Strategic Thinking and Implementation
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Jim Brunke
jbrunke@jbrunke.com
425-922-0094
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Challenges
•
Secy Gates –
– “We have specifically chosen to target the $101B savings during 2012-2016 POM across the
entire Defense Budget, to minimize adverse impact.“
– “2/3 must come from structural savings that are repeatable year after year.“
– "It is not lost upon us that we are facing daily growing pressure targeting Defense funding
from the Deficit Commission; mid-term Congressional elections; Tea Party; etc. Even Senator
Inouye recently conceded to bi-partisan pressure, to cut an additional $8B from Senate's 2011
Defense Appropriations Bill.“
•
Iraq/Afghanistan
– Current
– Reset/Recap
•
2008 GAO Study – Average cost overrun of 72 DoD programs – 40%
Innovate, Innovate, Evolve, Evolve……..Flawlessly
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
What Are The Implications?
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What is most likely to be cut?
How will the changes affect the macro environment?
How will the changes affect your operations?
What will happen to industry?
What are the big paradigm shifts?
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Innovation is Critical to Compete in the 21st Century…
Top Innovation Priorities:
 Extend the ability to collaborate inside &
outside
 Innovate business models & processes
 Leverage information for business
optimization
Innovation will shift from topdown to bottom-up within
enterprises
 More user input
 More spontaneous
 More collaboration on product
development
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
87% of CEO’s believe fundamental
change is required in next two years to
drive innovation
Future productivity will largely come
from the way people innovate, the
efficiency with which they can translate
innovation into value and how
effectively people can work together to
make timely well informed decisions
What is Strategy and Why Have One?
A Strategy Includes –
Direction
Boundaries
Considerations
A Strategy–
Is Simple
Is Clear
Everyone Connects
Keeps Leadership On Track
Fits with the Upper Enterprise Strategy
A good strategy capitalizes on the core purpose of the organization, its shared values,
what makes it unique and different and why
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
What Should a Good Strategy Consider?
Issues and Challenges
Desired Results
Values
Behaviors
Metrics
A Strategy Is Part Of An Overall System
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
The Four Step Process
Concrete
Phenomena
Grouping
Abstraction
Determination of
Approach (Very Concrete
and Specific)
•Increase in average age
•Seniority system of promotion
•Low mobility of personnel
among divisions
Personnel Problems
Inflexibility in Human
Resource Management
HR Plan
Cost Problems
Costs Higher Than Industry
Trends
Cost Reduction Plan
Strategic Problems
Inflexibility in Corporate
Strategy
Re-assess Corporate
Strategic Plan
•Increase in number of managers
•Decline in morale among
younger employees
•Increase in personnel costs
•Delays in new product
development
•Fall in profitability
•Increase in unprofitable
products
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Global MRO Strategy
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
A Typical Management System
Objectives
Strategies
People to
Watch
Development
Plans
Succession
Plans
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Core
Competencies
Annual Ops
Plan
Individual
Goals
Enterprise
Plan
Metrics
Metrics
Essential Ingredients
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Timelines for the actions
Required resources
Metrics tied to goal accomplishment
Accountability in goal-related initiatives
Training
Trend analysis
Core competencies analysis
Core values analysis
Risk mitigation
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
The Big Levers
Processes
Supplier Interaction
Centralized vs Decentralized
Business Model
Organization
Technology
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Materials
Tooling
Facilities
Intellectual Capital
Experience
Relationships
Organizational Influence
Risk Categories – The Big Three
Financial - from business failure, stock market, interest
rates, unemployment, etc.
Project - risks of cost over-runs, jobs taking too long, of
insufficient product or service quality, etc.
Human - from individuals or organizations, illness, death, etc.
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Other Categories to Consider for
Analysis
•Operational - from disruption to supplies and operations, loss of
access to essential assets, failures in distribution, etc.
•Reputational - from loss of business partner or employee confidence,
or damage to reputation in the market.
•Procedural - from failures of accountability, internal systems and
controls, organization, fraud, etc.
•Technical - from advances in technology, technical failure, etc.
•Natural - threats from weather, natural disaster, accident, disease,
etc.
•Political - from changes in tax regimes, public opinion, government
policy, foreign influence, etc.
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Risk Response
There are four things you can do about a risk. The strategies are:
Avoid the risk- Do something to remove it. Use another supplier for
example.
Transfer the risk- Make someone else responsible. Perhaps a Vendor
can be made responsible for a particularly risky part of the project.
Mitigate the risk- Take actions to lessen the impact or chance of the
risk occurring. If the risk relates to availability of resources, draw up
an agreement and get sign-off for the resource to be available.
Accept the risk- The risk might be so small the effort to do anything
is not worth while.
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Risks, Issues and Opportunities
Risks – Program related activities that might or can go
wrong
Issues – Program related activities that have gone wrong
Opportunities – Program related activities that can
improve the current program position
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Risk, Issue and Opportunity Management
Process
Set
Opportunity
Goals
OPPORTUNITY: What are
our program improvement
strategies and objectives?
Communicate
& Track
HOW ARE THINGS GOING?
•Communicate to all
affected parties
•Monitor Plans
•Update status regularly
Analyze
Identify
RISK: What could go
wrong?
ISSUE: What has gone
wrong?
OPPORTUNITY: What can
be improved?
Risk
Issue
RISK: Likelihood and
consequences
ISSUE: Severity, urgency
OPPORTUNITY: Likelihood
and benefits
Opportunity
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Assess
Handling
Options
RISK: Avoid, transfer,
assume mitigate
ISSUE: Resolve, transfer,
assume
OPPORTUNITY:
Reject/ignore, monitor,
transfer, capture/pursue
Plan &
Execute
RISK: Mitigation plans
ISSUE: Resolution plans
OPPORTUNITY: Achievement
plans
Risk, Issue and Opportunity Management
Additional Questions
Identify
Analyze
What can go wrong?
-Changes
-Staffing
-Process
-Design
-Supplier
-Transition to production
-Test Failures
-Failure to meet
objectives
-Simulations
-Negative Trends
How big is the risk?
- Likelihood of occurrence
- Possible consequences
should the risk occur
-Technical
-Schedule
-Cost
Risk
Issue
Opportunity
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Assess
Handling
Options
How can the risk be
reduced?
- Avoid by eliminating the
risk cause and/or
consequence
- Transfer the risk
- Assume the risk level and
continue on current plan
- OR –
-Mitigate the risk with a
step by step plan for
reducing the risk level over
time
Plan &
Execute
How can the mitigation plan be
incorporated?
-Determine what planning,
budget and requirement
changes are needed
-Include fallback plans for High
risks
-Review with management and
customer
-Incorporate the changes
-Follow the plan
Risk, Issue & Opportunity – Template
Risk Worksheet
Risk Title:
Project Team:
Date:
Project Leader:
Risk Type
5
Likelihood
Description Of Risk:
 Technical
 Schedule
 Cost
Describe the type of risk in this area of the worksheet.
Statement Of Basic Cause:
Describe the basic cause of risk in this area of the worksheet.
Consequence If Risk Is Realized:
Describe the consequence if risk is realized in this area of the worksheet.
Copy this checked box , and paste
it over the non-checked box(es) that
appear above to indicate which risks
apply.
4
3
2
1
1
Click on the appropriate box
above and type in a capital X.
Risk Reduction Plan
Action/Event
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Date
Schedule
Actual
Success Criteria
Risk Level If
Successful
2 3 4 5
Consequence
Comments
Risk Assessment
5
High
Likelihood
4
Moderate
3
2
Low
1
1
2
3
Consequence
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
4
5
Opportunity Assessment
What is the likelihood the opportunity will happen?
1
Not Likely
Cannot implement this opportunity, no known
processes or funding available
2
Low Likelihood
Cannot implement this opportunity, but a
different approach might
3
Likely
Can implement this opportunity, but
workarounds will be required
4
Highly Likely
Have implemented similar types of opportunities
with minimal oversight
5
Near Certainty
Can implement this opportunity using standard
processes and practices
High
4
Likelihood
Likelihood
5
Planned Approach and Process
Level
Moderate
3
2
Low
1
1
2
3
Opportunity
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
4
5
Thoughts on Opportunities
• Focus on Opportunities as much as risks
• Set appropriate boundaries
• Focus on creating value
• Use Opportunities for both risk mitigation and innovation
• Use the R’s…Rethink, reconfigure, resequence, relocate,
reduce, reassign, retool
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Lesson learned
Assign a Risk manager
A strategic Role
Create Robust R,I,O plans
Manage in Program reviews – End to End
Direct Suppliers
Critical Raw Material
Logistics Partners
Always evolve…require all groups to identify RIO’s
Embed Risk Management Activities and RAA into existing processes and Functions
Plans
Metrics
Business objectives
Job Descriptions
Use Cross Functional teams to manage and resolve Risks
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Lessons Learned (continued)
Create a Common Measure
I use dollars
Honor your organization’s sensitivities
But maintain consciousness
Be ready for unexpected consequences
Both good and bad
Understand the impacts to your organization and your customer’s
Evolve/adjust simultaneously
Risk is like matter…..it doesn’t go away
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Strategic Tests
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Do My Numbers Match My Strategy?
Will It Create Value?
Is It Material?
Is It Just Powerpoint Engineering?
Are We Properly Balancing Change and Risk?
Where Are We On The Strategic Journey?
Is The Problem Solvable And Do We Care?
Why Might We Fail?
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Ten Common Reasons Strategic Plans Fail
History
People/Culture
Leadership
Discipline
Communication
Monitoring, Measurement, Feedback
Lack of Flexibility
Milestones/Rewards
Bad Planning
Bad Plan
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Additional Thoughts
Strategy and Strategic Planning is not an Event
Don’t Flow Down Strategy Development
Look Outside Of Your Industry
All Money is Real
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
An Alternative View
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
An Alternative View
Failed to Connect the Dots
Number
Number of
of Dots
Dots
Dots
Links
Patterns
Number
Number of
of Possible
Possible Number
Number of
of Possible
Possible
Links
Patterns
Links
Patterns
N=4
N=4
L=6
L=6
P=64
P=64
N=10
N=10
L=45
L=45
P=3.5 Trillion
N=12
L=66
P=4,700 Quadrillion
L=N(N-1)/2
P=2
The Rule of 5, 15 and 150
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
An Alternative View
Key language –
A system is any network that has coherence. It may be fuzzy, it may or may not have purpose
An agent is anything which acts within the system - individual, group, idea etc.
Three types of systemsOrdered: system constrains agents, reductionism & rules based
Chaotic: agents unconstrained & independent of each other
Complex: system lightly constrains agents, agents modify system by their interaction with it and
each other, they co-evolve (irreversibility).
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Aspects of complexity
Characteristics
– Highly Sensitive to Small Changes
– Proximity & Connectivity of Agents Has High Impact
• Informational and Organizational
– Meaning Emerges Through Interaction
• Use of distributed cognition – The wisdom… not foolishness of crowds
– Hindsight does not lead to foresight
– Shift from fail-safe design to safe-fail experimentation
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
The Cynefin Framework
Networked
Org
?
Complex
Complicated
Probe
Sense
Respond
Sense
Analyze
Respond
(Emergent)
(Good Practice)
Chaotic
Simple
Act
Sense
Respond
Sense
Categorize
Respond
(Novel)
Exploration
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
(Best Practice)
Exploitation
Expert
Org
Hierarchical
Org
Leadership Actions - Order
Characteristics
Repeating patterns and
consistent events
Simple
Clear cause & effect
Relationships evident to everyone,
right answers exist
The Leaders Job
Danger Signals
Sense-categorize-respond
Complacency and comfort
Ensure that proper processes are in
place
Desire to make complex decisions
Simple
Delegate
Entrained thinking No challenge of
received wisdom
Response
Be patient and allow time for
reflection
Use approaches that encourage
interaction so patterns can emerge
Use best practices
Known knowns
Communicate in clear direct ways
Over-reliance on best practice if
context shifts
Fact-based management
Complicated
Understand that extensive
interactive communication may
be necessary
High turbulence
Act-sense-respond
No clear cause and effect
relationships, so not point in looking
for right answers
Look for what works instead of
seeking right answers
Unknowables
Many decisions to make and no
time to think
High tension - Pattern based
leadership
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Take immediate action to reestablish order (command and
control)
Provide clear, direct
communication
Applying a command and control
approach longer than needed
“Cult of the leader”
Missed opportunity for innovation
Chaos unabated
Set up mechanisms (parallel teams)
to take advantage of opportunities
afforded by a chaotic
Environment
Encourage advisers to challenge
your point of view once the crisis
has abated
Work to shift the context from
chaotic to ordered
Leadership Actions – Un-order
Complex
Characteristics
The Leaders Job
Flux and unpredictability
Probe-sense-respond
No right answers, emergent
instructive patterns
Create environments and
experiments that allow patterns to
Emerge
Unknown unknowns
Many competing ideas
A need for creative and innovative
Approaches
Increase levels of interaction and
Communication
Use methods that can help
generate ideas, large group
methods, encourage dissent
Danger Signals
Temptation to fall back into
habitual command and control
Mode
Temptation to look for facts rather
than allowing patterns to emerge
Desire for accelerated resolution of
problems or exploitation of
opportunities
Response
Create communication channels to
challenge orthodoxy
Stay connected without
Micromanaging
Don’t assume things
are simple
Recognize both the value and the
limitations of best practices
Chaotic
Pattern based leadership
Expert diagnosis required
Sense-analyze-respond
Cause and effect relationships
discoverable but not immediately
apparent to everyone, more
than one right answer possible
Create panel of experts
Experts overconfident in their own
solutions or in the efficacy of
past solutions
Listen to conflicting advice
Analysis paralysis
Expert panels
Fact based
management
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Viewpoints of non-experts excluded
Encourage external and internal
stakeholders to challenge
expert opinions to combat
entrained thinking
Use experiments and
games to force people
to think outside the
familiar
Principles of Knowledge Management
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Knowledge can only be volunteered it can’t be conscripted
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We only know what we know when we need to know it, we are pattern based
intelligences not information processors
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In the context of real need, few people will refuse to share their knowledge
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Tolerated failure imprints learning better than success
•
The way we know, is not the way we say we know
•
We always know more than we can say, and we will always say more than we can
write down
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Shifting From Leader to Facilitator
Leader
Facilitator
Concerned with doing the right thing
Concerned with helping people do things
Takes the long-term view
Helps people find a view and articulate it
Concentrates on what and why
`
Thinks in terms of innovation, development,
and the future
Helps people concentrate and be clear in the here and now
Helps people think, and helps them communicate
their thoughts
Sets the vision: the tone and direction
Helps people make meaning of tone pace and direction,
and to function well at the required pace
Hopes others will respond and follow
Hopes others will engage in the process
Appeals to hopes and dreams and defines limits
Helps others make meaning of hopes and dreams;
pushes appropriately on boundaries
Expects others to help realize a vision
Helps others articulate a shared vision and common
mission or purpose
Inspires innovation and invention
Helps people respond to things that are new and things
that remain the same
Source: Ron Scott, Scott Associates 2008
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
The Facilitation Model
Task
Every action facilitators take should help groups move closer to completing that task.
Facilitators constantly ask themselves, “Is this action going to help the group complete its task?”
Self
Facilitators must know themselves and how they impact their groups. They frequently ask
themselves the question, “What do I think is going on here? How do I feel about what is
happening at this moment?” They occasionally share the answer to this question with the
group—if it will help members complete their task.
Group
Process
They help people become more aware of how they are functioning and help them take steps to
improve. Underlying all of this is a continuing focus on task. The normal emotional energy
available to people becomes a practical asset in helping get the work done.
Process is a set of actions or tools, an exercise, or an intervention that helps groups progress
toward their goals. The three fundamental facilitation processes are planning, solving
problems, and finishing work.
Source: Ron Scott, Scott Associates 2008
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Actions of an Inspiring Leader
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Inspirational leaders…
– Use a sense of purpose to
motivate their employees to go
Leadership
beyond the normal call of duty
– “Sincerely” engage the spirit, mind,
body and heart of each individual
Intellectual Engagement
Emotional Engagement
on their team
– Inspire trust within their
Employee
organization
– Energize, excite and
motivate others
– Understand that every
Work
person is an individual
Task
with unique personalities,
Environment
talents, values and
motivations
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Random Thoughts
I learned how not to invent the light bulb 10,000 times – Thomas Edison
• Innovation Comes from Failure with Resilience
• Prevention of Failure vs Realize, Absorb & Recover From
Failure
• Tolerance of Failure is the Measure of Health of an
Organization
• Empirical Knowledge vs Coherence vs Gut Feel
• Attention is a Leading Indicator- Compliance is a Lagging
Indicator
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Going Forward
• Recognize the system you are
managing….and operating in
• Recognize your own capabilities and
the capabilities of others
• Create channels of communication
to challenge orthodoxy
• Resist the temptation to fall back
into habitual command and control
mode
• Recognize the need to evolve
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting
Recommended Reading
The Mind Of The Strategist
Kenichi Ohmae
Outliers
Malcolm Gladwell
The Black Swan
Nassim Nicholas Taleb
www.cognitive-edge.com
David Snowden
The Whiz Kids: The Founding Fathers of American Business - and
the Legacy they Left Us
John A Byrne
Jim Brunke
Brunke & Associates, LLC
National and International Aerospace Consulting