GOVERNMENT TACTIC ON DRIVING STANDARDS LACKING STRATEGY

9 06 2013
Transport Minister Stephen Hammond (pic: bbc.co.uk)

Transport Minister Stephen Hammond (pic: bbc.co.uk)

Earlier this week the UK Government announced new measures to address the poor driving standards all too frequently evident on the nation’s roads. But while the changes may appear sensible, once again the politicians have applied initiativeitis where competent strategy is required; they have employed a tactical approach without considering bigger picture strategy.

As someone who clocks up a high number of miles on Britain’s motorways and main roads, I have seen more than my fair share of the types of poor driving the Government is seeking to address via this week’s announcement. Tailgaters, middle lane hoggers and the rest are a constant frustration to anyone regularly driving on the motorways connecting the towns and cities of this country. All too often I have seen the M1 effectively reduced to a dual-carriageway by motorists who sit in the middle lane regardless of traffic, speed or any other consideration.

Transport minister Stephen Hammond said: “Careless drivers are a menace and their negligence puts innocent people’s lives at risk. That is why we are making it easier for the police to tackle problem drivers by allowing them to immediately issue a fixed penalty notice rather than needing to take every offender to court. We are also increasing penalties for a range of driving offences to a level which reflects their seriousness and which will ensure that they are consistent with other similar penalty offences.”

It sounds just what is needed and you would therefore think that I would welcome the announcement. And, in principle, I do. The policy is not where the flaw lies, the flaw lies in the execution.

In the way policy from governments of all shades frequently does, the initiative, the tactic deployed, has failed to consider the bigger picture. Most, if not all, police forces are under-resourced and given hard choices place policing the highways a lower priority than tackling crimes of other, serious natures. Police patrolling our major roads have become a rare sight, many of our highways seemingly policed by speed cameras and little else. That is not the police’s fault, they can only work with the resources at their disposal and prioritise accordingly.

I have discussed this issue before in July of last year and little has changed since then. The new initiative assumes a strategy which is not in place; it assumes resources which are lacking. In short, it assumes too much and knows too little. In Westminster ‘initiativeitis’ still reigns where strategy is what is required.

There is however good news. Businesses and organisations in all sectors can learn from Westminster’s poor understanding of strategy. Tactics on their own will always fall short of successful delivery of the goal. Tactics (initiatives) are a vital component of good strategy but they should not replace it, they should not ignore it. They should service it and the strategy they service should properly consider the bigger picture.

Next time you are tempted to rush to action before considering how that actions fits in the bigger picture, think carefully about what you actually want to achieve and the bigger picture surrounding that aim.

Or, as quoted in that blog from July of last year, unlike our politicians, heed the sage words of Sun Tzu from 2500 years ago; “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”

Previous blogs by me concerning policing and strategy:

Speeding to Action Before Thinking About Strategy (July 2012)

The Future of Policing in the UK – Where To? (August 2011)

 

© Jim Cowan, Cowan Global Limited, June 2013

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CORPORATE STRATEGY: NOT A NEW IDEA BUT NOT AS OLD AS YOU THOUGHT

3 06 2013

strategyAt a recent speaking engagement I was comparing how new Corporate Strategy is when compared to Military Strategy or the strategy of training for performance sport. I was later asked if I could write a short piece about the birth of Corporate Strategy. Happy to oblige, here it is.

Strategy as a concept has been around for centuries, for millennia. The first published thoughts on strategy are commonly believed to be the works of Sun Tzu and Wu Tzu from 2500 years ago. Sun Tzu’s ‘The Art of War’ is still essential reading in military academies around the world and should probably be required reading for business leaders too.

For 2300 years the principles of strategy, of formally identifying what success looks like and planning a route to achieve it was left to the military. That is until the early 1800s when ‘pedestrianists’ – early race walkers – took to planning their training, albeit in somewhat basic format. In the late 19th century athletes took up formal planning and gradually the idea of developing strategies for the training of sportspeople evolved and developed into the science (and art) of today.

Meanwhile, the post-industrial revolution world awaited ‘strategy’ in any formal sense. Managers and leaders thought and planned after a fashion but with little genuine cohesion and it was not until the 1950s that the term ‘strategy’ was regularly applied in a business context.

Then, in 1965, along came H Igor Ansoff and the business world would never be the same again. Ansoff’s publication ‘Corporate Strategy’ introduced the term, new thinking and the formulation and implementation of ‘strategic management’ and suddenly corporate strategy became a requirement for all businesses, large and small.

Ansoff stated that strategy was, ‘a rule for making decisions.’ He distinguished between objectives, which set the goals, and strategy, which set the path to the goals; something many modern businesses have forgotten. ‘Corporate Strategy’ also stated firmly that ‘structure follows strategy’ – something else a significant minority (majority?) of modern managers and leaders overlook.

Ansoff flagged up the important issue that has troubled formulation of strategy ever since; most decisions are made inside a framework of limited resources. Whatever size the company is, strategic decisions mean making choices between alternative resource commitments.

The process defined by Ansoff typically unfolds thus:

  • Mission Statement and Objectives – describe the company’s mission, vision and values and define measurable strategic (and financial) objectives.
  • Environmental scanning – the gathering of internal and external information analysing the company, its industry and the wider environment (e.g. the 5 Forces of Competition, SWOT and PEST analyses, etc.).
  • Strategy formulation – competitive advantage, core competence, corporate thinking, ‘inside out and outside in’.
  • Strategy implementation – communicating the strategy, organising resources and motivating teams to deliver.
  • Evaluation and control – measure, compare, adjust.

Since Ansoff, writing about Corporate Strategy has grown to become an industry all of its own and, like all industries, it is populated by the good, the bad and the indifferent. The growth of the internet has seen a boom in ‘off the shelf’ strategy templates for business. For the individual seeking text books on the topic it is now a case of caveat emptor. For the businessman seeking a quick fix download it is a world populated with poor options and little else.

Strategy should be personal, borrowed templates will never deliver quality. There are no short cuts, getting strategy right and, beyond that, of quality, is hard work.

But then, it was ever so. As Sun Tzu wrote 2500 years ago; “Strategy is the great work of the organisation.”

© Jim Cowan, Cowan Global Limited, June 2013

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THATCHER: A LEARNING OPPORTUNITY MISSED?

23 04 2013
pic: guardian.co.uk

pic: guardian.co.uk

A week on from Margaret Thatcher’s funeral I am left wondering whether one of the most important lessons from her time as Prime Minister has been missed. To those with right leaning tendencies she appears unable to have ever done wrong while those to the left insist she could do no right.

Right or left, those who do not learn the lessons of history are doomed to repeat them, something politicians of all hues have been doing since she left office and, no doubt will continue to do into the future.

Whichever space on the political spectrum your views occupy, there was one thing about Margaret Thatcher and her time as Prime Minister everyone appears to agree on; she polarised views. However the problem with such polarised views, such extremes of adoration and hatred, is that they get in the way of reasonable analysis.

That same thing; reasonable analysis of the available data, should be at the heart of the development of any kind of quality strategy and its absence from the politics of the Thatcher era (and, indeed, since) has seriously undermined the quality of strategy coming from government then and since. Then and now we are served a diet of initiative-led rather than strategy led policy delivery and that can only serve up problems for the future.

To explain what I mean, I will use two of Mrs Thatcher’s flagship policies as examples and explain how delivering them as single initiatives rather than integrating them into longer term strategy has led to some of the problems we face today. I should emphasise that this is a modern-day cross-party problem, not simply a ‘throw-back’ to a bygone era.

The first of those policies was that of allowing council house tenants to buy their homes. Surely, not a bad thing and at the time a very popular initiative. Unfortunately, in implementing the initiative little consideration was given to cause and effect. The policy was not examined in terms of what else needed to happen for it to prove successful in the medium to long-term and hence no strategy integrating the servicing of all requirements was developed. Reasonable analysis was absent.

Cause and effect? Today we have a massive housing crisis in the UK. Social housing stock was sold off and never replaced. Those who purchased their homes in the 80s and 90s have seen the value increase enormously while those now looking for a home either cannot afford their own home or struggle to pay private rents and have little or no hope of ever finding social housing. More over 30s live at home with their parents than at any time in history.

The second policy which seemingly made sense at the time was the wholesale privatisation of energy and utility companies (denationalisation). The thinking was that the State was poor at running them properly and that private companies would do a far better job. The public liked the idea and hundreds of thousands of people bought shares in the newly privatised companies.

Cause and effect? One of the primary responsibilities of the Board of any private company is to their shareholders. Profit is king. Although few have joined the dots from privatisation to where we are today, the result is energy companies seeking profits and customers far from happy with ever-increasing bills. A very popular initiative/policy had failed to look to an inevitable future. Reasonable analysis was absent.

I am not suggesting that either policy was right or wrong. What I am suggesting is that a lack of good strategy, of analysis of cause and effect on future generations and national need meant that the policy/initiative of eighties contributed to the issues of today.

We cannot change the past but we can learn its lessons. Primary among those lessons is the importance of politicians thinking beyond the initiative of now and applying sound long-term strategy to their policies. Had that happened in the eighties the housing crisis might have been averted and household energy bills might be more manageable.

Unfortunately politicians of all parties have continued to put initiative led policy before policy led by sound strategy. They put aside or ignore that reasonable analysis of history’s lessons, of likely cause and effect to which I referred above.

Regardless of your personal political beliefs, perhaps we should agree that the most beneficial legacy left by the Iron Lady would be if our current day and future politicians learned a little more about cause and effect and the value of good strategy.

The lessons are there to be learned if any of them care to look.

© Jim Cowan, Cowan Global Limited, April 2013

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ATHLETICS BECOMING A MINORITY SPORT – IS THIS THE OLYMPIC LEGACY?

24 02 2013
pic: telegraph.co.uk

pic: telegraph.co.uk

I have now written about the Olympic Legacy on a number of occasions; most frequently questioning the lack of competent strategy in fulfilling the promise our politicians made to us and to the world in 2005; that the Games would bring an increase in sporting participation.

Nearly eight years later, we still await any strategy worthy of the name and, for some sports, time is running out.

I have a lot to be thankful to the sport of athletics for. As a former athlete I spent many enjoyable years training for and competing in the sport. Later I became a coach and was fortunate to work with many talented athletes. I have made friendships which have endured the years and the miles, I have seen more of the world than I could ever have dreamed of and I learned much about myself as a person. Athletics gave me a base from which I worked in a number of other sports with many fantastic individuals and great teams. Other than my parents, the sport of track and field athletics contributed more to my being the person I am today than anything else. I am grateful, extremely grateful.

Why do I share this with you?

Because athletics in the UK is in serious trouble. Forget that ‘Super Saturday’ of last summer; forget the success of Mo and Jessica and the others. That is the glossy picture that fronts a sport in decline.

The official figures paint a picture far rosier than reality. Sport England’s annual Active People Survey reports 2.1 million adults regularly (once per week) taking part in athletics. That is more than 1 in every 20 people but few other than politicians and those in sport whose jobs depend on these figures believe them anymore. Grass roots athletics certainly doesn’t. Even when you allow for the fact that Sport England includes joggers as athletes the figures are barely credible.

But what about the sport the public think of as athletics? What of the sport of Mo and Jessica and the others? What of track and field athletics?

In 2011 the Association of British Athletic Clubs asked world-renowned athletics statistician Rob Whittingham to take an independent look at track and field participation focusing on the key adult competition age of 20 to 34. His findings were that fewer than 2000 people regularly participated in track and field athletics. That is 0.1% of people participating in what the public might term ‘real’ athletics compared to Sport England’s figure for their definition of ‘athletics’.

As a way of picturing 2000 people, let me put it this way; it is insufficient numbers to field even 182 football or cricket teams (that’s fewer than four per English county) and enough for only 133 rugby union teams (fewer than three per English county).

Since 2011 athletics plight has continued. Local, national and international facilities have come under threat of closure from Mansfield to Gateshead and from Cwmbran to Don Valley in Sheffield. Britain’s most successful ever athletics club, Belgrave Harriers, has had to withdraw from the British League because of a shortage of volunteers. For the uninitiated, Belgrave has been athletics equivalent of Manchester United having won 11 National titles in The League’s 43 year history. Now their top flight aspirations are over.

In the absence of any competent strategy from DCMS, Sport England or England Athletics, Belgrave Harriers are now going it alone and have developed a strategy which will develop new, non-funding reliant income streams which, given time, can be reinvested in the club to support proper development. Where once they led on the track, perhaps Belgrave Harriers are now leading in new directions which will benefit a sport in desperate need of leadership if it is to save itself.

This is not the sport of Super Saturday, this is a sport in transition from major to minor. The sport of my youth, the sport which gave me so much and which has the potential to give much to others has become a minority sport. Strip out the joggers and not much of a sport remains.

Despite the promises of 2005 we have still to see an integrated strategy for the development of sport in this country, one which recognises the full sports development continuum. There has been plenty of talk and lots of initiatives and more than a few bad strategies, but there has been little of quality and now athletics is paying the price.

If the Olympic Legacy is to mean something, if politician’s promise to the people of the UK and of the rest of the world is not to ring hollow that must change and change quickly. Competent, quality strategy is required now, for the bell is ringing for athletics’ last lap.

© Jim Cowan, Cowan Global Limited, February 2013

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DOES THE TABLE IN YOUR BOARDROOM HAVE FOUR CORNERS?

17 02 2013

Boardroom TableIn small to medium-sized businesses there is often a missing corner or two on the boardroom table and, increasingly, the same is now true of larger companies.

What are these corners and what purpose do they serve?

The smaller the business the more likely that it is run by people who think in similar ways. For start-ups that friendship, that ‘likeness of mind’ is often a key component in getting from concept to reality but at that point it can become something that hinders the unsuspecting company.

The ‘Board’ (or those running the company) becomes a couple of people or a group of people who think and act the same. They lack the diversity that is required to drive the kind of growth which delivers on early potential. The business reaches a critical size and growth ceases or, if they are fortunate, slows.

In the larger company the situation is different but generates the same problem. There are a number of people around the boardroom table, often very diverse in specialism, experience and knowledge. And because of that diversity, a dangerous assumption is made – that the necessary range of skills, knowledge and experience are assembled.

In both cases, a reality check is needed. That check involves ensuring that four vital specialisms are assembled; the four key corners of any boardroom table. But what are these four key specialisms?

1.    The Strategist. This specialism is the most easily and most frequently overlooked. The board assume strategy to be a generalist skill which they can all handle between them and any ensuing strategy ends up being a hotch-potch of generalist ideas lacking proper direction and cohesion. And responsibility for strategy (in other words the company’s future) is shared, the buck does not stop anywhere and over time the strategy becomes a vague notion or is discussed in terms of aims and objectives with few (if any) clearly defined actions worth having.

2.    The Money Man. Of the four, this is the specialism least likely to be omitted in larger companies (there will usually be a Financial Director) but in the smaller companies is an assumed presence which doesn’t really exist. It is assumed because books are kept and the accountant checks them over every quarter (if lucky) or annually (more commonly).

3.    The Manager. Of bureaucratic mind-set, the Manager is the ‘husbander of resources’ essential to any organisation to ensure the economical use of those resources and to the eradication of waste. Unwatched the Manager can become caught up in his/her own bureaucratic processes and start overlooking the very waste he/she despises because the processes appear to be working. Focus is on the job of management not the future of the organisation.

4.    The Leader. Often, wrongly, assumed to be the same person as the manager, the Leader tends to the less bureaucratic and more to the adhocratic. The Leader’s role is to take people with them on the journey. Of course, without a dedicated Strategist the journey is often ill-defined and the Leader, being of adhocratic mind-set will lead wherever people will follow but not necessarily in the right, planned direction best for the company.

Put together the four might seem a strange group to be working together but it is their diversity which gives them their strength. The Money Man and the Manager tend to be data driven, needing historical information to inform any decision making. The Strategist and the Leader tend to the visionary, preferring to look to the future in preference to the past.

The mix is further diversified when considering where they sit on the continuum between bureaucratic and adhocratic. The Manager tends to be highly bureaucratic, the system and the process are everything and ease the job of management. The Money Man and the Strategist sit nearer the middle of the continuum, the data driven Money Man tending to (but not driven by) the bureaucratic and the future driven Strategist tending to (but not driven by) the adhocratic. The Leader tends to be more highly adhocratic wanting everyone pulling together regardless of direction.

None of these definitions are absolutes. There are certainly Strategists who favour historical data and putting a strategy in place requires a healthy dollop of bureaucracy if it is to be cohesive and executable.

The key to the four corners is that they balance each other. Bureaucracy and adhocracy are not natural bed fellows but are both important components of a healthy board. Data driven and future driven mind-sets are more likely to get along (but not always).

Most boards will feature a nominal leader in the CEO however the reality is that individual could be from any of the four corners and tend to be either the Manager or the Money Man. Companies are run sensibly, conservatively but are resistant to change. This is all very safe unless change is required (think of the recent spate of closures on the High Street).

There is nothing wrong with the CEO being Manager or Money Man so long as the board is balanced, that all four corners are occupied. However, most likely to be absent from the board room are the Strategist and the Leader which can undermine future planning and the spotting and seizing of opportunities to diversify and realise attractive directions in which to move and grow.

The healthy board will ensure the four corners are filled before adding other seats around the table. But how many actually do?

© Jim Cowan, Cowan Global Limited, February 2013

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WHAT IS CORE COMPETENCE?

7 02 2013

Oak TreeIt has been argued that core competencies are the true source of competitive advantage. But might understanding ‘core competence’ mean a rethink of the concept of corporation?

The term ‘Core Competence’ as applied to the competitive advantage of a business has only existed since 1990 when the Harvard Business Review published Gary Hamel and CK Prahalad’s paper; ‘The Core Competence of the Corporation.’ Reacting against the decentralised business portfolio strategy then being followed (and still followed today) by many large corporations, they argued that instead of a portfolio of businesses housed in standalone strategic business units (SBUs), companies should identify their portfolio of competences and plan to these.

The corporate world of 1990 was one where western companies were beginning to feel they had stemmed the growth in competition from lost cost, high quality Japanese imports. The western companies were catching up in these areas and the competitive advantage enjoyed by the Japanese through the 70s and 80s was diminishing.

The Japanese responded with wave after wave of new products in new markets. Honda diversified from cars and motor cycles to buggies, lawn mowers, boats and more.  Other Japanese companies diversified in similar ways.

As in the 70s and 80s, the western companies were slow to react. Hamel and Prahalad identified that this was not because they had worse management or lesser technical capabilities. It was because top management lacked the vision to exploit the depth of technological capability their companies possessed; it’s ‘core competence.’

That core competence is defined as something that you do better than anyone else. The larger the company the closer to ‘world class’ the core competence should be. It produces a core product or an efficiency which is not an end product. Hence Honda’s core competence was (is) in engines and power trains; once they had identified this, the diversification of their product range around the core competence became a logical step.

For other companies it is different. For example, Black and Decker’s core competence is in small electric motors. Having recognised this, their product range grew to include a multitude of products from lawn mowers to vacuum cleaners and from power tools to electric can openers. Core competencies open the way to many different markets and in thinking about how to exploit these markets, an environment which encourages innovation is created (Honda call it ‘the power of dreams’).

Hamel and Prahalad laid down three tests to identify a core competence:

  • ·         It provides potential access to a wide range of markets
  • ·         It provides a significant contribution to perceived customer benefit of the end product
  • ·         It is difficult to imitate

Therefore, being world-class at producing an ordinary component will not bestow competitive advantage. A core competence makes a disproportionate contribution to customer value and must be judged relative to the competition. It is something your competitors envy and wish they had.

Back to 1990 and Hamel and Prahalad identified how, in trying to match the new, core competence based competition coming from Japan, western companies mistook what was happening and some even deliberately (but unknowingly) lost or gave away their own core competence.

Where Honda recognised their core competence was in engines and power trains, Chrysler saw them as just another component and outsourced their manufacture. Short-term, in doing so Chrysler created a more competitive product but in the medium to long-term such a move contributed nothing to maintaining and developing the skills required to retain product leadership.

Hamel and Prahalad saw such decentralisation as ‘the tyranny of the SBU’ – the enemy of core competence. SBUs tend to the present focusing on maximising today’s sales, tending to be tactic not strategy led. What competencies they have tend to be hoarded and a reluctance to lend talented people to other SBUs develops. New opportunities are neither explored nor developed.

The job of management should be to develop an organisation-wide ‘strategic architecture’ – a road map to the future identifying which competencies to build and what technology they need. Core competencies are corporate resources and SBUs should have to bid for them just as they bid for capital resource. Reward systems and career paths should break free of SBU silos and key employees should be weaned off the idea that they belong to one particular strand (SBU) of the business.

Hamel and Prahalad described this diversified company as a large tree with trunk and limbs as its core products, the smaller branches as strategic business units and the leaves, flowers and fruit as the end products. The root system that nourishes, sustains and stabilises the tree is the core competence.

If you look only at the leaves of a tree,” they said, “you won’t notice its strength. In the same way, you may fail to see the strength of your competitors if you look only at their end products.

 

© Jim Cowan, Cowan Global Limited, February 2013

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ENOUGH FANTASY: THE HIGH STREET NEEDS REALITY BASED STRATEGY

27 01 2013

His Masters VoiceAs more household names disappear from our High Streets on a seemingly weekly basis, it is time for that sector to start basing their strategies in reality and not in some fantasy world which doesn’t exist or in some bygone day which is not returning.

During 2012, I saw a sharp increase in organisations from one particular sector coming to me for advice and support in developing new strategies to carry them safely into the future. These organisations were seeing their world changing and historic certainties had become present day doubts almost overnight. Their world was changing and their strategies needed to reflect that fact if they were to have a safe, healthy future.

The sector I refer to is the Third Sector, that area made up of charities, voluntary organisations and social enterprises although the description of a sector facing a new world of uncertainty after decades of security could as easily fit the High Street.

The key challenge, among many, faced by the Third Sector organisations that came to me was that of reduced funding. Government and local authorities have drastically cut what funding they have available for the sector while other funders have found resources limited by a range of issues brought about by the ongoing downturn in local, national and international economies.

In order to continue with levels of service, care, development and intervention provided during the last decade, these organisations are facing a stark choice; diversify your income streams or shrink and possibly die.

Of course, I have come across organisations unwilling to change. Prepared to cross their fingers and hope the next funding bid is successful rather than plan for life in their new reality.

The parallels with the High Street are uncanny. We see a minority of businesses adapting to changing consumer habits and tighter consumer budgets while others close their eyes, cross their fingers and plan for a world where consumer habits are unaffected by the internet age and disposable income has been unaffected by the economic crisis.

The strategies of these companies are based in fantasy, a place in which no successful strategy will ever be based. Good strategy is of the real world. It is, of course, informed by the past but it is not dictated to by history. The place a good strategy is taking you is the future and a better future at that.

Next time a High Street chain closes and blames consumers for shopping on-line; instead of blame they should ask themselves if they were aware habits had changed why their strategy had not reflected this reality. And, if they were not aware, why not?

The Third Sector is grasping the fact that the world is a changed place from even five years ago. The High Street chains need to do the same, and quickly, before more household names go the way of Jessops, HMV, Comet, Blockbuster and far too many others.

© Jim Cowan, Cowan Global Limited, January 2013

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