Strategy in Three Minutes. Episode nine
1. Strategy and Value Exchange: Transformation: multiplying and adding, not dividing and subtracting
Working in an organization is a value exchange.
Employees exchange value with each other in an organized manner.
If this exchange is effective, they create value for the company along the way.
Value for the company = Value created by employees – (Value paid to employees + Indirect costs) – Wastage.
Too many leaders of strategic transformation projects are focused only on the right side of the equation associated with costs.
Because:
[1] It is easier to measure.
[2] It is easier to calculate a ROI of the project based on these numbers.
But:
[1] Reducing costs and wastage has its limits. Value creation hasn’t.
[2] While you waste of time of wastage reduction, your competitors probably learn to deliver more value to customers.
Reducing costs is important, but it can only do so much.
Contemplation questions:
[1] Does your strategy entails transformation?
[2] Is your transformation focused only on reducing costs and streamlining processes?
[3] What additional value could you create by transforming your business?
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2. Customer cognitive biases: Shady dealers shooting from three barrels
If an alien came to the Earth, they’d think humans love learning about others’ success more than succeeding themselves.
Few people succeed while tons of success stories are published daily.
Some authors of business success stories exploit three cognitive biases at once:
[1] Reductionism. We tend to explain complex phenomena with a few simple reasons and ignore complex factors.
“Bob is successful because he wakes up at 5 am.”
[2] Causal fallacy makes us see a causation where there is no one. For instance, we can believe that a business is successful because its board is diverse.
[3] Hindsight bias. When successful people remember their stories, they oversimplify their strategies.
“When I was four, my father gave me the best piece of advice ever.”
Moreover, there are success stories about the future, and people also love them. For instance, “AI will change the game” or “Companies who invest in cloud computing will thrive.”
If only some laypeople read such stories, it would be okay.
But your clients read these stories, too. They may have unrealistic requirements and ask for simple solutions that are too simple to be true.
I’ve seen it, too. Some of my prospects asked for 'three-point strategies' and 'a two-day strategic retreat to craft a strategy.'
Contemplation questions:
[1] Does your strategy focus on clients who see things realistically?
[2] Do your promos show how complex your tasks are and how you solve them?
[3] Are you ready to explain why there are no simple solutions for your clients’ problems?
[4] Do you articulate your strategic advantages when talking to clients?
Check out my new book, Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism, here.
3. Trend of the week: Employees don’t work for you. You work for them
Today, we'll talk about three trends at once.
First, Amazon tells workers to return to the office five days a week.
It's not the first company to make such a decision.
But, as many commentators note, Amazon is a role model for many other businesses, not only in tech.
Second, employees hate office jargon.
Fast Company has published the results of a survey by Glassdoor.
Most of all, employees hate the following words and phrases:
[1] "We're building the plane as we fly it."
[2] “Let’s double click on that”
[3] "Let me circle back with you."
[4] “We are family”
[5] “bandwidth”
Third, Chipotle returns to the idea of incorporating robots into its processes.
Its new robot can cut, core, and peel an avocado in 26 seconds.
Such ideas are becoming popular again today when the costs of food establishments are rising.
Contemplation questions:
Those three trends are very different, but I believe they have something in common.
As well as many other trends, they signal that there is strong mutual dissatisfaction between employees and employers.
It is a ticking bomb that will explode sooner or later.
[1] Is your strategy adapted to the employment market shifts?
[2] Does your strategy include measures to increase your employees’ satisfaction and engagement?
[3] Does your strategy reflect your effort to strike a balance between their needs and yours?
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Read also: Close the Gap: Align Your Leadership with the Company’s Real Strategy
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