DOES YOUR PLANNING ECHO WINNIE THE POOH?

21 07 2013

christopher robin and edward bearIt is probably not something that has occurred to many business owners and executives but nonetheless it is fair to say that when it comes to strategic planning, the vast majority are mimicking Winnie the Pooh and Christopher Robin.

Let me explain…..

But first, a quick history of strategy. 2500 years ago Sun Tzu wrote about the concept and application of military strategy in ‘The Art of War.’ Then, for 2300 years or so strategy developed almost exclusively as a military tool. In the 19th Century sports people recognised the value of planned training and started exploring the concept of strategic planning, developing into the finely honed tool it has become for today’s world class performers.

Nineteenth and Twentieth Century businesses dabbled with planning and the mid-20th Century business even employed an early form of ‘strategic management’ however it was not until the release of H. Igor Ansoff’s ‘Corporate Strategy’ in 1965 that business began to properly embrace strategy.

Since then, many business owners and executives have developed and delivered strategy but have failed to grasp one of, if not the, primary reason(s) for having strategy. Strategy should be about the art/science of seeking and gaining a competitive advantage.

The military recognise this. Leading sports performers and their coaches recognise this. The majority in business either do not recognise or choose to ignore this.*

Instead they prefer to employ the insane method of developing strategy. And gaining competitive advantage means avoiding the insane.

  • Insanity Planning is doing the same thing today and tomorrow that you did yesterday and expecting a different result.
  • Insanity Planning is doing the same thing as your competition and expecting to beat them.
  • Insanity Planning assumes the competitive environment does not change and expects the plans of yesterday will yield the same results tomorrow.

And modern business loves Insanity Planning. Businesses seek templates of strategies developed by others; copy the plans of others expecting different results. Such insanity should have no place in the seeking of competitive advantage; of excellence; of high performance.

Quality strategy was, is and always will be personalised. Having the same (or similar) strategy as everyone else will not deliver competitive advantage.

Of course, historically there have been times when the military have forgotten this important point in much the same way as business has. It usually takes a leader to come along and put in place strategy which avoids the insane to change thinking and remind people of the insanity of what they were doing. In hindsight, the new strategy might even look like common sense.

Such a leader was Horatio Nelson. In 1805, in the build up to the Battle of Trafalgar he recognised Insanity Planning for what it was (is). Had he not, I might be writing this article in French or Spanish.

Battle_of_Trafalgar_Poster_1805At the Battle of Trafalgar, Nelson’s fleet of 27 ships came up against a superior combined French and Spanish fleet of 33. The conventional, accepted strategy of the day was to line the ships of the two opposing forces up parallel to each other and, effectively, start shooting until a winner emerged.

Outgunned, Nelson recognised this template for strategy employed by everyone else for the insanity it was. He knew that if he engaged the opposition in this way the odds of winning were extremely long. Insanely long.

So he chose to employ a personalised strategy which would give his fleet competitive advantage; which avoided the insane. As the enemy lined up according to the accepted, shared, strategy template of the day, Nelson chose to sail towards them in single file and at right angles to their straight line. He evened the odds, caused confusion amongst his foe and the rest, as they say, is history.

Nelson recognised the need to personalise the strategy to HIS goal; HIS resources; HIS (and his sailor’s) skills and abilities; HIS definition of success. In doing so, he gained competitive advantage.

What does any of this have to do with Christopher Robin and Winnie the Pooh?

To explain that, I will quote Winnie the Pooh author AA Milne:

“Here is Edward Bear, coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin. It is, as far as he knows, the only way of coming downstairs, but sometimes he feels that there really is another way, if only he could stop bumping for a moment and think of it.”

When it comes to strategic planning for business who do you mirror?

Are you an Admiral Lord Viscount Nelson or a Winnie the Pooh?

*Just a small selection of the research to support this statement:

  • 84% of a sample of 3543 companies confuse Mission and Vision. 64% thought Mission and Vision are the same thing. 91% lacked concise Vision. (Forbes 2009).
  • 61% of CEOs believe inflexible corporate structure hampers successful delivery of strategy. 82% of companies design structure ahead of strategy. (Forbes 2009).
  • 47% of CEOs say their strategies are better described as matching industry best practices and delivering operational imperatives; in other words, just playing along. (McKinsey 2011)
  • 87% of companies plan strategy using only intelligence that they share with their competitors. (McKinsey 2011).
  • 79% of Company Executives do not understand the language of strategy yet still use it. (Business Review 2007).

© Jim Cowan, Cowan Global Limited, July 2013

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EQUALITY – WORTH THE BOTHER?

26 06 2013

Committed_to_Equality_1I haven’t written on the value to business of understanding equality for a while however an email exchange from this morning leaves me compelled to wonder whether many still view it as something not worth the bother.

There are many very good reasons to ensure that your business takes Equality seriously. Of course, the biggest driver for many is the desire not to fall foul of the law even if, at the back of their minds, many view meeting the requirements of the Equality Act (2010) as little more than red tape.

It would be nice to believe that in the 21st century laws to ensure access to equal treatment for all are not necessary and that we all seek to accommodate our fellow human beings as best we possibly can. Sadly that is not the case and I am not naïve enough to believe it is.

That does not mean most people deliberately put barriers in the way of others. What does happen is that ignorance drives practice and the right questions are not asked, reasonable solutions not found. For that is all that the 2010 Act requires; that reasonable adjustments be made.

But other than the legal and the ‘human’ reasons for trying to provide equal access to all for your company or organisation there is another; good business practice. It might sound obvious but I will say it anyway, the easier it is for more people to access your company or organisation, the more likely it is they will use your products or services.

Which brings me back to that email exchange from this morning…..

I will shortly be acting as an expert witness in a court case. While most know me as an expert in Strategy, in this case I will be appearing specifically as an expert in Equality Strategy. Earlier today I received an email from a solicitor asking that I pass comment on a document he had prepared for the Court. He was keen that if we were to be arguing a case based on equality, any documents submitted must reflect both expertise and belief in that area.

The content of both the solicitor’s email and the attachment read well and were factually correct, however both fell short of his aim due to his poor choice of font. I commented as such, suggested a different font and advised him why it made a difference.

His reply interested me. The attached document was now presented in a good, accessible font. However his email remained in the original font. I remarked on this over the phone and, to paraphrase his reply, was told, “Oh, that’s okay, the Court won’t see that.”

This attitude is not uncommon in businesses and organisations in all sectors. Government departments, local government, charities, sports clubs and others all discriminate against significant sections of society because they can’t be bothered to change once their ‘ignorances’ are pointed out to them.

The law requires reasonable adjustments be made. I believe changing the default font setting on emails is reasonable. I do not believe that not being bothered is but, to date, no test case has been brought to support my view.

But beyond the law, what about running a successful business, department, charity, club or whatever? Does it make sense to deliberately make it more difficult for large parts of society to work with you? Does it make sense not to make access as easy as competitors who do make reasonable adjustments? Does it make sense not to steal a march on competitors who do not make those reasonable adjustments?

You tell me. The example of the poor choice of font used above could negatively impact on dyslexics accessing and making use of that solicitor’s services. Ten percent of the population are dyslexic, 4% severely so. Even at four percent, that is potentially 2.4 million customers (UK) you are gifting to your competitors. Why? Because you can’t be bothered.

The Equality Act of 2010 is the legal driver behind businesses and organisations in all sectors making reasonable adjustments which will provide improved access for all. Some call it red tape, I prefer to think of it as acting like a decent human being.

But even if the legal and the human reasons don’t drive you to reasonable adjustment, maybe the business case should?

If you can be bothered.

 

If you would like to find out more about this topic and/or would like to discuss arranging an Equality Audit for your business or organisation, please drop me a line to the email address below.

Also on Equality:

Equality – No Room For Excuses (2012)

Equality and Ignorance Driven Insanity in Business (2012)

© Jim Cowan, Cowan Global Limited, June 2013

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CONFUSING MISSION WITH MISSION STATEMENT?

16 06 2013

what is your mission?A couple of weeks ago, I wrote a blog entitled ‘Corporate Strategy; Not A New Idea But Not As Old As You Thought.’ In that article, I noted that the “Mission Statement and Objectives – describe the company’s mission, vision and values…..”

I have since received a request asking me to clarify how the Mission Statement also contains the Mission and asking; “aren’t they the same thing?”

The words Mission and Vision frequently generate confusion from senior executives in large corporations to one person operations. Some omit one or the other, some confuse the two and some believe they are both the same thing. I discussed this in ‘The Vision Thing’ in 2010 but, in short, your Mission is why you exist while your Vision is where you are seeking to get to.

But what of the Mission Statement, that much-loved (and abused) adornment of annual reports? If it isn’t the same thing as the Mission then what is it and how do the two differ?

A good Mission Statement should provide a valuable touchstone for management and employees, helping to maintain focus, protecting culture and values while serving as a reminder of the organisation’s purpose(s).

The Mission Statement does not need to be the long rambling, mind-numbing tract seen in some annual reports. In essence its purpose is to cover three bases:

  • “Our Mission” – why we are in business; what is our purpose.
  • “Our Vision” – where is it we are planning to get to in X number of years.
  • “Our Values” – what we stand for, what we believe in, our style and what is important about the way(s) in which we work.

The Mission Statement does not create these elements, it reports them; they should already exist. It is not aspirational although, containing the Vision, should include that aspirational component.

The Mission Statement is never (repeat, never) a strategy. Its components might guide and, in part, inform strategy but it is never the strategy itself.

The confusion around the Mission Statement and its components has led to companies getting it wrong and, in some cases, avoiding having such a statement at all. In some sectors management have shied away from using terms like Vision and Mission, believing (wrongly) they serve little purpose, probably because they are frequently applied so badly.

As a way of addressing this fear of the Mission Statement and/or belief it has little value, I have recently applied a different, plain English, use of terms with some clients which you may find useful (they certainly have):

We replaced the trio of Mission, Vision and Values with a quartet of defining statements:

  • Why Are We Here?
  • Where Are We Going?
  • What Do We Stand For?
  • Who Are We?

In answering “why are we here?” the organisation is defining its Mission, regardless of whether that is what they call it. By declaring clearly “where are we going?” the business is putting in place Vision. And by considering “what do we stand for?” and “who are we?” the company Values are declared.

Taking it a step further, my challenge to those organisations with which I have employed this method, is to present the answers to the four questions as a ‘Statement of Intent’ in a way that can be clearly presented and understood on one side of A4 paper.

In achieving this they have created their Mission Statement and included their Mission, Vision and Values. Whether that is what they call them is unimportant. What is important is that they exist, are recorded and can be clearly understood for what they are/say.

If you are getting bogged down in and/or confused by the Mission Statement and its component parts or have avoided addressing them properly at all, give this way of addressing it a go, you will likely find it quite liberating.

In doing so you will also remove all confusion between what is the Mission Statement and what is the Mission.

© 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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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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HOUSTON: IT’S YOU WHO HAS THE PROBLEM!

17 12 2012

NASAIt is a line which became synonymous with the early days of space exploration and it fell into common usage as a term used whenever things were going wrong; “Houston, we have a problem.”

Only today it is Houston or, more precisely, NASA who has the problem. Why? The organisation used by consultants around the world as an example of quality Visioning has forgotten how to do quality Vision.

I am among the many Strategy Consultants who, when asked to cite a great example of what a Vision should look like has quoted NASA’s Vision originally stated by John F Kennedy on 25th May 1961:

“This nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.”

As a Vision it had everything a good Vision requires. It was measurable, it had a clear deadline, it was inspiring and motivational, it was achievable and it clearly sign-posted the way for the focus of the ensuing NASA Strategy which ultimately led to its being achieved.

Fast forward from the 1960s to the 2010s and things have drastically changed. Much of the discussion around the future of space flight appears to emanate from the private sector within the USA or from other nations not previously viewed as ‘space powers.’ NASA is slipping behind.

A recent report from the Space Foundation declared; “NASA’s 2011 Strategic Plan is no longer viable.” Others are declaring that neither NASA’s workforce, the US people nor the international community are inspired or motivated to achieve the goal previously stated of visiting an asteroid by 2025. (Source: Aviation Week).

In short, the pioneers and early pacesetters have flown off course. But why?

I would suggest that they need to do little more that look at their current stated Vision* and compare it to that of 1961. They should ask themselves; “is this measurable, does it have a clear deadline, will it inspire and motivate our people to strive for its achievement? Indeed, is it even a Vision?”

The answer will be a resounding no on all points.

While NASA need to look to their past to recognise a better route to their future, for businesses large and small around the world they still teach a simple yet vital lesson in Strategy, a lesson so many still get wrong:

The more specific and clearly stated your Vision, the easier it is to plan for its attainment, the more likely you are to achieve success.

It is a lesson which you forget at your peril!

*NASA’s current stated Vision is:

“To reach for new heights and reveal the unknown so that what we do and learn will benefit all humankind.”

It is classic bad Visioning; confusing Mission with Vision thereby omitting the very thing which gives Strategy direction!

 

© Jim Cowan, Cowan Global Limited, December 2012

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DRINKING AND DRIVING SHOULD NOT BE SEPARATED

28 11 2012

Photo: RoSPA

There is drinking and then there is driving and for many right-minded people, ne’er the twain shall meet. But is there a place where putting them together makes sense? A place where combining one with the other would add up?

I have been watching the unfolding debate about a statutory minimum price per unit of alcohol with some interest. Not for the same reasons as many others but more from the perspective of, yet again, watching a government in action which quite plainly does not understand the difference between strategy and good strategy nor (worse) the difference between tactics and strategy.

What has this got to do with mixing drinking and driving? Let me explain.

The Government’s logic is to introduce a minimum price of 45 pence per unit of alcohol as a way of reducing the binge drinking culture evident across England and Wales (there is separate legislation for Scotland from the Scottish Parliament of 50 pence per unit).

On the face of it, what the Government calls a ‘strategy’ is actually a tactic to address the issue. If booze costs more, people will drink less. It is somewhat simplistic but few alternatives have been put forward and there is the unfair burden on the non-binge drinking tax-payer of policing and health costs caused by the issue which might be met out of the extra income raised by the State.

But pause a moment. That is not what is actually happening. Yes, there is a 45 pence per unit increase on the way but, strangely, on Sky News’ Sunrise programme this morning, Secretary of State for Health Jeremy Hunt stated that this is not a revenue raising measure.

Not a revenue raising measure? What did he mean? Within 20 minutes Sky’s team of reporters had dug and found the answer; the extra money is retained by the seller of the alcohol, the State is not raising a single extra penny through this ‘booze-tax’.

It’s a good job the country is flush and doesn’t need to raise any extra income through genuine taxation at the moment.

Only it does. That is why the Government is umming and ahhing over whether to keep or cancel the proposed 3 pence per litre increase in fuel levy due in January.

This is where my drinking and driving analogy comes in. The media and others call it ‘joined-up thinking’ which is what we strategists call integrated planning (or more precisely, in this example, vertically integrated planning).

We have a struggling economy; we need to get business moving. Take me, picking a random couple of days from my recent diary as an example.

On 8th November I drove from Nottingham to Potters Bar for a client meeting in the morning. In the afternoon I went on to Woking to meet another client before heading for Goodwood and a business dinner that evening. The following morning I headed from Goodwood to Royal Wootton Bassett for two days work with another client before heading back to Nottingham on the evening of 10th November.

The relevance? Like many other businesses I can only carry out these essential journeys by car, which means putting fuel in that car, which means paying extortionate taxes on that fuel. The train would prove both inefficient and expensive, even without the above inflation fare rises announced today. If the Government’s plan is to get cars off the roads and their drivers onto trains then that part of their strategy is badly lacking in ‘joined-up thinking’ or integration (in this case horizontal).

Who bears the cost of these types of expensive journeys? Initially me, but in the end, you.

Yes; you. Whether it is me allowing for my costs in what I charge my clients and they then pass on to their customers or any other form of petrol or diesel driven transport used for business, ultimately the cost comes back to you. Everything, right down to the food you buy in the supermarket gets there because it is transported by vehicles reliant on heavily taxed fuel. Even if you don’t own a car, you are indirectly paying the fuel levy in almost every purchase you make.

Now, let’s try some of that joined-up thinking. Imagine two commodities; one is essential the other is not. Let’s name these two commodities; we’ll call the essential one ‘fuel’ and the non-essential one ‘alcohol’. Let’s then assume we need to raise income for the exchequer in a fair and equitable way. Assuming VAT on both, on which one would you add further taxation; the essential or the non-essential? Would you consider it even moderately sensible to tax (heavily) the essential while increasing the price of the non-essential without exchequer benefit? Especially at a time when even further taxation on the essential is being considered?

On the face of it putting up the price of alcohol and taxation on petrol are unrelated. But start thinking strategy not tactics, start thinking in an integrated way not in silos and the absence of common sense becomes more apparent.

This thinking should spread through the many arms of government as it should through all businesses; I have used drinking and driving only as examples as they are both currently in the news. But taking that example; how would your business fare if the quality of strategy, the difference between the strategic and the tactical and the depth and breadth of integration were examined?

© Jim Cowan, Cowan Global Limited, November 2012

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