Competing on the Edge: The use of time- pacing v The common traps in strategic change –The chaos versus the bureaucratic trap –The lockstep versus the star trap –The overconnect versus the disconnect trap –The foresight versus the no-sight trap v The use of time pacing and developing a strategic rhythm v 3M Optical Systems v Summary and conclusions

Commitment to a future and flexibility for a future v The collective vision of our business is Clear …………………………………………… Ambiguous v Our future success depends on particular industry scenario Yes ………………………………………………. No v Our approach to the future is to Plan ……………………………………………… React v Our attention to the future is Frequent ………………………………………… Rare v We have several meaningful products and future oriented strategic alliances Yes ………………………………………………. No v Our business is considered to be a Leader …………………………………………… Follower

Focus on Creating plans Focus on Creating plans One industry Vision Tightly configured Plans Sporadic attention To future One industry Vision Tightly configured Plans Sporadic attention To future Symbolic importance of planning Manage complex resource allocations Symbolic importance of planning Manage complex resource allocations Plans often wrong Single bet on the future Strategic drift Plans often wrong Single bet on the future Strategic drift The Foresight Trap Source of Foresight Warning Signals

Focus on current operations only No vision Reacting to events No attention to the future No vision Reacting to events No attention to the future Complete attention on today’s competition Frustration Late product and services Reactive strategies Missed opportunities Frustration Late product and services Reactive strategies Missed opportunities The No-sight Trap Source of No-sight Warning Signals

Experimentation at the edge of time Key Concepts Vision of the business Wide variety of low-cost probes Constant but thin attention Management Practices Craft a vision of the business not the industry Probe the future with a wide variety of low cost probes across multiple time horizons Where appropriate, measure the probe results and use these to shape strategic direction Frequently revisit the future without investing too much Results Insight into possible futures Anticipatory moves Flexible strategy Constant

Rules for picking probes v Develop many types of low-cost probes. v Be sure to choose some probes that have a chance of small failures. v Pick up some probes that require implementation followed by a measurement of results. v Use more probes when the market place is particularly volatile. v Break big probes into small ones as much as possible. v Place more probes into the most likely future. v Pick some probes randomly. v Build on the results of your probes to shape the next strategic moves. v Do not probe endlessly in a particular area.

Getting into the rhythm of time pacing v New product or service concepts are introduced in your business at rhythmic intervals TFTF v Your business has specific metrics, such as time to launch a global product, months to deliver a product, or percentage of annual revenue from new sources, that evaluate performance using time TFTF v Your business has explicit procedures for transitions such as moving into new markets, integrating acquisitions, or ramping up to volume manufacturing TFTF v Your business has a routine for leaving old business areas TFTF v Your business is synchronized with the rhythms of key customers and suppliers TFTF

Time pacing and developing a strategic rhythm v It involves changing because of the passage of time, not the influence of events. v It helps to ensure the early anticipation of future events. v It reminds managers to search for existing rhythms. v It creates a sense of relentless urgency. v It requires synchronization with the marketplace and with the internal capabilities of the business.

Which of the following do you have in your organization? v Introduction of new product or service concepts at rhythmic intervals v Use of specific metrics that evaluate performance using time dimension v Existence of explicit procedures for transitions in terms of markets, products, or production facilities v Use of specific sun-set rules for leaving old business areas

3M Optical Systems: Managing corporate entrepreneurship v What practices make 3M such an innovative company? v Develop a time line of Andy Wong’s actions. How effective has he been? v Develop a time line for Paul Guehler’s actions. How effective has he been? v What should Andy Wong do with the computer privacy screen AFE? –Postpone/Reject the proposal –Fund it within the business –Get funding from Guehler –Go to a senior mentor for funding

Rules of Competing on the Edge: Lessons Learned v On Strategy Advantage is temporary so continuously generate new sources of advantage Strategy is diverse, divergent and complicated so develop a semi-coherent strategy Reinvention is the goal so find out new ways of creating value rather than simply being more efficient in what you do. v On Organization Live in the present and maximize the advantages of minimum structure Stretch out the past and maximize learning Reach into the future and experiment by probing the future Time pace change and not become the hostage of external events

Lessons Learned… v On Leadership Grow the strategy by correcting the clearest cases of over – and under – structuring Drive strategy from the business level by letting it evolve bottom-up Repatch businesses to markets and articulate the whole by shaping a simple synthesis of the firm that captures the essence of of the businesses without constraining your front line managers

Structural alternatives for introducing change in organizations v Cocooned Model: The change team is made up of the best and the brightest talent available from across the organization. The team members remain within their particular organizational units but have a charter from senior management to operate across organizational boundaries. v Direct Delivery model: The organization creates a distinct unit with its own brand, business goals, and the freedom to compete with other organizational units. v The Ring Model: The organization surrounds a single manager with a ring of personnel drawn from all areas of the firm featuring a non-hierarchical structure and the allocation of overlapping responsibilities to team members.