high performance academy not: questioning your business questioning your processes give a full...
TRANSCRIPT
High Performance Academy
Not: Questioning your Business Questioning your Processes Give a full proof solution Tell you what and how to do it
High Performance Academy
Company shape
Bad Condition Good Condition
Relative Slow Improving System
Relative Fast Improving System
High Performance Academy
It is: Assessment of your strategy Assessment of your focus Assessment of your robustness of your
processes In line with strategy? Will they deliver? Scenarios of how to improve
Show you opportunities and tools Share experiences
High Performance Organisations
Basic criteria
Organisational environment Organisational relationships Competitive environment Strategic challenges Performance Improvement
System
EFQM
Organisational environment
5 Forces Porter
7
Drivers of five forces
Suppliers
Concentrated Able to integrate
forwards Alternative markets Differentiated products Crucial to performance Organised
New Entrants
Low barriers to entry Limited retaliation expected Visible business area Expectation of profits
Rivalry
Many competitors Equally balanced Strategic stakes Low growth Barriers to exit High fixed costs Commodity items
Substitutes
New technology Redefinition of customer needs Unrelated skills/processes Change in customer values
Buyers
Concentrated Low profit High information Influence in selling on Low switching costs
Organisational relationships
Starters
Supply Group
ProfLamps
LightingPhilips
CustomersSuppliers
BLT TLCFL.ni
Market groups
HID
Lumin.Special
Lighting
LeadWires
Deurne
Glass EMGO
Plastic DewitBottom KreutzBimetal DodocoCarton Kappa
CapacitorRica/ CGEAir Liquide
Lodz F&A
RegulationsCommunity
‘Pressure groups”
Stakeholder analysis
. BPT. GTI
Init Purch
Organisational relationships
Success = robust strategy + effective operations
Doing the right things
Making choices Investing in
strengths Seeking
uniqueness
Doing things right Solving problems Eliminating
weaknesses Emulating best
practice
Strategy Operations
Ashridge
Understanding strategic position: the Strategy Matrix
High
Moderate
Low
Attractivenessof the
Business
Weak Average Strong
Competitive Position
The Strategy Matrix: possible options
Well above
Same
Below
Players’ average earnings relative to Cost
of Capital
Below Average High
Relative Profitability of the Business
Invest to sustain
Restructure or exit
Hire me
Hmm…
Well done!
Valued customers (“who”): segmentation
Cost-to-serve
Base costs
Support costs
Acquisition
Retention
Value they bring
One off
Over time
Cost to them of our offering
Value they place on it
Their net value to
us
Our net value to them
L
H
H
L
Ashridge
Strategy development can start anywhere
CapabilitiesIs this something we can do?
OpportunitiesIs it possible to do this?
CompetitiveAdvantage
AimsDo we want to do this?
Elements of a business model
Value chain
Value propositio
n
Valued customers
How? What? Who?
The full model of a value chain
INFRASTRUCTURE ACTIVITIES: PLANNING, FINANCE, MIS, LEGAL SERVICES
TECHNOLOGY RESEARCH, DEVELOPMENT, DESIGN
HUMAN RESOURCE MANAGEMENT AND DEVELOPMENT
PURCHASING,INVENTORYHOLDING,MATERIALSHANDLING,(“Inboundlogistics”)
PRODUCTION WAREHOUSING&
DISTRIBUTION(“Outboundlogistics”)
SALES &
MARKETING
DEALERSUPPORT
&CUSTOMER
SERVICE
SU
PP
OR
T A
CT
IVIT
IES
PR
IMA
RY
AC
TIV
ITIE
S
MA
RGIN
(Porter, 1985)
The right way
Your ultimate
goalTargets
ProcessesEnablersC
m
e
e
o
p
t
nce
Benefit drivers
Perceived performance Features Reliability Durability… Perceived value creation Responsiveness Flexibility Availability...
Cost drivers
Scale Design Technology Factor costs… Recruitment costs Staff turnover Experience Sales hit rate...
Performance Improvement System
Difference between efficiency and effectiveness
If you are efficient but not effective, you are driving very fast to bankruptcy.
If you are effective but not efficient, you are not going to improve fast enough and stay competitive.
So check effectivity before efficiency
Performance Improvement System
What are your critical to strategy processes? Where can you win over your
competition? Where are your strengths?
Performance Improvement System
How would the world look alike if you are successful?
What would be different in the process?
Map your process Test the robustness of your process Define the way to go
Performance Improvement System
Ist
Soll
Test
Visualise
Assumptions
Executing Strategy
Stephen BungayDirector, Ashridge Strategic Management Centre
Introduction
The strategy triangle
AimsDo we want to do this?
CapabilitiesIs this something we can do?
OpportunitiesIs it possible to do this?
Competitive Advantage
Strategy is something you do!
Doing the right things
to
Shift the odds in your favour
which means
Making choices
Decisions
Doing strategy is thoughtful, purposive action
How can we help people to answer these questions?
1. What is my part in the plan?
2. How does that contribute to the whole?
3. What do I have to do to be successful?
Personal challenges
Directing
ManagingLeading
How do you set clear direction?
How do you allocate resources efficiently and
effectively?
How do you lead while allowing others to do so?
In each case: enough, but not too much!
Directing
ManagingLeading
Clarity about objectives, guidance on decision-making
Enough resources, manageable constraints
Giving space and support
Goals
Operational Control
Autonomy
Alignment
Where would you like to be?
Think about these questions:
Why is this a high performance organisation? How is leadership exercised? What behaviour standards are apparent? What values are implied? How does it reconcile autonomy and
alignment?
Executing Strategy
Stephen BungayDirector, Ashridge Strategic Management Centre
Directing through Intent
Operations: disciplined behaviour
Clarity about what and why Ability to make trade-offs between priorities Space and support Willingness to use the space Trust
Goals
Operational Control
Autonomy
Alignment
High alignment enables high autonomy
The problem: three critical gaps
Outcomes
Actions Plans
Knowledge Gap:the difference between what we would like to
know and what we actually know
Alignment Gap:the difference between
what we want people to do and what they actually do
Effects Gap:the difference
between what we expect our actions
to achieve and what they actually achieve
Usual reactionsOutcomes
Actions Plans
Knowledge Gap:more information
Alignment Gap:more detail
Effects Gap:more control
The system of solutions
Outcomes
Actions Plans
Knowledge Gap:restrict plan to
essential outcomes by clarifying intent
Alignment Gap:build alignment by
cascading ‘what’ and ‘why’
Effects Gap:encourage adaptation by giving freedom to act within boundaries
Goals
Operational Control
Delegation
Alignment
MISSIONCOMMAND
The military have an operating model for achieving this
The original guru – and practitioner
Von Moltke on the three gaps
Outcomes
Actions Plans
Knowledge Gap:‘do not command more
than is necessary or plan beyond the circumstances
you can foresee’
Alignment Gap:‘communicate to every unit
as much of the higher intent as is necessary to
achieve the purpose’
Effects Gap:‘everyone retains
freedom of decision and action within
bounds’
Strategy: enough but not too much ‘The Prussian general staff, under the elder von
Moltke…did not expect a plan of operations to survive beyond the first contact with the enemy. They set only the broadest of objectives and emphasised seizing unforeseen opportunities as they arose…Strategy was not a lengthy action plan. It was the evolution of a central idea through continually changing circumstances.’
Quoted by Jack Welch in Jack, p. 448
Why is it interesting?
It is: A set of practices With a 150 year
history An integrated system Scaleable
And not: A theory A new buzz word A list of initiatives Funky stuff for small
teams
A simple operating model
Leaders explain the outcome the unit is to achieve in the context of the overall strategic intention ‘2 levels up’ what part the team will play what resources are available what constraints are imposed
This enables the team to act at speed through clarity of purpose with freedom to adapting to changing circumstances ready to help others
Technique is based on very short written communications based on a standard format
Purpose
Alignment
What?Why?
Task
Clarity
&
Mission = task + purpose
Mission
Scope of the Purpose
Operating Boundaries
The mission sets you free
Strategy as a statement of intent
Capabilities and
opportunities
Time
Main
Effort
Analysis of the situation
Objectives as an end-state
Decisive points
defining main effort
A core alignment tool: ‘mission analysis’
A process for analysing higher level intent and the tasks necessary to fulfil a mission
It places in context what effect is to be achieved within the overall plan
It defines the boundaries within which there is freedom to act and makes clear the focus of effort
The analysis allows leaders to think through what needs to be done to fulfil a mission and affirm that it can be achieved
It is a dynamic process which must be reviewed if the situation changes
Defining ‘our part in the plan’
What do you need to specify in order to give direction?or
What do you need to know in order to receive direction?
Mission analysis: a briefing structure
1. Statement of the mission– what and why– measures
2. Strategic intent – one and two levels above
3. Tasks– essential high level tasks
4. Defining the boundaries– freedoms and constraints
5. Confirm the mission: has the situation changed?
Being Clear and Simple
In articulating the mission you need to Be clear about what really matters Focus your effort on it Leave out everything else
The mission answers the question: what does the plan mean for us?
To do this, you need to simplify complexity, which means mastering practical thinking
Ways of Thinking
Theoretical Thinking
Practical Thinking
Two Types of Thinking for two Situations
Theoretical Thinking
Its object is knowledge Its goal is to understand
reality Thinks backwards into
causality Involves making
distinctions
Practical Thinking
Its object is action Its goal is to make choices Thinks forward into
consequences Involves simplification
Turning Shades of Grey into Black and White
Simplification is a demanding intellectual process The best simplifications are insights into the essentials
Deciding what is essential involves Structuring
Turning lists into sets of relationships Selecting
What details matter? What is merely detail and should be forgotten?
Summarising Articulating the meaning of a large number of facts
Reality is never black and white - actions always are Your people can only act when you have made reality simple
for them
Adapting: strategy is something you do - by understanding what it means for operations
Strategy
Operations
The overall dynamic: a ‘do and adapt’ cycle
Think
Do
The ‘do and adapt’ cycle: learning and adapting
Think
Do
(Learn)
(Adapt)
(Observe
Orient)
(Decide
Act)
Example: mission statement – 1st iteration
Our Mission Statement:Significantly reduce time-to-market for development, enhancements and support of high-quality products to our customers in a cost-effective manner in order to help aggressively grow our revenues and increase our margins.
Mission Statement – 3rd iteration
To accelerate development, support and enhancement of critical products in order to enable sales channels to halt market share erosion by December 2003.
Successful mission analysis is:
Clear Simple Concise Incisive Realistic Inspiring