Observations and Lessons Learned: Strategy as the Enabler of change in an Era of Unbounded Disruption
Overview
The purpose of this White Paper is to provide a summary of observations and learnings gleaned from presenters and attendees who participated in our strategy conferences held in:
• Melbourne on the 16th and 17th of October, 2017 and
• London on the 14th and 15th of November 2017.
The title of the conference was Strategy as The Enabler of Change in an Era of Unbounded Disruption. The four streams that provided the structure to the conference are as follows, they are supported by White Papers that can be accessed at https://www.smiknowledge.com/resources
• Stream 1 Strategy Process: Reinventing strategic planning.
Refer White paper: “Culture Doesn’t Eat Strategy for Breakfast, Culture is Strategy”
• Stream 2 Strategic Thinking: Getting ready for strategic decision making
Refer White paper: “Shelley’s Dilemma: At What Point Do I Stop Planning and Start Strategising?”
• Stream 3 Strategic change: Coping mechanisms in an era of unbounded disruption
Refer White paper: “A New Era of Competition Needs New Perspectives of Strategy: Can Tesla Lead the Way?”
• Stream 4 Strategic Innovation: Out of the box strategic thinking and tool use
Refer White paper: “If the Balance Sheet provides a “Window to the Company”: What is the Purpose of Strategy?
We made the promise to provide this feedback as part of the value of attendance at the Conference. Our objective in doing so was to lay a foundation for further evolution and development of our knowledge in strategy practice. We invite you once again to contribute your views on topics discussed in this micro White Paper as any comments you may have will contribute to the continued understanding, and realisation of improvements in advanced strategy practices.
To add some additional support to our findings we also include observations, albeit limited in scope, from the Strategic Management Society Conference held in Houston, USA on the 28th to the 31st October 2017. The title of this conference was: Unconventional Strategies for Emerging Complexity and Intensifying Diversity.
Specifically, we invite you now to read the report presented herein, and to then provide us with your views on the commentary through either of our LinkedIn discussion group
https://www.linkedin.com/groups/3762509/ or our blog: https://www.smiknowledge.com/resources.
In writing this summary of conference outcomes I would like to thank all of those who assisted with the preparation, development and conduct of these two conferences and all those who gave presentations. Conference organisers included our Chairman, Honorary Professor Mike Donnelly (Herriot-Watt), our co-chair in Melbourne Professor Stuart Orr (Deakin) and a key contributor to the event in Melbourne, Dennis McCluskey.
In London I pass on special thanks to my co-chairs Associate Professor Amos Haniff (Herriot-Watt) and the Director for Business Engagement, UWE Dr Noordin Shehabuddeen. A full list of speakers to whom I am also indebted are listed at the end of this paper. Please let me also thank Lyn Hunter who played a success defining role in the administration and management of the conference proceedings.
Introduction: Background to the Conference
World economies and by definition, global business is on the cusp of significant change. Just as the fourth industrial revolution unfolds, so are strategy practitioners from industry, academia and consulting seeking to develop ways to both adapt to (respond) and invent (create) new capabilities in the practice of strategy specifically and strategic management in general. Individuals with a strong interest in strategy will recognise the value of the synergies that can be obtained from the sharing of knowledge between the three specific agents of strategy practice; that is the industrialists, the consultants and the academics. The practicality of such sharing is however often thwarted as the means to do so is mostly limited in scope; that is why we held the conferences.
Our focus for the topics discussed in the conference was on the ‘enabling’ and ‘doing’ strategy, that is ‘making strategy work in practice’. The streams that provided the structure to the conference were:
» Introduction: The emerging playing fields for Strategy Practitioners
» Stream 1 Strategy Process: Reinventing strategic planning
» Stream 2 Strategic Thinking: Getting ready for strategic decision making
» Stream 3 Strategic change: Coping mechanisms in an era of unbounded disruption
» Stream 4 Strategic Innovation: Out of the box strategic thinking
We follow each of these themes in this report and conclude with a summary of common themes and observations, recommendations for future consideration.
1. Introduction: The Emerging Playing Field for Strategy Practitioners
Assertions upon which the conference program was based were confirmed instantly by two of our Key Note speakers, Grantly Mailes, Partner and Associate Director of the Boston Consulting Group (BCG) and Professor Stuart Orr, Deakin University. Grantly’s presentation focused on the issues of disruption from new, emerging and predominantly digitised technology. He commenced his discussion with a stark warning to corporates, especially the fact that larger organisations are failing faster than they ever have in history. At the same time, he noted, small organisations are surviving longer than ever before. Orr and his colleague, Akshay Jadhav provided insight into the emergence of new and dynamic superpowers, those of India and China. Both offered some stark warnings in what not to do as well as some practical insight into what to do when attempting to do business in these countries. Insight into the future of business and indeed society in general was provided by Nick Price, who as a futurist and Director of ofthingsimmaterial conveyed some dire warnings as to the future of the global economy and indeed the planet – a sobering reminder of why we are here and what might happen should disruption extend beyond the upper limits of our normal levels of consciousness.
Disruptive Influence of Technology
Fundamental to the phenomenon of disruption is the rise of technological capabilities; in particular, that of digitisation. Corporates it seems, have been shown to be less innovative in the digitisation space while in contrast, start-ups are based on the adoption of new technology; digitisation being the predominant choice for entrepreneurs seeking to fracture convention and tradition. Nor it seems, will there be any let-up in this trend. In a way, we can observe that technology has emerged in the same fashion that a frog can meet a devilish demise when placed on the stove and heated to boiling point. Just as the slow speed of boiling doesn’t alert the frog to the changing environment from which it suffers a grizzly death, so too has technology been growing in the background, only now reaching boiling point. Whereas corporations have tended to treat the arrival of this phenomenon with scepticism, entrepreneurs have jumped on the opportunity and in doing so, have been laughing all the way to the bank (or in Cashaa’s case, all the way to their Blockchain Wallet).
Grantly also pointed to the emerging trend that points towards a reversal of globalisation, particularly in the USA. He also emphasised the rise of new super powers such as India and China as other factors of disruption in business today.
Responsive and Prosponsive Change
Paul Hunter, Founder of the Strategic Management Institute (SMI) and the consulting firm, Paul Hunter Strategy and Leadership provided insight into ways in which to manage strategic change, especially now as new opportunity emerges and old forms of management and strategic thinking decline. In his presentation, Hunter referred to the idea of strategy practice in this era of disruption as needing to adopt a capacity for corporates to be both adaptive to change, and also inventive in the uptake of opportunity. To adapt, an organisation needs to possess a capability to respond to change in the internal or external environment; or in any environment where change is occurring, and in ways that are beyond their control. A failure to change will result in a loss of relevance. This outcome carries with it the inevitable loss of control, either through; takeover by other corporates; a gradual decline, as they are surpassed by aggressive entrepreneurs; or outright failure.
Hunter stressed that the idea of strategy is as much about creating new opportunity (inventing) as it is about responding to threats. In the absence of an alternative to the word ‘response’ Hunter proposed a new word (in itself an adaptation) – that of prosponse. To be prosponsive is to be alert to opportunity and to be inventive, that is to position an organisation to take advantage of new opportunity as it arises. Mailes’ observation supports the notion of re and prosponsive change. As he suggested, many corporates are more like the boiling frog that fails to respond to changes in the environment when in fact, they need to be much more like the entrepreneurs who seize opportunity when it arrives.
Causes and implications of disruption from technology
Factors of significance that will be the cause of disruption for at least the next thirty years include the speed of change, personalisation (every individual will have their own technological device – of choice), autonomous machines (driverless cars), Artificial Intelligence and Machine Learning, the Internet of Things (connectivity), Quantum Computing and the arrival of the Sharing Economy. Fundamental to this technology will be access to, and the smart use of data, the acceptance of ‘openness’ and sharing, a capacity to filter data into relevant formats, and cognification.
For the strategy practitioner, cognification is perhaps one of the most significant of all technological advances. Cognification in this context refers to ‘the act of making things smarter’ (e.g. from landlines to smart phones). An added value is a combination of smart technologies such as Artificial Intelligence connected to machines - the ‘things’ that make up the Internet of Things. Linking smart communication devices with machines will present a whole new world of opportunity and value generation. An example is the linking of smart phones with digital electricity metering to enable remote monitoring of aged care – (refer www.howz.com).
Other factors to consider according to Mailes are the development of new algorithms feeding analytics and indeed, algorithms that evolve from capabilities associated with machine learning. An ability to identify the right data will also be critical and this is being aided by new advances in data cleansing and data filtering. Finally, it is recognised that all these technologies will grow at an exponential rate, meaning that they will become increasingly pervasive in our lives, and will evolve more rapidly over time. As technology improves so does our capacity to invent and deliver improvements. Whereas it took 100 years to launch a mobile version of the telephone for example, it took only ten years to transform telephonic technology from a basic, analogue mobile phone into a digital ‘smart’ watch.
Disruptive Influence of the Transformation of Power: The decline of the USA and rise of China and India
Even in campaign mode, USA President Donald Trump promised to reset the global economic balance through a refocusing of interest; from global domination to US centric strengthening, the latter described briefly through his dogma of “America First”. In his first year in office Trump moved quickly to enact his electioneering commitments. From an economic perspective we have witnessed the USA’s withdrawal from the Chinese, Asian, South Pacific and Australasian trade agreement known as the Trans Pacific Partnership (TPP). He has also treated the local North American Free Trade Agreement (NAFTA) with disdain and has made several moves to get the agreement reworked altogether. We also saw the USA’s withdrawal of support from non-trade global activities such as the ‘Paris Agreement’ on climate change along with the threat of the USA’s withdrawal from the North Atlantic Treaty Organisation (NATO). NATO is an intergovernmental military alliance that was formed between several North American and European states and was based on the North Atlantic Treaty.
Given the extent of social and other media coverage of President Trumps change campaign, the visible withdrawal of the USA from world affairs firmly set in the audience’s mind. Against this backdrop it was comforting to hear from Professor Stuart Orr, and his colleague from Deakin University, Akshay Jadhav, that the two emerging global superpowers China and India offer a strong promise of opportunity.
The beneficiaries of this transformation are the middle classes in China and India who have already experienced a major increase in their levels of individual wealth. This turnaround is creating a new world of opportunity for global traders and potential suppliers. There are however some pitfalls, the details of which were outlined by Orr and Jadhav. Their presentation addressed the good and the bad of growth opportunities available from the two economies. Causes of disruption in each of these countries were discussed under the headings of: 1) Innovation, 2) Human Resource Management Practices, 3) Barriers and Liabilities, and 4) Resources and Organisational Capabilities.
We explore Professor Orr and Jadhav’s insights into the practicality of doing business in China and India later in this paper (Stream 3 Strategic change: Coping mechanisms in an era of unbounded disruption). Should you be interested in a thorough overview of this topic, we refer you to Professor Orr’s et all’s forthcoming book: Innovation and Internationalisation: Successful SMEs’ Ventures into China, Orr, S., Menzies, J., Zheng, C. and Maddumage, S. (2018) Routledge.
The question that must be asked following the foregoing observation is: “To what extent will Trump’s reversal in policy result in a transformation in international business: is this the start of a trend, from further Globalisation towards a greater emphasis of Localisation?” To address this issue, the Strategic Management Society will be holding its 2018 annual conference on the topic of: Strategies in the Era of De-Globalization. In the conference to be held in Paris on the 23rd to 25th September, the organisers observe: “We have entered a new era, where the beliefs which we held true seem to hold no longer. Globalization doesn’t appear to provide all the answers to the economic growth and development of countries. Populism is gaining traction. The value of trade alliances, such as NAFTA, is being questioned. Political institutions, like the European Union, are being challenged and the UK is exiting the European project”.
Observations Stream 1: Strategy Process: Reinventing Strategic Planning
Setting the scene
The setting for this stream of discussion can be best described through the commentary provided by Professor Henry Mintzberg who presented at the Strategic Management Society (SMS) 2017 Conference, Houston, Texas. Here, Mintzberg proclaimed: “for me, strategy is an obsession”. That comment was of course based on his lifelong mission to get people to understand that strategy should be treated as something that continually evolves over time, and that the antithesis of this view is the notion that strategy could ever be a static strategic plan. Although he has addressed, on many occasions, his perceived limitations of Michael Porter’s ‘positioning’ perspective of strategy, he lamented that no response to his views were ever offered by Michael Porter. We pay tribute to both and encourage the ongoing debate as to the meaning, value and purpose of strategy.
Emergent vs. Deliberate Strategy
Where does that lead us? In his discussion, Professor Richard Whittington from SAID Business School, Oxford University proved the value of having both academics and business/government specialists together to discuss the topic of strategy. He made the point that rather than growing “the discipline of strategy has been declining – even though the rate of change in the business environment has been transforming rapidly”. This observation would not sit well with most strategy consultants and in business/government who are inundated with the demands of dramatic change. To support his view, Whittington noted that very little new concepts in strategy had evolved in the recent past and in fact, innovations in strategy had probably reached their peak in the mid 1990’s. This was an interesting observation for those in the audience who are engaged in strategic conversations daily, however no one disputed his opinion.
Whittington provided a quick history of strategy to prove his point. A few examples of new ideas in strategy were identified, they included Blue Ocean Strategy and Transient Competitive Strategy. We will see later that Patrick Hoverstadt and Lucy Loh also provide an alternative view of strategy from their construct that they refer to as Patterns of Strategy, however it was agreed that no spectacular insights into strategy practice had been discovered overall. In most instances, anything that is new according to Whittington, is generally limited to the laying of perceptions of the new over the old. When comparing the nature of supposed advanced strategy practices, Whittington did stress that most of modern adaptations of strategy oriented more towards dynamic as opposed to static strategy practice. That would have made Mintzberg happy.
The Evolution of ‘Open Strategy’
What would also have made Mintzberg happy is the emergence of a concept of ‘group’ strategy practices, a phenomenon that Whittington describes as that of ‘Open Strategy’. Promoting a view of strategy as a program of continual transition, Whittington points to the ‘democratisation’ of strategy whereby ‘open’ strategy practice is becoming the norm. Subsequent presentations, as you will observe provided great weight to this view as open strategy practices and indeed, technology each pointed to open strategy practice as a key enabler of successful management and implementation.
Typically, strategy has been the sole domain of corporate leadership and specialist strategy practitioners. Increasingly, this is no longer the case Whittington observed. Technology has been a key enabler in this transformation. In the past, communications between bureaucratically structured Divisions and Strategic Business Units were limited to telex and fax machines, physical ‘Town Hall’ meetings and phone calls. Today, open innovation and strategising techniques abound as do automated methods of communication which make the strategising process far broader, faster and more effective.
In this brave new world, the setting of strategic objectives can now be nimbler as learning from open strategy practice can be absorbed faster and acted upon far more rapidly than in the past. Investors have responded also. A demand for profitability and high market share is giving way to a promise of credible strategy – witness those willing to invest huge sums in Tesla, Amazon and Uber all with questionable financial performance in the past.
Implications of ‘Open Strategy’
To progress the idea of Open Strategy, Whittington points to three forces of change. First is technology, and these were described previously in our overview of Grantley Mailes presentation. Second is organisation and here the question of how organisations will be structured in the future comes into play. This subject was also the topic of a presentation given by Paul Hunter at the 2017 SMS Conference, Houston, Texas. Here Hunter observed that emerging trends point to new constructs and formats – that as a result, carry new consequences for strategy. These trends provided the basis for some of the changes that could well occur as:
· Privately held, super-corporations become the norm: In the future corporation, it is possible that managers, not stock exchanges will be responsible for the management of a portfolio of businesses. The role of these managers will be to oversee these portfolio’s rather than the more traditional portfolios of Product Ranges or Strategic Business Units.
· Corporate strategy is given a new focus: whereby there will be an emphasis on portfolios that represents a cluster of businesses within an eco-system, rather than an agglomeration of independent business units which will in return demand that:
o strategy practice will be focused on the monitoring of portfolio oriented, firm specific attractiveness over industry attractiveness, and
o portfolio managers will be required to meet measures of portfolio performance over corporate level, enterprise wide - shareholder value performance.
· Knowledge based cognitive strategy replaces planning: Under a new evaluation regime, cognitive capabilities and artificial intelligence will take priority over lowest cost, highest quality or market ‘niches’ as primary sources of competitive advantage.
The third force identified by Whittington as a key driver of change was culture. A degree of openness will require a relaxing of corporate culture and these topics were discussed in length in separate presentations in the Melbourne Conference (John Toohey and Zivit Inbar), Fiona Irvine in London.
Having identified the forces of change in some detail, Whittington left the audience with the challenge: “Who will be the agents of Open Strategy practice?” As key orchestrator of the Conference, smiknowledge sees itself as a key player in this field and by definition, a principle agent in the transformation. The method for new strategy practice was described by the Managing Director of the SMI/smiknowledge in his presentation, discussed next. The realisation of the approach developed by Hunter provided the basis for the success stories described on Day 2 of the conference in both Melbourne (presentation given by Anthony Claridge) and London (presentation from Paul Foley).
Strategic Management Institute Treating Open Strategy as a System
Grounded in a philosophy of re and prosponsive thinking (refer above) Paul Hunter sought to address business’s continued reliance on the sole use of static strategic plans to propose that advanced strategy practitioners should consider, at the least, as a system within the context of three dynamic elements of advanced strategy practice:
· Treat strategy as a system: smiknowledge has developed a fully integrated strategic management framework within which, strategy as a system can be formatted, structured and implemented – on the basis of a program of continual renewal as opposed to a process of static planning. Paul stressed however that it is not only strategy that should be treated as a system, but rather, the entire business should also seek to emerging itself in a customer focused, systems-based service solution.
· Evaluate strategy within a context of ‘reframing’: that is to “look at the world and its component parts and systems differently - sometimes very differently - as if from outer space”. No longer is SWOT a sufficient tool for informing strategic decision making. Reframing is necessary to allow an organisation to breathe new life into its psyche, new models for its business and new service solutions for its customers.
· The conduct of strategy at the level of a profession: whereby:
o standards are documented and elevated to a higher order of practice,
o a common language is understood and widely recognised, and
o strategic thinking is elevated from a conception of a ‘hoped for’ vision of the future to that of a systemic, cognitive appreciation of any eventuality that will either boost, or deplete the health of any organisation or business.
Systemic Cognitive Strategy Practice (SCSP)
SCSP represents one of the most significant departures from the notion of strategic planning. SCSP elevates the notion of strategy from conceptualisation of future outcomes, and attempts to pre-empt them, to that of a continual consciousness of an organisations wellbeing. SCSP is based on the actions taken by its leaders from the past, in the present and into the future. Just as Open Strategy carries with the promise of openness, transparency and accountability for all, SCSP can only be enacted by those who have the wherewithal to create, invigorate, invent and enact strategic change. Holders of SCSP cards can be found in formal or informal positions in the business. They will be those who identify as being ‘attuned’ to the nervous system of any organisation.
SCSP practitioners will be informed by explicit and implicit knowledge that is found within any organisation. In the future their power will be strongly influenced – and enhanced from the introduction of new knowledge-based technologies such as cloud-based analytics, artificial intelligence predictive/ big data analytics.
In his concluding remarks Hunter presented perceptions of a new world order where SCSP will be key to success. In particular, Hunter proposed:
· The emergence of new organisation structures where:
o Corporations will be tech heavy, agile, global and spatial (interested or involved in outer space venturing),
o Head offices will be reduced to the CEO, close (strategic) advisers and analytics/Artificial Intelligence specialists.
o They will be managing a Portfolio of Businesses, not Portfolios of Brands or Business Units
· New systems, processes and culture:
o Culture will reside with each business, there will be no ‘corporate culture’
o Legal, tax and compliance requirements will be fully automated – and different
o No business will be too small, all may be sold off at any time.
Observations Stream 2 Strategic Thinking: Getting ready for strategic decision making
In setting the scene for the topic of strategic change we refer to Nick Price who provided the audience with insight into issues associated with challenges that we are likely to face in the future. Nick of course alluded to the phenomenon of Volatility, Uncertainty, Complexity and Ambiguity (VUCA) and on this topic, John Toohey provided some very timely advice as he provided insight into the ways to deal with this phenomenon, and the thought processes that provide us with a capacity to think more strategically. Fundamental to a human’s capacity to engage in strategic thought is the context within which strategic thinking is enacted. Here Zivit Inbar and Fiona Irvine provided insight into the imperative of corporate culture as an essential ingredient in the strategic decision-making process; and in our capacity to deal with everything that is a part of VUCA.
The future of the future: Setting the scene for change
Nick Price is a futurist and as Director of ofthingsimmaterial. Price stressed that it was his observation that change is inevitable, but when it comes to overcoming the enormity of change, corporations are always reluctant to do so. If corporations are to change he suggests, they need a trigger. Ford and General Motors he noted, continually ignored the need for change as they both retained stood steadfast to their use of fossil fuels as source of energy. It wasn’t until Tesla arrived in the market place that they showed any interest in switching to electricity as a viable alternative. The challenge organisations must face Price noted was: “How do we respond to change and how do we deal with the change in the work place?” This is not an easy question to answer and was one faced by recently by the UK’s Southern Rail whose drivers embarked on an extensive industrial campaign in an attempt to protect conductors from losing their jobs. Even when the company promised no jobs would be lost, the drivers persisted in taking part in rolling strike action. Ironically, the reality of this situation is that it is not the conductors but the drivers whose jobs are threatened as autonomous trains could become the norm very quickly.
In focusing on Artificial Intelligence (AI) as a specific disrupter, Price observed that “The onset of AI will demand new conversations about the introduction of complete model changes”. Price defined AI as “a program based on a computer that adapts and changes itself in response to new information”. Its value he observed, was not yet clear, but it’s presence is real and to some, including the high-profile Professor Stephen Hawking, is dangerous. To move forward with AI therefore, Price proposed that we need to learn from the past, recognising that change should be introduced slowly, and in small chunks. Transformation he noted, must commence with an adoption phase which is then followed with the commence of the broad-based access to AI mechanisms. This phase has already started in society, it can be seen in ‘intelligent’ search engines and the use of voice activated search agents such as Amazon Echo, Apple Siri and Google Home. From this phase, trust will build, and this will be followed with the introduction of more comprehensive regulation. The process concludes with voluminous adoption at which point a luxury soon becomes a commodity.
Strategic Thinking: Improving strategy effectiveness through better decision making
John Toohey impressed upon us the fact that strategic thinking, like any form of thinking or decision making for that matter suffers from varying degrees of bias. This is in turn is fuelled by a lack of useful and relevant information. The consequences are swift and obvious:
· Strategic decisions don’t deliver intended results,
· The smartest people can be witnessed making the dumbest decisions, and
· The same mistakes are constantly being repeated.
The question is therefore; “How can we get access to better information?” To explain, Toohey proposed that we need to better understand how the brain works when we are engaging in strategic decision making. If we understand this process, we can then understand what outcome to expect.
Traditionally, the research required to address this conundrum has been held within the exclusive domain of neuro scientists. Increasingly however, managers and neuroscientists are combining forces to meet the challenge head on. Toohey provided insight into findings to date by identifying the 5 ‘B’s’ of strategic decision making. They are:
5 ‘B’s’ of strategic decision making
· Brains: these are not hard wired and change connections and shape all the time,
· Beliefs: many are predetermined for whatever reason, the existence of certain beliefs and values however has consequences,
· Behaviours: these are influenced by simple factors and they are not always appropriate,
· Biases: are omnipresent and inevitable, it is important for every individual to recognise the biases that hey carry around with them, and
· Bosses: Each are moved by insight, creativity, empathy, honesty and humanity.
In support of the notion of Cognitive Strategy Practice referred to previously, Toohey confirms that the trick to effective decision making is to reframe, to think differently and to avoid the trap of ‘auto pilot’ or ‘group think’. Instead, he suggests, we should engage in frontal cortex dominated ‘deep’ thinking that extends beyond the boundaries and constraints of ‘business as usual’.
Toohey concluded with the observation that there is no need to overcomplicate it, sometimes it is OK to simply look beyond the mainstream and identify the solutions that once identified, can be blindingly obvious.
Culture and strategy: Setting the organisation up for success or failure
In relating culture to strategy, Zivit Inbar observed at the Melbourne conference that an organisations culture is the most powerful force that sets an organisation up for success - or failure. A definition of culture was provided by Inbar, it is “the way we do things around here”. Culture is made up of shared beliefs and customs as well as shared norms and values. Most importantly, Inbar observed “organisational culture is here to protect organisations from change. It is dynamic and should change as the organisation changes”.
In London, Fiona Irvine provided complementary evidence to Inbar’s views on the importance of culture. In introducing the topic Irvine challenged the audience with the question “What comes first, strategy or culture?”. In answering it, she drew on her experiences with three different CEO’s from three different organisations. As a starting point, Irvine came up with an observation that CEO’s have different culture ‘types’, they are disruptive, common sense, reward, target focused and colliding. The challenge she issued to the audience was to identify “how do we get to the best alignment between each”?
Continuing her emphasis and focus on the role that the CEO plays in the alignment of strategy with culture, Irvine observed that:
· The CEO’s personality will shape the culture of the organisation, it sets its beliefs and behaviours.
· Often, CEO’s; lack self-awareness and don’t appreciate the impact that they have on the business.
· A single, controlling mind can shape the culture and strategy of the business, while delivering all sorts of results.
Irvine presented examples of strategy and culture alignment drawn from the CEO cases that she labelled the good, the bad and the ugly:
CEO Case Study: The Good
Irvine described this CEO as a caring type. His primary business was selling life insurance policies over the phone. To get results he provided incentives and sought to engage with them to provide support and guidance when needed. He gave them Christmas bonuses and highly valued those who worked for him.
CEO Case Study: The Bad
Irvine described this CEO as a street fighter who loved the high life and visibly demonstrated his love for wealth and romance. He came from the wrong side of town but had a heart of gold. Having started with a good idea he built a retail electronics retail chain that employed people whose average age was 24. He employed quite aggressive methods to get customers into his store, but staff remained very loyal as he rewarded them with high salaries. He operated without a strategy, relying instead on a ‘seat of his pants’ management style and ‘gentlemen’s agreements’ instead of contracts. Ultimately the business failed due primarily to the CEO’s arrogance.
The moral of the story according to Irvine: “You can have a really good company without a strategy and you can have a really bad culture, but still keep your people”.
CEO Case Study: The Ugly
The CEO in this case was a young, ambitious entrepreneur who set up business in the finance industry. Initially successful, things began to change as the culture changed in 2005 when a global expansion plan was put into place. By 2007, success had gone to the CEO’s head and culture was all about him. An ego-based strategy led him to aim for ‘global domination’ which would be achieved through his leadership style of micro management, bullying and a strong fear culture – all of which could quite quickly reduce people to tears. The final outcome was the collapse of the business.
The Big Question
Based on the foregoing cases Irvine sought to answer the big question: “How can businesses protect themselves from the negative impact of the shadow of the leader on culture and strategy?”
Moral of the story: “You can have all the right strategy in the world, but: if you don’t have the right culture your dead”. Now would be a good time perhaps to refer you to our own interpretation of the relationship between culture and strategy. I would in fact refer you to our White Paper section of our web site where you are able to download a micro paper that we have titled: Culture Doesn’t Eat Strategy for Breakfast, Culture IS Strategy the link is as follows: https://www.smiknowledge.com/whitepapers/strategy-remastered-culture-doesnt-eat-strategy-breakfast-culture-strategy/.
Drivers of culture
Irvine recalled three principles that reflected good culture. These were:
· Treat employees well
· Use employees with good ideas to set strategic direction
· Use employees in all areas of the business to suggest ideas
Similarly, she observed a summary of principles regarding ‘common-sense’ culture
Develop a common-sense culture
· Ask people for their ideas and suggestions
· Engage meaningfully, even in virtual organisations
· Ensure CEO is engaged with workforce
· Involve everyone at every level in the strategy process/system
· Pulse check the mood and temperature of the people regularly and act on it
· Encourage managers and leaders to be visible
Panel Discussion Q&A: Richard Whittington, Sir John Elvidge, Sotirios Paroutis
A Panel discussion was held at the conclusion of the Stream 2 Session in London. It was made up our guest speakers and visiting strategy specialist: Professor Sotirios Paroutis from Warwick Business School. The Q & A session was recorded as follows:
Q: Is a VUCA environment creating so much noise that it is difficult for people to have a clear view of strategy?
A: Professor Richard Whittington answered that possibly we can’t see the wood from the trees, therefore we can’t see innovation. In a VUCA environment, business is grappling with concepts to deal with uncertainty leaving less of a premium on strategy.
Maybe the established consulting firms and universities are not the right place for Innovation. Innovations will come from left field and not centre field establishments.
Q: Could get small consulting firms or crowdsourcing coming up with ideas on innovation and strategy. Possibility of happening on linked in instead of the Harvard Business Review?
A: Professor Sotirios Paroutis noted that few innovations or new ideas have been seen since the 2009 Financial crisis. Most were more interested in operations and cost cutting.
Sir John Elvidge noted that that things are often known for a long time with failure to adapt or adopt. There is a gap between what was known and what was done. Using VUCA is another idea to contain strategic thinking.
Knocking down excuses not to innovate. There is a need to factor in human behaviour.
Q: Is open strategy flawed, as we don’t want to share our strategy?
A: Professor Richard Whittington noted that in his research into the conduct of Strategy presentations over time, corporations are much more likely to talk about strategy now, an outcome which is often due to investor pressure. Most strategy presentations now would statistically show positive reactions judged by stock market reactions. Investors value the removal of uncertainty and markets value strategy directions.
Professor Sotirios Paroutis noted that consumers and employees trust of strategy.ie. ‘Kickstart” program”, noting “there is more value in raising money over the copycat risks”.
There is also a broad range of benefits in having imitators. They lead to investor confidence with more than one person going in the same direction. An example is ‘iTunes’ and ‘App’ stores. Trusting the system gives value and openness to the designer. People go to Apple because of trust over someone else. Transparency gives confidence to ‘apps’.
Q: To what extent is the tendency of openness now being checked by other forces?
A: Professor Richard Whittington noted that Google has realised that openness can be a double- edged sword. And that Apple is not particularly open and is in fact quite secretive.
Q: What about intergenerational issues with the internet?
A: It was noted that the youth get information from the internet and sharing with friends on Instagram, Facebook and Twitter. Through these social networks participants are able to build high trust networks amongst their peers. If trust is broken by someone in the group, they are swiftly alienated from the group.
3. Stream 3 Strategic change: Coping mechanisms in an era of unbounded disruption
We view the issue of strategic change from two different perspectives. First, we evaluate the issue of change from the perspective of those working in the public sector with input provided by Sir John Elvidge and Dr Amos Haniff. Second, we review the issue of change from within the context of corporations. Here we were provided with insight from two senior executives. Anthony Claridge (Melbourne) and Paul Foley (London). We conclude with a summary of lessons learned from a project that saw the introduction of an IBM Watson cognitive learning exercise undertaken by Alan Longmuir, a Cognitive Computing and Watson specialist from Deakin University.
Implementing Strategic Change – A Public Sector/Service Perspective
Two of our speakers provided insight into perspectives of strategic change within the public sector. First was Sir John Elvidge who as our Key Note speaker in London, provided us with broad ranging insight into this issue by sharing his experience from his previous roles in Government. In particular, he drew on his experience as Permanent Secretary to the Scottish Government. Sir Elvidge’s description of his experiences over a ten-year period provided a stark contrast to the University sector where Amos Haniff provided us with insight into his own recognition of the need for change, and his protestations that went largely unnoticed by many in the sector.
Implementing strategic change
In his presentation, Sir John Elvidge provided insight into different drivers of strategic change in Government. He identified these as being: The crisis of trust, the influence of global forces and associated diminishing returns, and unsolved problems. Sir John Elvidge embellished his views on strategic change by relating and describing his experiences in this area in three different countries: Scotland, Finland and Northern Ireland.
Scotland – Implementing sweeping strategic change
Since 2007, Scotland has been a first mover in implementing sweeping change. Fundamental to the building blocks of change that followed the Scottish National Party’s (SNP) election win (albeit as a minority) was a shift in the way strategic purpose was expressed. It was a move that saw a transformation from the very articulation of strategy; and the way the commitment to government and citizens were communicated.
The challenge that the SNP faced as the incumbent government was to find an answer to the question “How do we change?” The answer came in the form of a commitment to better communicate its strategic intent, and to express that intent in ‘real’ terms. An example of the way they resolved this was to express their commitments in terms of measurable outcomes – as opposed to vague promises uttered by many political entities. As an example of the way this was implemented, Sir John Elvidge referred us to a statement on health improvement which he observed, would be stated as: “Less people will die of cancer”. To make their promises more personable, the communications would also refer to social and economic outcomes such as ‘to save people’s lives’ as measured by “a reduction in hospital waiting time” and “percent of unoccupied beds.”
In order to redress a breakdown of communications across Government departments, the new team at the top simply abolished them, opting instead to introduce a bureaucracy made of a single functioning entity. The reaction was positive for First Minister of Scotland, Nicola Sturgeon as the opinion polls jumped substantially; in her favour. Whilst her government started out with a minority holding only 36% of seats before the strategic change she was later re-elected with an overall majority.
Finland – Different strategy, good results
Although not directly associated with this government, Sir Elvidge was keen to impress upon the audience the fact that the Scottish results had provided a great example for the Finnish Government to follow. Having initially been held up as the poster child of public services in Europe, Finland’s performance suffered significantly in later years. Finland was once recognised for its achievement of establishing one of the most successful economies in the region. An example of its success can be measured in terms of a huge shift in health performance in 1990, most notably the increase in survival rates of sufferers of heart disease.
As a country with a small population, the collapse of the iconic Nokia corporation exerted a considerable strain on the Finnish economy. A sense of a fundamental crisis arose as the Government was suddenly and unexpectedly faced with a reduced capacity to invest in the provision of public services.
Against this backdrop, there existed no other form of protection for its home market. This led to a great deal of soul searching within the ministry. This in turn led them into unknown territory culminating in the recognition of the need to instigate far reaching solutions. Following the success of the Scottish transformation, the Finnish government reached out to Scotland for ideas; although ultimately opted not to follow Scotland’s direct lead.
Going it alone, Finland identified five key strategic changes that would transform the country; at which point they borrowed one feature of the Scottish approach. That was the dissolution of the blockages created by the informal and formal internal boundaries, realised by the abolition of independent Government departments.
The decision to make this unusual and dramatic act arose from the discomfort that was caused by the slowing pace of bureaucratic decision making, at a time when the external environment was becoming accustomed to increasingly rapid strategic change. It became obvious that the rational thing to do was to engage the entire capacity of government, not just a subset.
Northern Ireland: Untapped potential from strategic change
At the beginning of 2016 Northern Ireland was grappling with a set of issues linked to a decreasing lack of trust with the Government in power. That lack of trust saw many in the electorate turn away from the domination of the two-party system, preferring instead to provide support to the more independent, minority parties.
Northern Ireland, Sir John Elvidge observed, turned their attention on the Scottish approach to strategic change. This, as we suggested previously, focused on personable and measurable outcomes rather than vague promises. In order to determine just how those outcomes should be described, they actively engaged with members of the community to find the answers.
Outcomes and Results
Each of these countries are still pursuing the path described above. Scotland has maintained its strategy since 2007 and is still enjoying great success. Sir John Elvidge acknowledged that although Northern Ireland is in political disarray, it has also stuck to its program of strategic change and maintained high expectations of fruitful outcomes in the future.
Common Features of Change
In order to make a success of a strategic change program, the protagonists must first seek to identify new ways of defining success Sir John Elvidge proposed. As a part of the process of doing that, it was found that in order to derive new solutions there must first be a stimulation of innovation. To do that, change agents felt it essential that the entities they were dealing with should be afforded greater freedom and also allowed opportunities for diversity; that is, they were not compelled to find only one answer. In fact, the identification of 50 different answers or more was encouraged – they then had a pool of choices from which alternative solutions could be plucked.
Measuring, Managing and Monitoring Success
Based on a premise of “Managing The truth will set you free”, Sir John Elvidge advocates a commitment to improve transparency as a key contributor to the realisation of results. “As soon as you have the data, put it into the public domain” is his moto. Consistent with the overall communications philosophy, the issuance of content should also meet the standards of ease of understanding.
In meeting this criteria in Scotland, the Government regularly publishes performance data on its website. The format includes the use of colour against specific Key Performance Indicators. Green is good, yellow is OK and red means not doing well.
The publication of this data Sir John Elvidge maintains leads to a sharpening of accountability and a motivator to deliver feedback. It is, he suggests an inseparable component of any strategic change agenda. “We found that this approach enhances the level of trust between a Government and its citizens”.
Sir John Elvidge’s insight into principles of Strategic Change
In his concluding remarks Sir Elvidge provided a summary of findings from his experience in leading strategic change. They are:
· Clarity of destination
· Creation of an authorising environment: (ref. ‘Mark Moore’s[1] values to maintain an environment around change)
· Ensure visibility of change, internally and externally
· Release energy; a need to release Innovation and unlock the knowledge
· Persevere: You are in it for the long haul even if it takes a decade or more to embed change of any magnitude
· It should hurt more at the top than at the bottom
University sector at the brink – who will blink first?
Issuing a stark warning in the introduction to his presentation, Amos Haniff alerted the audience that although change in the University sector was becoming paramount, there was little evidence of the acceptance of this fact and accordingly, little action was being taken. Haniff commenced his presentation with some facts about the existence, and growth of Universities in the UK. He quickly moved on to a description of challenges they face, but left us with the question: Where to next?
For the past 18 years Haniff noted, Universities have not experienced substantial change but prior to that a significant amount of change was evident, it started around the mid-1950s at which time there were 22 universities in UK and a total of only 3.4% participation. Attendance was mostly available to the few who could afford it. The sector enjoyed a strong demand for growth from that time and by 1970 the number of Universities had grown to 46 with 8.4% participation. By now, there had emerged a strong political drive to the provide a university education to all. Such was the strength of this drive that by 1992 the number of universities and polytechnics had grown to 84 with a corresponding 33% participation rate. By that time also, Prime Minister of the day, Tony Blair was openly stating an objective that 50% of the population should participate in a university education.
Today, there are 128 universities in the UK who enjoy a 49% participation rate – and moves are afoot to increase access to vocational courses as well, as witnessed by the introduction of Graduate Level Apprenticeships where awards can be realised from only 1 year of attendance. There is however some resistance to the introduction of this level of involvement within the academic community as many academics see it as a considerable weakening of the ‘Academic Rigour’ that is always associated with the award of a University Degree.
There are however many more significant ‘wicked’ problems at play that are promising to have adverse and far reaching consequences for the future of the typical university business model. In the face of this, there is a strong resistance to a change from within the system.
That resistance does not help dissipate or eliminate any of the threats and opportunities; and the pace continues to grow with consequence unaddressed. He describes these as follows:
· Significant disruption has been created as an outcome from the UK Governments decision to leave the European Union (EU) trade pact – an event widely known as Brexit
· Already, universities are finding it harder to attract academics from other countries, especially from the EU
· There are also some specific implications from leaving the EU and this has also raised levels of uncertainty
· Those areas of uncertainty include:
o a potential loss of certainty about funding once the UK leaves the EU
o the associated question of what will happen with University Coalitions around the world
o the question, will the UK still be invited to collaborate with Germany and other EU countries on research projects?
Meanwhile, university students are also facing increased pressure, and this is reducing their enthusiasm to explore a university level education. Some of these student pressures include:
· peer pressure to attend universities/ pressure to get degrees.
· extreme pressure from the occurrence of student debt.
· the question of preparedness to by universities to meet disruption and changes in the workforce.
· widening access and social inclusion demanding a university degree be made available to many
· extreme pressure for students to achieve high class degrees
At the same time, many noteworthy changes are occurring in the external environment that impact the value proposition of universities in several ways. These changes include:
· arrival of virtual learning as an alternative to face to face, classroom learning,
· the use of technological and digital collaborative tools as replacements for teachers
· extreme pressure on operational efficiency as universities are challenged to reduce operating costs
· the acceptance of virtual, digital and work place related assignments over teacher led assignment
· the enormity of social media and its influence on teaching methods
· the rise of internationalisation collaborations which have different impacts on those who have them, and those who don’t.
· the onset of international campuses meaning students will not necessarily travel to Australia or the UK to receive their education requirements
Where to from here?
It is uncertain where universities will go from here, the threats are real, the solutions are not. There is little evidence that the issue is being addressed – thereby presenting the perfect research opportunity for scholars interested in exploring the future of the brick and mortar style of university further.
Implementing Strategic Change – A Corporate Perspective
In this stream we combine observations from Anthony Claridge, Paul Foley who shared their experiences while engaged in strategic issues at ResMed Inc. and Vodafone Ireland respectively.
Implementing Strategic Change – A Chief Operating Officers perspective
Speaking in Melbourne, Anthony Claridge stressed the point that when engaging in a strategic change activity, the process of developing solutions to complex problems should not appear to be overly complex to participants. To avoid the perception of complexity however is one thing, as there is a considerable degree of effort that is required to arrive at a solution. It doesn’t stop there however, once reached there is further effort required to develop a ‘diverse communication’ approach to delivering the message; and obtaining buy in.
It still doesn’t stop there. Claridge impressed upon us the need to ensure that current strategy content remains fresh. At the same time, communication with staff demands that strategy is never out of date.
From there he warns that it is Important not to miss what is going on around you and that it would be a mistake to get too bogged down in day to day issues. As a senior executive Claridge advised us to always make ourselves available to join the dots – before your staff join them (in their heads) for you. On that front, Claridge advised us to be ready for the downside as well as the upside of strategy content.
Consistent with Richard Whittington’s observations regarding the emergence of Open Strategy, Claridge also advised us to share the approach for developing strategy content. He suggests we frame issues in a way that can be useful for employees to think in a broader way. Always give them the opportunity to think left and/or right about an issue, be aware of complexity and uncertainty and a warning:
Be Paranoid- always try to join the dots.
Time horizon for strategy actions
Claridge provided some sage advice on the activity of ‘doing’ strategy. Answers to his own questions follow;
· Q. How much can I do? A. Don’t sweat the stuff you can’t control - exchange rates and global financial meltdowns are examples of that.
· Q. What are the hardest things to influence? A. As he was working in healthcare, he pointed to examples of things that took time to influence people in that industry. They included issues such as a Change of Government, expected rates of remuneration and key factors in the competitive environment.
· Q. What are the short-term influences to be managed? These are simpler than you would think. Examples include the weather, customer actions, social media, Industrial action.
Summary of observations
Claridge also provided some more broad-based observations on the practice of strategic management:
· Organisations need to provide a sharing of knowledge environment.
· Supply Chain executives, Human Resources and Marketing should all be able to funnel information in a timely manner.
· No issues should be seen on their own
· Multiple things will influence strategy
· What the staff thinks is important is probably useful information.
· Share knowledge for action.
· Put problems on the table for help.
· There is a need to refresh and renew strategy regularly
Claridge applied each of the foregoing observations to a practical case study. We can only provide a summary of his recommendations here, they are:
· Train your organisation to understand- to look for trends beyond simple transactions and don’t fight the battle on your own.
· Look for connections in seemingly independent inputs.
· Every strategic plan needs to drive a reflection on the overarching strategy to ensure relevance.
· Use time horizons to help communicate the expected speed of implementation.
· Communicate and explain the link to the changes in the plan to the long-term strategy that should ensure a strong organisation in the long term.
· Underpinning everything is the SMI Strategy Framework.
· Employ people who you believe can think strategically. It was noted that only 30% of first line management thought strategically within an organisation but only 10-15% across the board also thought strategically.
Implementing Strategic Change – A Chief Strategy Officers perspective
Paul Foley was effectively the Chief Strategy Officer at Vodafone during the course of the strategy formation project that was the centre of the content contained within his presentation. From this, and his experience in strategy with professional organisations that include PwC and Grant Thornton, we were delighted he shared his experiences with us.
What is strategy and what is the impact of disruption?
Strategy, Foley suggests is a set of interconnected and interdependent activities that collectively drive long term sustainable competitive advantage in the firm’s chosen market. The only way to achieve this within an organisation he has found, is through the conduct of a consultative, collaborative and iterative approach.
When considering the topic of strategy within the context of disruption, he stressed that it is probably much more of an incremental process than the conference topic suggested. To address the management of disruption, he recommended the strategy practitioner focuses on things that are most aligned to each other. This, he suggests, is generally more likely to lead to success in the long term. Most of all Foley suggests, strategy practitioners should facilitate strategic thinking in the organisation in teams and with the active engagement of everyone in the business.
Foley also presented his experience in strategy from various organisations. A summary of his experience is as follows:
· The position of Chief Strategy Officer “CSO” is dead: at least from the perspective of the elite ‘brains trust’ in the corner office.
· Consistent again with Professor Richard Whittington’s observation, Foley also acknowledged the significant shift towards “Open Strategy” as the primary ‘drivers’ of strategic management.
· Instead, Foley suggested that the CSO now has a dual role. That is:
o CSO’s need to be the thinkers, and
o They also need to be futurists, so they can get the message out there.
o They must also be concerned with strategy implementation to put the plans in place.
· From there however, the CSO will end up handing over the strategy to the business units as the true owners of strategy.
· The strategic questions facing business are often the same.
· Businesses that do well tend to focus on less things that they do well, and more on the things that need to be strategically aligned.
· Culture in a business needs to be aligned to the business.
· The CSO needs to be the master of the “how” more than the “what”
· The CSO must be confident that strategy is enough of a skill on its own.
· The successful CSO must be confident that the business will survive and do well as a result of their deliberations – with the buy in of the entire suite of stakeholders in the business.
Adopting a philosophy of growth
Foley concluded his presentation with general summation of findings that all strategy practitioners should take on board. They are:
· Focus on alignment from CEO’S down.
· Incorporate a discipline of growth KPI’s in your performance management suite.
· Confirm the business has a culture of innovation culture and that it is useful.
· Everyone in the organisation has to believe in what you are doing.
· Make sure you know what you want them to know – and that they do know.
· Make sure you know what you want them to feel – and ensure that they feel that way.
Implementing Strategic Change – A Senior IT Executives perspective
First hand insight into the evolution of technologically driven strategic change was provided by Alan Longmuir who is the Manager, Personalised and Cognitive Platforms at Deakin University. Longmuir’s role at Deakin is the management the centralised IT Service delivery function. His department is a service provider to the University, its customers being both students and staff.
Five years ago, Longmuir explained, Deakin University subscribed to IBM Watson with the objective of developing a Questions and Answers Q&A database for staff and students. Q&A content included timetables, calendars and student services which were personalised for each student. Dubbed ‘Deakin Sync’ the IBM Watson based service offered a digitally progressive capability that provided students with contextual and personised information; underpinned by an AI platform designed to answer any real-time questions they posed. Watson was able to answer 6,500 questions with 83% accuracy, a performance level that could and would be improved over time.
Over the past five years this Q&A service evolved into a cognitive services platform with machine learning and IoT as its core functionality. Eventually, Deakin Sync assumed a new persona, that of ‘Gene’. In a new and enhanced format, Gene can now be accessed on any mobile device and is used for both teaching and learning. Gene is described as “a Watson based internal digital assistant that uses conversation or text, language translation, and integrates other services such as learning outcomes for the week”.
As a highly successful technological implementation exercise, the key learning from this long-term evolution of the Gene service is that:
· The adoption of these type of capabilities take time and will need an emergent strategy.
· They do offer opportunities to differentiate your business and to be the disruptor, not the disrupted!
· Building Knowledge needs to be allowed to evolve over time and is enhanced with the introduction of new people offering new capabilities.
· Drivers of change should be prepared to experience internal disruption and team friction when introducing new initiatives”.
4. Stream 4 Strategic Innovation: Out of the box strategic thinking
In this last stream of the Conference we explore the experiences of those who are applying or managing innovative endeavours, tools and techniques or indeed as Fractal Consulting representatives, Patrick Hoverstadt and Lucy Loh suggest, a new approach to strategy altogether. We start with a report on innovation and entrepreneurial practices in an international setting, representing the second component of the presentation given by Professor Stuart Orr and his colleague Akshay Jadhav. In this stream they are discussing the concept of strategy, innovation and entrepreneurship in an international setting; that of China and India.
We then move to a review of strategy and innovation practices adopted by the international bank – Commonwealth Bank of Australia (CBA). Here, the London based Head of Strategy and Innovation, Supan King-Jayawadana provided us with insight into his experience as leader of an innovation team and orchestrater of innovation practises across CBA. We conclude with a summary of contributions from presentations addressing unique and out of the box thinking in strategy as presented by; Messer’s Aaron Slater and Toby Bartholomew from the Open Innovation software solutions company - Solverboard, Patrick Hoverstadt and Lucy Loh suggest who introduce us to a new approach to strategy that they refer to as Patterns of Strategy, and; Ms Janina Lowisz, a Block Chain specialist from Cashaa, a start-up company offering Blockchain solutions to the Fintech industry.
We start our discussion with a summary of the research conducted by Professor Stuart Orr into innovation practices in China and India.
Innovation and Entrepreneurship in China and India
Evidence of the application of innovation as a concept in both India and China is hard to find. Poor education systems have no doubt had an adverse influence on economic performance in these countries as skilled labour is very scarce – even with an unemployment rate of above 8%.
Even though China as a nation is a known adopter of advanced technology, the uptake of innovation in areas outside the main capital cities is scarce. Overall Chinese business people cling to a focus on cost and product standardisation as a means of driving performance. An overriding cause for concern for western businesses seeking to enter both the Indian and Chinese markets is the lack of Intellectual property protection. There is little remedy to this issue as the legislative processes in each country are generally regionally based, not well defined or supported and are lacking in substance. It will be a while before this issue is resolved so the threat of loss of IP remains.
Suggestions for entrepreneurs: Human Resource Management Practice
Orr and Jadhav advised us that a good understanding of human resource (HR) management practices should be well understood before investing in either of these two countries. In India, the presenters pointed out that while the western approach to HR is primarily process and task oriented, in India the emphasis is much more people oriented. The situation is similar in China as is the lack of effective HR management practices overall.
Barriers and liabilities
In India, it is recognised that the peculiarities of culture and religion add complexity to business. Putting it bluntly, Orr and Jadhav observe that the bureaucracy is unmanageable, and this is complicated further through the frequent incidence of corruption. Another challenge is the fact that the Government structure varies, often significantly between states; as well as between state and central Government where legislation and the interpretation of laws can vary. The Indian culture also acts to limit progress as communications between upper and lower classes are limited.
In China, an understanding of business etiquette is essential – so listen up. Chinese employees are reluctant to admit their mistakes or challenges to other employees in public, so they may not be willing to express different ideas openly or critically evaluate the performance of other team members. Apart from the obvious language barriers it is also necessary to understand the Chinese culture that demands a less aggressive communication style. When Chinses communicate, context is important they can be delivered by nonverbal gesturing, unspoken assumptions including one that the receiver is intelligent enough their true connotation.
Resources and capabilities
The application of resources and competences to internationalisation is dependent upon the resources available to the SME, the characteristics of the foreign market into which it internationalises and the competencies the organisation possesses to exploit its resources.
The extent of bureaucratic constraints in India is a significant inhibitor to ‘doing’ business in that country. Similarly, the infrastructure is inefficient, tariffs are high, and roads and communication facilities are less than adequate. The market structure is largely volatile and quite often, businesses operate with the help of local networks.
The political context and sheer size of China makes doing business in this country quite unique. It is best to approach an investment in the country with a full suite of resources to hand and a solid understanding of ways in which resources can be acquired after the initial entry.
Resolving tensions that exist between strategists, innovators and operators in large organisations
As Head of Innovation Lab, London at the Commonwealth Bank of Australia Supun King-Jayawardana shared his observation that in many corporations, tension exists between strategists, innovators and operators. In establishing the basis for discussion King provided the audience with definitions of specific roles of each:
· The strategists: Professionally presented individuals who have analytical backgrounds, are committed to a planned / structured approach to strategy and are essentially risk adverse. Overall, they focus on long term strategy at a high level.
· The Innovator: Less formal, young, confident and relaxed individuals. They do not relate to corporate norms, even though they work in one and are more conversational than the pure strategist. They are characterised as being:
o empathetic and customer driven,
o exploratory and experimental,
o risk takers who are interested in short term change at the coal-face.
· The Operator: These are the people who actually run the business. They are likely to be:
o efficient and process driven,
o stuck in the middle – that is where change cycles are much faster,
o one of either risk averse or risk takers, seeking medium term results.
King highlighted his observation that tension is created because of conflicting culture, the diverse attributes of the many different teams and the silos that exist across organisations. Ironically, he has observed, each team essentially achieves the same outcome, and it is not positive. Because each of the forgoing teams are not integrated or coordinated, little strategy is set, and little innovation takes place.
When leading change King suggested, corporations need to create a cultural base first and then invite the Innovation team to look closely at areas requiring significant change. In a broader sense a change in this capacity requires a decentralised perspective of organisation wide, cultural change.
The process to realise this change King suggests, is as follows:
Strategy - scouting and partnership - Innovation Lab design - Obtain business sponsorship - translate outcomes into strategy
Working with different types of people in both strategy and innovation roles, Supun has concluded it is important to:
1. Ensure people really are interested in other’s ideas and have new ideas of their own.
2. Provide a facility to allow people who have new ideas can work on them with others
3. Encourage people who want to work on new ideas are able to do even if they want to work on their own
4. Across the board, people are encouraged to work on their, or others new ideas independently or in groups.
To achieve a program of strategy renewal King noted, it needs to be through an agile process. Here, it is essential that strategy teams should spend time with Innovation teams to enable the cross pollination of ideas. It is also important he suggests, to train people to think more innovatively.
Problems: Inhibitors to success in the area of strategy and innovation relate to:
· The existence of ‘corporate arrogance’ whereby individuals want to develop their own ideas – on their own
· The most successful outcomes arise from projects that incorporate ideas from people outside the organisation. Barclays Innovation system for example, works well because they work with external entrepreneurs to identify new ideas.
Automating Open Innovation Practices: Solverboard: Open Innovation case study Team Sky
Moving from experiences to tools, our next presenter, Aaron Slater, Customer Success Manager at Solverboard provided us with insight into the concept of Open Innovation, the use of the Solverboard Open Innovation software tool and its application to the world class cycling team: Team Sky. Solverboard is a digital, online platform that uses crowdsourcing to garner suggestions and ideas from through engagement in strategically focused challenges. These challenges can be internal, within an organisation or open, outside an organisation.
Ideas and Innovation Slater observed, can drive organisations forward. Businesses however, can often find it difficult to uncover and develop ideas. When ideas do arrive, they often come from unexpected places. An example of this is at Caterpillar, where a warehouse driver saw that large tyres and small tyres were being shipped separately. He suggested that the small types be transported inside the large tyres, an idea that saved the company millions of dollars in transport costs. While this was a one off, happenstance source of innovation, Solverboard was designed to support a sustainable culture of Innovation and driver of employee engagement.
The application of Solverboard to Team Sky
Team Sky in UK built a reputation for Innovation when they set the British professional cycling team which was launched in 2010. Their number one ambition was to ensure a British rider would be the winner of the Tour de France - within a 5-year period.
Within two years Bradley Wiggins won the Tour de France in 2012. Then Chris Froome went on to win in 2013, 2015, 2016, 2107. Their key to success was their willingness to make small incremental changes whenever and wherever an opportunity was identified. One simple solution was introduced for the benefit of their traveling athletes whom they recognised would benefit from a good night sleep. Addressing the difficulty in meeting this need, the solution that was identified and implemented was the use of mattresses and pillows that travelled with the team wherever they went. With the degree of success behind them, Simon Jones who was head of Innovation at Team Sky and now Cycling Australia, wanted to explore ways of applying open innovation methodology to team sky.
His idea was to engage fans better, bring left field thinking to the team, and show leadership amongst elite cycling teams. Team Sky engaged Solverboard to provide a platform to facilitate knowledge exchange between multiple audiences. In responding to the requirement, Solverboard created a bespoke instance of the Open Platform for team sky’s open innovation challenge.
· The Audience were team sky fans, Innovators who were cycling fans, and 10,000 signed up solvers.
· They posed a challenge to become an Innovator for team sky
· Incentives or rewards were issued such as a team sky shirt.
· There was social sharing and a deadline set for the challenge.
· They received 257 solutions from a mobile friendly platform.
· The results were 317 solutions in total with 100 new and unique ideas.
· Three were rewarded as winners and their ideas were explored seriously by the team.
· Team sky then started planning the next phase of Innovation on Solverboard.
· The new challenge will involve much more technical innovation.
· Partners and suppliers were invited onto the platform to realise competitive advantage with thinking from outside the organisation in collaborative solutions.
Patterns of Strategy
In the presentation given by Lucy Loh and Patrick Hoverstadt, the audience was provided with insight into a new approach to strategy, in a format that Patrick and Lucy refer to as Patterns of Strategy. The concept they introduced us to focuses on the relationships between organisations. It provides a framework to understand the way in which different forces will act on strategic relationships, so that you can tap into them and design them to work for you.
The approach includes 80 patterns or strategy ‘recipes’ which describe the manoeuvres required to achieve that strategy, and performance indicators to assess performance. The patterns include strategies for different types of organisation or context, such as small players, suppliers, defence, competition, collaboration, growth, market-changing, managing the herd, and cunning plans. There’s a toolkit which leaders and strategists can use to explore their strategic relationships so that that you can review your strategy whenever things change.
Cashaa - New Generation banking platform using blockchain
Janina Lowisz, Blockchain specialist and Ambassador for Cashaa provided us with an introduction to both the concept and application of blockchain technology. Blockchain, Lowisz observed, has been around since 2009. It was first used by ‘Bitcoin’ to send money through an electronic wallet for the purpose of fast money transactions. Cashaa uses blockchain technology for similar purposes, it has recently established itself as a global player in the international money transfer industry.
Casshaa enables the international transfer of instantly, and at no charge or at least a nominal flat £1 rate using existing systems but with blockchain in the background. It is a real disruptor in the banking industry. They offer a better exchange rate than banks and the exchanged can be finalised in a matter of hours instead of days. The transaction is also paid out in local currency. Cashaa works in regions to serve the people who need it most and where services are unreliable such as India and Estonia.
Cashaa has built an ecosystem of money senders, receivers and currency traders. This has taken a year to establish and they are now ready for commercialisation. The system is transparent and decentralised using a bitcoin wallet. Other advantages of blockchain technology are that it is a 24hr service and not tied to usual business hours.
Blockchain as an independent technology that can also be used for other assets. An example is high value personal items such as handbags and clothes that can be tracked via blockchain to ensure ownership integrity and that they are ethically sourced. Other applications include personal identity, a critical advantage for health records and asset ownership – especially land titles. Blockchain transactions are unable to be changed and are a permanent record.
5. Summary of common themes, observations and recommendations for future consideration
There are many common themes and observations that will become apparent from the conference. We invite you to add to these in the discussion forum of our website. Some of the more common ones are:
· Digitally focused technological change is upon us, and it is real
· New opportunity abounds in emerging economies, the reality of success will not arrive without challenge
· Open Strategy is the new norm – a concept apparent in both theory and practice
· Fundamental to dealing with change is the inclusion of all stakeholders, an effective open strategy is a useful way to deal with the occurrence of Volatility, Uncertainty, Complexity and Ambiguity that abounds
· Communications is essential as a medium and an appropriate construct for strategy
· Strategic change is difficult, but the realisation and need for change is not readily accepted
· Recognition of the need for change is less obvious than the process to deliver change
· Culture is a key component of both strategy and change
· Culture is also not apparent, it comes in the form of the good, the bad and the ugly
· Deep strategic thinking is required when addressing the big questions
· A good understanding of the way the brain works will help to satisfy that need
· Avoid complexity in communications, and don’t let strategy become stale
· Education in strategy practice is a useful means of improving strategic capability in organisations
· Many new tools and techniques will add an exponential contribution to advanced strategy practice.
Recommendations for the future: It is now quite difficult for the advanced strategy practitioner to keep pace. This is a skill set that is going to get harder and become more important as changes emerge at an increasingly accelerated pace. Strategy is therefore a core skill that anyone seeking to be successful in business must possess. No longer is intuition and gut feel appropriate or even valid; intuition is fine for the line manager and adviser concerned with operational issues. It is not fine for those wishing to lead an organisation into a future that is highly susceptible to failure; FAILURE IS NOT AN OPTION.
[1]https://sites.hks.harvard.edu/mrcbg/CSRI/publications/workingpaper_3_moore_khagram.pdf)
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