Category / Strategy

by Roger Dennis

Breaking paradigms – a science story

This article from The Guardian is a long, but excellent read about the health impacts of sugar.  However the story also examines something fascinating – how paradigms change in science:

In a 2015 paper titled Does Science Advance One Funeral at a Time?, a team of scholars at the National Bureau of Economic Research sought an empirical basis for a remark made by the physicist Max Planck: “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

 The researchers identified more than 12,000 “elite” scientists from different fields. The criteria for elite status included funding, number of publications, and whether they were members of the National Academies of Science or the Institute of Medicine. Searching obituaries, the team found 452 who had died before retirement. They then looked to see what happened to the fields from which these celebrated scientists had unexpectedly departed, by analysing publishing patterns.

What they found confirmed the truth of Planck’s maxim. Junior researchers who had worked closely with the elite scientists, authoring papers with them, published less. At the same time, there was a marked increase in papers by newcomers to the field, who were less likely to cite the work of the deceased eminence. The articles by these newcomers were substantive and influential, attracting a high number of citations. They moved the whole field along.

In organisations – large or small, formal or informal – it’s easy to get caught in paradigms.  New thinkers, young people and contrarians are essential in challenging accepted assumptions, and for the development of robust thinking that doesn’t fall into the trap of delivering the same outcomes.

Even when confronted with clear evidence that the paradigm is wrong, experts have trouble accepting this, and refute their own work, as evidenced by this other gem from the same article:

The National Heart, Lung and Blood Institute decided to go all in, commissioning the largest controlled trial of diets ever undertaken. As well as addressing the other half of the population, the Women’s Health Initiative was expected to obliterate any lingering doubts about the ill-effects of fat.

It did nothing of the sort. At the end of the trial, it was found that women on the low-fat diet were no less likely than the control group to contract cancer or heart disease. This caused much consternation. The study’s principal researcher, unwilling to accept the implications of his own findings, remarked: “We are scratching our heads over some of these results.” A consensus quickly formed that the study – meticulously planned, lavishly funded, overseen by impressively credentialed researchers – must have been so flawed as to be meaningless.

Just to emphasise this again: The study’s principal researcher was unwilling to accept the implications of his own findings.

This case study should make it into the leadership manual of every CEO when working with their strategy teams.

Source: The sugar conspiracy | Ian Leslie

by Roger Dennis

Strategy from machines and people

The HBR online has published an intriguing piece about the formation of strategy from a combination of information synthesised by people and machines.  In essence, it’s saying that some parts of strategy formulation should be informed by rules (i.e. data) and others by intuition (i.e. people).  the concept is nicely encapsulated in the graphic below.

An integrated strategy machine is the collection of resources, both technological and human, that act in concert to develop and execute business strategies. It comprises a range of conceptual and analytical operations, including problem definition, signal processing, pattern recognition, abstraction and conceptualization, analysis, and prediction. One of its critical functions is reframing, which is repeatedly redefining the problem to enable deeper insights. Within this machine, people and technology must each play their particular roles in an integrated fashion.

 

1 W160331_REEVES_INTEGRATEDSTRATEGY_final-850x634

Source: Designing the Machines That Will Design Strategy

by Roger Dennis

The implication for macro scale innovation cycles

This is a fascinating and long read about where the world is going to in regards to the next wave of innovation.  It’s also insightful when considering where innovation will focus in the coming years:

Intrapreneurship and skunkworks are replaced by internal innovation processes which, while ineffective at producing radical innovations, allow controllable and measurable sustaining innovation. Money that would have been spent financing external innovation is redirected back to corporate development and, perhaps, even corporate controlled research labs.

These sorts of controllable and measurable innovation processes are already taking hold, both inside and outside the corporate world. It’s no coincidence that the buzzwords in innovation the last few years have been ‘lean’ and ‘customer development.’ While these both claim to be new discoveries, they are actually old practices that fell out of favor during the installation period because they aren’t suited to radical, fast-moving innovation; they only work when innovation is slower and more predictable: Steve Jobs could not have used customer development to create the Apple computer; Henry Ford’s quip that if he asked his customers what they wanted they would have said “a faster horse” are both acknowledgements of this.

The hallmark of a new technological revolution is that the innovation trajectory is unknown: lean doesn’t work on early adopters because they will use anything novel (i.e. the Altair as an MVP was pretty well useless in predicting what mainstream customers would want in a personal computer); customer development doesn’t work when you’re developing a general purpose technology. In general, you can’t iterate your way to radical innovations, almost by definition.

Source: The Deployment Age | Reaction Wheel

by Roger Dennis

Cities, companies and innovation

Geoffrey West is a physicist by training, but has crossed over into theories of biology, and then to theories about cities.  More recently he has started to look at companies, and some of his research is illuminating with respect to the need for innovation in organisations.

His observation about cities is that they need diversity in order to grow, and companies need similar:

“…in what way can you make a company more like a city?” West asks. “You allow at least part of it to be a little more organic, to grow in a natural way, and let it be much more open to having mavericks, naysayers, and people with odd ideas hanging around. Allow a little bit more room for bullshit. You need some mechanism to somehow break this straitjacket that big companies take on as they grow.”

You can get further context from the full article here:  The Fortune 500 Teller

by Roger Dennis

Scanning to stop being ‘Ubered’

Over the last couple of years, and connected to the work on Sensing City, I’ve been advising Infratil on technology advances that could disrupt their business or provide opportunity.  This was referenced in the annual meeting where the Chair, Mark Tume said

…the challenge was to stop their investments from energy to the retirement sector getting “Uber-ed” or being able to “Uber” some else, in a reference to the Uber taxi service. Infratil would not be able to recognise the next Uber, Tume said and it was “incredibly difficult” to pick winners in new technology.

But Infratil’s board and management had to be open to the risks and how to react.  “So we don’t act like possums in the headlights” he said.

For example, Infratil had seen the rapid rise of solar power in Australia and the potential for new battery technology which would change the power sector landscape.

“The one I’m scared of is the one that blind-sides you”

Many organisations are increasingly susceptible to being blindsided, but only a few – like Infratil – have the foresight to seek to understand the risks and opportunities.

 

Full article here.

by Roger Dennis

strategy and business article: 20/20 Foresight

strategy and business have published a very readable article with specific tips for developing foresight capability, and it’s well worth the five minute read:

Many business leaders need to improve their perceptual acuity. Here’s how you can develop the ability to look around corners — and become a catalyst for change.

Source: 20/20 Foresight

by Roger Dennis

Linking strategy and innovation (article)

I’ve posted previously about the need to link foresight to strategy to innovation, but rarely seen concise articles that elaborate on this.  Strategy and Business has just posted one, and it’s worth looking at.  Here’s the first section of the article:

Strategic planning is different from innovation. When developing a strategy, you decide what your activities will be in the future, and you have to stay true to your predetermined course to see results. Furthermore, your plan includes a set of activities that you know how to do. But with innovation, your course of action is inherently unpredictable, and you know in advance that you’ll have to learn to do things that you don’t yet know how to do. Only after your innovation succeeds will you know what those things are.

That’s why your business strategy and your innovation practice must be kept apart: otherwise, the consistency of your plans may constrain your creativity and verve, and the surprises of innovation may distract you from your plan. At the same time, your strategy and innovation must also be aligned, or your organization will be incoherent and risk dissipating your efforts. So how can you integrate strategy and innovation, but still keep them separate?

The answer is simple in principle, but hard in practice. You probably have an annual strategy cycle of some kind; in most cases, the corporate office gives guidance to each unit, and then each unit maps out a strategic plan for the next one to five years. It is during this strategy cycle that you must ask the leaders of each unit to do two things:

1. Come up with a plan over the coming year for what that business unit knows how to do. This will involve about 99 percent of its time and activity.

2. Identify one or more innovations that the unit’s team would most like to tackle over that same year.

Source: The 1 Percent Innovation Solution

by Roger Dennis

Linking strategy to innovation – short article

From strategy and business comes a quick read about the links between innovation and strategy.  It misses the link between foresight and strategy, but makes it’s point well:

Strategic planning is different from innovation. When developing a strategy, you decide what your activities will be in the future, and you have to stay true to your predetermined course to see results. Furthermore, your plan includes a set of activities that you know how to do. But with innovation, your course of action is inherently unpredictable, and you know in advance that you’ll have to learn to do things that you don’t yet know how to do. Only after your innovation succeeds will you know what those things are.

Source: The 1 Percent Innovation Solution

by Roger Dennis

The importance of vision (McKinsey article)

Again from the McKinsey Quarterly comes a useful article about the challenges faced by new entrants to C-level positions. Of note was the reference to the difficulty of creating a shared vision:

When asked about different aspects of their transitions, executives rank business-related activities among the most important to the transition’s overall outcome. The largest share say it was very or extremely important to create a shared vision and alignment around their strategic direction across the organization (Exhibit 2). This is also among the most difficult aspects to carry out: just 30 percent of all respondents say it was easy to create a shared vision in their new role.

This has been an extremely important piece of the work that I have assisted the Canterbury DHB with over the last seven years, and has been one of the keys to the successful transformation programme (for more detail see here).

Visions are not created by black and white typing on a Powerpoint slide, neither are they broadcast down from a stage.  The best visions are co-created with the people that work in an organisation in such a way that they share ownership, and feel like they are part of something bigger.

This directly links to some previous work – also from Mckinsey – about strategy co-creation which you can read about here.

 

Source: Ascending to the C-suite | McKinsey & Company

by Roger Dennis

The eight essentials of innovation (McKinsey article)

The most recent McKinsey Quarterly has a concise article that sums up a multi-year research project by the organisation.  As the title suggests, it breaks the findings into eight areas.  While the article is rich in highly quotable insights, the one below caught my attention:

Innovation also requires actionable and differentiated insights—the kind that excite customers and bring new categories and markets into being. How do companies develop them? Genius is always an appealing approach, if you have or can get it. Fortunately, innovation yields to other approaches besides exceptional creativity.

The rest of us can look for insights by methodically and systematically scrutinizing three areas: a valuable problem to solve, a technology that enables a solution, and a business model that generates money from it. You could argue that nearly every successful innovation occurs at the intersection of these three elements. Companies that effectively collect, synthesize, and “collide” them stand the highest probability of success. “If you get the sweet spot of what the customer is struggling with, and at the same time get a deeper knowledge of the new technologies coming along and find a mechanism for how these two things can come together, then you are going to get good returns,” says Alcoa chairman and chief executive Klaus Kleinfeld.

(Source: The eight essentials of innovation | McKinsey & Company )