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Why?

It is an inquiry we do not make often enough. „Why?“ is the simplest form of a question, yet when it is asked, it cannot help but be thought provoking. „Why“, „what if“ and other forms of critical evaluation promote discussion and lead to improvement in our decision-making process. Even so, we all too often elect not to use these words from of our repertoire. Instead, they are often replaced by, „sounds good to me“ or some other form of passive acceptance. We should reflect on the importance of this elegantly simple but powerful trigger for critical thinking and make sure we do not allow „why“ to become part of a forgotten business vocabulary. This article explores the importance of critical evaluation in strategy planning and asking, „Why?“.

Our life lessons and common sense should be applied within our business lives, day in and day out; never left at the door when we get to the office. Just think about it. Whether it is selecting which grade of gasoline to buy or trying to determine what the difference is between the regular and the „extra strength“ brand variation that costs $.75 more — we use critical evaluation in our lives constantly and are good at it. Where we are less proficient is leveraging this skill to its fullest potential – all the time. To do so we just need to program it into the decision-making process to occur systematically so we benefit from our cognitive talents in all aspects of our lives.âEUR¨

Our strategic planning process should be leading us through a critical evaluation framework that drives better decision making. The process should automatically be challenging the status-quo of the organization in order to drive better performance through a constructive current-state critical evaluation.

  • We’re losing market share. Why?
  • Our costs containment strategy is not working. Why?

Exploring such questions ultimately leads to more questions to contemplate. „Is the status quo the right answer?“

The strategic planning process should structure critical evaluation and drive questions about current problems in the business or organization and provoke innovation and creativity channeled into addressing performance. Likewise, the strategic planning process should also challenge our collective ideas for the future state vision.

  • Is this the right next move? Why?
  • We’re not closing new business. Why?
  • Are these ideas worth pursuing? Why?
  • Is changing it a good idea? Why?

Propagating Mediocrity
Critical evaluation challenges us to think and improve. All ideas need to be challenged in order to weed out potentially risky or harmful strategies and operational tactics that could have long-term detrimental impacts on the business. Ask, „Why?“

Many times our instincts tell us that something just doesn’t feel right. Do we stop to analyze why, or think about the situation and try to determine what it is that is bothering us about it? Most of us will mull it over until the bothersome element begins to crystallize in our minds and we can then take appropriate action. Conversely, we can sometimes go with a spontaneous „gut feel“ – another over-used skill that can get us into trouble. If our gut is sending us a strong message, shouldn’t we in turn be asking ourselves „why“?

This is as true in conjunction with our day-to-day routines as it is in strategic planning. Too often we „accept“ mediocre suggestions without truly using critical evaluation to poke at the notion. It is just as damaging to excuse oneself from the decision process by deferring to weigh-in with an opinion or looking away when faced with the opportunity to evaluate data and impact a decision. Stepping forward to contribute is a valuable leadership trait and organizations need leadership.

Critical evaluation is our filtering mechanism to protect us from poor choices. Mistakes will still be made, but with our filter working at 100%, some poor choices will be avoided and bad ideas stopped. The filter is our protection from simply accepting and blindly trusting in consensus or the person speaking the loudest.

In our business world, we not only have the obligation to filter – but also to question, challenge and improve. Despite Enron’s „ask why“ tagline, it’s clear that the question wasn’t being asked and answered enough. If only the risky decisions had been averted and the unethical behavior questioned. Instead, a company has disappeared off of the map, and many lives were damaged or ruined. Many bad ideas and poor decisions can be effectively filtered out through systematic critical evaluation.

The Power Duo: „Why“ and „What If“
The same is true for seemingly „good“ ideas. During strategic planning, good ideas can be made better when challenged and defended. Without critical evaluation applied, how do we know it really is a „good idea“?

Consider the current disaster unfolding in the Gulf of Mexico with the sunken BP deep-water drilling rig. It would seem logical that „actionable“ contingency plans would have been in place for the „what if“ scenarios. Unfortunately for the Gulf States and BP, whatever contingency plans that may have existed prior to the explosion and massive oil spill, have failed to have an impact thus far. The company would have benefited from more „what if“ planning. Better yet, what would BP’s situation have looked like today if better planning efforts and controls had been in place to begin with? Could the disaster have been avoided entirely and lives saved?

The planning process for our business must force such evaluation to take place, systematically. When a thorough planning process is followed, future-state vision and key outcomes go through a critical evaluation and are reviewed against the same evaluation criteria we should be applying to our current-state result.

  • Are we satisfied that this the best it can be, at least for now? Why?
  • What if we’re wrong on our assumptions?
  • What are the scenarios we should plan contingencies for?

Why this and not that?: The Refinement of Strategic Key Outcomes
Good leaders become great by asking, „why?“ They test for weakness in concepts, the conviction behind the ideas and the depth of analysis behind the suggestions.

Our strategic planning processes must provide that same framework for critical evaluation. It must help us select amongst the options available in formulating strategy and provide us with guidance that is true. A good planning process is like a compass that helps us find „true North“ and avoid getting lost in the woods.

The planning process should serve us in the identification of the best strategic options. As part of the process, it should aid in the relative valuation of potential strategic outcome choices and help us to prioritize our options from greatest to least beneficial.

Timeframes and Decision Gates: Analysis Coupled with Action
A structured planning process is required to pull us through to the planning conclusion, keeping us from getting lost along the way. To do so effectively, the process must couple the required critical evaluation with the necessary rigor to maintain momentum and take action. Analysis paralysis would likely result in the absence of a process built around established timeframes and decision gates. In strategic planning, at a minimum, we need to take action based on:

  • Competitive analysis
  • Return on Investment data
  • Contingencies / mitigation plans
  • Fully vetted assumptions

Established timeframes and decision gates within the process allow deferring taking action on our ideas until the „last responsible moment“. At the same time, the process continues to drive progress towards the goal of completing our planning effort. Once we’ve reached the decision point, our choices will be based upon a superior body of analysis and more thorough understanding of our options.

The Rewards of Critical Evaluation
Our economy needs businesses to thrive. To do so, we as business leaders must continuously strive to mature our organization’s strategic decision process and planning acumen. Our business cultures must encourage free thinking and reward those who constructively challenge, innovate and participate in making our models more successful by asking „why“.

 

Joe-D-Evans_579512Joe Evans serves as the President and Chief Executive Officer of Forte Solutions Group (FSG). Forte Solutions Group provides specialized business consulting services through two operating divisions.

You can contact Method Frameworks at 877-317-5264 (877-31PLAN4. Check our articles and blog often at www.methodframeworks.com to get many more planning tips and information about our Plan4 process.

 

sti

Strategy misalignment is subtle and sometimes difficult to spot. Yet without a properly aligned corporate strategy, you are likely to introduce a serious dose of chaos into the organizational environment.

Corporate strategy is the blend of strategic goals that support the mission and vision of an organization. When a corporate strategy is aligned, the key outcomes (strategic goals) of the organization are united with operations and execution tactics. In other words, all parts of the organization’s eco-system (the sum of internal and external functions of an organization’s environment) are moving in the same well-defined direction. When strategy is misaligned operational initiatives are out of sync with the strategic goals of the organization, mission drift occurs within the operations of the business,

It is critically important to identify strategic misalignment early since misalignment can lead to chaotic reactions. Uncorrected, problems compound quickly and lead to serious issues within the organization.

How do you know if your corporate strategy is aligned?

Look for these symptoms:

Financial Projections are Missed

While missed projections can be traced back to an array of different issues, often the root cause is strategic misalignment. Why? Remember that strategy alignment is the union between operations/execution and strategy. If misaligned, you can imagine the types of non-strategic efforts that can occur at a grass roots level in the organization as managers and workers attempt to find their own direction. Over time you’ll find deadlines are not met within operations, product launches or service lines are delayed, and all of this directly impacts projected revenue streams.

Growth is Stalled

When organizations begin to misfire due to misalignment, initiatives required to support and sustain profitable growth get into trouble. It’s not that the leadership and rank-and-file employees don’t want to see growth occur. It is that, despite their best intentions, they cannot sufficiently coordinate efforts on their own to right the ship. Unfortunately, spotting this symptom is difficult in situations where governance is already lax or missing altogether. Righting the course of the business requires the efforts of all parts of the organization, but they must be working in concert together to do it. Such a feat requires the ability to align strategy and execution through and through.

Reactive Spending and Duplicity of Initiatives Occur

When strategy is misaligned, company divisions can drift into a self-directed mode that stray further and further from corporate goals. Reactive spending and duplicity of initiatives might occur as a result of lackluster quarterly or annual results being posted. In other cases, it could be part of a chain reaction, due to inter-dependent initiatives fighting for limited resources. These unsynchronized initiatives begin to impact each other and desperation sets in, creating a vicious cycle of time and resources being consumed.

Cultural Erosion and Morale Problems Appear

We’ve already mentioned the chaos that occurs with strategy misalignment. This chaos takes a toll on leaders and workers of the organization who share in a profound dislike of organizational chaos. As a result, morale suffers. If you notice an erosion of the corporate culture and morale problems, consider that your strategy may be misaligned.

Revenue and/or Profitability Decline

The bottom line impact of strategy misalignment inevitably falls to the bottom line. While revenue and profitability can decrease for a variety of reasons, most of these reasons trace back to misalignment. Profitability suffers as a result of any of the symptoms presented here, such as when new services or products are delayed in roll-out because the initiatives to bring them to market are unsuccessful.

How to Address Strategy Misalignment:

Just as it takes time and effort to see results from strategy, re-instilling strategy alignment and correcting misalignment requires time, work and discipline. The situation didn’t occur overnight, and won’t disappear overnight either.

Bi-directional planning (bottom-up and top-down) and appropriate plan governance can align corporate strategy and prevent the symptoms that can negatively impact an organization. We will discuss in greater detail how to address strategy misalignment in articles.

by Joe Evans

Joe-D-Evans_579512Joe Evans serves as the President and Chief Executive Officer of Forte Solutions Group (FSG). Forte Solutions Group provides specialized business consulting services through two operating divisions.

change

Trendy Business Concepts Have a Dark Side

Coded language serves the purpose of making things sound better or worse than they really are. This is going to be a journey through the lexicon of some of the ‚buzz words‘ we have been hearing during the past two decades:

Total Quality Management (TQM), empowerment, downsizing, restructuring, customer-driven, cross-training, change management, ISO certification and environmentally conscious organizations are some of the most common coded language expressions.

TQM means the exceedingly difficult task of convincing senior management of the importance of doing things differently than they have become comfortably used to. Second, if you succeed at selling them the idea, you now have the very much more difficult task of getting them to act according to the new line of thought you have persuaded them of. This is truly challenging because you are asking them to work harder by paying attention to details they never concerned themselves with in the past. Third, they will ask you what is the reward they will get for doing their job ‚right‘ from now on. Finally, they will have to be more than fully prepared to do all that TQM demands of them in order for them not only to ’sell‘ it to their subordinates, but to model the appropriate behavior themselves.

What if senior management doesn’t buy into the TQM culture? Replace senior management or drop the subject until they retire.

EMPOWERMENT means helping your subordinates to free themselves of you. Meaning that they should be able to do most of what is required of them without waiting for your instructions at every step. If you view this as a loss of ‚power‘ or ‚control‘ don’t try it. If you don’t see all the possibilities of how this would help free your time so you can really do ‚management‘ then stay away from Empowerment Programs.

DOWNSIZING means taking the ax and chopping all the deadwood or redundancies out of your organization. Stated more simply: „Kicking out as many persons as you can possibly manage without, from your organization.“ This is designed to squeeze labor costs to the minimum and boost profit margins to the maximum. The benefit of the exercise is in adding an important indicator for the further attraction of stock holders. For employees it means working longer and harder and with the constant fear of being the next to go: a special formula for insecurity and stress.

RESTRUCTURING means confusing the hell out of everyone by changing things, persons and processes around every day. It also means discovering that a lot of the old staff don’t have the competencies and skills you need for your new structure, but you can’t fire everyone or hire a totally new staff. What do you do? Design an organizational structure to meet the capabilities of the manpower you have or one that meets the needs of future business plans?

CUSTOMER-DRIVEN means you fully recognize that there is so much competition in your kind of business that your customers can easily find alternatives to your service. This helps to wake you up to the fact that you no longer enjoy the monopoly you thought you had, so you had better lean over backwards to keep your customers happy and therefore out of the hands of your competitors. It is an expensive place to be because it imposes certain constraints such as the need to be always taking initiatives that keep you ahead of others, a very costly business.

CROSS-TRAINING (MULTISKILLING) means recognizing the limitations of maintaining minimal staffing levels and preparing to meet the resultant risks, by ensuring that every staff member is able to replace another in case of illness or other cause for absence. Stated differently: everyone should be able to replace the other because they all know each other’s jobs. This requires that management runs a continuous job rotation program to ensure that each member of staff gets to do as many other jobs as possible during the course of a year. This requires extra work and detailed record keeping on the part of management.

CHANGE MANAGEMENT requires long term, integrated planning and execution. It begins with the identification and understanding of the sources and nature of resistance to change you will encounter in any given organizational entity. It requires a lot of seemingly contradictory skills: patience with people as well as impatience in the delivery of tangible results; long-term thinking in the achievement of super ordinate goals as well as short-term thinking in the achievement of a series of small ‚wins‘; excellent communication skills in persuasion and selling of ideas as well as extreme confidentiality with regard your influence and incentive plans. Don’t start such a process unless you define your time scale in terms of years and have the full understanding and backing of those directly concerned.

ISO CERTIFICATION means attendance of more meetings and documentation of more details than you have ever done in your entire life before ISO. If you are not a patient group with at least a few excellent listeners, analysts and writers don’t ever think of ISO. The process of certification is costly both in human effort and in the upgrading of facilities and premises. The process will also touch all of the above mentioned concepts in one way or the other.

ENVIRONMENTALLY CONSCIOUS ORGANIZATION means practicing what you preach when it comes to keeping the environment clean. For example, you can no longer afford to put up a real pine fir ‚Christmas tree‘ that has been cut from a forest; you can not have a chimney belching black smoke or other toxic fumes into the atmosphere; you can not have open drains pouring fluid, chemical wastes into the streets or into the rivers or sea; you can not have piles of rubbish or ’scrap‘ acting as health hazards or eye-sores in or near your organization. You must be prepared to put your money into your deeds before you speak of environmental protection.

This brief journey should help you ask the right questions so you can judge more accurately what process you are getting into and how far you are able or willing to go to realize the goals you hope to achieve.

Fay-F-NiewiadomskiFay Niewiadomski founded ICTN (International Consulting & Training Network) in 1993. ICTN provides complete management services to its clients who are among the leading regional and multinational players. Furthermore, she has worked with CEOs, Board Members, Presidents and Ministers of Government and other Leaders to help them meet the challenges of change within their organizations through creative problem solving, management interventions and powerful communication strategies. Prior to founding ICTN, she researched the subject of „Managing Change through Needs-Based Assessment‘ in large Lebanese Organizations“ for her doctoral work at the University of East Anglia in the UK. Additionally, she also held various university positions as a professor at AUB and LAU and as Dean of the Faculty of Humanities at NDU.

 

bank

Debt restructuring refers to the reallocation of resources or change in the terms of loan extension to enable the debtor to pay back the loan to his or her creditor. Debt restructuring is an adjustment made by both the debtor and the creditor to smooth out temporary difficulties in the way of loan repayment. Debt restructuring is of two types, and there are many ways to carry out the restructuring process.

Debt Restructuring: Types

Debt restructuring is of two kinds, depending on the terms and the cost to the debtor.

1) General Debt Restructuring
Under the terms of general debt restructuring, the creditor incurs no losses from the process. This happens when the creditor decides to extend the loan period, or lowers the interest rate, to enable the debtor to tide over temporary financial difficulty and pay the debt later.

2) Troubled Debt Restructuring
Troubled debt restructuring refers to the process where the creditor incurs losses in the process. This happens when the Debt Restructuring leads to reduction in the accrued interest, or due to the dip in the value of the collateral, or through conversions to equity.

How to Plan Debt Restructuring:

1) The crediting company should prepare a roadmap for the debt restructuring process. The strategy should include the expected time to be taken to recover the debts, the terms of loan repayment, and watching the financial performance of the debtor.

2) The decision of the financial institution regarding Debt Restructuring depends on whether the debtor has invested in the company, holds shares with the company, or is a subsidiary of the company.

3) If there is conflict within the company’s board of directors regarding the process, then it is advisable to ask for help from a third party. However, third party mediation is not needed if the debtor is a subsidiary of the company.

4) Making a cash flow projection is also important to the Debt Restructuring process. It is advisable not to include uncertain cash flow estimates in the plan.

5) The debtor’s financial situation should also be considered while making a Debt Restructuring plan. The debtor’s ability to repay the loan depends on his or her financial management, so the financial company needs to look into the debtor’s roadmap for repaying the loan. If the debtor is another company, then changing the key people associated with it, like the director, board of directors or chairperson might help.

If you are planning to go for Debt Restructuring, as a creditor or borrower, you can approach a small business consultant for help.

Debt restructuring depends on many factors like the debtor’s financial management, the projected cash inflow, the relation between the debtor and the creditor etc. Debt Restructuring is meant to help both the parties. It involves compromises made by the creditor as well as the debtor to ensure that the loan is repaid in full to the creditor without too much of a financial loss to the debtor.

Alexander Gordon is a writer for http://www.smallbusinessconsulting.com