Saturday, November 22, 2008

A Fresh Look at Strategy (and a green energy update)

Most of us have been fixated on the current economic crisis that seems to worsen by the day. But, how many have used this as an opportunity to revisit strategy? At a moment when we're all riveted to current events it's also the perfect time to think about the future.

By way of an analogy, here's a quick update on my green energy initiative. BTW, thanks to those of you that have given me such positive feedback on it.

As you can see from these photos, we're continuing to make great progress and should be generating electricity very soon. The concrete pad is now sufficiently cured, the base of the tower is ready and the frame for the photovoltaic cells is in place. We already have the photovoltaic panels on site and are awaiting shipment of the tower and wind turbine - which should arrive within the next few weeks. And, the paperwork for "net metering" is being submitted, which will enable us to sell excess electricity back to the local utility.

The second photo offers a view to the west - the dominant source of wind. We're very fortunate to have such a great site - with an average wind speed of 10 - 12 mph! If you look closely, you might be able to see the the wind turbines (there are 12 of them) from New Hampshire's first commercial wind farm, which is about 10 miles away. This wind farm recently went online and will soon be generating 24 megawatts of electricity - enough for 10,000 homes!

Our wind turbine is the first residential one to be constructed in our town and will generate about 3KW. Like the commercial wind farm, ROI won't be achieved for 30 or more years!

As I mentioned in an earlier post, this is our investment in the future and an important contribution to our community and the world. It is "strategic" - in the truest sense of the word. In light of the current economic maelstrom, it is tempting reduce costs and scale back our efforts. However, I am not willing to retreat or change my "strategic plan" for green energy. Of course, in parallel, we've also been (tactically) pursuing energy conservation. For example, we've replaced most incandescent lights with fluorescent or LED equivalents, we unplug appliances when not in use, and we've super-insulated the house and updated the heating system for optimal efficiency.

Likewise, in the business world, it's tempting to completely abandon long-term strategy in favor of short-term tactics (e.g., cost reductions). However, I believe that we can't allow ourselves to lose sight of our goals for the future. Do you expect your company to be around in 25 years? If so, what sort of future do you envision? How will you achieve your vision? What sort of scenarios have you developed to help think about the future?

In fact, I believe that the current crisis is the perfect time to revisit strategy, and to update, enhance or totally recreate it. In my book, The Performance Management Revolution, I cite strategy as one of the four tenets of any performance management initiative. The use of scenarios - which consider political, economic, social and technological possibilities - will help direct any strategic thinking exercise.

With a compelling and credible strategy, the current crisis need only present a temporary set back, instead of allowing it to redefine the enterprise, ultimately hampering its future.



Check out my website for details on where I'll be speaking, presentation abstracts, articles, my book and more!

Thursday, November 13, 2008

Why Performance Management and Business Intelligence are Crucial at this Moment

Now that the US elections are behind us, we can start to refocus on the biggest single issue facing businesses (and individuals) right now – the economy. In January, I started talking about an economic recession:January blog posting

I think it’s now unanimous that a global recession is upon us with more bad news emerging each day. In fact, today the OECD issued a statement saying that its 30-nation member area “appeared to have entered recession”: OECD Press Release

Even Asia is not immune, with China announcing that annual industrial output growth has slowed to 8.2 percent for October. And, I think we’re just getting started! All signs point not only to a meager Q4 but a Q1 that likely won’t be much better.

In the corporate world, we’re seeing many respond with a “kneejerk” reaction to this malaise: budget cuts, RIFs, financial guidance reduced, assets sold, bankruptcies, etc. These organizations have adopted a sort of “bunker mentality” to face the threat. As a result, they overreact, shedding more “ballast” than they need to stay afloat. By exaggerating the challenge and overcompensating, they weaken the enterprise for the future. One doesn’t have to look far to find these sorts of companies – for example: a number of companies in the auto and telecommunications industries. A friend of mine, who works for a large telco, shared with me extreme frustration concerning ongoing and across-the-board RIFs. Seasoned employees have been eliminated in favor of cheaper, less experienced labor, making it hard, if not impossible to get important work done. While this may please Wall Street (in the near term), this sort of tactical approach doesn’t bode well for their future.

In contrast, the wise organization carefully analyzes the current threat, developing multiple scenarios for the future and creates suitable short and long term plans. This forward-thinking approach allows management to proceed strategically, with an eye to the future, but still grounded in the present. Of course, organizations may still have to take measures to reduce costs – perhaps dramatically. However, they will do so with greater precision – ensuring they haven’t seriously hampered their future ability to execute. It’s also reasonable to expect that this sort of sober, yet visionary direction will expose new opportunities to invest in, which will have been obscured to less sophisticated organizations. A good example of this, in my opinion, is Alcoa. Hit with an industry-wide surplus of aluminum (and a dramatic decline in price), it took aggressive action to reduce costs, employing “a four-part model that spreads the curtailments across [the] global system and minimizes the costs associated with plant shutdowns and re-starts and, in turn, minimize the impact on plant communities.” You can read their press release here: Alcoa Press Release

Of course, the title of this posting has already given away my core message – that EPM and BI are critical during this time. This is true. However, I don’t mean just the technology. I mean the philosophy! This begins with transparency and accountability. Without those as core tenets of an organization, the best technology won’t help. However, under the right conditions, BI and EPM can work wonders – allowing an organization to quickly develop perspective, to assess strengths, weaknesses and capabilities. To plan, execute, analyze, re-plan, alter strategy, and plan and execute again in a continuous cycle – matching the changing dynamics of the real world.

So, I encourage organizations to avoid the reactive and tactical approach to a worsening economy and take a more strategic outlook – embracing transparency and accountability - with BI and EPM as enablers – delivering true perspective, precision of execution and agility and a better chance to survive and see the next era of growth.



Check out my website for details on where I'll be speaking, presentation abstracts, articles, my book and more!