Decision Processes International

What is Strategic Thinking?

dpieurope — Wed, 22 Jun 2016 11:51:15 +0000

Strategic Thinking is easy to say but much harder to achieve in reality. Understanding what strategic thinking is, and how it differs from operational thinking, is the first step in becoming an accomplished strategic thinker.

Strategy versus Operations?

Strategic Thinking is different from both strategic planning and operational planning. In fact, strategic thinking is the framework for strategic and operational plans.

Strategic thinking is the process of thought that goes on inside the head of the CEO and the key people around him or her that helps them determine the “look” of the organisation at some point in the future. And that look, or composition, of the business in the future may be different than it is today.

Strategic thinking can be compared to picture painting. It is the process that helps the CEO and the management team “draw a picture” or “profile” of what they want the organisation to look like at some point in time. It is this “picture” or “profile” that will determine the direction, nature, and composition of the business.

Strategic thinking, then, is the type of thinking that goes on within the mind of the CEO, and indeed the management, to shape and clarify the organisation’s future strategic profile. Decisions that “fit” within the parameters of this profile are taken and implemented, and decisions that do not “fit” rejected.

Operational planning, and even what has become known as strategic planning, is the type of thinking that helps us choose how to get there.

To illustrate the difference between the two types of thinking, we can develop a matrix with the “what” on the horizontal axis and the “how” on the vertical axis.

We can complete the matrix by further dividing each axis into good (+) strategic thinking and poor (-) strategic thinking as well as good (+) operational planning and poor (-) operational planning. Although both of these activities go on in all organisations, what we have noticed is that they go on with varying degrees of proficiency.

In quadrant A, we find companies that do both very well. They have developed a clear profile and explicit strategy, and they manage their business successfully on an ongoing basis. Companies that fall into Quadrant A include the likes of Apple.

In quadrant B, we find companies that have been successful by managing their ongoing operations effectively, but which cannot articulate where they’re going. In other words, management can keep churning out good operational results quarter after quarter, but they do not have a shared vision of what the company will “look like” as a result of all that churning.

In quadrant C, we find the opposite situation. This is where many “copy cat” firms reside. For example, think back to the years when there were many firms competing in the nascent PC business. Each company probably had a very clear strategy: “Be the best IBM clone we can be.” However, many of these companies had great difficulty making this strategy occur; thus, their fortunes were up and down like yo-yos. Today, most of them are out of business!

The last quadrant is the worst of both worlds. Here we find organisations that do operational and strategic thinking poorly. Companies that fall into quadrant D usually don’t survive very long.

Which quadrant is your organisation in?

Although we would all like to say that we are in the A quadrant, most of our clients readily agree that they fell into B. That is, they are effective operationally but aren’t always sure what direction they are pursuing. As a matter of fact, our experience has shown that almost 70 to 80 percent of companies are in that position.

Surprising? Not really, when we explore some of the reasons for this. Here are two major explanations.

Firstly, most of the people who lead and manage organisations got there from the operational ranks. They were promoted from one level to the next because of their operational skills. They were good managers and made good operational decisions. They were able to “make the numbers”. They did not, however, spend much time thinking about, or charting, the direction of the company. As a result, they have not acquired the skill of setting direction and being the organisation’s strategic thinker. That skill takes time to develop.

Secondly, the need for management to think strategically does not arise all of the time. It tends to surface only at “strategic retreats” or when a new “strategic thrust” is being pursued, for example, when deliberating entry into market(s) that represent unfamiliar terrain. Often, the rules of the game are different requiring management to shake itself out of its operational thinking boots. However, if thinking strategically is not an on- going habit, one can hardly expect management to be proficient.

Christopher Columbus School of Management

Let’s then return our attention to “Quadrant B” where 70% to 80% of organisations reside. These companies can be referred to as being part of the Christopher Columbus School of Management, the explorer who:

When he left, he didn’t know where he was going
When he got there, he didn’t know where he was
When he got back, he couldn’t tell where he had been!

But he got there and back three times in seven years! Columbus was operationally competent but a very poor strategist!

To avoid being like Columbus a robust strategic thinking process is required. The process should guide and promote the type of thinking necessary as management attempts to determine what an organisation should “look” like in the future. Operational planning systems, on the other hand, can be used to later to help determine how to get there.

Strategic thinking is a fresh approach to the subject of strategy. It identifies the key factors that dictate the direction of an organisation, and it is a process that the organisation’s management uses to set direction and articulate their vision. For strategic thinking to be successful, it is necessary to obtain commitment of the organisation’s key executives and the commitment of others who will called upon the implement that vision. Naturally, the vision is greatly shaped by the CEO.

It is a process that extracts from the minds of people who run the business their best thinking about what is happening in the business, what is happening outside in the environment, and what should be the position of the business in view of those highly qualitative variables (opinions, judgments, and even feelings) – not the quantitative ones. Strategic thinking produces a vision, a profile, of what an organisation wants to become, which then helps management make vital choices. It enables management to put the corporation in a position of survival and prosperity within a changing environment.

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What is Strategy Anyway?

dpieurope — Wed, 22 Jun 2016 11:41:19 +0000

by Richard W. Oliver

On the face of it, defining “busi- ness strategy” seems like a no-brainer. Yet when I was confronted with the challenge recently in a faculty meeting, I found myself rather less than articulate. “Bad form!” you might say, for a pro- fessor of the subject and more impor- tantly, a columnist on strategy.

Okay, so you got me. But before you get too critical dear reader, how about taking a shot at it yourself?

… I’m waiting …

Ah, see what I mean? It’s not as easy as it might at first appear. The fact is, there are many definitions of strategy, some are highlighted here.

Defining Strategy

Well, I finally got my act together and will share with you now my humble (and brief) contribution to the strategy definition debate:

Strategy is understanding an industry structure and dynamics, determining the organization’s relative position in that industry, and taking action to either change the industry’s structure or the organization’s position to improve organizational results.

This definition encompasses all the major activities undertaken in the strategy process and should focus practitioners and scholars alike on what’s important (i.e., what drives the amount and nature of corporate success). Industry structure and dynamics determine the broad para- meters of growth and earnings poten- tial and delimit what is realistically possible to achieve. The firm’s relative position in a given industry structure sets its specific achievement profile and the scope of its strategic options. Finally, industry or organizational change defines the specific organizational responses to its strategic (structural and positional) circumstance and aspirations.

While no definition is perfect (and granted, this one suffers from lack of detailed specifics when compared to some of those offered in the list that appears later), it does offer the practi- tioner a general place to start in determining an approach that a par- ticular firm might use.

To help broaden your thinking about the definition of strategy, I offer a brief review of the history of strategic thinking.

Download the full article here

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How to get more from your online marketing. 4 Strategies.

dpieurope — Wed, 22 Jun 2016 11:38:07 +0000

by Colleen Backstrom

Way back in 2007 Harvard Business School put out a paper entitled “Fixing the Marketing — CEO Disconnect”, which highlighted the gap between the marketing function and the C-suite. It emphasised that too much delegation of responsibility to the marketing department can result in marketing activities, which are not supportive of the company’s greater strategic goals. In 2011 the fundamental nature of marketing has shifted so rapidly that many CEOs, given the pressures of other priorities, have found it hard to keep pace.

Digital has become core to the future of marketing.

The days when digital simply meant a PR website are over. 2011 marketers require online to be more productive. They appreciate the extra reach that the internet offers and are making the deep strategic shift to make online work; digital needs to accelerate revenue growth; and digital needs to find new clients and generate real leads.

This requires a mind shift from the way we’ve done things before. And the CEO is the one that should be driving this mind shift to ensure that online marketing activities are aligned with strategic objectives. Unfortunately,

however, CEOs have often felt out of their depth when it comes to the inter- net and have left online marketing up to the marketing divisions completely. To make matters worse, the online marketing function in some corpo- rates has now been taken over by the IT department, because “they’re the only ones that understand the technol- ogy.” This gives us communications

that work technically, but the strategic marketing objectives have been lost somewhere down the line.

How to fix the rift?

Download the full article here

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Ten Deadly Sins That Lead to Corporate Extinction

dpieurope — Wed, 22 Jun 2016 11:33:03 +0000

by Michel (Mike) Robert — Founder, Decision Processes International

“It’s easy to develop a strategy, it’s the implementation that’s difficult.” This is a statement we have frequently heard over the years. Our own experience proves that the exact opposite is true. If a CEO thinks that he or she has a solid strategy, and yet it’s not being implemented, only one of two things can be happening:

1) The management team doesn’t know or understand the strategy (it’s very difficult to implement a secret strategy).

2) If the strategy is understood but still not being implemented, it’s because some members of the man- agement team don’t agree with it and may, in fact, be trying to sabotage it.

In our view, there are ten deadly sins that an organization can commit that will inevitably lead to one of these two conditions, and eventually to cor- porate extinction.

Download the full article here

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What is Critical Thinking?

dpieurope — Wed, 22 Jun 2016 11:29:47 +0000

What do Michael Phelps and Placido Domingo have in common?

Not so obvious is it? Here’s a hint: they both excel at a skill which many of us take for granted, are not able to “control” and, for the most part, are not consciously aware of. Yet, this is a skill that is essential to life.

If you’ve not got it, the skill we’re referring to is breathing. Luckily for us, “basic breathing” is not something that requires conscious effort. Imagine how tedious life would be otherwise. However, notwithstanding the impact of yoga over the last 20 years, few people really understand how to breathe correctly or have studied the art as a part of a conscious effort to improve their ability. What about you? Can you control your breathing in response to different situations?

Why then do these individuals bother? The answer is that for their chosen profession it is not a ‘nice-to-have’ or something taken for granted. “Professional standard” breathing is an explicit and critical skill essential to their success.

Thinking is the breathing of business

We hope that the parallel between breathing for Phelps and Domingo and thinking for those of us wishing to be winners in business is obvious. Quite simply, thinking is the “breathing” of business. For us to be successful in our corporate lives, or as an entrepreneur, “gut feel” thinking is rarely sufficient in the complex and fast-paced world we live in.

DPI’s raison d’être is to help our clients and their employees at all levels to think critically. This leads to two obvious questions:

What separates critical thinking from “ordinary” thinking?

Can critical thinking be learnt?

What is Critical Thinking?

The success and failure of any organisation rests on the quality of the thousands of decisions made and implemented every day, every week and every month. Like much other business jargon, the term “Critical Thinking” has been around for many years. However, few can describe what it is, and fewer still can explain how to do it. Let us offer a very down to earth definition: Critical Thinking is thinking that is critical to success and, therefore, is too important to be left to chance.

Good Critical Thinkers possess the following attributes:

Ability to ask specific and incisive questions at the right time
Awareness of where they and others are in their thought process
Clear-thinking even when under pressure or working on issues outside of their domain expertise or core experience

Here are some examples of real situations faced by our clients. How would you react if confronted with any of these?

Two weeks away from a product launch the Strategic Partner pulls out, and the marketing campaign has already been set in motion.
Developing a recommendation for a new CRM system when you are completely unfamiliar with the topic.
Facilitation of an impromptu meeting to uncover the reason for a host of customer service issues.

Would you know where to begin? What you would do first? How to proceed? Which questions to ask? Would “ordinary” or sub-conscious or “gut feel” thinking suffice?

It is in these situations that the ability to consciously “activate” critical thinking processes – reusable and expeditious road-maps of how to gain clarity, address problems, make decisions, be innovative – come to the fore.

The winning organisation of the future will be the one that can out- think, not out-pace, the competition. This out-thinking shouldn’t be restricted to the top echelons of management, so the leader must also take steps to be a critical thinking coach. The leaders who figure out how to harness the collective genius of the people in their organisations are going to blow the competition away.

As the famous saying goes, “Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for a lifetime”.

For more information on critical thinking please contact us

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Do you assume that your leadership team agrees on what “strategy” means?

dpieurope — Wed, 15 Jun 2016 12:34:52 +0000

One major obstacle leaders encounter when trying to develop a game changing strategy is that the leadership team cannot agree on what strategy actually is. Each executive has his or her own view or definition. This is not surprising. Even the strategy gurus that confused leaders turn to when seeking an answer cannot always agree!

Our definitions are simple. Strategy is what, and operations is how. Strategy determines what you want to become as a company, and operations determines how you get there. Strategy and operations require different processes of thinking and contain different concepts.

Some organisations are proficient at both strategy and operations. In other words, they have a clear strategy that is sound and well understood (what), and they are very competent operationally (how). However, our experience has shown that few companies are highly proficient at both. Most firms are so involved in operational activity that they do not spend enough time thinking about the future of the business. If this is your company, then you can consider yourself “normal”, but you also need to be thinking about how you can you transform how your company operates by being proficient in both these areas.

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The Four Deadly Sins that Kill Strategic Product Innovation

dpieurope — Thu, 02 Jun 2016 10:54:43 +0000

Since new-to-the-market products are the essence of strategic supremacy, why are companies spending their time, money and energy on product extensions at the expense of new-to-the-market products?

Most companies commit one, or more, of four ‘sins’ that kill new product creation and lead to a company’s loss of supremacy over its competitors. Unfortunately, all 4 sins are self- inflicting wounds:

Sin 1: Too Much Focus on Current Customers

Who do most books on product innovation tell you to consult in order to get inspiration for new products? The obvious answer: your customers. WRONG – dead wrong! If a company focuses its entire effort on current customers as a source for new products, it will always end up with incremental products. The reason is very simple. Current customers are very good at telling you what is currently wrong with your current product. They can do this well because they do side-by-side comparisons and they identify performance gaps in your product relative to your competitors. Naturally, you go back to the factory, tweak the product a little and come back with an incremental improvement. And the pattern is set and keeps repeating itself.

Worse than that, your current customers can begin to dominate your product development process. You cannot rely on current customers for your new product ideas because they are not always aware of what they will need in the future. For example:

Q: How many of 3M’s millions of customers asked 3M for Post-it Notes?

A: None.

Q: How many of Sony’s millions of customers ever asked Mr Akio Morita (Sony’s founder) for a Walkman?

A: Not one.

Q: Did anyone on this planet ever ask Steve Jobs and Steve Wozniak for an Apple computer, iPad or iPhone?

A: No. Never.

In order to propagate competitive supremacy and create new revenue streams, it is imperative to concentrate a company’s product innovation resources on new-to-the- market products. Livio De Simone, retired CEO of 3M, once said: “The most interesting products are the ones that people need but can’t articulate that they need”. New-to-the- market products satisfy the future implicit needs that you have identified and that your customers cannot articulate to you today. The upshot will be products that will allow you to change the game.

Sin 2: Protect the “Cash Cow” Mentality

Every company, over time, has products that become cash cows. Never worship at the altar of the cash cow. You will lose your supremacy.

IBM’s cash cow, as we all know, had been its mainframes – once the workhorses of the computing industry. In 1968, in its Swiss laboratories, IBM invented the first microchip – the RISC chip – with more processing capacity than its smaller mainframes. A small computer prototype, powered by this chip, was built and could have been the first PC the world saw. IBM, however, made a deliberate decision not to introduce that chip, because it could foresee the devastation it might have on its mainframe business. In 1994, 26 years later and maybe 26 years too late, IBM finally introduced the RISC chip under the name PowerPC. In the meantime, IBM lost the opportunity to be the powerhouse in the consumer market that it is in the business market.

“There is no such thing as a mature market. What we need are mature executives who can make markets grow”.

Sin 3: The Mature Market Syndrome

“Our industry is mature. There is no more growth in these markets”.

Many people would claim that the reason products become generic, prices come down to the lowest levels, and growth stops is that the ‘market is mature’. Mature markets are something of a myth.

Who would have believed 20 years ago – when everyone owned a £10 pair of trainers – that people would pay £100 for a pair? Some of these trainers are solely worn for fashion purposes and unlikely to ever see a running track! Along came Nike and Reebok and the ‘mature market’ exploded.

A few short years ago Starbucks revolutionised the takeout coffee business by introducing unique products and marketing in a ‘mature’ industry. Now our high streets and public transport systems are jammed with takeaway- coffee-cup-hugging individuals.

Lawrence Bossidy, formerly CEO of Allied Signal couldn’t have summed it up better when he said: “There is no such thing as a mature market. What we need are mature executives who can make markets grow”.

Sin 4: The Commodity Product Fallacy

“We’re in the commodity business” is another mind-set that can bring down a company’s supremacy. This is also a state of mind. Products become commodities when management convinces itself that they are. It’s a self-fulfilling prophecy.

An example is baking soda, a ‘commodity’ product that has been around since the days of the pharaohs. One day someone placed a small quantity in a refrigerator and noticed that it absorbed odours, soon afterwards the launch of deodorant with baking soda. We’ve since had teeth whitening baking soda toothpaste, not to mention dishwasher tablets and sink unblockers with this same ingredient.

Then there is the ‘mother’ of all commodities – water. Look at what the French can do with water. They have mastered the marketing of this mundane commodity by branding it under a variety of names such as Vitel, Evian and Perrier. Knowing that people are becoming more concerned about the quality of the water they drink, they began to market bottled water at exorbitant prices. This concept was immediately successful even in places where tap water is excellent and essentially free. Through brilliant marketing, they made water ‘trendy’.

Drinks manufacturers have taken the concept a big step further by adding nutrients to water to create a new category: sports water. Some of these even incorporate the ‘grandmother’ of all commodities: oxygen.

NEW TO THE MARKET PRODUCTS BREED SUPREMACY

Sony, 3M, Canon, Microsoft, Johnson & Johnson, Dyson and many others maintain their control of the ‘sandbox’ not be introducing ‘me-too’ products but rather by focusing their resources on the creation of new-to-the-market products. These have three inherent characteristics that contribute to propagating supremacy over their competitors:

A period of exclusivity. When you are the only product in the market, you are the only one.
Capability of charging premium prices. During this period of exclusivity, you can obtain premium prices, as opposed to me-too products, where every transaction comes down to haggling over price.
Ability to build in barriers. Being first to the market allows you to build in barriers that make it very difficult for competitors to gain entry into your game.

After all, that’s what supremacy is all about: changing the game and creating the rules to which competitors who wish to play your game must submit.

THE NEED FOR PRODUCT INNOVATION

DPI’S Strategic Product Innovation Process is a powerful tool that can help jump-start your organisation’s ability to generate a steady stream of innovative new product and/or service concepts, and to identify opportunities for entirely new markets and customer groups. The future holds vast opportunities for growth, if you know how to use change to your advantage.

Get in touch if you want to learn how to develop a continuous pipeline of new products/services for your organisation.

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How confusing Strategy with Vision can prevent us from developing a game-changing strategy

dpieurope — Wed, 27 Apr 2016 08:40:43 +0000

Although the concepts of vision and strategy are frequently used, few executives understand the relationship between them and this can prove a real obstacle in developing a game-changing strategy. Let us attempt to demystify these two separate but complementary concepts.

Vision, in our view, is the construction of a mental picture of what an organisation should look like at a given time in the future. A vision is usually long term in nature, typically decades, and in some instances centuries!

Strategy, in our view, is the process that leaders go through to convert that future picture into a tangible future strategic profile. They can then go on to use this profile as their filter for decision making, in order to grow the company over a specific time frame. Strategy is a verbal description of the business concept that the organisation will deploy in order to realise that mental picture or vision of itself in the future.

To find out more about how DPI’s tailored services and training programs enable its clients to consistently out-think and out-pace the market place contact us at contact@dpi-europe.com

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What are the three fundamental skills of leadership?

dpieurope — Wed, 27 Apr 2016 08:32:07 +0000

Many books have been written on leadership, but few have been able to describe the skills of leadership in any detail except to attribute it to a “trait of personality”. Our view is that there are some fundamental skills of transformative leadership that can be articulated, learned and perfected by almost anyone in any organisation. Leadership consists of mastering three critical management skills that should be practiced consciously:

1. Strategic Thinking - the thought process used by a leaders to formulate, articulate and communicate a coherent vision and strategy for the organisation.

2. Innovative Thinking - identifying or inventing new products or services on a continuous basis and the ability to instil this creativity in every member of the organisation.

3. Situation Management – being adept at dealing with operational problems and decisions successfully on a day-to-day basis in a manner aligned with the strategy.

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In an ever more fast-paced world of business, what’s the one thing that won’t change?

dpieurope — Wed, 27 Apr 2016 08:31:12 +0000

Amid all the changes facing leaders, there is one thing that will remain constant: formulating and executing strategies and plans that will ensure survival and generate future sustainable growth and wealth for their organisations. This has always been, and always will be, the primary and most important task of C-level leadership.

A vital input into this process is obtaining the best available view of what the future social, political, and economic global environment will look like in relation to the specific sandbox the organisation intends to compete in. Only then can the leader be confident that plans are relevant to the anticipated conditions. Developing the best possible understanding of the various possible future scenarios demands the leader’s attention so they can achieve the following:

Protect their organisations from future threats
Pursue future opportunities
Attain that desired but elusive goal of sustainable organisational growth

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