The S&OP Control Paradox: Folly in a Volatile World?

© StrataBridge 2012© StrataBridge 2012

The S&OP Control Paradox:

Folly in aVolatile World?


The S&OP Control Paradox:

Babbage’s Analytical Engine in aniPad World?


Some Structure & Thought-Provokers

The Case for ‘Agility’• So, what’s Agility anyway… and ‘VUCA’ – WTF?• It’s a ‘VUCA’ World… Some Insights• Most companies are compounding the situation

Contending with ‘VUCA’• The ‘Growth ⇆ Control Paradox’• Underneath it all… Three Laws• An Architecture for Growth against a ‘VUCA’

Backdrop

‘Joined-up Decision-Making’ for Growth• Where are you on the ‘Control ⇆ Growth’

Spectrum?• Some Implications and Questions for Decision-

Making





Backdrop



Making


What’s in a name?

© StrataBridge 2012

VUCA

Some Insights…It’s a ‘VUCA’ World… WTF?



UCA


VVOLATILITY



CA


VUUNCERTAINTYVOLATILITY



A


VUCCOMPLEXITYUNCERTAINTYVOLATILITY



VUC


COMPLEXITYUNCERTAINTYVOLATILITY

AAMBIGUITY



VUCA




Beyond the Human impact…

Massive disruption on both sides of the

Demand and Supply sides of the economic equation, amplified by an increasingly interconnected world…

Some Insights…It’s a (naturally) ‘VUCA’ World…



‘99 ‘00 ‘01 ‘02 ‘03

10.00

20.00

30.00

‘94 ‘95 ‘96 ‘97 ‘98

Brent Crude

$/Barrel

Source: FT.com

‘VUCA’ – It affects us all…

Some Insights…



‘04 ‘06 ‘10‘08 ‘12‘03 ‘05 ‘07 ‘09 ‘11

20.00

60.00

50.00

40.00

30.00

100.00

90.00

80.00

70.00

110.00

120.00

130.00

140.00

‘94 ‘96 ‘00‘98 ‘02‘95 ‘97 ‘99 ‘01

Brent Crude

$/Barrel

Source: FT.com

‘VUCA’ – It’s amplifying…

Some Insights…



Dairy

‘04 ‘06 ‘10‘08 ‘12‘03 ‘05 ‘07 ‘09 ‘11‘94 ‘96 ‘00‘98 ‘02‘95 ‘97 ‘99 ‘01

100

300

250

200

150

400

350

50Oil

Meat

CerealsFood

Sugar

PriceIndex

(2003=100)

Source: Centre for Security Studies

– ETH Zurich

‘VUCA’ – It’s ‘Everywhere’…

Some Insights…


© StrataBridge 2012© StrataBridge - 2010

There are many drivers; 20th Century Technology Adoption…

Source: Karl Hartig/WSJ

Television

Radio

Telephone

Computer

Some Insights…


Television

Radio

Telephone

Computer

Some Insights…20th Century Technology Adoption


Television

Radio

Telephone

Computer

Some Insights…The Context When S&OP Was Developed


Some Insights…

78%8%...while only

plan to decrease itInnovation 2010 – BCG Report – April 2010

61%of companies planto increase their Innovation spending......

of CEOs expect their innovations will lead to significant new revenue opportunities over the next three years

Source: PwC, 14th Annual Global CEO Survey, 2011

The Internal Drive for Growth



Some Insights…

13% 13%

13%

10%

15%19%

14%

21%

23%

20%

17%

30%

11%

14%

15%

37%38%

20%

29%

10%

14%

17%

02007 2008 2009 2010 2011

10

20

30

40%

Increased share in existing markets

New product/service developments

New geographic marketsMergers and acquisitions

New joint ventures and/or strategic alliances

CEO’s are turning to new product and service development for GrowthPercentage of CEO’s on the main opportunity to grow their business in the next 12 months

Source: PwC, 14th Annual Global CEO Survey, 2011



How Common is Joined-Up Behaviour?

Only 37% said they had a clear understanding of what their organisation was trying to achieve and why.Only one in five was enthusiastic about the goals of their team and organisation.Only one in five said that they had a clear line of sight between their tasks and the goals of their team and organisation.Only 15% felt that their organisation fully enabled them to execute key goals.Only 20% fully trusted the organisation they worked for.

The 8th Habit: From Effectiveness to Greatness November 2004 Simon & Schuster

Stephen Covey in his book The 8th Habit, describes a poll of 23,000 employees drawn from a number of companies and industries. Here are the findings:

Or, put another way…

Some Insights…



Only 4 of the 11 players would know which goal

is theirs

Only 2 would care

Only 2 would know what position they play

and what they are supposed to do

And all but 2 players would, in some way, be competing against their

own team members rather than the

opposition© StrataBridge - 2012


‘VUCA’ – How is it for you?


Are you experiencing, or can you see the early signals of, 'VUCA' in your external environment?

Does your strategy call for increasing degrees of 'new stuff' - new products, new services, new channels, new markets/territories, new technologies, etc?

Yes

Yes

No

No






Yes

Yes

No

No

You can check your e-mail now or be filling-in your expense form or something else useful… Keep improving what you’re doing and you’ll be fine! (Or will you?)






Yes

Yes

No

No

You’ve obviously got some work to do, but as it stands you can dictate the pace… Make sure your strategy takes advantage of this; it won’t last forever!






Yes

Yes

No

No

Wake-up! To quote Jack Welch:“When the rate of change on the outside exceeds the rate of change on the inside, the end is in sight”






Yes

Yes

No

No

It’s time to review our strategic and operational planning and decision-making processes for ‘design overreach’. We’re in danger of taking them past the limits of what they were designed for!





Backdrop



Making


Contending with ‘VUCA’The Growth Paradox…

The Pursuit of ‘Growth’The creation of new value for customers and shareholders, driving the need for new stuff – new products, new services, new markets, new business models, etc. – by definition, increasingly different from what we currently do…

The Desire for ‘Control’The focus on continuously tightening the grip on

how wedo things today – driving predictability and

productivity by fine-tuning our knowledge of, and control over, our existing business portfolio –

products, customers, channels, etc.


“If everything seems in control;you’re just not going fast enough”Mario Andretti

The Growth Paradox…

© StrataBridge - 2012


PERSPECTIVE

ENTROPY

CHANGE

Underneath it All3 Fundamental Laws that have shaped the StrataBridge approach…


Law of

ChangeNo matter how hard you resist or deny it, things are going to change, often unpredictably so

Underneath it All…


Law of PerspectiveIt all depends on ‘where you are coming from’



Law of Entropy

Unless energy is

expended to

counter it, things

become random,

break-down,

over time




Cle

ar decisio

n rig

hts, in

tegrate

d p

rocesses a

nd

routin

es to e

nact stra

tegy

Joined-upDecisionMaking

An Architecture for Strategy Development, Deployment & Delivery…Against a VUCA Backdrop

capabilit

ies require

d to e

nable, a

ccele

rate

and sust

ain s

trate

gy

‘Big C’Capability

Individual, team, le

adership and

organisa

tional

Laws,Principles

& Balances

dia

logue

arou

nd s

trat

egic

ch

oic

es

at

all l

eve

ls

Ser

ies

of q

ues

tions/

conve

rsat

ions

to s

truct

ure

eff

ecti

ve

ongoi

ng

StrategicDialogue

Analyses, models and

directional examples to inform choices

Strategy‘Toolkit’


StrategicDirection

Long Term Plan (e.g. 5-10 Years) – Context, fundamental choices and boundaries, combining clarity about where you are going and flexibility about how to get there


Laws,Principles

& Balances

StrategicDirection

StrategicDialogue

‘Big C’Capability

Strategy‘Toolkit’Strategy‘Toolkit’

An Architecture for Strategy Development, Deployment & Delivery…Creating a Tightly Integrated ‘Eco-system’


Joined-upDecisionMaking





Backdrop



Making


ConsistencyStandardisationProceduralisation

ChangeInnovation

Experimentation

Process (People are there to ‘enact the process’)

People (Process provides ‘enough

structure’)

ObedienceComplianceCompetence

CreativityStretchPassion

Automate the Processes

Enable the People

Analytical ExerciseFixed Destination/Direct Route

Systemic InterventionOverarching

Direction/Course CorrectionMechanical

FormulaicWanting Answers

Organic Dialogue-

basedAsking

QuestionsData-drivenNumbers based

Insight-drivenAssumptions

based

?1+2=3

Efficiency Productivity

Agility Adaptability

Hierarchical and Centralised

Flat, Networked

and Distributed


Learning, Competitive

Advantage & Resultsfuelled by…

Performance Beliefs…

Organisational Constructand Location of Power…

Approach to Strategy…

Decision-making Routines…

SupportingInformation Focus…

Results Driven Through…

Talent Hired For…

Technology used to…

Control

Growth

More VolatileMore Uncertain

New ‘Rules’

VolatileUncertainChanging ‘Rules’

External Environment - Competitor, Customer, Consumer Landscape &

Behaviour - & Macro Trends

StablePredictableConsistent ‘Rules’

VolatileUncertainChanging

‘Rules’

External Environment - Competitor, Customer, Consumer Landscape &

Behaviour - & Macro TrendsDecision-making

Contexts Mindsets

and Characteris

tics

© StrataBridge 2012© StrataBridge 2012© StrataBridge 2012

Control

Growth

Striking the ‘Right Balance’?

In general, how would you rank your organisational DNA on the 'Control-

Growth Spectrum’?

1 2 3 4 5

More 'Control’ More 'Growth’

About right

What do you need to strike the right balance to deliver your strategy and

desired business results?


‘VUCA’ and Growth Drivers?

‘Control ⇆ Growth’ Balance?

Key questions to provide a platform for AgilityJoined-up Decision-making

Right Conversations?

Right Capabilities?

Pace, Experimentation and ‘Learning-by-doing’?

Does ‘VUCA’ represent a strategic threat or opportunity in

our environment and do we understand our drivers of growth? Are are these reflected in our Strategy,

Tactics and underpinning Assumptions and Plans?Are we ‘wired’ for Control or Growth? Are our internal

mindsets, processes, routines and behaviours synchonised with our external realities?

Do our decision-making processes and forums ask the right questions, bring together the right perspectives from across the business, and generate insight and

coherent actions? Do we have explicit development actions building organisational capability – Capability with a ‘Big C’ – to develop agility and use ‘VUCA’ to our advantage?Are we countering ‘VUCA’ with vision, understanding, clarity and agility, and accelerating results through an aggressive transition, rapid experimentation and

‘learning-by-doing’?


‘VUCA’ and Growth Drivers?

‘Control ⇆ Growth’ Balance?

Key questions to provide a platform for AgilityJoined-up Decision-making

Right Conversations?

Right Capabilities?

Pace, Experimentation and ‘Learning-by-doing’?





Backdrop



Making


… and over to Ed for some insight into how leading-edge technology can enable and

accelerate agility…

Date post:	11-Jan-2015
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