We are overwhelmed with the proliferation of management, innovation and strategy frameworks in business. Is it time to step back and generalise, creating a “stack” for business thinking?
Over the past few years working in strategic consulting I’ve become a firm believer in the benefit of thinking apparatus and tools when developing strategies for organisations. However, most of the strategy tools we come across are in some way or another “propriety” or branded, we analyse industries with Porter’s five forces or Kim and Mauborgne’s blue ocean framework, we might look at our company’s value chain, we’ll measure performance with a Balanced Scorecard™, or look at innovation with a StageGate innovation system.
While understanding these frameworks is an incredibly important skill for the strategist (and particularly the consultant) as they are usually backed up by years of research and development and practical application through consulting, but the danger with following these frameworks is that they can encourage a lazy way of thinking about problems and they don’t encourage strategists to develop primary problem-solving skills.
What strategists need is a toolkit to develop strategy that doesn’t tie them into one proprietry view of their organisation. I’ve spent a bit of time unsuccessfully looking at whether anyone out there has developed an alternative to off the shelf frameworks but I couldn’t find one. So I propose a prototype strategy stack (in analogy to the Linux, Apache, MySQL, PHP “LAMP” stack) providing the neccessary machinery for strategists to explore strategy. This prototype stack comprises of 6 strategic machines, namely:
The concept is that when you are looking at a strategic problem within the environment, a corporation, or some sub-section of an organisation you can use these tools individually or in some combination to frame your thinking, explore and develop options, make decisions or develop strategy. In this way, we bypass the rote thinking that is encouraged by proprietary frameworks and develop customised tools for the problem at hand. Bear in mind this is very much an alpha test of this idea which I’m pretty excited about developing further and I’d love some comments.
I’ll go through each of these components in a little more detail.
One of the primary questions that strategist have to answer is deciding what an organisation is going to do with the limited resources it has at hand. For example, a corporation will have to choose between operating a number of businesses (and/or developing new ones), developing or maintaining a number of products, and running a suite of potential internal projects.
The portfolio looks at a number of options (businesses, projects or anything) and provides a framework for systematically evaluating these options in relation to each other. It may be a simple metric such as NPV or IRR that is used, or portfolios may be developed that compare products on multiple dimensions (BCG Matrix is an example here). The advantage of portfolio thinking is that it encourages businesses to think objectively about multiple options simulteneously, care must obviously be taken to ensure that you are comparing like for like.
Examples. The easiest way to find the fundamental portfolios in an organisation is to look at it from different levels (macro to micro), some examples are:
- The business portfolio – what businesses does your corporation want to be involved in.
- The product portfolio – what products do we want to provide in each market
- More proprietry portfolio models are the BCG Matrix and the GE/McKinsey Grid
The prism machine looks at an issue from a number of set perspectives to improve understanding of the whole, break a problem down, force opposing views and/or deal with compromise. The classic BCG consulting trick of breaking a problem down to a 2×2 matrix is the beginning of many useful strategic analyses, and many management and strategy frameworks look at the world through multiple perspectives and can be classified as prisms.
Examples. Some classic prisms are:
- The Strategy Diamond or Integrated Choices framework looks at strategic options from an arenas, differentiators, vehicles, timing and economic logic perspective
- The Performance Prism (surprise surprise) looks at performance from a stakeholder satisfaction, stakeholder contribution, strategies, processes and capabilities perspective.
- SWOT analysis is something of a two layer prism, looking at internal and external perspectives simulteneously with positive and negative attributes developing SWOT (strengths, weaknesses, opportunities, threats)
The funnel machine represents the reduction of some quantity, for example people, products or prospects over some other dimension usually time. The funnel thinks about these problems in discrete stages, which may mirror some internal process, have some barriers or “gates” that need to be qualified before the quantity in the previous stage makes it to the next. The great advantages of thinking using a funnel metaphor is that it encourages you to think systematically and process like about things which are probabilistic in nature (although be aware in radical innovation plays) and encourages you to invest in developing a funnel infrastructure that will allow you to get whatever you want out of the end (products, customers, good staff) in a consistent manner.
Examples. There are a few classic examples of how funnels can help strategic thinking:
- The Innovation Funnel, how products are selected, weaned, developed and commercialised
- StageGate Product Development process is a proprietry innovation funnel that looks at NPD through a series of stages
- The marketing funnel – how opportunities are selected, developed and capitalized upon.
- The HR recruitment process can easily be thought of as a funnel.
I’m going to save talking about three horizons models for another day.
Businesses run to a number of internal and external cycles as they operate and understanding these cycles can be the basis of excellent strategy and operations. Certain industries (notably construction/property and retail) have strong cyclical tendencies at different time frames and entire industries turn on a cycle of creative destruction. Internal to organisations there are a number of controllable cycles, where modelling and understanding of these cycles can improve the performance of an organisation.
Examples. some of these examples will be a little operational:
- The cash-to-cash cycle is one example of a bunch of organisational frameworks that are incredibly important for the profitability (and liquidity) of an organisation. The inventory cycle is another.
- Looking at business or economic cycles as a component of competitive and strategic analysis.
- Porters Value Chain (I’m still unsure whether to put in “process” in this framework/stack as another machine)
- The product development cycle
- PDCA or Deming Cycles (Plan, Do, Check, Act)
- The OODA (observe, orient, decide, and act) loop. Made famous by fighter pilots and scenario planners alike.
Networks are one of the primary keys to understanding strategy in the modern era. The network metaphor has always been present within organisations in the form of hierarchies, and organisations need to learn how to shift past these simple structures to drive connectivity. Taking the tools of graph theory and network analysis (or simply a whiteboard) the network can be used to discover, design and exploit connections and gaps within organisations, systems, markets and industries and can be effectively applied to many aspects of organisations.
Examples. Some applied strategic examples of a network based framework are:
- Stephan Lindegaard’s Three Circles for Open Innovation. Admittedly this one could also be looked at as a combination of a network and a prism (I’ll talk more about combinations at a later date).
- 5th Gen Innovation actually looks at the evolution of the innovation network (though from a primarily prismatic perspective).
- Causal Mapping, or in the case of the Balanced Scorecard community, Strategy Maps are a network of associated strategies (this could be combined with the differential below).
There are people out there who know a lot more about SNA and network mapping than I do, I’d love to learn about more network based frameworks.
Many business problems are associated with tension between two or more states and looking for the most appropriate way of dealing with this tension The simplest application of the differential is in the application of a gap analysis to a particular problem, resulting in a “we are at A, what is required to get to B”.
The differential, which may be the most challenging machine to use effectively, encourages bimodal or ambidextrous thinking about problems (if someone says cognitive dissonance I may throw something at them).
Examples. Some frameworks I’ve seen which I would classify as a differential are:
- Marty Neumeier’s Knowing, Making, Doing (here the making is the differential)
- Gap Analysis (as above)
- Grenier Curve (crises of growth) could be thought of as a bunch of differentials in a row.
- Porter’s Generic Strategies (which could also be thought of as a prism, but I think the tension between the three makes it an interesting differential example)
I hope this proposed strategic “stack” will allow a strategist to improve how they think about strategy, make interesting conclusions and perhaps break their dependence on proprietry frameworks. I should point out that while each of these individual components is useful by itself, they really come into their own when combined together to examine complex problems.
I’m interested in developing this idea further (on this blog hopefully) so I’ll be adding to the framework with new ideas, more elaboration and examples.
So, do you think a strategy “stack” comprising these six machines is a useful tool for thinking strategically?
One of the things that I was really excited about when I purchased (well, was lovingly gifted) my iPad was the ability to tap into the new world of digital magazines which was soon to sweep over the tablet world. I checked out the economist, the atlantic, the new yorker and HBR and truthfully was pretty unimpressed by the experience. Really these new magazines haven’t moved any further than the hyperbooks that were bandied around in the early nineties when CD-ROMs first became standard. The only mag I’ve looked at so far that begins to touch on what a digital magazine so far is PROJECT from Virgin and Richard Branson (but that has some pretty big flaws).
Although the potential for these publishing platforms is amazing, but there’s a long way to go. I see three major areas where these electronic magazines need to improve for them to bring the concept of digital magazines in line with (my) expectations. They are: content; community; technology
In today’s web connected world, we’ve become used to a constant flow of content, daily updates and live content yet all digital mazagines that I’ve used so far work purely on a basis of blocks of content, distributed in a periodic “issue” that directly mirrors the format of print. Why have we translated this metaphor directly into the digital realm? I do believe in the power of really well written content that by definition will be static (with the exception of comments), but surely there must be some way of incorporating into each issue some live content or topics rather than static reports and articles?
With the exception of the commenting in PROJECT (which unfortunately requires you to jump artificially to another section with no feedback telling you if a comment even exists) none of the digital magazines I’ve played with have any concept of social or community (PROJECT doesn’t have a twitter account WTF!). Surely, publishers can think about some interesting ways to engage their communities around their content. I can think of a few ways they could make community important for a lot of content types that are currently static:
- turn digital cosmopolitan’s surveys into digital ones with some stats to start with (actually do cosmo readers care about statistics?)
- Product/film/music reviews could include reader stats and comments (I’m sure you could make some money from iTunes here too…)
- “liking” articles, comments, starring. You know, things blogs have had for a couple of years now?
Why does each issue of PROJECT require a 500MB download and take 15 minutes to install? It’s quicker to walk to a newsagent and buy a copy of Wired than it is to get the digital issue? If I have 20 issues of magazines in my iPad (assuming I have a 16GB one and some other stuff on there) I’m screwed, and to be honest I don’t really see that much digital whizzbangery and amazing video content.
Platforms like Zinio make it cheap and easy to make digital download apps, they also make it really easy to be lazy with your content technology. Having a few touchy bits and some daggy embedded video isn’t really mindblowing (I remember seeing such stuff in PDFs about 8 years ago).
Content producers clearly need to start looking at their magazine platforms as true applications, and by putting time, effort and money into these platforms they are sure to see some advantage over their competitors (and maybe even onsell the tech for a tidy profit). In the meantime though, where the hell is search?
In conclusion, wake up or I’m going back to analogue…
I’m a relatively heavy consumer of content in print, paid and free digital content, yet currently I get more pleasure from reading print magazines than digital. I think content, community and technology is key to making digital magazines work and that publishers need to see that their future is digital and investing in development and innovation on their publishing platforms is going to pay dividends into the future.
Over the past year and a bit, ensparq has been a great platform for me to ramble about businessy stuff and attempt to tune up my writing skills and although they are still shoddy I think I’m slowly developing a bit of a voice (whether it’s worth listening to is another story). As you might know, wordpress has issued a challenge for bloggers to post every day/month for 2011 (possibly due to the falling popularity of blogging).
To cut a long story short, I’ll be taking up the weekly challenge. I’ve already written the first one, and I’ll be working through my backlog of ideas to attempt to build up at least one post a week from now on.
One of the unfortunate disadvantages of living in an isolated (yet otherwise wonderful) nation such as Australia is that occasionally concepts, businesses and products can take a little while to filter over from the US or Europe. Things like touch-and-go bus passes only recently arrived (in Brisbane at least), we still don’t have either Netflix or Hulu (although iTunes, Foxtel and Telstra are partially filling that gap) and wearing American Apparel over here will either make you really trendy or get no reaction at all (dependent on the current scene).
But with this isolation comes an advantage to locally savvy businesses and entrepreneurs who have an external focus to bring these ideas, products and businesses to their local markets. I don’t know how many BRW articles I’ve read showing some new startup which is doing something I’ve seen online in the states a couple of years back. If you’re lucky enough to travel regularly spotting an international trend, business model, idea, strategy or simply a product that hasn’t made it to your local market can be, in itself, a great strategy. Although large strategies like Virgin Blue are obvious translations, relatively innocuous things such as blogs can be successfully tweaked and localised in the form of Australianised (insert your local form here) content as has been seen here in Things Bogans Like which has been pretty successful if the reviews of the book I’ve spotted in GQ and the Australian are anything to go by, is pretty clearly influenced by Stuff White People Like, a US based blog, and marketing juggernaut, which makes fun of “white america” (which seems to translate to hipsters and suburbanites).
Although there are a million and one ways of localising I’ve built a table below that has a few examples that I’ve identified (this misses obvious ones such as simple products).
|Corporate Strategy||Virgin Blue copying the low-cost carrier form proven with Southwest Airlines
Big W taking the store concept from Walmart in the US (although not taking the small town component of the strategy)
|Business Model||Internet – Catch of the Day (catchoftheday.com.au) localising Woot! (www.woot.com)|
|Content Strategy||Localisation of TV shows (Biggest Loser etc.).
Localisation of publishing style – Chaser in Australia copying The Onion in the states (yes, shock horror, the chaser originated as a pretty lame localisation of a massively funny US comedy publisher).
Humor and/or websites (Things White People Like becomes Things Bogans Like)
Personally, I actually think the best example of a market that would respond well to this strategy is a westernised, yet slightly isolated nation such as Australia – it might translate to other cultures but I haven’t thought about that yet. As per usual, use your brain when localising, cultures and economies are not completely compatible.
I actually think this is a pretty interesting topic (particularly for Australia) and I’m sure there are way more examples of this and I’m going to set up a collaborative list when I figure out the best platform.