10 Ways To Reduce Your Organistion’s Complexity

Definition: Simplicity

As organisations succeed and grow they begin to face new issues and problems for managers to solve. One of the biggest issues, often unseen, is the problem of complexity.

Organisational complexity is a like an overgrown garden. Both are a result of neglect rather than design, and, although you may still be able to see some elements of the original intent, the weeds and light-hogging plants slowly but surely stunt the growth and impact of the best blooms.

A certain level of complexity is inevitable, yet many organisations make this situation far worse by living with too many management layers, fudging decision rights and accountabilities, setting unclear objectives and persisting with inappropriate projects and programmes.

Take your organization through a periodic simplicity audit and rate yourself these statements:

  1. We have a clear strategic intent that, in simple, everyday terms, articulates how we will succeed.
  2. As a management team, we have identified a handful of objectives (say, 3-6) that drive our focus and activity.
  3. We have crystal-clear accountabilities across the business, and managers are never concerned that they are stepping on someone else’s toes.
  4. Managers know exactly how to get approval for a new investment or initiative.
  5. In a typical week, I spend less than a quarter of my time in formal meetings.
  6. We have minimised the number of management layers – there is no further room for improvement.
  7. Our planning and budgeting process is short, sharp and effective, taking less than three months from start to finish.
  8. When a new programme or assignment isn’t working, it is quickly adjusted or killed – we do not allow problems to fester.
  9. I set my team clear objectives, but leave it to them to work out the best way forward. And they act in the same way.
  10. In the past six months, we have taken big strides in removing unnecessary complexity from our organisation.

Without clarity and simplicity, your projects and your people simply get stuck in the organizational swamp. So, how many of these statements can you honestly say you agree with? If it’s less than eight then, in my experience, your organization will struggle to deliver major programs of change and development.

In that case, work on each of the areas to tackle your organisation’s complexity at source. Simple!

© Stuart Cross 2017. All rights reserved.

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Strategy’s 7 Fatal Flaws

Watch out!

In my experience, many successful CEOs and senior executives dislike the time they have to spend on developing strategy. There are two reasons for this:

  1. First, strategy is seen as being difficult. Consultants and academics have somehow succeeded in creating a misguided mystique around strategy that only people with an IQ of 150 or more and who have attended the world’s best universities can do it, despite the overwhelming evidence to the contrary that demonstrates that the best business strategies are created and led by pragmatic business leaders.
  2. Second, and more importantly, strategy development perceived to be irrelevant to managers’ daily and most pressing issues. Attending strategy meetings and retreats feels like a world away from the real work that must be done, and as the meeting progresses the frustrated executives begin to take a peek at their smart phones so that they are able to keep up to date on what’s really happening with their business.

To a large extent, the frustrations of these executives are not their fault, but result directly from the way strategy is developed and managed in many organizations. I have identified seven ‘fatal flaws’. By addressing each of these flaws, you will start to hardwire your strategy work into the real issues and opportunities facing your business.

  • Fatal Flaw #1: Allowing planning to kill strategy. The term ‘strategic planning’ is an oxymoron. Strategy is all about creating a direction for your business that maximizes your chances of future success. Planning, on the other hand, is about the allocation of resources to achieve – usually incremental – targets. The problem arises when you try to do the two together because the urgency of planning will always beat the importance of strategy, resulting in incremental gains rather than step-change breakthroughs.
  • Fatal Flaw #2: Incremental thinking. The key to effective strategy development is the ability and willingness to engage in ‘what if’ questions that encourage dramatic new possibilities for your business. Unfortunately, however, there are several barriers to achieving this. An unwillingness of many senior executives to be seen to be ‘wrong’, unclear or limited goals and a resistance to challenging the sacred cows of your organization and market all contribute to incremental rather than step-change thinking.
  • Fatal Flaw #3: Putting financials ahead of ideas. Developing a business strategy relies on creativity and idea generation far more than it is driven by analysis. A certain level of analysis is, of course, essential, but without a greater focus on ideas, you will simply end up with a greater understanding of your current market position, rather than a dramatic new way to grow your business.
  • Fatal Flaw #4: All vision, no direction. A vision is not a strategy. While a vision statement can act as a point of inspiration for your people, you must also define how you will turn that statement into tangible success.
  • Fatal Flaw #5: A failure to make trade-offs. The flip-side of a strategy is deciding what you’re not. If you’re unwilling to make clear and proactive trade-offs, it is unlikely that you will ever turn your strategy into reality.
  • Fatal Flaw #6: Insufficient focus on action. Few, if any strategies emerge from implementation unscathed. It is only by learning from your actions that you can really clarify how you will best succeed in the future. In many ways, the best companies are not those with the best strategy, but those that can learn more quickly and more effectively than their competitors.
  • Fatal Flaw #7: A reliance on external consultants. As a consultant myself, I know that, done well, working with an external consultant can add real value to the strategy process. But ownership of your strategy only really happens if your people have been effectively involved in developing it. You cannot simply delegate the development of your business strategy.

Which of these seven fatal flaws are affecting your ability to develop and deliver an effective, high-value strategy?

© Stuart Cross 2017. All rights reserved.

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Business Rocks – The Last 98% of Success

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This week’s riff: If you want to lose weight, the best way is to manage your calorie intake on a daily basis. Similarly, if you want to get stronger, you should undertake regular – ideally daily – exercise, and if you fancy becoming a good guitar player, you should put some time aside each day to practice and improve.

In other words, it is the regular, daily discipline of action that makes the difference in achieving your goals. I call implementation the last 98% of strategy because you will only ever succeed if you and your managers and teams across right across your organisation have the collective discipline to make it happen on a daily basis.

It’s a little like oil exploration. Without the initial identification of a possible oil field the oil company will not succeed. But that is just the start, the first 2%. The remaining 98% of the company’s success depends on how it executes to overcome the inevitable production and logistical issues in bringing the oil to the surface.

What steps are you taking to improve the daily implementation discipline of your teams so that you can deliver the final 98% of your strategy and ensure that it succeeds?

Off The Record: Discipline by Nine Inch Nails

Once I start I cannot stop myself

I need your discipline

And you know

I need your help

© Stuart Cross 2017. All rights reserved.

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Cross Shots: The Magic Number

Stuart Cross talks us through the ‘real’ magic number for business and how you can implement this into your strategy.

© Stuart Cross 2017. All rights reserved.

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The Most Important Driver Of Your Strategy

iStock_GoalFocus

Your performance goals drive your business strategy. If your goals are fuzzy, weak or unclear, don’t be surprised if your strategy has similar characteristics. On the other hand, clear, ambitious goals – such as becoming the #1 player in your market, or achieving sales of £x million – demand a clear and well thought through strategy.

That is why it is so important to identify your organisation’s #1 performance goal; the goal, above all your other targets, you want to achieve over the next few years.

Here’s what Ian Filby, the CEO of DFS (the UK’s leading sofa retailer), said about the importance of goals in my book, The CEO’s Strategy Handbook:

One of the big strategy lessons I have learnt as CEO of DFS is that a strategy has to meet a clear goal. Without agreement about the goal, you can’t settle on your strategy. As a result, one of my first tasks was to agree the exit strategy goal – to agree the size of the business, its growth prospects and the type of sale expected by the owners.

As we did this we realized that we had different sale options according to the length of the current ownership journey, that inevitably would be market dependent.

We then built on these insights to create some new growth options, which hadn’t previously been considered. That’s what I mean about goals driving strategy.

What are your big, strategic goals? How clear and distinct are they? And what must you do if your organisation is to achieve them?

© Stuart Cross 2017. All rights reserved.

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Business Rocks: The Critical 4%

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This week’s riff: As the United Kingdom begins its seemingly irreversible process of leaving the European Union, many commentators are still trying to understand how the Leave side won? Some of the big arguments – the £350 million budget, immigration and ‘taking back control’ – were obviously important. But equally critical were some of the less obvious actions of the Leave campaign.

I’m currently reading an excellent book called All Out War, by Tim Shipman, which brilliantly and even-handedly sets out all the machinations that led to the Brexit vote. One of Shipman’s stories highlights how Steve Baker, the little-known MP for Wycombe, may have single-handedly changed the course of UK history. As the leader of a group called Conservatives for Britain, Baker saw an ICM poll in 2015 that demonstrated the importance of the referendum question to the final vote.

The poll, which took place a year before the actual referendum, showed that if the question was ‘Should the UK remain a member of the EU?’ 59% said yes. But if the question was, ‘Should the UK remain a member of the EU or leave the EU?’ only 55% opted to stay in.

In other words, there was 4% in the actual words used in the question. As a result, Baker led a successful campaign to persuade the Electoral Commission to change the government’s proposed ‘yes/no’ question. Given the final 52% vote in favour of leaving, the wording of the question made all the difference.

Business success is not only driven by delivering great products and services that customers love. It is also critical, as Steve Baker understood, to ensure that your ‘playing field’ is set up to give you the biggest chance of success. What steps could you take to make your playing field more advantageous to your business? You never know, even an improvement of 4% could make the difference between failure and glory.

Off The Record: Europe Is Our Playground by Suede

Run with me baby, let’s take a chance

From Heathrow to Hounslow, from the Eastern Bloc to France

Europe is our playground, London is our town

So, run with me baby, now

© Stuart Cross 2017. All rights reserved.

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5 Strategies To Accelerate Innovation

Text concept on blackboard with businessman

Strategic advances are made when organisations become the first to find a profitable way to exploit new opportunities. These opportunities may be created by changes in customer tastes, technology, economics or other external factors.

Critically, strategic advances are not made through problem solving. Resolving problems is about dealing with the past, not the future. Problem solving may help you drive performance – or at least return it to previous levels – but it will not dramatically improve your strategic position.

Many businesses, and their leaders, are focused on problem solving ahead of innovation, however. Of course, you need a mix of both, but the key issue is where your real focus is.

Here are five ways you can raise the bar and create a more innovative business.

  1. Become more future-focused. Problem solving is based on what’s happened in the past. If you’re more focused on the future you are looking at how you can make Version #10 of your new product great, and not simply spending your time resolving all of the issues associated with Version #1. How much of your time are you focused on future trends and opportunities?
  2. Become more outward looking and customer focused. This is more than undertaking research. It means spending real time with customers, experiencing your products and services from where they stand, and identifying their frustrations and hidden needs. How much time do you spend each week with your customers?
  3. Embrace prudent risk taking. There is no growth without risk. You do not always have to bet the farm, but by accepting and working with a certain level of risk you can focus on maximising the upside from your new ideas. What balance of risk vs. return are you prepared to take with new ventures?
  4. Acknowledge the inevitability of failure. Failure is the Siamese twin of innovation. The secret is not to avoid failure, but to fail as fast and cheaply as possible. Using prototypes, getting your ideas out there and learning as you go are critical approaches to driving strategic advantages from innovation. What is your attitude to the failure of early trials and prototypes?
  5. Push accountability through the organisation. Innovation cannot happen on the top corridor. It takes place in the outer reaches of your organisation. For innovation to become systemic, you need people to feel both empowered and accountable for their actions to bring new ideas to your customers. How active are your front-line teams in suggesting and developing new ideas to grow your business?

Which of these five approaches could help your business to become more innovative?

© Stuart Cross 2017. All rights reserved.

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Business Rocks: Finney’s KPIs

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This week’s riff: Finney, our beloved cocker spaniel, is an expert environmental scanner. Each morning he will lie on our bed and see what clothes my wife and I put on. If we are wearing business clothes, he realizes that he won’t be going for a long walk for a while and heads off for a little sulk. If, however, we put on jeans or casual clothing, Finney will bounce around the house with his tail wagging: he immediately knows that it’s going to be a good day!

Similarly, if Finney is in our front room and hears the fridge door open he probably won’t move; but the moment he hears someone opening up the packet of ham slices he’s off to the fridge like a shot. What’s more, he can discern the sound of my wife’s car from all the other vehicles passing by, long before it reaches our driveway and will immediately head to the front door to meet, as he’s quite properly realized, the leader of our particular pack!

Most businesses are awash with data, and business leaders are forever being encouraged to add more KPIs to their portfolio of performance measures. Most of it, however, just becomes noise. The key to managing the growth of most businesses is through identifying and focusing on the handful of objectives – and the related measures – that have a disproportionate impact on your business’s performance.

The CEO of one of my clients, for instance, focuses first and foremost on the size of his company’s order book, the percentage of orders delivered ‘on time and in full’ and the value of sales invoices still outstanding. If all three of these are healthy, he believes the company will be successful, but if any drop below his required standards, he uses it as sign to take action.

Likewise, Finney gets by with just a few visual and aural clues to determine his plans and happiness. Which are the few critical objectives and KPIs that you should focus on to drive your organisation’s success?

Off The Record: I Love My Dog by Cat Stevens

I love my dog as much as I love you

But you may fade, my dog will always come through

All he asks from me is the food to give him strength

All he ever needs is love, and that he knows he’ll get

Stuart Cross 2017. All rights reserved.

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Shifting From ‘Quick Wins’ To ‘Big Wins’

making a big change

One of the biggest drains on your organization’s time and energy are “quick win” projects. These projects often emerge at the end of a team or departmental ‘away day’. Following a brainstorm of potential ideas to improve performance, each idea is reviewed on two dimensions: (1) its overall value impact; and (2) its ease of implementation.

Unfortunately, few, if any of the ideas are both high-value and easy to implement. Instead you end up in a discussion over whether to pursue high-value, hard-to-implement initiatives, or lower-value, easy-to-implement projects. More often than not, the low-value, easy-to-deliver projects win out.

The barriers to the big prizes just seem too big and too difficult – especially at the end of a long and tiring workshop. But pursuing the “quick wins” is mistaken, for three reasons:

  1. Their impact is too small to register on any performance scale. This means that the project is never at the top of anyone’s priorities and is never delivered.
  2. They consume more effort than you originally estimate. The lack of progress means that you have to spend more time managing your project and communicating with and influencing your reluctant stakeholders.
  3. They prevent you from getting on with more important projects. This is the biggest reason of all. As Apple boss, Steve Jobs, once said, “It’s only by saying no that you can concentrate on the things that are really important.”

So how do you ensure that you are focused on actions that are both valuable and strategically important? The simple answer is to get on with the important stuff. If something is valuable, but difficult, that is all the more reason to do it.

Here are three practical steps you can take:

  1. Stop, reduce, slow down, delegate or defer “quick win” projects that have neither a significant financial or strategic impact. One of the first acts that Sir Stuart Rose took when he became CEO of UK retail giant, M&S was to reduce the number of ‘strategic’ projects from over 30 to less than ten, so that the energy of the organisation could be sensibly focused.
  2. Refocus your time and effort onto high-value projects that are directly in line with your broader strategic objectives, even if they are harder to implement. As Jeff Bezos, CEO of Amazon, once commented, “It’s important to be stubborn on the vision and flexible on the details.” By this he meant that Amazon’s success came from relentlessly pursuing big strategic objectives and being willing to develop and test many different solutions before finding the best one.
  3. Break these projects down into bite-sized chunks, enabling you to create the focus, momentum and pace that is required to deliver success. This requires that you identify the major milestones the project should deliver, as set out in the next section.

Focus on your big projects, your big wins, not meaningless “quick wins” that will simply become a distraction for your organization. As your teams then break down these major, meaningful challenges into more focused sub-goals and milestones, they will increase their energy, motivation and enthusiasm and accelerate the delivery of your most important objectives.

© Stuart Cross 2017. All rights reserved.

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Business Rocks: The Danger of Bargain Dungarees

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This week’s riff: My wife came back from her trip to Lidl this week with a pair of dungarees. I know that Lidl is famous for its impulse offers, so that’s not perhaps so surprising, but the dungarees were a size 10. Given that my wife is 5 foot 2 inches, 7 ½ stones and a size 6, I asked why she’d bought them. “Because they look good and were such a bargain!” she exclaimed, a little exasperated with my poor appreciation of her shopping strategy.

The desire to believe that things will turn out well, despite warning signs and evidence to the contrary, can prevent effective decision making. When I worked for Boots the Chemists, for instance, the company wrote off over £100 million through a misplaced investment in dentistry and other ‘wellbeing’ services in its stores, even though the trial sites failed to provide any evidence that the investments would succeed. Similarly, Tesco managed to lose over $1 billion in its US business, Fresh & Easy, even though the early signs were that the offer was not suited to American shoppers.

Yesterday I helped a client understand that the company’s bespoke product range, although emotionally appealing to the organization, was a tiny, loss-making part of the business that should probably be shut down. The company’s management had historically simply wanted to believe it was a good idea – it has become a microcosm of the organization’s culture –  and it has taken a new CEO and other fresh pairs of eyes to see that the cost and effort of making bespoke, one-off ranges simply makes little business sense.

My wife is reluctantly taking her “bargain” dungarees back to Lidl and, as she does this, why don’t you ask yourself what you are doing to view your business activities and performance dispassionately so that you don’t invest in unprofitable and unrewarding activities and focus, instead, on where you, your team and your business can grow and thrive?

Off The Record: I Want You by Elvis Costello and the Attractions

The truth can’t hurt you, it’s just like the dark –

It scares you witless

But in time you see things clear and stark

© Stuart Cross 2017. All rights reserved.

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