How Uber, Adidas, and Tesla Use Strategic Relationships To Get Ahead

Nobody has all the answers. Here’s how some of the most successful companies use collaboration to become smarter, stronger, and faster.

Two brains can be better than one. Some of the most successful companies evolve by forming strategic relationships with other innovative minds.

“Even the most progressive companies are forced to constantly think about the evolution of their business,” says David Nour, author of Co-Create: How Your Business Will Profit From Innovative and Strategic Collaboration. “They know what got you here won’t get you there. Strategic relationships allow companies to rethink their businesses and their evolution.” The important word is “strategic,” says Nour. “No one builds relationships because they’re bored,” he explains. “They’re created because nobody has all the answers. The collaboration is to make the end result different–smarter, stronger, faster. It happens when you both have a vested interest in each other’s success.”

RELATIONSHIPS WITH OTHER COMPANIES

Strategic relationships with other companies are different than partnerships, says Nour. “Partnerships are transactional,” he explains. “Strategic relationships are transformational. You create something you wouldn’t be able to do by yourself.”

Hilton and Uber recently joined forces to co-create value in the hospitality industry, says Nour. Hilton had hung a lot of pride on the fact that it was the first hotel brand to place colour televisions in rooms and offer room service, but executives realised that these things aren’t important to the millennial audience. The company had to think beyond its walls.

Recognising Uber’s growing market reach, Hilton created a new service that presets the hotel as the recommended destination on the Uber app. “By joining forces, the two companies are co-creating value when none previously existed,” says Nour. “In other words, the space between a hotel and various events or between the airport and the hotel used to be a bit of an anonymous wasteland. But now it is becoming a seamless extension of both brands.”

Hilton’s guest satisfaction is no longer limited to the experience inside the hotel property; it is deeply linked to the outcome that brought the guest to that hotel location. Uber is getting the opportunity to be the transportation provider to events and activities outside of the hotel.

RELATIONSHIPS WITH EMPLOYEES

Strategic relationships can also happen between companies and their employees. In 2015, Adidas decided to challenge its business model, with its new CEO, Mark King, asking employees for their best ideas to move the brand forward. Nearly 500 viable projects were proposed, and the winner was an idea that included three simple words: Netflix for runners.

A year later, Adidas launched Avenue A, a subscription service for runners that delivers a box of items curated by well-known runners, such as fitness instructor Nicole Winhoffer.

“Adidas’s Avenue A took them way out of their comfort zone as a sports apparel and footwear company and into curated, co-branded merchandising where those curators do not work directly for Adidas but bring their own leading-edge brands to the table,” says Nour. “This activates an army, and now Adidas is taking curation to other parts of their business.”

The success of forming strategic relationships with employees also prompted Adidas to create the Adidas Group Innovation Academy, an online learning platform that encourages employees to be more creative and invites them to submit more ideas. After 1,000 employees had passed through the academy, Adidas announced a Shark Tank-like competition to choose more winning ideas. “This is CEO King putting his money where his mouth is, while at the same time ensuring that the right risks are being taken and firing up employees around the world,” says Nour.

RELATIONSHIPS WITH CUSTOMERS

Tesla has evolved its company by being deeply aware of the customer experience and forming relationships with drivers, says Nour. In September 2015, the company launched its Model X, an electric sports utility vehicle that also competes with traditional SUVs on the interior space and amenities. But the design of its doors is where the Model X leaves iteration in the dust, says Nour.

“Every facet of the design of this car takes into consideration all the complaints about today’s minivans and SUVs,” he says. “The falcon-wing doors solve several of those with amazing elegance.”

For example, buyers with children need to install car seats in the second row, which makes the third row of seats nearly impossible to access. Parking in tight spaces is also challenging to buyers who need to help their children out of the car.

“The Model X’s falcon-wing rear doors rise up and fold out of the way,” says Nour. “While Tesla obviously has bright engineers, I suspect that the company is actively co-creating its future with its customers, anticipating their needs and innovating radical, effective solutions.”

HOW TO FORM A STRATEGIC RELATIONSHIP

To form a strategic relationship with another company, your employees, or your customers, you need five things, says Nour.

  1. Strategic thinking. Strategic relationships aren’t simply about iteration, says Nour. “Too often, companies innovate by coming up with a better product, a new colour, or a new flavour,” he says. “They’re doing the same thing a little bit better. Few companies do that intuitively well, but fewer do disruption. That’s about new things make the old things obsolete…If you don’t disrupt yourself, someone else will,” he says.
  2. A visionary leader. Great companies start with visionary leaders who challenge the status quo, not defend it, says Nour. “Business has to evolve and fundamentally change,” he says. “We don’t admit that we don’t have all the answers. This can be scary because when you co-create, you give up part of yourself, says Nour. “It’s intrusive and invasive, and it’s not for just anybody,” he says.
  3. Another party. Find another party that can bring a unique perspective or lens around common mission, vision, or enemy. “Who has a vested interest in your success?” says Nour. “Who will dramatically benefit? Who can bring a very different part?” Each party needs to bring a piece of the puzzle and together create something that’s different.
  4. Executive buy-in. “If reinventing business isn’t one of the top three priorities of senior leadership or board, it becomes somebody’s pet project, and the rug will get pulled out from under it,” says Nour.
  5. Someone who owns the execution. Someone has to be in charge of the project, identifying what works and creating a prototype. “Be realistic about your resources,” says Nour. “How much time will this take? What does the strategic relationship need to think and execute? What are your milestones and metrics? Then how do we take it to market?” A lot of great ideas die on the vine, says Nour. “Progress trumps perfection every time,” he says.

Written by BY STEPHANIE VOZZA. This article was originally posted on FastCompany.

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The Hallmarks of Bad Strategy

By Richard Rumelt

Richard Rumelt outlines the hallmarks of a bad Strategy with 4 key points; failure to face the problem, mistaking goals for strategy, bad strategic objectives and fluff!

1. Failure to face the problem

A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy. And, if you cannot assess that, you cannot reject a bad strategy or improve a good one. If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have a stretch goal or a budget or a list of things you wish would happen.

2. Mistaking goals for strategy

A few years ago, a CEO I’ll call Chad Logan asked me to work with the management team of his graphic-arts company on “strategic thinking.” Logan explained that his overall goal was simple—he called it the “20/20 plan.” Revenues were to grow at 20 percent a year, and the profit margin was to be 20 percent or higher. “This 20/20 plan is a very aggressive financial goal,” I said. “What has to happen for it to be realized?” Logan tapped the plan with a blunt forefinger. “The thing I learned as a football player is that winning requires strength and skill, but more than anything it requires the will to win—the drive to succeed. . . . Sure, 20/20 is a stretch, but the secret of success is setting your sights high. We are going to keep pushing until we get there.”

I tried again: “Chad, when a company makes the kind of jump in performance your plan envisions, there is usually a key strength you are building on or a change in the industry that opens up new opportunities. Can you clarify what the point of leverage might be here, in your company?” Logan frowned and pressed his lips together, expressing frustration that I didn’t understand him. He pulled a sheet of paper out of his briefcase and ran a finger under the highlighted text. “This is what Jack Welch says,” he told me. The text read: “We have found that by reaching for what appears to be the impossible, we often actually do the impossible.” (Logan’s reading of Welch was, of course, highly selective. Yes, Welch believed in stretch goals. But he also said, “If you don’t have a competitive advantage, don’t compete.”)

The reference to “pushing until we get there” triggered in my mind an association with the great pushes of 1915–17 during World War I, which led to the deaths of a generation of European youths. Maybe that’s why motivational speakers are not the staple on the European management-lecture circuit that they are in the United States. For the slaughtered troops did not suffer from a lack of motivation. They suffered from a lack of competent strategic leadership. A leader may justly ask for “one last push,” but the leader’s job is more than that. The job of the leader—the strategist—is also to create the conditions that will make the push effective, to have a strategy worthy of the effort called upon.

3. Bad strategic objectives

Another sign of bad strategy is fuzzy strategic objectives. One form this problem can take is a scrambled mess of things to accomplish—a dog’s dinner of goals. A long list of things to do, often mislabeled as strategies or objectives, is not a strategy. It is just a list of things to do. Such lists usually grow out of planning meetings in which a wide variety of stakeholders suggest things they would like to see accomplished. Rather than focus on a few important items, the group sweeps the whole day’s collection into the strategic plan. Then, in recognition that it is a dog’s dinner, the label “long term” is added, implying that none of these things need be done today.

A second type of weak strategic objective is one that is “blue sky”—typically a simple restatement of the desired state of affairs or of the challenge. It skips over the annoying fact that no one has a clue as to how to get there. A leader may successfully identify the key challenge and propose an overall approach to dealing with the challenge. But if the consequent strategic objectives are just as difficult to meet as the original challenge, the strategy has added little value.

Good strategy, in contrast, works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favourable outcomes. It also builds a bridge between the critical challenge at the heart of the strategy and action—between desire and immediate objectives that lie within grasp. Thus, the objectives that a good strategy sets stand a good chance of being accomplished, given existing resources and competencies.

4. Fluff

A final hallmark of mediocrity and bad strategy is superficial abstraction—a flurry of fluff—designed to mask the absence of thought. Fluff is a restatement of the obvious, combined with a generous sprinkling of buzzwords that masquerade as expertise. Here is a quote from a major retail bank’s internal strategy memoranda: “Our fundamental strategy is one of customer-centric intermediation.” Intermediation means that the company accepts deposits and then lends out the money. In other words, it is a bank. The buzz phrase “customer centric” could mean that the bank competes by offering better terms and service, but an examination of its policies does not reveal any distinction in this regard. The phrase “customer-centric intermediation” is pure fluff. Remove the fluff and you learn that the bank’s fundamental strategy is being a bank.

 

About the Author: Richard is the author of the bestselling book “Good Strategy/Bad Strategy: The Difference and Why it Matters”. He has also authored various award winning research papers which have been appeared in publications such as McKinsey Quarterly and Strategic Management Journal. His insights and experience have led to Richard being described as “a giant in the field of strategy” and “strategy’s strategist”.

Photo: Sebastien Gabriel

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Lessons in Strategy from the Nonprofit World

by Nicola Tyler 

Nestled in the heart of the Austrian Alps, Tyrol is home to some of the world’s best wines (yes, who knew?), heritage architectural sites and, of course, ski resorts.   Innsbruck, the capital is the only city to be found within the Alps.  Innsbruck is also home to one of the world’s most diverse organisations – SOS Children’s Villages.  This 1.2 billion euro non-profit supports over 1 million parentless and homeless children around the world and lives for its mission that “no child should grow up alone”.   During a recent trip to Innsbruck to work with SOS, I learned a lot about the parallel workings of the for profit and nonprofit worlds.

Serious About Strategy

It was clear to me as co-facilitator that this is a non-profit with a very clear plan.  Childcare isn’t a short-term plan; it requires long-term thinking, particularly when you are working with children from the age of 9 days old to 19.  During the first week of February, more than 100 leaders from around the world gathered in Innsbruck, representing more than 15 countries from all continents. It became a knowledge incubator for sharing best practice, lessons on advocacy and children’s rights.  A veritable feast of case studies was prepared, shared, consumed and cross-referenced.  The goal? To kick off the 2030 Strategy and to ensure that SOS is sustained beyond 2030.

Lesson learned: Strategy, good strategy, not only requires clear planning, but also a serious investment in engaging leadership to take ownership and implement that strategy.  Great strategy involves the people.  Awesome strategy ensures that people own the strategy beyond the leadership team.

Democratic Decision Making

The SOS Children’s Villages operate a federal system.  Long term decisions are made in the Senate, comprising representatives from Member Associates, who are made up of country members that meet a specific set of criteria.  A Quality Assurance model is in place to ensure appropriate governance and practices for child care within a country or region.  Members have a vote in the Senate, and these votes are used to appoint a President, Vice President, and “a Board” for a finite period of time.  The Senate meets every 4 years to decide and plan on the future leadership team, and to sanction a strategy for both fundraising and child care.  National Associates, are also present but do not have a vote.  These aspirant members, participate vigorously in the debates but a vote is only granted once they have met the criteria for inclusion.

Lesson Learned: While democracy often appears to be a slow wheel to turn, there is much to be said for the level of debate that occurs among equals, giving rise to higher levels of engagement and transparency, not often seen in a typical “for profit” environment.  While potentially flawed, the voting system of this working world ensured vigorous and non-adversarial debates.  A welcome sight indeed.

Knowledge Sharing

The world of this NGO, like any typical organisation, is broken down into Regions, with Directors appointed to work and lobby Governments and organisations, NGOs and communities.  When it comes to child rearing, everyone is involved.  For 3 days, Innsbruck became home to a brains trust of skills, experiences and case studies on child care, and everyone had a voice.  A powerhouse of insights was garnered by participants through a carefully planned and well orchestrated event allowing knowledge sharing and debate.

Lesson learned: When you invest that heavily in getting the right people in a room, invest as heavily in having them lead the learning.  This was not about leadership and “at you” presentations, this was about questions, answers, and engagement.  The presentations from leadership were not only brief but encompassed carefully facilitated Q&A sessions that were entirely interactive with the audience.  

Programme Review & Undo

What in business we might call a Strategic Initiative, in the world of NGOs is often called a Programme.  These are specific projects to which specific funds are allocated.  It is an incubator of ideas and opportunities. External organisations sponsor the research programmes, conferences, interventions, development programmes, and more.  What is clear is that these funds are respected, and protected, with careful monitoring and review processes in place from the outset.  Programmes may be funded for short periods of time, or over the longer-term.  Those that are considered successful may then be integrated into the ongoing care programmes.

Lesson learned: we could take a leaf out of this world when it comes to innovation in business.  It would be nice to see more frequent strategy testing programmes, where initiatives are first funded and tested, before being implemented.  A real incubator for strategic initiatives, instead of full steam ahead with ideas that may end up in file 13.  Worth thinking about.  Worth considering.  Worth doing!

Strength in Diversity

The group of thinkers was diverse, with participants from more than over 15 countries. Diversity is often seen as “colour” or race in South Africa, but here we witnessed the true power of diversity.  Diversity of race for sure, but also diversity of expertise, of culture, economic background and age. Diversity of experience (some had been in the organisation for a few weeks and others for two decades), diversity of information, perspectives, and outlook. The mix was electric. It was also respectful and inclusive and brought about new insights, creativity and a considerable drive toward a common purpose (no child should grow up alone). People from all walks of life came come together to achieve a common objective.

Lesson learned: diversity can be difficult, causing discomfort, a lack of trust and communication challenges among other things, but the commitment to a truly diverse team can bring profound value. Diversity works! It encourages the consideration of alternatives, drives creativity and a thirst for innovation. I cannot underemphasize the value of a clear strategic goal that goes beyond the numbers and unites a team. What could be achieved if everyone in your organisation woke up as committed today as they were yesterday, to the goal of your organisation?  I’ve said for years – people don’t get out of bed for a number.  Don’t have a mission, create a movement.  

Nicola Tyler is a highly respected strategic thinker. With over 20 years of experience in Strategy, Consulting, Leadership, Development and Coaching, she is an Associate of the Gordon Institute of Business, a Master Trainer in a full range of de Bono Thinking tools. Working both locally and internationally, she delivers her own “Strategic Conversation” methodology to senior teams committed to innovation and driving sustainable results.

Nicola has shared the stage with world renowned thought leaders such as Tom Peters, Robert Kaplan, Ricardo Semler, Edward de Bono, Dave Ulrich, Martin Seligman, Richard Koch and Martin Lindstrom. 

The ability to think, plan and operate strategically is fast becoming the true competitive advantage. Click HERE to find out more or contact us at info@brg.co.za to book a needs assessment.

5 Top Tips for Revisiting your Strategy

by Nicola Tyler 

Nicola Tyler, famous for her Strategic Conversations, gives some great tips and tricks for when you next revisit your strategy.

 

 

1. Create a movement beyond your mission

Today, it is important to build on the value and assets that you have.  Don’t reinvent the wheel. The wheel serves a purpose.  Stay true to your mission, and to your cause.  Believe in your purpose.  Service and hone your core capability as it will stand the test of time, and retain customers (donors) that have supported you for years.

2. Let go!

Plan for the future and continuously review your plans and improve on what you have.  Continuous improvement is key to longevity, but in the process, review your initiatives (programmes) and let go of that which is no longer serving your needs.

3. Be clear on your ‘To-Don’t’ list!

Tom Peters has long claimed that a “To-Don’t” list is critically important for personal and organizational success and this underpins a good strategy. He says “I have made more mistakes in my life by saying “yes” to too many things than probably any other thing that I’ve done”.  Be as clear on what you’ll say “NO” to, as you are about what you say “yes” to.

4. Innovate to be on-trend not off-track

Innovate with the curve, not necessarily ahead of it.  Trends, like waves, come and go.  It’s vital that you know what wave to catch, and which to let go.  Don’t innovate for the sake of it, as it may just destroy the value that created your business in the first place.  Innovate because it makes sense to your business model, and keeps you on trend instead of taking you off track.

5. Cross-functional integration is more important than alignment

Research tells us that the effective implementation of strategy is not just about cascading and alignment, it’s about creating a level of fluidity across units.  What is called “cross functional integration”.  Strategies are not implemented by stealth, they are implemented by teams.  If the leader is the bottleneck when it comes to decisions, then the wheel of strategy implementation will always be a slow wheel to turn.  Create teams.  Across the functions, not just within them and see what magic happens.

Nicola Tyler is a highly respected strategic thinker. With over 20 years of experience in Strategy, Consulting, Leadership, Development and Coaching, she is an Associate of the Gordon Institute of Business, a Master Trainer in a full range of de Bono Thinking tools. Working both locally and internationally, she delivers her own “Strategic Conversation” methodology to senior teams committed to innovation and driving sustainable results.

Nicola has shared the stage with world renowned thought leaders such as Dr Tara Swart, Tom Peters, Prof Robert Kaplan, Ricardo Semler, Edward de Bono, Prof Dave Ulrich, Martin Seligman, Richard Koch and Martin Lindstrom. 

The ability to think, plan and operate strategically is fast becoming the true competitive advantage. Click HERE to find out more or contact us at info@brg.co.za to book a needs assessment.

 

Serious About Simplicity

Ron Ashkenas, author of Simply Effective, suggests that complexity in business has emerged due to a combination of product mitosis, product proliferation, process evolution and poor managerial habits. These factors combine to land many businesses in a world of complexity and silo thinking and complicated work processes.  Ashkenas also suggests that one of the biggest, and often hidden, causes of complexity is the individual. Yes, that’s right – you!  It’s all your fault.  You did this!  But the great thing is that if you created the problem, then you surely have the talent to solve it.  Cue ‘Simplicity.’

If you’re ready to take the topic of simplicity seriously, and consider adopting it as a core business strategy (not a “we really should” but a deliberate, strategic focus for your business), then read on.

Ashkenas suggests you start with these four areas, which he believes to be primed for delivering value.  

  1. Streamline the organisation, or as Norman Kobert once said ‘Cut the fat, not the muscle”.  Companies are often resource heavy, process burdened, and policy proliferate.  Cut out what you don’t need, and make a deliberate effort to combine products, reduce lines, stick to the core.  
  2. Prune products, services and features to focus on those that are profitable and have the biggest growth potential.  Get rid of dead weight “stuff” that isn’t bringing in value.  Can you really turn 2% of revenue business into your biggest opportunity, or can you cull those things that don’t deliver, and get focused back on your core?
  3. Process – disciplined process.  Build pragmatic processes into your business that drive the right behaviours for your leadership and your teams.  Make what you capture relevant, useful and support fact-based, informed decision making.  Take a rigorous look at your processes and ask the question: is this necessary?  Do we really need this or could we do without it?
  4. Improve managerial habits.  Life would certainly be simpler (but so much sadder) were it not for other people. For the value of simplicity to realize benefits, it’s important to drive it home in behaviour. Ritualistic repetition, and supporting the value through consistent change and communication, are the factors most likely to reap rewards.  In short, consider making simplicity a cult if you want to make it part of your culture.  The gift is that everyone wins as the benefits reap rewards for both the business and the people who live in it.