Strategy Dynamics Briefing 71: Conflicting objectives

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Recent briefings urged us to focus on the direct impact of decisions, rather than following simplistic rules based on ratios or overall performance outcomes, especially profits. But many decisions, such as various spending choices, include a direct profit impact, as well affecting the resources and operating performance in their particular part of the system. In practice, then, many decisions have to balance conflicting aims.

Take the case of an established power company, supplying electricity to a large number of homes. ...

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Managing messes

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Making the Most of Mess suggests we manage strategy/policy the same way control engineers manage complex physical systems … which is exactly what system dynamics has made possible for the last 50 years, since it is precisely the use of control-theory principles for understanding and managing social systems. It has its limits but we can go a long, long way …

We may need first to clarify what we mean by “mess”. I haven’t been all through the book, but ...

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Strategy Dynamics Briefing 69: Basing decisions on performance outcomes

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Simplistic and static policies decision-rules, such as ‘spend no more than $X per month‘ or ‘spend Y% of revenue on marketing‘ are clearly way off what is best in most cases, so what exactly is wrong with them? We have repeatedly emphasized that our main aim in commercial cases should be to grow profits or cash-flow, so perhaps our policy on advertizing spend should be based on that measure? Neither of our simplistic policies above takes any account of profit, ...

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Strategy Dynamics Briefing 68: ‘Policy’ to control strategy

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Given the very wide range of performance outcomes that can arise from small differences in key decisions in examples from earlier briefings, a disciplined approach to decision-making would seem valuable. We previously described the strategic architecture of resources as “the machine” designed to fulfill the organization’s purpose, and like any machine, this one too needs a control system if it is to perform well.

The machine analogy is more complex when human behaviors are involved, because unlike the physics of mechanical ...

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Strategy Execution – not all about projects

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Most work on why strategies don’t get done focus on culture, but a new book [1] blames poor project management. It explains how the process should work, and tools to assess a firm’s capability to do it, but it needs a worked example to show the process actually happening.

“Projects” are certainly vital – a big part of Cisco’s past success came from its power as a ‘serial-acquirer’ of new technologies, each of which was a project. And a white-goods manufacturer recently ...

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