The S&OP Control Paradox: Folly in a Volatile World?

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The S&OP Control Paradox: Folly in a Volatile World?

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Steelwedge Agility Webinar Series ...

Steelwedge Agility Webinar Series

Featured Speaker: Chris Turner, Co-Founder, Stratabridge

On February 7, Steelwedge kicks off its 2012 Agility series of live webcasts with Chris Turner, co-founder of strategy, innovation and operations consulting firm StrataBridge and Ed Lewis, VP of Product Planning at Steelwedge. This session, The S&OP Paradox, will explore where S&OP sits at the cross hairs of planning to plan and planning to change. It will address how to optimize your company's approach to drive growth, regardless if you are new to S&OP, or you are evolving your existing strategy and process.

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  • 1. The S&OP ControlParadox:Folly in aVolatile World? © StrataBridge 2012
  • 2. The S&OP ControlParadox:Babbage‟s AnalyticalEngine in aniPad World? © StrataBridge 2012
  • 3. Some Structure & Thought-Provokers The Case for „Agility‟ • So, what‟s Agility anyway… and „VUCA‟ – WTF? • It‟s a „VUCA‟ World… Some Insights • Most companies are compounding the situation Contending with „VUCA‟ • The „Growth ⇆ Control Paradox‟ • Underneath it all… Three Laws • An Architecture for Growth against a „VUCA‟ Backdrop „Joined-up Decision-Making‟ for Growth • Where are you on the „Control ⇆ Growth‟ Spectrum? • Some Implications and Questions for Decision-Making © StrataBridge 2012
  • 4. Some Structure & Thought-Provokers The Case for „Agility‟ • So, what‟s Agility anyway… and „VUCA‟ – WTF? • It‟s a „VUCA‟ World… Some Insights • Most companies are compounding the situation Contending with „VUCA‟ • The „Growth ⇆ Control Paradox‟ • Underneath it all… Three Laws • An Architecture for Growth against a „VUCA‟ Backdrop „Joined-up Decision-Making‟ for Growth • Where are you on the „Control ⇆ Growth‟ Spectrum? • Some Implications and Questions for Decision-Making © StrataBridge 2012
  • 5. What’s in aname? © StrataBridge 2012
  • 6. Some Insights… It‟s a „VUCA‟ World… WTF? VUCA © StrataBridge 2012
  • 7. Some Insights… It‟s a „VUCA‟ World… WTF? V O VUCAL A T I L © StrataBridge 2012
  • 8. Some Insights… It‟s a „VUCA‟ World… WTF? V U O N VUCAL A T I C E R T L A I © StrataBridge 2012
  • 9. Some Insights… It‟s a „VUCA‟ World… WTF? V U C O N O VUCAL A T I C E R T M P L E L A X I © StrataBridge 2012
  • 10. Some Insights… It‟s a „VUCA‟ World… WTF? V U C A O N O M VUCAL A T I C E R T M P L E B I G U L A X I I © StrataBridge 2012
  • 11. Some Insights… It‟s a „VUCA‟ World… WTF? VUCA © StrataBridge 2012
  • 12. Some Insights… It‟s a (naturally) „VUCA‟ World…Beyond the Human impact…Massive disruption on both sides of theDemand and Supply sides of the economicequation, amplified by an increasinglyinterconnected world… © StrataBridge 2012
  • 13. Some Insights… „VUCA‟ – It affects us all… Brent Crude $/Barrel 30.00 20.00 10.00 „94 „95 „96 „97 „98 „99 „00 „01 „02 „03 Source: FT.com © StrataBridge 2012
  • 14. Some Insights… „VUCA‟ – It‟s amplifying… Brent Crude $/Barrel 140.00 130.00 120.00 110.00 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 „94 „95 „96 „97 „98 „99 „00 „01 „02 „03 „04 „05 „06 „07 „08 „09 „10 „11 „12 Source: FT.com © StrataBridge 2012
  • 15. Some Insights… „VUCA‟ – It‟s „Everywhere‟… Price Index (2003=100 ) 400 350 300 250 200 Sugar 150 Meat FoodCereals 100 Dairy Oil 50 „94 „95 „96 „97 „98 „99 „00 „01 „02 „03 „04 „05 „06 „07 „08 „09 „10 „11 „12 Source: Centre for Security Studies – ETH Zurich © StrataBridge 2012
  • 16. Some Insights… There are many drivers; 20th Century Technology Adoption… Radio Source: Karl Hartig/WSJ Television Telephone Computer © StrataBridge 2012 2010 © StrataBridge -
  • 17. Some Insights… 20th Century Technology Adoption Radio Television Telephone Computer © StrataBridge 2012 2010 © StrataBridge -
  • 18. Some Insights… The Context When S&OP Was Developed Radio Television Telephone Computer © StrataBridge 2012 2010 © StrataBridge -
  • 19. Some Insights… The Internal Drive for Growth61% 78% of CEOs expect their innovations will lead toof companies significant new revenueto increase theirplan opportunities over theInnovationspending...... next three years...while onlyplan to decrease 8%it Source: PwC, 14th Annual Global CEO Survey, 2011Innovation 2010 – BCG Report – April 2010 © StrataBridge 2012
  • 20. Some Insights…CEO’s are turning to new product and service development for GrowthPercentage of CEO‟s on the main opportunity to grow their business in the next 12 months Increased share in existing markets New product/service developments New geographic markets Mergers and acquisitions New joint ventures and/or strategic alliances 40% 37% 38% 30% 29% 30 23% 20% 20% 20 21% 17% 17% 19% 15% 15% 14% 13% 14% 14% 13% 13% 10 11% 10% 10% 0 2007 2008 2009 2010 2011 Source: PwC, 14th Annual Global CEO Survey, 2011 © StrataBridge 2012
  • 21. Some Insights…How Common is Joined-Up Behaviour? Stephen Covey in his book The 8th Habit, describes a poll of 23,000 employees drawn from a number of companies and industries. Here are the findings: – Only 37% said they had a clear understanding of what their organisation was trying to achieve and why. – Only one in five was enthusiastic about the goals of their team and organisation. – Only one in five said that they had a clear line of sight between their tasks and the goals of their team and organisation. – Only 15% felt that their organisation fully enabled them to execute key goals. – Only 20% fully trusted the organisation they worked for. The 8th Habit: From Effectiveness to Greatness November 2004 Simon & Schuster Or, put another way… © StrataBridge 2012
  • 22. 4 Only of the 11 players would know which goal is theirs Only 2 would care 2 Only would know what position they play and what they are supposed to do 2 And all but players would, in some way, be competing against their own team members rather than the opposition© StrataBridge 2012 2012 © StrataBridge -
  • 23. „VUCA‟ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA inyour external environment? Yes NoDoes your strategy call forincreasing degrees of new stuff -new products, new services, newchannels, new Yes Nomarkets/territories, newtechnologies, etc? © StrataBridge 2012
  • 24. „VUCA‟ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA inyour external environment? Yes NoDoes your strategy call forincreasing degrees of new stuff -new products, new services, newchannels, new markets/territories, Yes Nonew technologies, etc? You can check your e-mail now or be filling-in your expense form or something else useful… Keep improving what you’re doing and you’ll be fine! (Or will you?) © StrataBridge 2012
  • 25. „VUCA‟ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA inyour external environment? Yes NoDoes your strategy call forincreasing degrees of new stuff -new products, new services, newchannels, new markets/territories, Yes Nonew technologies, etc? You’ve obviously got some work to do, but as it stands you can dictate the pace… Make sure your strategy takes advantage of this; it won’t last forever! © StrataBridge 2012
  • 26. „VUCA‟ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA inyour external environment? Yes NoDoes your strategy call forincreasing degrees of new stuff -new products, new services, newchannels, new markets/territories, Yes Nonew technologies, etc? Wake-up! To quote Jack Welch: “When the rate of change on the outside exceeds the rate of change on the inside, the end is in sight” © StrataBridge 2012
  • 27. „VUCA‟ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA inyour external environment? Yes NoDoes your strategy call forincreasing degrees of new stuff -new products, new services, newchannels, new markets/territories, Yes Nonew technologies, etc? It’s time to review our strategic and operational planning and decision-making processes for ‘design overreach’. We’re in danger of taking them past the limits of what they were designed for! © StrataBridge 2012
  • 28. Some Structure & Thought-Provokers The Case for „Agility‟ • So, what‟s Agility anyway… and „VUCA‟ – WTF? • It‟s a „VUCA‟ World… Some Insights • Most companies are compounding the situation Contending with „VUCA‟ • The „Growth ⇆ Control Paradox‟ • Underneath it all… Three Laws • An Architecture for Growth against a „VUCA‟ Backdrop „Joined-up Decision-Making‟ for Growth • Where are you on the „Control ⇆ Growth‟ Spectrum? • Some Implications and Questions for Decision-Making © StrataBridge 2012
  • 29. Contending with „VUCA‟The Growth Paradox… The Pursuit of ‘Growth’ The creation of new value for customers and shareholders, driving the need for new stuff – new products, new services, new markets, new business models, etc. – by definition, increasingly different from what we currently do… The Desire for ‘Control’ The focus on continuously tightening the grip on how we do things today – driving predictability and productivity by fine-tuning our knowledge of, and control over, our existing business portfolio – products, customers, channels, etc. © StrataBridge 2012
  • 30. The Growth Paradox…“If everything seems in control;you‟re just not going fastenough” © StrataBridge 2012 2012 © StrataBridge -
  • 31. Underneath it All3 Fundamental Laws that have shaped the StrataBridge approach… CHANGE PERSPECTIV E ENTROPY © StrataBridge 2012
  • 32. Underneath it All… Law of Change No matter how hard you resist or deny it, things are going to change, often unpredictably so © StrataBridge 2012
  • 33. Underneath it All…Law of PerspectiveIt all depends on „where you are coming from‟ © StrataBridge 2012
  • 34. Underneath it All… Law of EntropyUnless energy is expended to counter it, things become random, © StrataBridge 2012
  • 35. An Architecture for Strategy Development, Deployment & Delivery…Against a VUCA BackdropLong Term Plan (e.g. 5-10 Years) – Context, fundamental choices and boundaries, combiningclarity about where you are going and flexibility about how to get there Strategic Direction Joined-up Strategic Laws, Decision Dialogue Principles Making & Balances Strategy „Toolkit‟ „Big C‟ Capability © StrataBridge 2012
  • 36. An Architecture for Strategy Development, Deployment & Delivery…Creating a Tightly Integrated „Eco-system‟ Strategic Direction Joined-up Strategic Decision Laws, Dialogue Making Principles & Balances Strategy Strategy „Toolkit‟ „Toolkit‟ „Big C‟ Capability © StrataBridge 2012
  • 37. Some Structure & Thought-Provokers The Case for „Agility‟ • So, what‟s Agility anyway… and „VUCA‟ – WTF? • It‟s a „VUCA‟ World… Some Insights • Most companies are compounding the situation Contending with „VUCA‟ • The „Growth ⇆ Control Paradox‟ • Underneath it all… Three Laws • An Architecture for Growth against a „VUCA‟ Backdrop „Joined-up Decision-Making‟ for Growth • Where are you on the „Control ⇆ Growth‟ Spectrum? • Some Implications and Questions for Decision-Making © StrataBridge 2012
  • 38. Stable Volatile External Environment - Competitor, Customer, Consumer More Volatile Predictable Uncertain More Uncertain Landscape & Behaviour - & Macro Trends Decision- Consistent „Rules‟ Changing „Rules‟ Changing „Rules‟ New Efficiency Agility Productivity Performance Beliefs… AdaptabilityC Organisational Construct making Hierarchical Flat, Networke and Centralised and Location of Power… d and Distributedo Analytical Exercise Fixed Destination/Direct Approach to Strategy… Systemic Intervention Overarching Direction/Course G Route Correctionn Mechanical Formulaic Wanting 1+2=3 Decision-making Routines… ? Organic Dialogue-based Asking ro Contexts Answers Questions Supportingt Data-driven Numbers based Information Focus… Insight-driven Assumptions based wt Results Drivenr Process (People are there to „enact the process‟) Through… People (Process provides „enough h Mindsets and structure‟) Obedience Creativity Compliance Talent Hired For… Stretch Competence Passiono Automate the Processes Technology used to… Enable the Peoplel Consistency StandardisationCharacteristics Proceduralisatio n Learning, Competitive Advantage & Results fuelled by… Change Innovation Experimentation © StrataBridge 2012
  • 39. Striking the „Right Balance‟? In general, how would you rank your C organisational DNA on the Control-Growth o Spectrum‟? G n 1 2 3 4 5 ro t wt r What do you need to strike the right balance to deliver your strategy and h desired business results? o More Control‟ More Growth‟ l About right © StrataBridge 2012
  • 40. Joined-up Decision-makingKey questions to provide a platform for Agility Does „VUCA‟ represent a strategic threat or opportunity in our environment and Growth Drivers? of ‘VUCA’ and do we understand our drivers growth? Are are these reflected in our Strategy, Tactics and Are we underpinning Assumptions andAre our internal „wired‟ for Control or Growth? Plans? ‘Control ⇆ Growth’ Balance? mindsets, processes, routines and behaviours synchonised with our external realities? Do our decision-making processes and forums ask the right Right Conversations? questions, bring together the right perspectives from across the business, and generate insight and coherent actions? Do we have explicit development actions building Right Capabilities? organisational capability – Capability with a „Big C‟ – to develop agility and use „VUCA‟ to our advantage? Are we countering „VUCA‟ with vision, understanding, clarity Pace, Experimentation and and agility, and accelerating results through an aggressive ‘Learning-by-doing’? transition, rapid experimentation and ‘learning-by-doing’? © StrataBridge 2012
  • 41. Joined-up Decision-makingKey questions to provide a platform for Agility ‘VUCA’ and Growth Drivers? ‘Control ⇆ Growth’ Balance? Right Conversations? Right Capabilities? Pace, Experimentation and ‘Learning-by-doing’? © StrataBridge 2012
  • 42. Some Structure & Thought-Provokers The Case for „Agility‟ • So, what‟s Agility anyway… and „VUCA‟ – WTF? • It‟s a „VUCA‟ World… Some Insights • Most companies are compounding the situation Contending with „VUCA‟ • The „Growth ⇆ Control Paradox‟ • Underneath it all… Three Laws • An Architecture for Growth against a „VUCA‟ Backdrop „Joined-up Decision-Making‟ for Growth • Where are you on the „Control ⇆ Growth‟ Spectrum? • Some Implications and Questions for Decision-Making © StrataBridge 2012
  • 43. … and over to Ed for some insight into how leading-edge technology can enable and accelerate agility… © StrataBridge 2012