‘Executing Strategy in Challenging Times’ with Prof. Patrick Gibbons and Dr. Karan Sonpar Dr. Karan Sonpar Lecturer UCD School of Business Prof. Patrick.

‘Executing Strategy in Challenging Times’ with Prof. Patrick Gibbons and Dr. Karan Sonpar

Dr. Karan Sonpar

Lecturer

UCD School of Business

Prof. Patrick Gibbons

Jefferson Smurfit Professor of

Corporate Planning

UCD Smurfit School

AGENDAThe webinar will cover the following key areas:

*   Challenges in Scanning, Planning & Execution

*   Addressing these Challenges

*   Things to get Real About

30 minutes

Questions and Answers - 15 minutes

• “The wrong way forward in a structural break during hard times is to try more of the same”, (Rumelt, 2009)

• “Planning is anticipatory decision making” (Ackoff)

• The strategy process needs to:- develop a coherent view of the forces influencing business- develop a coherent view of how those forces will affect the business- develop a coherent view of the appropriate responses thereby inspiring decisions across time- executing those decisions - evaluating the effectiveness of those decisions- learning from this cycle

Introduction

Uncertainty

EffectState Response

PlanningScanning Execution

(adapted from Milliken, 1989)

Challenges in Scanning

• Availability and recency heuristics– Overweighting non-systematic, recent/available evidence

• Functional fixation– Tendency to define problems from the perspective of

specialist training

• Confirmation bias– Overweight evidence that confirms beliefs and

underweight evidence that disconfirms belief

• Status quo bias– Preference for inertia

Addressing the Challenges

• Ensure the analysis of the environment is based on “facts” and identify

“guesses” and assumptions explicitly

• Set up competing groups to address the same aspects of the environment

• Develop a “momentum” forecast for the company, i.e. if we do nothing what

does the future look like for us?

Additional Thoughts on Scanning• In uncertain times, executives instinctively magnify risks

and discount potential rewards (Lavallo, HBR, 2007)

• Presence of some classic attention traps such as a focus on urgency and singular attention to an issue

• Get information on environmental trends and happenings from managers working in related industries

• Pay attention to the weak signals and things in the near future that may affect you. Focus both on the ‘Reset World’ and how things might be in the ‘New Normal’

• Also rely on soft information and qualitative trends

Challenges in Planning

• Overconfidence– Overestimating our skill relative to others

• Competitor neglect– Planning without adequately factoring in competitor

response

• Sunk costs– Paying attention to historical costs that are irrelevant

• Champion bias– Tendency to evaluate a plan or proposal based on the

track record of the champion, rather than the facts

Addressing the Challenges

• Focus on quality of meetings– Involvement of people with diverse

backgrounds, cross section of the organisation, who has a “stake” in the future?

– Engineer conflict to generate debate among the team

– Think about horizons• E.g. the three horizons (McKinsey)

Additional Thoughts on Planning • Making strategic decisions, not just operational ones

• Making decisions in the face of incomplete information

- weak trends, complexity, tight coupling, volatility

• Moving from how we survive to how we succeed

• Balancing speed and flexibility in decision-making

• Organizations that make fast decisions are able to do so since they evaluate more options, rely on soft information, and simulate productive conflict

Challenges in Execution• ‘The Knowing-Doing Gap’ (Pfeffer & Sutton) • Acting in the face of incomplete information

• Using power judiciously

• Balancing the need for originality and feasibility

• Managers change the organization’s structure without addressing the root cause. This leads to short- term efficiencies at best. Key causes of poor execution are:

- poor information flows

- unclear on responsibilities for decisions & actions

- poor motivation & reward systems (Neilson, 08’, HBR)

Addressing the Challenges

• Balance speed and flexibility using execution triggers

• Avoid viewing execution as a stand-alone event. It has to be a part of planning, as also must be fine-tuned based on learning and feedback from prior actions

• Focus both on meeting immediate challenges through speedy actions and on building an execution culture

• Having a champion who can monitor and energize

“In real life strategy is actually quite straight-forward. You choose a general direction and implement like hell!” (Welch)

Concluding Comments

Eight Things to get Real About• Your strength in your market• Your quality, especially compared with your competitors• What your customers think of you• What your non-customers think of you• The potency of your competitors• The cost position of your competitors, compared to yours• The potential impact of emerging technologies,or market

segments• Your projections for your product’s future

(source: Hammermesh)

Questions and Answers

Upcoming Alumni EventsWe also have a number of upcoming events, which will allow you to meet fellow alumni and increase your knowledge base. "Best Practice Networking” with Prof. Hunter, INSEAD at 6pm on Thursday 20th May in UCD Smurfit School.

“Executive Insights” with Hugo MacNeill, MD, Goldman Sachs and Prof. Ray Kinsella, UCD at 6pm on Thursday 27th May in UCD Smurfit School.

“Navigating the Markets” a panel discussion with industry experts on investment strategies for 2010 and beyond at 6pm on Thursday 10th June in UCD Smurfit School.

Golf Outing on Sunday 11th July in Druids Glen.

Purchase your ticket online at www.ucd.ie/businessalumni or telephone Caroline on 01 7168050 for more information.