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How to Tackle the Problem of Conglomerate Strategy

How do you craft a strategic plan for a group of companies? Why do so many efforts end up with nothing more than “last-year’s-plan-plus-5%?” Discard this path of least resistance if you hope to capitalize on COVID opportunities.

Conglomerates are, in the best of times, difficult to plan for. Units compete for resources in different markets, creating a headache for whoever must make an optimal allocation. It’s a challenge of comparing apples to oranges by executives who don’t specialize in either fruit.

The hope is that by the end of the day, each business unit has a unique set of marching orders: a custom “breakthrough strategy”. It should be powerful enough to meet customer’s unmet needs, conform to disruptive technology trends and prevent competitors from gaining a foothold.

Furthermore, at the group level, the overall strategy shouldn’t be just a grab bag of ideas. Each individual plan should be part of a puzzle that makes up a single coherent picture.

However, I have sat in group meetings in which business unit MD’s flounder when asked for their organization’s strategy. After a bunch of PowerPoint slides, it becomes clear: they have no real strategy. At most, they have a list of tactics.

Furthermore, in these pandemic times, most are facing game-changing disruptions. This requires them to engineer the “next normal.” More often than not, they simply aren’t equipped to get the job done.

Before your business units drift into becoming another Nokia or Blackberry (i.e. a has-been), how can your group of companies prevent its component businesses from failing?

Step 1 – Engage business units in long-term planning

The simplest request is for business units to lengthen their planning horizons. Ask them to look 15-30 years out. Give them the examples, support and templates they need to produce a feasible, detailed plan. While it needs to account for current trends, the team shouldn’t be limited by them.

After all, this is not an exercise in predicting the future, but crafting one which includes preferred outcomes.

For the average MD of a business unit, this is likely to be a tough activity. But even clumsy attempts will push executives into the right zone of discomfort.

Step 2 – Develop leaders’ everyday planning skills

To improve C-suite skills, don’t turn strategy into a onetime or annual event. Instead, train them to think strategically at all times.

Some group CEO’s mistakenly assume this is easy. In their role, they spend 80% of their time on strategy, and 20% on daily operations. However, the reverse is true for their business unit MD’s. The fact is, in their progress up the ranks, the drumbeat for immediate results kept them awake at night. Their ability to adapt quickly helped them get promoted.

As such, your organization may not be organized to think strategically, and MD’s will find this to be a challenge. Don’t let them languish.

Instead, give them the training and coaching to implement their strategy from month to month. Their environment is changing so fast that if they don’t keep the big picture in mind, they could miss out on opportunities created by disruptions like COVID.

What if they fail to grow the required skills? Expect big mistakes that destroy value and produce a “diversification discount” in which the sum of the parts of your company is greater than the whole.

Step 3 – Make Clear Proposals

Once a business unit has completed its planning, MD’s must advance proposals to the central group organization. This is pure lobbying: an appeal to support the business unit’s strategic plan with tangible resources.

Your leaders may also need to be trained to become balanced, fact-based advocates of the specific value they can bring in the mid to long term.

Their clarity is essential. Why?

As group executives hear a range of proposals, they need to make collective decisions about the direction of the entire organization. Consequently, business units will receive good news or bad news depending on decisions made to allocate funds, attention and power.

As such, MD’s must be clear as the future of the organization relies on the quality of their analysis. If they do a poor job, bad decisions will be made: a harsh reality.

But the worst decision of all is not to make any. Some companies drift along, sitting back to watch what happens next.

By then, the savviest staff members have found jobs elsewhere, looking for real leaders to follow. Customers uncover better products and services, and value is destroyed.

While it’s hard to marshal a conglomerate strategy, it’s a problem which must be tackled to assure the future of the entire organization.

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How to Tackle the Problem of Conglomerate Strategy

How do you craft a strategic plan for a group of companies? Why do so many efforts end up with nothing more than “last-year’s-plan-plus-5%?” Discard this path of least resistance if you hope to capitalize on COVID opportunities.

This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit longtermstrategy.substack.com/subscribe

Podcast: Play in new window | Download

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Misapplying Psychological Solutions to Practical Problems

Employee Productivity – Are you searching for psychological solutions to practical problems?

As an executive, have you fallen into the trap of looking for psycho-emotional solutions to issues of employee productivity? If so, you may need a fresh lens.

“I just don’t understand these people!”

While this is a common complaint in management ranks, it’s a bit of a racket. The complainer is going down a dead-end…a little like blaming one’s extra pounds on the abundant choices in the supermarket or juicy mangoes on the trees.

To wit, if you were to become magically capable of understanding your employees’ psychological drivers would you be able to motivate or better lead them? The answer might still be no, if the findings of reports such as Why Workers Won’t Work: A Case Study of Jamaica by Kenneth Carter are to be believed. Their performance has much to do with your actions, not their psychological state. Furthermore, due to COVID, we know that staff emotions are a roller-coaster.

Instead, try this: look for practical structures you are failing to craft. What are some actionable steps you should attempt? Here are 3 suggestions.

1 Construct Games at Scale

Many executives mistakenly believe that their employees won’t give discretionary effort. For them, the only thing that wakes them up is more money. Here’s a different twist: top leaders ruin engagement by diminishing gamified structures.

For example, on her way to the MD position, Rose had a mentor who helped her set one goal after another. Their regular meetings kept her on track, especially when she didn’t feel like giving an extra effort.

While it’s impossible to assign everyone a mentor, that’s not the point. The gamified approach to working unknowingly provided that added push Rose needed to stand out from her peers. In retrospect, she finds this hard to see, until she becomes a student of gamification.

Now, the game mechanics which she was lucky to benefit from are easier to appreciate: the measurable goals, the useful, timely feedback, the repeated challenges to hit the mark. And it’s not hard to notice where they are missing for employees, and where opportunities exist to insert them at will. In this context, luck plays a smaller role; intentional design becomes a tool.

Fortunately, in 2021 employees love gamified structure. When surveyed, they might not report this fact. But the most interesting parts of their lives are filled with the mechanics of good games: whether via sports, Instagram, or the church they attend. As such, they are living increasingly gamified lives, except for one place: their jobs. In MBA programmes, managers aren’t taught to manage a workforce of gamified employees.

As the CEO, teach your leaders how to set up games without using psychological language. With some creativity and commitment, they could become just as “sticky” as gambling addictions and video games.

2 Test Games

Managers who try gamification for the first time often adopt examples found in other environments. Unfortunately, it’s hard to find initial success being a copycat. Each corporate culture has its own dynamics which you must respect. But that’s no reason to surrender: instead, gamify your own gamification.

In other words, treat your effort to engage staff as a game for managers to play at the individual and collective levels. For example, within a particular department, encourage employee engagement experiments by supervisors. Reward the one who makes the most attempts, and the ones who succeed.

At the corporate level, promote games between departments to engage employees. But the intent here is not to crown a winner, but to determine which techniques work best. The fact is, the way to discover the handful of successful approaches is to learn from lots of failed experiments.

At a loss for what to gamify? Look for aspects of your work such as meetings and email that are hated across the board. When you construct your games around such public defects which affect everyone, you’ll be starting with areas of high commitment. They should sell themselves and have an impact because they are actually well-disguised improvement programmes. (Definitely don’t focus on pastimes or distractions such as dominoes, which are not included in business processes.)

If this all sounds like it’s easy, I assure you that this is not the case. In Caribbean companies, the challenges around engagement are deeply embedded in our region’s history and culture. However, the solutions do not require additional psychological insight, just strong doses of courage and creativity.

Why? In this case, the pathway to discovering what works runs through a thicket of things that don’t. You must be brave to deal with lots of failure in this area on your way to success. The good news is that if you endure, you’ll be creating practical solutions.

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Misapplying Psychological Solutions to Practical Problems

Employee Productivity – Are you searching for psychological solutions to practical problems?

As an executive, have you fallen into the trap of looking for psycho-emotional solutions to issues of employee productivity? If so, you may need a fresh lens.

“I just don’t understand these people!”

This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit longtermstrategy.substack.com/subscribe

Podcast: Play in new window | Download

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Scheduling an Ordinary Strategic Planning Retreat? Cancel It.

Is your company preparing to conduct it’s customary annual retreat? You may want to scrap it and instead create a breakthrough event.

In the best of times, companies fall into a strategic planning rut. They follow the same routine each year, lulled into complacency by their accomplishments. The company’s leaders go through the motions, staying well within their comfort zones. Maybe this approach has worked for your company until now.

Consider the following: what if your pre-pandemic success occurred despite your lack of strategic planning? In other words, there could be other reasons your organization was successful. Perhaps the founders made smart choices, you exist as a monopoly or your competition is incompetent.

If you are “winning” over your competitors, there could still be a problem. Your entire industry might have lost its way and be under an invisible threat. Therefore, you could be renting video-tapes or making buggy-whips when the world is about to turn away from your offerings.

A very different approach to your strategic planning would be to start with the disruptions that COVID-19 has wrought. While it’s easy to fixate on the enormous obstacles on the road back to business as usual, here’s a thought experiment.

What if the pandemic were a room you have always lived in, with several doors? Suddenly, a number of them have opened while others have slammed shut. A few have remained the same.

Most companies are likely to treat this once-in-a-lifetime disruption as an obstacle to overcome. But what if you were to see it as a collection of doors: opportunities and dead-ends? If you were to do so, you may seize to chance to plan a new strategy in the following two ways.

1. A breakthrough event

Companies whose leaders long for a return to the “good old days” are the least likely to get themselves out of a strategic planning rut. They are probably accustomed to treating the activity as an everyday, low-stakes ritual. If this strikes a chord, use the opportunity to declare your next retreat, the one that creates proactive, game-changing plans.

While this may not be possible to achieve every year, there should be a clear distinction between major and minor opportunities. When there’s a big disruption, as there is now, go for a breakthrough retreat. If nothing much has changed, cancel the event. Pull out last year’s plan and perform some minor adjustments, showing your executives that there is a difference. But above all, make the decision early.

In the case of this particular pandemic, you probably may not have a choice. When multiple disruptions (e.g. health and economic) coincide, you must act differently. By design, move your leaders into a fresh zone of discomfort by putting them together in breakthrough planning sessions. Carefully arrange the activity so that a business-as-usual strategy becomes the most unlikely result.

This teaches your executives that all plans are not equal, and there are moments when a fresh initiative must be launched.

2. A technology refresh

Many executives prefer to have cozy, collegial retreats on the North Coast that resemble mini-vacations. However, important planning involves a series of difficult, high-stake conversations. They can be stressful, purposely throwing a spotlight on simmering disagreements.

When companies give in to the temptation to keep the peace, important decisions are just not made.

For example, many local firms still need to be convinced that the IT department should play a vital role in strategic planning. But this is understandable. Their ordinary IT employees may be preoccupied with issues such as laptop security. Big challenges like digital transformation remain out of reach. Consequently, it’s often difficult to incorporate IT, and doing so makes leaders uncomfortable.

However, today most agree that breakthrough strategic planning must include a view of technology. Unfortunately, it’s awkward to have digital transformation discussions at this level. Board and executive members are usually uninformed. But these vital discussions cannot be avoided.

In fact, the future will include more explorations of hard-to-understand technologies. Not less. And designing retreats to emphasize this reality has become mandatory. As such, your company must use long-term horizons of 10-30 years to take into account the full effect of new innovations.

This requirement frustrates many executives who find it painful to think in such terms. But planning for the distant future is essential in smashing the status quo with immediate actions.

If your organization doesn’t intend to produce a breakthrough plan at its next retreat, cancel it and modify your old one. Save your energy for when it’s really needed: a game-changing meeting of the minds that rethinks your company and industry. This activity could be the one that takes you into a new, unprecedented future.

Posted on

Scheduling an Ordinary Strategic Planning Retreat? Cancel It.

Is your company preparing to conduct it’s customary annual retreat? You may want to scrap it and instead create a breakthrough event.

In the best of times, companies fall into a strategic planning rut. They follow the same routine each year, lulled into complacency by their accomplishments. The company’s leaders go through the motions, staying well within their comfort zones. Maybe this approach has worked for your company until now.

This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit longtermstrategy.substack.com/subscribe

Podcast: Play in new window | Download

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A CEO’s dilemma: having a great idea for a new strategy

If you’re the leader of an organization, what should you do when you develop an exciting, fresh strategic direction for your company? Before you rush in, take caution – you could do more bad than good if you don’t proceed carefully.

This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit longtermstrategy.substack.com/subscribe

Podcast: Play in new window | Download

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A CEO’s dilemma: having a great idea for a new strategy

If you’re the leader of an organization, what should you do when you develop an exciting, fresh strategic direction for your company? Before you rush in, take caution – you could do more bad than good if you don’t proceed carefully.

Imagine yourself as a CEO or MD, just returning from a two-day conference in New York. As you sit in the departure lounge, you’re filled with nervous energy. Three big ideas triggered by your exposure churn in your mind: your organization needs them to secure its survival in these trying times.

However, you also heard from a consultant who cautioned against implementing any new idea from the top down. If the implementation is complex, it’s easy for you to chase up the hill, only to realize that your troops aren’t behind you. How can you ensure that your business transforms in order to survive, while engaging staff at all levels along the way?

Would a town hall announcement do the trick?

The answer is usually “No.” As the leader, you must account for several gaps inherent in your leadership that could doom your effort. These must be accounted for in the way you roll out your ideas to ensure implementation.

Gap #1 – Your strategic thinking, versus that of others

Most CEO’s forget that while they are focusing on the company’s strategy 90% of the time, their direct staff is far less concerned. In my experience, the average leader wants managers who are short-term result-producers. As such, each manager spends no more than 10% of their time thinking about long-term strategy, triggered only by the advent of the annual retreat.

Therefore, managers develop strategic skills slowly, if at all. Consequently, many who are promoted to top positions end up floundering as they simply are not used to the long-term thinking needed to guide the enterprise.

This means that your bright, strategic idea might not be readily understood by your colleagues. While you came to these “sudden” insights based on your foreign exposure, it might take them much longer to arrive at the same conclusion. Therefore, you need to give them time to come up to speed, just to appreciate the nuances of your proposal. Don’t be impatient.

Gap #2 – Your executive’s engagement

While your top executives are used to managing their departments for quick results, they are probably not used to putting the hours into projects that have a long-term payoff. This can doom your strategy.

Most important strategic initiatives impact several departments at once. Also, the people who must implement them are usually far away from the CEO’s office. Therefore, top managers must have more than an abstract understanding; they need to show an emotional connection with the new project. That’s the only way to inspire those who need to set aside old behaviours and implement new ones.

Such executive bonds aren’t crafted via a town-hall speech, or by sending out messages on the importance of creating shareholder value. Instead, you must hold a commitment event – an occasion specifically intended to bring your top managers together in a public show of solidarity.

This usually takes place in a strategic planning retreat. By the time it concludes, each attendee has been asked to craft and engage with the new strategic plan. But it’s not a majority vote in which the losers are forced to sign up to something they don’t believe in.

Instead, there needs to be a sense that your three big ideas are self-evident: conclusions that any team of smart people would arrive at. As this happens, as the CEO, you must release any authorship of the original insights and allow others to build their own commitment, in their own words, for their own reasons.

Gap #3 – Their visible support

But this can’t be window dressing. Having everyone nod together is a start – the rubber hits the road when the plans hit the lower tiers of the organization. Now, leaders must engage staff so that they develop their own commitments as well, which cannot happen in an ordinary meeting.

The point of taking this circuitous route rather than just “issuing a directive” is that complex changes need the buy-in of many people who often don’t work together. The energy required to bring them to a single vision is considerable and doesn’t happen in an instant.

Don’t be fooled by those who offer instant assent. Instead, realize that success occurs only when staff members are applying private, discretionary time and effort.

This approach may not do much for the ego-driven CEO who is a magnet for credit and attention, but it’s the right one for the organization. In the long term, the best way to implement a new idea is through others.

Francis Wade is the author of Perfect Time-Based Productivity, a keynote speaker and a management consultant. To search prior columns on productivity, strategy, engagement and business processes, send email to columns@fwconsulting.com

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New Reasons to Stop Competing

Much of the MBA-level teaching around strategy focuses on beating the competition. Has that line of thinking been rendered obsolete by the pandemic, to be replaced by a fresh focus elsewhere?

Harvard’s Michael E. Porter is well-known for his thought leadership on competitive strategy – finding ways to beat your company’s rivals. Lately, however, his theories deserve a rethink, especially now that the end of COVID’s rampage is in sight. Has his main thrust of focusing on your competitors become obsolete?

This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit longtermstrategy.substack.com/subscribe

Podcast: Play in new window | Download

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Why you need an after-McKinsey retreat

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If your company is using an outside strategy consulting firm like McKinsey, what is the best step to take after they leave? If their expensive advice is so useful, why might you still require another planning meeting?

Many of the most successful companies around the world avail themselves of the research services provided by firms such as McKinsey & Co, Bain & Company and Boston Consulting Group (BCG). Their formula is often the same: a prospective client presents them with a difficult problem. To find solutions, they assemble a team of young, bright MBA’s who tackle the issue in an intense three to four-month sprint. Working long nights and weekends, they delve into their database of past projects and proprietary data, relying on the stellar advice of their global network of experts.

Compared to the internal resources of the typical client, they have an unmatched ability to bring a firehose of assistance to a threatening blaze.

However, don’t believe for a second that they are providing a complete solution to your troubles. Instead, their final presentation is actually just the start. Here’s why.

#1 – They Solve Narrow Problems

An outside expert isn’t geared to tackle a wide range of your company’s complex issues. They agree to focus on a sharp, well-defined scope: a tight problem definition that is clear to both sides. Given their brief tenure, they define problems that can actually be solved in a short timeframe.

Initially, it may seem strange to you, their client. The consultants appear to be trying to do less, actively resisting the temptation to do more. This sometimes lead to tensions. Some look at the huge price-tag (US$1-2 million) and believe that at that level, every issue should be resolved by their high-powered team.

But that’s not how it works, with good reason.

As expert problem-solvers, they operate a bit like surgeons. Within their narrow specialty, they are called into crisis situations to tackle your organization’s issues no-one else can. They represent an immediate investment of time and money to carry out a critical intervention. As such, it’s unprofitable and unwise for them to “boil the ocean”. Their value lies in their ability to go deep very quickly, not to understand a great deal of complexity.

That’s why, when their job is done, they need to walk away. They should never usurp the responsibility for the long-term health of the company. That should remain the primary job of you, the client. Likewise, the implementation of their recommendations should not be in their role.

#2 – Their Solutions Have an Expiry Date

An outside consultant’s advice might be the best possible answer to a given problem…right up until the date their intervention ends. After that, all bets are off.

Case in point: if COVID-19 has taught us anything, it’s the fact that dramatic disruptions do take place. Imagine if, after receiving a consultants’ report, a pandemic were to break out. The unfortunate timing could render the contents meaningless.

This is why it’s critical for clients to act on specific advice immediately, never allowing it to languish. Does this mean that they should rush to implement the suggestions without question?

#3 – Outside Experts Aren’t Your Company’s Primary Strategists

Ultimately, the fact is that consultants can’t understand the entirety of your business in just a few months. This means they shouldn’t become your organization’s chief strategists. That job remains in the executive team, led by the CEO.

Whether their recommendations confirm, deny or augment prior wisdom, your senior managers should consciously incorporate them into their thinking. But there’s a caveat. Not every recommendation they made is worth pursuing. Why? They simply cannot take into account all the factors necessary to lead your business into the future.

As such, the chances of their report being completely correct are low, especially in the areas in which they tend to be weak: cultural differences, human resources and change management. While their technical analysis might be on point, it won’t be perfect.

Turning their findings into something valuable requires some hard, additional work, regardless of the price-tag paid. Your team’s combined wisdom is needed to treat the expert advice as only a single input among many: an element of the organization’s strategic management, but never a replacement.

The final decisions remain in the hands of your executives. They must now plan a complete strategy, short and long term, that builds on the report. The first post-McKinsey meeting is therefore just the start of a new planning cycle, albeit one that has the advantage of some fresh insights.

This article was originally published in the Jamaica Gleaner.