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Six weeks to strategic excellence

Book cover

by The Chartered Management Institute, Hodder & Stoughton, 2003.

Abstract

The Chartered Management Institute (UK) offers a programme covering one component in each of six weeks - business strategy, staff retention, operations management, TQM, e-business, business recovery. Includes check lists, questionnaires and cartoons.

(Reviewed by Kevin Barham in November 2003)

(These book reviews offer a commentary on some aspects of the contribution the authors are making to management thinking. Neither Ashridge nor the reviewers necessarily agree with the authors’ views and the authors of the books are not responsible for any errors that may have crept in.

We aim to give enough information to enable readers to decide whether a book fits their particular concerns and, if so, to buy it. There is no substitute for reading the whole book and our reviews are no replacement for this. They can give only a broad indication of the value of a book and inevitably miss much of its richness and depth of argument. Nevertheless, we aim to open a window on to some of the benefits awaiting readers of management literature.)

The average life span of a small business is three to five years and for a large one is about 30 years. A company may be strong today but can disappear very quickly. Current success has very little sway over future success, but putting in place a strategy does, says this book. Produced by The Chartered Management Institute, it claims (ambitiously) that in just six weeks of step-by-step guidance, it will ensure you are well-equipped to cope with what the future holds and to get ahead of your competitors.

The book sets out a programme of work for each day of the six weeks, each week being presented by a different author and dedicated to one of the six major components of strategy. (Be prepared to work on Saturdays and Sundays, by the way.) The book is notable for what it believes those components should consist of in today’s business environment: strategy as learning, staff retention, operations management, total quality management, e-business strategy and business recovery planning.

Week One: Business Strategy

The first week separates strategy from planning (which it sees as having failed to adapt to the changing business environment) and redefines what organisations have to address to create an effective strategy for the future. Strategy is about what we want to do, what we want our organisation to be and where we want it to go; is therefore about shaping the future. A strategy should distinguish an organisation from its competition, make people sit up and take note, capture the imagination and commitment of the workforce, and have a significant impact on the market. In the 1970s and 80s the business adage was: ‘If it ain’t broke, leave it alone’. Rapid change in the business environment now means that the adage has switched to: ‘If it ain’t broke, break it anyway and start again’.

Some major strategy models are briefly considered (including, for example, Porter's Five Forces model, the McKinsey/GE matrix, and the BCG growth/market share matrix). The models, says the book, still have a role to play but they do not give the whole picture because they can’t predict the future with any certainty. They focus on products, markets and resources but not on generating values and capabilities for the future. What companies are good at today probably will not be the critical success factors of tomorrow. Models become formulas for success concerned with maintaining the current situation rather than frameworks for reflection and for questioning about where to go next. They require an intensity of effort that locks the organisation into set processes and prevents the organisation adapting and changing direction.

The key factor in formulating strategy is strategic thinking; creating problems and setting challenges which take the organisation down a different path from that of the past. This requires replacing a risk-averse culture with one where new ideas are encouraged and positively assessed, working back from the future to the present, and reinventing the organisation where necessary so that individual learning and development are at the heart of strategy and the rewards for individuals are geared to it.

A new strategic approach is needed that integrates organisational developments and goals with the personal values of learning, improvement and employability. The key is to align organisational with personal development tools. Making learning work for the individual is an important first step - organisational learning will not happen without it. The book recommends some emerging CPD's (continuing professional development schemes) as one way forward and points the reader to the CMI’s own scheme. This is built around two learning tools: the ‘Smart Management Assessment’ questionnaire which investigates your ability across general management areas and the ‘Smart Skills Benchmarks’ which diagnose your performance on a wide range of management skills. Both these tools provide feedback and offer practical learning and development advice. A third tool - ‘Smart Learning Assessment’ - examines your learning and application of new skills and their impact in the workplace.

Week Two: Staff Retention

It is noteworthy that the book positions the retention of valuable people as a top, if not the top, priority for strategic success. This is all about keeping those members of staff who you want to keep and not losing them, especially to the competition (the other book reviewed this month calls them the ‘80/20’ employees). To do this you need to understand what these individuals want and also how organisations and work are changing (this includes concern about the work/personal life balance and giving staff freedom in the way they work and where they work). Analysis, assessment and measurement will help you put in place retention strategies that will satisfy both staff and organisations. The costs associated with both staff turnover and staff retention need to be understood - failing to do anything about retention can be very costly indeed. A variety of people should work together and accept joint responsibility. Managers, team leaders and HR specialists all need to understand their role in staff retention.

Traditional views of staff retention are no longer possible - organisations can’t offer long-term employment for all and long service does not equal commitment and loyalty. It is the quality not the quantity of staff that is retained that is important. Staff turnover is not always negative. Rather than recruit and retain, the emphasis should be on attract, recruit, induct, develop, reward, retain and then separate. Separating positively can result in staff being positive about the organisation.

The organisation needs an action plan which sets specific objectives for staff retention, continually assesses and analyses the causes of staff turnover (through exit interviews or questionnaires, for example), and then takes action to retain staff. It is important to remember that staff retention begins long before recruitment and depends on whether the organisation has a good reputation and is somewhere that people want to work.

Week Three: Operations Management

The third week shows that managing operations is a vital part of every organisation and involves every one from the top to the lowest paid worker. This week considers such issues as volume versus variety, managing quality, project planning and control, managing people, and the role of computers in operations management. Many of us spend our working lives fire-fighting rather than fulfilling the job we are paid to do. We fall into the ‘Titanic Management’ trap because we are too busy to see the iceberg approaching. To survive, organisational strategy must incorporate operations management principles and practice. Organisations must remain customer and not product oriented. The strategic challenge facing operations management requires the operations side of the organisation to become its central hub, ensuring products and services are second to none. At the same time organisations must ensure that their external links with customers are strong enough to obtain specific, measurable, accurate, relevant and timely feedback that can be used to make improvements and ensure customers remain loyal.

Week Four: Total Quality Management

Quality means delighting the customer by continually meeting and improving upon agreed requirements. Customer power now reigns supreme. The old common law principle ‘let the buyer beware’ has now become ‘let the seller beware’. TQM is essentially a change agent to take us from our present culture to a new management culture based on the customer and continuous improvement. So this week we look at:

  • Assessing the need for TQM (using questionnaires to assess the perceptions of the organisation by customers, suppliers and employees and to assess teamwork and attitudes to quality and communication).
  • Planning for success (establish a planning team and a business plan for quality).
  • Providing the environment (by breaking down the barriers to communication and finding new ways of managing, working and thinking - such as making goal setting a collaborative process between management and employees).
  • Providing the process (ensuring the basic toolkit of TQM is fully utilised by managers and their teams and measuring the performance of our work processes rather than the people engaged in them).
  • Supporting the process (changing management behaviour - for example, rather than telling them what to do, ask for and listen to the views of those most heavily involved in implementing improvement throughout the organisation).
  • Ensuring success (this depends on the organisation keeping score through process reviews and audits, on constancy of purpose and enthusiasm, on a growing customer orientation and on continuously updating the benchmarks for success).

Week Five: E-Business Strategy

Digital TV is now a reality; anyone with a TV set will shortly be able to access the Internet, not only for information or entertainment purposes, but more importantly as a means of making purchases. Over the next few years a complete online retail environment will develop that will be accessed by your customers through the TV set, where they can make purchases as freely as they do in the high street. Any business that does not prepare for this new online marketplace will be left behind by their competitors. In this penultimate week, in addition to considering a range of e-business case studies, you learn how to implement an e-business strategy, choose an electronic shop front, consider your legal position, and understand your business’s place in this global market.

There is a misperception that e-business is a large and expensive undertaking only suitable for large firms. In fact, says this book, it can be as inexpensive as you would, like to make it. The Internet is a level playing field - you can compete with all your competitors, not only those in your niche. Competition is no longer defined by the advertising budgets that large firms can wield. With e-business you can dramatically cut costs and streamline your administration as processing and billing are done electronically and simultaneously.

The book looks at a variety of electronic shop fronts. The important thing is to build a website that is not only attractive but also functional - it should not stand in a customer’s way when they want to make a purchase.

Any firm that trades on the Internet must provide adequate levels of security for itself as well as for its clients. Although the Internet can provide higher levels of security than traditional retail outlets, it is still a matter of great concern for most would be online consumers and has held back the development of e-business. By enhancing your security features you can increase your own confidence and extend that confidence to your customers. The areas that need particular attention are ensuring security when payments are made, the available forms of encryption that can be employed on your website, and how you can protect your website from attack from outside of your organisation. As customer confidence grows, security issues will take a back seat allowing companies to concentrate on selling their goods and services.

With the advent of e-business, many firms find they are selling to a global market. Order fulfilment and logistics are fundamentally important aspects of e-business. An e-business must ensure it has the required inventory to supply the goods and services displayed on its website, and an effective and efficient delivery mechanism with a reliable carrier. It must track each order with enough detail to correct any mistakes that have been made and it must have an effective returns policy.

The Internet is global so always develop your website for a global audience. Although the UK did not join the Euro, every business should be considering how it will handle the Euro - will you be making and/or receiving payments in Euros? Do you need a Euro account now? You should also consider that your goods and services will attract taxation so be aware of your liability as you move into an e-business arena. Clarify your legal position (on copyright, intellectual property rights, contracts, data protection, consumer protection, etc.) as much as possible - in particular, the legal requirements of the different markets around the globe that you are selling to.

An e-business action plan should consist of the following:

  1. Start thinking and asking questions about how you are going to exploit the Internet.
  2. Build your team - it needs skills that cover all the parts of your business.
  3. Educate the rest of your company in what the Internet means for their part of the firm.
  4. Educate your partners and customers.
  5. Assess your market.
  6. Modify your distribution channels.
  7. Streamline payment systems.
  8. Consider your customer support strategy - how can you make your e-business one of the best assets your business has?
  9. Assess your products - can you develop new products to sell on the net? Can existing products be modified to give them a unique web added value?
  10. In-house design or outside contract? You know your business in depth but a design agency will have a deeper understanding of the technical aspects of the Internet.
  11. Consider costs - hardware, content, and human resources.
  12. The launch.

The important message from this week is: Act now - the Internet will wait for no one.

Week Six: Business Recovery Planning

The final week very much reflects heightened concerns about security and sudden catastrophe in a post 9/11 world. Every business needs to think about what it would have to do to recover from misfortune or disaster - whether this might come from the weather, theft, terrorist action or the loss of key employees. The business recovery plan maps out all the activities that need to take place in the event of a disaster and guides people on where to obtain information or help. All the key people in the firm need to be aware of the plan and how to access it. At least one copy of the plan should be stored away from the business.

To develop the plan, you need to map out the components of your business (e.g. orders, sales, distribution, services, accounts) and assess where you are vulnerable (for example, what would you do if your best/only salesperson were run over by a bus?) The book lists a whole range of potential threats from natural disasters to sabotage of IT systems and invites you to calculate the risk of any of them happening to your business. The plan needs to consider key people, key systems, the special needs of IT, and practical preparations (e.g. identifying potential members of the recovery team and communication). Apart from improving your chances of surviving a disaster, other benefits of the plan are that it may help to reduce insurance premiums and that it may reassure investors that their money is safe. It is important to test the plan - it will be informative even if the situation is a make-believe one.

Achieving strategic excellence in just six weeks is a very tall order. However, there is a lot of material in this book that could help you start the journey (although an index would have been useful). There are lots of checklists, questionnaires (and cartoons) along the way. And the chapter on business recovery planning seems particularly valuable. Definitely worth a visit. (Of course, if you don’t want to work on weekends, you’ll have to add another twelve days to the six weeks.)

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