ClearPurpose

One of the richest tools I’ve found for connecting strategy and execution is the Strategy Map introduced by Robert Kaplan and David Norton in 2001.

In their Balanced Scorecard work, Kaplan and Norton had defined four “perspectives”: Learning and Growth, Internal business process, Customer, and Financial. The Strategy Map creates a cause-and-effect relationship to emerge between these four perspectives, with the Internal and Customer perspectives being central.

If we are to achieve our strategy, what needs to be true about our business (Internal), and therefore what needs to be true about our culture and our people (Learning and Growth)? When we achieve our strategy, how will that translate into value for our customers (Customer) and therefore into value for our investors (Financial)?

As helpful as the Strategy Map is for “connecting the dots” from the company’s people and culture all the way to financial performance, with the strategy at its core, the Strategy Map often could not capture on a single page all of the things happening within the business to execute the strategy, and how those activities would be managed.

Kaplan and Norton introduced the concept of Strategic Themes as a way to focus on specific parallel aspects of the strategy. I like to consider the Pillars of the strategy as Strategic Themes and to map out the logical flow of the strategy at a greater level of detail. I also like to use this view to identify key initiatives that align with the aspects of the Strategy Map. Finally, the Strategic Themes level of mapping is also a great place to begin to call out specific metrics that can be used in monitoring the strategy to make sure that execution is staying on track.

Those metrics are then managed through the Balanced Scorecard. The Strategy Map and Strategy Themes help us translate the strategy into specific actions we need to take as a company and the Balanced Scorecard provides the tool for regularly monitoring our progress in executing the strategy.

Read the full story here.

Warner Bros. made big news this past week by announcing that new feature films in 2021 will simultaneously release in theaters and streaming on HBO Max. 

For many that haven’t closely followed the company’s corporate transactions, the decision was a bit of a head scratcher. But once you understand that Time Warner was acquired by AT&T in 2018, who had also acquired DirecTV in 2015, it all starts to make sense. Kind of. In a troubling sort of way.

AT&T clearly believes in vertical integration. Vertically integrating has many advantages — you can control the value chain, drive out inefficiencies, and make decisions to maximize profitability. 

But it also comes with significant challenges. I’m not sure AT&T is up for those challenges. The companies in AT&T’s portfolio come from industries with very different expectations, market disciplines, cultures, and ecosystems. 

In 2020, streaming networks are the shiny thing that everyone is chasing. AT&T wants to turn the crank on the vertically integrated machine they’ve built to deliver growth in HBO Max subscribers. Who cares if Warner Bros. gets squeezed a bit in the process?

It turns out a lot of people care. 

Let’s hope AT&T learns their lessons before they do too much damage.

Read the full story here.

Last week, General Motors’ Chairman and CEO Mary Barra increased the company’s commitment to electric vehicles from $20 billion to $27 billion by 2025 and announced the company’s plan for an all-electric future. This week General Motors sent another significant signal of this pivot by withdrawing from the Trump administration-led litigation against California’s tough fuel economy and emissions regulations.

Startups often pivot multiple times before settling on a winning business model. What GM is doing is much trickier.

The auto industry has been a mature industry for quite some time. When industries approach the end of their life, smart companies try to “jump” to another S-curve still in the startup phase. That’s what GM (and every other automaker) is trying to do. Making that jump isn’t going to be easy. Big mature companies are complex. GM customers, employees, and dealers are all heavily invested in the company’s gas-powered legacy. The company’s business model and economic engine are fine tuned for the way GM has always operated. 

While it might seem that logically GM has a strong starting point, the investment that the company needs to make to transition to electric vehicles may be greater than for a pure-play startup like Tesla. General Motors also has everything at stake. Their existing revenue streams and loyalties can easily be lost if the company stumbles in this transition.

Billy Durant successfully led his companies through the S-curve jump from horseless carriages to automobiles in creating GM. Can Mary Barra do the same as GM tries to jump from gas-powered to electric-powered vehicles? We will have to wait and see.

Read the full story.

This week, BuzzFeed announced that it was acquiring HuffPost (acquired by Verizon in 2015 as part of the $4.4 billion AOL acquisition) in a complex deal with Verizon Media. Meanwhile, AT&T is still looking for a buyer for DirecTV (which they acquired in 2015 for $49 billion). Also announced this week, T-Mobile is shutting down their TVision Home service that they aquired in 2017 (while confusingly launching a similar service also called TVision). These transactions are just the latest in a long line of symptoms of a consistent problem. While mobile operators are great at operating wireless networks, they fail their stakeholders when they stray beyond their strategic boundaries.

Verizon and AT&T have reached their similar situations by moving in opposite directions. Verizon seemed to start without a strategy, so they made some big mistakes, and now that they have a strategy they need to unwind those mistakes. AT&T had a strategy, but they ignored it and made some big mistakes. They now don’t seem to know what their strategy is, but still need to unwind those mistakes so their debt doesn’t kill them. Meanwhile, T-Mobile was a scrappy, under-resourced upstart that executed against a focused strategy.

Read the full story.

Rich Horwath is a consultant who helps companies with their strategic planning. In StrategyMan vs. the Anti-Strategy Squad Horwath uses a super-hero vs. super-villain comic book to teach his approach to strategic planning. He does so by introducing the factors common in businesses that lead to “bad strategy” in the form of the villains who are set on killing the strategy for TechnoBody, a fictional company. At each step in the process, the villains show up, only to be defeated by the heroes from the Strategic Thinking Institute (Horwath’s company). The heroes teach basic principles and tools that lead to successful strategic planning. 

StrategyMan is a fun and informative book. While a relatively quick and enjoyable read, it contains much to help business leaders recognize common behaviors that can impede strategic planning and learn tools and principles for doing it right. Optimally, the book would make a good pre-read for a team heading into the strategic planning process. Unfortunately, Horwath leans heavily on the terminology and some frameworks that are unique to his approach to strategic planning. While there’s nothing wrong with the Strategic Thinking Institute approach, companies that already have their own terminology, processes, tools, and timelines may be hesitant to confuse participants by introducing an alternative framework.

Read the full review here.

Maybe it’s just that I’m getting older and more perceptive (or perhaps more cynical) but with each election cycle, voters seem increasingly to be voting against a given candidate rather than for the one that gets their vote. So much of campaigning these days is trying to convince voters why the competitor is a bad choice rather than making the case for why the candidate is a good choice. It’s sad. And I’m glad businesses, for the most part, don’t work that way.

Smart businesses, on the other hand, realize that they don’t need to please everyone. In fact, trying to be “all things to all people” is one of the hardest business strategies to pursue and one that is rarely (if ever) successful.

Successful businesses carefully select which customers they want to please and then focus all their attention on that subset. For most businesses, this is a very small minority of the overall total market. And while business leaders, especially entrepreneurs, are always looking for opportunities created when existing solutions poorly serve customers, businesses do best when they focus their marketing and personal pitches on the value that they create rather than on the shortcomings of their competitors.

And when customers feel really good about the choices they make in the marketplace, we all win!

Read the full article here.

Media mogul Jeffrey Katzenberg formed startup NewTV early in 2017, landed Meg Whitman as CEO in March 2018, announced $1 billion in funding in August of that year, and two months later renamed the business Quibi. The service officially launched in April of this year and now, two years after its naming and six months after its launch, the service is being shut down.

I’m guessing the main problem is a simple, and unfortunately common one.

They simply forgot to ask if anyone needed a Quibi.

The really sad thing is that Katzenberg, Whitman, and their investors probably didn’t need to spend money on research or spend time in customer discovery. Their concept had already been disproven. In September 2015 Verizon launched go90, a mobile-centric video streaming service with studio-quality content. The service failed to attract subscribers and was shut down in July 2018 (a month before Quibi’s funding).

Katzenberg and Whitman don’t understand how to launch a startup. They tried to run Quibi like a big corporate initiative. Verizon can afford to lose $1 billion on a bad big bet. No startup can afford to lose $1 billion.

Smart startups realize that their concept is merely a collection of hypotheses. Those hypotheses need to be tested, proved, and improved. Smart startups spend as little money as possible until their experiments have shown that they provide a solution that the market really needs, wants, and is willing to pay for. And when they truly know that, they scale like crazy.

Quibi did everything backwards. They spent tons of money without testing any hypotheses. And when their hypotheses were wrong, it was too late. The money was spent. The goodwill with the industry, investors, and the public was gone. There was nothing left to do but close the doors.

If you have an idea for a startup, learn this lesson. 

Don’t be a Quibi.

Read the full story here.

IBM recently announced plans to split into two companies. The company continuing on with the IBM name will focus on cloud and AI solutions, while IBM’s traditional managed infrastructure services will reside in a to-be-named NewCo. 

I’m a huge fan of focus, so this is a good thing, perhaps even overdue.

However, I have often said that a company’s purpose should be “forever” and if a company changes its purpose, then that probably means it’s no longer the same company. This planned change is a good opportunity to reflect on the fact that IBM is no longer International Business Machines. While the company’s stock ticker, headquarters location, and even management and employee teams have enjoyed some level of continuity, it is not the same company.

In this article, I discuss how the company’s purpose and very nature have changed over the decades.

Read the full article.