Saturday, October 29, 2011

Focus and Leverage Part 58

Interference Diagram (ID) for Strategy

In the previous example we showed how to use the ID to exploit a constraint, now let’s look at the second application – strategy development. When using the ID for strategy development you want to focus on a higher level (more global) objective/goal, especially if the input audience is cross-functional. The Objective/Goal has to be at a high enough level to satisfy all parties concerned. If you drive the Objective/Goal too low, some organizations will complain that it does not apply to them. When using the ID for the purpose of strategy develpment, it is best if used in tandem with the Intermediate Objectives (IO) map. The combined thinking power of the ID/IO map is referred to as Simplified Strategy and will enable an effective strategy, and detailed implementation plan, to be developed. In this case, the IO map provides the intrinsic order (equence) of the tactical actions to accomplish the overall strategy.

When the ID is used in a strategy development scenario it is not a constraint you are looking for. Instead, what you want to define is the strategic Objective/Goal that you really want to achieve. When the objective/goal has been defined then, look next for the “interferences” that slow down or stop the progression towards the goal. Usually, there can be several interferences that block the path to success. If there is one thing people are really good at, it’s their ability to express their vocal rational about “why” something won’t work, or why you cannot have something you want. When you present your idea to someone else, or to a group, the common reaction is, “that’s a great idea, but….” As soon as the person says “but” they will interject the reason “why” they think the idea won’t work. “It’s a great idea but, the boss will never approve it.” Or, “That’s a good idea but, it’s not the way we do it here.” Or maybe even, “It’s a good idea but, it will be too expensive to do.” What they are telling you is what they think the interferences/obstacles are that will hinder your ability to succeed. In order to get more of what you want, you must reduce the impact of the interferences/obstacles, or remove them completely. As an example, let’s go through the steps to construct an ID that will be used for strategy development.

Step 1 – ID Strategy – Define the goal/objective

The objective/goal for the strategy application of the ID is focused on strategic direction rather than a constraint and generally answers the questions: “Where do we go from here?” The objective has to be at a level high enough to include the many. However, with that said, it is also important to understand that good strategy development can happen within a specific organization, such as Engineering, Procurement, or Manufacturing. Think in terms of a higher level objective/goal for this scenario when dealing with a single organization, or combining the objectives of many organizations into a single strategy at a higher level. The objective/goal that you pick might seem elusive, but it should also be necessary to get where you want to go. The focused end point of the journey.

The ID tool can work well in a group setting and allow the user to surface obstacles/interferences across many different organizations. Suppose for our example we defined the objective as “Increasing Revenue”.

Step 2 – Define the Obstacles/Interferences

When a group consensus is realized, and the objective has been clearly defined, then you need to look for the obstacles/interferences to characterize “why” you can’t have what you want. Again, when using the ID for strategy development the obstacles/interferences can, and most probably will, cross many organizational functions. There is no minimum or maximum number of obstacles/interferences required. Rather, you should be looking for a list of interferences that is comprehensive enough to surface those entities that are really standing in the way of your success. Suppose, for this example, our cross functional team listed the following obstacles/interferences for achieving the objective/goal of “Increased Revenue.” The obstacles/interference list might look something like this:


1. Not enough sales
2. No markets to grow into
3. Customer has low perception of our product
4. Products are priced too high
5. Competitor has higher quality
6. Production takes too long

This list defines the obstacles/interferences that are perceived to currently exist and block successful achievement of the goal. These are the things that stand in the way of being able to achieve “Increased Revenue.” This list can, and probably will, seem a bit overwhelming when you look at it, but don’t lose faith just yet. Let’s do the rest of the steps and see if we can tame the beast.

Step 3 – Define the Intermediate Objectives/Injections

As part of the ongoing group discussion, you’ll want to define the Intermediate Objectives/Injections. In Step 3 what you want to surface are those intermediate objectives (IO) that must exist to make the obstacles/interference go away and not be a problem anymore. Ask the group this question; “What must exist in order for the obstacle/interference not to be a problem anymore?” When you think of the actions required for eliminating or reducing the obstacles/interferences – be BOLD. Describe what you think is really necessary to counter the problem(s) to accomplish the stated objective. Don’t shy away from intermediate objectives/injections just because you think you cannot make them happen. If they are important for the overall objective, then write them down, no matter how far out there they might seem. Here are some possible intermediate objective examples for the obstacles on the list:

Obstacles/Interferences Intermediate Objectives/Injections

1. Not enough sales 1. Increased sales
2. No markets to grow into 2. Explore/find new markets
3. Customer has low perception of our product 3. Customers have high product perception
4. Products are priced too high 4. Products priced competitively
5. Competitor has higher quality 5. Quality higher than competitor’s
6. Production takes too long (lead-time) 6. Lead-time reduced (Increase throughput)

With the intermediate objectives/injections defined you now have the list of the required actions to eliminate the obstacles/interferences and make them go away. It is a foreboding list and at first glance it’s appears almost impossible to achieve any of these actions. Figure 5 provides an example of the basic structure and layout for using the ID for strategy development.
Figure 5. Converting from Discussion to an Interference Diagram(ID).

With this section complete the next step is to layout and constructs the Intermediate Objective (IO) map to govern the implementation plan and determine the tactical actions to accomplish the objective, which we will cover in the next posting.

Bruce Nelson

1 comment:

Bob Sproull said...

You're very welcome Anonymous. I'll check out your blog unless it's in German. :)