"The essence of great strategy formulation ..." (parte III)

Parte I e Parte II

"By respectfully engaging with one another’s ideas and arguments, participants begin to see alternatives to their own way of thinking’or indeed recognize that apparent differences are only superficial’and arrive at a common way of thinking.

If people at the start of a decision-making process have different opinions and points of view, then arriving at a common understanding requires at least some of them to change their minds. Arguing constructively, and in particular focusing on elaborating causal arguments, is more likely to cause such changes than a simple exchange of viewpoints. In fact, simply providing reasons for one’s viewpoint is likely to harden people’s points of view and lead to a stalemate.

...

When managers arrive, through disinterested dialogue, at a common understanding of the situation and an agreed-upon argument to justify their decision, they are more likely to act coherently 

...

If strategic management does not change the way organizational members think, and so act, strategy can only have any real impact through coercion. Without changing ways of thinking, organizational members continue to see the same problems as they always did, and they continue to solve these problems using the same beliefs as before"

Trechos retirados de “Arguing for Organizational Advantage” de Sorensen, Jesper B.; Carroll, Glenn R. 

Webinar - Instill a touch of STRATEGY in a QMS

 

How can we use the process approach (part IVa)

Part I, part II, part IIIa and part IIIb.

5.Processes and strategy

5.1 Anything about strategy in ISO 9001 and ISO 9000?

ISO 9000:2015 defines strategy as:

plan to achieve a long-term or overall objective

When you remember the old article from Henry Mintzberg, The Strategy Concept I: Five Ps for Strategy, published in October 1987 by California Management Review. 

Summarizing the strategy in a plan is too little, too poor. 

What about ISO 9001:2015, where does the strategy come in? 

Clause 4.1:

The organization shall determine external and internal issues that are relevant to its purpose and its strategic direction

Interestingly, not many people realize that relevant external and internal issues and their classification are a function of strategic orientation.

Clause 5.1.1:

ensuring that the quality policy and quality objectives are established for the quality management system and are compatible with the context and strategic direction of the organization;

OK, alignment of quality policy with context and strategic direction.

Clause 5.2.1:

is appropriate to the purpose and context of the organization and supports its strategic direction;

Again, alignment of quality policy with context and strategic direction. Quality policy should derive from strategic orientation.

Clause 9.3.1:

Top management shall review the organization’s quality management system, at planned intervals, to ensure its continuing suitability, adequacy, effectiveness and alignment with the strategic direction of the organization.

OK, this is understandable, it is peaceful. 

That’s it!!!

Not very useful as a guide to work with strategy.

Let us try another door. One of the quality management principles is customer focus. ISO 9000:2015 states:

The primary focus of quality management is to meet customer requirements and to strive to exceed customer expectations.

One of the things that worries me about ISO 9001 is that it uses the language "customer" instead of "target customer".

Seth Godin in his book “We Are All Weird” writes:

"The mass market — which made average products for average people was invented by organizations that needed to keep their factories and systems running efficiently.

Stop for a second and think about the backwards nature of that sentence.

The factory came first. It led to the mass market. Not the other way around.”

“For a hundred years, industrialists have had a clearly stated goal: standardized workers building standardized parts”, [Another text by Seth Godin, from his blog]. This resulted, as a business model, while demand was bigger than supply. When demand is bigger than supply, the boss, the one calling the shots, is the one who produces. And when that is the case, whoever is more efficient wins. Everyone tries to compete for the lowest cost. 

In this world, the competitive landscape can be compared to a single mountain and all competitors try to climb that mountain, the higher they rise, the higher the yield, but the higher they climb, the fewer the number of companies that survive, because in this landscape of a single mountain, the one that wins is the one that uses the effect of scale, grow in volume to lower unit costs and be more competitive.

As soon as supply started to exceed the level of demand, the economic world began a transformation towards more variety. In terms of the competitive landscape, this translates into many, more and more mountains. And those who climb one do not compete with those who climb the other:

In an economic world full of different peaks in a rugged landscape there are many types of customers. Different customers look and value different things. 

Let us stay away from statistics and look customers in the eye, literally and metaphorically. If we look at customers who value price above all else, what satisfies them? 

Satisfied customers do not happen by chance, they are the normal and natural result of work done upstream to achieve the results they value. 

What do we have to do upstream to produce these results in a perfectly normal, systematic, and sustainable way? 

This market is highly competitive, different competitors seek to improve their efficiency, whoever is more efficient wins, whoever stretches the frontiers of operational excellence wins. 

Amateurs cannot compete with paranoid competitors.

Now, let's look at another type of customer, the one who wants tailor-made service, or a customized product. What do they value? 

What kind of priorities are behind these results?

Finally, let's look at another type of customer, the one who wants innovation, or values design above all. What do they value? 

Again, what kind of priorities are behind these results?

Now imagine an organization that wants to serve the three types of customers at the same time

What a big mess it will be! A typical stuck-in-the-middle situation.

The following figure is taken from an article called “Using Product Profiling to Illustrate Manufacturing-Marketing Misalignment” by Terry Hill, Rafael Menda, and David Dilts and published in July 1998.

One can look into an organization and evaluate its products and markets, its manufacturing structure, and its infrastructure. 

For example, about the products and markets: organizations can have wide or narrow product ranges, high or low rate of new product introductions. High or Low frequency of schedule changes. And different order winners, the most relevant topic at the eyes of certain groups, certain segments of customers.

For example, for manufacturing: organizations can have small or large production run sizes, high or low set-up frequencies, low or high set-up costs.

For example, for infrastructure: organizations may be designed to new product introductions or for process improvements to improve efficiency. Manufacturing Managers’ tasks may be dedicated to schedules or to quantity.

Let us see two examples.

The blue company is a company that bets on innovation, they have a wide range of products, they have a high rate of new product introductions, They are flexible enough to accommodate and thrive in the middle of a high frequency of schedule changes. Customers love the innovative products and the brand. Their manufacturing is aligned by being able to run small production sizes, handle a high frequency of set-ups and their cost is low. Infrastructure is aligned with product introductions and meeting schedules.

On the other side, one can think about a green company. A company that bets on low cost to compete on price, they have a narrow range of products, they have a low rate of new product introductions. A new product introduction is a headache, is more entropy. They try to minimize the frequency of schedule changes, which reduces throughput, that reduces efficiency. Customers love their low prices. Their manufacturing is aligned by being able to run large production sizes without stop, they minimize set-ups, and their cost is high. Infrastructure is aligned with efficiency and process improvements process in and throughput.

Different organizations, different strategies, different processes, different mindsets.

Now consider the example of a third company, a company that has a weak or unclear strategy, a company not aligned.

They have a wide product range, an average rate of new product introductions, an average frequency of schedule changes, and their order winners are based on price. Things don’t fit nicely together

They run small to average production run sizes and average set-up frequency and cost.

Their mind is in searching for efficiency but at the same time, they look to meet schedules to satisfy different customers looking for different products in small quantities.

This company is a mess, is stuck in the middle trying to serve everybody and fighting with conflicting priorities.

Continue.

"Making choices"

"You cannot treat the whole market as one. The market has never been  homogeneous and is becoming increasingly less so. People and businesses differ in how they value  a product, how they value different product attributes and in their spending power. Marketing is about segmentation and targeting, find what is relevant and important to different segments and deliver a version they are willing to pay for.

most interesting to me are the regions outside the diagonal band. Notice the holes in top left and bottom right. Just because holes exist in a  segmentation strategy it does not mean it must be targeted. What would the price look like for these two segments? Are there sizable number of  customers in these two segments? If yes can AT&T target them with more versions without confusing the “diagonal” customers?  Do these holes open up opportunities for competitors to enter the market? If yes, why didn’t AT&T choose not to go after these segments? What do they know that competitors don’t?

.

If marketing is about segmentation and targeting, strategy is about making choices – choices about how to effectively apply limited resources to maximize profit."

Trechos retirados de "One word – Versions" 

Beware of the invisible water in the tank

Seth Godin in a recent blog post, “The dominant culture”, wrote:

 “One of the great cartoons involves two goldfish in a tank talking to one another. One responds in surprise, “wait, there’s water?””

This remind me of a growing concern in my analysis of the business world. Too often we analyze information about certain cases, about certain solutions, about certain methodologies and approaches, without being aware of the assumptions on which they are based. Why? Because no one cared about the water in the tank. 

 

For example, for years and years I have heard comments and stories, I have read wonders about the Toyota Production System.

 

Is it spectacular? Yes!

 

However, it was only in 2017 that I read in an article something that nobody ever says, either because they are unaware or because it is the water in the tank ... - Toyota "freezes" production 8 weeks in advance.

 

How many companies can afford to do this? And how many companies cannot do it, but try in good faith to implement the Toyota Production System in their production?

 

Recently also, the Wall Street Journal published an interesting article, “The Surprising Way Companies Can Shore Up Their Financial Strength”:

“The Drucker Institute’s statistical model serves as the basis for the Management Top 250, an annual ranking produced in partnership with The Wall Street Journal.

…

In total, we examined 820 large, publicly traded companies last year through the lens of 34 indicators across five categories: customer satisfaction, employee engagement and development, innovation, social responsibility and financial strength.

To construct our ranking, corporations are compared in each of the five areas, as well as in their overall effectiveness, through standardized scores with a range of 0 to 100 and a mean of 50.

…

Our model reflects shareholder returns, along with a variety of metrics that capture how effectively a firm has deployed its capital, among other things.

.

For companies in the health-care sector, we found over the course of the seven-year period a significant statistical relationship between financial strength and one other category: employee engagement and development. To be precise, a five-point gain in the latter produced a 0.79-point increase in the former.

.

That may not look like a big deal on its face. But it would have been enough to vault a company from the 50th percentile in financial strength to the 56th in last year’s rankings—up 38 spots on the list.

…

Meanwhile, it is a whole other story for companies in the industrial sector, which includes the airlines. There, it is social responsibility that should command the most attention. A five-point rise in that category translated into a 0.49-point upturn in financial strength.

…

For example, a health-care company wanting to lift its customer-satisfaction score can expect to reap an extra 0.49 points in that category for every five-point advance in employee engagement and development. But an industrial company hoping to achieve a similar bump in customer satisfaction should shoot for a five-point improvement in another area: innovation.”

While reading the article I thought about the water in the tank. Do these recommendations, do these relationships apply equally to all companies in the same economic sector?

I don't think so.

 

Some days ago, someone made the following comment to me:

 

“KPIs for production are simple: efficiency, low losses.”

 

When I heard that the picture of Bruce Jenner came to my mind.

Beware of the invisible water in the tank.

The Rules of the Passion Economy (parte III)

Parte I e parte II.

Ainda do capítulo 2 “The Rules of the Passion Economy", retirado de "The Passion Economy: The New Rules for Thriving in the Twenty-First Century".

"RULE #3: THE PRICE YOU CHARGE SHOULD MATCH THE VALUE YOU PROVIDE
...
Price should drive costs, not the other way around. [Moi ici: Recordo este postal sobre o vocabulário do valor] It took me a long time to understand the significance. We are wired to think that price is connected to cost.
...
Value is a conversation. [Moi ici: Recordo este postal sobre a interacção e o valor da fricção positiva. Recordo o postal de ontem]
...
You shouldn’t charge market prices. Market prices are based on the idea that whatever it is you are selling is a commodity that is no better and no worse than what everyone else is selling. Your products and, especially, your services should be unique—so special to your customers that there is no obvious reference point.
...
You should spend time with your clients, pointing out how you are saving them money in other ways, helping them make more money, or making their lives considerably more enjoyable. The price you charge should be the opposite of a fixed amount on a price tag. It should come from frequent discussions with your client.
.
Passion pricing is a service. The very process of discussing pricing can often be a central part of the service you are providing. When talking with a client about how much value your product or service delivers—how much more money the client makes, how much cost they eliminate—you are helping that client better understand her own business and needs. [Moi ici: Recordo este postal sobre o Total Value Ownership e este sobre o Cost of Ownership]
...
Pricing low is not a strategy. One of the most common errors people make is finding out what the competition is charging and then pricing their own goods or services a bit lower. This is not a strategy; it is the abdication of strategy to the competition. It avoids asking the crucial Passion Economy question: What is the value I am creating that is beyond that of similar businesses or services, and who am I creating it for?"

"It Starts with Strategy"

"the seven steps any business must take to build a robust marketing system.
...
1. It Starts with Strategy...
you’ve got to start with strategy, and strategy starts with knowing your ideal customer.
.
If you don’t understand who your ideal customer is—their core problems and the value you bring to every engagement—how can you possibly find a message that resonates and identify the tactics that will work?
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The short answer is that you can’t. Every great marketing strategy is rooted in pinpointing your ideal customer and honing in on the ways they want to interact with a business. Only once you’ve established your ideal client can you begin to connect what you offer with how you solve your customer’s problems.
...
3. Content Has Risen to the Strategic Level.
Don’t conflate the word “content” with “blog post.” Content is way bigger than that.
.
Content allows us to take the promise that we made to solve a problem and expand that so we can dominate search, social media, and all other places online where prospects are looking for answers about our brand.
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We like to use content hubs to create one-stop-shops for the kind of informative, meaningful content that addresses a customers’ needs anywhere along the journey. Hub pages are designed to bring together all relevant information on a certain topic on one page. Think of them as the table of contents for a great online book in your area of expertise.
.
Whether someone’s just discovering your business, are coming back for one last look before they make a first purchase, or are sharing information about you with a friend looking for a referral, content hubs have something for everyone.
.
Content hubs are not only great resources on your website, they help improve your ranking in SEO and ensure that it’s easier for new audiences to discover your business."

Trechos retirados de "Building a Marketing System in 7 Steps"

III - Interested Parties: Any Connection to your QMS?

The third video on our series about doing more than just complying with ISO 9001:2015.


Now, about interested parties and what can be their use in developing an aligned quality management system.


I do not say that organizations that want to be certified need to act like in this video. What I say is that organizations that look for business results should consider following an approach around what I propose.

In a world that is running away from the XXth century paradigm, based on just Quality-Cost-Delivery, and into what I metaphorically call Mongo, the planet Mongo from Flash Gordon's adventures, the number of segment of customers is exploding and the need to chose whom to serve and align the business in doing it is becoming more and more critical.

Organizations cannot expect to serve everyone, organizations cannot expect that a simple dyadic relation between customer and supplier will be enough. We are entering in a world of ecosystems.

A paisagem pode ser modificada pelas empresas

Demasiadas vezes olhamos para a paisagem competitiva como uma constante do desafio.
Na verdade, a paisagem competitiva não é um dado constante. Ela está sempre a mudar. Ainda ontem a notícia sobre a taxa de 25% que os EUA vão aplicar sobre as importações de queijo e fruta, representa uma alteração da paisagem imposta por agentes muito poderosos.
O que esquecemos muitas vezes é que as próprias empresa podem agir, elas próprias, para alterar a paisagem competitiva onde actuam.

"For purposes of understanding shaping in strategy, the idea that organisms can alter their selection environments and those of their descendants has obvious appeal.
...
In biology, organisms shape elements of the selection environment that affect survival. But in strategy, firms generally have a different proximate goal—they seek profits—and they take action directed toward this goal. Thus, for firms, the relevant selection criteria are those that determine profits and payoffs to specific courses of action.We can think of the selection criteria for profit-seeking firms as encoded in the payoff structure that maps particular firm actions or decisions or attributes (e.g., activities, resources, and capabilities) to the payoffs that ensue. In this sense, shaping the selection environment in strategy means shaping the payoff structure for all firms operating in that environment. In NK terms, firms generate or modify the “fitness function,” which lies behind the topology of the fitness landscape that all firms climb in search of profit opportunities. Similarly, in the context of strategic interactions, shaping the business context means that a firm or firms playing a competitive game endogenously generate or modify the payoff structure for all firms in the game, such as by altering the payoffs to particular moves or the types of moves available.
...
1. Shaping can have major direct effects on the performance of a shaper and its position on the business landscape, i.e., its competitive advantage.
2. As a corollary, shaping can also have direct implications for the competitive advantage of competitors. In addition to improving the focal firm’s position, shaping can directly undermine other firms’ positions on the landscape by affecting the bases of their competitive advantage.
3. Highly malleable business landscapes may hide subtle dangers for shapers because high malleability leads to more frequent shaping. Although firms may be individually rational when shaping the business context in an effort to improve their performance, their independent actions may collectively lead to overshaping and long-run instability in performance for all firms.
4. Overshaping is not independent of the number of firms of the shaping type in the population. Unless shaping involves joint action by a group of firms (a case that the model does not contemplate), ceteris paribus the fewer the number of shapers, the greater the benefits from shaping activity.
5. The sustainability of competitive advantage is likely to be highest in situations of moderate to high complexity (K) combined with a low to moderate number of dimensions available for shaping (E). Under these conditions, any advantage obtained through shaping is less likely to be undermined by shaping on the part of other firms and is more likely to be sustained due to complexity."

Trechos retirados de "Searching, Shaping, and the Quest for Superior Performance" de Giovanni Gavetti, Constance E. Helfat e Luigi Marengo, publico por Strategy Science, Volume 2, Issue 3, September 2017, Pages ii, 141-209

Practicing the noble art of cheating (part VI)

Part I, Part II, Part III, Part IV and Part V.

On Part II I wrote:

"A typical SME in Portugal cannot start with a blank sheet, and start from scratch in a rational strategy development exercise.
.
Stay with me and try to put on shoes of a SME in need of developing a strategy. Why do they need to do that? Normally, for one of two possible reasons:

• to seize an opportunity that it inadvertently discovered; or

• to stop a competitive bleeding that is weakening it, and find a way to recover."

Now, reading "What Sets Breakthrough Strategies Apart" I find this:

"We argue that strategic thinkers engage in an exercise that parallels that of scientists. Like scientists, they start with a significant problem to solve, and then use this problem as a prompt to compose a theory — in this case, a theory of value creation. This theory then becomes their unique perspective and point of view about the opportunity they see.
.
One role of a theory is to shape sight and perception, to enable seeing — often from simple observations — what was previously unnoticed. As Albert Einstein observed, “whether you can observe a thing or not depends on the theory which you use.” Through a novel business theory, you see value in choices, in combinations, and in purchases that others cannot. And most importantly, like theories in science, your theory of value should lead to hypotheses and experiments that help realize opportunities unseen by others."

This "start with a significant problem to solve" instead of starting with a blank sheet and thinking "let us plan" is the difference between the PDCA cycle and the CAPD (better CASD) cycle:

• SDCA e PDCA (June 2017)
• Fazer a mudança acontecer (parte II) (June 2009)
• PDCA vs CAPD (October 2007)
• Puxar, não empurrar (September 2006)

Starting with a problem is a way that lead us to start with the end, by where we want to arrive with our work not with fancy ideas:

"Government likes to begin things—to declare grand new programs and causes and national objectives. But good beginnings are not the measure of success. What matters in the end is completion. Performance. Results. Not just making promises, but making good on promises."George Bush

Practicing the noble art of cheating (part II)

Parte I.

Let us consider the case of a for profit organization.

What do we want for our organization?
We want our organization to be successful.
What will be the consequences of being a succsseful organization?
We will get good financial results.

Where do these financial results come from?
Saving money is not the same as earning money. The money earned will come from the customers pocket. Of course, this statement is increasingly simplistic these days. And as you can see in the third video in this series, to be published in October, it is becoming increasingly relevant to work with stakeholders, not just customers.

An organization may receive money from a customer while considering and acting with other interested parties as the real target of the business. So we get into the logic of the strategy map of a balanced scorecard:

Financial results come from satisfied customers.
Satisfied customers are the result of critical processes excellently operated. Beware of using the word excellent. We are not talking about whole excellent companies, we are talking about critically operated critical processes. Whole excellent organizations are very expensive and customers don't want to pay that cost.
Superbly operated critical processes require aligned resources and infrastructure. As I exemplified in Part I, it makes no sense to choose to work with customers who want flexibility and then to have a super efficient, single-product, rigid production structure.

Choosing strategic goals from a financial perspective, I risk writing, is the easiest, it's a matter of looking inward and understanding how to best measure the statement: sell more and spend less (sales and productivity).

When we come into the customer perspective I propose to think of three aspects: an organization needs to gain new customers; an organization needs to satisfy its customers; and an organization needs to maintain and/or develop relationships with current customers.

Why do I separate each of these aspects?
Because each of these results requires specific actions.
Winning a new customer implies making the company and the offer known, enticing seducing that potential customer with a promise that meets what he or she seeks and values. It also means working to know and minimize their fears and concerns, which can create friction and prevent them from trying the new option and sticking to the current solution.

Now, let's go to the whiteboard and look into the name of the best customer (the one mentioned on Part I) and fill the figure:

Try putting on this client's shoes, remember the conversations with him, remember the problems with him ...

Why can a potential customer who has never worked with your organization take a risk and work with you?

What could help developing the relationship with this customer X?

So, the big picture is:

Your organization's satisfied customers with their word of mouth help you win new customers. Satisfied customers have the potencial to become loyal customers.

Can you now unzoom and instead of customer X, characterize the segment where it belongs?

They are international brands of medium-high quality with quantities between A and B units per season. Most likely they are based on German or Nordic markets.

The ideal scenario will be having  3-4 anchor customers and complement production with emerging, growth potential brands requiring between C and D units per model and 1-2 models per season.

You know who are your target customers, you know what they want and expect.
Now, you need to know what does the organization have to focus on and be excellent at.

Each outcome in your clients' lives must be a perfectly normal product of the organization's work. The figure above speculates which internal work objectives are crucial to being able to aspire to succeed. An organization, any organization, has a lot of things to do but the most critical are the ones that contribute to win, satisfy and retain target customers.

For a full strategy map what is still missing is the resources and infrastructure perspective (yes, I don't follow the standard name of "Learning and growth").

In this particular case with the development of the strategy map so far we already had a good idea about what to include in the resources and infrastructure perspective: some investments in machines and some investments and changes with people.

A way of developing the strategy without theory and abstractions, just focus on a particular client.

Stay with me for the part III of this series to see how we develop the strategic initiatives and how I normally, develop the resources and infrastructure perspective.

Practicing the noble art of cheating (part I)

Yesterday, during a night walk, almost tropical, I was surprised to discover 4 geckos in Vila Nova de Gaia where I live

Along the same walk I read "Method for Strategic Objectives in Strategy Maps" by Luis E. Quezada, Felisa M. Cordova, Pedro Palominos, Katherine Godoy and Jocelyn Ross, published by Int. J. Production Economics 122 (2009) 492–500.

I'm a big fan of the balanced scorecard and even more of strategy maps.

"The BSC establishes cause–effect relationships among strategic objectives, even though they do not state the way to establish and quantify those relationships. The relationships are represented  in what the authors called strategy map, which is the main subject in this work.
...
The objective of this paper is to present a simple tool for identifying strategic objectives in order to build a strategy map. A strategy map is a component of a balanced scorecard that represents the cause–effect relationships among strategic objectives. Performance measurements are defined for each strategic objective."

This figure shows an example of a strategy map:

The authors studied 12 companies and describe 3 methods used to develop strategy maps:

"Method 1 carries out a strategic process, including the definition of a vision and mission, internal and external analysis from which a SWOT (strengths, weaknesses, opportunities, threats) analysis is undertaken. The strategic objectives are defined from the SWOT analysis. Fig. 2 depicts the process."

"Method 2 is similar to method 1, but the difference is that two types of objectives are defined: global and specific. Global objectives are defined directly from the vision and mission, while specific objectives are defined from the SWOT analysis. This method has an advantage over method 1; it translates the vision and mission into general objectives, helping the organisation to identify the strategic directions within the strategy map.
...
Method 3 identifies strategic themes from the organisation's vision and mission, which are the basis for defining the strategic objectives."

Then, the authors present their own method described by this figure:

When I saw using the SWOT analysis to develop a strategy map I smiled.
What is a strategy map?
A strategy map is a diagram that shows an organization's strategy as a chain of cause-efect relationships on a single page. And someone uses a SWOT analysis before getting the strategy? Come on!
Nothing is intrinsically a strength or a weakness, an opportunity or a threat independently of the strategy. I believe that only after formulating a strategy one can use the SWOT analysis. I can state that our organization has a tremendous strength: we have a very efficient high throughput production machine. But if our strategy is to work for customers that want small amounts, that want flexibility, that want customization... then that machine is not a strength. Most likely it is a weakness.

I smiled even more when I saw that the four methods started with "Vision and Mission". I smiled and while smiling I began to repeat Paul's words to the Corinthians: When I was a child (child-consultant) reading management books I also believed in these childish-scenes and I was amazed and said yes...

Then I started to work with SME's and I realized that it is a lot of BS.

Management books present this kind of method:

I learned long time ago that the order must be almost completly changed, and in October 2015 I wrote the blog post "From concrete to abstract and not the other way around" (in Portuguese).

A typical SME in Portugal cannot start with a blank sheet, and start from scratch in a rational strategy development exercise.
.
Stay with me and try to put on shoes of a SME in need of developing a strategy. Why do they need to do that? Normally, for one of two possible reasons:

• to seize an opportunity that it inadvertently discovered; or
• to stop a competitive bleeding that is weakening it, and find a way to recover.

SME have no money, no culture, no resources to be free and go after the next big hit. They have to start with what they have at hand.

To avoid daydreaming and to motivate participation I start the strategic thinking with the result of a competitive advantage: one or more sustainable satisfied customers.

My approach is based on their clients. Please tell me the name of one or two good clients you have. Those clients are your best clients, or the clients with whom you have the best margins or make more money. Give me a name.

And I put that name on the whiteboard.

Now, look at that client as a person, look into their eyes and answer me: customers are selfish, they only think about themselves. Why on earth do these customers think it's best for them to work with you? What do they get in their life for working with you? Why do they continue to choose your organization?

I don't care about vision or mission, at least for now. I just want a safe rock on which to lay the foundation of their competitive advantage. And they have to have a competitive advantage, the proof is that customer satisfaction and loyalty.

So, we reverse the order:

• Satisfied customers with whom we make good money;
• What is our competitive advantage behind working with them?

Knowing the competitive advantage one can start climbing the abstract ladder and go from the specific and concrete into the more abstract to develop rules and to practice the noble art of cheating. I call it cheating when an organization realizes what make customers satisfied and start to do that in a systematic way, not just hoping for the luck.

I will continue this post showing how to go from a specific customer into a strategy map.

How does the strategic direction of your organization influence or frame your quality management system? (Part I)

ISO 9001:2015 mentions "strategic direction" in clauses 4.1, 5.1.1b), 5.2.1 a) and 9.3.1.

How does the strategic direction of your organization influence or frame your quality management system?

ISO 9000:2015 defines strategy as "plan to achieve a long-term or overall objective". Also, ISO 9000:2015 defines policy as "intentions and direction of an organization as formally expressed by its top management".

Not very helpful.

If we think on an abstract ladder we will get:

How does the strategic direction of your organization influence or frame your quality management system?

What is an organization?
An organization can be viewed as a set of interrelated processes:

Where C's are customers at different stages of their relationship with an organization as set of interrelated processes (P).

If we choose an economic sector and compare performance among organizations we will see a lot of variability. There is more variability among organization within the same economic sector than between economic sectors:

So, same economic sector, same country, same rules, same people, ... what is different?

Something inside the organizations: strategy.

Let us make a comparison with sports.
When I was a small boy I watched in TV the Olympics at Munich in 1972. I remember this champion, Vasily Alexeyev:

Look into his body, a system prepared to compete and win.

Then came the 80's and there was a champion in athletics, Carl Lewis:

Look into his body, a system prepared to compete and win. A system very different from Vasily's.

Each sport requires a different set of skills, requires a different kind of body. Even in the same sport, like running, 100 m champions are different from 10 000 m champions.

What happens when an athlete wants to be good at everything?
Let us go again to the Olympics and to Montreal 1976.

Bruce Jenner won the gold medal in the decathlon, setting a world record. Bruce was a generalist among generalists and that year he was the best. For example:

• He run the 100 m in 10.94 seconds
• He pushed the shot in shot put at 15.35 m
• He threw the javelin at 68.52 m

When you're a generalist competing with other generalist the competition works at a certain level.

In the same Olympics there were specialists running 100 m, pushing the shot or throwing the javelin and the gold medalists had this performance

• Hasely Crawford  run the 100 m in 10.06 seconds
• Udo Bayer pushed the shot in shot put at 21.05 m
• Miklós Némete threw the javelin at 94.58 m

Bruce Jenner, a champion among generalists wouldn't had a chance against the specialists (Valery Borzov was bronze medal at 100 m with 10.14 seconds)

I believe that in every economic sector we are seeing more and more specialists, salami slicers. Organizations that don't pretend to win, to serve all kinds of customers. They pick one niche, one tribe and they become specialists in serving them, generalists have no chance.

Picking a strategic direction is deciding to be a specialist, is deciding whom and where to serve. It makes no sense speaking about process benchmarking in general. Will an organization compare its processes with another organization that serves different customers from a different segment and with different priorities and expectations?

According to your organization's strategic direction the quality management system can be like Vasily Alexeyev or Carl Lewis or ... 

Part II will be about different kinds of customers.

Part III will be about interested parties and ecosystems.

Acerca da estratégia

Comecei a ler "Business Strategy - Managing Uncertainty, Opportunity, and Enterprise" de  J.-C. Spender.
.
O primeiro capítulo, "Introduction to Strategic Work, Language, and Value", é muito bom. Vê-se logo que é escrito por um praticante, só um praticante pode escrever assim:

"strategic work and how it goes well beyond rational decision-making and goal-oriented planning.
...
So strategic work is less computable, more difficult, and more humanely dimensioned than rational decision-making - one of the reasons strategy professors, researchers, and students are so tempted to retreat into abstractions, away from the factual and moral complexities of day-to-day business. They keep the lived world at arm’s length, presuming it is computable and rationally structured according to their theories. The real world that managers inhabit is not a classroom - and therein lies what is so complex and difficult about strategic work. Theory is logical, it powers rational decision-making and while theory is often relevant to evaluating action it is never sufficient to managers’ practical needs. Strategic work, being in the lived world, reaches beyond computation and engages the messy and unavoidably compromising business of living."

Treating different customers differently

Trecho retirado de "The One to One Manager : Real-world Lessons in Customer Relationship Management" de Don Peppers e Martha Rogers.

"Treating different customers differently is an old concept, dating back to the very beginnings of trade and commerce. We began to lose sight of this concept amid the excesses of the Industrial Revolution and the decades of global turmoil that followed. The astonishing success of mass production as a means for adequately feeding, clothing and equipping unprecedented numbers of people pushed the concept even further into the background. Now, ... is returning the focus of business to the individual relationships between buyers and sellers."

BTW, isto deve violar umas quantas leis de Bruxelas, e mesmo americanas.