Editor’s Note:  If you are interested in becoming an expert on Innovation Management, take a look at Flevy’s Innovation Management Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

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Humans inherently connect to each other in an indigenous context, generate knowledge, and develop a product to be disseminated by way of commerce.  Traditionally, Global Innovation practice has seen assembling of people with vital capabilities and essential knowledge via co-location.

Co-location is the gathering of Innovation specialists into a handful of Innovation centers, domestically and in prime markets.  The innovative products and/or services created by them are then dispersed to markets throughout the globe.

However, as the array of knowledge required for Global Innovation becomes extensive and diverse, co-location has become inadequate.  Today’s dynamic and shrinking world necessitates taking an expanded approach to Innovation Management.

Most of the organizations have not been able to sufficiently internationalize their Innovation Strategies to make use of the multifaceted knowledge scattered world-wide; knowledge necessary for present-day products and services.

Cause of failure is the generally accepted but perceived trade-offs listed below.  The challenge is to surmount these trade-offs, which research has shown is possible.

1. Approval vs. Disapproval
2. Autonomy vs. Control
3. Capability vs. Motivation
4. Attraction vs. Interest
5. Achievement vs. Potential

Most companies leverage their international networks just to engage in mundane tasks, and are unable to make use of opportunities for Global Innovation to gain Competitive Advantage.

Let us go into some detail of these tradeoffs.

Approval vs. Disapproval

When pitched generally, the idea of taking Innovation to the global level is agreed to by everyone across the organization.  When the task is directed towards a specific entity or specifics of it are assigned, Disapproval ensues.

Autonomy vs. Control

This is the trade-off between granting local autonomy vs. losing centralized control over the Innovation process.  Reason for such interpretation is the inability to consider knowledge and power separately.

Capability vs. Motivation

A singularity exists where companies with elevated Innovation Capability exhaust their enthusiasm for Global Innovation.

Attraction vs. Interest

Taking Innovation to the global scale often necessitates partnerships.  Such partnerships typically present the predicament that the more desirable the probable partner appears, the less those feelings are reciprocated.

Achievement vs. Potential

There is a trade-off between the over-emphasis on historical achievements vs. the potential for future achievements, as over-reliance on what has worked in the past will hinder Creativity required for a new environment.

Effective Global Innovation of products and services has the hallmark of unrestricted reciprocity of unstated knowledge between people scattered around the world.  Such an evolution can be achieved by optimizing 3 diverse aspects of Innovation, generally simultaneously.

The 3-prong approach to Global Innovation Strategy that overcomes the Global Innovation trade-off of Knowledge Complexity vs. Global Dispersion comprises of:

1. Compact & Agile Innovation Footprint
2. Capabilities & Structures for Communication
3. Internal & External Collaboration

Universal principles of Global Innovation Strategy keep evolving for making each of these attributes work, based on the experience of numerous entities.

Let us delve a little deeper into the 3 principles.

Compact & Agile Innovation Footprint

This relates to the quantity of tangible sites in an Innovation network.  Only that number of physical sites should be included in an Innovation network which are able to add exclusive and discerned knowledge.

Capabilities & Structures for Communication

This aspect has to do with overcoming the challenge of distance, time, and culture when taking Innovation to the global level.

Communication is a momentous challenge when there is distance, time, and culture difference.   Developing a culture of open knowledge-sharing is vital for taking Innovation to a global scale.

Internal & External Collaboration

This aspect looks at collaboration protocols for co-located sites versus globally dispersed collaboration.

Interested in learning more about Global Innovation Strategy?  You can download an editable PowerPoint on Global Innovation Strategy here on the Flevy documents marketplace.

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To be competitive and sustain growth, we need to constantly develop new products, services, processes, technologies, and business models.  In other words, we need to constantly innovate. 

Ironically, the more we grow, the harder it becomes to innovate.  Large organizations tend to be far better executors than they are innovators.  To effectively manage the Innovation process, we need to master both the art and science of Innovation.  Only then can we leverage Innovation as a Competitive Advantage, instead of viewing Innovation as a potential disruptive threat.

Learn about our Innovation Management Best Practice Frameworks here.

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– Roderick Cameron, Founding Partner at SGFE Ltd

Potential opportunities always surround leaders.  It is up to them to pounce on those or regret overlooking them, when someone else takes advantage of them.

Leaders’ personal beliefs and assumptions often clash reality.  The trait is categorized as “confirmation bias” in Psychology, where individuals pick the data that supports their existing opinions and approaches and doubt information which defies their mindsets.  Leadership needs to develop themselves to the level to consider the slight hints of the opportunities surrounding them.

There are 10 hidden strategic opportunities that—exist in all businesses and geographies but—are often overlooked by the leadership due to personal biases.  These opportunities go unnoticed because they are often disguised in the form of anomalies and contradictions to leaders’ existing beliefs and assumptions.  It’s up to the leaders to control personal bias; explore anomalies; and develop capabilities to uncover and seize these 10 Hidden Strategic Opportunities before rivals do.

In this article, we will discuss the first 3 strategic opportunities.

Opportunity 1: Assuming a product already exists, but actually it doesn’t.

Most people assume that a certain product already exists.  Its only when an organization ventures into that segment—with a new value proposition—that people realize that there was a void there.  Such gaps are there in almost all industries, but only visionaries are able to recognize and capitalize on them—through innovation and creative product development.  A number of well-known inventions—e.g., tablet computers—were thought to have already existed, but actually didn’t.

For instance, Kate Brosnahan, accessories editor for Mademoiselle magazine, realized in the 1990s that the handbag market lacked stylish yet economical functional bags.  The market at the time was replete with expensive but impractical bags from top designers and functional bags deficient in style.  Kate left her job and founded Kate Spade LLC, with her partner Andy Spade.  Together they began creating fabric handbags which were practical as well as trendy.  Soon, their products started getting appreciation from customers, including media icons.

Opportunity 2: Customer Experience should be anything but strenuous, costly, or irritating (but most of the time it is).

Fragmented and delayed customer experience results in customer churn.  Annoyance caused by poor Customer Experience presents potential strategic opportunity to win customers by fixing it.  They are able to see the bigger picture and strive hard to relieve customers’ aggravation and offer exemplary Customer Experience.

For instance, creation of Netflix Inc. was the result of Reed Hastings having to pay a fine of $40 as late fee for a rented video cassette he had lost.  Leading organizations, such as Netflix, offer quality offerings and provide their customers seamless, quick, and pleasing experiences.

Opportunity 3. An item is often priced low only because not many people know about it.

Hidden merits of a location offers an opportunity for sharp people to invest in for future appreciation.  One of the reasons for inexpensive resources or items is the lack of their awareness and cognizance of their true potential among people.  When people recognize the potential of a property or resource, its price rises steeply.

Interested in learning more about the other hidden strategic opportunities?  You can download an editable PowerPoint on 10 Hidden Strategic Opportunities here on the Flevy documents marketplace.

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– David Coloma, Consulting Area Manager at Cynertia Consulting

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– Roderick Cameron, Founding Partner at SGFE Ltd

Tourism is a key element in creating an impetus for financial growth across the globe.  The sector was providing jobs to around 260 million people and contributing to over 10% in global GDP, based on 2010 numbers.  These numbers will grow in future.

However, these financial benefits do not occur without costs that have the potential to destroy popular destinations and disrupt tourism.  Costs—or adverse effects—of travel involve:

• Massive carbon footprints produced by air travel
• Changes in the clean environments due to human footprint
• Degradation—or obliteration—of ecology because of travel
• Climate change happening across the world—e.g., unpredictable weather, mounting sea levels, or land turning into deserts.

Tourism Research by UK’s Devon County Council reveals that tourists were considerate of environment when booking their travel, and were willing to pay more for green tourist destinations.  Tour operators, in turn, now regularly rank destinations based on their green services and products, and demand higher green standards from tourist resorts.

However, still a large majority of resorts, hotels, and tourist destinations fall behind in terms of environmental sustainability, green standards, and services.  Some are only hinging on marketing tactics, glossy brochures, and eco-friendly language.  These destinations are only eyeing near-term gains, and are at a high risk for draining their resources, environmental degradation costing fortunes to repair, and losing a sizable potential customer base.

Tourist destinations are facing critical environmental issues—e.g. clean water, carbon emission, protection of biodiversity, and waste reduction / disposal.  These issues necessitate commitment from all stakeholders and having proper structures and systems—i.e. regulations, stakeholders’ education, funding, marketing, and public relations—to regulate and promote Sustainable Tourism.

Above all, confronting these issues demand a coherent, carefully-crafted Green Tourism Strategy.  The challenge to devising a Green Tourism strategy is the uniqueness of each destination—in terms of culture, ecology, resources.  Thus, each destination warrants a bespoke strategy encompassing 3 key phases:

• Appraising Environmental Health
• Plotting the Green Journey
• Implementing the Green Strategy

Let’s take a closer look at the first 2 phases.

1. Appraising Environmental Health

The first step to devising a Green Tourism Strategy entails carrying out a thorough baseline analysis of the existing environmental health status of the tourist location, to outline its strengths and weaknesses.  This should encompass Benchmarking the site’s performance in comparison to global environmental best practices and defining what needs to be done in the near as well as long term (key initiatives), in the order of their importance for the destination.

2. Plotting the Green Journey

This phase entails defining the vision for Green Tourism and taking into account the objectives to realize that vision.  The vision enables the policymakers to plan and choose the measures to be taken to maintain the sustainability of the destination.  These measures fall into 2 categories:

• Preventive measures—meant to inhibit or avert any damage to the surrounding ecosystem of the destination. These initiatives are aimed at finding and employing cost-effective solutions and technologies rather than using modern technologies.  These initiatives suit locations with limited funds.
• Radical measures—meant for those destinations that are financially sound and want to maintain their status of being leaders in green tourism. These sites are always ready to adopt cutting-edge technologies to safeguard their eco-friendly status.

Interested in learning more about the key phases of Green Tourism Strategy?  You can download an editable PowerPoint on Green Tourism Strategy here on the Flevy documents marketplace.

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“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Editor’s Note: If you are interested in becoming an expert on Strategy Development, take a look at Flevy’s Strategy Development Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

What makes companies great in their industries is sustained above-average Growth.

Conventional approach to Organic Growth has business leaders extending their existing product lines and brands, as well as entering new geographic regions.  This conventional Growth Strategy at some point in time starts failing to provide the results required to hold market leadership positions.

Focus-driven Growth is an approach that provides results regardless of the economic environment.  The approach demands that the leadership team keep a methodical approach that covers the entirety of the business cycle i.e., from Strategic Planning and Strategic Vision to Strategy Execution and Performance Management.

Outwardly mature businesses can be reinvigorated by making a small number of—but larger—bets and by concentrating unremittingly on implementing a straightforward but forceful vision.

This approach has been successfully tested and has proven its mettle in at least 3 well-known companies, on 3 continents, over a span of 10 years.

Focus-driven Growth demands that the organization progress sequentially through a set of 7 steps.

1. Discovery—Through a Discovery process, determine what works and what does not for the organization.
2. Strategy—Through the Strategy step, group and prioritize what works for the organization.
3. Vision—By outlining a Vision statement, line up organizational efforts behind an unmistakably comprehended goal.
4. People—Through this step, place the right people in all functions and give them their required resources.
5. Execution—Through Execution, elucidate who does what and transfer decision making closer to customers and consumers.
6. Organization—Through the Organization process, manage the Growth initiative by establishing communities and networks throughout the organization.
7. Metrics—Through this step, keep a track of Growth with objective yet uncomplicated scorecards.

When taken collectively in the right order, these steps embody a formidable prescription for generating profitable Growth.

Let us delve a little deeper into some of the steps.

Discovery

Every organization has segments of Growth areas.  This step entails discovering those areas for further processing.  Leadership of the organization should gather in a series of workshops and identify which areas of the business are performing far better than the others.  Identified segments become the focus areas of Growth because it is easier to refine and enlarge the successful areas rather than remedy what is not working.

Strategy

Focus areas discovered in the 1^st step need to be grouped and prioritized in order to delineate the focused bets that the company ought to make.  Focus areas may be categories, brands, geographies, platforms, that are doing well.

A single page preliminary strategy roadmap giving priority for each area results from the above process.

Vision

Outcomes of Step 2 have to be summarized into a forceful yet uncomplicated Vision which serves to align efforts behind a clearly grasped goal.

Interested in learning more about Focus-driven Growth?  You can download an editable PowerPoint on Focus-driven Growth here on the Flevy documents marketplace. 

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“Strategy without Tactics is the slowest route to victory. Tactics without Strategy is the noise before defeat.” – Sun Tzu 

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics. Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy. Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations. 

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Research by PwC indicates that leading companies are in a near perpetual state of Reorganization.  This upsurge in Organizational Design initiatives is owing to the accelerating pace of strategic change caused by disruption of industries, changing competitor landscape, customer behaviors, and distribution channels.

Companies opt to commence efforts to restructure their organization in the hopes of enhancing efficiency, perpetuating growth, and surviving in future.  Some shift their Business Models, few alter their focus from products to customer-centric; whereas others adopt new behaviors, systems, or IT architecture.  However, merely a quarter of the Organizational Design initiatives succeed in achieving their anticipated objectives.

The reason for this high failure rate is simple.  Reorganization is not about changing a company’s organogram.  It’s a methodical processes that necessitates transforming / streamlining the decision-making process, mindsets, talent pipeline, reward structures, reporting lines, and the way responsibilities are assigned.

There is no cookie-cutter approach to Reorganization that can work across all organizations.  However, research and management best practices reveal 10 principles that are critical for developing an effective Organizational Design, applicable to any enterprise:

1. Don’t get caught in past Reorganization initiatives
2. Consider Organizational Design elements
3. Transform Organization Chart in the end
4. Don’t overlook top talent
5. Converge attention towards controllable factors
6. Encourage responsibility
7. Use best practices with care
8. Harmonize organizational hierarchy with Strategic Objectives
9. Give due emphasis to intangible elements of organization
10. Make efficient use of company culture and practices

Let’s dive deeper into these guiding principles.

1. Don’t Get Caught in Past Reorganization Initiatives

Leaders at most organizations tend to keep discussing and focusing on the old reorganization initiatives.  This takes away much of their time and energy which should rather be spent on making the current Organizational Design a success.

Organization Design should be created on the basis of an enterprise’s sense of purpose, strategy, core competencies, products, competitive advantage, and experience offered to customers and employees.  Senior leaders need to be able to see the broader perspective, set clear organizational objectives, and steer the workforce to achieve their personal as well as organizational objectives.

2. Consider Organizational Design Elements

Reorganization is a complex undertaking, but a structured approach to Organizational Design assists in identifying and prioritizing key priorities.  Organizational Design has 8 fundamental elements that are important for all organizations, Business Models, sectors, or regions.  These elements can be categorized into 4 pairs.  Each of these 4 pairs constitute a formal (tangible) and an informal (intangible) element:

• Decisions team up with Norms (the way people act).
• Motivators (the way people are influenced to work) pair with Commitments (what affects people’s thoughts about work).
• Information (the way data is processed) pairs with Mindsets (how people process knowledge and meaning).
• Structure (reporting lines) pairs off with Networks (how people collaborate).

Leaders should select fewer, prioritized Organizational Design elements to work on that have the most impact on their organizations.

3. Transform Organization Chart in the End

Most leaders consider Organization Structure to be the most critical element to Business Transformation.  In reality, there are other key organizational elements that need to be tackled first to improve effectiveness.  Revisiting the organogram does not have much effect on the way business is done—or to improve it.  Structure depicts reporting lines and changing it can reduce costs temporary.  Changing structure alone—without transforming other organizational elements—allows the redundant reporting lines to reappear and put the organization back to its earlier state of affairs.  Instead of changing the organogram, core organizational issues should be prioritized and confronted first.  Structure will adjust accordingly once the issues resolve.

4. Don’t Overlook Top Talent

Top talent often go unnoticed when it comes to Reorganization.  The skills and traits of the senior leadership has a profound impact on Organizational Design.  Mapping of technical capabilities and leadership abilities of top leadership is an important step to Reorganization.

Interested in learning more about the guiding principles critical for Organizational Design?”  “You can download an editable PowerPoint on 10 Principles of Organizational Design here on the Flevy documents marketplace.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Most organizations aren’t ready to deliver great Customer Experiences across all channels.  Many of them have invested heavily in conventional methods of doing business, backed by in person or over-the-phone customer experience.  This has led to creation of siloed operational structures within companies, where each silo operates individually.

With the advent of digital channels, these organizations set out to use and proffer their services via digital channels.  They did this by creating discrete digital-product groups in their existing operational infrastructure.  However, their siloed infrastructure falls short of meeting customers’ requirements in terms of seamless communication and interaction across all channels.  The reason being:

• Customers’ utilization of multiple channels and touchpoints across Customer Journeys.
• Requirements of personalized services / products by the customers.
• Anticipation of impeccable coordination and communication by the customers no matter how they interact with the business.

This necessitates the businesses to not only provide great Customer Experiences at each channel, but also make the transitions across these channels simple to improve the overall Customer Experience (CX). However, improving the overall Customer Experience isn’t that simple a feat, especially with silo-based operational infrastructures.  Providing consistent amazing Customer Experience warrants:

• Creation of a robust operational ecosystem through Transformation of internal operations, to respond quickly to customers’ expectations.
• Meticulous design and delivery of Customer Experiences.

Most organizations understand the significance of Transforming their Customer Experience—however, they lack the direction and support required to realize this goal. Organizational leadership can make use of the Customer Experience Pyramid to guide their CX Transformation.

The Customer Experience Pyramid is an empirical research based framework, which is quite effective in not only improving individual touchpoints but streamlining the entire Customer Journeys.  The CX Pyramid entails 2 core dimensions:

• Focus Areas – the organizational spheres that must change to enable provision of amazing digital Customer Experiences.
• Strategic Building Blocks – the strategies that define how this change can take place and made part of the organizational processes to deliver exceptional Customer Experiences.

The 4 Focus Areas crucial in a business to change in order to deliver top-quality Digital Customer Experiences at scale are:

1. Vision and Strategy
2. Talent Management
3. Operations
4. Technology

Let’s discuss the first 2 individual Focus Areas of the CX Pyramid in detail for now.

Vision and Strategy

Redirecting focus on making Customer Experience a part of the Organizational DNA necessitates creating a Vision statement and Strategy to depict, clarify, and plan out the purpose and objectives of serving the customers.  The senior leadership needs to come up with a short and crisp Vision statement.  The Vision sets out the foundation that reflects the leadership’s focus, importance the organization gives to Customer Experience, and the high-level objectives associated with the provision of quality Customer Experiences.

Next, the leadership should work on developing strategies to build fundamental competencies within the 4 CX Building Blocks—i.e., CX operations, metrics, CX-centric culture, systems and governance protocols.

Talent Management

Once the Vision statement has been agreed upon, it’s time to work towards carrying out the required actions to produce customer-centric outcomes.  The first step in that direction involves linking all employees who work in discrete silos (in conventional structures).  To align all employees, there is a need to create a Transformation team and define new roles / CX groups.  The Transformation team should train and direct teams responsible for the different stages of the Customer Journey, instill new ideas, and foster desired behaviors in them.

Senior Leadership need to also assign a CX Team to run the CX program.  The CX Team has to lay out processes and yardsticks to foster cross-functional collaboration and coach functional units to adopt customer-centric design practices in their operations.

Interested in learning more about the other focus areas of the CX Pyramid Framework?  You can download an editable PowerPoint presentation on Customer Experience Pyramid here on the Flevy documents marketplace.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

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A significant number of Mergers remain unsuccessful, because companies do not employ a thorough and disciplined approach to realizing Post-Merger Integration Synergies.  In reasons for failure, we hear remarks like:

• Targets were set several months earlier by the top management without consulting the line managers, or taking ground realities into consideration.
• Assumption base for setting targets was untested.
• Targets were met but the timeframe for achieving them made them ineffective—in terms of diminished returns, shareholder disappointment, or depressed share value.
• Desired Synergies were achieved but at a very high cost or fairly weakened morale.

A disciplined and rational approach to pursuing Merger Synergies is key to successful Post-Merger Integration (PMI).  Companies that authenticate and set pragmatic yet ambitious Post-Merger Integration Synergy targets do the following to exceed targets and achieve substantial share price premium and a significant Competitive Advantage:

• Advise Integration Leaders on how to aim high.
• Give managers—responsible for achieving targets—a say in target-setting process.
• Create detailed plans with built-in accountabilities.
• Pursue their targets aggressively.

Successful PMI Synergies—be it in Cost Optimization, Strategic Sourcing, Greater Revenues or any other Cost or Revenue realm—have the common characteristic of leaders pursuing synergies with speed, rigor, discipline, and pragmatism with lots of analysis, planning, preparation, and fine-tuning before the close.

Success can be ensured time and again if the 6 Strategies for Post-Merger Integration Synergies are followed to the letter:

1. Link Due Diligence (DD) and Post-Merger Integration (PMI)
2. Leverage Clean Teams
3. Establish Stretch Targets
4. Rapidly Iterate to Targets
5. Pursue Both Revenue and Cost Synergies
6. Institute Performance Management

Implementation of the 6 Synergy Strategies involves adopting High-Engagement and Rapid Iteration approach which yields effective Stretch Target Validation and High Level of Line Accountability.

Let us delve a little deeper into 2 of these PMI Synergy Strategies.

Link Due Diligence (DD) and Post-Merger Integration (PMI)

Linking DD to PMI ensures realistic estimates on part of the DD team thus avoiding formulation of broad-brushed and imprecise Synergies.  Linking also guarantees greater amount of ownership and accountability at the same time enabling more compelling Stretch Targets.  Linking of DD to PMI is necessary because:

• Under pressure to complete the M&A, Due Diligence teams frame assumptions with little knowledge of the levers influencing Synergies or the challenges involved in achieving them.
• Due Diligence teams typically project more value in Cost Reduction and enhanced Revenues based on erroneous assumptions—without taking into account either the Operating Model (of the former entities and the freshly created one) or the difference / overlap in Customer Base.

Successful Mergers ensure a harmonized hand-off from Due Diligence teams to Integration Planning teams by ensuring the following:

• Placing members of the Mergers and Acquisition team on the Post-Merger Integration (PMI) team to produce a greater degree of ownership and continuity.
• Involving Business Unit Heads in target setting at the Due Diligence stage and ensuring ownership and accountability.
• Linking of Due Diligence and PMI to enable setting of more profound Stretch Targets.
• Analyzing and detailing drivers of saving at a high-level for creating Synergy Targets and Ranges which make later improvements possible based on subsequent information. These targets and ranges enable evaluation of potential gains from new company’s Operating Model.

Leverage Clean Teams

Clean team is an independent group that is tasked with the collection and analysis of sensitive company data—pre-closure—with the guidance of management.  Clean team may comprise of third-party members or employees who can be reassigned out of business in case of deal failure eradicating the risk of compromising confidential information.  Clean team is formed by legal contract based on protocols agreed to by both company’s legal departments.  Clean teams help by:

• Accelerating PMI planning.
• Enabling the acquiring company to have a clearer picture of the target company without violating anti-trust regulation or confidentiality agreements.
• Assessing risks and enabling companies to achieve Synergies faster.
• Keeping sensitive information of both sides safe—pre-closure—yet embark on planning and preparation even before close in order to save precious time and keep customer confidence high.
• Aiding companies accomplish 3 core integration activities before closing—compiling wide-range baseline data, vetting Synergy targets, and preparing options for key decisions.
• Empowering companies to avoid / diminish confusion caused by overlap in client assignments and sales people.
• Assisting provision of clear information to customers regarding products and services thus avoiding drop in sales.

Interested in learning more about the 6 Strategies for Post-Merger Integration Synergies?  You can download an editable PowerPoint on Post-Merger Integration (PMI): 6 Strategies for Synergies here on the Flevy documents marketplace.

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M&A is an extremely common strategy for growth.  M&A transactions always look great on paper.  This is why the buyer typically pays a 10-35% premium over the of the target company’s market value.

However, when it comes time for the Post-merger Integration (PMI), are we really able to capture the expected value?  Studies show only 20% of organizations capture projected revenue synergies and only 40% capture cost synergies.  Not to mention, the PMI process is typically very painful, drawn out, and politically charged, often resulting in the loss of key personnel.

Learn about our Post-merger Integration (PMI) Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Strategy is about the methods used to attain goals.  It’s the “how” of achieving goals—desired future conditions and circumstances towards which effort and resources are spent until their achievement.

If Strategy has any meaning at all, it is in relation to some aim or end in view.

Strategy is 1 of the 4 dimensions of an enterprise structure:

1. Goals of the organization.
2. Resources at our disposal.
3. Strategies for achieving above-mentioned goals –i.e., the methods used to deploy the resources.
4. Tactics—i.e., the ways in which the deployed resources are used.

Strategy and tactics – integral part of Strategy Development – bridge the gap between goals and the methods used to achieve those goals.  These 4 dimensions of enterprise structure relate to one or both of the 2 domains; Policy and Management.  Policies determine the goals of an enterprise, whereas attaining goals is typically a matter of Management.  Tactics belong to the managers; strategy is the combined realm of the governors and managers; whereas resources are controlled jointly.

The employed resources through use of Strategies and Tactics give us “certain” conditions.  Inspecting them in light of the “desired” conditions enables us to determine future employment of the resources and thus emerges a pattern of actions and decisions which makes Strategy an adaptive and evolving view of what is required, to achieve goals.

We take a look at various perspectives on and definitions of Strategy, as explained by 8 of the most impactful and renowned Strategists in modern times.  Familiarity with the perspectives of these strategists enables us to develop a more holistic and thorough understanding of the topic, helping us improve our strategic thinking, decision making, and analytical skills.All of these experts agree on the fact that Strategy is a means to implement a policy or a view envisioned by those who matter.  Let’s see how the following strategists define Strategy:

1. Michael Porter
2. Henry Mintzberg
3. Treacy and Wiersema
4. H. Liddell Hart
5. George Steiner
6. Kenneth Andrews
7. Kepner-Tregoe
8. Michel Robert

Let’s break down how a few of these renown strategists define “Strategy.”

Michael Porter

Michael Porter, the father of modern Business Strategy, views Competitive Strategy as “intentionally opting a collection of activities that are dissimilar to the competitors in order to provide a unique mix of value”– i.e. Competitive Advantage.  Porter states that Strategy is about:

• A competitive position.
• Differentiating yourself in the eyes of the customer.
• Adding value through a collection of activities different from competitors.

Henry Mintzberg

Mintzberg is credited with co-creating the Organigraph.  He has written extensively on management and business Strategy.  His contribution to Organizational Theory in the form of “The Organizational Configurations Framework” is a model that describes 6 valid organizational configurations or Organizational Design.

Mintzberg argues that the contrast of changing realities with intentions necessitates accommodation, generating Strategy.  According to him Strategy is a combination of:

• The Perspective – Vision and Direction.
• The Position – Decisions to offer particular products or services in particular markets.
• The Plan – a means of getting from here to there.
• A Pattern in actions over time – for example, a company that regularly markets very expensive products is using a “high end” Strategy.

Treacy and Wiersema

Treacy and Wiersema’s Value Discipline Model talks about 3 different value disciplines: Customer Intimacy, Product Leadership, and Operational Excellence.  Their research on market leading organizations reveals that they outdid their competitors through mastering 1 of these 3 disciplines.

Treacy and Wiersema assert that companies achieve leadership positions by narrowing, not broadening, their business focus on any one of the following:

• Operational Excellence – lead the industry in terms of price and convenience and is based on the Strategy of production and delivery of products or services. It implies world-class marketing, manufacturing, and distribution processes.
• Customer Intimacy – Long-term customer loyalty and customer profitability is based on the Strategy of tailoring and shaping products to the increasingly fine definitions of Customer-centric Design.
• Product Leadership – concentrates on quick commercialization of new ideas. It hinges on market-focused R&D as well as organizational nimbleness and agility.

Interested in learning more about the 8 definitions of Strategy?  You can download an editable PowerPoint on 8 Perspectives on Strategy here on the Flevy documents marketplace.

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“Strategy without Tactics is the slowest route to victory.  Tactics without Strategy is the noise before defeat.” – Sun Tzu 

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics.  Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy.  Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations. 

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Inculcating productive workforce behaviors is of utmost significance in Business Transformation, successful Strategy Execution, and Performance Improvement.  However, making people embrace productive behaviors involves a concerted effort across the organization.

The realization of Transformation, Strategy, and Performance improvement goals can become a reality by developing a thorough understanding of the 4 components of Organizational Behavior.  These components act as powerful levers in shaping the desired behaviors in the workforce:

1. Organizational Structure
2. Roles and Responsibilities
3. Individual Talent
4. Organizational Enablers

These Organizational Design levers work effectively when combined and aligned.  Let’s discuss the first 2 levers in detail now.

Organizational Structure

Organizational Structure represents the management reporting lines that create the organization’s spans of control, layers, and number of resources.  Organizational Structure is a foundational driver to Organizational Design, which also has a strong positive bearing on promoting the behaviors critical to improve the overall performance of the enterprise.  This is owing to the power that a position exerts on the subordinates based on factors that are important for individuals—e.g., work, compensation, and career ladder.

The Organizational Structure indicates an enterprise’s priorities.  An organization is typically structured in accordance with its top most priority.  For instance, functional organizational structure is adopted by enterprises having functional excellence as a priority.  In present-day’s competitive markets, most organizations have to deal with several priorities at a given time, which could be conflicting.  However, this does not mean adding new structures on top of existing ones, thereby increasing unnecessary complexity.  Creating overly complex structures to manage multiple priorities results in red tape and delayed decisions.  All roles are interdependent, necessitating cooperation.  This means taking care of the needs of others—instead of just watching over personal priorities—and encouraging individual behaviors that boost the efficiency of groups to achieve collective objectives.

Roles & Responsibilities

Roles and responsibilities deal with tasks allocated to each position and individual.  Organizational Design depends heavily on redefining clearer and compelling roles and responsibilities—to avoid any duplication of efforts or creating adversaries among team members.  In a collaborative culture where cooperation is the mainstay of an organization, individuals should not only be aware of what is required of them, but also appreciate the responsibilities of their team members, the authorities their roles exercise, the skills required, and the metrics to measure success.

A methodical way to outline roles and responsibilities effectively—while minimizing complexity—that encourages cooperation and empowerment is through the “Role Chartering” technique.  The technique requires distinctly identifying all roles on the basis of 6 key factors:

• Describing shared and individual accountabilities
• Outlining indicators to track success
• Specifying who has the right to decide what
• Indicating the capabilities critical for roles
• Assigning the leadership traits valuable for the roles
• Charting the abilities required for accomplishing personal and team goals.

Interested in learning more about these components to Organizational Behavior?  You can download an editable PowerPoint on Organizational Behaviors here on the Flevy documents marketplace.

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