February 13, 2013

Two Left Shoes – Activity System Based Competitive Strategy

Shoe-1Thousands of businesses are out on a hunt for the White Rabbit (Customer): offline and online. Who will get the prize?  Imagine if you will.

Two weeks ago my daughter came back from a four week trip to the USA. Knowing my passion for shoes – those who know me will be aware that I live on high heels – she bought me a pair of really cool heels from Nine West Vintage Apparel. Risky present… in more than two ways!

Assuming she knows my taste, you could expect that they might be too large or too small. No! After putting the first shoe on my left foot and admiring it for a moment… perfect fit and look… I reached for the second shoe. And, couldn’t believe my eyes: it was also a left shoe!

Four weeks had already passed since she bought them in Soho, New York.

Admittedly, I was holding a ‘hostage’: half of a second pair they couldn’t sell. But would they go into trouble of shipping a pair to Australia? I rang. After speaking to ‘Jason’, and learning that they ship within US but not overseas, he offered that if I send back both left shoes they will personally go to DHL and ship me the complete pair. I said good-bye to my two left shoes and waited. The new complete pair arrived 10 days later, yesterday – with a hand-written, personal note from ‘Jackie’, store manager.

How cool is that?

Lesson…? It’s not what you know… but how you connect!

It’s about what really separates successful businesses from the rest, irrespective of economic conditions. It’s about connecting the dots and the challenge is how to turn it into a powerful weapon for Productivity, Innovation and sustainable Competitive Advantage…

Activity System Based Strategy

Employee_engagementStrategies rarely fail to deliver because of lack of thinking or planning or even creative potential. They fail because of missed connections in a company’s activity system.

Most organisations take a lot of care to hire most capable people – best for the job, with relevant experience. Then they invest more to further train them in their specialist skills. Admirable! But does it really help deepen your Competitive Advantage?

At best, it helps people do their job as well as the competitors, who get the same training from the providers. At worst, it just gives people portable generic skills that help them find another job – possibly in a ‘better’ organisation. Interestingly, ‘better’, doesn’t always mean better pay. Often the best companies, with great culture and great job stability, don’t pay best market rates. Yet, from graduates to experienced managers, people flock to these companies and stay.

Knowing business trends and sifting through annual predictions of thought leaders and researchers is a big part of my work in helping businesses succeed through branding and innovation. Research abounds in the area of predicting the ‘future of business’, complete with percentages, new trendy terms and acronyms and models. Yet, none of this makes it any easier for Managers to take action, let alone, help them to get employees to take action.

Perhaps by coincidence – my first profession was as a language interpreter – the other part of my work, as Chief Inspirator, is interpreting these trends into practical approaches to strategy and innovation.

One of the biggest ‘trends’ getting a lot of CEO attention lately is Productivity.

Three recent, different in nature, reports have caught my attention. I have already commented on the Gallup employee engagement study. It shows staggering figures of how employee active disengagement undermines strategy efforts of the brightest people in an organisation and destroys brand value.

The second piece of the puzzle is the Australian Agility Study by Melbourne University and PricewaterhouseCoopers. It defines four key elements of an agile organisation. It is worth knowing what they are and applying them in your business. As countless cases of corporate heartache show – think Nokia, Sony and Kodak – today speed aka agility is everything. It not only allows an organisation to cover competitive bases early. Importantly, it allows them to correct mistakes and improve quickly.

The third piece of the puzzle is a paper heralding the Next Wave in Productivity by International Data Corporation. This paper outlines a detailed model of Productivity, which, although heavily IT biased and rather conceptual – is nevertheless a powerful thinking proposition. It echoes InnoFuture’s own latest suite of services in the area of Productivity. What I find most useful about IDC 2013 predictions is that they emphasize the increasing importance of six concepts to consider in addressing Strategy development and strategy and execution:

  • Building models – Business models built around competitive activities that cannot be easily copied and provide repeatability of success.
  • Building systems
  • Building platforms – Think of Amazon’s success in its successful war for the e-readers because of a successful ‘platform’ for online book selling.
  • Building communities – I call it ‘purposeful networks’ of connecting all employees and suppliers around the strategic Non-Negotiable Principles.
  • Multidimensionality (connected activity systems as opposed to static business model based on functional silos)
  • Continuity of planning – Not an annual five day retreat and a big strategy document but a “freedom within framework” competitive strategy that is continually improved across the entire organisation.

All these concepts have one thing in common: connecting the dots around a strategic activity system.

The problem with the tried, old approach to strategy or innovation is that it assigns set tasks to set roles within separately driven functions without a clear connection. The power of the new, winning approach, championed by innovators such as IKEA and Southwest Airlines among others, is that it anchors strategy in a competitive Activity System, focusing every job in an organisation on those differentiating activities that allow it to consistently win, improve and grow the gap between it and its rivals.

As the above ‘Agility Study’ points out, today, everyone in an organisation must be looking for what’s out there so that the organisation can spot threats and opportunities well in advance and shift the resources quickly to where they are most useful.

But in order to do so organisations must know how to connect the dots in the Strategic Activity System (example below).

Example: Ikea – Activity System [Source: Michael Porter ‘What is Strategy?’]

NNP-IKEA

Conclusion

This new Activity System based approach to strategy planning and execution is the direct path to greater agility, productivity and improvement.

By identifying key competitive/differentiating Activities in the process, this approach also allows organisations to Focus their innovation effort. It provides a clear definition and criteria for innovation and places innovation resources where they are needed.
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Jojo-half image InnoFuture provides innovative business culture transformation services to progressive, Small-Medium organisations. You can request an appointment for a Free Consultation online Blueprint for Productivity or contact Margaret Manson on 0407 661 130 to find out how we can help your organisation be more focused, more differentiating and more competitive.