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Book review: Execution – The Discipline of Getting Things Done

This is one of my favorite books. It was first published in 2002, but is as relevant now as it was when it was first published. There have been several re-issues since then and second hand copies should be available cheaply. My copy is well worn and full of notes! I would consider this book a classic in strategy execution. The book focuses what the authors describe as the discipline of getting things done. I have always liked this book because it focuses on execution, not strategy, which I am passionate about. There are simply too many books that focus on telling the reader how to develop a strategy, rather than how to execute it.

The authors are Larry Bossidy and Ram Charan.  Bossidy is a highly acclaimed CEO, who has a track record for delivering results. Ram Charan is an advisor to senior executives and boards of directors. In the first section of the book, the authors define three building blocks that they hold is key to execution. On the first building block the authors describe what they call the seven essential behaviors of leaders. For me this is very useful because it focuses on what do I as a leader needs to do. Too many strategy books focus on what I as a leader need to know. Most people who buy books on strategy I think are seeking answers to what do I need to do rather than theoretical approaches. Listed in the essential behaviors of leaders are things like leaders know their people and their business, insist on realism, set clear goals and priorities, follow through, reward those who deliver and so forth. The second building block describes how to create a framework for cultural change. To change a business’s culture, you need a set of processes, or social operating mechanisms, that will change the beliefs and behavior of people in ways that are directly related to bottom-line results. You need to change people’s behavior so that they produce results. For a leader this is a crucial activity as the leader usually sets the culture of a company. The third building block is having the right people in place. For me this block is the most important. The authors highlight the importance of selecting, reviewing and appointing the right people and provide tools and examples that the reader can use to assist them. No matter how good the strategy is, how good the leader is and how enabling the culture is you cannot expect the wrong people to deliver the right results.

In the second part of the book the authors define three processes of execution i.e. people processes which links the strategy with operation, the strategy process which makes the link with people and operations and the operations process which links strategy and people. Here the authors are less successful. It feels rushed in its execution and somewhat incomplete, whilst many of the examples are a repetition of the first section. The second part of the book is thus not its strength but does not, however, detract from the excellent first section. Overall the book is written in easy to read layman’s language, and thus accessible to all. The authors place a lot of focus on people. This is the strength of the book. They highlight that the key to effective execution revolves around getting the right people in place, creating the right culture so that the right people can deliver and leading. I like this because it is the to success key in my experience. No matter how bright you are, once you get into a senior position your key to success is getting results through people. In that way the book is different in that it focuses on the things people should rather than on the way in which they do them. For me this book is one of the best reads in executing strategy and is highly, highly recommended.

execution

Map toolset

In a previous post I graphically illustrated the average annual GDP per capita for each country on a map. The colour coding approach and use of maps makes this kind of graphical display easy to understand, and eye catching to present. I thought it would be useful to explain how I did this so that readers can apply the same techniques to work they wish to do. The approach consists of two parts. Firstly one has to obtain a map that can be edited. There are several places where you can download maps that are editable for free, but I use the one’s from Wikipedia. Just go to http://commons.wikimedia.org/wiki/Maps_of_the_world or search the web for Maps of the World – Wikipedia Commons. There are host of thematic maps that you can readily use. If you want to edit the maps and change colours, then go to Category:Blank maps of the world. Here you will find, and can download, files with the extension.png. These files are editable with the correct editor. The maps denote each country separately, so you can move countries about and delete continents or regions as you see fit. The maps from Wikipedia are blank and fully editable.

Secondly one must edit the maps. For my editing I use Inkscape. Inkscape is an Open Source vector graphics editor, with capabilities similar to Illustrator, CorelDraw, or Xara X, using the W3C standard Scalable Vector Graphics (SVG) file format. This application is recommended by Wikipedia for editing these maps and is available for free download. The code is available for Windows and Mac, although if you are running the very latest version of Mac you will need to download and install the XQuartz application before you attempt to install Inkscape. XQuartz is an apple initiated project to enable X11, a windows server compatibility layer, to run on later versions of Mac OSX. If you do not install XQuartz beforehand the application will install, but not run. Its all very technical, but you need not worry as once you install the application things run smoothly and you can get to edit maps easily. Inkscape is a very useful application for more than just changing colours on maps, but whilst I probably have only used 1% of its functionality, it works very well. The team at Inkscape also have loads of tutorials and other support if you want to explore the capability of Inkscape fully. Changing the colours of a country on the map is literally one click and changing the colours on the globe to produce a heat map as I have done in a previous post takes a few minutes.

Using GDP to identify growth regions

In an earlier post I proposed that high GDP growth rates imply that there will be a demand for goods and services. A second factor to consider is country annual per capita GDP. By analysing per capita GDP the size of a country’s GDP is normalised relative to its population. There is, of course, criticisms of such an approach because it takes a country average and does not take city or regional differences within a country into account. This is a valid criticism, and in later posts i will consider this as we construct a comprehensive filter that allows business to identify where the best opportunity for expansion is.   Countries with low per capita GDP coupled with high GDP growth rates present a scenario for  potentially sustained growth. For business seeking to expand outside of their home base, this scenario is highly desirable. The desired outcome was to build a global annual per capita heat map that allows companies to see at a glance, based on colour coding, which areas of the globe have low annual per capita GDP. Presenting the data in this manner makes interpretation much easier, and intuitive, than looking at Excel spreadsheets or lists of numbers.

To produce my global annual per capita GDP heat map, I analysed GDP per capita rates for each country. The data for my analyses was obtained from the World Bank (World Bank, 2013) and was for the latest reporting period, 2011. There are alternative sources for the data such as the International Monetary Fund (IMF) and the CIA Factbook. A quick comparison between the sources shows that whilst each source differs at a detailed level, their reported numbers are similar and most importantly they agree at a macro level when comparing rankings. I chose the World Bank as they have data going back to 1960, making it possible to do longitudinal studies on specific variables for countries or regions over time. For some countries, such as North Korea and Cuba, data is not readily available because they are not reported. Other countries such as Syria and Somalia have historical data but ongoing armed conflict has prevent current data being available. The data is pure GDP calculated in US Dollars, and has not been corrected for purchasing power parity (PPP). I do not think they the overall trend would be very different if one used PPP, but at a future time I may undertake the exercise to compare. The objective of the analysis was to identify which regions have lower per capita GDP. In total 181 countries were analysed. The values of per capita ranged for $231 for the Democratic Republic of Congo to $114,508 for Luxembourg. I broke the range into five quintiles, with countries with lower per capita GDP showing lighter and those with higher per capita GDP showing darker. Each country was then assigned its colour and plotted on a map of the world. The result is shown below. You can click on the image to enlarge.

GDP per person

The data provides some very interesting observations. The darker the colour the higher the average per capita GDP. Two regions stand out as having relatively low per capita GDP. These regions are Africa and Southern Asia. The relative wealth of North America, Europe and Australasia is clearly highlighted with those regions solid dark green. Whilst not as wealthy as North America and Europe, South America and much of Asia shows relatively healthy average GDP. The regions that have low average GDP are also clear. These regions are Africa, with the exception of Southern Africa, Southern Asia centered around India and Pakistan, Central America, Indonesia and South East Asia centres around Vietnam and the Philippines. The map also show interesting anomalies such as Equatorial Guinea whose oil wealth means its GDP is on par with Greece and Cyprus! Geographically, however, it is Africa that presents the largest region with low average GDP per person. In future posts I will look at GDP growth in a similar manner to determine if there is a correlation between low average GDP per capita regions and expected GDP growth.

 

Hosting relocation update

Over the past few days I have moved my blog from one hosting service provider to another. This move took some time and resulted in no new postings.  I’m still trying to get the layout right, but I have checked that all the previous posts and attachments have transitioned smoothly. Everything appears to be working properly now so look out for new postings shortly.

Book review: Winning in emerging markets

People often ask me what books I recommend they read to learn about conducting business in developing regions. In 2011 Harvard Business School professors Tarun Khanna and Krishna G. Palepu published Winning in Emerging Markets, and this is a title worth exploring. The authors argue that the primary characteristic of developing markets is the lack of institutions that facilitate efficient business operations. They call this lack “institutional voids”, and whilst they present challenges to conducting business in developing markets, they also provide opportunities. The authors provide a toolkit for multinationals to identify and suggestions to fill these institutional voids. The toolkit is underpinned by a number of case studies.

The book is an excellent read, and makes a valuable contribution to the field of doing business in developing regions. The authors do not claim to provide a complete analysis of what is required to succeed in developing regions. A useful aspect are the wide selection of case studies that the authors use to illustrate their argument. This in itself is very useful. There are, consequently, some additional considerations that need to be taken into account when analysing developing regions or markets. Aspects such as literacy levels, religion, language, culture, history need to be considered. the book also is also focused on large multinationals. Regional players should not underestimate the challenges in expanding in their own space. The toolkit developed by the authors is interesting, and useful. I feel it is insufficient, and is a bit one size fits all. It is, however, a great starting point and I will come back to the approach in later posts as my work also proposes a filter for companies looking to expand into developing markets.

Winning in Emerging Markets is a useful addition for managers seeking to define and execute business strategy in developing regions and provides interesting case studies to support their suggested approach to dealing with the absence of certain structures and functions in emerging regions. A very worthwhile read.

Winning in emerging markets

GDP growth and company expansion

This post is the first in a short series of posts in which it will be highlighted why it is important for companies seeking growth to look toward the developing regions of the world. The company of which I am CEO, Drake & Scull, decided some time ago that our future lay in expanding into developing regions – Africa in our case. When we decided to expand into the rest of Africa, we considered many of the factors that I will talk about in the next few posts. Interrogation and evaluation of numerous factors allowed us to build a filter through which we identified which specific countries in a region, and which cities in a country, were the best entry points for our expansion strategy. I would suggest that companies and business leaders who are looking to expand into developing regions should construct a filter for themselves to evaluate ideal geographical entry points.

One of the most compelling reasons for companies to consider expanding into developing regions is the high growth rate these regions are expected to attain in the next two decades. Gross domestic product (GDP) is the value of all officially recognized final goods and services produced within a country in a given period of time. At this stage I am not considering other important factors, just GDP. Subsequent posts will consider additional variables that businesses need to incorporate into their filter. GDP per capita is often considered an indicator of a country’s standard of living. High per capital GDP growth rates may thus indicate a latent demand for goods and services and thus a market opportunity. A further consideration should be the current per capita GDP for a region or country. If a region or country has a relatively low current per capita GDP and a high projected GDP growth rate, it may indicate that economic expansion is likely to be sustained over a period of time with significant growth potential into the future.

In summary, consistently high GDP growth rates imply that there will be a demand for goods and services. Companies should look at regional and country historical and expected growth rates. Expected per capita GDP growth rates of regions and countries are one of the key variables when building a filter to determine where to target expansion in developing regions. There is an even greater advantage if such expected growth is off a relatively low base as this may indicate sustained growth prospects for companies.

Who are the developing world?

One of the first statements I made in introducing this blog was to highlight that there are differences between the developing world and the developed world. I have seen these differences first hand on my travels through various countries. So what are the characteristics of the developing world?

There is no universally accepted definition of “developing country”. The World Trade Organisation (WTO) notes there are no definitions of “developed” and “developing” countries. Members announce for themselves whether they are “developed” or “developing” countries. The United Nations (UN) has developed the Human Development Index (HDI), which takes factors such as per capita Gross Domestic Product (GDP), life expectancy and literacy to gauge the level of human development for countries where data is available. Developing countries are, in general, countries that have lower HDI and have not achieved a significant degree of industrialization relative to their populations. Their populations also enjoy lower standards of living compared to developed countries. The most recent UN report was issued in 2011 (Human Development Report 2011). It is interesting to note that in respect of GDP growth, many of these countries are expected to enjoy high GDP growth for the next few years because they are coming off a low base. They are thus increasingly attractive for companies seeking to offset low economic growth in traditional markets.

Rather than broadly talking about the developing world, I suggest that focus should be on studying developing regions. I argue that it is highly unlikely that in a relatively free business environment two countries would share a common border would have vastly different HDI. North Korea and South Korea highlight my caveat regarding free business environment. Based on HDI these developing regions are then Africa, Asia (excluding Japan), South and Central America and the Middle East. In each region you could make an argument for at least one country that does not have low HDI, so my proposal should not be taken as absolute but as indicative. In these developing regions executing strategy  needs to take into account the lower HDI and the implications thereof. One cannot, however, treat these regions as homogeneous as there are significant differences within regions that practitioners need to consider. For example and according to David Barrett, a mission’s researcher, there are some 3,315 ethnic groups in Africa. At a country level there are also significant differences – Nigeria has 419 ethnic groups. The focus on ethnicity is illustrative, and can be applied equally to language, religion, business practices etc. etc. For business leaders to effective execute strategy in these regions requires, I postulate, one cannot simply take, for example, Eurocentric models and apply them. The characteristics of these developing regions requires significant changes to widely held business approaches.

South Africa’s State of the Nation speech

On the 14th February the President of South Africa, Jacob Zuma, delivered his State of the Nation speech. This speech is delivered annually at the opening of the country’s Parliament.  It is similar to the more familiar State of the Union speech delivered by the President of the United States. President Barack Obama co-incidentally delivered his speech two days before. I was invited by a local radio station, Classic FM 102.7, to give my assessment both before and after the speech as part of a panel of experts.

The thrust of the speech was the National Development Plan (NDP). This is an ambitious development plan by the South African Government, and I include it at the end of this post. The plan is lofty in its scope and lays out a future strategic direction for the country to 2030. This is bold. It has the potential to move the country forward. It’s intent is similar to the plans launched by Malaysia starting in 1971. The course of Malaysia’s development was encapsulated in the three national policy frameworks that were the New Economic Policy (NEP), 1971-1990, the National Development Policy (NDP), 1991-2000 and the National Vision Policy (NVP), 2001-2010. Each of these policy frameworks was based on a profound understanding of the needs and challenges of the time, as well as the responses required for the nation. These aspirations culminated in the launch of Vision 2020 in 1991, outlining the aim of attaining developed nation status by the year 2020.

Malaysia provides a wonderful example of how to execute a country strategic vision. A clear vision was laid out, the political will was found to stay the path and the intentions of the various plans were broken down into clear actions that were to be executed by the various arms of government. These are the elements of any strategic execution, whether in business or government. My view after the speech, much like many expert commentators, was that the proof of the plan would be in the execution thereof. Anyone can lay out a grand vision – the difference between achieving that vision for a country is much like achieving a vision for a business. It lies in effective execution at an operational level.

Executive Summary-NDP 2030 – Our future – make it work

Why create this blog?

For me this blog serves several purposes. Firstly I have found that managers I mentor, students I teach and researchers I collaborate with have asked me over the years for my thoughts on operations, operations turnaround and how to execute strategy through operations. I have never having found the time or place to write these thoughts down and this blog enables me to do some of that. Secondly, as I have grown older, my memory cannot keep up with the experience I have accumulated and I need a place that I can refer to when people ask me about previous experiences or my views on a narrow part of the field what I may not currently be working in. Thirdly people have often asked me where can they read more about operations execution, and I have been frustrated with the lack of easy to understand advice or experience that was readily available. Many of the strategy execution blogs I have seen are used as entry points to sell software or consulting services. I do neither. The final reason for this blog is a realization that much of literature that relates to strategy execution is focused on the developed world, with an assumption that models and approaches are easily transferable to the developing world. My experience has taught me that linguistic, cultural, developmental and socio-economic circumstances in the developing world means that these models and approaches rarely transfer to the developing world without modification.

Who am I?

Hi. I’m Dr. John Wentzel. I hold a Ph.D. in Industrial Systems. I’m currently Chief Executive Officer of Drake & Scull, the premier facilities management company in South Africa and across Africa. In addition to my business career I am also an academic. I am currently a research associate at the Indian Institute of Management, Bangalore (IIMB) and serve on one of the faculty boards at the University of Pretoria in South Africa. As a business leader, and academic, I’m keen that people debate and know more about how to execute strategy through operations. I’m also keen to expand my learning in a field that I’m passionate about.