The anatomy of a strategist

February 19, 2012 § 1 Comment

ImageFirst of all, what IS strategy, anyway?  Ask 10 people and get 10 answers.  But I’ll answer the question this way: strategy involves assessing an organization’s internal and external factors to establish the most desirable future direction, and to determine a course of action and an investment of resources to get there.  Strategy can be “macro”, such as when setting a company vision, or tactical, such as when deciding whether, where and when to open a new manufacturing facility.

Now, after you get some strategy projects under your belt (and I’ve seen more than my fair share, having been in and around the field for over two decades), you start to notice some patterns related to successful strategy projects and the people who run them.  You also begin to realize that the patterns overlap greatly, meaning, great strategists are ones who excel across the lifecycle of a project, and successful projects are ones that leverage the full capability of a top strategy talent.  Being thoughtful about these characteristics can be helpful in many ways … when project planning, when staffing a team, and when recruiting and hiring, for example.  And if you’re an up and coming strategist, the reverse is also true – when deciding to whom you’d like to entrust the next few years of your career.  So what are these characteristics?

  • A good strategist is curious and aware:  sometimes, strategy is about optimizing what already exists.  But often, it’s about recognizing what is possible, both good and bad.  Ninety-nine percent of an organization’s headcount is dedicated to operating the business, so it becomes the responsibility of the strategist to look beyond current trajectories (sales growth, immediate competition, profitability, and so on) to identify new pockets of growth, as well as unforeseen threats.  One approach to this is “scenario planning”, wherein the strategist will extend observable trends into a longer-term timeframe, and then assemble them into 4-5 plausible (even if improbable) combinations that would meaningfully impact the businesses, and that call for a specific, proactive response.
  • A good strategist is comprehensive:  a classic mistake is to fail to consider options that simply don’t come to mind – to not think broadly enough.  So classically trained strategists often ask themselves a question to test the completeness of a set of options, which is, “is it Mutually Exclusive and Collectively Exhaustive?” (or MECE, for short).  What the MECE test does is it forces the strategist to think broadly enough that all primary possibilities are evaluated.  For example, a strategist may investigate both pricing and volume to properly diagnose revenue trends, or may fully consider the tradeoffs of buying vs. licensing vs. building vs. partnering to deliver a new product on schedule.  In any case, the goal is to not let the best option go unnoticed.
  • A good strategist is visionary and bold:  status quo, and even evolutionary moves, should always be among the options considered, but if the strategist doesn’t juxtapose some creative, extraordinary alternatives, then she’s taking the easy road.  I sometimes say that if the “currency” of the Finance department is dollars, and people for HR, then the Strategy function should be trading in big ideas.  How might the organization’s underutilized assets be deployed in new ways?  What new markets make sense to penetrate?  What new product lines could define the business’s direction in the next ten years?  A good strategist will understand the tradeoffs between current and new pathways, and help the executive team maintain a healthy balance between the two.
  • A good strategist is analytical:  I sometimes notice people confusing “strategic thinker” with “analytical thinker”, and they are, in fact, two very different types.  A strategic thinker, in my book, is someone who can synthesize multiple inputs (like competitive intelligence, customer research, and company capabilities) into meaningful implications and recommendations, whereas an analytical one will know how to shape raw data into actionable insights.  One knows what questions to ask, and the other knows how to answer them.  Your most versatile people, of course, will be capable of both.  That said, not everyone is destined to be.  There’s a reason that top strategy consulting firms staff “analyst” and “consultant” roles.  Some successfully migrate from one to the other, and even to the lofty rank of partner, but very few do.
  • A good strategist is, what I call, multivariate:  meaning, she can pick apart a situation from multiple angles and perspectives.  The proposed strategy may make the most economic sense, but do customers give you “permission” to expand into an adjacent growth area?  Operationally, do you know how to deliver and support the new concept?  Will your sales representatives welcome the new offering into their portfolio?  Does Marketing know how to promote it?  In other words, a good strategist will translate the theoretical down to the practical.  A strategy that isn’t implementable, or that hasn’t considered the operational implications, isn’t worth much more than the PowerPoint it was presented on.
  • A good strategist is persuasive:  the more significant the prescribed change (assuming status quo is not the preferred path forward), the more challenging it will be to bring others on board.  This is for good reason – change doesn’t come without risk and uncertainty.  And unless your organization is sitting on top of a “burning platform” as Nokia’s newish CEO Stephen Elop famously said, it’s not easy to make a different path look better than the present one.  An effective strategist, then, can’t declare victory at the Board meeting’s end.  Results are the only reward that count, and those come only after decisive agreements have been made and resources (including dollars, people and executive oversight) have been committed.  To earn that, a strategist must understand and adapt to the factual and emotional starting point of each decision maker, and the dynamics of how the organization makes decisions.  Whether the successful effort is fact-based or an impassioned plea, whether it’s supported by a carefully scripted slide presentation or an open ended conversation, and whether it’s achieved through a carefully sequenced series of one-on-one discussions or a group meeting, all depends on an up-front decision making analysis.
  • A good strategist is energetic (even if sleep deprived):  Strategy is a thinking-oriented discipline, obviously, but that doesn’t mean it’s any less demanding on the body.  In fact, I’ve heard that while the brain accounts for only 2% of a person’s body weight, it demands 20-30% of calories consumed!  So if Strategy demands more of the brain’s capacity, it may also demand more energy.  I can’t back that with science, but my point is that Strategy is demanding, even if only in terms of the time commitment required.  The environment that shapes and impacts strategy is never at rest, and so a good strategist is “always on”.  Consuming information.  Interpreting data.  Communicating insights.  Shaping discussion and decisions that can have a material effect on the direction of an organization.  Fielding questions from senior leaders looking for a balanced perspective on internal and external events.  It’s equal parts thrilling and exhausting, and a good strategist will be prepared to make a real commitment to the proactive and reactive nature of the practice. 

If a good strategist will excel at one or a few of these things, then a great strategist – or strategy team – will master them all.  And so will a successful strategic initiative.  Use this as a checklist the next time you’re filling a strategy position, or hiring a consulting firm, or managing a strategic initiative.

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The Verizon Wireless “Convenience Fee” and the End of Capitalism as We Know It

January 1, 2012 § 9 Comments

The concept first hit my radar when the “profit challenged” airlines decided to offset their personnel costs by imposing baggage fees, charging up to $50 to stow and deliver them.  Travelers complained, and the media had a field day – how dare they charge us!  Airlines held their ground (with the exception of Southwest, which never initiated the fees), and after the latest wave of bankruptcies, the charges have contributed to the restoration of industry profitability.  Then several banks (particularly the large, publically traded ones) announced that, in response to new regulations that restrict the profit they can make on electronic transactions, they would levy new monthly fees on debit cards.  Never mind that customers always had the option to do their banking elsewhere, including many community banks and credit unions.  The well-intentioned media and special interests came to the consumers’ aid once again, and rather than continue to face the negative publicity onslaught, most, if not all of the banks, relented.  No profit for you!

And now this.  Three days ago, Verizon Wireless (VZW) disclosed that customers who chose several bill payment methods (including phone and Internet) would be assessed a $2 “convenience fee” per transaction.  Customers who chose alternative channels (such as snail mail or online bank bill pay), or who signed up for VZW’s auto-pay feature, would avoid the fee.  But within hours, the media and special interests arrived on the scene again; this time joined by the FCC, which threatened an investigation.  And like the banks, VZW relented within hours.  What if VZW had simply discontinued its higher cost payment options – would it have faced the same ire?

So what’s the message here?  Are companies supposed to feel ashamed or immoral for making a profit, or for increasing them, by charging a fare rate for the services they provide?  In a competitive, capitalist market, is it not necessary to continuously innovate and to seek new ways to improve the amount and quality of the services they provide, and as these enhancements contribute their cost basis, are they not entitled to pass along these costs to their customers who are willing to pay?  After all, these are for-profit enterprises, aren’t they?  And — rhetorical question alert — don’t customers always have alternatives to paying these fees, including:

  • Comply with the conditions for “free” (such as with VZW’s free bill payment options)
  • Switch to a different provider
  • Stop using the service

What, suddenly it’s our right as citizens to have wireless service, and even more so, wireless service without extra service fees?  Since when is profitability such a problem?  For those who cling to the “greater good” argument, how would they respond to VZW’s (and all companies’) lesser ability to hire new workers without continuous profit growth?  I’m sure my assumptions are flawed, but for simply math, let’s assume 20% of VZW’s 100M customers use one of the implicated bill payment channels, and that VZW makes as much operating profit on the “convenience” fee as Verizon does overall.  On that basis, VZW could afford to hire an incremental 1,800 employees earning the median U.S. household salary, on a fully loaded basis.  If these employees helped create more growth for the company, VZW could hire even more.

Don’t get me wrong – I have no problem with consumers in a competitive, free market taking their business elsewhere, or in the case of Verizon, avoiding fees all together by complying with any of the company’s free options.  But when advocacy groups, the media, and regulators pile on together, and create the impression that the company has attempted some moral misdeed, well, that’s where I draw the line.  Come to think of it, I’m not even clear to what extent the customers themselves were even bothered by VZW’s fee — with all the noise coming from other, more organized groups, we never even got the chance to hear from them directly (other than a certain number of Tweets from some of the more vocal among them).  With only hours between the announcement and reversal of the fee, I’m not convinced the average VZW customer even had a chance to learn about it, let alone to consider how they felt about it!

Look, I know my rant may be unpopular.  I’m all for consumers making their preferences known, and even better, taking action with their wallets.  In a competitive market, this works especially well, and we have several layers of government and special interests to ensure competitiveness.  But when a business in a competitive market is vilified for imposing fees, especially when it gives customers a free alternative, I just don’t get it.  Healthy, growing businesses hire people, give raises, and pay taxes.  Isn’t that important too?

Taken to the extreme, I can see this slippery slope gaining momentum, and before you know it, our economic machine could edge its way closer to the European model, with heavier regulation and less commercial fluidity.  Even if this doesn’t occur through formal methods, it could happen through PR pressure applied by special interests or individuals in high places with “an axe to grind”.  But with many Euro Zone economies presently at risk of default, it’s hard to make the argument that their model is more desirable.  I’m happy sticking with good ol’ fashioned, American capitalism, if you please.

Winning the war for talent takes thinking like a marketer

March 1, 2011 § 1 Comment

How nice it would be to have the allure of Facebook or Twitter.  If you’re these guys, you get job applications by the truckload whether you’re looking for talent or not.  Armed with universally loved services, plenty of media buzz, fresh rounds of capital, and rapidly appreciating stock valuations, you can easily offer what most employees want – to the detriment of everyone else looking to hire.  Despite overall anemic economic growth, in the technology arena the war for talent is in full swing.  Facebook is reportedly doubling its workforce of 1,500 this year, Groupon is quickly building upon its 3,000 employees to drive expansion into new markets, and Zynga is adding staff to studios in major cities across the U.S. and abroad.  These high profile players, and others like them, are gobbling up top notch engineering and product talent seemingly at will, and putting pressure on the rest of the industry to compete, not just for consumers and capital, but for people.  Even industry stalwarts like Microsoft and Google aren’t immune.  Consider some of the evidence: 

  • The average annual salary for software engineers is $89K in the U.S. overall; it’s $106K in Silicon Valley.
  • Zynga has been said to offer still wet-behind-the-ears engineers up to $150K in salary and bonus.
  • Yahoo! has been bleeding talent for a couple years now.
  • Late last year, Google bumped employee salaries 10% across the board to better compete with offers from Facebook and Twitter (although they have denied the raises were in response to any company in particular); start-up Tagged has just done the same.
  • With multi-billion dollar valuations again possible, equity packages have become a primary draw

If Google is struggling to keep its edge, how do the rest of us stand a chance?  If you were thinking like a marketer, you’d realize that yours is a positioning problem, not a compensation or even an stock valuation one.  Marketers know instinctively that they cannot be all things to all people, and to go head-to-head with a better equipped competitor is a Kamikaze mission.  To the contrary, marketers understand the iterative process of matching what a target market prefers with the unique offering you specifically bring to the table.  Your company’s Employee Value Proposition (EVP) is its blend of tangible and intangible attributes that it can deliver better than most (if not all) others.  Once you recognize this, to target job candidates who seek something different is a waste of time.  But if you know your strengths relative to your competitors, you can seek out employees for whom your differentiation resonates.  Let’s take a look at how this idea could play out against many of the attributes that make up an EVP:

  • Base pay: Unless you have the cache’ of a hot growth company, you need to be paying market rates, if not higher.  There are premium services that do the benchmarking for you, but if you’re bootstrapping it, I recommend that you take a look at Salary.com.
  • Performance pay: Whether you offer this to everyone, and to what degree, is a matter of your comp strategy and economics, but keep in mind that it can be a differentiator for you; and lower risk when only paid out in exchange for high quality work.
  • Stock/Options: If you want your employees to behave like owners, then you need to pay them as such.  But be realistic.  If a candidate is choosing between you and Quora, you’re not going to outgun your competition on equity alone.  If this is the primary decision factor for the candidate, you may have to fork over a larger share, or concede and move on.
  • Perks: The media likes to celebrate perks such as free meals, snacks, on-call massages and laundry service, and for many people, these benefits have become table stakes.  But for others, they are relatively unimportant.  Know your audience.
  • Culture: People want to work for a company whose culture reflects their own values.  Glass tower vs. Soho loft?  Code-till-you-drop vs. time for family?  Buttoned-up vs. casual?  Where you fall on these scales shouldn’t be random, or merely a reflection of the founders’ management style; it should represent a strategic decision you make about the environment that will best set you up for success with hiring, keeping, and motivating employees.  And although it’s fun to talk about hacker environments that survive on pizza, Mountain Dew, and foosball, in reality they aren’t for everyone.
  • Location: Not every company can (or should) be based in the Valley or New York, and so right away, you can better compete by keeping your literal distance from strong players.  Some players will specifically choose NOT to be based in the Valley so as to avoid direct competition and potentially overpaying for talent.  Others will base themselves in larger talent markets, but perhaps on the geographic fringe.  There’s two sides to this approach, of course, but it’s a factor that every technology leader must determine.
  • Leadership: Speaking of leaders, people want to work for those they respect and trust.  If your leaders are charismatic and visionary, then use them as a hiring weapon.  Have them publish, put them out in front of trade groups, and make them part of your recruiting plan.  If they are not the kind of people who represent the company well, then hiring is only one of your many challenges.
  • Team: Some people prefer the structure that comes with a larger business and others despise the bureaucracy.  Don’t paddle upstream on this – leverage what  you have.  Or, if consistent with your organizational strategy, you may choose to consolidate or specialize teams to better appeal to current and prospective employees.
  • Mission: Beyond making a decent living, most people want to make a difference, even if a small one.  Your company purpose doesn’t have to be altruistic, but should go beyond “maximizing shareholder value” (unless, perhaps, you work on Wall Street).  Not that they need the recruiting help, but the roles played by Twitter and Facebook during recent events in the Middle East have helped solidify their  importance as organizing and communication platforms that go well beyond the function of advertising.  And for some, will be the primary reason they choose to work there.   

All companies can be measured across these dimensions, but very few will look alike.  And therein lies the marketer’s edge – knowing that while you may be ill equipped to wage an all-out war with the hottest growth company in town, you will have distinct advantages that appeal to a set of candidates.  Synacor, a technology solutions provider to ISPs based in Buffalo, NY, is a great example of a company that’s playing the marketing and positioning game well.  As proud a city as Buffalo must be, it’s got to be hard to sell outsiders on the concept of a smaller town with bitter cold winters.  But check out the career section on their site, and you’ll find a company that knows who it is and what it has to offer.  Like Synacor, know your strengths and who values them, and you’ll be well on your way to securing the talent you desire.

In addition to honing your EVP, you also need to cultivate and promote your reputation.  If your company isn’t a Fortune 1000, or isn’t getting much love from TechCrunch, Engadget or Mashable, you’d better find alternative channels with which to get the word out.  I’ve already touched on leadership exposure.  You should also post and actively manage a Facebook Fan Page, LinkedIn profile, and company blog.  And even if TechCrunch isn’t within your grasp, a well rounded PR and sponsorship strategy should still be.  Of course, the best thing you can do for your reputation may be to treat your people – whether they’re on their way in or out — like the important assets they truly are.  Make them ambassadors for your business, and you’ve compounded your recruiting muscle.  Sour them, and your reputation is DOA.  Don’t believe me?  Check out the employee reviews on TheVault.com.

Winning the war for talent is not unlike winning market share – focus on what you do well, and don’t try to be all things to all people.  You’ll not only have an easier time securing talent, but also keeping the good talent you already have.

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