Book Review of “The New How” (Business Strategy Book)

It is atypical for me to write a book review for this blog, but Nilofer Merchant’s “The New How: Creating Business Solutions Through Collaborative Strategy” is very respectable contribution to both audiences of this blog and the process of strategy development in general. In particular, the book does two important things beyond other strategy books:

  • it breaks down the ivory tower of centralized strategy and addresses, in detail, the roles and responsibilities that each employee must fulfill in the new model, and
  • the book explicitly documents a collaborative process that one can use to develop strategy, a process which from my vantage point has only been addressed either through mentorship and transfer of tacit knowledge or in fragments within other documents.

The book divides strategy into two domains – 1) where a company competes, and 2) how a company competes. The premise of the book is that the former topic (where a company competes) is well-addressed by existing strategy books, such as those by Porter, Chan, Kim, and Mauborgne. Nilofer’s book addresses the gap in business texts regarding the latter topic, which includes day-to-day and quarter-to-quarter strategies, such as “how do we grow sales of product XYZ” or “how do we grow sales of division Y by Q%?”  As she writes, “One person’ strategy is another’s tactics. The unnecessary and fruitless war of what is tactics or strategy or execution must end.”

Part 1 of the book provides a call to action for individual employees and leaders. But the book goes further by providing specific responsibilities that each person must fulfill. Where I admire the book is in its approach to addressing each employee’s role. Whereas “older” methods of strategy may have been focused on executive management teams, this book provides context, terminology, and frameworks for educating a broader audience. As an aside, I am also struck by the fact that Nilofer does a good job of incorporating concepts of improvisation into the strategy development process, culture, and mindset of employees. Improvisation is especially a soft spot for me given my involvement with Business Improvisations, a collaboration between business academics and improvisation instructors which helps companies in areas such as innovation, leadership, teamwork, etc. through customized, experiential learning sessions.

Part 2 of the book goes into greater detail on process of strategy development. It breaks down the process into four major areas:

  • Question Phase – articulating the problem scope and assessing the current state of the organization
  • Envision Phase – creating options for the organization developing criteria that would be used to evaluate options
  • Select Phase – using a “MurderBoarding” process to sort, tune, fix, etc. options
  • Take Phase – creating accountability, identifying who does what, and getting down to interdependencies and execution.

Although the book goes into much greater detail on all of these areas (with specific examples, charts, tables, etc.), one of my favorite charts is the MurderBoarding overview chart (copyright image reproduced below from “The New How” via permission from Nilofer Merchant). I often find this part of the strategy development process to be at risk of falling apart – this part of the strategy process is inherently messy, and unless the team focuses on a disciplined reference framework (like the one here), it becomes too tempting and easy to try to cut corners. Look carefully at the chart and see if you have been tempted to cut corners in the process. For example, did you forget to test the idea in part before finalizing the strategy? Or did you forget to vet and refine the criteria used to evaluate a strategic option?

Diag018Even as an experienced management consultant and manager, I would highly recommend this book (I’ve also added it to my popular Crash Course Consulting Reading List). The book is practical and covers a body of knowledge that has been largely undocumented to date. Whether one explicitly uses the processes Nilofer describes, the book still provides a good framework for assessing how one is doing. This book is well-suited for corporate executives, strategic planners, general managers, and management consultants. It would also be good as a textbook to supplement strategy and/or consulting courses.

Feel free to let me know your thoughts!

How To Help Ensure Strategy Scorecards Don’t Fail You

For many strategy engagements, a lot of attention is paid to the detailed analysis framework. For example, should a benchmarking framework be used? Or will that framework lead us down a path of mediocrity? Or perhaps value-chain or Blue Ocean-like analysis should be used here? What method should we use for prioritizing brand associations and rectifying brand image versus identity? Regardless of strategy technique, one key output of these efforts is often a scorecard summary. A scorecard is tangible. It can be like a report card that you got from school in elementary school. While the scorecard is important, it’s important to not lose sight of how a scorecard is developed and what the scorecard could mean for your organization.

The figure below shows an illustrative scorecard for a company. The scorecard helps to identify strengths and weaknesses. In the scorecard below, I’ve also depicted areas where the company needs to make improvements (operational and tactical focus) and where the company needs to differentiate longer-term (strategic focus).

Scorecard 
Traps with scorecards can happen with the processes before, during, and after the scorecard.

Common traps that can occur before the scorecard are:

  • Failing to craft the problem statement properly
  • Pursuing too narrow activities to solve the problem statement
  • Falling short on involving a broad part of the organization in the assessment & strategy development process
  • Getting the wrong mix of structured and unstructured methods
  • Using the wrong tools for the job
  • Having an inherently biased processes or failing to frame and address biases and limitations properly

Traps during the scorecard readout process include:

  • Being too negative and demotivating an organization
  • Not stepping back from the scorecard to look at the bigger picture
  • Failing to educate new audience members about the context of the scorecard and the prior processes used to arrive at the scorecard
  • Letting an organization rest on its laurels

(Very) common traps after the scorecard readout process include:

  • Failing to develop specific action plans
  • Not having a good follow-up and cadence for making progress

The picture below shows the logical context for an example scorecard process, and it is an important aspect often lost in the mix. Note that the process context for the scorecard is as important (if not more important) than the scorecard itself.

Scorecard Process 
What are your experiences with scorecards? How can you use them more effectively?

The Business Plan Is Alive And Well But It May Not Be What You Think

As many times I have written a “business plan”, it seems the flavor of it can vary quite substantially. I think the notion of this catches a good number of people by surprise. And why shouldn’t that be the case? Many textbooks and templates seem to cover business plan outlines with relatively similar structures. My suspicion is that the perspective that gets lost in the mix is intent. The intent of a business plan affects its format and content dramatically (more than outline). For this post, I thought it would be good to share some perspectives on why the process and plan should vary.

Business plan as a process – The process of vetting ideas, getting buy-in, and achieving alignment is most important in these situations. Example situations are new business launches in larger companies (e.g., intrapreneurship). Business plans can often take the form of workshop sessions and Powerpoint documents as opposed to a traditional textual Word document. See a popular post of mine, “In Consulting The Process Is An Essential Part Of The Deliverable“.

Business plan as a sales document – This situation is particularly appropriate for fund raising (e.g., angels, VCs). Key goals of the document are to establish trust with prospects, enable the investment idea to be shared via networks, and persuade people of the merits of an investment opportunity. Often need a mix of instruments here (Powerpoint & Word docs, napkin drawings, demo), depending on the team, industry, and phase of product development (e.g., technology feasibility, commercial feasibility, ramp-up).

Business plan as a hypothesis test or investigative framework – An entrepreneurial way of looking at a business plan is more as a framework or series of hypotheses tests. Questions may be: do customers really want product aspect A, do customers prefer this variation over that one, do customers perceive me as Y relative to my competitors, and will the dog eat the dog food? The business planning effort can be more organic than written and involve focus groups, customer prospect interviews, etc. But the framework process should be systematic in determining which hypotheses are true/false to prove out aspects the business over time.

Some other ways that come to mind are viewing the business plan as a communication tool, a dissertation (that must be closely inspected), debate tool, product development stage gate requirement, and RFP response requirement (e.g., for government grants).

How do you view you business planning efforts? To what extent could you benefit from new ways of thinking about them?