Planning
The sense-andrespond approach of
strategy-making
Lecture 10


Today lecture
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The traditional view of planning with the sense-andrespond approach of strategy-making, presenting seven
IS planning techniques

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Case examples include
¨ Skandia

Future Centers
¨ Shell Oil,


SKANDIA FUTURE CENTERS
Case example: Formulate Strategy
Closest to the Action
n

Skandia Future Centers (SFC), located in Stockholm,
Sweden, is an incubator for testing ideas on IT, social
relationships, and networking for the Skandia Group, the
150-year old giant Swedish financial services company.

n

The center acts as an inspirer and advisor to those who
do the strategy making within Skandia.


SKANDIA FUTURE CENTERS
Case example: Formulate Strategy
Closest to the Action
n

The center was created in 1996 by Leif Edvinsson to
give Skandia a laboratory to break out of its current ways
of thinking and to provide a place where different
generations can collaborate on on-the-edge projects.

n

The mission is to explore five key driving forces of the
business environment:


SKANDIA FUTURE CENTERS
Case example: Formulate Strategy
Closest to the Action
n

The European insurance market, demographics,
technology the world economy, and organization and
leadership.


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goal is to devise a vision of the company’s future.


SKANDIA FUTURE CENTERS
Case example: Formulate Strategy Closest to the
Action
3-Generation Teams:
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One of the first concepts used at the center was 3G
teams, getting three generations (25+, 35+, 45+) to work
together.

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The teams were part-time and cross-cultural; coming
from Venezuela, Germany, Sweden, and the United
States.

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The participants were chosen by peers as well as
nominated from different parts of the company.


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SKANDIA FUTURE CENTERS
Case example: Formulate Strategy Closest to the
Action
“When you ask for answers, you get a debate. When you
focus on questions, you get a dialog,” says Edvinsson.
Based on their questions, participants arrived at a
number of interesting contexts for the questions, such as
the evolution of the financial community around the world
and the evolution of IT.
These contexts were presented to 150 Skandia senior
executives, not through a report, but through scenarios
of these five future environments performed by
professional actors in a theater play.


SKANDIA FUTURE CENTERS
Case example: Formulate Strategy Closest to the
Knowledge Café: Action
n

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The play led to the first knowledge café among the 150
executives.
The café was created by one of the 3G teams and a few
of the executives.
At the café, the 150 gathered for one hour around standup tables at different Skandia sites.
Each table had coffee and a laptop loaded with
groupware software from Ventana Software


SKANDIA FUTURE CENTERS
Case example: Formulate Strategy Closest to the
Action
n

The entire project was videotaped and sent to a larger
community, along with the questions and a video of the
play and the café.

n

The goal of this project was to show the power of
collective intelligence.


SKANDIA FUTURE CENTERS
Case example: Formulate Strategy Closest to the
Action
n

The knowledge café accelerated innovation at Skandia,

transforming it into an innovation company.

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The effect has been demonstrated by Skandia’s growth,
to become a global innovative financial service company


SKANDIA FUTURE CENTERS
Case example: Formulate Strategy Closest to the
Action

Nurturing the Project Portfolio:
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Edvinsson thinks of the center as a garden, where some
of the projects are growing and some are not.

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He tends them by looking at the level of interest
surrounding each one and at the progress each has
made, which he equates with gardening


SKANDIA FUTURE CENTERS
Case example: Formulate Strategy Closest to the
Action
n


Ten years after the creation of the center, the head of the
FSC was appointed as Chair Professor of Intellectual
Capital at the University of Lund, Sweden.

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Looking at the future, Edvinsson reckons that the
success of the firm of the future lies in its ability to create
intangible value creation, through intense exchange of
knowledge at the global scale.


Today’s Sense-and-Response Approach
cont.
If yesterday’s assumptions no longer hold true, what is
taking the ‘old’ approach’s place? cont.:
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Guide Strategy-Making with a ‘Strategic Envelope’:
¨

Having a myriad of potential corporate strategies being tested in
parallel could lead to anarchy without a central guiding
mechanism


Today’s Sense-and-Response Approach
cont.
¨


Top management set the parameters for the experiments (= a
‘strategic envelope’), and then continually manage that context

¨

Need to meet often to discuss:
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Shifts in the marketplace

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How well each of the experiments is proceeding

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Gaining ‘followership’ or showing waning interest?


Today’s Sense-and-Response Approach
cont.
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A strategic conversation is a regular, frequent meeting at
which executives share the workload of monitoring the
business environment and responding to it.

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Perhaps the vice president of operations might be

charged with reporting on “today,” such as the size of the
company’s mobile workforce


Today’s Sense-and-Response Approach
cont.
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The emerging technologies director might be charged
with reporting on “tomorrow,” such as recent
developments in Web Services or mobile or fixed
wireless services.

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The HR vice president might be the team’s eyes and
ears on outsourcing.


Today’s Sense-and-Response Approach
cont.

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The purposes of each meeting are to stay in tempo with
the marketplace (which may mean setting new priorities),
spot trends in their infancy, launch new projects, add
resources to promising ones, cut funding for others, and
so forth



SHELL OIL
Case example: Guide Strategy-Making
with a ‘Strategic Envelope’
n

Steve Miller, then incoming general manager of oil
products at Royal Dutch/Shell Group, believed change
would only occur if he went directly to his front lines—
employees at Shell gas stations around the world.

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He felt he had to reach around the middle of the
company to tap the ingenuity of frontline employees at
the gas stations, encouraging them to devise strategies
that were best for their local markets.


SHELL OIL Web Portal

Now utilizing Social Media


SHELL OIL
Case example: Guide Strategy-Making
with a ‘Strategic Envelope’
n

He set aside 50 percent of his own time for this work and

required his direct reports to do the same.

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His goal was not to drive strategy from corporate, as had
been tried and failed, but to interact directly with the
grass roots and support their new initiatives, thus
overwhelming the old order in the middle of the
company.


SHELL OIL
Case example: Guide Strategy-Making
with a ‘Strategic Envelope’
Action Labs:
¨

His technique was to use action labs.

¨ He

invited six teams, each with six to eight people
from gas stations in one country, to a week-long
“retailing boot camp” at which they learned how to
identify local opportunities and capitalize on them


SHELL OIL
Case example: Guide Strategy-Making
with a ‘Strategic Envelope’

n

The teams were then sent home for 60 days, each to
develop a proposal of how to double their net income or
triple their market share..

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six teams came to headquarters:
n After 60 days, the first six teams returned for a “peer
challenge” at which they critiqued each others plans
n They then returned home for another 60 days to hone their
plans for the third action lab: approval or disapproval.


SHELL OIL
Case example: Guide Strategy-Making
with a ‘Strategic Envelope’
n

At this third lab, each team took turns sitting in “the
hot seat” facing Miller and his direct reports, who
grilled them for three hours on their plan.

n

The teams, in turn, described what they needed
from Miller as the other teams watched.



SHELL OIL
Case example: Guide Strategy-Making
with a ‘Strategic Envelope’
n

The plans were approved, denied, or modified.

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If funded, the promised results were factored into
an operating company’s goals.

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The teams then had 60 days to implement their
plans, after which they would return for a fourth
session with Miller and his reports.


SHELL OIL
Case example: Guide Strategy-Making
with a ‘Strategic Envelope’

The Results:

q

These action labs had a powerful effect.

q


They caused stress on Shell’s way of doing business, in
effect, unfreezing the status quo.