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Friday, 29 February 2008

Stop Wasting Valuable Time – Affordably with the Competitive Strength Report

Key ideas from a Harvard Business Review article by Michael C. Mankins

The Idea in Brief
"Most leadership teams spend just three hours per month making strategic decisions. That translates into less than a week per year. Worse, many teams fritter away those precious hours on unfocused, inconclusive discussion rather than rapid, well-informed decision making.
The consequences? Delayed decisions that lead to wasted resources, missed opportunities, and poor long-term investments. One global firm spent more time each year selecting its holiday card than it did debating a vital Africa strategy.
How can your leadership team avoid such pitfalls? Spend your limited time on issues exerting the greatest impact on your company's long-term value. Deal with operations separately from strategy. Put real choices on the table, evaluating at least three viable options for every strategy. Use meeting time for decision making--not just discussion--and agree on what was decided. And move issues off your agenda as quickly as possible.
Your reward? Strategic decisions - made better and faster."

The Idea in Practice
"Apply these practices to make the best use of your leadership team's time:

Deal with Strategy and Operations Separately
Holding separate meetings for each prevents day-to-day operations from dominating your team's agenda and liberates time for substantive strategy debates.
Dutch banking giant ABN AMRO's board used to spend only about an hour per month on strategy, with most of its meeting time devoted to day-to-day operational details. But market changes required a more strategic focus. The board now spends slightly less time together - but devotes much more of that time to strategy, typically about 10 hours per month.
Focus on Decisions, not Discussions
Enhance the quality and pace of your team's decision making, for example by distributing reading materials in advance of meetings. Specify why participants must read them (e.g., for information only? discussion and debate? decision making?) This readies participants to devote precious meeting time to deciding crucial issues.
Measure the Real Value of Every Agenda Item
Prioritize meeting agenda items according to each issue's impact on your company's long-term value. Address high-value issues only, and delegate low-value issues to lower organizational levels.
At Roche, the Swiss drug and diagnostic product maker, CEO Franz Humer created a "decision agenda" comprising the 10 most important opportunities and problems facing the company. Leaders regularly update the agenda by quantifying the value at stake for each issue and spend over half of their meeting time on those ten items. This process has transformed the quality and pace of Roche's strategic decision making.
Get Issues off the Agenda Quickly
Develop clear timetables detailing when and how participants will decide each issue and who will approve final strategy.
At Cardinal Health, a pharmaceutical and medical supply distributor, senior managers continually ask themselves, "When must this decision be made?" and ensure that they reach decisions within a predetermined time. Results? Less over analysis and more rapid decision making.
Put Real Choices on the Table
Evaluate at least three viable alternatives (not just minor variations on one theme) before approving any strategy. This encourages teams to choose the best course of action, not just the most obvious. By debating alternative strategies, British retail bank Lloyds TSB decided to exit international markets, helping to expand its market value 40-fold between 1983 and 2001.
Make Decisions Stick
Explicitly agree on what was decided in the meeting. Then specify the resources (time, talent, and money) required to execute the strategy, as well as the financial results you've committed to deliver."

Our View
So that is what Harvard Business Review is telling us we ought to do. And we agree 100%.
But people are people and “ought” has never yet made a rice pudding – let alone persuaded a Management Team to take time away from the daily battle, priorities and urgencies. We have met so many business leaders who knew what they “ought” to do, but simply could not see how and where to start – and always “didn’t have the time”.
There is an additional and important aspect for which theorists and academics do not make a sufficient allowance. A high proportion of the extraordinary people in leadership positions have won their spurs operating their business – making it work every day. They are “doers” not planners. They have never had any educational or training opportunity to discover what “strategic thinking” is – let alone how to do it. And Michael Mankins’ "three hours per month making strategic decisions" would be unrecognisable to most of them

This is why we developed the Competitive Strength Report and Process specifically so that this critically important decision making is made readily accessible, simple and enormously time effective.

How does the Competitive Strength Report Process address the criteria set out by Michael Mankins?

Deal with Strategy and Operations Separately
The Competitive Strength Report questionnaire process takes 40 minutes for each member of the leadership team (or group) – it is 100% focused on how the organisation thinks about its strategy, however the questions are in the type of language familiar to operational people.

Focus on Decisions, not Discussions
The Competitive Strength Report Decision Process takes 1 working day (or 2 half days, more usually) for the leadership team (or group), provides concise templates to prepare for the meeting and focuses only on what decisions need to be made

Measure the Real Value of Every Agenda Item
The Competitive Strength Report gives an objective measure of how the organisation compares with the very best in the World – and identifies the financial implications.

Get Issues off the Agenda Quickly
The Competitive Strength Report Decision Process is highly structured to focus on directions and not details to ensure that items are addressed rapidly and decisively.

Put Real Choices on the Table
The Competitive Strength Report Decision Process demands that the leadership team (or group) make one of three critical choices – all three are valid options, all three have different outcome implications, the leadership team (or group) is required to make a conscious choice.

Make Decisions Stick
The Competitive Strength Report Process includes an Action Review, typically 3 months later, to ensure that decisions have been sustained and lessons learned and applied.

The Competitive Strength Report Process addresses these Harvard recommendations 100%. Well, that is a pleasant surprise for us. But with 40 years of practical experience in our international authorship team we have learned what does work and what does not.

It is this experience and expertise that has enabled us to design the Competitive Strength Report Process for practical, action centred, business leaders. It is not knee deep in managerial theory, we have tried very hard to avoid business school jargon and to provide simple practical guidelines.

The Competitive Strength Report Process simply says
“This is how your input shows your business compares with the very best in the world. These are the financial implications. These are the threats that you see coming up behind you. This is what they could do to you. Do you need a Transformation of your Performance? You have three choices, which one will you make?”

The Competitive Strength Report Process can deliver this within 3 weeks, with not more than 10 hours from each leadership team member and with a structured outcome that will enable them to sustain their strategic focus with less than one hour a month thereafter.
And, here is the big difference, because the Competitive Strength Report Process is web based and highly automated, it requires the absolute minimum of external assistance which makes it highly affordable.

If you would like to know more about the Competitive Strength Report and Process, please look at the website – or contact us via the ChangeWORLD website

Clean Tech - The Next Big Thing?

A couple of weeks ago an article in the Daily Telegraph business section by Tom Stevenson highlighted the growing interest from investors in the “clean tech” sector, notably solar and wind power companies. He quoted New Energy Finance, a supplier of research and data to investors, who reported that more than $117bn was invested worldwide in clean tech last year, a 41% increase on the year before.

He also quotes a number of fund managers who are universally optimistic about prospects for this sector. Here are two examples.

“The scale of the challenge of moving on from fossil fuels makes this an attractive area for long-term investment. This industry could sustain growth rates of over 20pc per annum for more than 20 years”. – Tom Guinness, Guinness Alternative Energy Fund.

“As an investor in 20 years, will you look back and wonder why you did not read the signals? The global market for environmental goods and services is incredibly exciting and we believe that within the climate change funds you may find the Microsoft of the future”. – Mark Haskins, partner at Holden.

However Tom Stevenson also draws some parallels with the dotcom boom, funds queuing up to invest, stock prices driven up to unsustainable levels (he reports p/e ratios of 30 or 40 as being typical), followed by sudden stock price falls of up to two thirds in a few months in certain cases.

So what is going on? Could you trust your money to one of these funds? Would they produce above average returns given the apparent strong prospects for the sector? Or will it all end in tears?

Once again we have to challenge the conventional thinking of so much of the investment community. There will be winners and losers in any market, irrespective of whether it is high growth, mature or even in decline; the trick is to spot who will win and who will lose, before they do one or the other. There is an added problem in high growth markets because for a while some of the losers can look like winners as they ride the temporary and highly precarious advantage high growth sectors can give them.

The difference will be comparative Competitive Strength. Those companies with high Competitive Strength conditions, Excellence or above, or who take advantage of the high growth sector to achieve this, will be the winners. Those who do not will lose and so will those who invest in them.

Tom Stevenson gives an example in his article.

Shares in Renewable Energy Corporation, the world’s biggest producer of the polysilicon used in solar panels, dropped 23% in one day when it warned of delays and cost overruns at a new facility it is building in the US.

If a company does not even have the capability to bring on new capacity to serve a high growth market on time and on budget then it is not demonstrating a level of Competitive Strength that would indicate it is likely to be one of the winners. The market only corrected the share price to take account of this after the bad news appeared.

Applying the Competitive Strength Report process to this company would have indicated the weaknesses that were likely to lead to failures of performance of this kind. So before considering investing in this sector ask the fund manager if they have assessed the Competitive Strength of the companies whose shares form their fund’s portfolio. If they have not and/or don’t know what you are talking about, avoid.

You can find out more about the Competitive Strength Report (CSR) and Process and how this can give you different insights into how to assess company performance by visiting our website. The CSR is the only completely independent organisational self assessment tool that rapidly provides a simple and clear assessment of Competitive Strength compared to the best in the world. Please have a look at the Competitive Strength Report website or contact us via the ChangeWORLD website It may change much of your thinking about your investments.

Tuesday, 12 February 2008

It’s a Flat Earth. Can Your Business Stand Up?

In a world that technology has made flat , where do firms find a competitive edge?
Patrick Foster The Times February 11, 2008

Klaus Kleinfeld, president and chief operating officer of Alcoa, the world's biggest aluminium producer, said that the internet and advanced communications had “made the world flat” and had led to such a free flow of information that the only way that companies could get ahead of competitors now was by having a better workforce.
It actually holds true for most industries that ... they have changed in such a way that the only sustainable competitive advantage, probably, is the type of people you have and the way they work together.”
He added: “If that is so, the biggest question becomes: how can you attract the best and brightest around the world? Coming from the pockets of excellence, how do you make yourself, your company an interesting company, the one that they'd love to continue to work at?”

Here we have an all too rare example of a business leader who really understands that the key to Competitive Advantage is Excellence. Indeed, if you look at the dominant position of Alcoa, and if you have heard some of the stories (over 20 years or more) about their extraordinary internal performance improvement culture, it is not too surprising. Klaus Kleinfeld is telling us that the modern communications environment is removing the “Our Knowledge is Our Capital” intellectual property differentiator and that therefore something else is needed. Interestingly, if you spot it, he takes “excellence” as a given; he is looking beyond excellence. The very fact that he is raising this question signals a company with exceptional Competitive Strength.

Our Competitive Strength Analysis suggests that Alcoa may be in the highest level, which we call Free – and that is above Excellent. Typically, they are thinking ahead creatively, looking for further ways to sustain their Competitive Advantage. Alcoa will be well aware that their current Comparative Competitive Strength is open to threat – not least from the energetic Chinese.

How high is the Competitive Strength of your organisation, or your Suppliers or your Customers? Will you still be in business if they weaken? What other threats are out there? How resilient are you and your people, really? How far ahead are you thinking? How much time can you afford to think about these things?

Not much, if you are typical, there is too much else to do and no one is making that situation any easier, especially with such a micro-management obsessed bureaucratic Government continuously dipping its nosy teaspoon in your cup of tea.

The Competitive Strength Report Process with its web based survey and 60 page Report will provide you with a completely objective and independent assessment of your Comparative Competitive Strength and the financial implications of that result. It will enable you to work your way through all the key issues that influence your future. It is highly affordable, will take very little of the valuable time of your management team and can be completed in 3 weeks.

To find out more about the Competitive Strength Report, please see the website