Archive for June, 2009

Five Questions To Identify The Secret Of Your Success

Tuesday, June 30th, 2009

This is an article I have published this week at BNET.co.uk, and which can be found here:

 

Understanding, developing and exploiting your company’s strengths and competitive advantages is at the heart of any strategy for business growth. Yet many business leaders do not fully understand how and why their company wins.

Executive teams often draw up a list of strengths and competitive advantages based on gut feel but have few robust facts to support their beliefs and they risk building their business strategy on flawed assumptions.

A UK supermarket chain I worked with needlessly invested in a multi-million pound bonus package. Management held a belief that the quality of their store teams gave the company a competitive advantage versus other grocers. To underpin this belief the company created a bonus for store managers based on the satisfaction of their store staff.

The problem was that there was no discernible link between staff satisfaction and customer satisfaction for this retailer. Customers were focused on speed, convenience and price, which don’t always tally with satisfied staff.

Identifying your core advantages needn’t take months of detailed analysis. Like a good episode of “Columbo” – simply follow the trail of clues and answer these five questions:

  1. Which of your products or services are outperforming the market? Where are you experiencing high sales and profit growth? Where do you have high market shares, and where are these growing? Importantly, the areas where you are winning may not necessarily be where your sales are highest! You need to look for unusual and unexpected areas of success, and these may be in some of your smaller business areas
  2. What are the characteristics of these products or services? Are they new product ranges or old? Do they require high levels of pre or after-sales service, or are they self-select? Are they exclusive or freely competed? Are you able to offer a premium price, or have you discounted to the market?
  3. Which customers are buying them? In most cases you will not be winning with all customers, but with certain customer groups. What are the demographic (who are they?) and psychographic (what makes them tick?) characteristics of your buyers?
  4. Why are these customers buying them? Ideally you will have some reliable customer research, otherwise you need to get as close to the customer as possible. Talking to your sales teams will give you a good indication of the reasons if you probe appropriately.
  5. What are the skills and capabilities that have enabled you to deliver these results? Is it your low costs that enable you to offer such low prices? Or is it your product development approach that allows you to gain high share and maintain margins?

Understanding what drives your success will help you make better investment decisions to further improve your key capabilities and reduce excess investment where you are not affecting customer behaviour.

© Stuart Cross 2009. All rights reserved.

Posted in Growth, Strategy | No Comments »

Lead or Liked?

Saturday, June 27th, 2009

Today’s FT editorial argues that President Obama is so focused on being liked that he is not taking the necessary actions to lead effectively. In particular, he is not grasping the thorny issues on healthcare reform and climate change.

Whether you agree with this view or not, it is good to be reminded that leadership is not about being liked. 

Leadership is about raising the bar, clarifying goals, selecting and developing talented people, influencing and selling, setting priorities, making the big calls, persistence, creating meaning, learning, creating momentum, driving action, building relationships and trust, and managing the politics.

At the end of all this you may or may not be liked. But don’t start with that as your goal.

© Stuart Cross 2009. All rights reserved.

Posted in Leadership | No Comments »

Don’t Take The No-Risk, No-Growth Option

Thursday, June 25th, 2009

This is an article I have published this week at BNET.co.uk, and which can be found here.

 

Avoiding risk is the most effective way to make your business irrelevant, redundant and bankrupt.

Unfortunately, it appears that, in the face of the recession, risk avoidance has become the preferred strategy of most British companies.

Last week, the insurer RSA and the Future Foundation published a report that suggested that British companies were choosing not to pursue growth opportunities.

Although over 60% of the 250 business leaders questioned said that opportunities existed in their markets, less than half of them believed that their company would grow. More worryingly, only a quarter of these senior executives agreed that risk-taking was a good way to make money.

It seems that the mismanaged risk-taking in the financial sector over the past decade, the subsequent decline in bank lending and the stream of bad news in the media, is persuading our business leaders to steer clear of new opportunities and their inherent risks.

This attitude is both wrong and concerning. Prudent risk-taking is at the heart of corporate growth. Indeed, most company breakthroughs occur when business leaders spot a new opportunity and find ways to exploit it profitably.

Take Tesco, for example. It is one of the UK’s biggest corporate successes of the last 20 years, and its executive teams have continuously raised the bar and been willing to invest in new opportunities that have included international expansion, new ranges and departments, new formats, new channels and stronger customer relationships.

What’s more, history tells us that continuing to invest in growth during recessions is likely to drive longer-term success.

For example, McKinsey, the management consultants, studied 1,000 companies that performed strongly following the recession of the early 1990s. During the downturn these companies had clearly demonstrated a greater appetite for acquisitions, for using their cash reserves and for investing in R&D, marketing and sales.

Of course, taking risks does not mean being reckless:

  1. Understand and focus on the assets and capabilities that will allow you to exploit the opportunity.
  2. Understand the nature of the risks involved: their likelihood of occurring and their impact if they were to become manifest.
  3. Put in place preventative and contingent actions that enable you to minimise the impact of the key risks on your business.

Above all, you shouldn’t avoid risks. British business leaders must find ways to embrace the risk and uncertainty that comes with opportunity. As Tesco’s management team know it is the only way to drive market-leading growth.

© Stuart Cross 2009. All rights reserved.

Posted in Growth, Innovation | No Comments »

Is Your Strategy Lost In Translation?

Wednesday, June 24th, 2009

This is the latest article from my monthly e-newsletter, Great Results:

Is Your Strategy Lost In Translation?

Many managers believe that strategies fail in development, while others argue that they fail in implementation. They are both wrong. The most common cause of ineffective strategies is through the mismanagement of the gap between development and implementation, an area I call “strategy translation”.

Let me give you an example. Two years ago I helped a client identify their strategic priorities. Their most important internal issue was to improve the low productivity of certain sales teams, and we established a high-level strategy to resolve this issue.

A month ago I was back at the same client. Unfortunately, their biggest internal issue had not changed; it was still the productivity of their sales teams.

The reason that the issue had not been resolved was not because of a lack of implementation skills (they had several capable programme managers), or because the strategy was flawed in its development. The lack of progress was, instead, due to these three factors of translation:

  1. Critical differences in opinion, between the CEO and one of the executive directors, about the best way forward had not been resolved. The lack of alignment and shared commitment meant that the cross-functional programme team was unable to really get going.
  2. Explicit objectives had not been established. Although we had agreed a general direction for improvement, we had not set specific performance goals, or broken down our high-level aspirations into smaller objectives that the organisation could understand and deliver.
  3. Accountabilities for improvement had not been embedded into the performance management system. Personal performance contracts did not reflect the agreed strategy, partly because the objectives were insufficiently explicit.

These three steps are crucial in translating strategic concepts into a set of actions and operations that can be implemented. In US sports’ terms, they are the ‘hard yards’ of strategy, forcing alignment and commitment across the organisation, particularly its leaders.

If the executive directors had acknowledged their differences the programme team could have quickly tested two or three different solutions to determine the best way forward. But with no clear choices being made the issue continues to hold the business back.

The bottom line

As with my client, failure to take these crucial steps of strategy translation leaves organisations stuck in a strategic quagmire. It is not possible to go back, because the issue has been identified and is ‘out there’. But, until there is focus, alignment and specificity about future objectives it is equally difficult to move forward.

 

© Stuart Cross 2009. All rights reserved.

Posted in Strategy | No Comments »

Simple is hard

Monday, June 22nd, 2009

Despite the evidence that  businesses with a focused offer outperform more diverse businesses, many companies find it difficult to create a simple, focused model for success.

The truth is that creating the simplicity required is difficult. There are three core reasons for this:

  1. It forces choice. Keeping things simple requires constant pruning of the business, its offer and its operations. This, in turn, demands that choices are made, certain projects are killed and that some activities are eliminated. Many managers find this difficult, but it is necessary. It is little surprise that when Sir Stuart Rose first took over at M&S, the capacity and the capability of the organisation to drive growth was aided by a reduction in “strategic” projects from 30 to 10.
  2. It may lead to some lost sales and profit in the short term. Many companies drive growth by adding one or two more sub-categories to their existing offer, but, over time, this stifles the energy of the organisation to deliver its core business effectively. Unilever, on the other hand, has delivered recent growth on the back of  focusing on fewer categories where the company has real competitive advantages. Despite losing sales in some less attractive businesses, the company has more than made up for this by focusing its resources where it can achieve better returns.
  3. A fear that it reduces options for future growth. The economic downturn and related uncertainty has encouraged managers to hedge their growth. It is true that the recession will create different market opportunities, but history- see here and here - tells us that it is those companies that focus on investing where they are advantaged that perform best in the subsequent recovery.

The purpose of this blog is to  give executives more confidence to create focus and simplicity in their organisations, and tohelp them eschew the temptation for the small, incremental gains that add unnecessary complexity.

I welcome your ideas, comments and challenges and hope that you’ll join in me in this journey.

Very best, Stuart.

 

© Stuart Cross 2009. All rights reserved.

Posted in Growth, Simplicity, Strategy | No Comments »