Tag: Strategic Change

Strategic location, direction and path

After a busy month spent judging awards, in conversation with alternative thinkers and reviewing research from business analysts and academics, one key question emerges as preoccupying business leaders:

‘How do we think, decide and act in the long term interests of our organisation?’

Strategic thinking

Our attempts to imagine alternative futures require curiosity and creativity. We bring together a range of interested parties and share insights and dreams. When we encourage diversity of thinking, our biases and pre-conceptions are challenged. Shrewd boards ensure that they are composed of individuals who bring a range of perspectives to the exploration and discussion of strategy.

These ingredients appear simple but are complex to engineer. The currency and contribution of each thinker are critical. This raises complex questions about refreshing board membership and planning succession. Offboarding directors involves difficult but honest conversations in the interests of the organisation’s future. Onboarding directors is an art form, best tailored to the needs of each individual to ensure they can contribute as soon as they are ready.

Our ability to look ahead also requires us to understand our past. We therefore need to ensure that corporate memory informs our discussions but doesn’t prevent imaginative thinking beyond a simple extrapolation of our current approaches.

We are often reminded that listening to the business and its stakeholders is an essential part of any strategic thinking activity. When these conversations go beyond mechanistic process and take place in a culture of trust, they provide valuable intelligence.

Strategic decision making

Your governance framework identifies the roles and responsibilities for strategic decision making but ultimately the responsibility for the strategic direction of your organisation rests with the board. When your board is only used as a ratifier of strategy, valuable opportunities to contribute experience, challenge and stress test assumptions may be missed. A dialogue between horizon scanners and operational experts generally produces robust decisions.

Award winning organisations, projects and initiatives share a common factor in that they are able to clearly articulate ‘value delivered’ and ‘impact’ against defined criteria. Where decisions are made with no clear rationale or intention, tracking performance is problematic.

Among the decision criteria receiving significant attention are cultural fit and risk appetite. Strategic decisions which are aligned to the beliefs and values of your organisation are more likely to engage the support of those responsible for delivering them. Equally, those decisions which are perceived to be contrary to the shared understanding of ‘how we do things around here’ are likely to meet obstacles. Given that the Board are tasked with creating the tone in their organisation, the debate around whether a decision is ‘right for us’ is critical.

Having set the risk appetite of your organisation, the board can assess strategic decisions against clearly defined tolerances. The wise ensure that risk appetite is kept under regular review and does not constrain the selection of innovative options with the potential to deliver value.  

Enabling living strategy

Strategy is merely window dressing if action is missing. Effective strategy formulation involves and engages those who are accountable for delivery. By the time the strategy is launched, a critical mass of enthusiasts can be ready to inspire and encourage their colleagues to deliver the required value and impact.

Effective monitoring involves tracking quantified performance metrics and listening to the real voices along your value chain. Together these practices create focus and sustain momentum. Importantly, they may provide early insight into strategy modifications required and, in some cases, obsolescent activities and initiatives which should be stopped. A continuous appraisal of resource deployment enables agile redeployment where appropriate.

It takes effort to provide opportunities for board members to be visible sponsors of strategy.  ‘Walking the floor’ may result in valuable conversations when leaders encourage the transparent sharing of opinions and capture intelligence for discussed with their colleagues.

The potential for intrapreneurship is often neglected by organisations. If curious and creative individuals are not valued and nurtured, they go elsewhere taking their insights and dreams with them. There is merit in identifying individuals with the natural strengths to think strategically and generate innovative and creative ideas. By exposing them to board thinking, your organisation can increase the probability of retaining their talents.  

A quick healthcheck

  1. What contribution do you make to strategic thinking?
  2. How do you enable other contributions?
  3. Who encourages you to be imaginative?
  4. What metrics do you use to evaluate different strategic options?
  5. How do you stress test your strategic decisions before ratifying them?
  6. Who ensures that strategic decisions, once taken, have collective board support?
  7. How do you show support for those who are accountable for delivery?
  8. What involvement do you have in tracking performance against strategic objectives?
  9. When and how are strategic decisions reviewed and modified?

Sources:

Henry Mintzberg on Strategic Seeing

Nasdaq 2023 Global Governance Pulse

PWC Strategy and Business CEO articles  

Intrapreneurial culture   

Engage to transform

Governance Awards 2023

Focus

What do you see?

How clearly?

How far do you see?

My picture shows the Kerry Peninsula in Western Ireland taken from the Dingle Peninsula. Do you focus on the surf hitting the shore along the impressive 5 km Inch Strand; the sparkling track of light across Dingle Bay; the mountains of the Ring of Kerry or the extraordinary variety of cloud formations. Do you anticipate the arrival of Storm Agnes moving across the Atlantic Ocean and due to hit Western Ireland a few hours after I captured this picture. For those of you who have joined me virtually, you will have seen my library of cloud formations used as backgrounds. My eyes are drawn to the far horizon and then move to the foreground before widening to encompass the whole picture. 

Many ‘experts’ have long advocated that we need to hold different horizons in mind at the same time, among them McKinsey 3 Horizons Model

What we naturally focus on is not automatically the same as colleagues. We each have a unique strengths profile which includes our propensity to focus on detail and our ability to see strategic horizons. What may seem obvious to one person may be obscure to another. Cognitive diversity is prized as contributing to better thinking and decision making. Creating an environment in which different perspectives are honestly shared is an essential foundation to effective governance by boards.

It takes effort to hold now, soon and the future in mind. When times are tough, the frequent response is to focus on survival now. The business challenges of the past five years have provided stories of organisations managing crises effectively but failing to think beyond the immediate situation.

We are also aware of imaginative businesses that made tough decisions about activities they needed to modify or stop and others they needed to invest in and launch. Courage, curiosity and creative thinking characterised the successful navigators. Importantly, the leaders in these businesses demonstrated an interest in and empathy with their internal and external stakeholders, engaging in continuous conversations and providing a strong sense of purpose and direction.

Wise boards are able to shift their focus according to priorities. Increasingly they consider immediate matters requiring their decision making and strategic issues for reflection and discussion at each board meeting. The practice of separating strategic thinking and planning to an annual or six-monthly event can prevent the entrepreneurial and opportunistic leadership required in volatile times.

Where trust exists between the board, the business and it’s stakeholders, it lays the foundation for empowered operators to make responsive decisions to adapt and meet the requirements of their markets. Tracking performance, recognising contributions and celebrating adaptability are important board activities, which create focus and sustain momentum in their businesses. They require the visible and inspirational involvement of directors with genuine curiosity and a desire to listen and learn.

Returning to the picture above, what did you see? The following situational questions provide food for thought about focus:

Now – presenting situation.

Q: What is the tide state and when will it turn?

Q: What time of day is it and where is the sun positioned?

Q: What is the air pressure and visibility level?

Soon – emerging themes.

Q: How soon will the light change – sunset time?

Q: What is the wind direction and speed?

Q: What weather fronts are expected, when and what severity?

Later- alternative developments.

Q: What are the levels of erosion impacting the coastline and how will global warming impact the communities living on the coast of Western Ireland?

Q: How will the local seafaring industries – fishing and tourist excursions – be impacted by changes to the sea and weather conditions?

Q: How can the community of Dingle Peninsula adapt to changes in their natural environment?

Contemporary thinking?

How do I stay current?

Expertise takes effort to achieve. It can carry recognition, qualifications and position. The danger is always to rest on our laurels.

Our expertise must be relevant and relevance is impacted by changes to the context in which our expertise will be applied.

Staying current takes continuous and consistent effort.

September seems to be the month when clients ask me this question. Perhaps a Summer break has provided time to reflect and individuals have returned with a renewed appetite for auditing their currency. Quarter four will certainly be a busy one for boards with increased regulatory and legislative requirements to fulfil and contemporary thinking to apply.

Three habits to develop and nurture:

  1. Develop curiosity and healthy scepticism.  Many thought leaders highlight the importance of investing time in reading and listening. In a busy world with continuously shifting priorities and deadlines, protecting this time requires our active commitment and regular practice. We also need to avoid living in an echo chamber where only inputs which support our world view manage to get through the natural filters we apply.
  1. Recognise the changes which are material. Tools exist to enable us to focus on what is relevant for us now and for the future. These need to be imaginatively rather than mechanistically applied. When we set filters to help focus our efforts, it is important to recognise that they need monitoring. We also need to be realistic about our capacity to track changes and avoid noise. Our efforts are enhanced when we identify sources which provide aggregated and unbiased insights and learn to recognise patterns and interconnections.
  1. Seek relationships which will constructively challenge our certainties. In order to connect with people and sources who don’t think like us, we need to be open minded and willing to adapt our thinking. This habit is less comfortable than a natural gravitation to familiar communities. The value of cognitive diversity on boards is well publicised. Encouraging a wide range of voices to inform our thinking and decision making has been a feature of high- performance boards and individual directors.

Benefits:

  1. Continuous surprise. When we travel hopefully and take alternative paths to inform our thinking and decisions, we avoid boredom and dated or obsolete thinking.
  1. Ability to contribute valuable insights. With currency comes amplification of our voice and invitations to share insights with others.
  1. Network of sources and relationships. Collaborating and working in partnership to scan an increasingly complex world, builds trust and a wider understanding of our context. From tracking what has and is happening, our focus can change to discussing how change may develop in the future.

Where to start:

It is often said that making a habit takes 21 days while ensuring it is embedded takes 90 days. Choosing to develop the three habits mentioned above will also involve deciding what we are going to stop doing. A conversation with our coach, mentor or sounding board is a useful first step.

Reflections 3 years on

March 2020 Looking back at my diary, the month started with a busy week facilitating a number of different workshops for Boards of Directors and Governance Professionals in London. On Friday 6 March I replanned all my Q2 scheduled activity for virtual delivery. Looking back, it is difficult to identify the single trigger which prompted me to replan. Based on my experience as a founder member of The Henley Future Work Forum (FWF) back in the 1980s, and my subsequent collaboration with Dr Laurence Lyons, the FWF co-founder and Research Director, the technological and behavioural transition was smooth. I am fortunate to have a valued support network and trusted client relationships.

Adversity Much of my time over the last three years has been spent supporting business leaders as they navigate adversity. The privileged position of being invited to talk with leaders across multiple sectors and territories, highlights two truths:

– Adversity corrodes inspirational leadership

– Adversity reinforces inspirational leadership

Identifying angels and devils has pre-occupied business authors for decades. The corrosive damage which toxic behaviour can wreak on any organisation is universally recognised. Perhaps it is surprising that multiple recent examples exist of visible devilry being tolerated and condoned. The behaviour can be viral and damages people.

Conversely, spirits lift with examples of inspiring leadership practiced passionately and altruistically. This celebration of angels is also viral and draws together communities of loyal followers, eager to share and collaborate.  

Leaders Our decisions and behaviour are scrutinised to determine whether we are devils or angels, or perhaps a bit of both. Taking time to consider the impact we have on others is essential, but as a solitary activity we can be selective in what we choose to see and believe. It takes curiosity and also bravery to develop self-awareness of the real impact of our behaviour and how people perceive us.

Relationships Resilient and agile leaders nurture relationships, investing time and effort in building and sustaining trust. These relationships extend beyond the boundaries of their organisations and create continuous conversations which lead to shared solutions to challenges. It is heartening to hear many examples of supply chains and customers collaborating to sustain organisations in the difficult trading environment of the last three years.

Constructive challenge Talking to people who don’t think like us takes more effort but provides insights which may be far more valuable than existing in an echo chamber. Inspirational leaders are increasingly ensuring that they make robust strategic decisions by creating small groups of empowered individuals with the brief to rigorously test implications and impact.  The practice is not new. When co-writing the British Airways Leadership Story with Tony Voller back in 2004, we highlighted how the CEO, Rod Eddington, navigated the airline through 9/11 supported by a ‘Gang of 5’ constructive challengers who gathered ideas and perceptions from across the airline and beyond.

Learning The last three years have been characterised as ‘unprecedented.’ Reflecting on  the organisations who have navigated well, one characteristic stands out. They have experienced adversity before and learned from it. Going far beyond a mechanistic review process generating ‘lessons learned,’ these organisations have probed to discover causes behind symptoms and developed new ways of operating which anticipate change. Mistakes are shared not hidden and ‘near misses’ are discussed openly. This behaviour requires the visible sponsorship and involvement of all leaders to become instinctive. It requires inspirational leaders.

Now, soon and the future

Multiple research reports counsel against short term thinking and decision making in boardrooms. Regulation seeks to prevent directors capitalizing on short termism. Governance codes highlight the importance of balancing short term performance with long term stability. Working across different time horizons is recommended.

When a crisis occurs like a global pandemic, thinking beyond survival becomes more difficult. It is a brave board which sponsors significant changes in strategic direction and major investments. We will hear the stories of these brave boards, navigating their organisations through transformational change. We may hear less about the teams who enabled their informed bravery.

Behind every high performance board are professionals from many disciplines, accountable for providing intelligence to inform strategic decision making. Working in partnership with the board, they enable holistic questioning and are responsive to constructive challenges. From disciplines including corporate governance, compliance, strategy, risk, legal, internal audit, investor relations and communications, these experts enable board effectiveness.

To sustain a range of initiatives which simultaneously maximises short term survival/performance, while planning changes to the current business model and exploring innovative and transformation changes, calls for courage, imagination, stakeholder engagement and excellent programme management.

The Board’s future thinking is often overtaken by the time required to solve problems in the ‘now’ and ‘soon’. A recent McKinsey Sustainability at COP26 event predicts the emergence of ‘50 new Tesla’s’ led by innovative technologists engaging multiple stakeholders in their ambitious plans.

Beyond auditing the time investment each board makes in operational problem solving and designing the future, exploring board health and dynamics is often an effective means of identifying the quality and effectiveness of strategic thinking, decision making and monitoring. With better understanding of their effectiveness and the support of internal stakeholders, each board is well equipped to improve their strategy formulation process and outcomes.

Applying Situational Intelligence

In a world where existing knowledge is codified and available for those who know where to look, a spirit of enquiry is a strength worth cultivating. And now we have time.

The global pandemic provides periods of frenetic activity interspersed by periods of reflection. This ‘black swan’ event has been on the risk: impact maps of futurists for some time but we don’t always pay attention to voices that don’t share our world view.

Now is certainly the time to gather intelligence, anticipate, plan, respond and re-plan in continuously evolving circumstances.

The search for intelligence which provides certainty may be rather fruitless. Innovative thinking and imagination can appeal as we all seek solutions to universal problems. Collaborative thinking may not respond quickly enough, but conversation is critical.

Now is also the time for kindness and gratitude.  

Over the past two decades of running Cutting Through The Grey, I have been fortunate enough to work with thousands of business leaders and governance professionals from across the globe. Building trusted business relationships has enabled individuals, boards and their organisations to realise the greatest value from our activities together.

In the last 100 days, clients, colleagues and friends have generously contributed their insights to Situational Intelligence stories we have been developing and I am grateful for their time and energy. Together we are creating a different way of thinking.

A robust strategic process

Increased scrutiny by a range of interested stakeholders is prompting many boards to explore how robust their strategic process is. For listed entities, regulators require evidence of compliance and have extended their interest to incorporate a broader governance agenda. Positioned as good practice for all, the agenda has been tailored for large private companies into the Wates Principles. For public and third sector entities, standards bodies provide inspection regimes.

Investors expect to make informed choices and seek assurances that they have a true and fair picture of organisation performance and aspirations. Talent is attracted to organisations that clearly position their strategic intentions and report on their delivery. 

When health checking their strategic process, boards may choose to consider the following: 

Inputs – board intelligence 

Specification  – asking the right questions and requesting the exploration of alternatives.

Collation – triangulating sources to increase confidence and including big data and human intelligence. 

Clarity – ensuring that assumptions are explicitly stated.

Process

Timing – building on the board rhythm. 

Urgency – determined by the level of dynamics in the wider world and market places

Order – sequencing activities to recognise appropriate involvement and sustain focus and momentum through time.

Involvement – building engagement through conversations between horizon scanners and those with operational insight. Ensuring respect for different perspectives and perceptions. 

Outputs – decision and tracking 

Aspiration – developing a storyline to explain the journey to the future.

Evidence – showing how decisions have been arrived at.

Metrics – choosing the few lead strategic metrics which will clearly show progress and behaviour.

Most critically, a robust strategic process requires the commitment of all members of the board and the teams who enable them to govern effectively. It takes time to align individuals and build common purpose. Failing to ensure that alignment before health checking your process will deliver flawed results.

The Brand/Reality gap

Teflon leaders. Toxic cultures. Tribal behaviour.

Trust dissipates. Reputations tumble. Performance in trouble. 

But how long does the impact last and are lessons learnt to prevent repetition? 

Regulation and legislation may be a blunt and slow instrument for dealing with systemic dysfunction. 

New leaders emerge to deal with the mess, and so we go on. 

Self interest and the loss of contact with reality seem to define so many stories. 

The price of agility

According to thought leader Dr Laurence Lyons:

‘The price of agility is under-utilisation.’

Agile – Alert – Nimble – Sprightly, highly desirable characteristics. Being agile is the aspirational goal of most business leaders, but it comes at a cost.  

How do you resource the need to deliver value to your existing customers with the need to be continuously curious and quick to spot opportunities.

‘How do you factor in the fat which makes you fit?’

Who keeps the wheels on the car? How do you ensure that the business as usual team don’t feel under valued as the development team are commissioned to seek new and novel solutions?

How do you ensure that insights from the people working with your customers reach strategic thinkers and inform their decision making?

How do you create a culture where reflection time is valued, where the time and inclination to innovate are actively encouraged?

And how do you achieve all the above if the message you send is ‘do more with less?’