29.01.2009

Strategic and Business Planning, the Role of Non Executive’s Directors, Sleeping & Walt Disney

I have never found it easy to sleep and neither does a friend of mine who tells me he is starting up a new business in Spring 2009.  Good luck to him, he has vision but he is not getting much sleep so tells me.

Personally, I just don’t seem to need that much sleep.  I never have. Nothing is gnawing at my psyche – it’s just that I have other more interesting thoughts of….. “what if’s” to keep me awake. 

But the lack of business planning for my colleague is starting to get to him and keeping him awake.  He has difficulty with his strategic business plan – so he has taken to cycling.  This concerns me because he is no Lance Armstrong and the ‘lycra’ outfit does not enhance his body type.

Strategic & Business Planning on a Bike

He tells me he could not sleep the other night so he went for a ride on his bicycle at 4am on a January morning and returned much refreshed with ice on his handlebars, his nose and his chin.  But he still had no business plan. 

That has always amazed me - you can cycle your bike as much as you want at 4 am in the morning but it will not produce a business plan.  It must be the gearing.

Non Exec’s Role

Anyway, that brings me to the role of Non Executive Directors.  We all are aware that their role is to support the executive team or owner of CEO of a business to steer ahead, to provide wise counsel and experience, and to ensure that good Governance is pursued.  Who better to help with business planning?

They have probably experienced most of what business life has to offer – running their own outfits – so they are probably are well respected and can provide good common sense solutions to avoid potential disasters.

Wise Counsel Having Been There

Few small to medium sized businesses have the luxury of Non Exec’s in a formal sense but most of us have wise counsel from others.  And to my colleague I would suggest that he approach a ‘trusted associate’ who has grown their business through tough and easy times.  However he could adopt another approach – the Disney strategy.

Walt Disney, Dreamer, Critic & Realist

I would also suggest the Walt Disney strategy for those who are a little bit more visionary and imaginative.  The Disney strategy is based on the technique that Walt pioneered and then adopted for the design and writings for all his films. 

It involved the designer of such ventures taking the role of Visionary, Critic and then Realist in his design of the scripts and story boarding.

This is how it works. First, the Dreamer would brainstorm all the crazy routes and plots the story could pursue.  Then in a different role the designer or writer would be strongly evaluative and find every reason why the story-line would not work. 

Having developed these two widely different perspectives the designer or writer would adapt the role of Realist, take both sets of ideas and weigh up the pro’s and cons.

Creative Teams Implementing Change

This approach works for people individually or in teams.  Another approach which I picked up from Personal Development Guru, Brian Tracy is to create a Virtual Team of Non Exec’s.  Think through who ideally would advise you and your business  and come up with a list of 4-7 people.

Virtual Teams of Non Exec’s

I undertook this exercise some time ago and my perfect team included, John Harvey Jones, Richard Branson, Anita Roddick, JK Rowling, Brian Tracey and Digby Jones.  This is how the process works.

Write down all your issues for resolution in starting up and running your business as open ended questions.  Then for each question consider what advice would each member of your Virtual Team would provide to you.

You probably have made some interesting assumptions on the values and behaviours of each Virtual Team member.   Now, imagine asking the question to each of them as if they were in the same room.  Think about how they might respond – and really commit to the exercise. 

I guarantee that this approach will work to help you through the strategic planning and the creative element of your business.

The Virtual Non Exec’s will never come up with your spreadsheet calculations of business costs and likely flow of income but this approach certainly helps in creating a vision for the business upon which survival exists – and all without the cost of Non Exec’s.

20.01.2009

What will leverage Recovery is Investment in the driving force behind RBS – the employees

Can the RBS and other Banks use cost reduction as a strategy to build themselves up and out of the recession?  No, that would not work anyway - and dictating cost reduction by 10-20% to RBS is no way to create stability, win trust and confidence.  It would only make things worse for business and retail customers.

It is an exercise by the Government in PR for the public and customers - all good intentioned, but nevertheless it will not work.

Richest Asset are Royal Bank’s People

The only asset of worth right now is staff and can you imagine the burden that will create for the tax payer in the long-term if there is a forced reduction in head count?

High Calibre Assets – RBS People

RBS was never shy about employing some of the best people around and tactically positioning them throughout their businesses.  This is one asset they still have and is valuable in leveraging them to start afresh.

They have to lead and develop these people and use their competencies wisely. 

RBS Culture is High Performance

The RBS high performance is the driver that can make it weather the transition. You know the business culture of RBS generated £10 billion in profits last year.  Yes, it is still 'new school thinking' - the culture that can work for 2009+. 

What must change is its intent, strategic direction and behaviour in mitigating business risk.  The vast majority of people in this 140,000 person business are hard working, high calibre people.

The way RBS people work together to deliver customer service does not have to change.  The foundation is in place.  They do have a strong organisational culture despite their poor decision-making ability.  What must be remembered is the driving force is still there.

Headcount & Balance Sheets

That’s why reducing headcount will only make the balance sheet look better – it will do nothing for service to the customers and helping businesses at risk to recover during Spring 2009. 

Yes, we have to invest our way out of this recession and that means working swiftly on strategic plans for the great Bank.  £28 billion is a huge loss.  £2.5 right down on a loan to a Russian Oligarch through ABN is a horrendous decision but we need to start shaping a future for the Bank, its employees and the Financial Centre in Scotland if it is going to survive.

RBS must Survive in 2009

Looking to the future –setting plans and actioning implementation will make RBS survive.  Sitting down, procrastinating on actions will sound its death knell and huge losses for economic recovery in the UK and Scotland.  This cannot be allowed to happen.  It is not matter of throwing money at the problem – but taking thoughtful action.

Hunting for scalps of offenders will occupy some people’s time.  I’d rather be using their talents to turn the place around.

Optimists and Activists

The media have provided enough pessimistic thought lately.  It is the time to start looking for the ‘presence’ of potential green shoots and nurture opportunities.  Pharmaceuticals, Bio-Technology, Energy and Renewables are good bets with Tourism not far behind.  It is a start and the more we look for good news the more we find

We need to prepare now for the push ahead in 2009 and choose to assess opportunities in a positive manner.

We need to be more authentic in our approach to how we transact business and recognise that the public as employees and consumers have changed their attitudes, expectations and behaviours radically and incorporate that change into our strategic plans to stage the Recovery on 2009+.

06.01.09

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‘Black Swan’ Thinking Strategies

The text, ‘The Black Swan: the impact of the Highly Improbable’ has now captured the attention of many business leaders but they still don’t know how they can use it to aid their business recovery.

Things Just Happen: Unexpected Recession

Black Swan theory tells us that things happen against improbable odds which have not been predicted.  Until a Black Swan was discovered in Australia – it was believed that Swans only came in one colour.  Statistics told us the odds of finding a black Swan was a million to one yet that is no longer true.  It’s not as if we were looking in the wrong place – we just were not looking!

Sudden Impact: Improbable Odds

Well, it’s not just swans.  Just think of the impact of of Black Monday in 1987, the rise and the commercialisation of the Internet, 9/11, Northern Rock, the recent Banking crisis and the deepening Recession of early 2009.

None of the events above were predicted – yet on reflection, the markers were all there but no one was really paying attention. 

Harry Potter & the Black Swan

What were the odds on an unpublished author scooping millions of pounds with her first novel?  Author JK Rowling succeeded in landing a huge book and film deal for her series of Harry Potter novel after years of rejection by many publishers.

Recognise Patterns Intuitively

Today we still focus too much on our analytical processes without rewarding and encouraging our intuitive behaviours.  Let me explain what I mean regarding the economy.

If people had been looking in the right places, exploring a more diverse view, and had moved away from the traditional view of how markets operate, they may have spotted some interesting trends.

More importantly, if they had moved radically away from the restrictive, ‘one best way’ logical, normative interpretation of Economics they may have seen the pattern of events and where they were leading.

The Death of Economics as I studied it!

I am an Economist – but with a difference – a behavioural economist who drives organisational change.  Years ago, when I studied for my BSc degree, we focused entirely on analytic models, theories and the application of maths and statistics to the markets and the behaviour of the firm (Macro & Micro Economics).

Prediction & Economic Theory

The mistake is that economists actually believe that their theories predict how people behave and how that propels the market moves to a state of equilibrium through rational action. 

What no Economist tells us is that reaching the state of equilibrium consumes just 1% of the time – the other 99% is consumed by the market adjusting to this new equilibrium.  Yet, when we study the markets we spend too little time on behavioural factors that cause changes to take place – we fail to study precisely how the market does make that adjustment.

If traditional economic theory worked for the average business, we would have no need for marketing, public and investor relations, the study of consumer behaviour and billions devoted to servicing the fickle customer.

Shift in Mindset: Economic, Social and Organisational Change

We need to change our focus on how markets and organisations change.  Change itself is a systemic process, yet we treat economic and organisational change as a process of ‘box ticking’ and adhering to a set formula.

Any change in any system be it economic, biological or organisational, creates changes that have not been predicted.  Because our systems are people systems we cannot predict with accuracy all the behavioural outcomes.

What we can do is focus far more, collect feedback and apply our intuitive capabilities (founded on our experience and EQ) rather than reach for analytical economics.

If we did just that we would be in a stronger position to adapt to radical change and even orchestrate change for the better.

Balance in Change Management

Insanity has been defined as “doing the same thing and expecting different results” and this is true of how we were managed into the Recession. Had we developed a more pervasive, expansive and intuitive approach to managing in the 21stC then more businesses would not be experiencing the traumatic decline in consumer confidence.

Randomness & Risk

The author of ‘Black Swan,’ Nassim Nicholas Taleb, has taken many of his ideas based on his previous book ‘Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets’ and his experience managing Hedge Funds.

Randomness is a lack of order, purpose, cause, or predictability. A random process is a repeating process whose outcomes follow no describable deterministic pattern, but follow a probability distribution such that the relative probability of the occurrence of each outcome can be approximated or calculated.  My tool for this analysis is the ‘Comparative Vulnerability Matrix’ which enables businesses to assess where they are most at risk.

Donald Rumsfeld’s ‘Known – Unknowns’ & ‘Unknown Knowns’

An organisation has to radically review its strategies and tactics to assess how to steer its business back on course and they can only do this by addressing ‘Known – Unknowns’ & ‘Unknown Knowns’.  To quote Donald……

“There are known unknowns.  There are things we know that we know.  There are things that we now know we don’t know.  But there are also unknown unknowns.  There are things we do not know we do not know..”

We can take you through this exercise for fun or for serious strategic work on change management recovery.  We use the ‘Comparative Vulnerability Matrix’ to radically improve your path of recovering competitive positioning and speeding up implementation to completion to anew state of functioning and performance.

Black Swan Thinking & Recovery Plans

Black Swan Thinking requires a different mindset to create a scenario planning exercise to expose each of the quadrants.  As you will know, this can only come about through creativity and innovation managed in a culture of structured and disciplined implementation.  If interested in pursuing this unique approach to guaranteeing some certainty by creating your own in radically changing world please contact us through email Philip@philipatkinson.com

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