Hit the ground running 2013 - Strategic Thinking

Agenda

• Introductions– Who we are, what we do, why we are different

• PCP Management to …..• Strategic Thinking• Greg Bateman – Strategic CFO• Morning Tea 10.30am• On-Line Marketing • 2013 for your company

From PCP Management to …….

Strategic Thinking

• Some “thoughts”• What is it?• How important is it?• Are we doing enough of

it?• How can we do more of

it?

A Short Test

How Different are you Thinking (or how strategic are you thinking)

Thinking Style

InspiredSeeking Insights

AdaptiveForming Concepts

DecisiveTesting

Hypothesis

ConsideredConfirming

Facts

Means of Data Capture SequentialRandom

Mea

ns o

f

Cat

egor

isin

g D

ata

Reasoned

IntuitiveSay XYZ just happened……

Lets try DEF or SDP or LAD…..

XYZ appears to be like ABC. They are related to DEF

If we do ABC it will confirm what we think has happened

How are we sure about what caused XYZ to happen?

Conventional Wisdom

• The biggest problem in business today?

• Execution is the missing 98% for success in business (Tom Peters)

• Strategy is very straightforward. You pick a general direction and implement like hell (Jack Welch)

• Building a great company requires 1% vision and 99% alignment (Jim Collins)

• Software Applications for Strategy Execution

• Execution is the KEY!

Henry Mintzberg• Born Montreal 1932• Currently Professor of Management

Studies at McGill University, Montreal

• 150 articles and 15 books on Strategy

• A Global leader in Strategic Management and Strategic Thought

• His modus operandi = assume nothing, question the unquestionable

• He has been described as a “difficult academic” – because he is so practical!!

Mintzberg – 1994“The Rise and Fall of Strategic Planning”

• Strategic Planning is not working in many organisations. Why? Because Strategic Planning is NOT Strategic Thinking

• Strategic Planning often spoils Strategic Thinking• The most successful strategies are visions, not plans• Strategic Planning is often simply the articulation and

elaboration of strategies or visions that already exist• Strategic Thinking is what the Strategy-making process

should be – capturing what the manager learns from ALL sources, and then synthesising that learning into a vision of the direction that the business should pursue. It involves intuition and creativity

Some Research

• Wall Street Journal (2011)– Identified the Top 5

executive skills sought by organisations:

1. Strategic Thinking2. Ability to work across

Functions3. Ability to drive results4. General Leadership5. Core Financial

understanding

More Research

• Carroll & Mui (2008)– Studied 750 bankruptcies of

companies with at least $500m in assets in the last quarter before bankruptcy – from 1981 to 2005

– Number 1 cause of bankruptcy in almost 50% of the cases was bad strategy

– In most instances the avoidable situations resulted from poor initial strategies and not incompetent execution

…..and more• Kaplan and Norton (HBR 2005)

– “85% of executive leadership teams spend less than 1 hour per month discussing strategy, with 50% spending no time at all

• Bruch (HBR 2002)– 90% of managers squander their

time in all sorts of ineffective activities

• Mankins (HBR 2004)– 80% of top managements time

is devoted to issues that account for less than 20% of a company’s long term value

Views from the “Thought Leaders”• Michael Porter:

“There are no substitutes for Strategic Thinking. Improving quality is meaningless without knowing what kind of quality is relevant in competitive terms”

• Brian Tracy:“The ability to think and plan for the future is the most important single skill of effective executives”

• Clayton Christensen:“Although companies find it difficult to change strategy for many reasons, one stands out: strategic thinking is not a core managerial competence in most organisations

• Peter Drucker:“The major problem with business today (1963!) is the confusion between effectiveness and efficiency that stands between doing the right things and doing things right. There is surely nothing quite so useless as doing with great efficiency what should not be done at all”

Some Definitions

• Define Strategy• Define Strategic Thinking• “The generation and application of business insights on a continual basis to achieve competitive advantage”• Define Strategic Planning

Insight

• Insight is at the heart of strategic thinking• It is the difference between taking an incremental

business-as-usual approach and pursuing game changing initiatives that separate winners from losers

• If our business is a Ferrari, then strategy is the steering wheel and insights are the key to the ignition

• Insights are the “bridge” between experience and expertise

• Insight is the product of two or more bits of information that are combined in a unique way

An example• Telecom

– Started life as NZ Post Office in 1856– Telecom was formed in 1987 and privatised in 1990– Loads of experience (131 years) but how much expertise?– 2004 – won the prestigious “Roger Award” for the Worst Trans National

corporation operating in New Zealand• Vodafone NZ

– Formed in 1998 with Bell South’s 138,000 customers (28% market share, Telecom 62%)

– By December 2003 Telecoms share had decreased to 50%, Vodafone’s share increased to 40% (of a much larger market)

– Think about the experience versus expertise balance– By 2011 (prior to Vodafone’s purchase of Telstra) – Vodafone had 48% and

Telecom 37%

Insight

Insights are the “bridge” between experience and expertise, and strategic thinking is how we build that bridge of insights every day we are in business

Nobel Prize-winning German Economist Reinhard Selton

“I run business decision-making experiments both with experienced managers and with university students. Overall, the students do much better. Its always the same story – people are guided by little-understood experience and make the wrong generalisations. Less experience can be advantageous when it forces you to think harder”

The Four Types of Strategic Thinkers

Beach Bum

Snorkeler

Scuba Diver

Free Diver

Impa

ct o

f Ins

ight

s

Freq

uenc

y of

Insi

ghts

Low Low

HighHigh

High

Why?

• Strategic Thinking, and the actions taken to follow through on it, requires an appetite for RISK

• Most managers (67%) would rather play it safe• Because in most organisation sins of

commission – taking a risk and failing – are punished much more harshly than sins of omission – not taking a risk and missing out on a great opportunity

6 Habits of True Strategic Thinkers

• Anticipate – Look for game changing information at the edges– Build wide external networks – scan the horizon

• Think Critically– Question everything – especially conventional wisdom

• Interpret – seek patterns• DECIDE!!• Align - a measure of alignment?• Learn

– Debrief– Emergent– Celebrate

Some Thought

• Consider your daily activities. How often do you have the opportunity to come up with insights that change the course of your work?

• What level of effect do these insights have on your business?

• What type of strategic thinker are you?• What about your colleagues?• With reference to the 6 habits of strategic thinkers,

write down 3 things you will do in the next week that will “improve” your strategic thinking