Strategy
strat'e-gē: 1. the science and art of using all the forces of a nation to execute approved plans as effectively as possible during peace or war.
What We Do
  • Risk Management - we will broaden your scope of what risks you do not know about because internal personnel can never see them all.
  • External Factors - we will help you consider the actions and beliefs of competitors, regulators, customer dissatisfaction, and suppliers, particularly regarding their closely-held opinions.
  • Internal Factors - we will act as your intermediary, to help reveal the true issues between employees, management and executive.
  • Strategic Planning - we will help you balance the heavy accountability of strategic planning with outside opinions and experience.
How We Do It
We are not fans of keeping up with competitors. Rather, we want to make companies leaders, and if you should decide to ask AG Advice and Support about strategy, you will see that before long. But we are not "loose cannons" who shoot baseless suggestions from the hip. Here's some examples of how we approach strategic decisions.
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Risk Management: Predicting the Future

Clearly, no one knows the future. But it is possible to make some account for the impact of certain decisions. In Risk Management, inexperienced planners often apply within their minds a "straight-line" logic, where they anticipate that if they make a change to a larger system, the change will be small enough that it will not have an impact on the greater system. For example, a government authority may impose a tax on a group, which in turn causes the group of earners to earn less. This in turn can reduce the expected tax revenue, however, if the group's lower earnings due to the effect of the tax was not anticipated. Such effects should be included when legislators planned on imposing the tax in the first place.

Of course, this is where it can get complicated. What else could occur? The economy of the taxed group might be rapidly growing for other reasons, resulting in a windfall of tax revenue. Conversely, their revenue may be inconsistent or dropping, reducing the group's and government's revenue even more than anticipated. Both possibilities, with different degrees of severity, must be anticipated and planned for.

This requires the anticipation of "
oblique" possibilities, the often unlikely or unforeseeable emergencies, problems or impacts that no human can possibly understand in advance of their occurrence. Yet they can be planned for without regard for why they may occur. This consumes some time and effort, which itself may discourage the planning from happening. But this is ill-advised, as such planning often saves time, particularly as time passes and such contingencies eventually come to pass. Contingency planning can also be adapted to other situations once created, saving time in future deliberations.
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External Factors: The Economy

Though it may come as a surprise to anyone who likes to occasionally pull the handle of a slot machine, Las Vegas actually saw slowing visits for years, from the late 1990's and into 2004, despite the crowds up and down The Strip. But as the US economy grew into 2006, with national unemployment dropping into single digits, visitations and the willingness of those visitors to spend saw casino resort revenues soar. This prompted enormous development, with multiple new resorts, hotel rooms, and the requisite gaming facilities to match. In fact, gaming was becoming incredibly popular worldwide with the relaxation of government policies and attitudes. Even in the European Union, or China's Special Administrative Region of Macau or Russia or the internet, an explosion of gaming capacity was a worldwide phenomena.

Some companies, including us here at AG Advice and Support, found the trends unsustainable, and had begun advising clients as early as 2004 when the sustainability of real estate development came into question. In October 2005, it became clear that we were at or near the top of a real estate bubble in the United States, and by 2006, we felt a minimum 5 year correction was underway. There were many other problems festering that only a few people around the world knew about, like the use of collateral debt swaps to protect against the unknown value of mortgage backed securities. But one really did not need to know the specific details. All that was needed was plans to address any eventual shock (or benefit) to the economy.

There is an old gaming-industry adage that there is "never enough capacity", but this belief suddenly started to show cracks. We had written into our reports that major gaming resorts should start considering alternative ways of generating revenue if the Las Vegas 95% occupancy rate started to drop, in case of some economic or other unforeseen reason. Advice like review of new-construction, hotel-to-condo conversions, short-term rentals, discounting and comping, opening lock-offs, television ads emphasizing patriotism and lower cost of local trips, and other such counter-measures were understandably not popular in 2006, but plans to implement these types of ideas were recommended to be drawn-up in case they were needed.

Of course, in only two short years, things changed dramatically and many of the above ideas were needed. The problem with not developing these plans well in advance is that developing them once needed consumes too much time -- many resorts started to implement alternative methods like those above only after the economy declined, which it did faster than the alternatives could take effect. There was no time to sell assets, re-evaluate construction or develop customer loyalty, right at a time when those things would be needed most.

It's difficult enough to see anything of the future, and earning revenue when the national money supply nearly halts circulation is a remarkable challenge for any company. But some signs were there well in advance, and we at AGAAS are somewhat comforted that we helped foresee and plan for these scenarios and the economic morass the followed. A willingness to tackle possible future possibilities with open-minded planning can help make you prepared for any outcome.
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Internal Factors: Workplace Attitudes

It's widely recognized that to attain your goals, everyone within an organization must be working together towards that goal, particularly understanding the nature of their own contribution. But how often is this really occurring? Many employees have frustrations, questions, and contradictions. Shyness, uncertainty, fear of being judged and other worries can prevent them from overcoming their difficulties on their own. This can affect workers and managers alike.

Sometimes, a serious issue may arise out of a perception, rather than a reality, and it can be difficult to break the deadlock if one or both sides are not communicating. Indeed, perceptions based on relatively minor or even non-existent problems can have just as serious an effect as a real problem.

For this reason, all workforce issues are valid...even if the rationale behind them may not be. What we mean by this is, if employees cannot support the overall strategy, for whatever their reason or perception, than you are not going to accomplish objectives regardless of the reasonability of the perception.

To correct and prevent such perceptions, everyone within the organization must be communicated with. For example, before finalizing a strategy, the executive can find out what management, workers and staff know and believe, and then those people must learn what the executives know and believe. In organizations where this is not often done, the communication process can be somewhat spirited, to say the least. But not only is this type of communication going to improve the likelihood of obtaining wide scale buy-in for a strategy, it will also identify issues before hand that could not have been anticipated by just a small group of planners. Everyone learns of the organization's goals first hand, and what their roles will be. They are also given a chance to contribute, and while they may not always agree with the proposed strategy, at least everyone now has some understanding of why certain decisions are being made. This is a form of courtesy, which over time, helps build trust amongst all members of the organization, and that trust both focuses goals and prevents problems. But you knew all that, right?

Here's the other half the story. Several broadly-distributed surveys have revealed that, when asked if employees of their organization understood their company's goals, most executives answer "yes". But when employees themselves are asked this question, typically less than 40% -- and often much less than that -- can even name one goal, objective or the company's mission. Engaging in more frequent two-way communication (particularly one-on-one), providing personal recognition or offering simple but meaningful rewards are some of the ways to rapidly encourage everyone to learn more about the goals they are working towards.
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Strategic Planning: Innovation and the Future

Here at AGAAS, we tend to think about the future the way well-known science-fiction authors or prescient economists do...if a certain set of decisions are made today, how will their outcomes be perceived in 10 to 20 years? Finding answers are not always easy, but once you do set down some expectations, you can design a strategy. This is a form of double, or even triple psychology. How so?

You, your competitors and your customers all expect some level of innovation in the future. They may not know what the exact nature of a new product might take, but they have an expectation that things will at least be improved in some way (normal psychology). You understand this yourself, and plan to offer something innovative and hopefully surprising (double psychology). Where it gets interesting is to think about what your competitors will be doing too. They also want to surprise customers, in an attempt to acquire market share. You can also consider new or anticipated regulations, customer trends, economic changes, etc. When taken together, you might realize that your planned product really won't be any more surprising that anyone else's, because many or all competitors are doing the same thing. You have to anticipate their surprise offerings and
improve upon what doesn't exist yet, but is anticipated (triple psychology). We could go into quadruple psychology, but not only would this explanation start to seem like a question on a central intelligence admissions exam, but additional levels of psychology effectively cancel themselves out.

In the more conventional realm, other common methods of information gathering like trend analysis, or looking at snapshots of today's competitors, or surveys from your customers are all terrific, and we advocate all of them when working out strategic direction. But, these are still only reactive components of a larger strategy. We believe you must also add proactive, future-looking elements, and then commit resources to those expectations within the master plan. This is what innovators do.


The short Planning: Predicting the Future article below describes some terrific examples of proactive planning by anticipating some future technologies, products and attitudes.
Planning: Predicting the Future
Apple's iPod® or Toyota's popular Prius® (recent recall issue notwithstanding) are each examples of products from companies in highly competitive industries where, had you asked the executives and analysts within those industries if they really understood their competitors, they would have resoundingly answered "yes". Yet in the year 2010, there are few flash-media music players or hybrid-electric cars that offer the comparable technological advantages of these products. This is made somewhat more remarkable when one considers the Asian currency crisis of the late 1990's, which greatly hampered the income of companies like Toyota and their ability to fund the R&D of a new vehicle platform, or Apple's waning computer market share in the early millennium, and its related reduced-income when it developed the iPod®. Each of these companies was largely invigorated with their new products, enabling them to improve sales across their entire product lines.

How did they do it?
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Though they did many things well, a major difference lay in seeing the future. Flash-memory based hard-drives were too expensive several years ago, and most consumer electronic manufacturers were waiting for their prices to decline before incorporating them into products, despite their obvious advantages. But Apple understood the impact of continual miniaturization, realizing that they could start design on a new device in the year 2000, so that when flash-memory technology caught-up in 2002, it could be quickly incorporated. This allowed the launch of a product with a significant first-to-market and technological advantages over competitors. Though still a major player in the computer world at that time, Apple did not at that time have the enormous R&D funds at its disposal that it has today. But they stuck to their view that a flash-media player would be a hit, and perhaps more interestingly, that the player should also be made of high-quality materials which would cost more to manufacture, but also allow for better sales margins, which would also help the company's reputation for building higher-quality products.

iPod® is a registered trademark of Apple Inc. iPod Classic photo courtesy of Apple Inc.

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Toyota early recognized a worldwide desire to own lower-emissions vehicles. This was not an easy decision in 1997 when a barrel of oil was selling for around $18 USD, and demand for larger vehicles in the United States and other countries were at odds with building a lighter, smaller vehicle. The perceived need that a network of "filling stations" with electrical hookups would have to be built to support sales of electric vehicles seemed to doom the development of a consumer-ready, hybrid electric car. But Toyota persevered, understanding that even if the Prius® didn't sell well, their investment in mass production of hybrid-vehicles would gain them a valuable knowledge base. It was really just a matter of time...and they did not need to wait long. In only 5 year's time, world demand for an efficient, fuel-saving vehicle was growing by double-digits each year, and has continued to grow so quickly that there were still waiting lists for Prius® vehicles 8 years after its introduction. Many automobile manufacturers now offer some version of a hybrid vehicle, but as of this writing, Toyota sells more Prius® hybrids than all of its competitors combined.

Prius® is a registered trademark of Toyota Motor Corporation. Prius photo courtesy of Toyota.

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There are other fascinating examples of letting the future be your guide, such as the parallel-development of technology where several pieces are a larger product were being developed in tandem, with the expectation that when finished, they will fit together and work. The original applications of the Intel 8086® microprocessor in telecommunication switches or Boeing's multi-manufacturer 787 Dreamliner® involved the manufacture of several parts which had never existed before, except in crude, non-production prototype form. Missteps always occur with this type of "skunkworks" development, but these are the types of inventions that often redefine technology for the next decade and beyond. The parties involved knew they had to look at what would be normal in the future, making that their target. That, by definition, makes them innovators today.

787® and Dreamliner® are registered trademarks of Boeing. 787 photo courtesy of Boeing.

Article Copyright, 2009, AG Advice and Support, LLC.