Category Archives: Strategy

Effective Policy Deployment Process

As per this recent article in Industry Week on “planning an effective policy deployment process”, there is a difference between a strategic plan and strategy deployment. While a strategic plan is a three- to five-year vision of where you want an organization to be, strategy deployment is the one-year plan or process instituted to break down that vision into short-term goals that can be assigned, measured, provided with resources, and revisited to determine progress.

While short, it was an important article because many supply chain process improvements fail due to poor execution, which boils down to a failure to not only manage the change, but break the change down into manageable chunks that can be assigned, measured, provided with resources, and implemented in reasonably short time periods to demonstrate progress and interim success before enthusiasm for the initiative wears off.

In other words, the key to effective policy deployment is in the details. A long term vision is important, but so is a manageable path to get there that takes into account the timeframe that will be required which, as per Bob’s recent article on Procurement and Supply Chain Transformation: How Fast, will generally take a good 18 to 36 months.

Has Fear of Failure Kept Companies Dumb?

As you know, I’ve been on my dumb company kick ever since the recession started as nothing disgusts me more than good companies flushing themselves down the toilet from a seeming inability to stand out from the crowd and do the right the thing. It’s something I still can’t fathom, despite my best attempts, but after reading this recent blog post over on Harvard Business by David Silverman on “How Successful CEOs Respond to Failure”, I may have found another answer.

They’re afraid to fail. And that’s just stupid. Everyone fails. Even the doctor. The difference between those companies and individuals who enjoy grand success and those who don’t is the smart companies don’t release the failures. Great companies and great people learn from their mistakes, fix the problems, and then go on to design and release a great product or service. Remember Tom Watson‘s formula for success:

    It’s quite simple, really. Double your rate of failure. You are thinking of failure as the enemy of success. But it isn’t at all. You can be discouraged by failure — or you can learn from it. So go ahead and make mistakes. Make all you can. Because, remember that’s where you will find success.

Or, as the author notes:

    the professional makes as many mistakes as the amateur, the difference is, a professional fixes them faster.

So go forth and fail. You’ll prosper faster that way!

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Time to Start Preparing for the Next Recession

Wow! This recession isn’t over yet and CNN Money is already telling us to “prepare for the next recession”! (CNN Money, Sep 25, 2009) Considering that boom-and-bust cycles have been happening faster and faster, it’s good advice, but it’s still a bit of a downer. I agree with Moore (in the contained video interview) that a new economic order is likely needed, but it’s not going to happen any time soon, so we have to optimize against what we have.

So how do you prepare for the next recession? The article offers three primary pieces of advice:

  • Make friends now with people you’ll need later.
    For example, if the government gives you a chance to sit on task forces, send executives, not functionaries. It doesn’t look good when the CEO only shows up to lobby officials on a potential tax or regulatory change that would benefit his or her company.
  • Listen to unconventional wisdom.
    No one wanted to listen to Jeremy Grantham when he said that real estate and asset prices had become insane. He’s still working when many fund managers aren’t.
  • Don’t go soft on evaluations.
    The best companies, like P&G, are as rigorous in evaluations in good times and bad. That’s why they never find themselves with a roster of C players when the downturn hits.

It’s all great advice, and I’d heed it because you’ll do even better than your peers during the recovery if you do.

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Six Keys to a Successful Reorganization (of your Supply Chain)

This fall, Strategy + Business, with the help of Booz & Co., got “Inside the Kraft Foods Transformation” and talked with level top leaders about their three-year turnaround and their campaign to reorganize for growth. It was a good article, but the best part was the six keys factors to a successful reorganization because not only are these themes common to Kraft, but they are common to most of the studies I’ve read regarding transformations in the leaders in the Food & Beverage and Consumer Packaged Goods industries. Since they definitely deserve to be repeated, I’m repeating them.

  • Start with the Business Strategy
    The new organizational model should primarily enable and catalyze the strategic direction of the company. An organization can only align behind a clear strategy.
  • Go Beyond Lines and Boxes in Organizational Design
    The right people and the right organizational chart is important, but supply chain is people, process, and platform. All three have to be aligned in the right workflow, under the right metrics, to fit the right goals.
  • Understand that One Size Does Not Fit All
    For example, a centralized strategy might work for the majority of your categories, but a minority might have to remain decentralized, or vice versa. Make exceptions where exceptions make sense.
  • Have Thorough Planning Lessons Pre-Launch
    Not only do major change initiatives work best when key shareholders have had a chance to articulate their concerns and grievances, but they also work best when sufficient time has been taken to identify what could go wrong and how those situations will be dealt with. It’s easy to focus on the ideal process flow, but they keys to success is having streamlined recovery plans in place when something goes wrong.
  • Leverage the Power of Leaders
    Make sure they are actively involved in all changes. Talk isn’t enough! Actions speak much louder than words.
  • Expect a Multi-Year Journey
    Major changes don’t happen overnight, especially if you are a multi-national. If you put a realistic, multi-year, timeline in place, you will get there … and do so with great success!

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All Brands are Niche Brands

I loved the title of this recent article in Strategy + Business. All Brands are Niche Brands. It’s true. It doesn’t matter what you sell — automobiles (which the article was about), computers, music players, clothing, fast food, etc. You name it, it’s niche. It doesn’t even matter if the industry has a clear “market leader”, like Microsoft in operating system software, because, when you get right down to it, even though Microsoft might still have 85% of the OS market, they have so many versions that there is no true majority leader. Furthermore, as Linux and Mac OS X gain market share, their market is shrinking.

As Stephen Dubner and Steven Levitt, authors of Freakonomics, and Chris Anderson, author of the Long Tail, have noted, with a global population approaching Seven (7) Billion, two standard deviations from the mean is fast becoming a sizable market in its own right, with a potential market size of up to 280 Million (as only 95.4% of the global population is within two standard deviations of the mean). If we subtract the 39% living in poverty, and then restrict our market size to the middle class (about 45% in non-third world economies), that still leaves a potential global market size of up to 76 Million. And if even only 1% of that market would be interested in your product, that’s still a sustainable business for a small company.

Plus, with product proliferation almost out of control in some verticals — such as cell phones, media players, and clothing — it should be easy to see that niche markets are fast becoming the norm.

So next time you’re sourcing, remember that you’re not just sourcing a commodity, you’re sourcing a niche product for a niche market and, sometimes, differentiation does help.

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