Category Archives: Blog

How the MBA Changed my Life

James Dunbar SMALL
SMF James Dunbar is an Analyst, Refining; Logistics Technology on the Future Leaders Programme at BP.

Has an MBA has changed my life? Back in 2006, I was in a Middle Eastern desert with the Royal Air Force, reviewing whether we had enough PGMs for combat operations. Here I am in 2012, looking at the capital portfolio for BP, reviewing whether we have enough PGMs for business operations.

In 6 years, I’ve gone from worrying about Precision-Guided Munitions, to Project General Managers. Anyone who has ever changed companies or industries will talk about wrestling with a new business dialect. But it’s not just the language that I needed to make this change; it’s the knowledge to lead at both a tactical and strategic level. That’s what the MBA gave me.

Commissioning into the Royal Air Force in 2002 was my first career-changing leap. The military encourages officers to accept leadership responsibility very early in their career and I thrived in these circumstances, building on engineer training to successfully deploy military aircraft to trouble spots around the world and manage projects across the Tornado fleet. Leading 110 technicians on operations, mentoring junior officers and managing discipline challenges are experiences that will stay with me forever – and not easily explained to some of my more sheltered colleagues! My RAF service also helped me complete my chartership and a second undergraduate degree (in engineering management). After a hugely enjoyable six years, I felt that my future career in the RAF would re-tread familiar roles and I wanted a new challenge.

A stint as a project manager for Bombardier Transportation helped me quickly realise how much I didn’t know about applying my experience to the commercial sector! I needed to re-orientate my leadership skills to managing in the business context – much as I had developed military knowledge for a successful career with the RAF. An MBA seemed to provide the transition I was looking for.

After a lengthy application process, I was lucky enough to get a place on the full-time MBA at London Business School. This world-leading institution reflected environments I really enjoy: highly collaborative, very academically challenging and employing a global view. Deciding to undertake an MBA is a big decision – it’s a massive investment. Winning the funding of a Sainsbury Management Fellowship, awarded through the Royal Academy of Engineering, was the decisive factor in making this second career-changing leap. I think an MBA should give you three real advantages: technical skills, commercial leadership skills, and a powerful peer network. That’s exactly what I got from LBS, taking courses as diverse as advanced corporate finance, strategy, business communication, acquisition management, negotiating; bargaining, risk analysis, and accounting.

The scholarship not only enabled me to go to business school, but also gave me access to an invaluable network of nearly 300 SMF professionals with a vast range of experience and knowledge. This network led me to several academic studies during my MBA, my first consulting contracts after graduation and continues to be a source of professional advice – as well as a great advertisement for the benefits of engineers as industry leaders.

After the MBA, I wanted to work in a global engineering-related business that actually produced something tangible, where I could use the skills to make a strategic difference, but still benefit from my experience of managing in a safety-critical environment. Whilst at LBS, I was lucky enough to attend the CBI conference, where I heard CEO Bob Dudley talk about the turnaround of BP. I had not seriously considered the energy industry before, but the values he described directly matched what I was looking for. Fortunately, the company was looking to start its Future Leaders Programme, to develop a more diverse leadership talent pool in the downstream business. They recruit externally for individuals with post-graduate qualifications, relevant professional experience, international exposure and, most importantly, leadership potential. The structured development plan also helps in getting up to speed on the breadth of different global business areas BP work in.

So here I am, working on BP’s strategic plan. I miss the camaraderie of the military, but professionally I haven’t looked back. Challenging, continual professional development has always been important to me, and without the MBA I certainly wouldn’t be enjoying the career that I am now.

You may also be interested in reading interviews with the winners of the SMF MBA Scholarship.

Guide to Entrepreneurship – Getting Started

George Fowkes Cropped
SMF George Fowkes runs The Clear Alternative, which provides interim director expertise to clean technology companies to catalyse their start-up and growth phases. George’s early career was in new product development for Cambridge technical consultancy Sagentia, and management consultancy at A.T. Kearney. Conversations with investors while raising finance for The CarbonNeutral Company in 2001 gave him the idea for a company that would bring commercial and project skills to clean tech ventures, to accelerate their development. This became The Clear Alternative in 2006.

Before I start I wanted to add to Chirag’s post by nominating David Hansson, the founder of software company 37Signals, as the international grandmaster of ‘CARD’. And in fact most things about getting a business started. I think he has written a book but his speech at Stanford boils his whole philosophy down into one irreverent hour that you can laugh along to on your way to work.

If I had to summarise the very best of what I’ve seen in the past 12 years of getting ventures started for people, it would be the following:


Find a complementary partner

Most people think that the expression ‘better to own a share of something than 100% of nothing’ came about from raising money. That may be true, but it’s even more relevant right at the beginning. To get any new organisation started is such a huge amount of work, requiring so many judgement calls and such a very wide range of skills, that even an engineer with an MBA cannot do it on their own. You can’t be world class at everything, and it’s lonely flying completely solo.

If I think of the half dozen really successful serial entrepreneurs that I’ve met – the people who have built and successfully sold more than one business – almost without exception they work with a business partner. That partner doesn’t just fill a skills gap with their co-entrepreneur, they also fill what I’ll call a ‘character gap’, as follows.
Everyone has a number of aspects of the business that they can’t help preferring. It could be sales. Or the numbers. Or building the team. It’s very difficult indeed for an individual not to give these preference – it’s part of their character – so stuff gets missed. The partner has an innate preference for different aspects of the organisation. Their first thought on Monday morning is quite different to their co-partner. And so most of the bases get covered. That’s why you see sales people paired up in business with accountants, marketeers with ops people, Myers-Briggs introverts with extroverts, and so on.

So my point would be to find someone who’s quite different to you that you can trust implicitly and make them a significant partner in the business. And even (especially) if you’re married to them, sign an agreement that at least covers what happens if things don’t work out.

Touch the market early and often
With the very rare exception that essentially comes down to luck, it is not possible to bring a successful new product or service to market without first exposing it to the target market. To compete against better-resourced incumbents your product or service has to not just work, but fit the way its users look for, assess, buy and use the thing.

For the product itself we need to bring the alpha and beta-test principle common in software development to our own business idea. How to do this depends largely on the nature of the product, but everybody should be able to find their own versions of customer and competitor interviews, pitching the concept to friendly contacts in the target market prior to development, lending prototypes to prospective customers, offering ‘no-regrets’ deals for early buyers and so on, as the feedback from this user experience is essential. The next proof point is the one where customers actually part with their cash for the product. Hansson is right that this cannot come too soon and, in general, almost any way to bring early revenue into the business (that does not distract from the main development effort) is a good idea.

Closely linked to this, especially in B2B markets, is that your product can only be successful in the context of the buying patterns in the target market. Every market has its idiosyncratic way in which solutions are sought and evaluated, buying decisions made, price and delivery negotiated. And if you’re not compatible with the time of year, use of OJEU, ‘Plan A’, Environment Agency regs, contract management or other trivial necessity you won’t sell any product to that sector. The least costly way to master an industry’s buying patterns that I have seen is to get an industry veteran on the board.

Have a plan

It is true that no plan survives first contact with the enemy, but keeping a plan (i.e. a list of milestones/targets and dates, with associated responsibilities and costs) updated on a regular basis confers many benefits. First, putting the plan together forces you to think about priorities and risk. What’s got to go right, and cheap ways to stop things going wrong. Second, it’s a fantastic communication tool. With a plan everyone can see where the effort has to go. Scope creep – possible the worst enemy of the pre-revenue business – is easier to keep at bay. And finally, it enforces realism. Not all milestones will be met. The insights from ‘why not’ and ‘by how much’ make achieving future targets more likely. And achieving targets is an essential skill to keep investors putting money into a business. So put together a plan and keep it with you. If you have to keep changing it, at least you’re learning!

None of this covers seed funding, getting an office, or marketing, recruiting and financing on the cheap, which will have to wait for another day. Or be picked up by another blogger.

Guide to Entrepreneurship – The Idea!

Chirag Shah (1)
Sainsbury Management Fellow, Chirag Shah, is a serial entrepreneur.  A Londoner born and bred from a family of medical doctors, he studied Engineering at the University of Cambridge. He completed his Engineering apprenticeship at Rover Cars where he worked as a Production Manager before gaining a scholarship through the Sainsbury’s Management Fellows to pursue an MBA at INSEAD Business School in France. Following a short spell in management consulting, he started his first business at the age of 28. His entrepreneurial ventures include Trading Partners (a business services company), écurie25 (the largest chain of Supercar Clubs in the world), MarketMaker4 (an internet software company), and Assassin Live (an iPhone application game). He is also active as an angel investor.

Most people think the biggest obstacle to getting started with a new business is coming up with a really great idea. But this generally isn’t the case. Ideas are all around us and mostly come from finding solutions to our problems.
Unless your name is Jesus and you can simply perform miracles whenever you hit a problem, we generally tend to address problems by tolerating them or avoiding them. The key to successful entrepreneurship lies here. Instead of living with your frustrations, take the extra few seconds to challenge the issue and explore how you might solve the problem. The answer could be your business idea!

In my experience, the much more challenging aspect to getting started is turning the idea into a viable business proposition. To illustrate, I’m going to use as an example my 19 year-old cousin – who has half a dozen more new ideas every time I see him. He’ll be a great entrepreneur one day but first he needs to overcome what I call the “CARD-test”. In order for an idea to become a successful business it needs to be Commercial, Aligned with resources, Relevant (to you) and Defensible.

An idea my cousin had when we were 15 was the concept of having a rotating sunlounger. Just like a sunflower, the lounger would turn slowly during the day saving the users from having to get up and move the lounger themselves.

Commercial
Applying the “Commercial” test, the key question is: “can you make money from the idea?” If one manufactured the product, would there be enough sales to offset the manufacturing and distribution costs and still leave some profit leftover? In the case of the rotating sunbed, I’m not sure ‘enough’ users would pay the necessary sum to avoid getting up and turning the lounger themselves.

Aligned with resources
Another idea he had was to build a field of solar panels and sell the electricity, whilst growing some vegetables in the shade. In the right circumstances this idea can meet the Commerciality clause, and indeed there are such implementations around the world.

Alas, for my poor cousin, he does not have enough money to implement this idea nor could he hope to raise sufficient funds from other people given his lack of previous experience as a farmer or energy consultant or similar. So for my cousin, this idea falls down because it is not ‘aligned’ with his level of resources. [A particular frustration of mine, and a reason why I think the green energy movement fails to reach breakthrough levels of adoption is that so many innovative projects very quickly require significant levels of capital to bring them to market and hence remain the remit of larger institutional sources which are inherently more risk averse than your average entrepreneur. Compare this with the Internet revolution where the cost of starting a business is very small and new business concepts dominate.]

Relevant (to you)
As a general rule of thumb I tend to advise budding entrepreneurs to focus on businesses that they actually know something about – by way of their prior work experience, or background, or specialist product knowledge, etc. From the businesses I have seen people starting up around me, I would say your chances of success are less than 20% if you know nothing about a particular product or market, and probably closer to 80% if you have worked in that sector, already have relationships with potential customers, and are familiar with your competition. If you have a great idea in a sector you know nothing about, then getting a job in that sector is a great way to start.

Defensible
Defensibility, or Barriers to Entry as the academics would call it, refers to how difficult or easy it is for others to copy what you are doing. Patenting or copyrighting an idea is an important consideration but don’t assume that just because an idea is patented it cannot be replicated or if an idea cannot be protected that others will definitely copy it. In any case I mention this criterion with lower priority than the others because a business lacking defensibility is not necessarily doomed to fail.

As you will see in later posts, how well and how quickly you execute your idea can play a much larger part towards its success and having imitators can even be a good thing. There are benefits to competition in terms of growing the size of a market that can outweigh the downsides of competing for business. For example, one of my own companies, écurie25 Supercar Clubs, is the global market leader for enthusiasts wishing to share the costs of owning a Ferrari but I actually wish we had more competitors because the sector would grow from the resulting greater awareness of such clubs. And I would rather have a smaller market share of a larger sector than a large share of a niche market.
Now that you have your idea in-hand and you’ve vetted it with the CARD Test, it is time to get started. In my next post, I’ll give you some tips for making sure you de-risk your venture as much as possible before you commit too much.

How the MBA Changed my Life

David-Falzani-President-SMF-MCP_3834-(landscape)
David Falzani
President Sainsbury Management Fellows

CEO of a consulting company Polaris Associates, David has extensive executive and strategic business development experience in various industries. David began his consultancy career with LEK Consulting which recruited him from the prestigious Wharton School in Pennsylvania.

David has worked with a wide variety of clients including IBM, British Bakeries, Kingfisher, BAE Systems, Marks & Spencer, Sainsbury’s, 3i and Cooperative Bank. Additionally, David is a Visiting Professor at Nottingham University Business School.

Let me start by saying that in my opinion an MBA is a beginning, not a destination in its own right. No MBA can hope to make you any kind of expert in one or even two years in as fluid and nebulous a field as business. It does however offer a good introduction.

In starting my MBA I think I had a well-researched set of objectives and intentions. I already knew that a top MBA would double my salary. I knew I would receive a useful network of contacts, a toolbox of functional business skills and have a call upon the school’s all important brand name to supplement my own.

What did surprise me was the extensive rewiring of my brain that seems to have been an unintended but virtuous side effect of the crucible of learning environment. To illustrate this point, my first job after my MBA was a role with a leading strategy consulting house (yes I know, you may well call it “falling into the management consultancy trap”, but I call it a good place to consolidate new skills).

These firms are quite notorious in the hours they can require you to spend. The economy was booming and it was busy: I averaged some 70 hours per week in my first year. But my point is that I recall this seeming like a bit of a holiday compared to the MBA.

The MBA really was an expansion process that, yes, increased my understanding of how business works, but it also quietly stretched my brain into something new and improved. It was also one of the most rewarding periods of my life in all kinds of ways.

Spending 40, 50, 60 hours a week with the same group of people involved forming friendships and relationships that were quite different to the norm, and remain priceless. Also, the richness of the environment was astounding. Imagine being surrounded by world class faculty, interesting intelligent colleagues, being set continually stretching challenges; a learning machine wrapped all around you to whet your appetite and then satisfy it, and an addictive growing sense that anything was possible. If I could have stayed on for another year on my MBA, I would have jumped at the chance.

Post MBA, the fun continued. The opportunity to launch a start up business came via my classmates.  The confidence to raise venture capital funds came from the MBA. We may have missed the IPO window with that venture but the lessons learned were incorporated into the framework set down during the MBA. The next role was more demanding: a tech turnaround. The next: a service business. And so the fun continues today.

Fast forwarding a few years, I still marvel at how those lessons gave me an ability to immediately understand the larger business picture, and the sense of confidence that such insight brings.

That MBA was a set of starting blocks (if we’d made that IPO I would have said launch pad!) for a learning journey that continues to intrigue and challenge, and there’s no sign of it getting boring or processional any time soon.

In answering how the MBA changed my life, I should also ask myself what would the last 15 years have been like if I hadn’t done the MBA. Would I have been more successful? I honestly don’t know. After all, the vast majority of the world’s leading entrepreneurs and business persons don’t have an MBA, and many haven’t attended any university, let alone business school.

Would I be better informed? I think it’s unlikely. As I say, as an introduction to business a good MBA is hard to beat.  But would I have had more fun? I seriously doubt it.

Can We Help You Prepare for the Top Job?

Patrick Macdonald
SMF Patrick Macdonald, Partner, School for CEOs

There has never been a greater need to prepare businessmen and women to become CEOs. The biggest recession in 80 years, intense media scrutiny and investor nervousness all combine to make the top job tougher than ever.

When I was CEO of John Menzies – a £1.5bn quoted plc with a substantial family shareholding – it struck me that, as in any position, CEOs get better as they learn. I certainly did. But the old dictum “leaders are born and not made” still holds sway in many quarters. We still expect CEOs to take on the toughest job in business without any specific preparation.

This seems a little strange!

So I’ve teamed up with David Sole, the well known international rugby captain and business coach, to launch the School for CEOs. David has coached main Board directors and senior executives from a wide variety of functions including finance, human resources, sales and marketing, IT, property, legal and company secretariat.

Experienced businessmen and women will teach the next generation of business leaders using a carefully structured curriculum. A highly accomplished Advisory Board will work with us, including Sir David Reid (Chairman of Intertek plc and ex-Chairman of Tesco plc), Jonathan Warburton (Chairman of Warburtons) and Alex Wilson (ex-Group HR Director at BT plc).

  • The two-day Vital Few residential programme will cover the complexities of
    managing up – forming a relationship with the Chairman and Board
    managing down – leading the team
    managing out – handling investors and the media and
    managing in – staying centred and grounded

Future leaders will explore what really happens in the boardroom, rather than academic theories and frameworks. There will be follow on coaching to help embed the learnings, insight and wisdom gained on the programme. And delegates will join a fantastic network which will grow as the School grows.

The Vital Few is a standalone programme. It also forms the first module of the comprehensive Alchemy of Leadership programme which lasts eight days spread over several months.

The first programme takes place in London on 19/20 September. It’s aimed at anyone three years or less from becoming a CEO, as well as those already in the job. For future programme dates, visit www.schoolforceos.com

NEDs Just Got Interesting?

Mark Winkle - IDDAS Executive Coach and Chief Operating Officer (small)
Mark Winkle, COO, IDDAS

The world of the NED has been moving at a pace, the traditional view of a NED; ex-top executive, one or two board positions after retiring and aged in ‘his’ 60s, is still with us, but there is a marked trend towards, younger professionals, who are making a deliberate choice to abandon corporate life and pursue an NED portfolio and who have reached senior executive positions relatively early in their careers and want a change of lifestyle.

This trend has been articulated in the recently published IDDAS NEDs Perspective Report, which is the third in the IDDAS Board Dynamics series.  These Reports provide a unique insight into the Board world, with the previous two Reports giving the Chairman’s Perspective and a Females FTSE 100 Perspective on Boards.

This powerful triangulation of Reports provides a real sense of how the Board works and what it is like to be on a Board; ‘hearing’ directly from NEDs, Chairman and FTSE 100 female Directors the reality of the Boardroom.  The most recent NED Perspective Report has given a number of insights and views, for example.

  • The majority of NEDs are reluctant to have compulsory quotas introduced to increase the numbers of women on boards, but recognise the need for change.
  • A third think the level of remuneration for NEDs is too low given the increased workload and greater risk to corporate reputations now involved with the role.  However, most acknowledged they were well rewarded and that too much focus on financial reward could compromise independence.
  • NEDs see challenge in the boardroom as vital to their position, however they agree this should come with an equal measure of support – a balance they sometimes find difficult.
  • The lifestyle and practical changes between executive and NED roles are vast. As well as stepping back and accepting less control, NEDs commented on the lack of administrative support they were used to in their corporate careers.
  • NEDs have mixed views on whether those from outside the corporate world such as media, HR or academics should be considered for NED roles.
  • Many said that the board should not be a team, rather that they should learn to understand each other and work effectively, which should be done outside the boardroom.

The full report consists of a wonderful array of quotes directly from the NEDs and we hear the ‘real voices’ of their motivation, frustration and excitement.  In particular, I was stuck by the sense of the ‘Board’ not being viewed as a team, but as a collection of individuals who meet in a common space, the inference being that being a ‘Team’ takes away objectivity and is too cosy.  This provided a fascinating insight which got me thinking of how we define this Boardroom space.  How can we start to provide the ‘Board’ with the sense of their own worth as a ‘Team’, based on the definition of a high performing team, as needing, a common vision, values and strategy; constructive, creative, challenge and debate, which surely is a prime function and description of an effective Board?

Potentially, this misunderstanding of what a team is, could well be at the core of how we develop effective challenge and behavioural frameworks for the ‘Board Team’ to become most effectively.  We may need to re-calibrate this space in a different way from traditional ‘team working’ and be more cognisant of the different perspectives that the constituent cohorts bring to the Board. Certainly the NEDs are coming to this ‘team space’ with a clear and increasingly demanding ‘governance’ perspective and a keen eye on their duties and responsibilities as a NED, which are increasingly in the spotlight.

The Executive Team, additionally brings a set of perspectives and energies which are closely linked to their central individual values and ‘status’, to which any ‘threat’ is likely to elicit a strong reaction.  One of the key developments emerging from neuroscience research is the impact that threats and anxiety can have on our power for rational deliberation and perspective.  As the brain is threatened it becomes overwhelmed and reverts to a short term protective mode, with a shortening of horizons and acute awareness of the immediate, at the expense of the longer term.

The Chairman’s role is to ‘orchestrate’ this space and develop a coherent and robust atmosphere of Trust, Challenge, Vision and Coherence, which is quite a balancing act.   There are many artful Chairman who able to ‘pull’ this off, but one of the aspects of our Chairman’s Research was how little Development and Support Chairman had received to achieve this level, most having got there through a process of previous experience, trial and error.

Some of the aspects of this balancing act have been identified by the Financial Reporting Council (FRC) in their ‘Guidance on Board Effectiveness’, which identifies the need for appropriate decision making frameworks and the creation of an atmosphere of effective challenge towards strategy and the risk model of the organisation.  The refining of this ‘Board Team’ space is overdue, the challenge is for Boards to more clearly understand their own interpersonal dynamics and create an open and recognised decision making framework which stands the test of tough times.  The FRC guidance describes the dangers of ‘group think’, and a casual and untested decision making process which can be overrun by events.

Additionally, the IDDAS Chairman’s Report and the FTSE 100 Female Directors Report, along with other reports in this area have identified the ‘female’ approach to challenge and decision making, which is less directly confrontational, more systematic and less ego driven, as a positive influence on Board performance.

It is likely, that as we drive toward the achievement of the Lord Davies Report targets of 25% females on FSTE 100 Boards by 2015, there will be an updraft of females onto Public quoted Boards and also onto the organisation’s Executive Committee, which the Davies Report rightly identifies as the feedstock for Board Directors of the future.

So, it is my hope, that as Boards review their performance and fitness for purpose for the future that we will see both the desire for; and increased capability, to deliver an open and interactive ‘Team Space’ environment which leads progressively to enhanced board effectiveness.

Is Manufacturing the linchpin of the British economy?

Chris Coopey - SMF Guest Blogger
Chris Coopey, Partner, Carpenter Box LLP

The 3,000 redundancies planned by BAE come as a bitter blow to the firm’s employees and to perhaps, the 6,000 subcontractors who supply the firm.  But what does it say about manufacturing in general in the UK?  As someone who trained as an Engineer but is now a Partner at a chartered accountancy firm I believe that unless some real action is taken to fundamentally shift the balance of our economy, these redundancies and more like them will change nothing.  Whether we are talking about BAE or Bombardier (1,400 jobs lost at the train manufacturer in July 2011) or numerous other examples down the years, what seems obvious is that as a nation we continue to lie back whilst our engineering and manufacturing skill-base is inexorably eroded.

For more than 30 years manufacturing has been written off as a mainstay of the economy.  We’ve blamed foreign competition, trade unionism, poor management and a lack of investment for the decline in our manufacturing fortunes but the truth is we haven’t as a nation stepped up to the plate.  If the same care had been taken to protect and nurture manufacturing as has been put into promoting the UK as a major global financial centre we would have a strong and vibrant manufacturing base keeping people employed, paying valuable taxes and selling the products we are so good at inventing and developing for other nations.  Imagine the engineering equivalent of the redeveloped square mile and Canary Wharf and you start to understand the analogy. I’m not for a minutes suggesting that we abandon our banking and services industry, but what I am saying is that we should recognise that the balance has swung too far away from creating tangible wealth.  We’ve come to depend far too much on the intangible wealth associated with city.

In the words of George Osborne, wrapping up his last budget speech;

‘We are only going to raise the living standards of families if we have an economy that can compete in the modern age. So this is our plan for growth.

We want the words: ‘Made in Britain’ ‘Created in Britain’ ‘Designed in Britain’ ‘Invented in Britain’ To drive our nation forward. A Britain carried aloft by the march of the makers. That is how we will create jobs and support families. We have put fuel into the tank of the British economy.’

Sadly the present government, despite its own words, has still not woken up to the fact that manufacturing should be the linchpin of the economy rather than the poor relation of the banking and the business service sector.  To put manufacturing back into centre stage will take billions in investment and a long term structural shift, but it has to be the future.  Now is the time for the government to stop talking and to start to take action.

Chris Coopey is a Partner with Carpenter Box LLP, Chartered Accountants and Chartered Tax Advisers.  He originally trained with a subsidiary of Simon Engineering in Gloucester, qualifying as a design draftsman.  In 1979 he moved to the telecommunications industry where he worked for 10 years.  Chris subsequently went to Exeter University before qualifying as a solicitor.  He joined Carpenter Box as Practice Director in 2005.
 

Creating Strategy Middle Up

Paul Christodolou Group
SMF Paul Christodolou

The age of top-down strategy is long gone. This doesn’t fit with the guiding principles of modern, empowered business cultures as it tends to disempower and demotivate the people who are our greatest asset. Strategy is now developed ‘middle-up’, often involving cross-functional teams of managers, subject experts, and the handful of wise old heads that often sit quietly hidden away in every organisation. This, in theory, shouldn’t be a problem. Indeed, since the people that live-and-breathe the business everyday know the strategic levers better than anyone, this should be the ideal way to create breakthrough thinking. All we need to do is liberate this latent power within the organisation to beat the pants off the competition (and, at the same time, save a fortune in high powered consultants).

The problem is that this middle-up, consultative process for creating strategy is prone to severe pitfalls if managed poorly. Without structure, process and clear deliverables, this can end up as ‘strategy by committee’. One board member of a leading airline recently expressed her frustration and horror at this modern, workshop-based approach, bemoaning the ‘death of individual thought’.  Furthermore, since strategy naturally destabilises the status quo and challenges territories, organisational politics can often interfere and create unhelpful tension and even strategic paralysis.

However, the prize from getting this right is so big that middle-up strategy needs its own definition of best practice. This approach is too good to miss. It not only taps directly into the best source of rich and vibrant thinking, but it automatically creates a motivated and unified implementation team. And anyway, the best alternative is to use expensive consultants whom the in-house team will just end up resenting and whose outputs they will almost certainly disown.

There are golden rules that can help make a success of this empowered strategy approach. Here are seven important ones.

Plan a structured ‘journey of discovery’: It’s no good just scheduling a strategy workshop and expecting this to lead to innovative, joined-up thinking. Developing strategy this way should be a structured ‘journey of discovery’ for the project team. Designing the journey is the first crucial task. There are natural phases and milestones in the journey, and different types of activities to ensure the right blend of workshop, individual thought and background analysis.  Carefully planned workshops typically form the backbone, with supporting analysis filling out the flesh. The project needs to start with divergent, creative thinking and move steadily towards more convergent, analytical thinking. The journey needs to cover exploratory pilots, decision points that help distil new strategic principles, and practical planning sessions so that everyone understands how to make it all happen. 

Create a ‘burning platform’: Launching major strategy projects with cross-functional teams requires a sense of urgency – the so-called ‘burning platform’. The term originates from the oil industry (i.e. a burning off-shore oil platform) and refers to the urgent need to move from an uncomfortable position.  In business terms, this demands a clear articulation of exactly why we need to change in a simple and compelling fashion. This might also paint a disturbing picture of what might happen if we just let the status quo drift while the competition forge ahead. Without the burning platform, time-starved managers will not be motivated to get involved.

Get everyone on the same page: When a major strategy project is launched, it is amazing how quickly key participants develop different ideas of what it is all about. Some will want this to fix their own pet problems, some will have wildly over-ambitious views of what this can achieve, others will just get the wrong end of the stick. Creating a clear project charter is the obvious way to get everyone on the same page as they become engaged. This may be a written document or, more likely, a short presentation to guide a personal briefing. This can be followed up with workshop techniques such as roadmapping – simple but powerful visualisation approaches that help liberate, structure and distil the accumulated wisdom of the team.

Predict winners and losers: As soon as the project is launched and the team is engaged, the likely winners and losers will start to become apparent. The problem is that at least some of the big potential losers will be on the team that is shaping the strategy and, as the saying goes, turkeys rarely vote for Christmas. The strategy leader needs to be considering this right from the project inception as this can create a negative influence or even derail the project completely. The key point is that individual roles will almost certainly change during the course of a major strategy programme. If you want to take everyone with you, you need to facilitate a change in every individual’s position and contribution that aligns with the emerging picture.

Blend experience, gut feel and facts: Developing innovative strategy requires a balance of ‘hard’ data analysis and ‘softer’ inputs such as the collective judgment and experience of the management team. Many organisations go to one or other extreme. Intensive strategy workshops are the perfect means for combining hard and soft inputs in a balanced way. But this means careful preparation of meaningful data pitched at the right level – it’s easy to try to ‘boil the ocean’ of possible data. It also means preparing each workshop in full detail, using appropriate visualisation and analysis tools, and making sure that every activity leads to a useful outcome and a clear set of strategic insights.

Expose the really breakthrough thinking: Strategy development can tend to polarise around two extremes – constraint-driven improvements on today or sexy blue sky thinking on what might be possible. The former can lack ambition and the latter is often unrealistic.  Both of these are useful calibration points, but the best answer lies somewhere between the two. Breakthrough strategy refers to that elusive middle ground – the point that represents new, visionary thinking that is also practical and do-able. Getting to breakthrough requires particular workshop approaches, constant iteration and dogged determination.

Move seamlessly from planning to doing: A common problem in traditional approaches to strategy development is that, even when the final strategy has been agreed, there is huge inertia that delays the launch of implementation. There are various ways of ensuring that the transition from ‘planning’ to ‘doing’ is seamless. One crucial issue is seeding implementation champions into the process early on. These may not be the clearest thinkers on the team, but they may be the barrier-smashing enthusiasts who will make it happen. Another important step is to define pilot implementation projects and not be afraid to launch these even before the overall strategy is complete. Strategy shouldn’t be developed in an ivory tower and there is a lot to be said for learning by doing.

But can we demonstrate that middle-up strategy works?:  One leading multi-national recently used this consultative, workshop-based approach to develop an innovative strategy across a large, complex organisation. This $5bn global leader with 15,000 staff had grown significantly by acquisition over the preceding 10 years, leaving a latent need for integration. The imperative was to develop a unified, global strategy that would optimise the operational network to reduce cost and provide a platform for growth in the major emerging markets.

This company was made up of three autonomous regional businesses (Americas, Europe, Asia) co-ordinated across four global product lines. The dynamics and tensions within the complex matrix of responsibilities was a key feature of the project. The strategy process involved running a set of pilot strategy workshops within each global product business, followed by a set of aggregation workshops organised by geographic region, then culminating in a finalisation workshop covering the whole business. All this was interspersed with significant exploratory and then validating analysis. The strategy development process involved 110 senior and middle managers and took around 12 months. These managers, of course, had to run the business at the same time (although special backfill support was organised to free-up some of their busy schedules).

The outcome of this intense and dynamic process was a multi-faceted strategy that was truly both global and local, and that could naturally be implemented by regional teams with consistency regarding globally standardised products and processes.  It provided the blueprint for a $250m transformation programme which required a Wall Street rights issue to fund. Five years on, the project has created $55m in repeating annual savings for the company, has helped to reinvigorate its lead in technology, and has forged market-leading positions in Asia, South America and Europe.

So it can be demonstrated that middle-up strategy not only works, but can produce stunning results. It fits the modern business culture, it intimately involves the people who know the business best, it automatically primes and motivates implementation champions, and it gets results. It is far  preferable to top-down decree or simply outsourcing strategy to external consultants.   Running effective middle-up strategy may have just become a critical success factor in 21st century businesses.

About the Author
Paul Christodoulou has over 20 years experience as a strategy leader working in international business. His career has seen him working in senior management roles, heading up global strategic projects covering manufacturing, marketing, M&A and post-M&A integration. Originally an engineer, Paul switched to strategy after completing his MBA at INSEAD which was supported by the Sainsbury Management Fellowship. SMF was established in 1987 by Lord Sainsbury who believes talented engineers make a valuable contribution to the senior management of an organisation.

Paul is currently working for the University of Cambridge Institute for Manufacturing managing collaborations with partner companies aimed at putting university research into practice in the general area of global strategy (ifm.eng.ac.uk). Paul also runs a strategy consultancy Strajectory which provides innovative and practical strategy support to businesses of all sizes (strajectory.co.uk). Paul’s recent book “Strategy Workshop Toolkit: How to Herd Wild Cats and Create Breakthrough Strategies” is available through online booksellers.

Recruiting Trends in Engineering

Mike Astell 2

SMF Mike Astell has both engineering and business qualifications, the latter he gained through his MBA study thanks to a hefty bursary from Sainsbury Management Fellows which champions the idea of having engineers in board positions because they bring a multiplicity of skills to these roles.

Mikes’ MBA enabled him to transition into senior management posts where his is responsible for hiring a diversity of staff including engineers.  Mike’s view on current recruitment is that “Engineering recruitment is at a turning point.  A major shift is taking place within  graduate recruitment as many more are seeing engineering as an exciting long term career choice.

“Our industry has long lamented the fact that large numbers of talented engineering graduates have not seen their careers in engineering roles and have been lured by City employers which offer big incentives and salaries to attract people with strategic, analytical and project management skills.

“The failure of so many financial institutions has led to the restructuring of the economy  (eg headcount reductions, divestments) and engineering graduates are starting to look at things differently.  They are exploring engineering roles more carefully and beginning to appreciate the potential for challenging careers with long term prospects for advancement.

“This shift in perspective has increased the pool of graduate talent from which to select the very best engineering graduates, creating a very competitive market – many graduates are having to do work placements or part time work to improve their competitiveness.  Now  we are recruiting some amazing graduates; not only in terms of their academic achievements, but their energy and enthusiasm to contribute to industry.

“And it’s not just engineering graduates. The upheaval in the job market has resulted in a large churn and highly experience engineers who may have stayed at one firm for a long time, becoming frustrated at not progressing, have joined the candidate market, creating even more opportunities for employers to access the best engineers. This diversion of talent into industry will most definitely help to rebuild the British economy.”

 

 

President’s Letter

annual dinner 2010

SMF Ernest Poku
Each time I look through the profile book it impresses me how unique a group the Fellows are. Although we work in a wide variety of industries and roles, we all share a common perspective and experience. We have also all participated in the vision of Lord Sainsbury.

The Society has in essence two broad aims. Firstly to add value to the UK and international economy by supporting the aims and vision that Lord Sainsbury expressed in setting up and supporting the scheme and associated bursaries that we have all benefited from. Secondly, to add value to each individual Fellow by organising and encouraging interaction, and otherwise supporting our careers.

We are entering a period where the future form and role of the society may well be decided. There are now almost 300 Fellows, representing a considerable network of talent covering all major sectors and functions, and many countries. The debate on what makes us unique, what aims we should have and how we can realise them is coming to a head.

Recently, a strategic review was initiated to better understand what role the Society should or could fulfil. To further understand the Fellows’ profiles and their current views on the scheme we have asked Hall Associates to undertake a telephone review. You will therefore be contacted over the next few weeks and asked a range of questions. At one end of the spectrum we can be a mere alumni association, at the other, we can seek to positively influence views and attitudes across commerce. We are interested in your views on the Society’s future role and how you would like to be involved.

Re-Engineering the Board
You will have found enclosed our publication Re-engineering the Board to Manage Risk and Maximise Growth, or “HR Pack”, targeted at key HR decision makers. This pack was designed by our Communications Group to challenge the view that accountancy and legal training are the best qualifications for effective boardroom directors, and to highlight the strengths of the engineering mindset. Most of our outward communications to date have been via Public Relations. The HR Pack is a deliberate break from this approach and provides a more direct channel. If the evaluation of this new approach is positive then we intend to look at additional opportunities for new publications and forums for challenging views and arguing for wider adoption of our values. Please give us your feedback on this pack.

Website & Improved Engagement

We will shortly be launching a new website and interaction platform. Many of you will already be members of the SMF group on LinkedIn but this new website has vastly increased functionality and a new social engine to allow for private communications between Fellows.

As Fellows are geographically dispersed, the website is also intended to provide a material forum for useful interaction on a variety of initiatives irrespective of geographic location.

How we support each other and add value as a community will no doubt dictate the future success of the Society. We hope that the website will enable a higher degree of interaction and engagement by delivering value to every Fellow that uses it.
Funding
As you know, the SMF bursaries are funded by Lord Sainsbury via his Gatsby Charitable Foundation. However, the Society itself has been funded to date almost entirely by Lord Sainsbury’s private funds. Whilst we have been informed that the future of the scheme continues to be assured, and all recent feedback on our performance has been most positive, we have also been asked to take a hard look at whether there is a point at which the scheme becomes self funding.

We are currently reviewing whether to incorporate the Society and establish a registered charity to further pursue this question. A key benefit of this incorporation would be a tax efficient vehicle for those Fellows who have expressed an interest in investing back in to the scheme.

We also collect annual subscriptions from the Fellows. These subscriptions go directly to supporting the Society’s aims. They are not a ‘social fee’ but, rather, they underline the identity and activities of the Society and point to the responsibilities of the individual recipient of the award. We continue to ask for your support in collecting these fees.

Mentoring and Other Activities
An outstanding success of last year was the launch of the mentoring scheme. Fellows have been partnered with mentors at the very highest levels of UK PLC. We intend to look not only at how we can extend the scheme in size, but also how to access new key sectors of Fellow involvement such as Finance and Entrepreneurship.

We also launched the successful Energy Roundtable. This is a forum – currently physical but soon also to be online too – to exchange latest ideas between those with a role or interest in the Energy arena. We would like to have additional roundtables in areas of key importance to the economy such as Finance and Manufacturing. Please let Cathy know if you would like to be involved in this.

Other activities where our involvement continues include supporting the next generation through the RAEng’s BEST Programme and the Engineering Leadership Award scheme. If you feel you now have the time and would like to become further involved please do not hesitate to contact Cathy or myself.

There is no easy way to measure the sphere of influence that the Fellows have. However, by rising to the challenges we are set, and increasing our ability to collaborate, we can exert a positive influence of a disproportionate magnitude to our size.

Lastly, I would like to warmly thank outgoing President Ernie Poku for all of his hard work, initiatives, and achievements during his term of office.