After reading the excellent and provocative Lords of Strategy only recently, I eagerly seized “The State of Strategy Consulting, 2011”. (A blog post by Walter Kiechel in the Harvard Business Review, March 2, 2011) I should have known that when Walter Kiechel cited the Book of Job in the first sentence of his post that the outlook was not going to be rosy.
His assessment of the state of strategy consulting was that the premier firms are going to have difficulty selling their services at premier prices and that they are already doing strategy work as a “loss leader.”
Of course, the Lords of Strategy itself would caution that it’s difficult to remove assessments of the value of management tools from their market context. Rationalizing portfolio strategies in the 1970s, grasping the transformative impact of the Internet on the five forces in the 90s…leaders have consistently found that in times of fundamental change, strategy tools have proven valuable. Bain research drew this conclusion several years ago.
So what should we make of our current context and what implications should future lords of strategy draw? A clear-eyed assessment might begin with the fact that the HBR has found it useful to facilitate a “conversation” blog and that multiple participants commented on the state of strategy consulting by referring to technology, open source concepts and agile responses.
The basic point of Walter Kiechel’s blog post (that when the premium firms pursue whale projects they are moving into a competitive space that will make premium pricing a challenge) is not contradicted by an even more important development. A challenge has been issued to the traditional concept of strategy in places like Tunis and Cairo with astonishing results.
Strategy, the “work of generals,” that Napoleon and Clausewitz adopted from the Greeks, is already being challenged in fundamental ways by technologies like Twitter and Facebook. Only a few weeks ago it would have been controversial to suggest that a democratic impulse is surging in the traditional constituencies of the firm who are demanding a seat at the table when the most sacrosanct of strategy concerns are decided. The future lords will have to adjust and anticipate the crowd that is gathering outside the door. While strategy firms are seeking new markets, the core concept of strategy is itself changing.
Senator Mark Warner (D, VA) calls a new law for which he can claim some responsibility, the “biggest little bill that nobody has ever of.” With relatively little fanfare the GPRA (Government Performance and Results Act) Modernization Act of 2010 was signed into law in early January. Senator Warner (who was there to vote for health reform and financial services reform) believes that GPRA Modernization may be the most significant act of the 111th Congress.
The first GPRA (the law that’s being modernized) has a unique history. A Republican Administration (George H. W. Bush) worked with a Democratic Congress to pass a law that would require every federal agency to develop a strategic plan and annual performance plans. But there are laws and then there are laws. It was when Democrats took the White House (Bill Clinton) and launched a National Performance Review to create, as Al Gore used to say, “a government that works better and costs less,” that the performance reporting began to pick up steam. But in one of Washington’s ironies, it was when a Republican Congress seized upon the law to drive change in the (now Democratic) Executive Branch that the law took on meaning.
But that was then. Time has eroded the first enthusiasms, given the second Bush Administration (George W. Bush) the chance to create a performance scorecard and program evaluation system, and introduced new technology. The new technology in particular and the social media offer the government new opportunities to manage performance and drive innovation. So there is value in modernizing the planning and management process.
Sen. Warner believes that what will be most critical to making the new law work will be to improve the government’s collaboration skills. The new law needs to be implemented in a manner that will encourage government managers to adopt the best practices of others who have found ways to improve performance
The modernized law makes a number of changes that have long been needed (or at least codifies the directive to make the chances). Duplicative reports are to be eliminated for example. And the law directs agencies to do some things that most people would think were so logical that they would have expected that the government be already required to do them already. Strategic Plans, for example, must be aligned with the Annual Performance Plans and plans must be aligned with the Administration in charge.
What is perhaps even more significant, the modernized GPRA will create a number of mechanisms that are likely to dramatically encourage the practice of performance management. Each Agency will (1) have a Chief Performance Officer, (2) reports will explain why performance goals haven’t been met if there are shortfalls and there will have to be a performance improvement plan. In cases where goals are not met two years in a row, there must be a report to Congress. (3) There will be public web sites that are likely to dramatically expand the scope of the review and (4) a government-wide performance report will designate a small number of high level goals. Creating accountability, a governance process, public access and focus may still not be enough to dramatically change the practice of strategic planning and execution. But there’s no disputing the fact that these are all moves in the right direction, or as they might say in Washington “they’re directionally correct.”
There is a great deal written about alliances among competitors in the increasingly complicated marketplace of the post Internet world. The mailing and delivery industry is no exception.
In fact this summer a former Senior Vice President with the Postal Service and a Vice President from UPS published a paper together congratulating themselves on their collaboration.
Today comes word from the New York Times of a new UPS service, an experiment, to be sure, but a new marketing service direct to the door. (From the New York Times, reported by Postcom.org – see below.)
The description of the service is a milestone of its kind as the UPS innovative product manager explained that the new service will be different from what you would receive from the postal service because (the New York Times adds) you would not feel that you were receiving “junk.” No more Mr. Niceguy?
September 24, 2009
Delivering Something Extra
By STUART ELLIOTT
SINCE 1907, United Parcel Service has been delivering packages ordered by consumers. Next week, the company plans to deliver packages they have not ordered, in a test of an effort to expand into direct marketing.
Beginning on Monday, U.P.S. will experiment in five major markets with a service it calls Direct to Door, giving advertisers and retailers a chance to provide offers and product samples to U.P.S. customers. The marketing materials will come inside small boxes labeled Direct to Door Paks, and will be delivered to customers along with merchandise they actually ordered.
The test, to run through Oct. 2, is intended to gauge whether there is interest in having U.P.S. serve as an alternative to marketing mail delivered by the United States Postal Service or by companies like Valpak.
If Direct to Door goes forward, the added revenue could help United Parcel offset declines in demand for its mainstay package delivery service since therecession started.
In July, U.P.S. reported its sixth consecutive quarter of lower package volume in this country. The decline in the second quarter was 4.6 percent compared with the period a year earlier, which Bloomberg News described as the worst result since United Parcel went public in 1999.
“I wouldn’t say it was developed as a result of the economy,” said Lisa Lynn, marketing director for new-product research and development at United Parcel in Atlanta.
Rather, she said, it stems from “some opportunity we saw at the heart of what we do every day working off our delivery network.”
Read more at the New York Times
Predicting the future makes most people so nervous that they often make the same joke about Yogi Berra’s insight that the future is the hardest thing to forecast. But in spite of the normal anxiety, we can anticipate that there are going to be a boatload of stories about the future now that it begins to appear that the financial crisis is passing.
Today brought two new contributions. First, Deutsche Post has just published a study of the future entitled “Delivering Tomorrow: Customer Needs in 2020 and Beyond, a Global Delphi Study.” The study draws conclusions from an intensive examination of expert perspectives on a number of critical issues that will define our future: what will happen to the price of oil? what will the progress of climate change mean? how will global interactivity evolve?
Perhaps the cultural differences in perspective offer theses about the future that move beyond traditional boundaries. Or, possibly its just going to be more interesting to think about these long term issues now that we are on this side of the financial crisis than on the old, optimistic one with which we are familiar. But the 2020 study offers numerous startling theses. What will a world look like when China is the undisputed winner of global economic competition? What will global transportation be like when polar routes have been opened up by polar melting.
The McKinsey Quarterly then wrote about one of its classic articles, the next revolution in interaction, Like Deutsche Post, McKinsey found that the progression of interactive technologies will continue to evolve and to shape the future. The point of the 2004 article from McKinsey was to encourage a focus on trends that will enable companies to attain sustainable competitive advantage.
Instead of strategies that focus on cost cutting, a short-term benefit that can ultimately be copied, both research sources encouraged their readers to focus on trends that would enable customized solutions. Whether the discussion is of the evolution of the logistics business or the changing nature of enterprise in an information rich marketplace, trends that make it possible to individualize solutions will be dominant ones in shaping the future. For those who become anxious with discussion of the future and its uncertainties, these studies point to the need to engineer organizations and infrastructures that facilitate agility and adaptability to changing customer requirements.
This may be hard to communicate. Individualization? Adaptability? Most will say, but what will the future be like? Talk of “open standards” and “plug and play” solutions seems to be a slide into software jargon. Yet the idea of creating a framework that is the opposite of command and control seems to be captured by the iPhone ads. Apple has communicated a framework. Understanding that “there’s an ap for that” may turn out to be Steve Jobs biggest contribution of all.
The financial crisis of 2008 raised the question of whether we are facing a turn, resetting to a new normal or pausing before the resumption of growth. Knowing where you are is critical. Those who bet on future growth that doesn’t materialize will lose the race and even bankrupt themselves. But those who bet on decline when they are only seeing a pause will stagnate and they too will lose.
What’s hard to see from the outside is the way that the stakeholders will work overtime to assert that the curves are heading up. Vested interest is so powerful that they will honestly believe that the Sun is the Moon.
Great leaders will have the courage to call the turn.
Listening to Jim Collins talk about his new book How the Mighty Fall, in which he traces the five stages of ascendancy and decline, you can see that this is is going to be one of the enduring questions of our time.
The experience of living through the worst financial decline in 80 years and not being sure of what you saw will be an framing memory that will structure our perceptions. The fear of imminent decline will cast a long shadow into the future.s