External Assessment

There are seven components of a good external assessment:

• Industry/market trends

• Technology trends

• Competitor assessment

• Social and regulatory environment

• Macroeconomy and demographics

• International threats and opportunities

• Overall threats and opportunities

INDUSTRY/MARKET TRENDS

Take a quick snapshot of your industry…

• Most importantly, what are your customers telling you about their evolving needs? What are they telling you about how well your company is meeting their needs? How are customer demands changing? Direct input from your customers is an essential part of setting strategy. Get input directly from your customers regularly. They can tell you what’s going on in your market because they are the market. They can also tell you about your competitors. It’s wise to survey your customers at least once per year as an integral part of setting strategy.

• At what stage of evolution is your industry? What does this imply in terms of how the industry might change in the next five years? See nearby diagram, “Stages of Industry Evolution,” as a backdrop to this analysis. (Various versions of this chart are common in strategic management and marketing literature. A more detailed version can be found in Competitive Strategy by Michael Porter.)

All industries, even “low tech” industries, have a technology component to their evolution, either in products or in process. Every industry is somehow affected by changes in technology. For example, the banking industry, which has not historically been known as “high tech,” was nonetheless dramatically changed by computer technology. In back-room processing, effective use of computers became a key strategic advantage for those who mastered their use quickly. In services to customers, adoption of ATMs became an essential part of banking services.

Examine the technology trends in your own industry and ask how you can best use them to your advantage. The question is not whether technology trends will affect your industry, but how.

Never underestimate your competition. One of the biggest mistakes in mapping out a strategy is doing so in ignorance of the competition or, worse, with disdain for the competition.

• Who are your current competitors?

• Who are potential competitors?

• What are their strengths and weaknesses?

• What do you anticipate as being their future moves in the market? What are their visions and strategies?

• How do your strengths, weaknesses, and product line stack up against the competition? Where are they vulnerable? Where are you vulnerable?

• Do you have a clear, differentiated position with respect to your competitors? What is it?”

Examine the general macroeconomic climate and assess what impact the overall economy might have on your company.

Pay particular attention to demographic trends. Entire industries can be dramatically affected by demographic changes. For example, the United States’s “baby boom” (a gigantic bulge in the birth rate from 1945 to 1960) will continue to have a profound impact on a wide range of industries until at least the year 2020. This is only one of many demographic forces…

In preparing for a strategy session, ask a selected group of employees, managers, and objective outsiders to list the top three external opportunities and top three external threats facing the company. This is a quick and efficient way to tap the insights of a range of people as input to your external assessment.

Throughout the internal and external assessment process, it’s absolutely paramount that you do everything possible to see reality—to see things as they really are and not the way you wish they were.

The Three Legs of Setting Strategy:

VISION:

Core Values and Beliefs

Purpose

Mission

INTERNAL ASSESSMENT:

Strengths & Weaknesses

Resources

Innovations & New Ideas

EXTERNAL ASSESSMENT:

Industry / Market / Current Trends

Technology Trends

Competitors

Social & Regulatory

Macroeconomy & Demographic Trends

International

Eight Management Techniques for Stimulating Creativity

We’ve spent most of this chapter describing the traits of companies that remain innovative. We’d now like to discuss things individual managers can do to stimulate creativity.

1. Encourage; Don’t Nitpick. Keep in mind that there’s no shortage of good, workable ideas, but that there’s a tremendous shortage of receptivity to ideas. Don’t be like one of those “wet blankets” that shot down the radio, the telephone, Federal Express, the personal computer, and NIKE shoes as “dumb ideas.”...

1. Be Not Judgmental. Harshly critical people destroy creativity and initiative. The fear of being criticized or being made to look and feel stupid is the biggest impediment to people experimenting, initiating, trying new things. The problem is not that people are inherently uncreative, it’s that people are afraid to be creative—afraid of being laughed at, ridiculed, personally attacked, or otherwise psychologically abused. It’s the deep-rooted fear we all carry around of the seventh-grade math teacher making an example of us in front of our peers. …

1. Help Shy People. Some good ideas never go anywhere because the people who have them are too shy to speak up. In fact, some of the best ideas come from quiet people. Quiet people tend to be excellent observers and thinkers; like cats, they’re watchful and attentive, and often intensely curious. Yet they’re also often fearful of voicing their ideas….

4. Stimulate Curiosity. Relentless curiosity, the pure desire to know things, to test them, to see if something will work, fosters creativity. The most creative people ask many questions; it’s as if they never outgrew that naive childlike desire to ask why. Create an environment where it’s ok to ask questions. Ask questions yourself—not critical questions (again, don’t be a wet blanket), but open ended questions in the spirit of inquiry. A favorite question of ours is, “What did you learn from that experience?”...

1. Create Necessity. Human beings have an amazing ability to innovate their way out of seemingly impossible situations. “Necessity,” as the cliché goes, “is the mother of invention.” But cliché or not, it’s true. In fact, many great ideas have emerged precisely because a company lacked the resources to do what it ideally would have liked…

6. Allow Time Away from the Fray. Certain highly creative individuals need solitary time to do their best thinking, time away, time to think in silence. Phil Knight, founder of NIKE, believes that people get their best ideas away from the office, at the beach, or running, which is one reason why NIKE has a wide ranging campus with running trails, tennis courts, basketball courts, weight rooms, and aerobics studios. Herman Miller lets its designers choose their venue for creativity—and some choose to do much of their work at home or somewhere else off-site. .. At Patagonia, the pattern-making group (part of the design department) has a little sign posted near its area: PLEASE OBSERVE QUIET TIME. Closed from 8:00 to 12:00.

1. Catalyze Group Problem Solving. “Quiet time” is not the whole story at Patagonia. In addition to letting people have quiet, solitary incubation and thinking time, it’s essential to capture the creativity of multiple minds thrashing about together. Brainstorming and other group activities produce extraordinary ideas.

Desks at Patagonia are jumbled together in large, open bullpen-style pits (called “Bangladesk”). People are expected to work closely with others—both spontaneously and scheduled—in coming up with new ideas and solutions to problems….

8. Require Fun. “As far as I’m concerned, the most important thing is having fun,” explains Ted Nierenberg, founder of Dansk International Designs. “If you’re not having fun in what you do, lock it up and try something else.”

We’re serious about fun. Fun leads to creativity. Ask people, “Are you having fun?” Ask yourself. Set enjoyment as an absolute requirement of work; if there’s no joy, there will be little creativity. Have you ever noticed that some of the most creative people are a lot like little kids? They like to play, and, to them, work is play.

This doesn’t preclude hard work. Creativity is hard work, but it should also be fun.

The first part in understanding how you lead is to know your strengths—the things you’re talented at and love to do. This is crucial because great management typically comes from playing to your strengths rather than from fixing your weaknesses. There are some useful frameworks for understanding your strengths, like StrengthsFinder 2.0 by Tom Rath or StandOut by Marcus Buckingham. If you want to do a quick version, jot down the first thing that comes to mind when you ask yourself the following questions:

• How would the people who know and like me best (family, significant other, close friends) describe me in three words? MY ANSWER: thoughtful, enthusiastic, driven

• What three qualities do I possess that I am the proudest of? MY ANSWER: curious, reflective, optimistic

• When I look back on something I did that was successful, what personal traits do I give credit to? MY ANSWER: vision, determination, humility

• What are the top three most common pieces of positive feedback that I’ve received from my manager or peers? MY ANSWER: principled, fast learner, long-term thinker.

Like mine, your responses will likely cluster around a few themes. Here, you can see that my strengths are dreaming big, learning quickly, and remaining upbeat. Whatever yours are, remember them and hold them dear. You’ll be relying on them time and time again.

The second part of getting to an honest reckoning with yourself is knowing your weaknesses and triggers. Right beneath your list of strengths, answer the following:

• Whenever my worst inner critic sits on my shoulder, what does she yell at me for? MY ANSWER: getting distracted, worrying too much about what others think, not voicing what I believe

• If a magical fairy were to come and bestow on me three gifts I don’t yet have, what would they be? MY ANSWER: bottomless well of confidence, clarity of thought, incredible persuasion

• What are three things that trigger me? (A trigger is a situation that gets me more worked up than it should.) MY ANSWER: sense of injustice, the idea that someone else thinks I’m incompetent, people with inflated egos

• What are the top three most common pieces of feedback from my manager or peers on how I could be more effective? MY ANSWER: be more direct, take more risks, explain things simply

Again, you may see some themes emerging. The biggest barriers that get in my way are self-doubt, a tendency to complexify, and not being clear and direct enough.

In many large organizations, the challenge is often diagnosed as internal. That is, the organization’s competitive problems may be much lighter than the obstacles imposed by its own outdated routines, bureaucracy, pools of entrenched interests, lack of cooperation across units, and plain-old bad management. Thus, the guiding policy lies in the realm of reorganization and renewal. And the set of coherent actions are changes in people, power, and procedures. In other cases the challenge may be building or deepening competitive advantage by pushing the frontiers of organizational capability.