The Business Value Proposition

Posted on January 12, 2013 by

Value Propositions Strategic InitiativesLeaders of strategic initiatives need to have a working knowledge of the various perspectives on value propositions. Why? Because organizations often charter strategic initiatives to close the gap (or create advantage) on value propositions. To reinforce this point, PMI’s updated Standard for Program Management places more emphasis business value realization as a key rational for the use of program and project management techniques.

The term “value proposition” is a bit abstract, and borders on jargon. That probably explains why many managers  shy away from developing them.  As one research study explains,

“Value propositions can be intimidating because they strive to combine small size — often 10 words or less — with a lot of substance. After all, those 10 words are supposed to convey the unique qualities of your company and/or products and services.”

This article identifies two approaches for describing the value proposition, using elements of the Renew Blue strategic initiative at Best Buy as an example.

Business Model Canvas Perspective

Osterwalder and Pigneur’s business model canvas is a useful tool for understanding business models. You can understand the value proposition as the answers to (and optimization of) these two questions:

  • Where does the money come from? What are the revenue streams?  What customers are sought, and how much are they willing to pay?
  • Where does the money go?  What is the cost structure?  What does it cost to serve that customer?

The nearby graphic shows how I interpret Best Buy’s value proposition in its short-term rejuvenation objectives based on the company’s presentation in November 2012.  The data and model are from their communications.

Best Buy Implied To Be Business Model

The VALiD Methodology

The VALiD methodology (Value in Design) originated with a group of people at Loughborough University in the United Kingdom as a tool for building architects to help project teams understand the issues that are important to their stakeholders. First, you need to understand the values of the stakeholders, then define value in terms of criteria and targets, and then assess the value proposition in terms of benefits, sacrifices, and resources.   See the nearby figure for a generic formula, which is described in the VALiD framework:

Value formula benefits - sacrifices resources
Best Buy is redesigning most of its big box stores as part of Renew Blue and this redesign and associated merchandising hopes to create a better shopping experience.  See the following figure to examine the VALiD framework for the new value proposition. VALiD helps stakeholders express the “get” and the “give” of their value as the benefits they seek from the project, the sacrifices they are willing to make to get those benefits, and the resources then consume in doing so.

Best Buys new business value proposition

The point of this article is to stress that the value proposition is the key results area of competitive performance and provide you with two differing-but-complementary approaches. I provide the examples from Best Buy’s Renew Blue initiative to help illustrate the helpfulness of the tools in generating strategic insight.

Best Buy certainly has a huge business turnaround challenge ahead of it. I will provide more analysis of their approach (from a strategic initiative leadership perspective) in future articles.

Do you agree that value propositions are important? How have you developed them and what do you include in your statements?

Posted in Examples of Strategic Initiatives, Interpreting Strategy Documents, Success Principles for Strategic Initiatives, Useful Practices & Management Tools | Tagged , , , , | 3 Comments

Strategic Thinking: Seven Questions for Your New Year’s Resolution

Posted on December 31, 2012 by

English: example of using a mindmap in a strat...

Major milestones – such as New Year’s – prompt people to reflect on their current situation, and to look ahead. With that spirit, I recently shared seven questions with several professional friends. It’s a good message, worth considering by a wider audience…..

….As we transition to a new calendar year, it’s time to ask,

“Am I applying strategic thinking to
my career, and to my organization?”

What’s Your Personal Brand? Brands are statements that imply performance and trust. The concept of personal branding consistently resonates with attendees of my workshop Leading Strategic Initiatives (Program Management). You need to proactively get your implied and real promises established in the minds of your audience.  If you don’t establish your brand, others will do it for you (and you might not like the result!) Test your branding out. My brand is: Greg Githens helps executives turn vision into results through strategic initiatives.  What’s your feedback on my branding?

Are you thinking strategically?  Strategic thinkers are tolerant of ambiguity. The very word strategy itself is ambiguous (has many subjective meanings). Do you keep – top of mind –  YOUR DEFINITION of SUCCESS?  Are you looking for small wins to move you toward that vision….. and away from failure?

Are you anticipating opportunity?  I think that 2013 will be a good year for the world economy and for economic growth. I think that there are going to be many new opportunities open up for leaders to take charge of strategic initiatives.

Have you taken the time to reflect on your lessons learned for the year? As I reflect back on 2012, I’m grateful for all of the opportunities given to me for improvement.  I’ve met a lot of really smart, wonderful people; and I’ve grown through the vigorous exchange of ideas.  I’ve coached executives and program managers on several strategic programs, and have gained more perspective on the tools that work.

Do you have stretch goals? My favorite definition of youth is when you think the best is still ahead of you. Old people believe that the best is behind them.

Do you carry a mentality of abundance or a mentality of scarcity? We are lucky to live in this time. While Earth and our societies has many challenges, we are blessed with intelligent and creative people who  are looking to collaborate.

Are you paying forward?  Have you looked into the community for those in need? One of the best things you can do for your career is to get involved in charitable and community leadership positions. It’s probably one of the best ways to learn more about influencing others and positive politics. If you know of a charitable organizations that needs help in formulating and executing strategy, put them in contact with me.

I wish the best of success, however you chose to define it!

Do you agree that strategic thinking is a key to personal and organizational success?

Posted in Strategy, Ambiguity, and Strong-Minded Thinking | Tagged , | 2 Comments

Use Small Wins to Attract Allies To Your Strategic Initiative (and Overcome Shabby Thinking)

Posted on December 20, 2012 by
Find allies to support your strategic initiative

Find allies to support your strategic initiative

Organizations often use strategic initiatives as a tool for improving operations. The deployed solution typically includes new toolsets and processes that change the flow of work, decisions, and information.

The success rate for these process-improvement initiatives is about 1 in 3. In prior articles, I have described examples of success in product development, healthcare quality, and hospitality. Often the failures are done clumsily, as described in the first change effort in this article describing a tale of two initiatives at Intel.

I find it best to think of tool and process deployment as a social process of adopting an innovation. How do you get employees to adopt the a new toolset or culture? One approach is to invoke top management authority. However, this requires them to apply sustained effort of sponsoring and leading. Because they are busy and easily distracted by urgent business problems, this approach typically leads to floundering.

The bottoms-up  approach of small wins is a useful alternative. A small win, defined by Karl Weick, is a “series of concrete, complete outcomes of moderate importance that build a pattern that attracts allies and deters opponents.” (See Small Wins: Redefining the Scale of Social Problems). This article will help you learn how to attract allies to create small wins, and how to characterize your “opponent” so you can effectively apply deterrence.

Example of Small Wins: Deploying a Risk Management Toolset

I saw a product development organization effectively use a small wins strategy recently.  The organization wanted its product developers to identify and analyze risk better, and it developed tools and training to make this happen. However, many of the engineers and managers were skeptical. They opined that the tools and process were bureaucratic and added little value. Regardless of their opinion, they were willing to attend an awareness-level presentation (one must always show the willingness to try new ideas, right?)

People who liked the tools and ideas had the opportunity to continue learning and practice them.  Those who didn’t have their opinion change were allowed to go their own way. The small win was each individual who returned to deepen their skill and try out the tools. Slowly, the tools and culture adopted the tools, incrementally reaped the benefits of the tools and got the economic outcomes required by its strategy.

The skeptics freely ignored the change, but gradually adopted most of the ideas simply because everyone else was using the language.

How the Strategic Initiative Leader Attracted Allies

The leader attracted allies to gently build a community of risk-management practitioners:

  • He defined the benefits offered to the individuals as well as to the organization. He created simple messages that explained the benefits in both organizational and personal terms.
  • He was authentic in his approach, and that helped him generate trust. Small wins often come from high-quality relationships between individuals. Authenticity and trust are “attractors” of high-quality relationships that create their own positive energy!
  • He encouraged experimentation, so that the tools could be adapted to the organization’s culture.

How the Strategic Initiative Leader Deterred Opponents

His response to the skeptics was simple: don’t force them to do anything, answer questions, and be patient.  An interesting learning is this:

The opponent is not a person, it is a ill-defined ideology.

The word “opponent” is a bit of an overstatement for most internal change efforts.

I spoke with many of the managers who were the late adopters of the tools and process. In this case (and others like it), their resistance was ideological and ill-defined. Usually, people are ambivalent if the change affects others and only oppose those things that they think will affect them personally. These two statements summarize their mental model:

  • “I don’t like the idea of bureaucracy.”
  • “As an individual, I like the idea following my own muse and doing things idiosyncratically.”

This next example reinforces the argument that the opponent is an ill-defined ideology.

F.E.A.R. is False Evidence Appearing Real

Here is another example of how you need to work with opponents on internal-process strategic initiatives…

During an early-state planning meeting, one of the team members declared that fear was a major obstacle.  None of his colleagues challenged or asked for clarification, so I let the statement pass.  A few minutes later he repeated the statement, so I jumped in with a request, “You’ve said twice now that fear is a big issue.  Can you clarify or provide an example of how that affects this strategic initiative?”

He explained that the many of the top executive equated “process” with bureaucracy. Although he didn’t explicitly state that bureaucracy equated to “adds no value and creates burdens,” that was clearly the implication.

I interrupted him with the statement, “F.E.A.R. means  false expectations appearing real.”  That drew a big tension-releasing laugh and one of the other team members said, “That’s good. I’m going to write that down.”

In this example, “fear” really represents a conclusion that the good intentions of the strategic initiative team would result in non-value added activities and unwelcomed self discipline. Here are a few lessons:

  • Fear is a strong word and probably overstates the legitimate anxiety found around any organizational change effort. Base your conclusions on good evidence, not gut feelings!
  • The idea that bureaucracy is non-value added is a half truth.  Don’t let half-truths go unchallenged; over time they become accepted truth!

How have you attracted allies and deterred opponents? Do you agree that the opponent more often an ill-defined ideology, not a person?

Posted in Strategy, Ambiguity, and Strong-Minded Thinking, Success Principles for Strategic Initiatives, Transforming the Organization, Useful Practices & Management Tools | Tagged , , , , , , | 3 Comments

Strategic Initiatives | What Are the Metrics That Matter?

Posted on November 23, 2012 by

Commitment and alignment are critical success factors for any strategic initiative. Metrics are by far, the best tool for alignment because they create a singular focus on strategic performance outcomes and their enablers.

Leaders of strategic initiatives should regard good metrics as a priority. Metrics will help foster learning, support the strategic initiative story, integrate the many components, and encourage good decision making.

What Makes a Good Metric?

A good metric – or set of metrics – does these six things:

  1. It measures something important. If the word strategic means important, then metrics reflect the imperatives of the individual or the organization.
  2. It has relevance to the audience. Since strategic initiatives have difference stakeholders, one of the biggest challenges is to prioritize the audience and tailor messages to them.
  3. It measures something that is directly controllable by individuals or small groups. This suggests that metrics are local, and connected to action.
  4. It is resistant to gaming. This is the counterbalance to localization; that is, the metric is difficult for self-centered actors to manipulate.
  5. It is a member of a very small, lean set of measurements. Since people have a limited span of attention, we want to keep the metrics to a handful: five to seven metrics is advisable.
  6. The set of metrics includes both leading and lagging indicators. No one drives their car by focusing on the rear view mirror, they look down the road to see the turns and respond to the threats.  This analogy holds well for the set of metrics.

Metrics versus Measures

The concept of metrics is distinct from the term measures. An organization’s accounting system can measure thousands of performance indicators, frequently yielding “measurement clutter.” Thus, the term “measure” is a generic term referring to anything that be captured as a measurement, regardless of usefulness.

A metric is a subset of all measures. It is a measure that is relevant to someone: it has meaning (tells a story) and causes action. A metric is to a measure as information is to data. They are limited in number and effective because they stimulate action.

People have a limited ability to process information, so they employ filtering. A metric is a signal that cuts through all of the noise in the organization. Metrics reflect and reveals people’s values and reward systems; they are part of the organizational culture.

Metrics both reflect and shape the organization’s culture.  People can only pay attention to a handful of things, so the question for any change agent is what metrics are preserved and what new metrics are needed to encourage people to move in new directions.  The metrics that matter are those that are valued by the culture, or believed to be new signals of something important.

Example: What Earns You Your Bonus?

IBM is a company staffed by thousands of accountants and reporting systems many of them involved in measuring individual performance for the purpose of promotions and bonuses.

Several years ago, I was there supporting a strategic initiative that involved improving the new product development process. One day’s task involved helping a group of senior managers understand how project management enabled its product development process to be faster and more productive. The managers listened dutifully and asked many questions. As the day wrapped up, I noticed they were scheduling a follow up meeting to discuss their “game plan.” Was this game plan good or bad?

They explained that every year a new strategy and set of objectives came out of corporate headquarters, and that individual bonus and promotions were tied to the objectives. This group of managers made it a practice to schedule an offsite where they would develop a spreadsheet model. Through their analysis, they figured out how to create the right enablers for that model, so that they could maximize their share of the bonus pool.

These were smart people who cared about their careers. They needed to know what was considered important and how it would be measured, so they could align their actions accordingly.  The commonsense principle,

Tell me what is being measured and I’ll tell
you want people are paying attention to.

Lesson: Never Overlook the Importance of the Individual

When I introduce the principles and practices of metrics to audiences, I ask them to take a moment to think about their performance objectives for the year.  I then ask them to answer this question:

What are the five to seven things that you
must accomplish in order to earn your bonus? How will you measure and report your success with them?

The same principle applies to strategic initiative performance.  What are the five to seven things (including leading indicators) that you – as the strategic initiative leader – need to focus on?

So, What are the Metrics that Matter?

The metrics that matter are those that are relevant to you and your audience. You develop metrics by asking and answering questions such as these:

  • What is our performance gap and how do we define success?
  • What leading indicators are most useful?
  • Who will see the metrics, when, and in what reporting format?
  • Are the chosen metrics effective and impactful?

As an example of a strategic, I’ll return the Domino’s pizza turnaround. One performance gap was to improve sales revenues, and the vision for success was to make a claim that “our pizza tastes best.”  The metric for performance was consumer preferences in a blind taste test, and Domino’s continually tested different formulations to improve its score on that metric. It made its “Oh Yes We Did!” product launch announcement when its metrics supported its advertising claims.

What metrics have you used for strategic initiatives?

Related articles
Posted in Incremental Benefits Delivery, Success Principles for Strategic Initiatives | Tagged , , , | 3 Comments

S.T.I.C.C. – A Useful Communication Tool for Critical Situations

Posted on November 1, 2012 by

STICC is a useful communication template for situations where time pressures and mistakes can lead to grave consequences. Organizations such as hospitals have trained nurses and physicians in its use and it is also endorsed by US Forest Service fire fighters.

A Project Portfolio Management Example

EAMES (a pseudonym) is a business with over 600 projects underway, each of them labeled “strategic” or “very important.” EAMES has been very successful in its business, with ambitious managers always pursuing new growth. One manager described the company like this, “EAMES has never seen a proposed project that it didn’t like.” During the past 2 years, senior management has grown in the realization that more focus is needed.

The company charted a portfolio analysis team to develop a prioritized list of strategic initiatives. It was successful in collecting data. (Finally, a list of all projects!) The company does not have slack resources to staff all of the proposed initiatives and it does not have a prioritization methodology. Frustration is mounting.

Here is how STICC was used to convey the situation to the CEO. Notice that the statements are kept concise.

Situation & Task

The first step is asserting your opinion: Here’s what I think we face. The second step is your recommendation. Here is what I think is the most appropriate response to the situation.

Application: Boss, Here is the situation that I think we face. After 9 months of work, our team has been unable to gain consensus.  Our attempts to identify screening criteria and the weights have become tedious and have bogged down. Every project is important to someone, somewhere in the organization.

Here is what I think we should do. I think we should work with the Board and the senior-most echelons of management to identify the three types of strategy: corporate, business, and functional. I think we should establish a budget for a strategic initiatives of about 25%, put all corporate ventures and a selected few change-the-business strategies in that bucket. For the short term, no functional initiatives should be considered a strategic initiative.

Intent

The “I” in STICC signifies your intentions. Your goal is to provide the rationale (“here’s why”) for your recommendation.

Application: Boss, the reason why I am making this recommendation is that we are not making the progress that we had all hoped for. We seem to be suffering from analysis paralysis. The crux of the matter is that many managers confuse goal setting with strategy formulation. Until we can gain clarity and educate people, we are better off with a few simple classifications. As an organization, we conceptually understand strategic alignment, but we struggle to translate the theory into practice. It’s like triage on the battle field: we shouldn’t waste scare resources on something that gives no strategic advantage.

Concerns

Here you are providing an understanding of risks and issues that you will face. You are explaining your perceptions of, “Here’s what we need to watch.”

Application: Boss, we need to watch dissention and push back from the VP of Human Resources and the CIO. Both of them have ambitions to deploy new software solutions.

Calibrate

In this last step, you are inviting feedback from the audience. You might say something like, “Tell me if you don’t understand, can‘t do it, or know something I do not.”

Here are some questions you might ask to calibrate: What are the areas of agreement and disagreement? What are the risks, of delay and of impulsiveness? How strong is your support for my recommendation?

You incorporate the feedback, and work to gain agreement on a path forward.

Next Steps after STICC: Listen, Acknowledge and Negotiate a Plan

You can think of STICC as a concise, straightforward way to announce crucial information. The next steps are to acknowledge to the feedback and negotiate an action plan.

As I mentioned in the introduction, STICC is used by a number of professions where miscommunication may cost lives (hospitals and firefighting). The pressure is high, the consequences large. Strategic initiatives may not be life and death, but their lasting impact may be huge.

Where can you apply STICC?

[The source of STICC is Gary Klein, who adapted Karl Weick’s research on High Reliability Organizations.]

Posted in Strategic Planning Issues for Strategic Initiatives, Useful Practices & Management Tools | Tagged , , | Leave a comment

The “20%-of-Your-Time” Rule-of-Thumb

Posted on October 16, 2012 by

Gaining the commitment of the right resources is arguably the greatest success factor for strategic initiatives.  Let’s say we have identified a competent strategic initiative leader in the organization. Chances are excellent that they have other responsibilities that they can not easily shirk or delegate. Does management make a tough choice, or hope that this person can do it all?

Reality Check: There are (only) 24 Hours in a Day

A practical problem for resourcing strategic initiatives is that the best people in any organization are kept very busy. Everyone wants a piece of their time. And they deserve a personal life, too.

Given this, I always probe for patterns that help me answer these questions:

Can individuals give the initiative more-than-enough time?
Have individuals identified the sacrifice they will make?

I inevitably hear people on the strategic initiative team verbalize this pattern: “This performance gap is huge and needs to be addressed. I am happy to be part of the solution.  But where am I going to find time to participate?”

A Useful Rule of Thumb for Staffing Strategic Initiative Teams

When resourcing of a strategic initiative, follow this rule,

Each key player in the strategic initiative must
devote at least 20% of their time to the initiative.

Everyone has heard (and used) the statement, “I didn’t have enough time” as an excuse. As a reality check, estimate the impact of 20% on a standard work period. Twenty percent amounts to

  • One day per 5-day work week
  • 96 minutes in a 8-hour day
  • Four days per month

I tell people on the strategic initiative teams, “If you can’t find sufficient time, you are not likely to succeed. You and your boss have some tough choices to make.” Another way to frame the issue is, “If you want to be remembered for five things this year, is the strategic initiative one of them?”

The implications resource availability to strategy are huge: If an initiative can’t get the resources, it should not be carried in the portfolio of strategic initiatives. The performance gap targeted by that strategic initiative will not be closed.

Five Challenges for Resourcing a Strategic Initiative

The resourcing headwinds for a strategic initiative includes:

  • Ambiguity about purpose. Strategy is inherently ambiguous. Ambiguity takes different forms, and is uncomfortable to many. Thus, people tend to avoid ambiguity; the consequence being that they don’t readily volunteer effort to the strategic initiative.
  • Novelty. Unfamiliar tasks are more likely to exceed the initial duration estimates.
  • Run-the-business work consumes time. People have many other responsibilities to fulfill in their organization.  This strategic initiative will likely be a part-time effort.
  • Corporate-level budgeting & talent management processes don’t plan with enough granularity. It is hard to know what competencies are needed and difficult to assess their availability.
  • Burn-out and balance of personal life with work life. High performers are ambitious, but face practical limitations on the amount of energy they have and the willingness to compromise health and family.  Unless the individual focuses, they become distracted, stressed, and are strategically ineffectual.

Based on your experience with strategic initiatives, is 20% too high or too low? How does it help force the discussion on prioritization?

Posted in Strategic Planning Issues for Strategic Initiatives, Success Principles for Strategic Initiatives, Useful Practices & Management Tools | Tagged , , | 2 Comments

That’s the Fact, Jack: Data Drive Strategic Initiatives

Posted on October 9, 2012 by

A strategic initiative is more likely to be successful if there is an accessible record of facts, data, and patterns. This gives the leader the inputs for creating a valid, useful narrative that will gain the attention of stakeholders. Two cases in point:

  • Domino’s Pizza Turnaround was driven by consumer verbatims about the lack of quality in the product. The data was cross referenced with social media, focus groups, and accounting data.  The complaints (such as “crust tastes like cardboard”) were even posted in the product development laboratory.  Further, the development team used a sophisticated experimental design to find the optimal new product configuration.  The key launch criterion was supported by data.
  • Google’s initiative to reinvent the news was supported by extensive data and analytics on trends in the news business, from circulation to advertising revenue.

One warning sign of trouble is when a narrative is created by the strategist, but that narrative is not supported with relevant data. An example: A manager at Cooper Tire related his perception of the challenges of repositioning the company into an unfamiliar market.  He said, “It was the CEO’s vision. It made no sense to the middle managers. There was no data. We didn’t have strengths in the market area, and it took away from our core focus.” He and others did what was instructed to support the initiative, but didn’t believe in the initiative. Over time, the initiative floundered, in part leading the Cooper Tire Board to issue a press release announcing that CEO Thomas Dattillo, was leaving to “pursue new opportunities.”

Diagnosis is a Key Part of Any Strategy

A key element of any strategy is a diagnosis of the situation. The question is simple, but the answer to it involves ambiguity and strategic thinking,

What is going on here?

A diagnosis serves to describe the situation. For Domino’s Pizza, the diagnosis was that a trend of food-quality complaints in social media and elsewhere was related to revenue trends.  For Google, the diagnosis was, “If newspapers stop producing good journalism, we will have nothing interesting to link to.”

All organizations face complexity and struggle to master it (see this article for rules for managing complex strategic initiatives). A diagnosis provides a simplification of reality that allows managers talk about the causes of the situation, and to evaluate the worthiness of various plans of action.

Strategic Initiative Leadership: Connecting Facts to Strategy

I find Christopher Agyris’s ladder of inference (illustrated in the nearby graphic) is a useful tool for connecting strategy to the facts.

In the previous article, I explained how strategy and conversation are intertwined. At a micro level, strategy is a set of actions based on a set of beliefs. Where do those beliefs come from, and how does this relate to data?

At the top level of the graphic we see the actions-belief relationship. The beliefs rest upon conclusions that in turn rest upon assumptions that are culturally influenced.

A skilled conversationalist uses this tool to walk people up and down the ladder. Sometimes the conversationalist uses inquiry (help me understand your mental model) and sometimes the conversationalist uses advocacy (let me explain my mental model).

An Example of Walking Up and Down the Ladder of Inference

In a recent strategy session, Deborah and Mike found themselves disagreeing on the proposed actions of their group, and were taking up valuable group time with their discussions. They were each frustrated. Deborah advocated for “Strategy X” while Mike advocated for “Strategy Y.”  I helped them get through this by sketching out the ladder, and inquiring about their mental models. Soon it became very clear that Deborah was looking at a different set of facts than Mike. Further, Deborah placed more meaning on some data that Mike found less important.

We didn’t resolve the frustration in that meeting, but at least we got agreement that we needed better data and analysis.  The situation was resolved and a strategy was set at the next meeting.

Include White Hat Thinking in Strategy

I suggest that people read Edward de Bono’s Six Thinking Hats.  Early in any strategic planning or execution planning exercise, we should use the White Hat, which is the emphasis on gathering and understanding the facts.  The White Hat is a useful counterbalance to Red Hat emotional reactions.

How has data and analysis driven your strategic initiative?

Posted in Competencies of Strategic Initiative Leaders, Strategic Planning Issues for Strategic Initiatives, Strategy Coaching and Facilitation, Success Principles for Strategic Initiatives, Useful Practices & Management Tools | Tagged , , , | 3 Comments