Category Archives: Strategy

Projects Fail — Here Are Four Proven Reasons Why!

An article over on Outsource Magazine on Project Delusion summarized research from a group that has been tracking UK project management for more than a decade. This group, which has seen budget overrun recently climb from 18% to 27%, investigated the minority of projects that ran more than 200% over original projections. When the causes of deviation from the plan were analyzed, the following major contributors were found:

  • Missing Focus
    Specifically, unclear objectives, poor requirements, and a lack of business focus.
  • Execution Issues
    Specifically, unclear objectives and reactive planning.
  • Content Issues
    Specifically, shifting requirements and uncontrolled technical complexity.
  • Skill Issues
    Specifically, an unaligned team, lack of skills, experience, and resource.

That’s why you should never start a project until

  • The Goals Are Clearly Defined
    along with the metrics that will be used to measure against them.
  • Disaster Recovery and Business Continuity Plans Have Been Defined
    along with processes and procedures for creating new plans for unexpected situations.
  • Change Request Procedures Are Clearly Defined
    so that requirements don’t shift and technical complexity does not spiral out of control.
  • Proper Training is Provided Before the Product Starts
    so that team has the right training, is led by the right experience, is aware of, and able to use, the resources at their disposal, and have what it takes to align toward the project goals.

Also, you should adopt some best practices based on lessons learned. Four best practices, as detailed in the article, include:

  • Manage strategy and stakeholders.
  • Master technology and the business.
  • Excel at core project management practices (as defined in the PMBOK).
  • Fail quickly and cheaply.

For details, see the great article on Project Delusion in Outsource Magazine.

Dick Locke On The Yin-Yang of the Business Universe (Repost)

Editor’s Note: This is a repost of a classic post by Dick Locke. (His guest posts are all archived.) Dick, who has delivered seminars to over 100 companies across the globe, is a seasoned expert on International Sourcing and Procurement who wrote the book.

Steven Guth proposes that “Procurement pros should be in sales“. He
implies, but never quite says, that procurement pros should have sales
skills. That’s right on. I’ve been there, done that and even got a
tee-shirt. Sales skills are essential, especially if you are in a
corporate central group that is outside of any profit centers.

Here’s the situation. I won’t mention the company name, but I hope
people will figure out who it is. They had a Corporate Procurement group
of which I was a part. I received an assignment to start up International
Purchasing Offices (IPOs) in Asia back in the mid 1980s. Funding those
offices quickly became an issue. It had been an issue all along for the
Corporate Procurement Group, with big annual negotiations and
discussions about how much each profit center would pay to fund the
corporate group. Now we wanted to add more people and expense for an
unproven new function. They might as well have painted a big target on
our backs.

The funding solution we came up with was that we had to generate our own
funding and using us had to be voluntary. That meant we had to charge
our users a fee and that we were in competition with two other groups.
One was reps and subsidiaries of (largely) Japanese and European
companies who had set up a sales subsidiary structure in the US. The
second group was our own company’s buyers and purchasing managers in
profit centers who felt they could source, purchase from, and manage
overseas suppliers themselves.

We realized we had to not only charge less than what sales subsidiaries
charged but also less than our profit centers felt it would cost to do
it themselves. We came up with essentially a sliding scale of markups on
purchase orders. Small users might pay as much as 5%. Large users might
pay less than half a percent.

I’m glad to say it worked. The operation was handling more than a
half-billion dollars per year in orders when I left. That’s not to say
there weren’t, err, “learning experiences.” One of our big issues is
that we had selected employees for their purchasing and engineering
skills, and not for their marketing skills. It required a tune up for
several of our people, not excluding me. It took about three years to
become fully self funded. If we had avoided some mistakes we could have
shaved about a year off that time.

It had some very pleasant side effects. We essentially were running a
small business within a big corporation. Our people got lean,
entrepreneurial and very customer-oriented. We quickly developed an
antipathy to bureaucracy. We became really efficient. It also took us out
of the annual budget battle and the annual exercise to calculate what we
were saving. (I refer to that as “lies, damn lies, and purchasing
statisitics.”) We merely had to state that we received x number of
purchase orders per day from people who didn’t have to use us and were
paying us for our services. That kept management happy nearly all the time.

Where is this model applicable? In companies where there is a lot of
independence on the part of profit centers, a center-led purchasing
effort, issues with funding the central department and finally where an
internal department can develop and market an advantage over their
competitors. Check it out, it may be right for you.

Dick Locke, Global Procurement Group.

This was, and is, and a great post, Dick.
(And why SI is including a few games to sharpen your sales mindset in it’s Gamer’s Guide to Supply Management.)

The (Board) Gamer’s Guide to Supply Management Part XVII: The Village

Life is tough in Competitive Co. Global growth is slowing with the economy. Your products are no longer the most wanted in the marketplace. And at the end of every quarter, the employees who fall in the bottom 10% of their performance reviews get axed. Plus, you just found out that the CPO has been lured away to Big Money Co., one of the Directors is getting promoted, and it’s likely that the next Director will be promoted from within. You want that job, because it significantly decreases the chance that you will be cut when your next annual performance review comes up.

But how do you progress up the corporate ladder? Where do you focus your efforts? Even though you’re required to be a jack of all trades as a Category Manager, you can’t focus on everything, and if you’ll try, you’ll be a master of none and one of your category management rivals will be picked instead of you. Looking around, you see that people who get promoted to Senior Management positions tend to be those who either excel in timing the market and locking in contracts and/or spot buys at the perfect time, forging new markets, managing supplier relationships to optimize production, embedding themselves in standards organizations, or mastering the politics of the workplace to advance despite their lack of skills.

It’s not much different than trying to progress up the social ladder in the typical medieval village. If you were unhappy with the simple life of a farmer (like in Agricola) or a fisherman (like in Le Havre or Rouen Upon a Salty Ocean), then you either have to make your life as a merchant in the market and learn how to profit on every trade, travel to strange new lands to find new and valuable goods for trade, become a master craftsman and produce the ploughs and carriages needed by the farmers and traders, take the religious path and join the church and try to become a monk and work your way up the pecking order, or, if you were lucky to be living in one of the early commonwealths or states, where leaders were elected, become a politician and try to work your way up the ranks in the city council to eventually become elected (or appointed) as the representative of your city.

In other words, things haven’t changed much in 300 years. If you want to get ahead in the world, you either master trade, travel, craft, religion*, or politics. And that’s what you have to do in The Village.
In The Village, you win by controlling the family that achieves the most prestige by the end of the game. Prestige is gained by traveling to new cities, occupying the council chamber(s), progressing through the ranks in the church, succeeding in trade at the market, amassing wealth (in the form of gold coins), and getting your family members recorded in the village chronicle (for their deeds) on their demise. (Unlike the other worker-based games we have covered so far in this Board Gamer’s Guide to Supply Management, where you either have a constant number of workers, or a slowly increasing number of workers as the game progresses, in this game, you lose workers as the game progresses as actions have a time element, and you only get so much time per worker. This adds a new dimension of complexity as you have to be balance worker acquisition with worker loss, just like in the real world where workers retire, defect, or, occasionally, drop dead at their desks.)

As with most worker placement games, the game is round-based and each round consists of a number of actions. In each round, there are a fixed number of birthing, grain harvest, craft, market, travel, council, church, and well actions and players take turns until all the actions have been taken or the end-game has been triggered (in which case each player takes one more action). The birthing action adds one family member (worker) to your family; the grain harvest allows you to take 2 (3, or 4) bags of grain (if you have a plow and a orse or an ox); the craft action allows you to either produce or trade for a scroll, plow, or wagon, mill grain and sell it for gold, or work or trade for a horse or ox; the market action allows you to trade goods (and acquire prestige for your trading skills); the travel action allows you to visit a new city if you have a wagon and the resources to do so; the council action allows you to place a member in the council if you have a scroll or the influence (resources) to do so or, if you have a member in the council, advance him through the ranks if you have the scroll and/or influence (resources) to do so and gain rewards for doing so; the church allows you to enroll one of your family members in the clergy in the hopes that they will be selected for advancement at the end of the round (which will give you prestige if you have the most family members in the clergy); and the well action allows you to acquire a resource (needed for travelling, council advancement, goods, etc.).

The difficulty is in balancing your actions so that you always have the resources and time to advance. For instance, you can’t take too many time-based actions until you have expanded your family as you lose one family member after you have taken actions that require 10 time units in total, and, because this game takes place during the time of the plague, you cannot add more than 7 family members over the duration of the game. Many of the actions, such as travel, advancing through the council chamber, trading in the market, milling grain for gold, and working for scrolls, ploughs, wagons, horses, and oxen, require time. Depending on the action, it can require anywhere from one time unit (to enter the council chambers for the first time) to six time units to produce your first plough (as it takes 3 time units to learn the trade and 3 time units to build a plough). Just like in the real world, it takes time for your workers to learn their jobs and then time to produce results. That’s why you often buy or outsource, trading money and material (in The Village, resources) for goods and services you need instead of trying to acquire the talent and build the product yourself. Some competencies (like category management) you invest in and others (like production) you outsource. Sometimes you keep a superstar on your team, and advance them through the ranks (like you advance them through the council or the church in The Village) and sometimes you let them go (or, in The Village, let them expire to be recorded in the Chronicle for prestige).

It’s another great game for testing your Supply Management muster, with the unique twist that you not only have to balance resources with growth, but you also have to balance trade with workforce output, because, just like in real life, if you burn out your workforce, they expire. Do you have what it takes to be master of The Village. Why don’t you find out? Maybe you’ll even figure out where to focus your efforts to advance your own Supply Management Career!

* Some standards have as many zealots as recognized religions!

The Board Gamers Guide to Supply Management Part XIV: Le Havre

You’ve mastered Agricola and feel that you are an agricultural supply master and after sailing Upon a Salty Ocean, you feel you are also a master of logistics and market timing. But can you handle the full meal deal? Especially when you not only have to balance food and resource acquisition with trading and energy needs? Le Havre, an economic construction strategy game, adds a new dimension to put your supply management strategies to the test: having to balance the use of resources for food and the use of resources for energy to power ships, brickworks, iron mills, abattoirs, bakeries, and smokehouses which allow you to acquire and trade resources, convert raw materials into useable building materials, and turn raw fish and grain into food.

You win Le Havre by acquiring the most wealth over the course of the game, and you acquire wealth by collecting, selling, and using goods and by buying and constructing ships and buildings which have a monetary value. This sounds easy enough, but it is a significant supply management challenge as you have to continuously make enough money to cover the entry costs to the buildings you need (but don’t own), acquire enough raw materials that can be used to produce energy to power the buildings that produce food and building materials, and produce enough food to feed your constantly growing workforce at the end of every round (just like your payroll for an increasingly growing workforces increases in real life), which requires more and more food as the game goes on (just as your corporate workforce also grows as your company grows and you acquire more property and trade more resources).

Although you want to focus on acquiring buildings and building ships, as this is generally what helps you accumulate the most wealth (especially if you leave out the special buildings), you’re constantly having to interrupt your strategy to acquire food to feed your workers, raw materials for future buildings, and energy sources. The last thing you want to do is run out of food, because then you have to buy food, and if you don’t have enough money you either have to fire sale a building (if you have one) at half of its value or borrow, and every loan accrues interest every round (and there’s no limit on debt or interest, just like there’s no limit in the real world).

The game consists of a fixed number of rounds (defined as 14 rounds for 2 players, 18 rounds for 3 players, and 20 rounds for 4 or 5 players), each of which consists of 7 turns. On each turn, you take one of two actions:

  1. take an offer from the harbour or
    on each player’s turn, new goods arrive in the harbour and are added to the appropriate offer space, which the player can take
  2. use one of the available buildings
    which can include the construction firm that allows you to build up to buildings of your own

The base goods that are available as offers for the player to take are:

  • fish
    a food source worth 1 food or 2 food if smoked in the smokehouse
  • wood
    used to construct buildings, ships, or supply 1 energy (via fire); it can supply 3 energy if converted to charcoal in the charcoal kiln
  • clay
    used to construct buildings, it can be upgraded to brick in the brickworks to build more buildings
  • iron
    used to construct buildings or iron ships, it can be upgraded to steel
  • grain
    a harvest good that can be baked into bread (worth two food) at the bakehouse, or used to grow 1 more grain (at the end of the round)
  • cattle
    a harvest good that can be upgraded to meat (worth three food) at the abattoir and hides (for every 2 cattle slaughtered); also, 2+ cattle produce one more cattle at the end of every round

All other goods have to be produced. These include:

  • charcoal: an energy source worth 3 energy produced from wood in the charcoal kiln
  • coke: an energy source worth 10 energy produced from charcoal in the colliery
  • brick: produced from clay in the brickworks
  • steel: produced from iron in the steel mill
  • bread: produced from grain in the bakehouse
  • smoked fish: produced from fish in the smokehouse
  • meat: produced from cattle in the abattoir
  • leather: produced from hides in the tannery

There are 33 standard buildings (and 36 special buildings, which you should ignore until you’ve built up some experience with the base games). In addition to the 9 resource conversion buildings already mentioned, specifically:

  • Abattoir
  • Bakehouse
  • Brickworks
  • Charcoal Kiln
  • Cokery
  • IronWorks
  • Smokehouse
  • Steel Mill
  • Tannery

The following 8 buildings are also available, and necessary:

  • Building Firms: necessary to build buildings
  • Clay Mound: a source of clay
  • Colliery a source of coal
  • Construction Firms: necessary to build buildings
  • Fishery: a source of fish, which is a vital food source
  • Shipping Line: necessary to trade
  • Wharf: necessary to build ships

In order to use a building, you have to pay the entry fee (if you don’t own it), have the energy sources to power it, and one or more of the base goods required to use its ability. In order to build a building, you have to have the resource cost, just like in Agricola. Not to mention, it has to be available. This is the challenge of Le Havre, not only do you have to balance food production (to feed your workers) with resource acquisition (to build), energy production (to power buildings) and ship production (to acquire fish and trade), but you also have to build at the right time, use the buildings at the right time, and trade appropriately. Especially since, just like in the real world, only one player can use one building at a time, take an offer from the harbour and the resource type associated with it, or get points for a particular building or action. And the increasing food costs make the game quite challenging if you don’t adequately prepare for food production from round one. In a four player game, you will need to produce 113 units of food and in a two player game, you will need to produce 177 units of food! A growing workforce needs to be fed (paid)! And you just can’t borrow willy nilly, as the bank only lends money to cover the cost of food (as in Agricola, you can only beg for food).

If you really want to test your supply management mettle, Le Havre is a good game to test it on. While it will likely take twice as long as Agricola to get through a session, it puts your thinking skills and ability to balance supply (offered resources) with demand (building [utilization] costs) in a way that maximizes overall value generated (as the winner is the one that acquires the most wealth by the end of the game). So give Le Havre a go. You might just get more than you negotiated for. (And get one step closer to the ultimate supply management challenge.)

P.S. If you want a good guided introduction to the game, try the iOS version and see if you can become Le Havre’s next titan of industry. The tutorial is good as is the gameplay. (But it won’t give you the challenge of going head to head with your team-mate — all AI’s have preferred strategies and predictable responses when you play them enough.)

The (Board) Gamer’s Guide to Supply Management Part VII: Upon a Salty Ocean

SI is almost radiating rainbows now that it’s resurrected it’s one-of-a-kind blog series that will help you take your Supply Management career to the next level by giving you new and interesting ways to hone your supply management skills. Still more fun than reading about the latest study on the daily migration patterns of the three-toed sloth, but now that you can hone your skills while challenging your peers, it’s three blasts and a half.

It’s 1515, and you are a merchant of Rouen. You invest in ships and city buildings in an effort to not only get rich, but be the richest when Francis I comes to visit the city in an effort to win his favour. The city’s wealth is dependent on fishing and the trading of salted fish, herring and cod in particular. Every week, ships full of salt barrels leave Rouen for the fishing grounds of the Atlantic Ocean and, upon their return, sell their fish in the market.

Upon a Salty Ocean is a turn-based work-placement game that consists of 5 turns, where each turn consists of 3 phases: an event phase, an action phase, and a turn end phase. The event phase determines weather and market conditions which affect fishing and the cost of fish and salt. In the action phase, a player chooses to either take a city action (in which she can buy salt or buildings), a navigation action (in which she can take her ships to the open sea and fish or return to Rouen), a harbour action (in which she can move goods to or from her storage depot or build a ship), and a market action (in which she can buy to or sell from the market).

Sounds simple enough, right?

It would be except for the fact that:

  • the event that happens at the start of the phase can bring stormy seas, which will decrease the amount of fish that can be caught; pirates, which will damage the ships and decrease the amount of fish that can be held; market dips, which will lower the selling price of fish and/or salt; and/or market surges, which will increase the selling price of fish and/or salt
  • actions in the action phase are consecutive, each player can only take one action at a time, and every time an action is taken, it gets more costly for the next player — and all purchases and sales affect the market price
  • you begin the game with a small amount of money, have a limited credit line, and interest charges rack up quickly if you go into debt
  • if you prosper, you must invest in a bank to safeguard your money, or you will lose some of it at the end of the turn
  • each building investment provides different advantages
  • a strategy only works if there is limited competition in that strategy, or
    you luck into the right timing

Just like in the real world,

  • shipping is subject to stormy seas, pirates, and other calamities
  • no one can take two actions at the same time in the real world, w.r.t. the markets in particular, and every action taken increases or decreases the cost for everyone else
  • your resources are always limited, debt is costly, and too little cash flow can bankrupt you (and prevent you from taking any more actions for at least one turn)
  • the more you have, the bigger the target you become for thieves and the more you have to invest in security
  • different capabilities in Supply Management give you different advantages, some tactical, some strategic, some innovative, etc.
  • not everyone can corner a commodities market, a CPG segment, etc.

It’s a real supply management market conundrum. Do you try to conquer the seas and get the most fish? Conquer the market, buy low, sell high, and make your riches off of trade? Or do you acquire the most buildings and make money off ship building, banking, and building the church? Played properly, all strategies can win, including the fishing-free market strategy. Played wrong, and bankrupt you will go. Just like the real world.