This article is by three senior people from the Boston Consulting group (BCG) whose reputation in the area of business strategy is strong and whose latest thinking is likely to be interesting. The article challenges conventional wisdom around strategic planning and offers a new two by two matrix to help us find the 'right' approach. But, though thought provoking, it is doubtful if this new framework will attract as much attention as BCG's earlier famous matrix that divided companies’ products and businesses into dogs, stars, cows and question marks.
The basic thrust of the article is that the style of strategic planning should be varied according to two factors, the degree of predictability in the industry, and the extent of malleability, how much power one player has to change the environment. The authors contend that 'classical' approaches to strategic planning - frameworks like Porter’s five forces and the BCG matrix mentioned above – assume a predictable environment that is difficult for one player to change. The oil industry is quoted as an example of this situation; for Exxon and Shell it is worthwhile having analysts and strategists using traditional approaches, developing long term plans and making multiyear financial forecasts.
While accepting the logic of the two dimensions, I was unsure about the oil sector as an example – for instance the impact of the BP Gulf Oil disaster was hardly predictable - and my reservations were confirmed later in the article where the Oil sector is only rated near the middle on both dimensions. The BCG ratings suggest that the two sectors with the most predictable but least malleable characteristics are Tobacco and Paper, for whom ten year plans and classical frameworks are particularly appropriate.
Three other planning approaches are suggested, depending on where each company falls within the matrix. Where the environment is unpredictable but the power to change things is low, an 'adaptive' approach is required, planning that is much more flexible and over much shorter timescales. Even annual planning may not be flexible enough; planning has to be embedded in operations and must be highly responsive to short term changes. Fashion retailing is quoted as an example, where the ability to respond to trends quickly is imperative; a flexible supply chain and speedy innovation are key to success.
This seems to make sense though I did wonder if 'fast moving' might be a more appropriate dimension for the matrix, rather than predictability; nevertheless it is almost self-evident that conventional strategic planning techniques are less appropriate for certain volatile market sectors. However, it was when the article moved on to the 'malleability' dimension that I became less sure of its value, particularly when the 'shaping' approach to strategic planning is introduced. This is for sectors where there is high unpredictability but where players have the ability to change the dynamics of the sector. My reservation about this approach is that surely it depends on market share of the company concerned, unless there is innovation that changes the rules of the game. The fact that Facebook is quoted as the example increased my concern that this scenario is not likely to happen too often and only to the mega players; Apple is the only other company that obviously falls into this category.
The final approach to strategic planning is 'visionary' for companies that are lucky enough to operate in sectors which are predictable and where it is possible to change the dynamics of the sector. Here the company can devise its own future and implement a strategy to exploit it. UPS is quoted as a company that adopted this approach, because they were able to predict the rise of package deliveries following the growth of e-commerce and develop a strategy to take 60% of the market. I can see how this applies in their case but again the issue of market share seems to be fundamental; the reason why UPS could do this might have been the strong base they were working from; surely it is market position as much as industrial sector that determines whether such a strategy is possible.
Overall, this article provides an interesting new perspective on strategic planning and the fact that it comes from BCG means that it has to be taken seriously. But its most powerful message is one that is perhaps too obvious to be a major breakthrough; that traditional strategic planning does not work in companies which are unpredictable and fast moving. And, after reading the article, I wondered if we could develop a better 'MTP' matrix, based on whether the industrial sector is fast moving and the size of market share of the particular player. But an MTP matrix might not have as much impact as one from BCG!
Read the article;
http://hbr.org/2012/09/your-strategy-needs-a-strategy/ar/1
Tuesday 25 September 2012
‘Your strategy needs a strategy’ by Martin Reeves, Claire Love and Philipp Tillmanns, Harvard Business Review, September 2012
Wednesday 12 September 2012
‘Hard versus soft skills training’ by Natalie Henville, Training Journal, September 2012
The premise of the article seems, on the face of it, to be sound; we should examine the key success factors of both hard and soft skills training and see what each can learn from the other. But as you follow the arguments, it is difficult not to question the premise and the assumptions. There are many who would quite rightly question the validity of the author’s assumption that behavioural skills are soft and topics such finance and project management are hard. And at MTP we could point to many programmes that combine both these elements in one learning activity, for instance a Business Partnering programme for financial people.
In fairness to the author, she does come to some of the same conclusions by the end of the article but there still seem to be misconceptions about how so called 'hard' training is designed and delivered. It is obvious that she is coming from the perspective of a trainer in behavioural skills who has negative perceptions about any training other than her own, not an unusual feature of behavioural trainers in my experience! This impression is strengthened by the fact that the quoted examples of hard subjects are assumed to be covered generically, without the necessary tailoring to the target audience.
There is also a mistaken assumption that measuring the effectiveness of hard skills training is relatively easy because there can be tangible outputs, for instance a risk register or financial analysis can be produced. But this misunderstands the nature of measuring effectiveness; those involved in well-designed finance and risk management programmes would not regard such outputs as a sign of success; we would look for changes in behaviour and performance as a result of transferring that learning back to the workplace, in just the same way as a behavioural colleague. And this would be no more or no less difficult than for soft skills programmes.
Nevertheless, the author makes one or two valid points. One genuine difference is that retention of hard skill learning may be less easy because it depends on opportunities to implement the acquired skill soon after the training; you lose it unless you use it. We can recall in the early days of MTP how past attendees in Finance for Managers courses would tell us that they really enjoyed that course two years ago but it's all been forgotten now, because it was not applied.
The author argues that, on the other hand, most soft skills learning can be applied immediately on return to work because influencing, leadership and building relationships are part of the everyday life of all managers. There is a grain of truth in this argument but only if one assumes that training in hard skills is being carried out for target groups who will not have chance to apply it. This may have happened twenty years ago but, in these days of tight budgets and desire to see a tangible return, we do not see any companies wasting their resources in this way.
The author's bias is shown once again when she suggests that those who train in harder disciplines can learn from the interactive methods that are used by behavioural skills trainers which, to quote, are 'targeted, experiential, build on real work issues and …share knowledge and experience'. This is contrasted with the 'Death by Powerpoint' and 'Rigid Syllabuses' of the hard school. It is certainly true that, over the years, many of us in finance training have learnt from our involvement with the softer disciplines and stolen some of the ideas, but the stereotype advanced here is a least twenty years out of date. There may be some who use one way presentations of harder topics but they are unlikely to survive long in the current management training market. And it is sometimes because internal company presenters stick to these old fashioned methods that specialist trainers like MTP find a niche in the market.
It was hard not to let my irritation with the author’s prejudices cloud my judgement - and I probably failed in this respect - but I was pleased eventually to find something with which I agreed; that the hard and soft dichotomy is a false one because effective training of today’s managers should provide both elements, integrating them in a business context. The author mentions supplier relationships as an example of a topic that requires such integration, we would quote Business Partnering by Finance or IT people with their internal customers. By case studies or role plays, the integration can be displayed and the links back to the job demonstrated.
Towards the end of the article, there are several mentions of ROI - Return on Investment - and this is typical of the looseness with which this term is bandied about. It may be that, as a financial person, I am too precious about its correct meaning - the extra profit generated as a percentage of the investment made. I am not suggesting that such calculations can and should always be done but the way in which ROI is used here is to describe any benefit, even if not quantifiable. For instance it is suggested that 'increased visibility to the rest of the organisation' is 'a real test of ROI'. Not in my book it isn't.
But despite all the above criticism and scepticism, I still found the article stimulating and worth reading. To be as irritated as I was, you have to be engaged and challenged. I have no doubt that those involved on the 'softer' side of training will be equally irritated with my views but, as long as we are learning, this doesn't matter. I would like to think that the development of MTP into a more cross-functional and business focussed organisation has, to some extent, resulted from this kind of debate.
Read the article
http://www.trainingjournal.com/feature/2012-09-01-hard-vs-soft-skills-training/
In fairness to the author, she does come to some of the same conclusions by the end of the article but there still seem to be misconceptions about how so called 'hard' training is designed and delivered. It is obvious that she is coming from the perspective of a trainer in behavioural skills who has negative perceptions about any training other than her own, not an unusual feature of behavioural trainers in my experience! This impression is strengthened by the fact that the quoted examples of hard subjects are assumed to be covered generically, without the necessary tailoring to the target audience.
There is also a mistaken assumption that measuring the effectiveness of hard skills training is relatively easy because there can be tangible outputs, for instance a risk register or financial analysis can be produced. But this misunderstands the nature of measuring effectiveness; those involved in well-designed finance and risk management programmes would not regard such outputs as a sign of success; we would look for changes in behaviour and performance as a result of transferring that learning back to the workplace, in just the same way as a behavioural colleague. And this would be no more or no less difficult than for soft skills programmes.
Nevertheless, the author makes one or two valid points. One genuine difference is that retention of hard skill learning may be less easy because it depends on opportunities to implement the acquired skill soon after the training; you lose it unless you use it. We can recall in the early days of MTP how past attendees in Finance for Managers courses would tell us that they really enjoyed that course two years ago but it's all been forgotten now, because it was not applied.
The author argues that, on the other hand, most soft skills learning can be applied immediately on return to work because influencing, leadership and building relationships are part of the everyday life of all managers. There is a grain of truth in this argument but only if one assumes that training in hard skills is being carried out for target groups who will not have chance to apply it. This may have happened twenty years ago but, in these days of tight budgets and desire to see a tangible return, we do not see any companies wasting their resources in this way.
The author's bias is shown once again when she suggests that those who train in harder disciplines can learn from the interactive methods that are used by behavioural skills trainers which, to quote, are 'targeted, experiential, build on real work issues and …share knowledge and experience'. This is contrasted with the 'Death by Powerpoint' and 'Rigid Syllabuses' of the hard school. It is certainly true that, over the years, many of us in finance training have learnt from our involvement with the softer disciplines and stolen some of the ideas, but the stereotype advanced here is a least twenty years out of date. There may be some who use one way presentations of harder topics but they are unlikely to survive long in the current management training market. And it is sometimes because internal company presenters stick to these old fashioned methods that specialist trainers like MTP find a niche in the market.
It was hard not to let my irritation with the author’s prejudices cloud my judgement - and I probably failed in this respect - but I was pleased eventually to find something with which I agreed; that the hard and soft dichotomy is a false one because effective training of today’s managers should provide both elements, integrating them in a business context. The author mentions supplier relationships as an example of a topic that requires such integration, we would quote Business Partnering by Finance or IT people with their internal customers. By case studies or role plays, the integration can be displayed and the links back to the job demonstrated.
Towards the end of the article, there are several mentions of ROI - Return on Investment - and this is typical of the looseness with which this term is bandied about. It may be that, as a financial person, I am too precious about its correct meaning - the extra profit generated as a percentage of the investment made. I am not suggesting that such calculations can and should always be done but the way in which ROI is used here is to describe any benefit, even if not quantifiable. For instance it is suggested that 'increased visibility to the rest of the organisation' is 'a real test of ROI'. Not in my book it isn't.
But despite all the above criticism and scepticism, I still found the article stimulating and worth reading. To be as irritated as I was, you have to be engaged and challenged. I have no doubt that those involved on the 'softer' side of training will be equally irritated with my views but, as long as we are learning, this doesn't matter. I would like to think that the development of MTP into a more cross-functional and business focussed organisation has, to some extent, resulted from this kind of debate.
Read the article
http://www.trainingjournal.com/feature/2012-09-01-hard-vs-soft-skills-training/