Strategy

Strategy

Jill Bamburg, part of BGI's core faculty team, led a fascinating discussion around strategy at our final intensive of the year. The June 2013 issue of the Harvard Business Review ignited the conversation as they published three articles oriented around the evolving world of strategy.

• Transient Advantage: Achieving a sustainable competitive edge is nearly impossible these days A Playbook for strategy in a high velocity world
• What Is the Theory of Your Firm: Focus less on competitive advantage and more on growth that creates value
• The New Dynamics of Competition: An emerging science for modeling strategic moves

As technology has moved from waterfall implementation to MVP and Agile processes, companies that are most nimble are the ones succeeding. What sort of implications does this have for strategy? The argument is that as business evolves, so must strategy. 

I hold that perspective that good strategy includes evolution. I also appreciate my classmate Emily Kanter's stance on growth, and recognizing the cyclical nature of the world, also appreciates how businesses can exit the marketplace(Also a shout-out to Cameron Miller "To grow or not to grow"). In the HBR article "What is the Theory of Your Firm", they capture this concept well:

...To make matters worse, attempts to grow often undermine a company’s current market position. As Michael Porter, the leading proponent of strategy as positioning, has argued, “Efforts to grow blur uniqueness, create compromises, reduce fit, and ultimately undermine competitive advantage. In fact, the growth imperative is hazardous to strategy.” Quite simply, the logic of this perspective not only provides little guidance about how to sustain value creation but also discourages growth that might in any way move a company away from its current strategic position...

Aside from changing paradigms around growth strategies, this point illustrates to me how effective our old theories can be. Porter's theories around competition and strategy evolved around the concepts that "Zero-sum is ho-hum" and effective strategy requires working with uncertainty. To me this speaks to our conversation around Purpose in Business. 

John Boyd's OODA loop theory on strategy truly captures working within a dynamic environment. Moving quickly through this loop is essential to learning, and ultimately, surviving. Their are some powerful parallels between this theory on strategy, and how we move through our own lives. Boyd comes from a military background, where strategy in war truly determines the impact on human lives. Even the new theories on startup strategy, with Eric Ries and the lean startup embraces the OODA loop. The purpose of the minimum viable product(MVP) is primarily in moving through the loop quickly.

Good strategy lasts through the ages, whether it's Sun Tzu's Art of War or Musashi's Book of Five Rings, it comes down to the application of strategy.

What variables affect the application of strategy?

The largest barrier that I have seen, and which also resurfaced during our conversation, is the effective application of strategy in super-sized organizations. The bigger the ship, the harder it is to turn. This isn't an argument against growth or large organizations, it's simply the acknowledgment that more challenges around adaptability arise the larger an organization is. I wonder what implications organizational design theory has around this. Can we use fractal design processes to allow all elements of an organization change at once? What about biomimicry? There are countless examples of a cluster of organisms dynamically shifting together. Schools of fish that can turn on a dime, or insects who lead from the rear.

What opportunities do we have to allow effective application of strategy?

Patent Trolls or Goals?

"Congress shall have power...To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." - United States Constitution: Article 1.8.8.

How do we track how well we are "promoting progress" in the United States? How do we measure innovation? I might suggest that tracking patents could be a great measure of innovation. Unfortunately, patent law and the politics surrounding it are a mess right now. The White House just published a fascinating piece entitled "Taking on Patent Trolls to Protect American Innovation". They analyze the impacts of patent litigation on the economy and on innovation. Over the past 10 years, as technology has exploded(for better or worse), so have patent filings. In fact, the number of patent cases filed over the past decade has doubled, from around 2500 to 5000 since 2003. Impressively, "patent trolls" account for over 3000 of these cases, much more than the couple hundred they were 10 years ago.

Coincidentally(maybe?), This American Life broadcast a part-two on their story on patent trolls. Fascinating, as Intellectual Ventures - the local (Bellevue) company - is the star of the story, as well as a major player in the study shared by the White House.

I encourage everyone to hear Intellectual Ventures perspective as well, and draw your own conclusions. They have three pertinent articles:

• In response to This American Life’s updated story, “When Patents Attack Part 2”
• The Red Herring of Transparency
• Disruption Invites Controversy (IV's response to the original story in 2011)

I agree wholeheartedly that our current system of patent law is flawed, and that massive amounts of litigation don't inspire innovation. For me, it hinges upon intention. Are we rewarding innovation or just trying to make a buck?

Coming from the perspective of positive psychology, I offer a reframe to the discussion. How do we(as a society) go back to square one and "promote the progress of science and useful arts"? The top line in the White House's patent report executive summary says, "Some firms that own patents but do not make products with them play an important role in U.S. innovation ecosystem, for example by connecting manufacturers with inventors, thereby allowing inventors to focus on what they do best". 

What practices can we implement to encourage this type of behavior?

Cost Structure & Revenue Streams

Costs	Revenues and Benefits
(What you give)	(What you get)
•Hard costs	•Normal benefits
○Money	○Money
○Time	○Insurance
○Energy	•"Soft" benefits
•"Soft" Costs	○Increased satisfaction
○Sanity...	○Social contribution...

This is the final entry for Business Model You! Interestingly, the book has the least amount of content around these parts of the canvas. 

The "Soft" parts of the above definition led me down a ridiculously long rabbit hole of research into soft-skills.

As part of a side project I'm working on involving "green staffing", soft-skills have come up over and over. As the research around this topic is pretty elaborate, I'm going to make this a two-part post. This week, I'm going to define soft-skills, and next week, I'll present my thoughts on why they are particularly important, and how to bring them to the table in business.

What are Soft Skills? <- Awesome link to the most comprehensive aggregation of information I've ever seen.

Investopedia.com and Wikipedia seem to agree, soft-skills are traits and interpersonal skills that characterize an individual's relationship with other people. Sociologists use the term EQ (Emotional Intelligence Quotient) in parallel with soft-skills. 
 

The challenge with this definition is that "traits" and "interpersonal" skills feel ambiguous to many people; most people "get it" - they're just not sure what they're getting.

On the other hand, Hard Skills are easy to define. Here's Investopedia's definition.

 Specific, teachable abilities that can be defined and measured. By contrast, soft skills are less tangible and harder to quantify... In business, hard skills most often refer to accounting and financial modeling.

How amusing is it that the 2nd sentence in their definition names the challenge of soft-skills?

In the blogosphere, Forbes, Fastco, Inc.com, etc. there's a lot of disagreement on what the critical soft skills in business are. Here's my bulleted takeaway:

•  Problem-Solving & Critical Thinking
• Adaptability 
• Organizational Learning
• Creativity
• Communication
• Listening
• Presenting
• Story-telling
• People Management
• Conflict Management
• Leadership 
• Teamwork 
• Self-Management
• Emotional Awareness & Control
• Resilience
• Confidence
• Professionalism

I would argue that BGI empowers students by developing soft skills(as well as understanding the languages of the hard skills), and students need help presenting those soft skills as a "tangible" asset. The hard data and research is out there, I'll link to it next week as I dig through it - just as there is a "business case for sustainability", there's also a "business case for soft-skills". 

I'd love some input for my content next week around soft-skills, please post your thoughts/questions! Thanks!

Customer Relationships & Channels

• Customer Relationships - How You Interact
• Channels - How They Know You/How You Deliver

This week, I brought in some outside help, Jo! So many of our conversations, particularly around modifying and changing behaviors have overlapped. It's fascinating to think about how some of the concepts we're learning in an MBA program, parallel with the scientific rigor of behavior therapy. Here's our edited and paraphrased conversation.

[Jo enters - stage left]

As a speech-language pathologist, my job is to analyze behavior and break it down into steps to be changed and shaped. This week, I was reading over Aric’s shoulder while he was looking at the Business Model You “Channels” component and I saw the “marketing process,” a series of five questions laying out how to define the conduit of information and products to customers:

1. How will potential Customers discover how you can help them?
2. How will they decide whether to buy your services?
3. How will they buy it?
4. How will you deliver what Customers buy?
5. How will you follow-up to make sure Customers are happy?

I immediately thought, “oh, I know this, it’s the ABCs!” Not the alphabet song, mind you, but the chain of events surrounding human behavior that I examine every day: the antecedent (A), behavior (B), and consequence (C) of decisions that people make. These small actions are governed in large part by surprisingly simple rules, rules that are also surprisingly simple to influence.

So, let’s break it down, analyst style. The above questions target three steps in a behavior chain: what happens before the behavior, provoking or preventing its occurrence. This is called the antecedent and includes components of the environment or conditions such as where, when, who is involved.

Then, the behavior itself: the target behavior, it is called, the behavior that you want to change or modify. The crucial aspect of identifying the behavior is creating a definition of the behavior that is observable, measurable and specific.

Finally, what happens after the behavior: the consequence, which can either reinforce or increase the frequency of the behavior or punish and decrease the frequency of the behavior in the future.

Implementing changes in channels, then, becomes a scientific process instead of a guessing game. We manipulate the antecedents – the environment and conditions – and the consequences to change the behavior. Just like the behavior has to be specific, measurable  and observable, so too do the changes. Step back, look at the variables currently influencing behavior. Decide on a small change. Make one change at a time. Observe and record data. Measure outcomes. Repeat and refine as needed. Or, as Gerald J. Langley et al. say in their book The Improvement Guide, Plan-Study-Act-Do. They set out a systematic way to approach system changes that can be universally applied.

Plan-Study-Act-Do: Scientific method of looking at change and implementing it in small steps

Many business problems have already been tackled and analyzed in this way, for example:

• Behavior analysis to increase customer service: 
• Analyzing salesperson burnout: 
• Influencing customer’s buying of reusable vs disposable containers: 
• Advertising’s influence on sales and theft of candy bars: 
• How to increase residential consumers’ environmentally friendly energy use: 

Being able to identify the decisions and choices we make can feel overwhelming. That creative tension I mentioned before - is easier to manage, when we can recognize that it's there. I'm reminded also of the LPD discussions around "Big Assumptions" - and how we try to live with them, and not "conquer' them... See you all at intensive! 

Key Resources & Key Partners

1. Key Resources
1. Your Interests
2. Your Abilities and Skills
3. Personality and what you have.
2. Key Partners
1. Those who support you

There are a plethora of tools out their that help us identify our interests, strengths, abilities, and personalities. At first, I thought I might link and post about a variety of them; Meyers-Briggs Type Inventory, Enneagram, Strength Deployment Inventory, coaching sessions, surveys etc.

Amusingly, in my search for useful resources to share, I ended up watching yet another TED talk, by Martin Seligman. He introduces his research into the field of Positive Psychology. I found his talk fascinating, and ended up doing further research into his work, and was amused when his website, was oriented around "happiness."

http://www.authentichappiness.sas.upenn.edu/newsletter.aspx?id=1554

Essentially, Positive Psychology is about using the science of Psychology to help people move forward, to build thriving and fulfilling lives, as opposed to treating deficits. It's a shift from the "disease model" to a generative model for health and well-being.

While perusing through the information around positive psychology, and looking for tools for identifying "Key Resources", I stumbled across a parallel and common theme, one I've tried to embrace for a while.

The more we understand the context of our strengths, we can understand our weaknesses as well, and knowledge of both of these, is power.

Harvard Business Review states, "In cross-training, the combination of two activities produces an improvement—an interaction effect—substantially greater than either one can produce on its own." For me, I've also applied the 80/20 rule and Pareto principle, to my own "strength training". 

In a not so surprising connection, Key Partnerships seemed to apply well within positive psychology as well. Early in the TED talk, Dr. Seligman suggests that social interaction is one of the most important indicators for health and happiness. For me, this is taken within the context, recognizing that we have many social networks. One of the first exercises around identifying Key Partnerships, is drafting a venn diagram/nested circles diagram on the people around us, and how they impact us. 

I think this exercise is particularly useful, just like doing a systems diagram. The more we understand the elements that surround a variable(ourselves), the stronger we can develop our opportunities for improving that system.

On a final note, Dr. Seligman is currently advocating for his concepts to be used in a similar fashion as Gross National Happiness. He argues that the capacity for citizens to fill fulfilled should drive governmental policy.  In an interview(likely paralleling our coursework next quarter- Means and Measures),  he says, the first step towards designing policy that aims to improve people's well being, is designing the appropriate measure, and that perhaps GDP isn't very effective.

Purpose

"Whatever a person's mind dwells on intensely and with firm resolve, that is exactly what they become." - Shankaracharya

This is most definitely an iterative process. I decided to start with the more intricate topic of "Purpose" for a variety of reasons:

• Our recent Values exercise - and the fact that we're in "Values and Value Creation"; Should help fill in the Value Prop section.
• Just got back from TEDxBGI, and the theme was, "Purpose", which seems to align with value prop somehow - although might align with the Business Model Canvas(BMC) as a whole...
• I think it will require the most iteration, so better to start early!

To assist me, I'm going to use the following rubric as provided in the book. I'll also upload/post the exercises I'm using somehow, for readers to follow along with.

Definitions:

Value-Prop: "How you help." What benefits do Customers gain from me?

Customers: "Who you help." Who benefits from your actions? Who do you serve? Who depends on you?

Key-Activities: "What you do." What are the critical tasks you perform regularly, physical, mentally, or emotionally?

Purpose Statement:

"I value-prop(verb) customers(noun) by doing key-activities(verb)."

e.g. I heal families by providing counseling.

1. Value Prop:
1. Empower
2. Support
3. Inspire
4. Love
2. Customers 
1. The disenfranchised
2. People unaware of their own value
3. Specialists
3. Key-Activities
1. Communicating
2. Empathizing
3. Holding diverse perspectives

What's on your list?

During Jill Bamburg's presentation at TEDxBGI, she offered that a company's end goal is actually "Purpose", not "Profit". 

When she offered this viewpoint, one that we hear often at BGI, I was reminded of an old RSA Animate featuring Daniel Pink. At around 7 minutes into the video, he begins to talk about volunteer think tanks, and why these highly qualified thinkers would offer their limited time to some "greater" cause. He argues that when people are driven by Purpose, they are truly able to achieve more. Jill, and several others during TEDxBGI, expanded on that, offering that when companies and organizations are driven by purpose, they truly achieve more.

This concept, reminds me of our school. It also reminds me of all of our CAIR's, e.g. Darcy Winslow and her contemporaries working together on the Academy for Systemic Change. Or Hunter Lovins and Donna Morton and the Unreasonable Institute.

Really, everything boils back down to "Why?". Why do you do it? 

Howard Thurman offers, "Ask not what the world needs. Ask what makes you come alive...then go do it. Because what the world needs is people who have come alive".

Business Model Me

This quarter, I'm orienting my learning blog around personal learning, and I will be going through the spin-off, "Business Model You". To keep things moderately entertaining, I'll also  try to integrate interesting ideas/tools for you to use.

In an effort to keep myself accountable to this task, I'm going to apply the Fogg Behavior Model.

My last blog post, "Changing Behaviors!", seems a perfect segue into a "New Years Resolution" type post.  I was semi-inspired to write this post because of a the YouTube Channel: PBS Idea Channel: "a PBS show that examines the connections between pop culture, technology, and art."  According to the show, New Years Resolutions have a success rate of about 12%. This is not due to a lack of willpower or discipline; It's in the creation of the New Years list. This is referencing the book, "Willpower: Rediscovering the Greatest Human Strength" by Roy F. Baumeister and John Tierney. 

"Put the blame where it belongs, on the list. Noone has enough willpower to for that list". 

 This idea sounded extremely familiar, in fact, for any who enrolled in Brian Weller's: Ultimate Study Skills course, it's based on the same principle. Essentially, in our personal quests for improvement and learning, we often set expectations that are so high, they end up becoming a barrier to our own improvement.

The concept is this, we can utilize creative tension to grow and expand our boundaries. In fact, we perform at our best with this tension. However, if the boundary we are reaching for is too far away, the tension snaps, and no progress is made. 

Once we're able to set realistic expectations for ourselves, that still push our boundaries, we are more effectively able to embrace change. Instead of reaching immediately for our future vision, recognizing the steps that are required can be a beneficial strategy in reaching that future vision. 

We briefly looked at backcasting strategies last week, which provides an excellent example of incrementalizing procedural steps towards sustainability. 

In another fascinating parallel, in many behavior modification studies, they've found that most people increase their behaviors in incremental steps, as opposed to gradual adoption. 

In this great marketing strategy video BJ Fogg, Director of the Stanford Persuasive Tech Lab, makes the argument that high motivation is not the most effective driver of behavior change; it's making things easy to do.

So, my realistic goals? Each week, I'll break down one section of the Business Model Canvas, write about how it relates to personal development, and provide at least one tool related to the content.

If any readers are interested in any behavior modification, or accountability to a New Year's Resolution, I will also commit to following up with them.