"strategy needs to change as the world does"

ONE COLD, HARD truth laid bare by the pandemic is how vulnerable a business can become when strategic foresight and operational flexibility are low on the list of priorities for boards and leadership teams.

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strategy needs to change as the world does. Over the past 30 years we've lived through a remarkable era of macrostability, characterized by largely peaceful geopolitics, generally falling interest rates, expanding credit markets, and moderate inflation. During that time, five new trends in the business landscape emerged: globalization, capital superabundance, the declining cost of distance, labor superabundance, and, underlying all those, technology-led innovation. Winning companies adapted their organizations to the trends, embracing such mantras as "Move fast" and "Adapt or die" to create enormous amounts of value.

We've now entered a new era in which new rules apply. It's a time of post-globalization, capital rationalization, spatial dispersion, shrinking workforces, and dependence on automation. Meanwhile, technology-led innovation is only accelerating and compounding. In this environment, the intuitions that leaders have developed over the past few decades will cease to be useful-and the shape of opportunity and risk will be entirely different.

If leaders want to continue creating value in the era of volatility, they must still focus on adaptability. But they'll also need to revive strategies that boost investment in two other capabilities that have fallen out of favor in recent years: resilience and prediction. Ultimately, every company will need a strategy that allocates time, resources, and energy to all three capabilities."

Trechos retirados de "How to Succeed in an Era of Volatility"

"how to shape the future"

 

 "The future is not about prediction but about shaping the future with agile experimentation on what works and what does not work

Regardless of how much you plan, you will not predict the future because neither customers nor companies can anticipate what is possible. The only way to push for radical innovation is to accept the uncertainty and thereby accepting that with more traditional planning we can not predict the future.

By saying so, I do not mean that we need no planning or management anymore. We even need it more than ever, but with a different aim. The aim should not be to predict the future but to plan a creative process how to shape the future."

Recordar o pensamento baseado no risco que a ISO 9001 propõe: o que pode correr mal? 

Recordar os rinocerontes cinzentos e os fragilistas:

A 2 de Janeiro de 2016 escrevi em "O não-fragilista prepara-se para os problemas":

"Os fragilistas partem do princípio que o pior não vai acontecer e, por isso, desenham planos que acabam por ser irrealistas ou pouco resilientes. Depois, quando as coisas acontecem, chega a hora de culpar os outros pelos problemas que não souberam prever, não quiseram prever, ou que ajudaram a criar."

Em Julho do mesmo ano em "O fragilismo" escrevi:

"O fragilismo espera sempre o melhor do futuro, não prevê sobressaltos. Acredita que os astros se vão alinhar em nosso favor, não vê necessidade de precaução, just in case."

Trecho retirado de "The missing part for business model innovation: The process" 

"Adaptability, not efficiency, most become our central competency"

"Our struggle in Iraq in 2004 is not an exception—it is the new norm. The models of organizational success that dominated the twentieth century have their roots in the industrial revolution and, simply put, the world has changed. The pursuit of "efficiency"—getting the most with the least investment of energy, time, or money —was once a laudable goal, but being effective in today's world is less a question of optimizing for a known (and relatively stable) set of variables than responsiveness to a constantly shifting environment. Adaptability, not efficiency, most become our central competency."

Trechos retirados de "Team of Teams: The Power of Small Groups in a Fragmented World" de Stanley McChrystal e Chris Fussell

"but what really matters is succeeding"

Aprecio esta abordagem e postura, mas ao mesmo tempo faz-me impressão pensar nas organizações e instituições pesadas e prisioneiras de conceitos teóricos quando o mundo muda tanto. Recordo um texto de Nassim Taleb que dizia que os Romanos adoptavam as leis que resultavam.

"We'll then look at the leaders we've traditionally sought, and why they are perhaps an endangered species in the new environment.
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to succeed, maybe even to survive, in the new environment, organizations and leaders must fundamentally change. Efficiency, once the sole icon on the hill, must make room for adaptability in structures, processes, and mind-sets that is often uncomfortable.
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The first was that the constantly changing, entirely unforgiving environment in which we all now operate denies the satisfaction of any permanent fix. The second was that the organization we crafted, the processes we refined, and the relationships we forged and nurtured are no more enduring than the physical conditioning that kept our soldiers fit: an organization must be constantly led or, if necessary, pushed uphill toward what it must be. Stop pushing and it doesn't continue, or even rest in place; it rolls backward.
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Before we begin, a thought. There's a temptation for all of us to blame failures on factors outside our control: "the enemy was ten feet tall," "we weren't treated fairly," or "it was an impossible task to begin with." There is also comfort in "doubling down" on proven processes, regardless of their efficacy. Few of us are criticized if we faithfully do what has worked many times before. But feeling comfortable or dodging criticism should not be our measure of success. There's likely a place in paradise for people who tried hard, but what really matters is succeeding. If that requires you to change, that's your mission."

Trechos retirados de "Team of Teams: The Power of Small Groups in a Fragmented World" de Stanley McChrystal e Chris Fussell

"a problem has different solutions on different days"

"Most of us would consider it unwise to do something before we are fully prepared; before the equipment is optimally in place and our workers well trained. But as the reader will discover, that's the situation we found ourselves in. And in researching this book, we discovered that that is the situation leaders and organizations far from any battlefield face every day.
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The Task Force hadn't chosen to change; we were driven by necessity. Although lavishly resourced and exquisitely trained, we found ourselves losing to an enemy that, by traditional calculus, we should have dominated. Over time we came to realize that more than our foe, we were actually struggling to cope with an environment that was fundamentally different from anything we'd planned or trained for. The speed and interdependence of events had produced new dynamics that threatened to overwhelm the time-honored processes and culture we'd built.
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Little of our transformation was planned. Few of the plans that we did develop unfolded as envisioned. Instead, we evolved in rapid iterations, changing—assessing—changing again. Intuition and hard-won experience became the beacons, often dimly visible, that guided us through the fog and friction. Over time we realized that we were not in search of the perfect solution—none existed. The environment in which we found ourselves, a convergence of twenty-first century factors and more timeless human interactions, demanded a dynamic, constantly adapting approach. For a soldier trained at West Point as an engineer, the idea that a problem has different solutions on different days was fundamentally, disturbing. Yet that was the case."

Trechos retirados de "Team of Teams: The Power of Small Groups in a Fragmented World" de Stanley McChrystal e Chris Fussell

Pode ser a vantagem das PME (parte III)

Parte I e parte II.

Não é novidade aqui no blogue mas assim, directo ao tema, nunca é demais:

"1. Product InnovationIn markets with an abundance of brands and less and less differentiating products, product development and sourcing capabilities move back into the strategic focus of fashion retailers. It’s the key enabler for differentiation in the competitive environment. Access to deep technical expertise and unique handwriting of product groups that are critical for brand building as well as curated supplier portfolios with the true ability to drive innovation, evolve to an indispensable asset to drive top line as well as markdown and margin performance.
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2. Time to MarketIt is obvious that the speed of trends and innovation has tremendously increased over the recent years and consumers are adopting market impulses from option leaders, celebrities, and bloggers at high pace. This requires being closer to consumer needs with critical seasonal milestones on concept, design, and development for adoption of trend impulses as well as buying decisions to ensure market right products and quantities. Sourcing plays a critical role in enabling differentiated seasonal calendars based on individual product needs and a balanced mix of near shore and far east sourcing destinations.
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3. Demand & Supply ResponsivenessA significant part of end-of-seasons stock and related markdowns stems from buying and production volumes being insufficiently aligned with actual consumer demand on the shop floor and online during full price selling period. Leading retailers and brands currently make significant investments to drive end-to-end planning integration along the value chain across retail, product merchandising, material management, and sourcing/production. Main objective is to act vertical while typically not owning the different stages of the value chain down to production.
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4. Reliability and Execution ExcellenceWith shorter in-store product lifecycles, delivery reliability is more critical than ever before. A delivery delay of 1 or 2 weeks will strongly diminish sell-through performance if the overall planned lifecycle is only 8 weeks without any option to extend as following collection drops are already waiting to take the space on the shop floor. In this context, a reliable collaboration on both brand and supplier side will significantly increase importance and clearly dominate compared to short term FOB cost advantages."

Pode ser a vantagem das PME (parte II)

Escrevemos na Parte I:

"A doença que começámos a relatar aqui há mais de 10 anos começa a chegar agora às consultoras que trabalham com empresas grandes. Imaginem as transformações que estão ou vão de ter ser feitas por essas pesadas e conservadoras estruturas"

O título que se segue chama a atenção para o importante, "From Sourcing Cost Focus to True Value Creation":

"While shifting volumes to “even lower cost countries” might appear as a possible way out of the “gross margin trap” the true effects are limited.
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However, beyond production cost optimization there are much more powerful levers which are suited to build a truly differentiating answer from the product development and sourcing side for the current market challenges many brands and retailers are facing.
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Looking at current markdowns of often 15 to 25 percent of net sales this is obviously a very powerful source of gross margin improvement. Each percentage point of markdown reduction immediately translates into n equivalent in realized margin. A close alignment between product development and supplier can play a significant role in unlocking this potential by providing true consumer value and brand differentiation with regard to product innovation, time to market, reliability and execution excellence, as well as superior technical capabilities and quality."

Sublinho novamente aquilo que são sugestões deste blogue há mais de 10 anos e que serviram de base para o turnaround dos sectores tradicionais em Portugal:

"by providing true consumer value and brand differentiation with regard to product innovation, time to market, reliability and execution excellence, as well as superior technical capabilities and quality"

Pode ser a vantagem das PME

"Many fashion brands suffer from high inventories and suboptimal sell-through, which cause strong markdowns and diminishing margins. Full-price sell-throughs between 65% and 80% and stock turns above 4.0 to 5.0 have been more a rule than an exception in the past. Today both commercial fashion brands and premium/luxury brands struggle to maintain comparable levels. Often, even total sell- through falls to levels below 70%, causing inevitable margin losses from skyrocketing markdowns far beyond benchmark levels of 12% to 15%.
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Global increases of cost for apparel and footwear production have steadily continued during the last two years. Sourcing markets with stable costs are rare while the vast majority showed strong to very strong increases of production costs. This does not only affect China which has already been on a strong upward trend for many years, but also many of the typical low-cost sourcing destinations in South East Asia like Bangladesh, Pakistan, and Indonesia. Recent cost increases have been driven by both rising labor costs and strengthening local currencies in the sourcing markets versus US Dollar and Euro.
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Facing these strong cost increases in key sourcing markets, brands and retailers continue to search for alternatives in their global sourcing portfolios, shifting their production from more established yet increasingly costly regions (e.g. South-East China) to less developed but cost-wise promising regions (e.g. Western China, Myanmar, Cambodia). [Moi ici: Recordar o exemplo da Etiópia] While this is easing the pressure on the cost side in the short term, it is adding clear risk on flexibility and operational performance as well as product quality and corporate social responsibility. In addition capabilities and capacities for selected product groups are not available in the same breadth and quality, limiting the opportunity for larger shifts of volume especially of products on higher price points and with more sophisticated technical requirements.
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While shifting volumes to “even lower cost countries” might appear as a possible way out of the “gross margin trap” the true effects are limited."

A doença que começámos a relatar aqui há mais de 10 anos começa a chegar agora às consultoras que trabalham com empresas grandes. Imaginem as transformações que estão ou vão de ter ser feitas por essas pesadas e conservadoras estruturas. Depois, leiam "Never Under-Estimate the Immune System":

"Every large and successful institution has an immune system – a collection of individuals who are prepared to mobilize at the slightest sign of any “outside” ideas or people in order to ensure that these foreign bodies are neutralized and that the existing institution survives intact and can continue on course.
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But here’s the paradox: the immune system that has given large institutions extraordinary resilience in the past may be the very thing that makes these institutions so vulnerable today. In more stable times, institutional immune systems are very effective at keeping institutions focused and on course, resistant to the distractions that might lead to their downfall. In more rapidly changing and volatile signs, this same immune system can become deadly by resisting the very changes that are required for the survival of the institution.
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I’ve been involved in large scale transformation efforts for decades now and there’s only one lesson that I really have to share from all that experience: never, ever under-estimate the power of the immune system of a large existing institution. I’ve developed an enormous respect for the incredible power of the institutional immune system.
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And let me be clear. The immune system is not driven by evil people. The people who are part of the immune system are extremely well intentioned – their overwhelming desire is to contribute to the success of their institutions. That’s why they are fighting so hard and so determined to crush the foreign bodies."

Esta pode ser a vantagem das PME num mundo em que VUCA rules. Pode, porque há PME tão avessas à mudança quanto uma empresa grande.

VUCA rules!

A propósito da primeira compra do ano, acerca do último livro de Nassim Taleb:

"The problem, says Taleb, is that in modern times we have become increasingly preoccupied with prediction, and blind to the value of antifragility. As a result, iatrogenic damage (harm caused by well-meaning interventions) has become ubiquitous. ...
Taleb describes himself as a skeptical empiricist and a disciple of Seneca, the Stoic philosopher. We tend to think of the Stoics as being able to withstand life’s vicissitudes, but Taleb says they are always looking for situational asymmetries. This quest is the essence of an antifragile strategy: to identify and exploit options in which you can bet against the fragilistas with little to lose and much to gain."

Este trecho acerca da minha segunda compra do ano:

"vivid account of what happens when superbly trained and highly resourced teams that operate as part of a bureaucratic structure confront a decentralized and fluid network of underprepared and barely resourced competitors that are nonetheless fiercely aligned around a persuasive common narrative. And it offers a rich template for effective action. In the process, One Mission demonstrates precisely why 20th-century managerial innovations such as management by objectives and vertically cascading strategic alignment are doomed in an environment characterized by complexity, unpredictability, and speed." 

Em tempos de volatilidade III

Parte I e parte II.

"Our research has identified six disciplines—meaning habits, attitudes, and capabilities—that are essential for leaders to thrive in VUCA environments.
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1. Anticipate changes in the market environment by staying closely connected with customers, partners, and competitors, rather than becoming disconnected and reactive.
2. Challenge assumptions and the status quo by surrounding themselves with people who think outside the box and are open to new ideas.
3. Interpret a wide array of data and viewpoints rather than looking only for evidence that confirms their prior beliefs.
4. Decide what to do after examining their options and then exercise courage to get it done rather than waffling or belaboring the decision-making process.
5. Align the interests and incentives of stakeholders, based on understanding different views, rather than relying on their power or position.
6. Learn from success and failure by experimenting, making small bets, [Moi ici: Fragilistas, aprendei!] and mining the lessons from both the good and the bad outcomes to create quick learning cycles."

Trechos retirados de "Winning the Long Game - How Strategic Leaders Shape the Future" de Steven Krupp

 

Em tempos de volatilidade

"The present level of uncertainty is such that many leaders consider it an impediment to spending and investment. In such times it is tempting to scale back and play it safe, but strategic leaders stay focused on the future, wary of curtailing investments and plans needed to win the long game.
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“If you don’t invest in the future and don’t plan for the future, there won’t be one.” Although uncertainty need not impede investment, and entrepreneurs routinely exploit uncertainty, it still tends to paralyze many leaders and companies. There is an abundance of excellent operations managers in companies around the world, but there is an acute shortage of leaders who can think and act trategically when confronted with volatility, uncertainty, complexity, and ambiguity - that is, the world of VUCA.
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When times are stable, meaning that economic, political, social, and technological forces are reasonably predictable, leaders can formulate a straightforward plan to help execute a strategy. Their challenge in such cases is twofold: setting the right strategy and then delivering the desired results efficiently. Of these, execution will receive the most attention since the strategy is clear and stable—akin to the way a conductor executes a score in orchestral music. In a stable environment, the ability to execute consistently on a quarterly or annual basis can make a good leader great and widely admired. In times of volatility, however, the right strategy can quickly become the wrong strategy, and even flawless execution will not help. The game will have shifted from classical music to jazz, since improvisation  around broadly agreed themes is now called for."

Algo que devia preocupar os empresários das PME, o alerta para a evolução do contexto externo, a disponibilidade para ter de mudar de estratégia, para ter de alterar o modelo de negócio, para ter de ver o mundo de forma diferente... recordar este senhor:

Mentiras que passam a verdades e vice versa.

Trechos retirados de "Winning the Long Game - How Strategic Leaders Shape the Future" de Steven Krupp