the business doesn't use much cash and generates a lot of cash, we call that a cash cow. And these profits can be taken to invest in other areas of the business. Now, if an area of the business uses a lot of cash because it's in development, it's new, you're building momentum in the marketplace, but it's a high cash generator also, that's a star, and you want to keep that going. But if it's using a lot of cash and has low cash generation, you may want to look more carefully at that area. It's a question mark. Could be that it's going to fail, or it could be you just haven't given it enough time or developed it in the right way. Now, if an area uses only little cash and doesn't generate very much cash, that's a dog. And oftentimes businesses will assume that these dogs are— if you look up here to the product life cycle, they'll assume that these are areas are declining and they may want to get out of them. Next, where do we want to go? All right, um, the core of any strategy— and yes, you see the arrows, this is a piece of a bigger framework that I'll show you a little later— the core of any strategy is your mission, vision, and values. And from those you derive objectives, strategies for how to achieve those objectives, and tactics—exactly what are you going to do. But let's go back to the beginning. Purpose or mission. Why does this organization even exist? It's shocking to me how many organizations are led by people who really don't know why they exist. They just do. Or they have mission statements that are all about themselves. And not what they're trying to accomplish in the world or how they're trying to serve people. Let me share one of my favorite stories from the March of Dimes. So the Mothers' March of Dimes was put together to raise funding for research for polio, to prevent it and eradicate it if possible. Um, and these mothers would go out all over the United States, knock on doors, and hold out a can and say, will you donate to the Mother's March of Dimes to prevent polio, or to stop polio? And purses would fly open, wallets would fly open, and people would put the money in and say, here you go, go, go, go, go, go. Um, they were very effective. Now, as luck would have it, Someone did develop a polio vaccine. So the leaders of the organization had to sit down and say, um, uh-oh, our mission is fulfilled, our purpose is gone. What do we do now? We could shut down. But that would be kind of sad because they built up a wonderful organization that was— had very powerful capabilities. To raise money for medical research. So they took a better option and became the Mother's March of Dimes for the Prevention of Birth Defects. And they're still going strong. They still do a great deal of good in the world. And if there's one birth defect that is eradicated or prevented, there's plenty more. They will never run out. Of work. And if all birth defects are gone, they'll find another mission. Now, values. My favorite story here shows you the power of values. Sounds like kind of a fluffy thing. We value people, we value honesty. But in reality, your values can be the things that see the organization through unprecedented crisis where something has never happened before. Here's how, and that you can't plan. So here's a story for that. Tylenol was at one time Johnson Johnson's number one personal healthcare product. Grand. And then a death occurred and the police had to investigate. And then another death occurred and the police investigated. And another one and the police investigated. And they couldn't figure out why these people had died. There was nothing in common. One was a child, one was an older person, etc. And then one police officer overheard another one say, "I really don't get it. There's no connection. Um, you know, this person wasn't feeling well and took a Tylenol and went to bed." And then the other officer said, "Whoa, whoa, whoa, whoa, wait, wait. Yours took a Tylenol? Mine took a Tylenol. Could that be the connection?" Indeed it was. They ran lab tests and found that these people died of cyanide poisoning, and no one knew how they got the cyanide, but they thought— they realized that Tylenol was the connection. So they went back to the homes of these people and tested the bottles, and indeed there was cyanide in the product. Aha. Okay. So now you're the leader of Johnson Johnson. What on earth are you going to do about this? Nobody knows how the cyanide got into your product. What to do? The leaders of the organization decided, number one, to recall absolutely every bottle worldwide. Bar none. Bring them all back. We don't want one single death to occur again for this crisis. Number 2, they instituted an openness and honesty transparency policy. They cooperated with police, helped as best they could, and they sent press releases and video statements, all kinds of stuff. The policy during the crisis was, "When we know, you'll know, no matter what it is." How did they know how to respond to this kind of a crisis? Had something like this ever happened before? You know, these products were tampered with, and they didn't know, did it happen in the store, in the home, in the distribution chain, in the warehouse, Where? What happened? Well, as luck would have it, they did a lot of investigating and discovered that a person had put the cyanide into the product in the store. They opened it up, injected a syringe into the caplets, and put the bottle top back on and put it back on the shelf. All right, so out of this came a new design called triple tamper-resistant packaging. And you may notice when you buy bottles in the pharmacy of anything that this is how they're packaged. There's a film over the bottle opening There's a plastic wrap around the cap, and there are plastic tabs on the carton. If any of these are missing, then this product might have been tampered with. It's not tamper-resistant, but it does give you a hint if there has been some tampering. All right. So this sort of tampering had never happened before. How did the leaders know what to do to recall everything and to send the press statements and, and to investigate in this manner? They didn't. It was the value of Johnson Johnson's founder, a value statement that that guided them through this crisis. They had no contingency plans that would have helped them. They had no scenario plans, et cetera. The value statement said, "Our number one priority is the safety and the health of the public and our customers." The leadership team decided no matter what, what the cost to the organization, this would guide every action in how they dealt with this crisis. So afterwards, perpetrator was caught. Now they have triple tamper-resistant packaging. This never happened before, but they acted honorably. Should they relaunch the brand or kill it? They relaunched. Did the public accept the brand again? Indeed they did. And today it's still their number one healthcare brand. Now, in contrast, Perrier found benzene in their water. Did they recall every bottle around the world? No, they recalled some of their bottles. Did they have an open and honest transparent policy during the crisis? Somewhat, but not entirely. After the crisis and after the cleanup, and by the way, they did not recall all bottles necessary, there were benzene in bottles that they did not recall. Did Perrier as a brand come back the way Tylenol did? No, it didn't. So the ethics and the values of the organization, they sound like nice-to-haves, not need-to-haves. I would beg to differ. These are the things that guide you through crises that you could not plan and help you protect the value that everyone has worked so hard to build and provide resilience. You can bounce back. Your vision of the future. This vision should not be, we're number one in our market. The vision of the future is someone makes a vaccine for polio and we eradicate polio worldwide. That's a vision, that there is no more polio in the world. Makes sense? Okay, let's move on. Core competence. There's such a thing as conglomerate penalty. When an organization branches out into completely different areas that are not relevant to each other and there's no synergy between them, what's essentially happened is that the leadership has made a portfolio decision— what portfolio of industries and businesses to be in— and the shareholders cannot make that decision for themselves. So if they buy shares in this company, it's like a mini portfolio that they don't control, and they don't like it as much as companies that have a focus area so they can control their own portfolios. So this is called the conglomerate penalty. Um, when this happens, you can have a bigger collective market capitalization by just breaking up the company. And making it different companies and giving shareholders a choice of what to invest in. Now, in some cases, especially emerging economies, there are some synergies, even if at face value you wouldn't think there would be. It could be the ethics of the organization and the training of the management. It could be the skills of middle and management and leaders. It could be quality that everyone in the organization is committed to a certain level of quality. So no matter what they make, you know, it's a high quality product. So there's a, there's value in the brand being shared, etc. All right. So when you are in front of a client, you'll have to think about and ask them, what is your core competence? What are you really good at? And this will lead you to number one, should they be broken up into separate companies or stay together? Is there synergy? And number two, if you're really good at something, have you branched out into into all the industries and products and services that you can based on that competence. Maybe there's more that you can do to grow the business based on what you're good at. So core competence. Strategy and structure. If you have a strategy whereby you're doing research and development for certain types of technologies, you may want to structure yourself along those lines of those different technologies and let those different technologies be different divisions. However, if you have a global-local type strategy, some things are globally shared, but we also localize to our particular markets, you may want to organize by country or by region. Whatever the case, the strategy of the organization that helps drive them forward should match the structure of the organization. Because all of the activities within each piece of the company then has a logical way to share resources, grow, et cetera. You may want to gather a broad team and get the client leadership together to do some visioning of the future. You might also bring in a professional futurist, someone who looks at trends and makes predictions about what will be, um, so that you can all radically innovate and head in very bold new leading directions. All right, business models. This is a big, big list of business models. You'll prob— you're probably going to want to hit the pause button at some point in time. When we first started with e-business, it was either you make a profit on what you sell or were going for eyeballs and grabbing the market, hoping to make money later. That was kind of it. But in the past two decades of e-business, we've evolved a whole host of these different business models. So here's your list. Here are example companies. And you can look up exactly what all these different models are. I won't explain them right here. The business model canvas. All right. When Lean, The Lean Startup came out, Eric Ries, and when Agile came out, so the Lean and Agile movements, corporations realize that startups can do some things a lot better than they do.. And one of the things that is hard for a startup is coming up with a strategic plan. And I remember particularly, I used to make these strategic plans for big companies, big banks, as you know, when I was with Accenture. And then I started my own ventures. And I couldn't plan, I couldn't strategize, and I felt like the dumbest person in the world and such a fraud. Because we couldn't take historical data and stuff we knew and extend it into the future. I was faced with a situation where I had no data. I didn't know for sure what product we were going to sell, how we were going to price it, who was going to buy it, where, what country in the world we're going to sell this thing in. There was just so much I didn't know. So when startups are faced with situations in which they are making something brand new, or especially if there is no industry for this yet, or you're going into a market where nobody is doing this, the Business Model Canvas is really useful. Just map out in— on one sheet your key partners, activities, resources, your value proposition, you know, in what way are you creating value and sharing a piece, keeping a piece for yourself. Map out your customer relationships, your channels, your customer segments, your cost structure, your revenue streams. Put it out on one page and get an overview of your business. And if you can't fill in all these boxes, you haven't thought through it enough. Also, when you're in a corporation, Corporations often kill new initiatives because they don't have all this data for the planning and the risk assessment. That holds them back from doing anything new and innovative. So if you can't make a big corporate strategic plan, use the Business Model Canvas. How to get there. Blue Ocean, Red Ocean, that is a wonderful concept. And it's, it's about competition and cooperation. Basically, do you want to enter a market where you have a lot of competitors, i.e., a lot of sharks feeding, and there's a lot of blood in the water? That's an uncomfortable place to be. You may want to instead head towards a blue ocean where nobody has offered what you're offering, there are no competitors, But you will have different problems. You may have to explain to people what it is that you're offering and how it works and go through that whole adoption process. You may have no ecosystem, no suppliers, no support, no, no other products and services that go along with what you offer. So you may have to offer that. You may find yourself in a role of developing a whole ecosystem where if you were in a red ocean, you would only be doing your own business. But now you take a bigger role in society and developing a new market. In these situations, it's, it's not a situation as much about competition as it is about cooperation. And you may find yourself with cooperative advantage, not just competitive advantage, because you were the first in, developed the ecosystem, and you keep developing based on a stronghold because you were the first there. So recognize the problems, whether you're in a blue ocean or entering a red ocean. And talk about those with your client. Following on to the blue ocean, red ocean concept, um, there's a wonderful HBR article called Cracking Frontier Markets. So if your client is moving into frontier markets, emerging economies, and so forth, they may not be able to introduce just their product. They may have to introduce the content. They may have to build up the ecosystem of supply and distribution and so forth. There's a wonderful story in the article about the— well, Nollywood, the Nigerian video industry. There was a seller of videotapes and he wanted to sell more of them. People weren't buying them because they didn't have any content. So he started developing content and grew a video industry like Hollywood or Bollywood. Initiatives mapping. You know, when we do design thinking and we come up with solutions to an envisioned future, you know, in a 15-minute brainstorm, we may have 50 ideas. How on earth do you map them? How do you choose what to work on? Well, one way to do that is with an initiatives map. Along one axis is the impact of what you're doing. Along the other is the feasibility. Can we really do it? Is it going to be easy or hard? Now, if you come across initiatives that have low impact and they're not that feasible, yeah, that's the little one posted with an X on your screen. Don't do them. If it's high impact and easy to do, yeah, that's the exclamation mark. Do it. And then for everything else, map it out and make your decision what to include in your portfolio and what not to include or potentially include. Now, as I mentioned with the blue ocean, red ocean, if you've invented something new, then it may not be just about your invention. Success may not be just about that. You may have to create a whole system. And the case in point is the icon, the symbol most recognized as innovation, the light bulb. You know, some people say that the light bulb, without a bigger, more important innovation, would have been just a parlor trick. You know, a toy. Some people say that Thomas Edison's real innovation was General Electric and the electrification and electric systems across urban areas worldwide. So if you've come up with an invention and you want to get it out to the marketplace, stop and think about what system is going to be necessary to support it, and you may have to craft that system as well. Stickiness. When the iPod first came out, it was lampooned as lower storage, slower, a technologically inferior device to other MP3 players. However, people did love it because it was beautiful and super easy to use. Once they put their music into iTunes, it was devilishly hard to get it out. And even, even today, there are no really easy ways to get out your playlists. So iTunes was actually the thing that provided stickiness for the iPod, and then later for iTunes on smartphones, etc. So if your, if your client is offering something, whether it's technologically inferior or superior, no matter what it is, you may need to suggest some way of making it sticky to keep the relationship with customer going. All right, there's a wonderful book called "10 Types of Innovation." by Keeley Walters, Pickle, and Quinn. And there was— in their research, they found that the more types of innovation that are present in an initiative, the higher the chance of success. That's significant. So a lot of organizations are happy to put out an offering that's at the bottom of your screen. It's got improved product performance, or it's— and it may have to have a product system. But what about the configuration and the experience? Okay. Is there a new profit model involved in this new offering? Is there a network involved whereby the more people get in, the more valuable it is. Facebook, um, even Netflix, um, the suggestion engine, AI engine, the more people get on Netflix, the smarter the AI becomes and the better recommendations it'll give to you. So is there a network effect where you're connecting with others even if it's through an AI engine. Do you have a different structure? Do you have an innovative process for production? In terms of experience, do you have an innovative service supporting and amplifying the product value? How about how you deliver it? Do you have a new brand, and does it really mean something to people? How are you representing your business or offerings? Customer engagement. Are you fostering compelling interactions with your customers? So when you're addressing innovation of your clients, do think about these and ask how many of these you can include in new business areas that are being launched as part of your strategy. Stakeholder mapping. No matter what you do now as an entrepreneur, this is incredibly important because you cannot do things on your own. And usually you're building a new ecosystem, you're building new relationships, and everybody has a different part to play, and you're the glue that pulls everyone together. It can be really helpful to do a stakeholder map and write down for each party who's involved, what do they give, What do they get? And who does— who is that relevant to? This is useful for established companies as well. If somebody is giving but not getting, they're probably going to drop out. If they're getting but not giving, you need to find a way to get some value out of them. If there's an imbalance in what they give and get, etc., you get the idea. All right. See in the middle, the vision and strategy, purpose, value, mission, vision, objective, strategy, tactics. That little piece that I introduced you to earlier is part of the Balanced Scorecard. And the Balanced Scorecard was created to help people implement strategy, to make strategy real and actionable. And when it was first introduced, the strategy was tied to the company's financial performance, their performance in, in regards to customers and customer satisfaction. They needed to see the strategy enacted in the internal business processes and also in innovation, the learning and growth. Of the company. So what would happen is the top leaders would do the middle box, and then we would take the department heads, the next level down, and say, okay, the middle box is here. This is the mission, the values, the vision, da da da da da. Let's work with you to fill in your financial objectives measures, targets, and the initiatives you're going to pursue so that you get financial performance that's aligned with the strategy. Same with the customer satisfaction, the internal business processes, and innovation for your area. Um, it should all tie together and everything should be aligned with the strategy, and all the different departments would be aligned because they all aligned with this core strategy of the overall organization. So this may be something that you want to introduce. Now, remember I mentioned a bit ago how big companies with data and established businesses can make strategic plans, but new ventures find it really difficult to do that. Okay. And the, the process of strategy is actually different. Whether you're a new venture or a stable existing venture. Okay, that old way of doing strategy is called deliberate strategy. Uh, you feed in your strategic focus and your decision criteria into resource allocation. You do stuff, you see how it turns out, and then you revise. Um, for emergent strategy You may actually have to launch, collect the data, and based on your actual strategy, what really happens, feed that into your emergent strategy, which is going to change, and then you change your decisions of what to make, how to allocate resources, how to launch, yada, yada, yada. And you emerge and grow your strategy based on the data you collect. And it's basically an experimental way of doing business. Launch, see how it does, come back, revise, put something out again, revise, etc. So deliberate strategy versus emergent strategy. All right, business analysis framework. This was first done for risk management, to look for areas of risk. However, you can also use it a little bit like the Business Model Canvas to make sure you've laid out all of the strategic issues in these areas. The thing I'll— I won't read everything to you, but the thing I will mention is that while you can control your operations, or try to anyway. Um, you can influence suppliers, customers, stakeholders, even competitors. Now, you can't control usually those external stuff and external things, and you notice that that includes the PESTLE framework in there. Um, but you can maneuver yourself. So whatever it is you're focusing on, you're going to have to use different management tools, techniques, and methods, either to control or to influence or to maneuver yourself within the uncontrollable. All right. Ways to grow. So companies don't necessarily— they shouldn't necessarily grow in only one way. And the framework on the left is from IDEO. It's a very simple one. With your new products and services, are you going to serve existing customers or new ones? Are these existing offerings that you're just making a little better, or are they new offerings? And you're going to— most companies will want to have a portfolio whereby they'll do incremental, incremental improvements and innovations where it's existing users and existing offerings. Just get better at what we are, at what we do. Or they can evolve. They'll take existing offerings to new users or have new offerings for existing users. That's an evolutionary approach. Revolutionary is where it's a new offering, it's a new user— well, revolutionary according to this framework— new offerings, new users. We have no idea what's going to happen, but we think that this is the future, this is important, and we want to experiment. Okay, so if you look at the right-hand side, Chief Innovation Officers often will balance their innovation portfolio in the following way. They'll, they'll put 70% of their budget towards existing customers and products, 10% of their budget to new customers with existing products, another 10 on new products for existing customers, and then another 10% in the wildcard area. Now, usually, they're not hoping to be the next Facebook, Airbnb, or Uber, but they are hoping to learn. And the learning from that upper right-hand quadrant then should be shared with projects in the other quadrants. So the learning is the key value there. And who knows, Sometimes you do come up with the next Airbnb, Uber, etc. Now, here's why I didn't say that that was my definition of radical over there. If you look at the photograph, most people, when I ask them to name a great innovation, they say the automobile. And then I have them look at this picture and say, what's going on? And most people do come up with, ah, perhaps the car broke down. Okay, well, wait a minute. How can it be a great innovation if it's expensive, it breaks down all the time, it's hard to start, it's noisy, it stinks, etc.? Okay, that's what the car was like when it first came out as a radical innovation, a revolutionary product. What happened then was bit by bit by bit— so, so it was a completely different design, completely different thing from a horse and carriage. Okay, now over time, people improved this product. They found ways to make it cheaper. They put in the, the key starter or an electric starter. They made it quieter. All the different little pieces were made made more reliable. They put in exhaust controls so it's not too stinky. So it was the routine innovations or the evolutions that made it the product that is so well accepted today. So when your client is sitting in front of you talking about what kind of innovation they need to be doing, tell them, Don't forget to do something radical because you may come up with something game-changing and very important. But when you do introduce it, you'll need those routine innovations in order to make it a high-quality, really usable innovation that really captures people, people's hearts. So once you've been all through all of these strategic ideas, an analysis of where the business is today, might go tomorrow, and how they might get there. The business itself is going to need good leadership. Um, here are a few articles that I've listed on the screen, and you as a strategist might take a role in developing that leadership. So these are just a few articles. There are many, many more, and many more on strategy. What I've shared with you today is not exhaustive. It's just a few of my favorites. Also, you may want to see Future State 2030, the video by KPMG, and consider if any of these key trends will affect your client. That's all for today. Um, if you would like to learn some more about innovation, we've got a 2021 book out. It's coming out into Amazon and Barnes Noble very soon, Famous Business Fusions. I want to thank you and SP Jain School of Global Management that not only sponsored the time to make this video for you, but also sponsored all of that research. Best of luck in your innovations and your strategies. And for all of the great ideas that you're going to be sharing with your clients and the organizations you will lead. Bye for now.