 |
|
 |
By DERRICK ROME, CFA
 |
A client's experience with prior consulting engagements can assist in bridging the gap that often exists in understanding how to optimally engage a consultant. However, the unique nature of each consulting engagement challenges these prior perceptions, introducing a potential gap between expectations and reality. By definition, each engagement is a dynamic and fluid exercise towards uncovering an often hidden and elusive truth.
The consulting firm acts as an impartial observer, analyst, educator and facilitator to assist in resolving those issues for which it was engaged. The client and consultant must therefore work in close partnership to uncover those optimal solutions which lead to "true" issue resolution, and to ensure that resources can be deployed in a timely fashion to execute those solutions. What follows is a recommended path that will maximize the probability that these truths will indeed become self evident and will ultimately lead to enhanced profitability.
Assessing the Situation
Identifying the correct issue to be solved is the most critical and often the most elusive aspect governing each strategic consulting engagement. An organization often runs the risk of focusing on issues that do not address core problems. Elegant solutions are then crafted, approved and implemented to address perceived critical issues. As time passes and as core problems continue to adversely affect the organization, a sense of confusion takes hold, often causing the organization to step up efforts to implement more of the same solution at a faster pace. This often leads to the ultimate abandonment of the incorrect solution after a considerable amount of time and financial resources have been expended.
A classic case study can be demonstrated by observing how a hypothetical organization attempted to stem declining market share. This organization determined that declining market share was the result of incorrectly addressing issues related to the marketing and selling of products. It then determined that a marketing application needed to be built to facilitate an analysis which would improve their selling capabilities. Since this was a marketing issue, feedback for the design of the system was limited to personnel within the marketing department. The marketing department further concluded that all of the relevant data needed to analyze the situation resided within the department, therefore only internal data was input and analyzed after the application was built. They came to the ultimate conclusion that sales discounts and extended warrantees would solve the problem of declining market share. A year after the discounts and warrantees went into effect however, market share continued to decline and a consulting firm was retained to reexamine the problem.
The consulting firm began by assessing both the history of how the situation evolved as well as the current state of the situation. The organization perceived that the core issue rested with the application, which was not generating the correct solution to the declining market share problem. The consultants first determined that the application's solution would only be as good as the data analyzed; therefore they recommended that data from all departments as well as outside sources be used. They further concluded that the analysis of the data would still be flawed unless the application answered questions relevant to the true issue. Towards this end, they solicited feedback from outside suppliers, customers, and each department within the organization to determine if a redesign was necessary. A surprise conclusion came back from the customer surveys, which obviated the need to redesign or utilize the application in any capacity. The customers simply regarded competitor's products as being superior to the client's products and had been slowly migrating away from the client's products over time.
In this case, conducting a thorough situation assessment up front would have maximized the chances of successfully addressing the core issues before any solutions were proposed. The objective of designing a more competitive product can begin now that the issue of how to stem the reduction in market share is fully understood. Other relevant issues must also be reexamined at this stage and should include strategic concepts such as diversifying product lines, increasing efficiency, and reducing costs.
Issues facing client organizations often cover a wide range of areas. For instance, a delicate balance between addressing strategic long term objectives and immediate tactical goals must be maintained to ensure that the mission is successfully accomplished. Focusing on functional and departmental issues to the exclusion of the enterprise, or addressing enterprise wide issues without regard for departmental impacts must also be avoided. Another challenging concept involves the pursuit of process improvements or technologically driven solutions when the true root cause of organizational inefficiencies can be traced back to behavioral or corporate culture issues. A mixture of all of the aforementioned issues can often be buried so deeply within an organization that the desire to identify, quantify, and control them has been replaced by a dysfunctional complacency that denies their very existence.
The successful resolution of these issues lies in the methodologies a consultant employs to find the root causes of the core problems. The consultant begins assessing the situation by conducting a series of interviews, often at various levels within the organization, which ensures that an enterprise wide assessment can be correctly made. A gap analysis is subsequently performed to determine if organizational perceptions are in line with the heuristically derived problem definitions. After agreement has been reached as to the true nature of the problem, the consultant will compose a situation assessment document that will contain high level objectives and constraints defining how the problem will be addressed and resolved.
Pushing the Benchmark Envelope
The physical conditions under which labor, material and financial resources are employed, as well as the opportunities and limitations of any given enterprise, are governed by the industry within which the enterprise operates. Problem resolution must therefore be pursued by understanding the operational dynamics of an enterprise's associated industry. This provides a benchmark for determining how efficiently revenues are generated utilizing a given asset base, the level of income retention from these revenues governed by internal cost structures, and the level of debt and equity employed to finance the asset base. The product of these three concepts, asset turnover, profit margin, and leverage equate to return on equity, which is the ultimate indication of the enterprise's ability to deliver long term shareholder value.
The consultant therefore determines how the enterprise is performing against industry norms to assist in determining specific areas to address that will contribute the most to sustainable profitability. Industry best practices should be used as a guideline to assess baseline performance at a more detailed level. This can lead, for instance, to the discovery of an existing process, procedure or application that can be utilized, eliminating the need to build a costly, time consuming and unproven solution in-house.
It is also important to understand the dynamics of how benchmarks change and evolve over time. Competitors are in a continual state of self assessment, evaluating ways to identify and incorporate upgrades and improvements that will allow them to efficiently increase their market share. Different points along the business cycle, from expansion, peak, contraction and trough affect industries in specific ways that also must be taken into account. For example, smaller highly leveraged single product companies are much more vulnerable during recessions than large, cash rich, multi-product companies. Knowing which benchmarks to use at specific times during the business cycle is critical to the success of an enterprise.
Benchmarks lay the foundation upon which industry median success is measured, however the continual development of new and more innovative products and practices enables an enterprise to rise above this median to capture and maintain a strong competitive advantage. Incremental improvements on existing products and services can also lead to a rise above industry medians. The consultant therefore assists in placing issues in the proper historical context, facilitates an assessment of the current situation using industry benchmarks, and helps foster an environment conducive to empowering the creativity and innovation needed for an organization to stay ahead of the competition.
Leveraging Strengths and Mastering Weaknesses
| The consultant's role is to gather and analyze a diverse set of information relating to an organization's strategic and tactical plans, to assess critical problem areas, to transfer knowledge of these discoveries, and to formulate alternate recommendations that will increase the probability of successful strategy execution. |
One of the most challenging aspects in managing change is to correctly assess the strengths and weaknesses of the enterprise. The best laid plans will never come to fruition without an honest assessment of the ability of the enterprise to successfully execute the plan. Overconfidence in strengths and overlooking weaknesses may not produce any adverse effects in the short run, however long term implications of not addressing these issues will eventually surface, often with deleterious results.
One manifestation of the failure to address these issues is the restriction of an organization's ability to be proactive in seeking solutions before problems arise. This relegates the organization to a reactive fire fighting role that ultimately chokes off the oxygen needed for growth and innovation. A protracted fire fight further drains valuable financial and human resources, forcing the creation of new roles that focus entirely on retroactively solving preventable problems. These resources are therefore removed from the pool of resources that produce high value added services in groups like the marketing department or the finance department, and are subsequently redeployed into virtual reality fire departments. This lowers operational efficiency, increases costs, and ultimately reduces profitability.
Leveraging strengths may appear to be an easy and obvious path towards profitability; however history is replete with examples of organizations that strayed from their core competencies. Many of these organizations pursued the latest fads in an attempt to increase revenues. This was evident during the recent technology boom where some brick and mortar companies began to believe that delivering services via the internet was superior to delivering services face to face. Conventional wisdom has since proven that many products and services are best marketed in a tangible form, where a customers tactile experience is paramount in the decision making process.
Other organizations have attempted to reduce costs by reducing the quality or timeliness of the products or services delivered. An example can be made of an upscale restaurant, which initially catered to a satisfied clientele by employing gourmet chefs who used top quality ingredients. Once the restaurant began surreptitiously using inferior ingredients to cut costs however, no level of gourmet skills was able to continuously mask the degradation in quality. Costs were reduced, however the strength in using quality ingredients was lost, customers migrated away from the business, revenue was lost, and the overall mission to deliver a superior dining experience failed.
While strengths may be obvious and more readily identified, pinpointing weaknesses can prove to be more challenging and elusive. The best approach to uncovering organizational weaknesses is to treat the process of identifying the weaknesses as a strength within its own right. Once the potential stigma has been removed, a serious assessment can be made as to the nature of the weakness, and how best to rectify the weakness by molding it into a strength.
Satisfying organizational objectives and meeting goals are directly affected by the degree to which leveraging strengths and mastering weaknesses have been achieved. The most effective way to achieve specific goals is to identify how internal and external strengths and weaknesses should be addressed over both short and long timeframes. These subdivisions will help isolate the most critical issues that need to be addressed, and the timeframes under which they can be most effectively addressed.
The internal assessment deals with the inner workings of the organization. For instance, a traditional functional organizational structure for a manufacturing company segments each group of related tasks within separate departments. Once a group of tasks is completed by a particular functional department, the product will then be passed to the next department for further work in assembly line fashion. The strength in this methodology enables the workforce to specialize and become experts in a narrow range of tasks. Lack of close interaction with other departments however can manifest as a weakness in overall product development. The concept of a matrix organizational structure was introduced to address this weakness by requiring different functional groups to interact. Opinions at each level of the organization could then be solicited, resulting in collaborations between design and manufacturing teams that enabled designers to cater to external clients' needs in addition to internal manufacturing needs, by incorporating design enhancements that increased the efficiency of the manufacturing process.
The external assessment deals with an organization's interaction with clients, suppliers and competitors. Strengths and weaknesses must be assessed and periodically reevaluated for all three external agents. Are client's expectations being met regarding product quality? Is supply and demand in equilibrium? Are suppliers delivering materials in a timely manner? Can suppliers be consolidated and can bulk discounts be negotiated? Are competitors gaining market share? Is it feasible to enter into collaborative arrangements with the competition? These are some of the questions that will help define where specific strengths and weaknesses reside.
Short and long term goals should be set once strengths and weaknesses have been correctly identified. Short term goals may address issues that need immediate resolution, or that can be accomplished in a short period of time. Long term goals should be set to address issues that will surface well into the future or that can take a longer time to achieve. A manufacturing example would be the ability to adjust variable costs in the short term and the ability to adjust fixed costs only in the long term.
Training and continuing education can both be used as effective long term tools to manage strengths and overcome weaknesses. Training in both hard skills and soft skills should be pursued simultaneously, since both skill sets are critical to efficient project execution. Hard skills are classified as being technical and procedural in nature while soft skills deal with organizing and managing resources, in addition to effectively communicating the overall vision of the project.
Translating Vision into a Cohesive Strategy
Vision is the articulation of potential yet to be realized. It is the image of the substance and shape to which the future will conform. Present realities often fall far short of this vision, due to any number of extenuating circumstances. A well planned and cohesive strategy therefore becomes the bridge which connects the tenuous present with a sound future.
The initial challenge in building a cohesive strategy is dictated by how effectively the vision is communicated, both internally and externally. The vision should be comprehensive in both scope and duration, while at the same time being simple and easy to understand. A strategic framework is then built around the vision to ensure that all of the necessary building blocks will be in place, and that strategic initiatives will be engineered with a measured degree of flexibility critical to dynamically adjusting to a changing environment.
The strategy is then drafted as a long term two to five year plan with clear objectives broken down into quarterly and semi-annual increments. Detailed descriptions of the types and quantities of products and services to be delivered to specific demographics within the environment of current and future industry competition will then be drafted. An example in the communications industry would be the strategic push to deliver higher resolution streaming video to mobile devices for segmented demographics based on content. The strategic plan would then outline the types and costs of the technology required, the specific content to be delivered dictating which content providers will become major suppliers, and the marginal service prices to set based on the targeted demographics.
Identifying these issues enables a sound revenue and cost structure to be projected into the future, which will help assess the profit potential of the strategy. As with all plans, a best and worst case sensitivity analysis should be conducted to determine how profitability will be affected under a variety of revenue and cost structure scenarios. The sensitivity analysis forms the basis of a contingency plan, which becomes critical to the overall success of the baseline strategy.
Finally, the baseline strategy lays the groundwork for determining the overall feasibility of realizing the vision. Industry benchmarks should be revisited at this stage to determine how close the strategy conforms to industry norms. More innovative cutting edge strategies will by design deviate from these norms to a greater degree. The organization must realize at this stage that the risk of successfully executing the strategy will increase in proportion to the greater rewards sought through innovation.
The strategic plan therefore translates the vision into well defined concepts that can be quantified and objectively evaluated across a wide range of scenarios. This process is critical in accounting for contingencies and reducing long term uncertainties, which ultimately increase the probability for success. A good strategic plan should also uncover hidden relationships that can materially affect the organization. Procedures can then be incorporated into the plan to ensure that these hidden relationships are well managed from the outset, further mitigating the risk of hidden surprises surfacing at inopportune moments in the future.
Designing Tactics
A cohesive strategy should itemize concepts that describe a sustainable long term business model, utilizing tactical methodologies that satisfy interim short term goals up to one year in duration. These tactics determine the detailed procedures and resources needed to successfully execute the strategy. Although tactical methodologies must be well defined, they are dynamic by nature and afford an organization the flexibility required to respond quickly to a changing environment.
The feasibility of accomplishing each tactical solution must be assessed by setting quantifiable goals, defining each potential obstacle that will adversely affect the achievement of these goals, then determining what is required to overcome each obstacle presented. Tactics should then be designed to address each obstacle and to achieve each goal within a well defined timeframe. Although it is deceptively obvious that intractable obstacles result in missed goals that adversely affect strategic execution, many organizations do not satisfactorily address these obstacles and become victims of their own oversights.
One of the best ways to design effective tactical methodologies is to subdivide the process of manufacturing and delivering a product or service into each of its constituent parts. These parts are then linked together chronologically and assigned values based on the criteria of measurement, which can include costs, time to completion, resource constraints, or behavioral challenges at each stage. The linked set of parts form a value chain, which is an invaluable tool for identifying the most and least efficient stages of a process based on the measurement criteria.
Business process reengineering uses this methodology effectively to isolate those elements in the value chain that have the greatest effect on successful strategy execution. The investigation should go beyond examining each link in the chain in isolation, but should also examine how each link affects all other links, and how the simultaneous interaction among all links ultimately affects the strategy. In the previous case where it was discovered that a sub standard product was the cause of loss of market share, the value chain approach would have identified the product design chain as the main cause of the problem. This approach enables the highest value added parts of the chain to be addressed first. Lower value added parts of the chain can still increase the overall efficiency of the process but are obviously not as important in solving the most critical issues. This triage approach to problem solving helps ensure that the organization lives to fight another day.
The interactions between links in the chain are best represented in an impact analysis study, which determines how perturbations in one area ripple through to upstream or downstream areas. The proper identification of these ripple effects is often overlooked. A classic example of this type of oversight was a large Fortune 500 company's design of a multi-million dollar electronic component that could not be tested because the test connections on the component were incompatible with the connections on the automated test machine. Needless to say, an expensive and embarrassing redesign of the component was needed to rectify this situation.
Another byproduct of increasing the efficiency of a particular link in the value chain is to free up resources that can be redeployed to other value added areas of the organization. The satisfaction level of employees redeployed to higher value added areas should then improve significantly. Even though intangibles are often hard to measure and quantify, empirical evidence has shown that satisfied employees create a multiplier effect on the ability of an organization to create wealth. The process of constantly evaluating and improving the chain therefore enables the organization to fine tune its business model, to become a well oiled machine, and to maintain a strategic competitive advantage.
Assessing Risks
 |
Arguably the most crucial aspect of managing organizational change rests with identifying, mitigating or eliminating risks associated with both strategic and tactical execution. The three well publicized classifications fall into the knowing what you know, knowing what you don't know, and not knowing what you don't know camps. Awareness of any risk enables that risk to be managed, whether the risk is already quantified or whether the risk must be quantified before it can be assessed. The hidden and unknown risks are those that can often cause the most damage, since contingency plans are never drawn to address them. The most effective way to identify the hidden risks is by gathering additional information related to the strategy or tactics to be employed, which will increase the probability that the right questions will be asked so that analysis and synthesis of the answers will provide sufficient clues to identify and quantify these risks.
The consultant is uniquely positioned to ask these right questions and to synthesize the answers into an assessment that enables risk to be properly managed. This assessment determines what could happen under worst case scenarios, then places safeguards into the project to mitigate the effects of these adverse scenarios. Risk management therefore becomes an integral part of the strategy and tactics, enabling adjustments to be made in response to changing environmental circumstances. As mentioned before, risks are obstacles that stand in the way of successful execution. Failing to address these obstacles before they are encountered exposes the organization to a high degree of uncertainty.
One of the most egregious examples of the inability to address obstacles, resulting in the complete failure of strategic execution, can be made from Napoleon's campaign to conquer Russia in 1812. Napoleon had invaded Russia with an army just over 690,000 men, successfully pushed back the Russian army and made a successful march into Moscow, which the Russians had previously evacuated in response to the French advance. Having captured the city, Napoleon expected the Czar to surrender and to use the city as shelter for his army. The Czar did not surrender however and a series of suspicious fires broke out, leading to the almost complete destruction of Moscow. Left without shelter for his troops and the prospect of facing the Russian winter, Napoleon ordered the long retreat back to France.
Supply lines had been stretched thin throughout the campaign, and the retreat retraced the same path as the advance, across a countryside that had been destroyed by a scorched earth policy during the initial invasion leaving little in the way of resources. Then winter hit early and was particularly harsh, with temperatures dropping well below freezing. The Russian army took full advantage of this situation and continued to successfully engage isolated and exhausted French army units as they retreated. In the end, Napoleon lost approximately 97% of his army, a clear strategic defeat due to lack of attention to the risks that presented themselves. An even more stunning lack of prescience and attention to the risks revealed through the Napoleonic wars was exhibited when Germany attempted a similar invasion of Russia during the Second World War. History does repeat itself, as the German army soon discovered when they met the same fate as Napoleon's army had met over one hundred years in the past.
There are a plethora
of methods that can be utilized to minimize unknown risks, which focus on
creating situations where the risks can be identified in a controlled environment.
Beta versioning of software is one example, where a group of external beta
testers utilize pre-production software for an extended period of time in
an effort to identify bugs that previously went undetected during in-house
quality control tests. Prototype testing of new aircraft enables test pilots
to provide actual feedback of unanticipated aircraft performance that cannot
be simulated in a laboratory setting. This type of testing was particularly
critical in highlighting unforeseen stability issues when the sound barrier
was initially broken. In addition, test marketing of new consumer products
enables potential customers to provide recommendations for feature changes
or upgrades, before the design and manufacturing processes are finalized
and before the products are mass produced.
While hidden risks may be difficult to detect, known risks can pose a similar threat and can quickly transform into hidden risks if not managed properly. The example of a decision to build an application in-house or buy an application off the shelf appears to be an easily quantifiable problem with well known risks. However, a decision to buy an off the shelf solution to cut expenses and to reduce deployment time may not satisfy long term strategic needs, which will increase long term risks. Conversely, building an in-house solution to meet long term strategic needs may prove to be costly, time consuming, and may fail to meet immediate tactical needs.
Outsourcing is another example of a deceptively simple cost benefit exercise. If a set of tasks can be outsourced to save production time and labor costs, then short term expense reductions appear immediately on the income statement, boosting net profit margins. However, the quality of a remotely generated product or service is more difficult to control, and a remotely located labor force is decidedly more difficult to manage than a local labor force. Outsourcing can therefore lead to long term quality control problems, fostering increased customer dissatisfaction and defections, a reduction in revenue, shrinking long term profit margins, and the ultimate failure of the long term strategy to increase profitability.
Outsourcing can also reduce long term competitiveness by transferring the development of critical skill sets to locations outside of the organization. If these skill sets are no longer being developed at the junior levels, then the question becomes one of who will be best qualified to run the organization at the senior levels in the future. A consultant can assist in wading through this seemingly infinite maze of possible outcomes to craft a solution that addresses both long term strategic and short term tactical needs.
Planning the Project
The project plan provides a visual depiction of strategy execution by itemizing high level strategic objectives and timeframes. Detailed tactical goals are then assigned to each of these objectives. Feedback from each member of an organization involved in the project should be solicited at this stage to assess the feasibility of accomplishing each goal.
Tactical goals are
further subdivided into specific tasks, where each task is classified according
to task interdependencies, associated time and resource constraints, major
milestones to be achieved, and contingency tasks required to mitigate or
obviate risk.
This plan lays the foundation for efficiently meeting strategic objectives
and introduces the flexibility required to accommodate changing tactical
circumstances. A review of this preliminary plan should be conducted to
validate timing and resource assumptions. Adjustments should then be made
as needed before the plan is finalized and submitted for formal review.
The completed plan should be reviewed by all parties involved and signed off on all levels to increase the probability of successful project execution. Individuals or groups assigned to subsets of the plan should be encouraged to generate their own detailed working plans at the sub-task level. This will facilitate a more thorough review of progress at key milestones, and will enable issues to be addressed before they become potential obstacles.
A typical manufacturing based plan follows several sequential phases, which include a conceptual analysis, business requirements, functional specifications, design, construction, testing and delivery. New home construction is often the most visual analogy that can be used to describe the process. The conceptual analysis and business requirements phases outline the size, location and landscaping needs. The functional specification and design phases itemize the detailed measurements and materials to be used. Construction and testing phases involve building the structure and testing the mechanical devices, while delivery includes the final inspection and acceptance by the new homeowner.
The plan also addresses independent tasks that can be completed concurrently and dependent tasks that must be finished consecutively. Any gaps in timing or resources will also be highlighted, so that timing can be adjusted and resources can be secured well in advance of when they will be needed. Additional time should be placed into the plan to account for unforeseen contingencies, which will inevitably occur.
The finalized plan therefore becomes a working document which serves as one of the primary means of communication between the client and the consultant. The client must therefore understand and agree on how the plan will facilitate the execution of the strategy while minimizing risks that could materialize. Client participation in drafting the plan is therefore critical to the success of the overall mission, further highlighting the nature of the partnership between client and consultant.
Communicating Through Project Reviews
Constant communication must be maintained between the client and consultant to ensure that the engagement is on track and that no hidden surprises arise that may derail project success. Formal project review dates should be set to measure progress towards interim milestones; however frequent project updates between formal project reviews are often required to ensure that the project stays on track. Overall objectives of the strategy and tactics must be periodically reviewed to ensure successful project execution.
Early identification of resource or timing problems will enable steps to be taken to quickly realign the project with overall objectives. A project impact analysis must be conducted when misalignments occur, detailing project sensitivities to various time, money, labor and materials anomalies. The upstream and downstream effect of these sensitivities on objectives and constraints will dictate the specific types of corrective actions required to realign the project with strategic requirements.
The project plan must be dynamically updated to include corrective action tasks highlighted as a result of the impact analysis. These corrective actions will be kept to a minimum if all of the major issues were properly anticipated and thoroughly addressed in the initial planning stages before work commenced. The introduction of a multiplicity of corrective actions is often a sign that the original plan was not well conceived. The corollary to the house construction example would be the red flags raised if several corrective actions were required to secure the foundation and structure, issues which should have been addressed before construction was initiated.
Project reviews benefit from feedback at all participating levels within an organization. Feedback should also address relevant organizational activities outside of the immediate project scope. This will assist in verifying that the project continues to be in alignment with an ever changing corporate climate.
Proprietary industry and company terminology can become a major obstacle in properly communicating project needs and goals. This terminology must therefore be fully defined and understood by all parties to avoid any potential miscommunications. The definition of risk amongst financial institutions is a salient example, covering various descriptions such as the standard deviation or volatility of an asset's price around a mean, downside deviation or the negative portion of the volatility of an asset's price, and value-at-risk or the probability of loosing a certain dollar amount of a portfolio on any given day.
Problems should be communicated and defined initially at a high level to avoid introducing complicating details. This will encourage a more comprehensive evaluation of the issues and will avoid the trap of solving the wrong problem because the problem was too narrowly defined. A more detailed and comprehensive problem definition should be communicated only after all parties have a firm grasp of the high level issues. Clear and concise communication of problems and issues therefore becomes an important aspect for successful project execution.
Managing Scope Expansion
 |
A well crafted plan
addresses the majority of issues required to successfully execute a strategy.
Unforeseen problems however require plan modifications to address deficiencies
in issues for which work has already commenced. Plan modifications are also
required to address new issues, which expand the scope of the project beyond
its original intent.
The identification, evaluation and prioritization of new issues must be
made in concert with overall strategic objectives. These new issues may
add significant value to an existing strategy, however the projected time
and resources required to address these issues may be best spent on existing
strategic initiatives. Another impact analysis should therefore be performed
to determine if, when, and how the new issues can be integrated into the
existing plan.
The main goal of this exercise is to separate the nice to have issues from the must have issues. A ranking system from one to five can be utilized to rank each new issue on the merits of the risks and rewards it would bring to a project. High reward low risk issues would be addressed first while low reward high risk issues would be addressed last. Rewards and risks should be measured on both a quantifiable and qualifiable basis. This is an important exercise to conduct because the tendency to add easy to complete tasks to a project could cause the project to exceed time and budget constraints without adding significant value.
High reward issues should be added to a project in a phased approach. If possible, the original project should be completed before any additions are made, however if the additions are critical to overall project success, they should be phased into the existing plan in a manner that minimizes the effect on concurrent and downstream project activities. All such additions should be agreed upon and officially signed off between the consultant and client. The sign off should include language that describes the nature of the additions, why they are required, the potential risks the additions pose to the project, and the time and money that will be required to include the additions.
An assessment of the need to initiate follow-on projects should be made as the original project comes to a conclusion. Initiating follow-on projects soon after the initial project is completed increases the probability that current resources can be retained for the new project. Employing a continuity of resources will reduce the time required to gather and analyze information relating to the new project, since existing project resources will already be familiar with the client's current organizational practices and procedures.
Controlling External Competencies
Successful organizations focus on perfecting a set of internal core competencies, which define their competitive marketplace advantage. Supply chain and distribution chain products and services are examples of external competencies also employed by organizations to complete a full product life cycle. These external competencies are vital to the operational success of the organization and must therefore be managed and controlled effectively.
The profitability of any product or service can be linked to the quality, cost and timeliness of the raw materials used. These factors can best be managed in an environment where competition amongst suppliers is high. Consultants therefore utilize a combination of industry knowledge and research to recommend ways to optimize the use of supply side raw materials. The tradeoff between quality and cost may not always be obvious, leaving room for the discovery of low cost providers that also provide high quality products and services.
A similar analysis is conducted on the distribution side to determine the depth and breadth of services each distributor provides, including demographic penetration and capacity to deliver higher unit volumes. Market analysis may conclude that more innovative distribution methods can be utilized to reach a wider demographic. For example, the decision to utilize a single distributor may increase the chances of getting a higher quality of service; however this could lead to a single point of failure if that distributor is not able to upgrade delivery to an expanding demographic base.
International outsourcing continues to provide lower cost services within certain industries, resulting in higher profitability over the use of domestic resources. The decision to buy instead of building in-house solutions may also offer short term cost savings. However, it may be more prudent from a strategic standpoint to begin developing in-house proprietary expertise that will be capable of delivering higher margin products and services in the future. Under these circumstances, providing specialized training and recruiting top proprietary talent may ultimately enable an organization to obtain and maintain a vital strategic competitive edge.
Conclusion
The consultant's role is to gather and analyze a diverse set of information relating to an organization's strategic and tactical plans, to assess critical problem areas, to transfer knowledge of these discoveries, and to formulate alternate recommendations that will increase the probability of successful strategy execution. This role is facilitated through the 10 steps discussed above, which provide a flexible framework under which known and hidden issues are identified, contained and rectified. The consultant is also adept at identifying key relationships between these issues that may not be apparent within the organization.
Clients play an important
role in this process and are integral to the success of the mission at all
levels, from the initial stages straight through to the end game. Vision
is often an amorphous conceptualization of a desired future outcome. The
consultant is uniquely positioned to help mold this vision into the shape
of reality.
Derrick Rome is currently building an investment methodology and portfolio. Write or Subscribe to Consumer Strategies Report.
 This
page is formatted for printing. Add it to your brochure.
. Privacy
Policy
.
Get
a fresh perspective on strategy. |
