Saturday, May 20, 2017

Reflections on Leading Execution

Recently, I was asked to share some brief reflections with a group of middle level managers on leading execution. Please, find below my reflections.

1.      Strategy is mere statement of intent unless it gets done. Organizations need to get better in translating their strategy intent and conceptual thoughts, usually in various PowerPoint documents to action and results. Leading execution can therefore be reframed as “From PowerPoint to Action” or  “From PowerPoint to Results”.

2.      The nexus of increasing size of organizations or the need for rapid scaling, diversity geographies and business scope, competitive and fast pace markets, disruptive technologies, active regulations and sophisticated and very aware customers, and convergence of markets and industries create particular execution challenge for organizations in what may look like increasing complexities and interdependencies.  Yet simplifying these complexities and interdependencies is at the heart of good execution. Managers must not further complexify internal and external processes but must rather find ways to simplify them to execute, to achieve operational excellence.

3.      Two key parameters for measuring good execution (assuming that strategy is right), are fast speed to market and great customer experience. The faster our speed to market and the better our customer experience, the better our execution or vice-versa.

4.      Below are some of the things managers must do to execute brilliantly.

a.      Outside-In Thinking: Product, service and programs must be designed from the viewpoint of what the customer wants and internal processes aligned to deliver the product or service, the way the customer wants it. In many instances, organizations design their product and services to fit their internal processes and not the need of the customer leading to poor customer experience and poor execution. 

b.      Define clear end goals and design program and processes backwards: Usually a key reason for poor execution is fuzzy or lack of clarity about end goals which leads to poor process design that sub-optimizes program delivery. While in some experimentation instances, it may be difficult to define sharply our end goals, nevertheless it would still be imperative to define at least broad qualitative outcomes that such program must deliver and processes designed backwards from such defined outcomes.

c.       Define and understand clearly program dependencies internally and externally. Seek and get alignment of these dependencies before your begin execution of the program.

d.      Understand your resource constrains and align priorities: Rarely will managers have infinite resources to do all that they conceive. Clear priorities and trade off must be set within the context of resource constrain; and necessary alignment sought with stakeholders and dependencies to execute flawlessly. An average manager or organizational unit is likely to be unable to execute more than three to four high level priorities at the same time. Long list of priorities mean no real priority in which priorities pull resources from each other usually in different directions leading to sub-optimal outcomes.

e.      Define measureable goals, milestones, timelines and accountabilities: Well defined milestones that indicate the program is on track are critical to execution. Lack of well- defined and measurable milestones create irreversible resource investment in which significant resource is sunk before the organization realizes that program is not on track or program will not deliver the desired outcome. The organization would be stuck on a wrong journey with sub-optimal outcomes steering in the face of managers, yet they would find it difficult to re-track the program due to irreversibly sunk quantum of investments.

f.        Know the numbers that matter, the leading and lagging indicators that show your program is on track or otherwise. Every program should have leading indicators or proxies that send early warnings or comfort that desired periodic outcome of programs or market actions would be delivered or otherwise. In consumer goods industry for example, the trajectory of periodic tracking of brand preference is usually a lead indicator of medium term sales. Even if sales are strong today, it will eventually align with the trajectory of brand preference if it is in decline. Do you know the leading or lagging indicators of your program’s eventual outcomes? Do you measure them and take proactive measures to correct their trajectories if they are in the negative?

g.      Leverage technology maximally to simplify complexities, eliminate or shorten manual processes and deliver great customer experience.

h.      Learn project management skills: Every manager today giving the increasing interdependency of their work and resource constrains, must have project management competency. The days are gone when project management skills of the firm would reside in few managers in the project office. As a manager, you are managing one form of project or the other with defined by end goal, cost or finite resource and defined deliverable time. Optimizing effectively these variable makes project management a sine-qua non for all managers.

i.        Engagement, leadership and good inter-personal skills are critical to good execution. Managers will never work alone. They work in interdependency with other managers. Leading execution implies that engagement, leadership and interpersonal skills to motivate the right alignment with other managers, to engage them, to align their incentives with program and service outcomes become critical. Leadership is not necessarily about hierarchy but about program role. If you are product, service or program manager, you must lead, engage, manage and motivate your dependencies to deliver what is required of them to deliver on overall program outcomes.

j.        Lastly, good execution provides a great feedback loop for firms to validate and fine-tune their strategy in a dynamic world. If there is good execution and the desired results are not forthcoming, it is clear that strategy needs to be changed, fine-tuned or assumptions revalidated. If there is no good execution, the firm will never know if strategy is right or otherwise and may be stuck for too long on a wrong path.

Wishing you the best as you lead execution.

Olu Akanmu

May 2017

Saturday, January 14, 2017

Strategy and Public Policy: Managerial Compensation and Risk Incentives in the...

An essay written six years ago (2010), even more relevant now given current asset quality challenges in Nigerian banks.

Strategy and Public Policy: Managerial Compensation and Risk Incentives in the...: By Olu Akanmu Given our recent experience and the need to rebuild public trust in the financial system, we will need to reshape the values ...

Monday, January 2, 2017

Business in recession-the years of lean cows

By Olu Akanmu

"and the cows that were ugly and gaunt ate up the seven sleek, fat cows”
-Genesis 41:4
“and the thin heads of grain swallowed the seven healthy, full heads”
-Genesis 41: 7

This essay discusses what businesses can do to pull through the years of recession. The years of lean cows are the years of famine akin to the years of economic recession. When Pharaoh dreamt as above in the biblical history, Egypt mobilized to prepare for famine or economic recession by building strong national reserves of grains in its years of boom and abundance. With such strong national reserves or savings of grains, the biblical Egypt of Pharaoh was able to minimize the impact of famine on its people even when it lasted for seven years. There was however a country whose Kings did not save its grains in its years of fat cows because their Kings did not dream, they had no vision and lacked foresight. When famine, the years of lean cows came, there was limited supply of grains available in the country. Grains became so scarce that there were long queues of citizens to buy the limited quantity of grains available from the national warehouse. The King out love for his people decreed that the now scarce and limited national grains should be sold to the people at the same price or close to the price, they used to buy, in the years of fat cows. Grains had however become more valuable in that country because of its limited supply in the now years of lean cows. The queues for grains were so long that millions the citizens who wanted the scarce grains were willing to pay far higher prices than the official price of the King, reflecting the true value of the scarce grains. This created very significant rent seeking opportunities in the sales of the scarce national grains. A citizen would also need to be well connected to access the grains even if they are the most economically efficient user of the scarce national grains. This was because the queues for grains were so long that no one was certain when it would get to their turn if they stayed on the queue as the supply in the national warehouse got depleted.

As the grains supply got depleted by the day, their value to the citizens increases at higher premiums to the King’s official price.  The state was now selling its grains at old prices, lower than their real value, at far lower revenue that constrained its ability to replace the stock of grains it has sold, such that the national grains reserves began to fall rapidly creating even further scarcity. Meanwhile, there were merchants in overseas countries where there had been good harvest of grains. Those merchants would like to bring in ships of grains to the country to sell in very large quantities. They could see the demand from the scarcity in that country but they lacked the incentive to bring their ships of grains because they had to sell at that large quantity at the official decreed price, far lower than the true value of their grains. Therefore, there was very limited private supply of grains into that country to complement the limited supply of the King. The famine and recession therefore got worse and became unnecessarily prolonged beyond its natural course. Extrapolating this analogy, it is certain that if biblical Joseph were Nigerian, he would have advised against an inflexible exchange rate policy in our current economic situation.

Nigeria’s recession, our own years of lean cows is characterized by very high inflation, declining real wages and accelerating unemployment and underemployment.  It manifests on businesses in three ways, which are massive contraction of market demand, rationalization of demand and the trade –down of market and product preferences as consumers shop for value. There are nine ways a business can respond to this recession and pull through this challenging period. The first is re-engineering your product and services for value to keep them at affordable prices for consumers. Toothpastes and packages of consumer goods are now getting smaller to keep them at affordable price points. You can also take out the bells and whistles in your product to keep them at affordable prices. Bells and whistles are product ingredients that may be twenty percent of your cost and deliver only five percent value to your customers. By taking them out, you can effectively shave fifteen percent off your cost making your product or service more affordable. The second way your business can respond is to make your route to market more efficient. Find partners who have a wider market reach and plug into their platforms. It will be cheaper than doing it yourself especially if you a small business and your scale is small.  You may for example plug into established digital and e commerce aggregation platforms to reach a wider market while developing your own websites for more people to reach you at a lower cost. The third way is to find if there are new value segments emerging in your industry or market because of the recession. Enter such value segments early to colonize and dominate them. Such emerging value segments will be usually small and may not be able to accommodate more than one or two brands profitably. The first brands to get in are the ones who can build a minimum profitable scale while the third and fourth will have very little market left to harness.

Fourthly, your business can identify markets, sectors or segments that are resilient and realign your commercial investments around them. Despite the famine in Isaac’s time in the book of Genesis, Isaac sowed and prospered because he had the skills of finding wells in dry and famine lands. Identify your more resilient markets and realign your commercial investments to focus on those need or geographic segments. The fifth way your business can respond is to rationalize your product scope, offering and store-keeping units, to make them efficient in line with market reality. Are there product or product lines that consumes twenty percent of your working capital but deliver only five percent of revenue and have done so stagnantly over a long period?  Such product lines are candidates for rationalization to make your commercial program more efficient. You must however be careful to preserve your core strengths and market advantages even as you rationalize your offerings to ensure you can take full advantage of next market upturns when the economy gets out of recession. The sixth is to increase the local content of your product to make your business less forex dependent. This also ensures that you can keep your prices affordable. The seventh way is to find customers who can replace the import content of their product with your own local product. Today, retail chains with their shelves getting empty because of their inability to import, are looking for local agriculture processed products to replace previously imported products. Are there such opportunities in your own industry or in adjacent industries where you can become an effective, cheaper and available local substitute? The eighth way is to run tactical promotions to stimulate demand. Lotteries and lottery -leveraged initiatives interestingly become more appealing to mass market customers as economic situation bites harder. The ninth way your business can respond to recession is to explore export opportunities for your products, which will give amplified local currency returns even at relatively small scale.

Best wishes to your business in the new-year.

Olu Akanmu publishes a blog on Strategy and Public Policy on