Developing Strategy: collecting and generating ideas

Earlier we learned how to introduce strategy to your team, now it's time to collect ideas

This post is a follow up to an earlier post I had written on introducing strategy to your team via a simple 3 step guide. The idea was to be able to introduce the concept with minimal preparation and friction. Check out the link below for that post.

Introducing Strategy: A Simple 3-Step Guide

Now once you have introduced the concept, I am assuming at some point of time you want to get this team together to either think through a new strategy or revise an existing one.

Now how does one go about doing this? Does one define the objective first? Does one already identify the prioritized customer segment first? The question always is where to start.

Roger Martin talks about starting from where you are and collecting the biggest opportunities and challenges and solving them in coherent manner (to de-jargonize, to solve the ones which make sense to be solved together and do not pull in opposite directions)

Richard Rumelt talks about collecting ideas, clustering them, putting them in a timeline and coming up with a guiding policy and plan to solve them.

In both of these schools of thought, it first starts with getting a list of opportunities and challenges written down (though in his book Roger Martin says one should start with the winning ambition, but I am not always a big fan of that flow). Today we will try to see how we can effectively generate this list of ideas.

Often the quality of the strategy will be dependent on the base of ideas from which it is generated, so it is very critical to generate a good set of ideas or identify the right challenges being faced by the team. It is like the taste of the dish is dependent on the quality of the ingredients (not necessarily the quantity).

This is only the feeder into the Strategy process and a lot more will need to be done post this as well but for today we focus on collecting or generating ideas. While we will not mention this again,customer need should be the central point behind all idea generation.

Collecting Existing Ideas

Each organisation has a lot of opportunities and challenges that are already known but often strewn all over the place and not collected holistically. We would propose going after them in the following manner

Revenue generation opportunities

Each organization ideally keeps a track of

a) why they won a deal

b) why they lost a deal

c) why they did not pursue a deal

Based on the above data, the organization can easily come up with ideas regarding how they can increase their revenue. These ideas would ideally be clustered under the four buckets of Ansoff’s matrix.

Source: appinio website

Also while collecting the ideas do collect

a) revenue impact by project (this will be an estimation, so don't over index on it)

b) costs required for implementation

So, how do you actually do this exercise?

• Ideally collect the deal data and conduct the analysis first to come up with the list of opportunities

• Almost always, there would some missing nuance, so you will need to sit with sales and marketing leaders to bring out the qualitative elements for the opportunities identified

• Cost estimations should be made based on inputs from R&D and operations/supply chain.

Cost optimizing opportunities

Now the ultimate aim of a firm is to generate customer value and in the end create profits. So there will also be cost optimizing opportunities that one should be able to collect based on existing projects.

A good way to do this is to go department by department and look at the cost pareto. In the cost pareto, you will encounter two things

a) avoidable costs (usually one time)

b) non avoidable costs (usually recurrent)

avoidable costs would be things like issues in the manufacturing plant, quality defects, last minute shipment, PR horror shows (Astronomer) etc.

Non-avoidable costs are basic costs of running operations. For non avoidable costs, there will always be a list of productivity ideas by each department that is usually on hand or needs to be collected by floating an email or survey in different departments.

Always collect

a) costs to be saved by project

b) costs required for implementation

So, how do you actually do this exercise?

• Collect cost breakdowns of each department

• Analyse all avoidable costs and see if there are any patterns there

• Collect list of all current productivity initiatives which are on hold or not getting funded

Generating New Ideas

This is the fun bit. A few key challenges with existing ideas are:

• they are reactive to competition

• they are born out of benchmarking

• they might be already outdated

This is why one also needs to make sure there are creative new ideas that are also part of the options that we are going to put on the table for creating a new strategy.

For this purpose, I would propose this methodology below from Adam Brandenburger which is explained in his article “Strategy needs creativity” and it relies on 4 key principles

• Contrast: question the underlying principle of current industry and ask why the inverse, reverse or contradiction is not being done
  E.g. People were coming in to rent movies from Blockbuster. Contrast: why the movies cannot be sent to them via mail? And thus Netflix was born.

• Context: Using analogy or inspiration from other industries (where similar problems have been solved) and applying them to your own industry
  E.g. Intel used the example of Teflon to start branding computers as Intel inside and build a brand where many thought it was not possible. Nvidia did the same for gaming PCs then.

• Combination: Combining elements can result in new industry or business opportunity creation.
  E.g. The creation of Amazon prime as one subscription service across video, music, shopping has led Amazon to create a strong ecosystem.

• Constraint: Turning the current constraints or limitations into strengths or using them as principles to guide imagination
  E.g. Tesla overcame its limitation on competing with the big auto via dealership network by building own stores and focussing on online selling model

Check out this link to understand more.

Now there are also other ways to do it. Another interesting approach of generating ideas is using what Richard Rumelt calls “sources of power” in his book, Good Strategy Bad Strategy. They are named as below (I won't explain them here but you can read about them here)

• Leverage

• Proximate objectives

• Chain-link systems

• Design

• Focus

• Growth

• Advantage

• Dynamics

• Inertia and Entropy

• User Base

So, how do you actually do this exercise?

Preparation for the meeting

Our proposal here is to have a brainstorming session ideally in person with no more than 8 people in one session. Ideally it should be 90-120 minutes in duration.

Share with the participants via email that the idea is to be as creative as possible and think of what they would do to disrupt the industry or operations in the company.

Ask every member to think of at least 3 ideas before they come for the meeting. Ask them to think about customer needs and speak with a few customers as they prepare for this meeting.

Share the link to the two articles I have shared above to get them to think.

Running the meeting

The meeting ideally should be run by someone who is neutral. Let everyone present their ideas one by one.

Do not, I repeat, do not try to bring down any idea. Just note them.

Post all ideas being presented, ask if any new ideas have propped up as a result of the discussions? If yes, ask them to present the idea.

End the meeting. You do not need to decide just yet what to do now.

After this, some people might still think of new ideas based on what they have heard. Give them a platform they can reach out on to share that idea.

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Well this is it, for collection and generation of ideas. Your strategy is only as strong as the quality of ideas that feed it. So it is important to spend enough time collecting ideas. Often this stage is very rushed and what happens is only the existing ideas come to the fore and very little time is spent on actually creating new options/ideas. I would urge you to spend more time on generating new ideas, as this might end up being the key.

That is it for now. We will write more about what to do next once you have the ideas in another post soon. Hope you have fun reading. Do share how else you would go about generating new ideas with us. See you next week