Discovery Driven Planning: Most barriers to growth are self-inflicted
I am spending today with a very well-managed, large company, and even here the long fingers of the economic slowdown are creating even more obstacles to innovation - led growth than in more ‘normal’ times.
The issues they raised as barriers to growth include:
- The “de-risk” mode that many companies have gone into which makes anything even remotely unpredictable look dangerous
- A lack of a global mindset that leads to local optimization of investment and cuts off more promising corporate projects
- Brand conflict - when a new project isn’t a great fit for the existing brand
- Churn among the managers and leaders involved in innovation projects
- Silos within the organization
- Existing metrics and rewards that are not suitable for innovation
- Fear of cannibalization of the existing business
- Fear, in general
- Short-termism driven by quarterly results pressure
- Politics
- Existing power structures in the company
What I find absolutely fascinating about this list (and remember, this is an extremely well managed firm) is the extent to which the barriers to growth are essentialy self-inflicted. They are internal processes, systems, relationship sand politics that can get in the way of doing anything new. Existing companies tend to have accumulated lots of these sorts of barriers - but it doesn’t have to be a foregone conclusion that these will be or should be in place. Here is where adroit innovation leadership, to me, can make all the difference. This is one of the key themes in our forthcoming book Discovery Driven Growth.
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- Posted Rita McGrath on October 30, 2008
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Discovery Driven Planning: Teaching in Non-Degree Executive Education Programs
I’m just here at the Strategic Management Society’s annual conference in Cologne. It’s a meeting which aspires to bring together academics, consultants and business-people for fruitful dialogue and exchanges, although in fairness the tilt does seem to be more toward academics recently. I did participate in an interesting session on how to teach in executive education programs. I focused on issues of style (not too much lecturing, please!) and actually included some substance on real options reasoning and discovery driven planning. Anyone with an interest can download the attached .pdf. (the blog software wouldn’t allow me to upload it in .ppt.)
For now, the key takeaways from my session:
1. Too much one-way communication is ineffective
2. In design, remember the basic principle of what makes something interesting—challenge to weakly held assumptions
3. Build on executive participants’ own experiences and connect to your teaching points
4. Creative repetition (700 times)
5. Tell stories
6. Combine facts, emotions and symbols—often, one or another are left out
Feel free to write with any questions or further ideas. On to the next session!
ExecEdTeaching.SMS.10-08.08.pdf
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Discovery Driven Planning: Why I like the term ‘business model’
I rather like the term business model because in my view it suggests a change to the way that we conceive of, create, and execute strategies. In highly uncertain, complex and fast-moving environments, strategies are as much about rapid experimentation and evolutionary learning as they are about the traditional view of planning and rock-ribbed execution. Modeling, therefore, is a useful approach to figuring out a strategy, as it suggests experimentation, prototyping and a job that is never quite finished.
My colleague, Ian C. MacMillan (or Mac, as everybody calls him) with some colleagues is putting together a special issue of the journal Long Range Planning in which a bunch of well known management thinkers are putting together their best ideas on the topic of the future of business models. When I last checked in, they had some submissions from pretty heavyweight folks, among them Raffi Amit, Hank Chesborough, Yves Doz, Hiro Itami, Costas Markides, Anita McGahan, CK Prahalad, David Teece, Michael Tushman and Peter Williamson. I feel flattered to be included! The special issue should be out next year - keep an eye on the LRP web site for details as to when.
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- Posted Rita McGrath on October 08, 2008
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Discovery Driven Planning: Good new book on Innovation
It’s always a welcome moment when a new perspective on innovation is offered from the folks over at Clayton Christensen’s Innosight consulting firm. They’ve just recently published a new book, The Innovator’s Guide to Growth that looks to be a very welcome read. I’ve just ordered it and will give it a review here when I get the chance!
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- Posted Rita McGrath on October 08, 2008
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Discovery Driven Planning: Not just for new businesses any more
The headlines are all around us - I just returned from a fascinating session in Seattle at the Microsoft Global Chief Information Officer summit to a pile of newspapers screaming “Washington Mutual Goes Under” and related stories. Everyone, it seems, is shaking their heads in wonderment that so many smart people can have been so dreadfully wrong about so very many things.
Which brings me to a bit of advice for you. Virtually everyone reading this blog will be involved with businesses whose fundamental assumptions were created in a radically different economic era. The net effect has been to dramatically increase the amount of uncertainty in which planning and resource allocation are taking place—not to mention in which strategies are being conceived and executed. When uncertainty goes up, the benefits of checking and re-checking fundamental assumptions, being prepared to redirect the business and looking clearly at what the future might hold increase dramatically. So humor me—as you think about the next six months of activity that you’re involved with, what are the fundamental assumptions you are making, and have you re-visited them since our entire financial landscape came crashing down around us?
Here are some good candidates for assumptions you might want to think really hard about:
Price. We’ve already seen the consequences of rising raw materials prices on the costs of everything from bagels to basic supplies. But are the pricing assumptions in your business also taking into account the fact that your customers may not be able to get the credit they need to pay your prices? Or that they may not be able to assemble enough money in one lump to pay you up-front, or even when you submit your bills? You may want to consider adopting new, flexible pricing programs in the event this is the case—for instance, perhaps instead of an outright purchase, a customer might be able to afford a lease or an installment purchase.
Timing. One thing we know about uncertainty is that people tend to ‘freeze in the headlights’ when confronted with it. What does that mean practically? Well, it mean that decisions you thought were going to take place soon are likely to take place later. So you might want to give some thought to how you can help people to make commitments and decisions in a more timely way, if that’s important to your business. You might consider thinking through the factors that would cause them to delay and how you might mitigate those. For instance, if customers are worried that they’re paying peak prices, you might offer a money-back guarantee if prices fall within a specified timeframe. Or if customers are worried about cash flow, you might offer to defer billing until they are feeling more secure.
Talent. Any business strategy depends on talented people to deploy it. But are you really thinking about the talent implications of current hard times? Some of them might surprise you—for instance, if your best people are feeling insecure, they might jump at job opportunities offered by a competitor, just because they don’t know if they can count on you. Likewise, you may be discovering that some of your medium-talented people are just not up to the challenges of such tough markets, creating the chance to replace them with high performers cut loose from organizations in trouble.
Competition. It sounds tough-hearted, but sometimes if you are better prepared than your competition, you can use their disarray or confusion to your advantage. Have a strong balance sheet, good people and killer products? Consider leveraging those advantages against competitors who may not have those attributes - or who are paralyzed by the uncertainty they are facing.
If these ideas intrigue you, you might want to check out my upcoming program Leading Strategic Growth and Change which will be next be offered in November. In it, we’ll be adapting the Discovery Driven Planning technique to take account of today’s tough times and show you how the principles that help drive growth under uncertainty can also be applied to core businesses newly facing uncertain times.
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- Posted Rita McGrath on September 26, 2008
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