Thursday, August 16, 2012

More on Strategy, from McKinsey

Being alert to opportunity, perceiving and responding to threats, and making timely decisions: these three strategy components make up part of any executive's job, argue researchers in the McKinsey Quarterly, available here (free once you have registered). How do you do this? McKinsey offers some tips. (As usual with McKinsey, the context is for-profit business. As usual, the tips apply equally well to not-for-profit management jobs.)

First, the researchers say, understand what strategy means within the context of your sector. And, they add, don't save the work for the time of a strategic planning process.
Because strategy is a journey, executives need to study, understand, and internalize the economics, psychology, and laws of their industries, so that context can guide them continually.
In practice, this means thinking about your sector or agency as part of a larger system. If you provide mental health services, how do you related to hospitals? Referring sites? Single points of contact or assessment centers? Thinking of your services as part of a matrix of services lets you think more broadly about your strategy.

Second, learn to identify potential disruptive changes when they are far away. Expand the strategic group to gain a broader perspective. But there are other options as well. The authors offer the example of technology executives who check in on what technologies their younger colleagues, or even their children, are using. In the public sector, another way to think of potential disrupters is to look at large reimbursement areas. Large reimbursement areas for not-for-profits are large cost areas, which might be the source of large savings, for government agencies. For years, people in the foster care industry knew that Medicaid - to pay for medical services for children in foster care - was a large-budget item, and for years, governments have proposed different ways to reduce it. Most recently, there have been proposals to eliminate it entirely. For all those years, the Medicaid payment for children in foster care was a potential disruptive change.

Third, improve communications, or, as the researchers put it, "make strategic insights cut through the day-to-day morass of information." They suggest using experiential exercises, and making backup data easily available. "Executives hoping to become more strategic should look for opportunities to innovate in their communication of data, while prodding their organizations to institutionalize such capabilities." They also cite several examples of interactive data visualization efforts such as those of the New York Times, like this one showing restaurant cleanliness, and Hans Rosling's 200 years of changing life expectancies video, available here.

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