‘Executing Strategy in Challenging Times’ with Prof. Patrick Gibbons and Dr. Karan Sonpar

1. ‘Executing Strategy in Challenging Times’ with Prof. Patrick Gibbons and Dr. Karan Sonpar Prof. Patrick GibbonsJefferson Smurfit Professor of Corporate Planning UCD Smurfit School Dr. Karan SonparLecturerUCD School of Business

2. AGENDA The webinar will cover the following key areas: *   Challenges in Scanning, Planning & Execution *   Addressing these Challenges *  Things to get Real About 30 minutes Questions and Answers - 15 minutes

3. Introduction • “The wrong way forward in a structural break during hard times is to try more of the same”, (Rumelt, 2009) • “Planning is anticipatory decision making” (Ackoff) • The strategy process needs to: • - develop a coherent view of the forces influencing business • - develop a coherent view of how those forces will affect • the business • - develop a coherent view of the appropriate responses • thereby inspiring decisions across time • - executing those decisions • - evaluating the effectiveness of those decisions • - learning from this cycle

4. Uncertainty State Effect Response Scanning Planning Execution (adapted from Milliken, 1989)

5. Challenges in Scanning • Availability and recency heuristics • Overweighting non-systematic, recent/available evidence • Functional fixation • Tendency to define problems from the perspective of specialist training • Confirmation bias • Overweight evidence that confirms beliefs and underweight evidence that disconfirms belief • Status quo bias • Preference for inertia

6. Addressing the Challenges • Ensure the analysis of the environment is based on “facts” and identify “guesses” and assumptions explicitly • Set up competing groups to address the same aspects of the environment • Develop a “momentum” forecast for the company, i.e. if we do nothing what does the future look like for us?

7. Additional Thoughts on Scanning • In uncertain times, executives instinctively magnify risks and discount potential rewards (Lavallo, HBR, 2007) • Presence of some classic attention traps such as a focus on urgency and singular attention to an issue • Get information on environmental trends and happenings from managers working in related industries • Pay attention to the weak signals and things in the near future that may affect you. Focus both on the ‘Reset World’ and how things might be in the ‘New Normal’ • Also rely on soft information and qualitative trends

8. Challenges in Planning • Overconfidence • Overestimating our skill relative to others • Competitor neglect • Planning without adequately factoring in competitor response • Sunk costs • Paying attention to historical costs that are irrelevant • Champion bias • Tendency to evaluate a plan or proposal based on the track record of the champion, rather than the facts

9. Addressing the Challenges • Focus on quality of meetings • Involvement of people with diverse backgrounds, cross section of the organisation, who has a “stake” in the future? • Engineer conflict to generate debate among the team • Think about horizons • E.g. the three horizons (McKinsey)

10. Additional Thoughts on Planning • Making strategic decisions, not just operational ones • Making decisions in the face of incomplete information - weak trends, complexity, tight coupling, volatility • Moving from how we survive to how we succeed • Balancing speed and flexibility in decision-making • Organizations that make fast decisions are able to do so since they evaluate more options, rely on soft information, and simulate productive conflict

11. Challenges in Execution • ‘The Knowing-Doing Gap’ (Pfeffer & Sutton) • Acting in the face of incomplete information • Using power judiciously • Balancing the need for originality and feasibility • Managers change the organization’s structure without addressing the root cause. This leads to short- term efficiencies at best. Key causes of poor execution are: - poor information flows - unclear on responsibilities for decisions & actions - poor motivation & reward systems (Neilson, 08’, HBR)

12. Addressing the Challenges • Balance speed and flexibility using execution triggers • Avoid viewing execution as a stand-alone event. It has to be a part of planning, as also must be fine-tuned based on learning and feedback from prior actions • Focus both on meeting immediate challenges through speedy actions and on building an execution culture • Having a champion who can monitor and energize “In real life strategy is actually quite straight-forward. You choose a general direction and implement like hell!” (Welch)

13. Concluding Comments Eight Things to get Real About Your strength in your market Your quality, especially compared with your competitors What your customers think of you What your non-customers think of you The potency of your competitors The cost position of your competitors, compared to yours The potential impact of emerging technologies,or market segments Your projections for your product’s future (source: Hammermesh)

14. Questions and Answers

15. Upcoming Alumni EventsWe also have a number of upcoming events, which will allow you to meet fellow alumni and increase your knowledge base."Best Practice Networking” with Prof. Hunter, INSEAD at 6pm on Thursday 20th May in UCD Smurfit School.“Executive Insights” with Hugo MacNeill, MD, Goldman Sachs and Prof. Ray Kinsella, UCD at 6pm on Thursday 27th May in UCD Smurfit School.“Navigating the Markets” a panel discussion with industry experts on investment strategies for 2010 and beyond at 6pm on Thursday 10th June in UCD Smurfit School.GolfOuting on Sunday 11th July in Druids Glen.Purchase your ticket online at www.ucd.ie/businessalumni or telephone Caroline on 01 7168050 for more information.