Key To Success
Does your organization successfully anticipate future opportunities? Does it know which technologies to pursue, which core competencies to build, what product or service concepts to back, which alliances to form and what kind of people to hire? Does it know which investments, activities and actions will create and deliver the most value now and in the future? How does it choose what investments, activities and actions to pursue?
Organizations must constantly address a variety of complex strategic issues. Given the disparity between our inherent limitations and the desire to create strategies and solutions that deliver the greatest value, organizations have made many attempts to find simple ways to deal with complex realities. Despite the number of strategy formulation methods that exist, most have failed to eliminate the natural barriers to success.
1. A structure that enables organizations to successfully organize, filter, prioritize and manage the information that enters the strategy formulation process.
2. A process that enables organizations to capture, filter and sort requirements and other information that is required to create breakthrough strategies and solutions.
3. The tools that deliver the processing power that is required to simultaneously process all the information needed to uncover the optimal strategy or solution.
In short, the process resulting from our efforts provided the structure, information and processing power that is required to formulate breakthrough strategies and solutions. We have quantified that the strategies and solutions resulting from this process are ‘‘breakthrough’’ in the sense that they often deliver up to 10 times more value than strategies and solutions that are created through the use of traditional methods. This magnitude of improvement is accelerating the rate at which organizations create and deliver value to their internal and external customers. This explains why many organizations are using this process to replace or enhance their existing strategy formulation processes.
Since 1991, these ideas and theories have evolved into an advanced strategy formulation process that we now call The Customer-Driven Mission Achievement Process, or CD-MAP. This process is being used by Fortune 100 companies and other organizations around the world to create a broad array of company, product and operational strategies. For example, organizations are using this process to:
1. Devise company-wide and division-wide operating strategies.
2. Formulate short-term and long-term product and service strategies.
3. Create strategies that improve their value-added processes.
4. Formulate strategies that reduce time to market.
5. Optimize investment and trade-off decisions.
6. Identify and select target markets.
7. Optimize product and service concepts.
8. Improve many other operational, support and management processes.
This process has been used across many industries and for many purposes and consistently produces breakthrough results. For example, when using this process to improve the development and testing of composite materials, a Fortune 100 company discovered how to reduce the cost of development by over 80% while reducing development time by nearly 75%. A cardiac pacing system company used this process to create a product concept that offered the same function as a highly valued competitive product, but at 40% of the cost. A manufacturer of industrial packaging used this process to create a company strategy that increased their market share by 10% in an environment in which the top 10 players had less than 50% market share. A medical device manufacturer used this process to create a line of angioplasty balloons that took them from less than 1% market share to a market leadership position in just two years.
Organizations are effectively using this process to choose which markets, products, technologies, investments and activities to pursue to strengthen their strategic position. They are identifying value-producing activities that complement, reinforce and optimize one another. They are making discoveries that often form the basis for a distinctive and sustainable competitive advantage.
The following study gives you an idea of the degree to which this process has overcome the natural barriers to success. Approximately 60 individuals from organizations around the world, who have applied this process, were asked to compare their traditional strategy formulation process to the CD-MAP process. They were asked to respond, quantitatively, to a series of questions that offer insight into the effectiveness of the strategy formulation processes that they use. They were asked to compare the strategy formulation methods they typically use to the CD-MAP process for each of the stated criteria. The results of the survey are documented in Table. As you read through the questions,
An Evaluation of the CD-MAP Process
can evaluate the strategy formulation process used within your organization in the space provided.
Dramatic improvements have been made to the process of strategy formulation along each of these dimensions. Individuals using this process recognize that it dramatically reduces the percent of decisions that are negatively affected by politics, intuition and gut-feel. They also recognize that it reduces the percent of strategies that are negotiated and compromised to the point that they are void of value. At the same time, the users of this process recognize that it dramatically increases the percent of decisions that are based on 100% of the facts as it enables organizations to capture and understand what their customers value and define evaluation criteria that all can agree on. In addition, they recognize that it increases the number of individuals whose knowledge and wisdom are used to formulate the strategy. As a result, more people within the organization believe they have uncovered the optimal solution, and they are committed to the result.
This process is focused on ensuring organizations make the choices, formulate the strategies and define the plans that create the most value for their customers and investors. It empowers individuals—gives them the power—to effectively contemplate strategies, plans and decisions. It enables organizations to win today’s battle for intellectual leadership so they will be likely to win tomorrow’s battle for market leadership. It is a driving force behind the Intellectual Revolution.
TERMINOLOGY
It is important to have a clear understanding of the terminology that is used to describe the concepts introduced in this book. Several concepts are described using words that may have other meanings. To reduce the time it will take to internalize the concepts that are put forth, several potentially ‘‘vague’’ words are defined below. The terms will only be used in the context in which they are defined.
Breakthrough Solution: A solution or strategy that satisfies over 50% of the customers’ desired outcomes better than an existing strategy or solution. Breakthrough solutions often deliver up to 10 times more value than commonly implemented solutions and enable an organization to leapfrog their competition. Breakthrough solutions also often provide an organization with a unique and valued competitive position. A competitive advantage will often arise as a result of a breakthrough solution.
Concept: An idea, strategy or potential solution in its conceptual or theoretical stage.
Customer: An individual or group of individuals involved in, or affected by, the strategy, plan or decision that is being contemplated. As an example, if an organization wants to improve the process of surgery, the customers may include surgeons, support staff, hospital administrators, the manufacturer of the product and the individuals within the organization who are providing the solution.
Desired Outcome: A desired outcome is a statement, made by an individual involved in or affected by a strategy, plan or decision, that describes an important benefit they would like to receive from the strategy, plan or decision that is being contemplated. Desired outcomes are unique in that they are free from solutions, specifications and technologies, free from vague words such as ‘‘easy’’ or ‘‘reliable’’ and are statements that are stable over time.
Mission: A specific task or project with which an individual or organization is charged. A mission may include improving a surgeon’s ability to conduct the process of surgery, improving an organization’s ability to manufacture a product or improving an organization’s ability to formulate a strategy. A mission may be large or small in scope.
Optimal Solution: The one solution or strategy that will satisfy the largest number of important desired outcomes given the internal and external constraints imposed on the solution and the competitive position that is desired. The optimal solution will also be the solution that delivers the most value for the least cost, risk and effort. The optimal solution is typically a breakthrough solution.
Predictive Metric: A parameter that can be measured today to ensure its corresponding desired outcome will be achieved in the future. A predictive metric is measured and controlled in the design of the solution and predicts the solution will satisfy one or more desired outcomes. A predictive metric may also be referred to as a predictive success factor (PSF).
Process: A series of activities, actions or events that produce a desired result. Examples of processes include conducting surgery, manufacturing a product, making an acquisition, developing a product and formulating a strategy.
Solution: A specific set of features that form the elements of a plan or strategy, and define how the desired outcomes will be achieved. A proposed solution is often referred to as a plan or a strategy.
Strategy: A strategy is a plan. It is an executable plan of action that describes how an individual or organization will achieve a stated mission.
Strategy Formulation: The process of creating a strategy.
Value: The degree to which important desired outcomes can be satisfied while minimizing cost, risk and effort.
The language used throughout this book is precise. It may be helpful to reference the definitions stated above, as required. A comprehensive list of commonly used words and their meanings can be found in the Glossary.
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