planning the sense-and-respond approach of strategy-making lecture 10

Planning

The sense-and-respond approach of strategy-making

Lecture 10

Today lecture

The traditional view of planning with the sense-and-respond approach of strategy-making, presenting seven IS planning techniques

Case examples include

Skandia Future Centers Shell Oil,

SKANDIA FUTURE CENTERSCase example: Formulate Strategy

Closest to the Action

Skandia Future Centers (SFC), located in Stockholm, Sweden, is an incubator for testing ideas on IT, social relationships, and networking for the Skandia Group, the 150-year old giant Swedish financial services company.

The center acts as an inspirer and advisor to those who do the strategy making within Skandia.



The center was created in 1996 by Leif Edvinsson to give Skandia a laboratory to break out of its current ways of thinking and to provide a place where different generations can collaborate on on-the-edge projects.

The mission is to explore five key driving forces of the business environment:



The European insurance market, demographics, technology the world economy, and organization and leadership.

goal is to devise a vision of the company’s future.

SKANDIA FUTURE CENTERSCase example: Formulate Strategy Closest to the

Action

3-Generation Teams: One of the first concepts used at the center was 3G

teams, getting three generations (25+, 35+, 45+) to work together.

The teams were part-time and cross-cultural; coming from Venezuela, Germany, Sweden, and the United States.

The participants were chosen by peers as well as nominated from different parts of the company.


Action

“When you ask for answers, you get a debate. When you focus on questions, you get a dialog,” says Edvinsson.

Based on their questions, participants arrived at a number of interesting contexts for the questions, such as the evolution of the financial community around the world and the evolution of IT.

These contexts were presented to 150 Skandia senior executives, not through a report, but through scenarios of these five future environments performed by professional actors in a theater play.


Action

Knowledge Café:

The play led to the first knowledge café among the 150 executives.

The café was created by one of the 3G teams and a few of the executives.

At the café, the 150 gathered for one hour around stand-up tables at different Skandia sites.

Each table had coffee and a laptop loaded with groupware software from Ventana Software


Action

The entire project was videotaped and sent to a larger community, along with the questions and a video of the play and the café.

The goal of this project was to show the power of collective intelligence.


Action

The knowledge café accelerated innovation at Skandia, transforming it into an innovation company.

The effect has been demonstrated by Skandia’s growth, to become a global innovative financial service company


Action

Nurturing the Project Portfolio:

Edvinsson thinks of the center as a garden, where some of the projects are growing and some are not.

He tends them by looking at the level of interest surrounding each one and at the progress each has made, which he equates with gardening


Action

Ten years after the creation of the center, the head of the FSC was appointed as Chair Professor of Intellectual Capital at the University of Lund, Sweden.

Looking at the future, Edvinsson reckons that the success of the firm of the future lies in its ability to create intangible value creation, through intense exchange of knowledge at the global scale.

Today’s Sense-and-Response Approach cont.

If yesterday’s assumptions no longer hold true, what is taking the ‘old’ approach’s place? cont.:

Guide Strategy-Making with a ‘Strategic Envelope’:

Having a myriad of potential corporate strategies being tested in parallel could lead to anarchy without a central guiding mechanism


Top management set the parameters for the experiments (= a ‘strategic envelope’), and then continually manage that context

Need to meet often to discuss:

Shifts in the marketplace

How well each of the experiments is proceeding

Gaining ‘followership’ or showing waning interest?


A strategic conversation is a regular, frequent meeting at which executives share the workload of monitoring the business environment and responding to it.

Perhaps the vice president of operations might be charged with reporting on “today,” such as the size of the company’s mobile workforce


The emerging technologies director might be charged with reporting on “tomorrow,” such as recent developments in Web Services or mobile or fixed wireless services.

The HR vice president might be the team’s eyes and ears on outsourcing.


The purposes of each meeting are to stay in tempo with the marketplace (which may mean setting new priorities), spot trends in their infancy, launch new projects, add resources to promising ones, cut funding for others, and so forth

SHELL OILCase example: Guide Strategy-Making

with a ‘Strategic Envelope’ Steve Miller, then incoming general manager of oil

products at Royal Dutch/Shell Group, believed change would only occur if he went directly to his front lines—employees at Shell gas stations around the world.

He felt he had to reach around the middle of the company to tap the ingenuity of frontline employees at the gas stations, encouraging them to devise strategies that were best for their local markets.

SHELL OIL Web Portal

Now utilizing Social Media


with a ‘Strategic Envelope’

He set aside 50 percent of his own time for this work and required his direct reports to do the same.

His goal was not to drive strategy from corporate, as had been tried and failed, but to interact directly with the grass roots and support their new initiatives, thus overwhelming the old order in the middle of the company.



Action Labs: His technique was to use action labs.

He invited six teams, each with six to eight people from gas stations in one country, to a week-long “retailing boot camp” at which they learned how to identify local opportunities and capitalize on them



The teams were then sent home for 60 days, each to develop a proposal of how to double their net income or triple their market share..

six teams came to headquarters: After 60 days, the first six teams returned for a “peer

challenge” at which they critiqued each others plans They then returned home for another 60 days to hone their

plans for the third action lab: approval or disapproval.



At this third lab, each team took turns sitting in “the hot seat” facing Miller and his direct reports, who grilled them for three hours on their plan.

The teams, in turn, described what they needed from Miller as the other teams watched.



The plans were approved, denied, or modified.

If funded, the promised results were factored into an operating company’s goals.

The teams then had 60 days to implement their plans, after which they would return for a fourth session with Miller and his reports.



The Results:

These action labs had a powerful effect.

They caused stress on Shell’s way of doing business, in effect, unfreezing the status quo.



The corporate middle, which had not formerly seen good results from corporate efforts, saw solid plans and energized subordinates.

In turn, they became energized.



In addition, the labs led to much more informal communications up, down, and across Shell.

The teams, for instance, felt comfortable calling up Miller and his staff—a significant departure from the past.



Miller and his staff made decisions: These executives had to make on-the-spot decisions in

front of the frontline teams rather than behind closed doors.

They found they had to be consistent and straight with the teams.

It was a difficult and trying experience for all, but humanizing for the teams.



Guerilla leaders:

Emerged and initiated innovative experiments. One, for example, was “the soft drink challenge.”

Whenever a customer was not offered the full gamut of services at a Malaysian gas station, they received a free soft drink.

The result: a 15 percent increase in business



Miller learned that small local projects can have large effects.

The focus was to tap the intelligence at the front lines, with controls and rewards supporting that goal.



“We’re not going to tell you what to do. Pick a big-ticket business challenge you don’t know how to solve.Let’s see if we can do things a little differently,” told Miller to teams from Malaysia, Chile, Brazil, South Africa, Austria, France and Norway.


with a ‘Strategic Envelope’ Top management had the illusion of being in control via

their directives.

Through the action labs, they learned as their staff learned, they received much more feedback, and they knew far more about their customers and the marketplace.

Guidance and nurturing came from the top, so there was not complete chaos.


Be at the Table: IS executives have not always been involved in business

strategizing.

That situation is untenable today because IT is intrinsic to business.

However, to have a rightful place in the strategizing process, the IS function needs to be strategy oriented.


Many have been tactical and operational, reacting to strategies formulated by the business.

To become strategy oriented, CIOs must first make their departments credible, and second, outsource most operational work to release remaining staff to help their business partners strategize and experiment


Test the Future: To get a running start, as well as contribute ideas about

the future, IS departments need to test potential futures before the business is ready for them.

One mechanism for testing the future is to provide funding for experiments.

Another is to work with research organizations. Yet another is to have an emerging technologies group.


The Infrastructure in Place:

Internet commerce requires having the right IT infrastructure in place.

Hence, the most critical IT decisions are infrastructure decisions


Roger Woolfe and his colleagues recommend that IT experiments include those that test painful infrastructure issues, such as how to create and maintain common, consistent data definitions;

How to create and instill mobile commerce standards among handheld devices; how to implement e-commerce security and privacy measures; and how to determine operational platforms, such as ERP and SCM

Seven Planning Techniques

Due to the importance and the difficulty of systems planning, it is valuable to use a framework or methodology

A number of techniques have been proposed to help IS executives do a better job of planning.


The seven presented here take different views of IS planning, including

IT in organizations, defining information needs, understanding

The competitive market, categorizing applications into a portfolio, mapping relationships, and surmising about the future


1. Stages of Growth

2. Critical Success Factors

3. Competitive Forces Model

4. Value Chain Analysis

Seven Planning Techniques..

4. E-business Value Matrix

5. Linkage Analysis Planning

6. Scenario Planning

Stages of Growth

Richard Nolan and Chuck Gibson observed that many organizations go through four stages in the introduction and assimilation of a new technology.

Stage 1: Early Successes.

The first stage is the beginning use of a new technology. Although stumbling occurs, early successes lead to increased interest and experimentation.

Stages of Growth conti

Stage 2: Contagion.

Based on the early successes, interest grows rapidly as new products and/or services based on the technology come to the marketplace.

They are tried out in a variety of applications; growth is uncontrolled and therefore rises rapidly.

This proliferation stage is the learning period for the field, both for uses and for new products and services.

Stages of Growth ..

Stage 3: Control.

Eventually it becomes apparent that the proliferation must be controlled.

Management begins to believe the costs of using the new technology are too high and the variety of approaches generates waste.

The integration of systems is attempted but proves difficult, and suppliers begin efforts toward standardization.

Stages of Growth conti

Stage 4: Integration.

At this stage, the use of the particular new technology might be considered mature.

The dominant design of the technology has been mastered, setting the stage for newer technologies, wherein the pattern is repeated.

An organization can be in several stages simultaneously for different technologies.

Stages of Growth …

Example (Figure 4-5):

DP Era 1960 – early ’80s

Micro era early ’80s – late ’90s

Network era late’90s – 2010?

1. Stages of Growth cont.

The eras overlap each other slightly at points of “technology discontinuity” Proponents of the proven old dominant design struggle

with proponents of the new and unproven designs ‘Inevitably’ the new (proven) win out

Importance of the theory is understanding where a technology or company resides on the organizational learning curve e.g. too much control at the learning and

experimentation stage can kill of new uses of technology

Stages of Growth Management principles differ from stage to

stage Different technologies are in different

stages at any point in time

Stages of Growth ..

Management needs to tolerate, even encourage, experimentation.

Because the management principles differ from one stage to another, and because different technologies are in different stages at any point in time, the Stages of Growth model continues to be an important aid to the systems planning process.

summary


Case examples include

Skandia Future Centers Shell Oil

planning the sense-and-respond approach of strategy-making lecture 10

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