Strategy in an Uncertain Future

Six key questions answered

October 2012

Strategy in an Uncertain Future a response to Audience questions

by Nick Bruse & Tony Inglis Firstly, thankyou to TEFMA, ATEM and everyone that attended our presentation Strategy in an Uncertain Future, that Tony Inglis and I presented at the TEMC 2012 conference. During our presentation we prompted the audience to ask questions, which we would then digest and provide answers to. This document captures those answers. For those of you who were unable to attend our presentation (view slides) we discussed how a new mindset is required when developing strategy in an industry undergoing high levels of change for example the higher education sector. But these questions are relevant to all industries undergoing high levels of change. From the 60+ attendees, all questions boiled down to six key areas. The questions were as follows: How to manage the people aspects when change is occurring in the organisation? How to position or differentiate your services and offerings? What type of governance and leadership is required in a changing industry? How can we be expected do more with less funding and resources? How do we manage change in such a way that we don't just manage risk, but take advantage of the opportunity too? How do we need to change our ways of working in uncertain times?

What weve done is summarise our thinking around each of the areas below We have written our responses to suit a broad audience, so we apologise if in some cases we are telling you things you already know. What we are seeking to do with these answers, is provide some added thought horsepower that might kick-start a new line of thinking for you and/or your organisation. If you would like to read any of your colleagues comments or post a question or comment on this article, you can so by visiting the LinkedIn ATEM group and going to this discussion. You can contact both Tony and I directly also. Our details are at the bottom of this email, and dont forget to you can follow Thinc Beyond on twitter and connect with us on linkedIn Read on for our answers. Regards Nick Bruse Principal, Thinc Beyond

Strategy in an Uncertain Future a response to audience questions - TEMC 2012 Copyright Thinc Beyond 2012

October 2012

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How to manage the people aspects when change is occurring in the organisation?
At the heart of change is uncertainty. Often people say that uncertainty is a fear of the unknown, but I believe that its a fear of losing what we already have - and in some cases this is certainty. This is why the adage "why not take a chance, you have nothing to lose" is so powerful - it reminds us that our desire to avoid loss is often greater than reality of it. With people in changing organisational environments, those that perceive they have more to lose - jobs, certainty or clarity of their of role, benefits, their office - will struggle. Those that feel they have little to lose, will more likely thrive. You must also consider that certainty is a very subjective measure. After all, many financial institutions were certain that a sub prime meltdown could never happen. By altering or renormalising peoples perception of what is certain, we can help them deal with elements of change. One way to manage the people aspects of a changing business, is to provide a level of collective clarity for the team - i.e. to provide a different certainty. This can soften the psychological (individual) and the sociological (team) impact of change. Now this is obviously a complex topic, and each situation will differ but here are a few tips of what can be done. This list is obviously not exhaustive. Run a collective process, e.g. workshop, team project, to do the following: Understand the external factors impacting your organisation and your broader institutional objectives and agree on the organisations Key Result Areas, then bring your team together to collectively understand how these might be achieved, as well as hear their concerns about the resulting change. Discuss and spend time in the present (part A of our strategy model we discussed) to make sure everyone understands the reasons for change. Prioritise - remove the uncertainty of trying to pursue multiple targets and focus on a few that are achievable and important, and get them done. Clearly define roles and responsibilities, and change KPIs to match the new objectives. Nothing will slow you down more than people pursuing old objectives for their annual bonus.

As mentioned in our presentation you do need to think about actions within an implementation framework. Comment or ask question

How to position or differentiate your product and service offerings?

Companies often spend millions of dollars trying to crack this question. At the heart of what they are doing is trying to come up with a unique way of servicing their customer needs, whilst avoiding high levels of competition. There are two processes at work in society that are geared towards achieving this. One is the
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top down planned approach - lets throw our best company minds at it. The other is bottom up emergent approach - lets be one of a thousand startups that try and hopefully succeed. Whilst we dont have pages to go into these approaches in detail, what we can say is that successful practitioners share the following characteristics - they understand the target customer and conduct proactive market validation before heavily investing. Market validation is the process by which you can confirm your assumptions of what customers will buy. Larger organisations can invest in heavy market research and survive product failures as a result of poor market validation, hence the lets try a few different approaches strategy. However, smaller organisations and teams dont have the luxury of large bank accounts, so market validation becomes critical to confirm your assumptions. In addition, market research can only give you a picture of the present - it cant gather data from the future. You can arrive at a great differentiated offering through either approach - using brute force or survival of the fittest. However you can waste time and money if you over-build, before testing your assumptions and building a greater understanding of your customer. Some of you may be saying, but where do we start in a big institution. Some good techniques to provide you some initial thinking and direction are to try Value Innovation on your business model, and Blue Ocean Strategy. Value Innovation aims to increase value to the customer whilst decreasing the cost to deliver that value. This is achieved by analysing your business model, and altering it to come up with new modified versions. Like providing an instant coffee experience at a full coffee flavour - Nespresso. Blue Ocean Strategy seeks to find niches in your industry where there are currently noncustomers and no competitors. This is achieved by analysing the basis for what your current customers value about the competing products in your market, then seeking alternative values that can be added to your current offering, resulting in an offer that drastically change the status quo. Like creating a no-frills, low-cost airline, in a sea of high-cost, full-service airlines - EasyJet UK By no means does this fully answer this question, but we will provide more detail via our mailing list in future, or you can ask us to talk to you in more detail. I would suggest though that you start becoming familiar with the idea of developing two slightly different offers, that differ around a key customer assumption e.g. price. design. promotional material. Learn to test alternatives to see which fares better, and learn more about your customers in the process, allowing you to determine what might differentiate your offer further.. Innovation will come from an honest understanding of the present combined with an instinctive view of the future. Combining the two in a process with your team will help guide you forward. Comment or ask question
Strategy in an Uncertain Future a response to audience questions - TEMC 2012 Copyright Thinc Beyond 2012 October 2012

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What type of governance and leadership is required in a changing industry?

Once again, this answer depends on the scale at which you are operating at, and your objectives. If you are involved with the rollout of a new building or IT system, then youll need to manage the significant financial risks associated with that process. Governance is great at managing risk, but to date it hasnt been great at managing upside. Its not often tasked or staffed with upside in mind. This is where leadership comes in. When you are trying to generate opportunity, you need to develop leaders that are willing to take a level of risk - e.g. in proposing an exploratory strategy, and validation approach to offer design. For leaders to be successful, select them carefully and back them. Give them clear high-level goals, accountability, support and a budget.. but if they are unproven, start small. But be prepared to accept failure - it happens to the best of them - adopt the philosophy Fail often, fail quickly, and fail forward I would suggest that given the transitional changein the Higher Education sector, a sector that is governance heavy, its worthwhile to bring some leadership and innovation to the table. Developing this in sympathy with the culture of this sector is a challenge. You need to create space for these projects and people and avoid smothering them in the governance wet blanket One topic, that almost never fails to gain an enthusiastic following is the allocation of financial resources. Combining this with the notion of piloting - as we discussed in Adelaide, will help bring you to clearly defined, small scale but radical pilot projects. Provide these projects preferential resourcing, set clear goals and be prepared to monitor the success and trim the course as necessary. By allowing these projects to succeed or fail often, quickly and forward you learn faster whilst avoiding large financial outlays. Comment or ask question

How do we manage change in such a way that we don't just manage risk, but take advantage of the opportunity?
The previous question touched on how risk and opportunity can be managed in organisations by engaging both leadership and governance effectively. There are a number of techniques you can use when looking at risk and opportunity. One that provides a good balance is scenario planning. To do this we take teams through a process of understanding the trends impacting on their industry in order to help them create both plausible negative and positive scenarios that their
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business may face, 5 to 10 years from today. Doing this allows participants to enter a frame-ofmind that fosters effective identification of future opportunity and risk, when asked to do so. This approach has two key aspects. Working with both positive and negative perspectives gets people to think about potential future upside and downside to their business. Getting them to think 5 to 10 years from today, gets the team to lift their eyes to the horizon rather than the immediate road before them. This increases the field of vision they have and what they might consider as risks and opportunities. We then work back from these and prioritise and build them into the planning process. This is a technique you can apply in your own teams - its worthwhile to get someone to plan and facilitate the process. Comment or ask question

How can we be expected do more with less funding and resources?

Less money? Less time? Fewer resources? Yes, appealing as the thought is, the magic pudding does not really exist - you cannot really do more with less. You can be more efficient to a point, you can be better focussed so your efforts result in better and important outcomes, but pretending that you can really commit to much more with much less over the long term can be destructive. One approach is to do less. If you can be successful at it, then you can ask for more. The trick is deciding on the shortlist. What courses, building features or software systems will get cut, and what will you lose in the process. If you have a clearer understanding of where you are trying to get to and the existing problems with your current situation, you have the basis for better decision making. There is no easy answer when peoples jobs are at stake, but if you can act before this becomes necessary, then you can turn around your fortunes. The other approach is to remove the waste in your current approaches. Make more out of what you currently have. Focusing on the customer should be a key tenant in this situation. Easy to say, but years of doing things a certain way can indoctrinate the way this challenge is approached. Perhaps there are things that you do that dont have a great deal of value to the customer? Comment or ask question

Strategy in an Uncertain Future a response to audience questions - TEMC 2012 Copyright Thinc Beyond 2012

October 2012

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How do we need to change our ways of working in uncertain times?

We have left this question to last on purpose. A lot of what we have advocated involves a shift in mindset. Its important that organisations understand that in markets requiring a transitional strategy as in the case of Higher Education in Australia, mindset is one of the things that doesn't cost you a lot to set you apart from your competition. In order to change the mindset amongst teams and individuals in established organisations, a combination of bold but compelling leadership, an infusion of fresh thinking, and the ability to harness that into productive outcomes is critical. The good news is that in an uncertain environment - everyone is uncertain. However if you can pool the collective experience of your team you can envisage options for your future - and pathways to validate those options. You will need some fresh thinking to flush out and develop these bold ideas, and some honest courage to face up to what might be a really inconvenient set of strategies to implement. Fresh thinking doesnt have to come from hiring new staff, or turning everything on its head you can work with what youve got, if you have the right process and combine strategy and team engagement. Everything in moderation.

Now we realise that this article is not exhaustive on each of these topics. However we hope you have enjoyed it and that it has prompted some fresh ideas. To continue your thinking on these topics, if you would like to read any of your colleagues comments or post a question or comment yourself about this article, you can so by visiting the LinkedIn ATEM group and going to this discussion. If you liked this article and are interested in receiving future articles you can signup to our mailing list at http://bit.ly/thinc-beyond-signup Dont forget to you can follow Thinc Beyond on twitter and connect with us on LinkedIn You can contact both Tony and I directly also. Our details are as follows. Nick Bruse nbruse -at- thinc.com.au 03 9654 6799 @nickbruse www.thinc.com.au Tony Inglis gistadvisory -at- bigpond.com

Strategy in an Uncertain Future a response to audience questions - TEMC 2012 Copyright Thinc Beyond 2012

October 2012

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