First Serve Strategies

Archive for the ‘Business Strategy’ Category

Most would agree that when trying to develop effective strategies to drive transformative change it is helpful to start with agreement regarding objectives.  After all, if we are each working toward a common objective, how hard can it be to reach agreement?  Look!  It’s a bird.  It’s a plane.  It’s a Debt Ceiling!

The current debt crisis in the U.S. provides ample evidence that starting with common objectives may be overrated.  I would like to believe that there is a common objective to which every member of Congress can agree.  Oh, I don’t know.  How about something like, “we all agree we would like to maintain a AAA bond rating?”  The problem is that finding a common objective that becomes the common denominator is often too far removed from strategies to be useful.  Said differently, the more abstract an idea, the farther it is from concrete strategy or policy.

Over the past two days I was involved in a strategy advance (as opposed to a strategy retreat) with a group of my colleagues at Drexel University.  At the beginning of the first day the facilitator asked each of us to reflect on past meetings or strategy sessions that were particularly productive.  She then asked us to recall if there was an essential ingredient that made it successful.  Upon reflection, I settled on one ground rule that I feel is essential–complete transparency of objectives.

While it is not necessary that we start from a common objective, it is essential that we be honest and transparent regarding our objectives.  Said differently, there should be no hidden agendas.  Often, facilitators argue that everyone must check their egos at the door.  One can check one’s coat at the door.  One can check one’s purse at the door.  One can even check one’s smart phone at the door.  But it is very difficult to check one’s ego at the door. Even if we could, it could prove dangerous.  All those very large egos would likely block the exit, creating a fire hazard! Furthermore, our passion, creativity, drive and intellectual power is often fueled by our egos. How transformative would our strategies be without passion, creativity, drive and intellect?

During those two days, I witnessed a diverse group of very bright, passionate, creative people working together in an energetic and collegial fashion to tackle tough issues toward positive, transformative growth.  As a result, we were able to celebrate the victory of a great start on a long journey.  One reason for the success is that we established realistic ground rules up front.  Not the least of which was to ensure complete transparency of objectives.

© Mark Loschiavo

When my son was in middle school he got involved in a program called Children’s International Summer Villages (http://www.cisv.org/about/history.html).  A woman who believed that if children could learn to relate to kids from other countries it would promote world peace started CISV shortly after WWII.

In my travels, I have found music to be a common denominator—the universal language.  Whether it was singing along to a Beatles tribute band at a table in Roppongi with two Koreans and six Japanese, jamming in a karaoke bar in Tokyo with musicians who spoke no English, or jamming with an outdoor market vendor in Bangkok for 45 minutes, playing a stringed instrument called a Thai Pin, that I picked up for the very first time that day, connections were made.  The Thai vendor and I couldn’t communicate with each other in any other way, but we became brothers that day.  When my business associates finally found me they were relieved to learn that I was NOT abducted–just distracted.

I am privileged to serve on the board of LiveConnections (http://liveconnections.org), an organization dedicated to providing innovative music education programs to build bridges and connect cultures.  It was started by a group of people who are passionate about music, but more passionate about making a difference in the world through music.  Now, that is something to sing about!

If this is something that resonates with you, please go to http://liveconnections.org to make a donation.

Previously, on The Disintegration of Companies, I wrote about the art of alliances.  The blog ended with the caution that alliances often fail.  In this installment I would like to discuss some of the reasons for failure.

In their work on Entrepreneurial Alliances, Jeffrey J. Reuer, Africa Ariño, and Paul M. Olk argue that alliances fail because of changes in the environment of the alliance, poorly aligned partner strategies, governance issues, deficiencies in managerial capabilities and commitments, and a failure to collaborate.  While all of these reasons are relevant I will focus on two.

Partners’ Strategies

Partners’ strategies, should be carefully evaluated during the selection process and before an alliance is created.  The more closely aligned the strategic interests of the prospective partners, the more likely the alliance will succeed.  Several years ago I was one of the founders of a Joint Venture between two fortune 100 companies.  The Joint Venture provided computer maintenance and network services to customers for all of the top tier brands.  As a private label company, we acted as representatives of the companies who sold the products to the end users.  Even though we delivered service to thousands of companies in the US, our direct customers were IBM, HP, Gateway, Dell and others.

The majority partner in this strategic alliance was IBM.  As such their strategic interest in the alliance was quality service at an affordable cost.  The other partner’s strategic interest was primarily one of financial return.  While these two strategic interests are not mutually exclusive, it proved challenging.  As expected, both partners cared deeply about financial returns, but one partner was unwilling to gain it at the cost of customer satisfaction.  Ultimately, the joint venture did exceedingly well, but not without its share of governance issues that may have been minimized if the partner selection process focused more on partner strategies.

Culture

As mentioned above, Africa, Ariño, and Olk discuss managerial capabilities and commitments and collaborative processes.  I tend to group both of these under culture.  The need for a cultural match among alliance partners compounds as the level of interdependence and commitment among the parties increases.  If the alliance is in the form of a preferred vendor, cultural fit matters, but not as much as it does with a merger or acquisition.

In an attempt to enter the telecommunications market in 1984, IBM partnered with (and later acquired) Rolm Communications of Santa Clara, California.  In the mid-1980s IBM was known as an innovative company with a no-nonsense, button-down culture.  While employees were encouraged to take judicious risk and think outside the box, they were also encouraged to act and dress in only the most professional manner, which meant dark suits for both men and women. Alcohol was forbidden during the workday. A salesperson was only allowed to have a drink at lunch if his or her customer wanted a drink.  If that occurred, the salesperson was not supposed to make another call that day. While not forbidden, beards were discouraged.

Contrast that with the culture of California based Rolm, which held on-premise beer bashes for its employees each Friday, and the majority of the men I met sported full beards, and came to work dressed in casual clothes.  As far as I know, the women did not have facial hair, but they did dress casual.  I think you get the picture.  The two cultures were distinctly different, and I think it contributed heavily to the ultimate collapse of the alliance.

Cultural differences can lead to difficulties in collaboration, which can ultimately lead to the inability to adapt, a lack of communication and trust, and inadequate coordination and conflict resolution.

Before entering into an alliance it is important to look for fit—both in strategic interests and in culture.  All of these things can, and should be, evaluated during the selection process.  The selection process is much like the courting process in a romantic relationship, where each party is trying to put their best foot forward.  A dear friend once offered advice to her daughter regarding finding a mate.  “Take the one thing that bothers you about that person just a little bit now, multiply it by 100, and ask yourself if you could live with it for the rest of you life.”

©Mark P. Loschiavo

While reading a recent blog post entitled, Develop A Business Plan and Change It Up On A Regular Basis, Susan Gunelius describes the importance of frequently revisiting the business plan and changing it as needed.

Being immersed in the strategic management process for 30 years, I have seen, first hand, the importance of continually monitoring strategies in order to make necessary changes. Even the very best business plans are nothing more than a “great start”. I often tell the many entrepreneurs and students I work with that the business plan changes the minute it is introduced to the market.

In the first sentence of her blog, Susan asserts that, “Most people in business believe that you should make a business plan and ‘stick to the plan’.”

Growing up, our family had a wonderful tradition of engaging in debate at the dinner table. These debates often became so spirited that, to an outsider, it might have the appearance of a town hall brawl. During those discussions I can still hear my mom saying, “never say never”. And if one of us fell into the trap of saying, “they say…”, it would be immediately met with “Whose they?” from my dad. As such, whenever a sentence begins with the phrase “most people”, my focus tends to drift away from the intended message to wondering about the veracity of whether or not it is really most people.

I am not really interested in determining if most people in business believe that you should stick to the plan. What I do find interesting are the contrasting philosophies by different types of people about changing the plan.

In large companies it is not uncommon to find scores of employees who only wish, “we could put a stake in the ground”. At the same time senior executives often embrace plan changes. In my work with startups and entrepreneurs I find a very different dynamic.

Instead of refusing to make adjustments to the business plan when needed, they take on the characteristics of a Golden Retriever in a field of butterflies–jumping from one opportunity to the next with reckless abandon.

In the end, I think there are two factors determining which camp one falls into—locus of control and opportunism.

Typically, folks with a strong internal locus of control, complemented with a dose of opportunism are more comfortable with change, because they believe they have more control over the change. People with a strong external locus of control often fear being victimized by change, and nobody wants to be a victim. Or do they?

©Mark P. Loschiavo

As the Executive Director for the Laurence A. Baiada Center for Entrepreneurship at Drexel University, I incorporate our guiding principles of “always rich content” and “excellence in everything we do” into all of our events. At our recent annual entrepreneurship conference I was struck by a recurring thought. As one might expect, a significant amount of research, thought, planning and coordination took place long before the day of the event to make it successful, but that is not the theme that kept playing through my mind throughout the day.

Like the tune that stays in your head, long after the song has been heard, the concept of transitions kept tickling my gray matter. As important as the registration process, the audience, the panel, the presentations, and the food, the transitions were what brought it all together. The transitions were an important differentiator.

This should not come as a surprise. For three decades I have been heavily involved in strategic management. Strategic management inevitably results in change—sometimes very significant. Change causes stress for everyone in the organization, and those not involved with architecting the change feel the stress more intensely. When planning, communicating and implementing change it is important to focus on the transitions.

Television networks carefully manage the placement of their commercials to entice the viewer to stay tuned for the next show. With the advent of technology and the increase in choices the phrase, “don’t touch that dial” is no longer sufficient to hold the viewers attention.

Successful novelists focus on the transitions from the end of one chapter to the beginning of the next. A fluid transition entices the reader to rush headlong into the next chapter. The objective is to ensure that the reader “can’t put it down.”

Change requires everyone to move from one chapter in the organization’s life to the next. In order to manage it successfully, stakeholders need to be motivated to rush forward into that next chapter with enthusiasm. If you do not want them to “put the book down” focus on making the transitions as fluid as possible.

©Mark P. Loschiavo

Legend has it that a young man stopped on a dusty French path in the late Middle Ages to watch a laborer chipping away pieces from a large stone. “What are you doing?” he asked the worker.

“I’m trying to make this round stone square,” came the reply. “I’ve been working on this one stone for more than a week, and look how little progress I’ve made.”

The young man walked a bit farther and saw another laborer hammering away at a similar block of stone. “What are you doing?” he asked.

The worker replied, “My job. I’m a stone mason.”

Not much farther down the path the young man encountered a third laborer, also working a heavy piece of stone. “What are you doing?” he asked.

The worker looked up briefly from his task and replied, “I’m building a cathedral.”

Where do you find yourself these days? Are you chipping away at the tasks in front of you, just doing your job, or are you fulfilling your vision for the future? How about those around you?

The difference between “doing a job” and “fulfilling a vision” is often reduced to nothing more than risking the comfort of the current state long enough to visualize a desired state. Once you have even a fuzzy vision of where you want to go you must set specific goals along the way, and have the courage to tell someone about them. If you don’t think you have the time or patience for that, remember that the cathedrals of the Middle Ages typically took about 100 years to complete.

©Mark P. Loschiavo

One day this man’s daughter came to him and said, “These puzzles are no longer challenging enough for me. I want you to find for me a puzzle that is really difficult.” So dad purchased a three dimensional puzzle. While that presented a bit more of a challenge, the puzzle was quickly completed, and his daughter said, “Dad, you can do better than that!”

After searching to no avail for a more complex puzzle an idea came to him, and he said, I will find you a puzzle tomorrow with less than 100 pieces that you will not be able to put together.” She said, “Bring it on, dad.”

The next day, the daughter spent the entire time at school in great anticipation. When she got home she ran into the dining room, where she found what looked like a puzzle with relatively few pieces. This was a puzzle she knew she would be able to assemble before evening’s end. Under dad’s watchful eye, she smoothed the puzzle pieces out on the dining room table to begin. Then she said, “Dad, give me the box top so I can get going on this thing.” That’s the catch”, he said. “Your challenge is to put together this puzzle without a picture of what the finished product is supposed to look like.”

After giving him that look only a daughter in high school can master, she set out to assemble the puzzle. After several frustrating attempts over what seemed like an eternity she said, “Dad, how am I supposed to put together a puzzle without having any idea what the finished product is supposed to look like?” After giving her a look that only a dad with a daughter in high school can master he said, “You said you wanted a puzzle that would be tough for you to do.” Her response was, “This is stupid and I don’t want to do it anymore.”

As leaders, how often do we give out similar assignments? We tell those we count on that we need better results. Maybe it is more revenue and profit. We tell them that they have to do better next year than the year before—that they have to be faster, smarter and more competitive than anyone else out there—but we do not articulate a clear plan for how to get there. A good business plan is much like the box top of a puzzle. With it, everyone on the team knows what success looks like when achieved, providing a clear guide along the way.

©Mark P. Loschiavo

As we plow in to the New Year with an uncertain economy, and troubling world events I am reminded of an excerpt from Earl Nightingale’s Lead the Field. I find it inspirational and thought I would pass it along to you. I hope you are finding the New Year prosperous.

In 1843, a man was born who was to have a profound effect upon the lives of millions of people. His name was Russell Herman Conwell. He became a lawyer, then a newspaper editor and, finally, a clergyman. During his church career, an incident occurred that was to change his life and the life of countless others.

One day, a group of young people came to Dr. Conwell at his church and asked him if he would be willing to instruct them in college courses. They all wanted a college education but lacked the money to pay for it. He told them to let him think about it and to come back in a few days.

After they left, an idea began to form in Dr. Conwell’s mind. He asked himself, “Why couldn’t there be a fine college for poor but deserving young people?” Before long, the idea consumed him. Why not, indeed? It was a project worthy of 100 percent dedication—complete commitment.

Almost single-handedly, Dr. Conwell raised several million dollars with which he founded Temple University, today one of the country’s leading schools. He raised the money by giving more than 6,000 lectures all over the country, and in each one of them, he told a story called “Acres of Diamonds.”

The story is the true account of an African farmer who had heard tales about other farmers who had made millions by discovering diamond mines. These tales so excited the farmer that he could hardly wait to sell his farm and go prospecting for diamonds himself. So he sold his farm and spent the rest of his life wandering the African continent searching unsuccessfully for the gleaming gems that brought such high prices on the markets of the world. Finally, the story goes, worn-out and in a fit of despondency, he threw himself into a river and drowned.

Meanwhile, back at the ranch, or farm, in this case, the man who had bought the farm happened to be crossing the small stream on the property. Suddenly, there was a bright flash of blue and red light from the stream’s bottom. He bent down, picked up the stone—it was a good-sized stone—and, admiring it, later put it on his fireplace mantel, as an interesting curiosity.

Several weeks later, a visitor to his home picked up the stone, looked at it, hefted it in his hand—and nearly fainted. He asked the farmer if he knew what he’d found. When the farmer said no, that he’d thought it was a piece of crystal, the visitor told him he’d found one of the largest diamonds ever discovered. The farmer had trouble believing that. He told the man that his creek was full of such stones—not as large, perhaps, as the one on the mantel, but they were sprinkled generously throughout the creek bottom.

Needless to say, the farm that the first farmer had sold so that he might find a diamond mine turned out to be the most productive diamond mine on the entire African continent. The first farmer had owned, free and clear, acres of diamonds, but he sold them for practically nothing in order to look for them elsewhere.

The moral is clear: If only the first farmer had taken the time to study and prepare himself—to learn what diamonds looked like in their rough state—and, since he had already owned a piece of the African continent, to thoroughly explore the property he had before looking elsewhere, all of his wildest dreams would have come true.

Each of us, at this moment, is standing in the middle of his or her own acres of diamonds. If only we will have the wisdom and patience to intelligently and effectively explore the work in which we are now engaged, to explore ourselves, we’ll usually find the riches we seek.

©Mark P. Loschiavo

During my most recent trip to Italy I was once again reminded of a difference between Americans and Italians. While walking the streets of Rome I witnessed people engaged with one another in discussion and fellowship both day and night. I saw it in and around the restaurants, the squares, the fountains and on the sidewalks. Time seemed to take on a different meaning.

The Greek language has two different words to describe time. One provides the root for our word chronology, and describes time from the perspective of moving through time. The second refers to time as a moment—a good time was had by all. What struck me as I walked the streets of Rome is that Americans all too often view the things that happen to us on our way to our destinations as distractions or things we must endure along the way. To most Italians these distractions are what life is all about.

Upon further reflection I have come to believe that successful leaders have the ability to capitalize on both elements of time. The first is obvious. Through strong organization skills and the ability to prioritize, effective leaders are able to accomplish a great deal in a short amount of time. While not as obvious, the second is even more important. By being in the moment, and remaining receptive to those we encounter along the way, we can gain a great deal. In addition to developing stronger relationships, being in the moment opens our minds to take advantage of the serendipity that surrounds us. By keeping our eyes open to the possibilities of our everyday encounters we might just find solutions to our toughest problems.

©Mark P. Loschiavo

When a business gets started, the founding members spend a great deal of time together visioning what the company will be. Often, they spend more time together than they do with their friends and families. It is a very intense time where there are endless discussions about what they want the company to look like, what makes them unique in the marketplace, to whom they will offer their products and services, and how they intend to deliver those products and services. Exit strategies are also a topic of discussion. During these times much dreaming for the future occurs. A common story is developed and a common language takes form. In short, the culture and the strategy for the company starts to take shape-either explicit or implied.

If the company is successful, structure and organization will soon follow. At this stage the founding members will often compartmentalize responsibilities among themselves in order to optimize their time. Once this occurs they find themselves spending less and less time together. When they do meet it is typically to discuss monthly measurements or to deal with a particular crisis.

As time goes on the management team becomes consumed with the operational issues of maintaining the company infrastructure, managing customer satisfaction and growing the company. If successful, the company continues to take on more employees to handle the increasing demands-still little discussion about the company vision.

As long as the company is growing rapidly the leadership team is happy and morale remains high throughout the organization. Everyone has plenty to do just keeping up with structure, performance and growth.

But once the growth begins to slow, things change, and the focus often turns to maintaining existing accounts and rethinking the structure of the company-the beginning of the slippery slope, and possibly the beginning of the end.

Mark P. Loschiavo, President of First Serve Strategies talks about what you, as CEO, can do to avoid the slippery slope and optimize your company’s growth over the long-term.

©Mark P. Loschiavo