‘Executing Strategy in
Challenging Times’ with
Prof. Patrick Gibbons and
Dr. Karan Sonpar
Prof. Patrick Gibbons
Dr. Karan Sonpar
Jefferson Smurfit Professor of
Lecturer
Corporate Planning
UCD School of Business
UCD Smurfit School
AGENDA
The webinar will cover the following key areas:
* Challenges in Scanning, Planning & Execution
* Addressing these Challenges
* Things to get Real About
30 minutes
Questions and Answers - 15 minutes
Introduction
• “The wrong way forward in a structural break during hard
times is to try more of the same”, (Rumelt, 2009)
• “Planning is anticipatory decision making” (Ackoff)
• The strategy process needs to:
- develop a coherent view of the forces influencing business
- develop a coherent view of how those forces will affect
the business
- develop a coherent view of the appropriate responses
thereby inspiring decisions across time
- executing those decisions
- evaluating the effectiveness of those decisions
- learning from this cycle
Uncertainty
State
Scanning
Effect
Response
Planning
Execution
(adapted from Milliken, 1989)
Challenges in Scanning
• Availability and recency heuristics
– Overweighting non-systematic, recent/available evidence
• Functional fixation
– Tendency to define problems from the perspective of
specialist training
• Confirmation bias
– Overweight evidence that confirms beliefs and
underweight evidence that disconfirms belief
• Status quo bias
– Preference for inertia
Addressing the Challenges
• Ensure the analysis of the environment is
based on “facts” and identify “guesses”
and assumptions explicitly
• Set up competing groups to address the
same aspects of the environment
• Develop a “momentum” forecast for the
company, i.e. if we do nothing what does
the future look like for us?
Additional Thoughts on Scanning
• In uncertain times, executives instinctively magnify risks
and discount potential rewards (Lavallo, HBR, 2007)
• Presence of some classic attention traps such as a focus
on urgency and singular attention to an issue
• Get information on environmental trends and happenings
from managers working in related industries
• Pay attention to the weak signals and things in the near
future that may affect you. Focus both on the ‘Reset
World’ and how things might be in the ‘New Normal’
• Also rely on soft information and qualitative trends
Challenges in Planning
• Overconfidence
– Overestimating our skill relative to others
• Competitor neglect
– Planning without adequately factoring in competitor
response
• Sunk costs
– Paying attention to historical costs that are irrelevant
• Champion bias
– Tendency to evaluate a plan or proposal based on the
track record of the champion, rather than the facts
Addressing the Challenges
• Focus on quality of meetings
– Involvement of people with diverse
backgrounds, cross section of the
organisation, who has a “stake” in the future?
– Engineer conflict to generate debate among
the team
– Think about horizons
• E.g. the three horizons (McKinsey)
Additional Thoughts on Planning
• Making strategic decisions, not just operational ones
• Making decisions in the face of incomplete information
- weak trends, complexity, tight coupling, volatility
• Moving from how we survive to how we succeed
•
Balancing speed and flexibility in decision-making
• Organizations that make fast decisions are able to do so
since they evaluate more options, rely on soft
information, and simulate productive conflict
Challenges in Execution
• ‘The Knowing-Doing Gap’ (Pfeffer & Sutton)
• Acting in the face of incomplete information
• Using power judiciously
• Balancing the need for originality and feasibility
• Managers change the organization’s structure without
addressing the root cause. This leads to short- term
efficiencies at best. Key causes of poor execution are:
- poor information flows
- unclear on responsibilities for decisions & actions
- poor motivation & reward systems (Neilson, 08’, HBR)
Addressing the Challenges
• Balance speed and flexibility using execution triggers
• Avoid viewing execution as a stand-alone event. It has to be a
part of planning, as also must be fine-tuned based on
learning and feedback from prior actions
• Focus both on meeting immediate challenges through
speedy actions and on building an execution culture
• Having a champion who can monitor and energize
“In real life strategy is actually quite straight-forward. You
choose a general direction and implement like hell!” (Welch)
Concluding Comments
Eight Things to get Real About
•
•
•
•
•
•
•
Your strength in your market
Your quality, especially compared with your competitors
What your customers think of you
What your non-customers think of you
The potency of your competitors
The cost position of your competitors, compared to yours
The potential impact of emerging technologies,or market
segments
• Your projections for your product’s future
(source: Hammermesh)
Questions and Answers
Upcoming Alumni Events
We also have a number of upcoming events, which will allow you
to meet fellow alumni and increase your knowledge base.
"Best Practice Networking” with Prof. Hunter, INSEAD at 6pm on
Thursday 20th May in UCD Smurfit School.
“Executive Insights” with Hugo MacNeill, MD, Goldman Sachs and Prof.
Ray Kinsella, UCD at 6pm on Thursday 27th May in UCD Smurfit School.
“Navigating the Markets” a panel discussion with industry experts on
investment strategies for 2010 and beyond at 6pm on Thursday 10th June in
UCD Smurfit School.
Golf Outing on Sunday 11th July in Druids Glen.
Purchase your ticket online at www.ucd.ie/businessalumni or
telephone Caroline on 01 7168050 for more information.