ValuExecBlog

Leaving Knowledge on the Table

One of the most underestimated challenges facing companies today, when it comes to execution excellence, is ensuring that the knowledge of key strategic processes is 'left on the table.' That is to say, that the knowledge that employees have of key strategic processes does not remain in their heads and go with them should they ever leave the company, but is captured in some hard form or another. Depending on the strategic and unique nature of that knowledge, allowing the knowledge to simply 'walk out the door' can have serious repercussions for the company and cause major disruptions.

There are two things that a company can do when approaching this challenge. The first is to ensure that all key strategic processes are captured in written form whether it is by means of process mapping, process business blueprints, SOP or a word document. Whatever the preferred option, the objective is to capture the knowledge so that any person can replicate the process and execute it consistently thereafter. The second thing that a company can do is to ensure that knowledge is transferred to others within the department by way of training, on-the-job projects, etc.

Last week an MD was faced with just this particular challenge. All of his senior managers were in their late 50's and there was a huge gap in skill sets between the managers and their direct reports. All of the senior managers without exception, stated that none of their direct reports would be able to take over from them should they retire or leave the company; and all agreed that there would be a lengthy 'learning curve' for anyone coming in from outside even if they had the necessary skill sets. The MD was in constant fear that he might lose one of his senior managers and was therefore alot more lenient on performance issues than he might have been otherwise. There is no doubt as to where the power base lay!

If you have not yet captured your key processes in some form or another, then you need to do so sooner rather than later. That will ensure that those charged with their execution will be consistent and that is essential to execution excellence. And besides, you will also have less sleepless nights!

ian

         

Skirting the fringes of reality

In the main, we are all optimists when it comes to developing our business strategy. And it is no wonder for there are alot of pressures or expectations placed on us from several groups of interested parties to either grow the business or improve returns and / or increase market share etc., etc. Over the years I have sat through a large number of strategic presentations and I have found that the best presentations are those that are immersed in reality whilst being challenging at the same time. 

To be honest, I have given my fair share of "Opportunistic" strategy presentations; presentations that have skirted the fringes of reality. Generally, those presentations have all begun with a very simple question: What does my boss want? What will be acceptable to him? Usually, what he wants and what the business is capable of delivering are miles apart and then the scramble to fill the gap commences over the entire strategic period.

Someone once told me that "if you want to see what the future has in store for you, look at your past results, and then ask the question - so what is different?" Perhaps one of the best strategic presentations that I have given to a senior management team was when I presented a plan that basically said "if you want this, we will need this because the market will only deliver this and the reason it will only deliver this is because of this and this." It was steeped in reality and the discussion that followed was strategic-based and not financed-based.

In their book "Execution - The Discipline of getting Things Done," (Crown Business, 2002) Larry Bossidy and Ram Charan suggest that the discussion at a strategy review must answer the following key questions:

• Is the plan plausible and realistic?
• Is it internally consistent?
• Does it match the critical issues and the assumptions?
• Are people committed to it?

Do not skirt along the fringes of reality; but rather embrace it and then once armed with it, challenge its boundaries.

ian

Slipping up on their own Skins

It was with interest that I read an article from TradingMarkets.com entitled "Chiquita outlines restructuring plan." The article was dated Monday October 29,2007 and reported the restructuring plan and management changes that Chiquita Brands International has made to implement its previously announced business strategy (Italics are mine).

Why the interest? Well, since we are told that 'structure' should follow 'strategy' it appeared that the Chiquita management team was making all the right moves. I mean, you can not argue with any move that is designed to (in their words) "improve the company's profitability by consolidating operations, simplifying its overhead structure to improve efficiency, stimulate innovation and further enhance focus on customers and consumers." All text book stuff and good on 'em.

But my interest was piqued when on reading further I learnt that the company expects to generate new, sustainable cost reductions of approximately $60-80 million annually and that the cash generated will be used primarily to reduce debt. Still nothing wrong with that  but I was becoming curious as to what the company was actually going to do differently to ensure the execution of their 'previously announced business strategy,' because it was appearing to me that their focus was debt-related and not consumer- related as reported in the opening paragraph of the article.

And then confirmation came from Chairman and CEO, Fernando Aguirre. Mr. Aguirre mentioned that the execution (implementation) of their strategy has since 2005 been slowed by the market dynamics and competitive landscape. Now, in the belief (and probably mistaken belief) that the market dynamics and the competitive landscape will not disappear from the world stage at any time soon and will in all probability intensify, I can only ask "why has it taken the company so long to respond to a changing market place?" and I can only assume that this is not a company where execution ranks high on its priority list.

You can not cost-cut your way to success and cutting out layers of people may improve the decision making process and the bottom line, but it will not necessarily improve execution. Small companies of only 40 people struggle with execution just as much as their larger counterparts. If Chiquita management believes that their restructuring plan is the answer to implementing their previously announced strategy, then they may well slip up on their own banana skins. Only time will tell, but from what I have read, I wouldn't hold my breath.

ian