Steve Shu on Management, Consulting, and Strategic Initiatives

Book Review of “The New How” (Business Strategy Book)

It is atypical for me to write a book review for this blog, but Nilofer Merchant’s “The New How: Creating Business Solutions Through Collaborative Strategy” is very respectable contribution to both audiences of this blog and the process of strategy development in general. In particular, the book does two important things beyond other strategy books:

• it breaks down the ivory tower of centralized strategy and addresses, in detail, the roles and responsibilities that each employee must fulfill in the new model, and
• the book explicitly documents a collaborative process that one can use to develop strategy, a process which from my vantage point has only been addressed either through mentorship and transfer of tacit knowledge or in fragments within other documents.

The book divides strategy into two domains – 1) where a company competes, and 2) how a company competes. The premise of the book is that the former topic (where a company competes) is well-addressed by existing strategy books, such as those by Porter, Chan, Kim, and Mauborgne. Nilofer’s book addresses the gap in business texts regarding the latter topic, which includes day-to-day and quarter-to-quarter strategies, such as “how do we grow sales of product XYZ” or “how do we grow sales of division Y by Q%?”  As she writes, “One person’ strategy is another’s tactics. The unnecessary and fruitless war of what is tactics or strategy or execution must end.”

Part 1 of the book provides a call to action for individual employees and leaders. But the book goes further by providing specific responsibilities that each person must fulfill. Where I admire the book is in its approach to addressing each employee’s role. Whereas “older” methods of strategy may have been focused on executive management teams, this book provides context, terminology, and frameworks for educating a broader audience. As an aside, I am also struck by the fact that Nilofer does a good job of incorporating concepts of improvisation into the strategy development process, culture, and mindset of employees. Improvisation is especially a soft spot for me given my involvement with Business Improvisations, a collaboration between business academics and improvisation instructors which helps companies in areas such as innovation, leadership, teamwork, etc. through customized, experiential learning sessions.

Part 2 of the book goes into greater detail on process of strategy development. It breaks down the process into four major areas:

• Question Phase – articulating the problem scope and assessing the current state of the organization
• Envision Phase – creating options for the organization developing criteria that would be used to evaluate options
• Select Phase – using a “MurderBoarding” process to sort, tune, fix, etc. options
• Take Phase – creating accountability, identifying who does what, and getting down to interdependencies and execution.

Although the book goes into much greater detail on all of these areas (with specific examples, charts, tables, etc.), one of my favorite charts is the MurderBoarding overview chart (copyright image reproduced below from “The New How” via permission from Nilofer Merchant). I often find this part of the strategy development process to be at risk of falling apart – this part of the strategy process is inherently messy, and unless the team focuses on a disciplined reference framework (like the one here), it becomes too tempting and easy to try to cut corners. Look carefully at the chart and see if you have been tempted to cut corners in the process. For example, did you forget to test the idea in part before finalizing the strategy? Or did you forget to vet and refine the criteria used to evaluate a strategic option?

Even as an experienced management consultant and manager, I would highly recommend this book (I’ve also added it to my popular Crash Course Consulting Reading List). The book is practical and covers a body of knowledge that has been largely undocumented to date. Whether one explicitly uses the processes Nilofer describes, the book still provides a good framework for assessing how one is doing. This book is well-suited for corporate executives, strategic planners, general managers, and management consultants. It would also be good as a textbook to supplement strategy and/or consulting courses.

Feel free to let me know your thoughts!

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What I Didn't Learn In Business School I Learned From Improvisation Instructors

Well I suppose technically speaking I learned this as part of instructional and experiential sessions at the UCLA Anderson School of Management and Duke's Fuqua School of Business, but I didn't pick up improvisation instruction at the Chicago Booth School of business more than a decade ago when I first got my MBA (side note: a cohesive mix of business theory and improv training definitely would have been good for prepping the cohorted classes).

Without getting technical and being too precise, what does improvisation mean to me (apologies to my mentors for cutting corners)? To me improvisation is about reacting in the moment at the top of one's intelligence and skills to serve not oneself but the greater good.

But there is a lot of confusion about what improvisation (or improv) means. Does is mean "acting" and "being funny"? No. Does it mean "making it up as you go along"? No.

Considering that I am a jazz drummer (long-time hobbyist), I would have thought I understood what the term improvisation means. After all, improvisation is something that is done in jazz music (e.g., bop, fusion) all the time.

I am realizing that improvisation is really a general foundational skillset and knowledge area that gets augmented by domain-specific areas. So "jazz improvisation (on the drums)" builds on concepts of core improvisation by adding things like common ride cymbal and snare drum comping patterns, song structure, phrasing, and supporting the band (above all). On the other hand, "improv acting" can include other concepts and specializations such as "physicality" (which seems to be about making it seem like you are interacting with real physical objects on stage when there is only thin air) and even "improv musicals".

As such, business improvisation is about taking improv concepts, developing specific specialties, and applying them in business situations. So core concepts of business improvisation can be further developed in areas such as creativity and innovation, teamwork & communication, change management, crisis management, merger integration, and conflict management. To take it a step further, these applications can be further used in situations related to sales & marketing, customer care, operations, and general management.

So what did I learn from my improvisation and business academic mentors? A lot, but here I'll share the tip of one area. It's about focus (of attention). Focus is something that needs to be worked on very consciously. And for me, there are elements of situational specifics. So for example, focus in a jazz improv session (a la Miles Davis) is different from focus in a sales meeting and which is different from focus in the household when you are talking with family. One can take one's skills too much for granted and move on autopilot. So a potential hazard of expertise is that one loses focus and/or one falls into the same habits. Improving focus requires constant work. And while I may go into more detail in a later post, some key elements of tweaking focus are around warming-up and supporting the team (and building on ideas).

Note: I have recently taken on a fractional, management role with a firm specializing in business improvisation training and human capital program development. If you want to learn more about programs that can be developed for your organization, please feel free to contact me. Thanks!

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Business Development May Be On The Upswing Careerwise, But What Is Business Development?

Earlier this year I had heard from sources at various business schools that given the recession and slower consulting and investment banking hiring, a lot of MBA graduates were looking to careers in business development. This is a great development, but in my experience the term "business development" means quite different things to different people. Here's a paraphrasing of some of the types of statements I've heard in the workplace:

• "Business development is about new customer acquisition and sales."
• "Sales personnel are divided into existing accounts and hunters. Business development looks for breakthrough, strategic sales."
• "Business development handles strategic partnerships & deals."
• "Channel sales are the primary focus of the business development team."
• "The VP of Business Development works financing, acquisition, and strategy activities."
• "Business development establishes the cross-promotional marketing deals."
• "Business development focuses on strategic initiatives (whether partnership, financing, product) identified by the Board."
• "The business development team is facilitating design of a new product with XYZ company and our development team."
• "Business development sells product to the channel."
• "Oh. You handle a mixture of finance, marketing & sales, strategy functions. You're business development."
• "Business development folks are jacks of many different trades."
• "Business development is about getting larger partners to commercialize on brand extensions that you may not be able to handle on your own."
• "The sales team does that. You want to know what business development does? We need to talk about that in my office. Come on in, and please shut the door so we can have some privacy."

There is an element of truth in all of these statements. Business development can be all of these things. It really depends on company. In my mind, however, the role of business development is to find new strategic opportunities for the company and start the company on the path to execute (incubation). It is not uncommon for business developers to have a combination of strategy, marketing & sales, finance, legal, and operations background.

Based on my experience in business development, here's the flavors I've run into (roughly from more to less common):

• Partnership development
• Strategic market development and sales
• Strategic marketing
• Mergers, acquisitions, and financing
• New business line exploration
• Channel sales
• New product development

What are your experiences with business development professionals? To what extent is it a well-defined function within your business? What types of issues have you run into?

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Mini-Brand Audit of Guitar Hero By Activision (Independent Research)

Listed below is a pre-release, draft copy of a brand audit on the Guitar Hero brand by Activision. I performed this mini-brand audit as a self-funded, independent party, and I created this document for reasons related to business development, marketing, and teaching purposes (brand management & consulting).

The purpose of a brand audit is to provide a company with a starting point for managing brand architecture, brand identity, and brand-building activities. Brand audits are often refreshed every one to two years and may be done by either internal staff of the company or external consultants.

Although I am a stickler for crafting problem statements, I did not explicitly articulate the problem statement assosciated with this audit (which is something I typically recommend in a consulting deliverable). That said, the general notion of an audit performed by an external 3rd party is to provide a wholistic, and independent view of strategy and tacics. I believe this document accomplishes that goal within the described limits stated in the document.

For the coming weeks, I would appreciate input and feedback from folks. I would also appreciate help in spreading the word as I am not a mainstream media channel. :)

Again, there are few angles I am thinking about in terms of releasing this note in the public domain:

• business development purposes for consulting
• general marketing & personal brand development
• instruction and teaching purposes

I plan to finalize version 1.0 of the document and re-release around September 1, 2009 before key milestones are reached by Activision and competitors.

Thanks for your interest. Please help to spread the word!

Draft copy of brand audit here (PDF file replaced by update below).

Update (8/30/09): Version 1.0 of Guitar Hero brand audit here (PDF file).

Update (9/4/09): Guitar Hero and related subbrand logos get a bit of a refresh (see here and here). The changes are consistent with the strategies outlined in the audit.

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What The Entrepreneur And The MBA Taught One Another

Two topics that I frequently see discussed in online forums, blogs, and articles are entrepreneurship and MBA degrees. In such venues, perspectives and responses are often very polarized, and it would not be unusual to see different camps characterizing the relationship of entrepreneurship to MBA training as either highly relevant or highly irrelevant to one another.

Rather than taking an argumentative approach to distill relevancy, one of my former colleagues (Paul Brown, an entrepreneur & founder, PhD degree) and I share a few things below that we specifically learned from one another (with Steve playing the role of non-entrepreneur, MBA degree). The context is during an enterprise software startup that went from Seed financing to Series A corporate venture capital to Deloitte Rising Star to sale/merger over a period of five or so years.

Some key things Paul got or learned from Steve (my notes taken from discussion and correspondence with Paul):

• Level of professionalism added - Having an MBA-trained person on the team changed professionalism not so much in demeanor but in the total approach to business. The MBA perspectives complemented a very technical, software R&D organization that sold highly technical products.
• Concrete methods and processes added - As opposed to piling receipts in the corner of the room and calling the pile "our accounting books", having an MBA on the team introduced discipline and methods in finance, sales, competitive intelligence & benchmarking, Board meetings, etc.
• Business literacy added - Perhaps an understated item but by adding an MBA competency to the team it helped to make a difference in key company situations as to whether we were taken seriously or not by others (e.g., partners, investors, customers).

Key lessons that Steve learned from Paul:

• Business experimentation is part of the entrepreneurial spirit and approach - Although I may have paid lip service to this in the past, I recalibrated myself away somewhat from business role models where managers are expected to "know the right answer" a priori. When you are paving new ground as in an entrepreneurial venture, there is tremendous value in conducting safe tests (such as floating an idea with another entrepreneur or an industry veteran, presenting a new pricing plan to a niche distributor).
• There is value in tapering the need to make hasty decisions - Something that has always stuck with me for many years was something that I remember reading about the Harvard Business School training method. Students were pressed to make decisions and calls based on information (however limited) in a case study. In reality, this type of mentality is reinforced in many business school and business settings. The mentality is that one will always have incomplete information whether in a managerial, case study, etc. setting, and one needs to make decisions as a manager. Boom, boom, boom, done. Although I have not fully formulated my thoughts in this area, what I believe I learned from Paul was that the entrepreneur may benefit not from procrastination but by delaying critical decisions as long as there is time to either gather additional information, see activities play out, or let management team emotions clear. (I know - my idea is a bit convoluted in its current form, but I am onto something and will revisit).
• If you want to appreciate entrepreneurship truly, you must witness someone with total willpower, drive, and endurance - I don't think I need to say more here, other than Paul has these characteristics.

Paul, thanks for the lessons!

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Collecting My Favorite Multimedia Clips and Exhibits For Marketing Course

Starting to collect my favorite videos and photos on my new posterous site (marketing section at http://steveshu.posterous.com/tag/marketing) for teaching business school classes (e.g., marketing, brand management). Folks may find some of the videos and photos entertaining.

I am still trying to find the best way to organize the videos in the context of what part of the marketing or brand management framework is being covered. I may also find a better way to include more detailed marketing notes on each video or photo. In any case, please feel free to send me links of your favorite videos. I may extend the posterous site to include organizational behavior topics, depending on my fall teaching load.

As background, I am using my posterous site as a scratchpad space separate from this blog and Twitter streams.

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My Experience With Teaching Ethics Session As Part Of Core Marketing Course

This past week I had a chance to teach an ethics session as part of a larger, core marketing course that I am teaching at Irvine University. I write this post to share my experiences on what worked and what didn't.

Now as context, about four years ago in 2005 I wrote a post on covering ethics as part of business school curricula, and to make a long story short, back then I didn't have a very comfortable opinion on how effective that type of training would be and whether students would want to pay for such training. I have since that timeframe (and based on comments from folks) augmented my opinion a little bit in that while I feel that ethics is something that should not be exclusive to business schools, it is something that leaders need to work with, and as such, is a fundamental topic for business schools to address.

That said, I am not quite comfortable with how I addressed ethics in this past week's session. Setting my effectiveness and student perceptions aside for the moment, here's the basic path that I took:

• Though I'm no business historian, I characterized the history of the revitalization of ethics in the business schools as falling into two mini-eras in recent history- One of these mini-eras started on the order of five to ten years ago and was driven by a lot of the corporate scandals, executive fiascoes (e.g., Enron), and need for better financial reporting (e.g., Sarbanes-Oxley). In this first mini-era, business schools introduced ethics into their curricula with some of them incorporating ethics into leadership courses with others taking ethics and spreading a little bit of those ideas into all courses. Waving my hands a lot, I cited Michael Lewis' piece, "The End" (Of Wall Street), the role of credit default swaps, and failure of ethics (among other things) being at the heart of the cause of the economic downturn. So I concluded that business schools can still do more. Mini-era two is taking place with MBA graduates taking part in the student-led MBA Oath, which has been going viral.
• I indicated that leaders need to be concerned with ethics - basically what I said above in that it is not the sole responsibility of business school students, but that we can further the practice of ethics.
• I promoted two key frameworks for analyzing ethical concerns- Both of these frameworks are from Chapter 4 of the McGraw-Hill Irwin textbook, "Marketing", 9th Edition, by Kerin et. al. One framework was the standard, 2x2 consulting-like matrix that broke ideas into 4 quadrants with (Ethical-Not Ethical on one axis and Legal-Not Legal on the other). We spent time discussing certain scenarios and whether they fell into one quadrant or the other. I argued that the legal axis was, in principle, more straightforward than the ethics axis, where the degree of overlap and misfit between individual, company, general business, and international ethical principles are more fuzzy and can require reconciliation whether by management, ethics officer or other. I cited Transparency International as a data point and source for international practices and norms for ethical conduct. The second ethical framework that we covered conceptually balanced profit maximization and shareholder value against items like environmental, societal, and other factors. Here I feel that the best management practices for balancing things are not so well-developed, but I struggle a bit with how this area should be advanced.
• I talked about ethical codes of conducts (as documents that need to be affirmed by employees in many companies) and associated online training programs - although I did not have example references or documents to point to off-the-cuff.

With respect to the big picture, I was able to cite a number of cases where companies (e.g., Body Shop, POM, BP) have made ethical and social concerns an essential part of their business and/or marketing strategy, but I think my ability to cite, crisp quantitative information could have been better. What are the costs of being ethical? What are the costs of not being ethical? Where does being ethical add to the bottom-line in terms of revenues, sales commissions, shareholder value, reduced churn, etc.? The answers I provided to these questions were either a bit long-winded or not available at the tip of my tongue.

In any case, if folks have thoughts on ethics, teaching ethics, receiving ethics training, etc., please feel free to share your stories. I am interested in what works and doesn't work for folks.

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Blog Interview On Consulting For Chicago Booth Corporate Strategy and Management Group

I did a blog interview for the Chicago Booth Corporate Strategy and Management Group (student-run organization for part-time and evening program). The interview (link here) covers areas such as typical week in the life of an independent consultant, common problems currently facing clients, and the most helpful MBA training I received at Chicago.

Aside from the fund raising item I mentioned in the interview section on current client issues, I also shared the following (which characterizes one current client philosophy on approaching prospective consulting projects):

... The other theme I have been seeing more of is in the operational process improvement area. The themes here, however, have not been so much around improving profits as they have been about weathering the economic storm and making improvements that increase either customer satisfaction or quality of services and products. Clients, on the balance, are more conservative right now. Whereas the smart executives and managers may have been going for broke before and taking bigger chances, they now see making continuous improvements as a must-do (not necessarily demonstrating immediate margin or revenue improvement until after the storm lifts). As additional light, some executives are missing their revenue numbers in the current (bad) market climate, but they are making their net profit numbers. These companies are using the stable net profits as their bulletproof vest with their Boards while using consultants in very targeted ways or in controlled “entrepreneurial experiments” to help build for the future.

As an independent consultant, I increasingly need to use my network to read the market (as opposed to having information flow to me from "The Firm". Don't know whether others are seeing similar things or not. Please feel free to share your thoughts.