Strategy, Revisited. Part 2.

mountain biker riding on Croatia

Prepare to go off-road.

Defining the outcome you want is the first part of strategy, and the next part is equally important.  It is about how you plan to get there: The standard analogy is about drawing the map. ‘Roadmap to success’ on Google returns over 30million results, and a very popular book by John Maxwell with a similar title tops the list.  The problem with this analogy is that a roadmap implies travel over well-known and well-described territory. When translated back to business terms this means highly competitive markets where pricing is keen and profits have to be fought for.  Those companies that succeed in this environment are mostly battle-hardened veterans who are used to surviving on knife-edge margins.  So what does this mean for your strategy?

Staying with the map analogy, it means going off-road, to find those opportunities where customers have needs and want that are not being satisfied.  Or where their current solution is causing them worry, costing too much or taking too long to do. It is a journey into the unknown where there will be many obstacles to your success, unexpected problems and constant threats.  Which is why a strategy is more than just setting off on a journey with clearly marked intermediate goals. That is merely a process.

Strategy has to prepare for the unexpected, in Donald Rumsfeld’s famous words, the known and unknown unknowns. It is to assume set-backs, failures and threats and to be prepared to deal with them. It is having multiple tactics to achieve the outcome, and having the flexibility to switch and adapt as necessary.  Take for example Amazon, about which Jeff Bezos has talked openly about failures, and why they are important. Or the story of Soichiro Honda, who battled adversity for years until his breakthrough success with motorcycles. It may mean abandoning some much loved ideas and aspirations, such as Richard Branson did when he sold Virgin records, the company that gave him his first success.

Strategy in a word is ‘messy’, you know where you want to get to, but when you set off you don’t know what is going to be the route to get there.  Going back to the consulting strategy I discussed last week, a key intermediate objective in the strategy is getting to talk to the business executives and owners who have the problems you can solve.  Easy to say, but it requires more than just a brochure, website, and social media (as I found out).  One important additional element is about being in places where your target customers will congregate.  About demonstrating your skills to build trust with your client. And constantly reminding them that you are there for them when they have problems that you can solve.  In a word, networking.

So your strategy will need multiple tactics, flexibility and discipline during implementation.  This is where you put your reputation on the line and start delivering the results you have promised, and it is the part where most people get lost. ‘Messy’ situations need structure, governance and constant visibility to stay focussed on the outcomes.  This may be hard-work and inconvenient, but it is necessary.  Check back here next week for a few examples of how to implement strategy.

Strategy development is a critical issue for business success, please do share what works for you in the comments section.

If you want to learn more about the Cosmapec approach to strategy development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Strategy, Revisited. Part 1

Light bulb design from icons infographics, vector format

Last week’s article about ideas had its beginnings in why I benefit from sharing my experiences.  But as my editor-in-chief pointed out, people are not much bothered about what I get, but more about how they can find solutions to their problems. (Fussy editor: Pointing out that I didn’t see the elephant in the room).

My wounded pride responded, eventually, by asking why had I done this?  It is the starting point of any business strategy that customer comes first.  If it is going to be of benefit to the business or organisation it is advising, consulting must be seen to add value in excess of the cost of services provided.  A well-known IT consulting company ignored this point recently, and by serving its own interests through jaw-dropping scope-creep, has mortally-wounded its chances of ever doing business again in the country concerned. So how do you develop a coherent consulting strategy?

It starts of course with having a very clear understanding of your customer, and what their needs and wants are.  Get this wrong and you are doomed, as every failed business finds out. Take for example taxi-drivers: They have for a very long time had a monopoly in most large cities for picking up passing trade.  Private-hire vehicles were until recently a cheaper but less convenient alternative because they had to be booked in advance.  Uber, and other slightly different operators such as Grabtaxi have massively reduced the inconvenience of private-hire.  In addition, they have more or less solved the problem that it is near on impossible to get a taxi when it is raining or during peak-periods.  Taxi-drivers have just seen their strategy shredded, because they disregarded what their customers wanted.  This genie isn’t going back in the bottle; Uber has had an early mover advantage, but even if their business model gets ruled out by law as has happened in France, newer legal alternatives will be developed.

For consultants the strategy revolves around firstly understanding who your customers will be, then finding out what their specific needs are.  As an example here, the Cosmapec* strategy is to address supply chain problems for companies wanting to source from, sell into or operate in developing markets. Our consultants know how to do this, and I know that they can alleviate a very great source of pain for companies that are struggling to understand the developing world.

However, this alone isn’t a useful strategy, because it doesn’t clearly specify the customers.  Large companies will not employ small consultancies, except in exceptional circumstances, because they feel there is too much risk for them to do so. Small companies do not have the financial resources to pay consultancy fees.  Cosmapec then needs to reach customers in medium-sized companies.  Again, this is still not enough to be useful, because ‘supply chain problems’ is too broad.  The type of supply chain problems we solve needs to be more specific. (At this point I will not do a detailed sales pitch, but if you are interested, follow the links to the Cosmapec web-site).  In short though, Cosmapec provides customers with the resources to establish projects and initiatives, and rescue failing ones, in places where they have limited internal resources.

That is the first part of strategy, defining what outcomes you want to see.  The next part is how you get there, which I will be talking about next week.

*Blatant and obvious self-promotion alert.

Strategy development is a critical issue for business success, please do share what works for you in the comments section.

If you want to learn more about the Cosmapec approach to strategy development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Lessons Learned: Plan A or Die is Not a Contingency

In the early life of this blog I shared thoughts on ‘Why Projects Fail’.  It was written with hindsight of working on multiple projects a year, over many years.  I am proud of the many successful projects I have been involved with, but I have also worked on ones that have failed.  Project failures can be career threatening and are, at best, depressing when they happen, but they are still useful.  The Queensland Health payroll system failure report from the Commission of Inquiry should be read by anyone who undertakes large projects. It is lengthy and complex, as befits an inquest on failure of a colossal scale.

I have learned much from reading it, and there are many lessons that I take away from it.  The over-riding impression is that ‘group-think’ eventually dictated the actions of those involved to such an extent that they ignored even the most explicit warnings of the impending disaster.  One of the investigators for the inquiry termed it ‘Plan A or Die’.  But before that, they condemned it to failure by committing all of the well-documented major mistakes that lead to project failure.  Each one alone can be fatal to a project.  All of them in one project is stunning, and that one of the world’s biggest and most widely-admired companies failed to deliver a solution which is central to their core business proposition is a salutary lesson to us all.

The main conclusions include:

  • No single point of responsibility – in other words, no sponsor.
  • Scope was never established, and no one individual or group ever accepted responsibility and accountability for defining it.
  • The main contractor provided neither the quantity nor quality of resources to complete the work.
  • Accountability for the project was divided over multiple governance committees, and none of them discharged their duties responsibly.
  • The main operators of the payroll system were openly hostile to the solution that was being delivered.
  • And as noted earlier, group-think disconnected the team from the reality that their chosen course of action would inevitably end in disaster.

A major part of the failure was in the choice of contractors; despite clear warning signs that the chosen contractor was ‘low-balling’ the price to make their bid irresistible, and that the leader of the selection process had serious conflicts of interest that would favour this supplier, they went ahead and awarded them the contract.   (Note to self: Add in conflicts register to anyone involved in the procurement process for future projects.)

At every point thereafter when they could have, and should have called the project failed and started again with a newer provider, they refused to administer the coup de grace. Even when issued the clearest and unequivocal warnings that the solution would not and could not work they pressed on, despite alternatives being available to them.

This one of many conclusions from the report speaks volumes to why the project output when delivered, two years late and more than four times higher than the original contract price, failed to work.

(The supplier) relied upon there having been completeness in the communication to it of the State’s business requirements.  The State on the other hand seems to have thought that (the supplier) having agreed to deliver a payroll solution would be obliged to deliver one that paid staff and did so accurately, even if all (the State’s) requirements had not been communicated and found their way into the various scoping documents.  This was folly on the part of those within the State who took that view.

If you take nothing else from this tale, sordid as it is, remember that quote.  Projects deliver benefits from the solution to the end customer.  In this project, the requirement to accurately pay their staff was wilfully ignored by those who held the responsibility to do so.

What lessons have you learned from working on projects?  Please do share your experience in the comments section so all readers can benefit from your knowledge.

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Supply Chain Trends: Segmentation Adds Value

Strategy in supply chain is becoming more diverse, reversing the trend for tactics to converge around ‘big’ solutions such as Enterprise Resource Planning (ERP) systems.  Over the last few years the emphasis on driving costs out of supply chain has been changing to one of driving customer value in.  The recent shift from off-shoring to re-shoring is just one example where manufacturing locally supports customers more effectively through increased service levels.  Technology is also creating supply chain opportunities at all levels at an unnerving speed, and new players are responding to customer needs and creating products and services at a pace that can be utterly disruptive to previously dominant suppliers.  Apps like Uber has completely over-turned the logistics of moving people around in cities, and the established licensed taxi systems are struggling to respond. It is hard to imagine that a similar technology will not disrupt other logistics systems.  Indeed, Uber-style apps for parcel deliveries are already in use and being tested by big players such as Amazon.  How are supply chain professionals going to adapt their strategies to cope with these rapidly evolving trends?

The point in any trade between individuals or groups is to maximise value for the seller and buyer, in other words, both get what they want from the transaction.  In the Uber example, it has turned on its head the concept that taxis need to be licensed and controlled.  This safety-driven system severely restricted supply of licensed taxi services and gave the providers a significant pricing advantage at the expense of the consumer.  Uber, by providing visibility and accessibility to private-hire cars has significantly improved supply to the point they are a viable alternative to the licensed taxis.  So the first point in this case is no matter how good your customer value is at the moment, improving it is always essential because eventually someone else will.

The second point is that the reasons taxis were licenced and controlled haven’t gone away either.  Their drivers are background checked and tested to ensure they can drive safely, will keep you safe and (in London) have an encyclopaedic knowledge of the city.  Getting in a Uber car has fewer such safeguards, however they have worked hard to minimise the risks with the technology they deploy.  Licensed taxis do still have customer value, it is not all about cost.  They will however need to focus on that customer value because the Uber genie is not going back in the bottle.  What Uber has done for private hire is to segment and add a supply of services at higher value than their telephone–based service, and which the traditional licensed services were not interested in fulfilling.  Yes the services may not be as safe, secure and reliable, but it is now in the hands of the customer to make the choice and buy what they want, when they need it.  A bold strategy, deployed at an astonishing speed.

Supply chains, are going to face similar revolutions, and not just in logistics as shown by the example above.  Enterprise wide ERP systems are specifically designed to be safe and secure.  They are engineered for repeatability and reliability and will still be needed by many suppliers.  It is hard to imagine how the economies of scale that have driven the significant reduction in real prices for almost all consumer goods could be maintained without them.  However customer value is not just price.  Supply chains also add value by being able to provide solutions for where, how quickly and when the product gets to the customer.  Or by making it possible for them to touch it, feel it and try it before they buy it.  And to fix it if necessary, send it back if they don’t like it, and upgrade it if they want to do more with it.  Who segments to do this best will keep existing customers and attract more.

The mix of solutions that supply chains provide to a business look set to increase rapidly.  Cost reductions will remain a part, but are not the only component.  ERP solutions that take years or even decades to implement are facing some tough competition.

Is your supply chain being segmented or disrupted?  Please do let me know in the comments section, it would be great to hear your thoughts.

If you want to learn more about the Cosmapec approach to strategy, visit us at http://www.cosmapecsupplychainmanagement.com or contact us