The limits of strategy consulting

The limits of strategy consulting.

Strategy consultants are a species of their own. They tend to come and go, but not always for the right reasons.

The thing is, as with most things, you should use strategy consultants as a cure for some diseases, not for all. Basically, they are probably a good choice when you need ‘exising knowledge’. Their business model is around best practices, so if you want to move into an industry, a new country,… they will help you in not making the mistakes others made.
They are also a good choice when you are the CEO of a major corporate and need to initiate a change. If they can back up your choice, it will not only be much easier to sell to your board of directors and shareholders, it will also make it easier afterwards when things get ugly.

But strategy consultants have their limitations. Putting your hope on them to do something truly innovating (if it’s best practices it is by definition done multiple times before you know…) or work on ‘small innovation’ by combining new ways of working, new tools,… with your day to day work, they are probably not a good choice (neither will they want to work on the day to day work since it seems to ‘small’).

That’s where intrapreneurs come in.

That’s where JOINED! can come in!

The marginal cost of an extra customer.

The marginal cost of one extra customer if you can produce at a marginal cost of almost zero is… well… almost zero. So economical theory suggest you should go for that extra customer with all of your heart. Even without economics, people tend in a natural way to aim for an extra customer.
But is the total cost of that extra customer as low as you think? Should you not incorporate a cost of a lower availability, a lower service level, a less personal service,… for all of your existing customers? Knowing when that extra customer will start hurting your current customer base is as important as knowing how to get her in the first place.

Innovation is not a business unit, it is a mindset.

A lot of companies set up a dedicated innovation department, expect the world of it and then… get disappointed by the results.

The reason is simple: typically these departments are organised to work on business changing and money generation projects which tend to be… well large.

To make it very clear: they should be there and they should be filled with some of your best people, but innovation is more than only this. It is also about your team member having an idea on how to get your insights faster to the sales team, on how to save 1000 Euro by doing something different, on just testing out that new product tweak with a real customer (yes, he might be surprised, but he will not kill you for it), on trying to use a new tool to get organised better, on sharing that one thing you learned from that book/blog you read.

Innovation is about going out their, alone or with your team and challenge the status-quo of your day to day operations.

The end of the waterfall model in Strategy.

The waterfall model is well know in IT and general project management. Basically it’s model where you first let all business people work on requirements. When these are all clear, you let some outside ‘designers’ translate this ‘business language’ in project or IT language, then you hire an army of programmers to build the stuff. When they are ready, you invite the business guys back in and show them what you build.

It has taken a lot of time and money for companies to realize that this model is not always good: You have to invest a lot of money in order to actually get a shippable product, markets are changing faster than you can develop the ‘perfect’ product, projects take so long that you are forced to pull the plug out of them before there has anything been sold, people get demotivated because what they asked is not being delivered (business to IT) or because nobody seems to have an idea on what is exactly the requirement (IT to business).

Since once image says more than thousands words: it’s quite clear here: http://www.projectcartoon.com
The alternative that now is being used a lot is the scrum methodology, where you have iterations of short cycles where you create a shippable prototype, learn from that and continue to build further. In a world were market conditions change constantly, this is also the only way to make sure that you do not spend 2 years building to realize that is no longer what your customers want.

The strange thing is that with strategy, people still tend to use a waterfall model:

The CEO knows he needs a vision and strategy.
He hires a bunch of highly paid strategy consultants.
Those people mobilize the complete management to work on plans, create business cases,…
A committee is set up to decide upon and steer the actual projects that will be done.
Lot’s of interdisciplinary project teams are defined to do the work.
After one year, half of the projects are dead, the other ones have an outcome that is not what we expected.
The CEO is replaced or other strategy consultants are hired to determine why the organization was not able to deliver.

I dare to argue that in today’s world, strategy should also use a scrum kind of approach. Small teams of the most skilled people in your company should be able to challenge and convince the leadership that should give them the feedback and resources in order to try to set up small but strategic changes.

Imagine the typical timeline:

Hire a strategy consultant : 1 month
Let them take the the time of all your top people to come up with slideshows : 3 months
Decide on the priorities of the plans : 1 month
Let your people redo half of the business cases to ‘fine tune’ them: 1 month
Re-priorities: 1 month
Assemble project teams for your top 15 priorities: 1 week
Set up governance structure: 1 month
Do projects: 1 year
See results and ask yourself why the bottom line is not better even with the numerous projects: 3 sleepless weeks

And then it all starts over…

…or you can go for the following scenario:

Start with a strategy 1.0 workshop tomorrow: 1-2 day(s)
Empower your best people to try a first solution, develop a first beta version, test an approach: 1 month.
Let them come back after 1 month to see what it delivered. With their feedback, go into strategy 1.1 workshop: 1 day
Give them extra power to bring the next iteration quicker: 1 day
Let them do the next iteration: 29 days.

Ps: Don’t make it about problems, make it about solutions.

JOINED! can help you in challenging the strategy work you need to deliver this month, not in the years to come!