Friday, April 06, 2012

Breaking strategic inertia: Tips from two leaders
A CFO and a business unit head explain how they overcome the barriers that all too often separate capital, talent, and other resources from vital strategic goals.
APRIL 2012

Managing your portfolio and the resources –capital and people- to run it is one of the most critical aspects of driving sustainable growth. Regardless of all the great processes and ideas you may have, if you cannot resource the most promising initiatives to win while still meeting your current performance commitments, you will not be successful. The article highlight learning’s from a number of executives. Here is one of the case studies for making decisions at the business unit level.

……Andreas Kramvis, who heads Honeywell Performance Materials and Technologies, provides insight from a business unit perspective and outlines his novel approach to bringing strategy and resources into alignment…
…When you are in a business unit, you are much closer to your markets than the corporate entity is. Your knowledge of how to invest should be much sharper as well. Through rapid reallocation of your existing resources, you should be able to capitalize on opportunities more quickly than if you needed to apply for funds through a corporate capital process. The last thing you want to do is go hat in hand to corporate asking for capital when your businesses are not running well….
.. To ensure that your organization is constantly reallocating resources from weak areas to promising ones, you need a systematic operating method. Most companies have a rhythm of meetings and performance reviews but spend much of their time looking in the rearview mirror: What was last month’s performance? What was last year’s performance? I believe you need to impose an operating mechanism that reallocates resources in real time and that educates your organization and instills core capabilities.
One operating mechanism I’ve found helpful is something I call “business decision week.”1 We run BDW ten times a year, and we take its name seriously: decisions are actually made on the spot in real time. Attendance is mandatory for my direct-leadership team. Confidentiality limits the number of people who can be in attendance at some sessions, but for others there is no reason not to have a large number of managers listen in. The discussions are lively, and listening in can be a great learning opportunity.
I will not take a meeting outside BDW to discuss a project requiring capital approvals. Similarly, I will not take a separate meeting about resources for a new project involving research and development. Having one-off meetings and decisions would waste a lot of time and defeat the objective of this open system, in which all the key people must be present and comment on the matter at hand.
Business decision week forces my leadership team to look out the windshield. What are the biggest opportunities we should concentrate on? What capabilities do we need in order to pursue them? Where are our people wasting time, and where should they be spending more time today? How about in six months? We try to place management time and focus on areas where we can grow, rather than focusing on firefighting and activities with low potential.

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