Strategynut

September 11, 2008

Your biotech investment: leave home without it

Filed under: Strategy — Nicola Rowe @ 6:10 am
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Green biotechnology, which is biotechnology applied to plants, holds out hope for the bottom billion. As the United Nation Economic Commission for Africa points out, “Rapid developments in science allow […] scientists to modify the very building blocks of life—the genes themselves.” So urgent is the situation in Africa that the potential upside can be measured, not just in dollars, but in human lives. Closer to home, plant tissue culture, plant genetic engineering and plant molecular marker assisted breeding offer higher yields for first-world farmers. And you’re probably already eating hybrid tomatoes.

 

But while you may feel the difference in your wallet at the grocery store, what does it mean for your portfolio? Should you invest directly in a green technology venture?

 

First, the time from idea to market realisation is about the same time for green biotechnology applications as for red biotechnology products: fifteen to twenty years. So you’re looking at a long-term return on investment – if you can obtain any return at all: uncertainties increase as your time horizon extends. But the higher return you’ll want compensate for that risk may not eventuate. A survey of applications made for regulatory approval in one English-speaking country showed that most were for variants on existing lines of fruit and root vegetables. This means that the likelihood of the product succeeding is greater – it is easier to adapt than to create – but it also means that the target product will be competing in the same market space as the crop it replaces. You’ll want to ask yourself how likely it is that a new variant of, say, potato can create additional demand, and how much of the existing potato market it’s likely to cannibalise. Often, the answer will be: not much.

 

Even if you do manage, a decade and a half out, to hit on a winning potato brand, you’ll still have to manage product stigma. How genetic modification will be viewed in fifteen years is anyone’s guess. Wizard’s blessing or devil’s curse? Right now, the odds look even.

 

If you don’t mind a roulette wheel with a low-chip load and a twenty-year spin cycle, green biotech may be for you. Otherwise, let others reap, and seed your own funds elsewhere.

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September 5, 2008

Chief Ethics Officer – can we take the post seriously?

Filed under: Organisation design — Nicola Rowe @ 8:39 am
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In the wake of its contracting scandals, Boeing hired one. HP had one all along, but that didn’t stop chairwoman Patricia Dunn from spying on her fellow board members. Can we take the post of chief ethics officer seriously?

Having a vice-president for ethics helps a corporation to avoid the appearance of impropriety and be seen to be doing the right thing. That’s not just a nice-to-have: Forbes magazine points out that federal sentencing guidelines provide for preferential treatment in white-collar crime prosecutions if companies have “effective compliance and ethics programmes” in place.

What does it say about a company that it needs to appoint a head of ethics? Some worry that creating the post signals to the world at large that the company has ethical problems to address. Others argue that creating a special post for ethics is unnecessary, since ethics is everyone’s business: in this view, ethics should be part of the DNA of the organisation, lived by everyone from the CEO on down to the newest shop-floor assistant. 

Yet a chief ethics officer can be an appropriate point-person for a variety of reasons. While a would-be whistleblower who sees a company breaching the law can go to the chief legal officer, it’s not so clear where he or she should turn to air conduct that seems dubious, but might not breach the law.  Chief ethics officers can raise their voices in the C-suite to highlight technically correct conduct that’s inconsistent with the company’s vision and values. And, for those who tend to be cynical about company values statements, the appointment of a C-level ethics officer is a powerful statement from on high that the company takes its values seriously. 

The Role of the Chief Strategy Officer (CSO)

Corporate strategy is a beast of uncertain provenance, in theory falling within the bailiwick of the board and in practice within the purview of the CEO. Against this background, the chief strategy officer (CSO) – a particularly 21st century role – cuts a curious figure.  Certainly the CSO is a respected figure – General Motors has one, as do Sun, Cadbury and Morgan Stanley – but it is less clear what the CSO actually does. An article that appeared in the McKinsey Quarterly this May concluded that the job was poorly defined. But essentially three roles are possible: the CSO may be responsible for the  generation, the facilitation or the execution of strategy.

The CSO responsible for generating strategy is in the weakest position. Strategy is the core preserve of the CEO and the board, and no effective CEO will abdicate her responsibility for formulating it to another C-level officer. A CSO responsible for originating strategy is thus in a delicate dance with the CEO: part counsellor, part idea generator, he or she provides the CEO with strategic options and recommendations, but leaves the ultimate course up to the CEO. Functionally, the originating CSO competes with outsiders – McKinsey, Bain and so on – for the provision of strategic advice. Operationally, this kind of CSO is responsible for the corporate strategy department, but may be weakened in practice, since he or she presides over a staff function (and usually a relatively small staff function at that) without P&L responsibility, and is thus fully dependent on the CEO for support in order to be effective.

The CSO responsible for facilitating strategy is deeply involved in, and usually oversees, the strategic planning process.  This role is transactional, rather than content-driven: the job of the facilitating CSO is, at least in large part, to ensure that the strategic plan is delivered. His or her role may extend only to ensuring the process proceeds smoothly. Ideally, however, the facilitating CSO will challenge the assumptions made by the organisation’s departments so that the plan finally presented for board discussion is as rigorous and stable as possible. Here, too, the CSO relies on the strong and public support of the CEO in order to be effective, since it will be difficult in practice for someone without his or her own corporate fiefdom to challenge the plans developed by business unit heads

The role of the CSO responsible for executing strategy centres on implementation.  Part of the role lies in communicating the strategy to the organisation: here, since execution requires the understanding and cooperation of both employees and managers, the CSO will liaise closely both with corporate communications and with line managers. The CSO responsible for executing strategy is also a controller, verifying that milestones have been reached and implementation is on track.

As an originator or facilitator of strategy, or where responsible for strategy execution, the chief strategy officer can add value to the corporation in a variety of ways. Since the role lacks a common definition, it is clear that, in order for the CSO to be effective, the demonstrative support of the chief executive officer is a sine qua non.

Seven tips for building trust with your consulting clients

Filed under: Consulting — Nicola Rowe @ 12:55 am
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First off, admit what you don’t know. The client hired you for your expertise, not your omniscience. Telling the client when you don’t know something has two benefits. First, it gives you the opportunity to make and keep a micro-promise (“I’ll find out for you”).  Secondly, it makes the client feel wise: they’ve thought of something you haven’t.

Find common ground. It’s about what you and your client share, not what you exchange: the relationship between the two of you is more important for generating long-term business than the actual work you’ve contracted to do. So don’t focus on the work without the frills: establish a relationship with your client. Invite her out to dinner. Take him to a baseball game.  If clients enjoy working with you, they’ll bring their business back.

Make micro-promises.  Every time you keep a promise, your trustworthiness inches up. So make promises wherever possible. You don’t have to promise the earth – it’s enough to say “I’ve got an article that might interest you – I’ll pass it on,” or “I’ll get you the name of our translating service”. Note that this tactic will backfire if you don’t keep every one of your promises. Nothing erodes your integrity faster than saying you’ll do something you then leave undone. 

Don’t be disrespectful of your competition. If you’re working for McDonald’s, don’t slam Burger King. Even if your client badmouths your competitors, don’t get in on the act. Showing respect for your competition raises your own worth in the eyes of others, who will wonder how you’ll speak of them if you don’t get their business.  

Speak your client’s language. If he calls a pack of presentation slides a deck, call it a deck. If she calls weekly meetings jours fixes, adopt the French expression. The more you use the client’s vocabulary, the less foreign you seem.

 If you ever expect to do business again – and, as the German saying has it, you always meet twice in this life – then look to the medium term, even when doing so isn’t in your immediate interest. Turn down work if you’re not best qualified to do it or don’t have the capacity to do it well. Doing so has two advantages. First, you’ll astonish your client and cement your reputation for integrity: when more work comes up in the medium term, you’ll be the one she thinks of first. Secondly, turning down work gives you the opportunity to refer business on. Especially if the work you’re turning down isn’t in your sweet spot, recommending someone else means he or she will owe you a favour – one that’s likely to turn up in the form of work for you further down the track. 

Go out of your way to maintain your relationship after the assignment ends. That goes well beyond Christmas cards or birthday wishes. Search out articles that might be of use to them, and clip and send them on.  Read their trade magazines, and call them about new developments in their industry. (You can set up a news watch on their company via Google Finance, if they’re publicly listed.) If you keep calling when you have something to offer, they’ll take your call when they have something you want. 

At the end of the day, while there’s no relationship without high-quality content, there won’t be much more content coming your way in future if your relationship with your client doesn’t flourish.

 

September 4, 2008

Where’s the best place to practise strategy in industry?

Filed under: Strategy — Nicola Rowe @ 6:41 am
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Thinking that strategists are the right-hand men (and, rarely, women) to captains of industry, you might want to head for the strategy department of a multinational – BP, say, or Roche. And you’d find others there who thought the same: alumni of McKinsey, Bain and BCG. But here’s the secret: they’re clamouring to get out.

 

How can this be? The truth is that a strategy department is a staff function. It has no profit and loss responsibility, and, despite its massive PowerPoint output, it has no decision-making power, either, so no one – especially not the managers it exists to serve – takes it seriously. Decisions are taken by line managers, and strategic decisions are taken a long way up the line. A strategy department may provide high-quality advice, but there’s the frustration of waiting months to see it grind into implementation, if implementation ever happens. (The recommendations made by a consulting firm aren’t always implemented, either, but this is less frustrating for the individual consultant because he or she has moved on before the client shelves the slides.)

 

If the strategists’ advice is implemented, one of two things can happen. It can be handed over to the change management team, or the strategy department itself can be tasked with implementation. Moving across the strategy spectrum towards implementation has been the mantra of the big consulting groups for the past half-decade, but consultants hate implementation, seeing it as boring and trivial. And it can be trivial: I once watched a consultant colleague write an implementation workplan that contained such highlights as “24 April: Attach nameplates to doors”. In a strategy department, working to the ponderous timelines of industry, you’ll grind your teeth out before the 24th of April rolls around.

Career-wise, once you’re in a strategy department, there’s nowhere to go. You can head sideways into change management – a horror all its own, of which more later. But, if you want to change into a line function, you have to beg your way in. It’s hard to be an egghead, but it’s harder still to have your egg poached by marketing or sales.

 

So where does the aspiring strategist go? That’s a topic all its own. But only the foolhardy or the brave – or the terminally exhausted – should offer themselves as grist for the corporate strategy mill 

The art of the recruiting interview: the S-A-O-L rule

Filed under: HR — Nicola Rowe @ 6:39 am
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Want to know how potential employees will perform in a new job? Apply the SAO L formula: Situation – Action – Outcome – Learnings to mine their past behaviour and predict how well they will perform with your company.

 

The first step is to think of a situation you expect the new employee to encounter at your company and match it with a situation in your applicant’s past. Choose one where it’s crucial that your new hire will excel. For example, you might be filling a position involving dealing with dissatisfied customers. That’s your starting situation. Now, look for a similar situation in your interviewee’s past. Using concrete questions, probe to see whether your interviewee has dealt with angry customers in the past. Ask, “Can you describe a situation where…” or “Tell me about a time when you….”. Note that it’s important not to ask hypothetical questions. Never ask “How would you react if…” That doesn’t tell you anything about what the applicant has done in the past: it only tells you how creative his or her imagination is.

 

Once you’ve lined up a situation to explore, you’ll need to understand what your applicant did. Press the applicant to be as concrete as possible, using phrases like “Tell me specifically what you did”, or “What exactly did you do”. Question the applicant politely but closely until you understand exactly what steps he or she took in the past. What exactly did the applicant do to handle irate customers? You want to finish this step with concrete examples of what happened.

 

Next, you want to know how effective the applicant was, so you need to make sure you understand what the outcome was. If your applicant tells you that he or she dealt with angry customers by explaining that the fine print on the warranty meant that the company couldn’t provide product support, you’ll want to know whether that was effective. Was the applicant able to meet the challenge? Applicants who were unsuccessful in meeting common challenges in the past are unlikely to be successful in future.

 

Finally, you want to understand what the applicant learned from his or her experience. For example, your applicant might say, “Initially, I carefully explained the conditions of our warranty to customers and made clear why we couldn’t support products beyond twelve months. But then I realised that satisfied customers often more than made up for the cost of that support in extra business and referrals, so I started to waive that time limit if they were only one or two months past the expiry date.” Establishing what the employee has learned tells you two things. First, it tells you that the employee was able to adapt and meet the challenge successfully. Secondly, it tells you that the applicant is able to take on and respond to feedback – a characteristic which will make him or her a successful employee in your own workplace.

 

In sum, the rule to remember is this: Past behaviour predicts future behaviour. To know how applicants will perform at your firm, first define a situation that they are likely to encounter, then probe for a similar situation in their past. Next, find out what they did when that situation occurred. Thirdly, discover how effective they were – once you know what they did, ask what happened next. Finally, ask them what they learned from the situation. 

Checking for strategic fit in a strategic alliance

Filed under: Strategy — Nicola Rowe @ 6:38 am
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Before you enter into a strategic alliance, you need to make sure you and your partner are a good fit for each other. You should check three kinds of fit: strategic fit, capability fit, and organizational fit. Let’s look at each of these in turn.

 

First, you want to make sure there’s a strategic fit between you and your partner. The first question to ask is whether the alliance is equally important to both of you. If it’s more significant to one party than the other, that’s a sign of a power imbalance – and potential trouble – down the road. Conduct a further check for strategic fit by comparing your strategic agendas. What does each of you hope to gain from the alliance? If you‘re seeking to learn about your partner’s technology while they want to leverage your distribution networks, your strategies will complement each other nicely. But be clear on whether you and your partner will be extracting complementary value from the alliance – a good sign – or whether you’ll be competing for value. If it’s the latter, stop and think twice before proceeding.

 

Secondly, you want to check for capability fit. Here, you need to ask what resources are needed to fulfil the objectives of the alliance. Next, and crucially, you need to check whether you or your partner can supply them. Does your promotion policy require door-to-door sales representatives? If you can’t supply them, can you be sure your partner is able to? Search specifically for the resources that are lacking. You need to nail down upfront who will supply these and how they will be paid for.

 

Thirdly, there needs to be organizational fit between you and your partner. Often overlooked as the “soft stuff”, a lack of organizational fit (sometimes called “cultural fit”) is actually the most common reason alliances fail. You’ll want to check five things. First, how decentralized is decision-making in each organization? If your managers are expected to show initiative while your partner’s employees are rewarded for following specific instructions from on high, you’ll run into trouble when your first joint project gets going. On that note, you’ll also want to look at how closely rules are documented – are they broad guidelines that leave lots of room for interpretation, or are there detailed policies and procedures? Either way, you’ll need to ensure you write the rules for your project at a level both of you are comfortable with. Finally, another important part of organisational fit is matching your reporting and controlling systems with your partner’s. You’ll need to agree on the metrics that will measure how your venture is progressing, and you won’t be able to do that unless you and your partner both have reporting systems that can spit out figures in the form they’re needed.

 

In sum, then, an alliance can enrich your business, taking your expertise, your geographic representation or your product base to the next level and beyond. Keeping a watch for strategic fit, capability fit and organisational fit when you’re designing your alliance will ensure you don’t run afoul of the most common traps. 

Five ways to reward employees without spending money

Filed under: HR — Nicola Rowe @ 6:28 am
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Want to reward your employees, but lack the budget to splash out on bonuses or raises? Here are five ways to reward your employees effectively without spending a cent.

 

1. Praise

Often overlooked, praise is the simplest and most effective way to reward individual acts. Praise should be specific. Explain what the employee has specifically done well and why it matters to the company – not just “well done”, but “You did a good job managing Mr. Jackson’s complaint this morning. You’ve just created another satisfied customer who will bring more business to us.” Praise is more effective when it’s delivered in public, so don’t shy from praising your employees in front of others. Remember, though, that individuals aren’t always the right target for praise. If a group has done well, praise the team, not just the leader.

 

2. Time

Everyone wishes they had an extra hour or two in the day. So why not give a top employee a well-deserved break? “Anna, it’s great that you’ve finished the library job a week early. I’d like you to go home early this afternoon.” If you’re worried about productivity, schedule the time off for Monday morning or Friday afternoon.

 

3. Events

People relax when they’re out of the office. Getting your employees together for an activity off-site can be a fun way for them to kick back and enjoy the fruits of their labor. It doesn’t have to be bowling: you can go indoor-climbing, play theatersports, or even learn to make sushi together. If you don’t think employees will stump up the cash to go, why not do something free, like a pot-luck picnic in the park? It doesn’t have to cut into work time, either: arrange to get together one evening after work.

 

4. Services

Liaise with local businesses to see whether you can swap your services for credit. If you’re an accounting business, can you swap a few hours with a style adviser? For the time it takes you to do her taxes, she gives you a set of one-hour sessions. Your employees would probably never think of “getting their colors done”, but they’ll jump at the chance to have a style consultation for free. Or, if fashion isn’t their thing, why not barter services with a local physiotherapist so you can hand out massage vouchers to staff?

 

5. Status

There’s nothing more galling to an administrative employee than feeling like a cog in a big machine. Next time you make a supplier visit, take your secretary along. They’ll probably enjoy meeting the people they only know from email headers and the telephone. You’ll benefit, too: once she can put faces to names, you’ll find that communications become warmer and more congenial.

 

In sum, you don’t have to spend money to show your appreciation for your staff. Recognition, unexpected breaks, get-togethers, unusual services and signs of esteem go a lot further toward applauding your employees than a little extra cash. And they’ll thank you for it, too – not just with words, but with increased motivation and more effective work.

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