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The Future of Human Work Is Imagination, Creativity, and Strategy

The hardest activities to automate with currently available technologies are those that involve managing and developing people (9 percent automation potential) or that apply expertise to decision making, planning, or creative work (18 percent).” Computers are great at optimizing, but not so great at goal-setting. Or even using common sense.

As AI Makes More Decisions, the Nature of Leadership Will Change

AI will supplant many aspects of the “hard” elements of leadership — that is, the parts responsible for the raw cognitive processing of facts and information. At the same time, our prediction is that AI will also lead to a greater emphasis on the “soft” elements of leadership — the personality traits, attitudes, and behaviors that allow individuals to help others achieve a common goal or shared purpose.

Strategic Alliances: Fact-Based Decisions Help Build Consensus and Lower Risk

A strategic alliance is an agreement between two or more organizations or companies to cooperate in a specific business activity, so that each benefit from the strengths of the other to achieve an objective. Alliances typically involve sharing strategy, revenues, costs, and/or risks.

The formation of strategic alliances has become more prevalent over the last two decades in response to globalization and increasing uncertainty in the business environment. Some estimates suggest that 35% of the revenue of the largest 1,000 firms in the United States is a result from strategic alliances, yet the failure rate for alliances hovers between 60% and 70%.

Whether you are running a multinational corporation, a not-for-profit organization, or a small business, the process to select and manage strategic alliances can be a complex and daunting undertaking. Taking advantage of proven methodologies and techniques to make fact-based decisions will help build consensus and drive better alliance results.

Set up a Governance Board

strategic alliance, consensus building, decision making process

The first order of business, particularly in larger organizations and companies, is to set up a governance structure. This may take the form of a partner alliance strategy council or review board comprised of cross-functional leaders and representatives who:

  • Set and maintain the alliance strategy and policy
  • Approve the alliance management process and procedures
  • Approve strategic partnerships that meet threshold criteria
  • Allocate resources (funding and people) to establish and manage alliances
  • Commission and retire alliance management teams
  • Review alliance performance and plans at periodic checkpoints
  • Resolve conflicts arising from the alliance management teams

Select Strategic Partners using a Decision Model

The task of selecting and managing strategic partners is a classic portfolio management challenge. There are many factors to consider, alternatives to evaluate, and decisions to be made. Here, an emphasis should be placed on analyzing available data and engaging internal stakeholders to leverage their experience, insights, and judgments. This is best handled by building one or more decision models to enable multi-criteria decision-making, as I discussed in my October blog Using Decision Models for Multi-Criteria Decision-Making.

Depending on the number and mix of strategic alliances in play, the analysis can be improved by organizing and managing the alliances in portfolios, using one or more of the following attributes:

  • Category (e.g, products, services, branding, marketing, and loyalty)
  • Type (e.g., joint venture, outsourcing, marketing, distributors, licensing, franchising, and R&D)
  • Geography (e.g., city, state, region, country, or continent)
  • Tier (by duration) (e.g., short-term, mid-term, and long-term)
  • Industry Vertical (e.g., entertainment, financial, healthcare, real estate, sports, and technology)

When evaluating potential strategic alliances, it’s important to evaluate quantitative data and criteria, as well as qualitative factors such as cultural fit. The top five of the eight most cited reasons for the failure of an alliance are the direct consequence of cultural mismatch, with “cultural mismatch” itself cited as #7.

During this phase, it’s not too early to begin to define “how” the alliance will work, even if at a conceptual level. Once there is agreement on the conceptual approach, representatives from both strategic partners should define how the parties will work together by collaborating on the business process and procedures.

Manage Strategic Alliances as a Portfolio

Once a strategic alliance program has been formed, it must be managed. This introduces a whole new set of evaluation criteria and an additional decision model for multi-criteria analysis and decision-making. For example, is the strategic partner meeting its commitments? Have there been breaches of the alliance agreement? Is the alliance meeting its objective? Are there unacceptable risks (e.g., financial, operational, intellectual property, reputational)? These criteria should feed into a semiannual or annual portfolio review to determine which strategic alliances should be continued, re-structured, or terminated.

In closing, to successfully manage a strategic alliance program and out-perform the 60-70% failure rate, an organization must have a governance and management commitment commensurate with the investment and risk levels associated with program. That commitment should include using proven portfolio management methodology, and multi-criteria decision-making models to build group consensus and make fact-based decisions.

© 2018 Definitive Business Solutions. All Rights Reserved.

John Sammarco has thirty-five years of experience leading, managing, and consulting to top public and private sector organizations, and has over twenty years of experience in facilitating complex group decisions. John founded Definitive Business Solutions in 2003, which provides world-class group decision-making solutions to increase efficiency, boost ROI, and reduce risk associated with business and technology investments. In 2016, John developed Definitive Pro™, which helps groups build consensus and make multi-criteria decisions.

IT Modernization: 5 Criteria for Reviewing Further Legacy System Investments

If your agency or company is planning to modernize one or more systems, the entire process could take two to five years. During this period, human and financial resources will be in greater demand than ever, as there will be a need for two spending streams – one to plan and execute the modernization initiative and one to maintain the legacy system. Now, you have a dilemma: How do you manage your investments during this period, and under what conditions should you continue to make investments in the legacy system?

A Sharp, Bright Line or a Fuzzy One?

Because investment decision-making is a team sport, different players will have different ideas on how to proceed. Some will advocate for a sharp, bright line between the two ecosystems, suspending all investments into the legacy system so that all possible resources can be reallocated to the modernization initiative. They will argue that continuing to invest in the legacy system will only drain resources away from the initiative, extending the timeline and the need for dual spending streams.

Other team members will argue for a fuzzy line so that your mission and business can still be supported and enhanced during the modernization period. They will assert that you can’t leave your users twisting in the wind for years with a dormant system that can’t be enhanced. Besides – that shiny new system may or may not deliver as promised or as scheduled.

Five Criteria to Serve as an Investment Filter

To strike a balance between starving the legacy system and over-investing in it, you can apply a filter on all proposed investments into the system. This filter should consist of a set of mutually agreed-upon criteria that articulate what is a mission-critical or business-critical investment.

From my experience, I have found that there are five criteria that can collectively serve as a screening filter for legacy-system investment. One criterion must be met to further consider a potential investment. Together, the five criteria serve as an excellent starting point for team review and discussion.

Will the investment:

  1. Keep the system from becoming non-compliant?
  2. Reduce the risk of a major system failure?
  3. Decrease the risk of a major system investment (e.g., repair expense)?
  4. Serve as a strategic building block on the modernization roadmap?
  5. Provide a critical and urgent capability (i.e., a throw-away capability necessary for the mid-term)?

Some Important Process Considerations

These criteria should serve as a filter to be applied to an investment request before any effort is expended on it. This will help to ensure that precious resources are not spent reviewing, estimating, and planning enhancements to the legacy system that will later be deemed to be non-mission-critical or business-critical. In short, those investments that do not meet one the above criteria would be placed “on-hold” and consume no additional resources.

For those investment requests that do meet one of the above criteria, they should then proceed to the next step in the process. That next step could be to either plan and implement it, or to further evaluate it. That evaluation could include using portfolio management techniques to determine the degree to which the investment contributes to the overall strategy in relationship to its cost, and the analysis of other dependencies and considerations. These techniques were discussed in my October 2016 blog, “Group Decision Support for Agency Budget Formulation”.

In closing, to make effective use of the five criteria for reviewing further legacy system investments, it’s critically important to have a good sense of the timeline associated with the modernization initiative. Knowing how long the modernization initiative will take will provide the necessary context to help you assess the impact of deferring a given investment, and better manage your legacy system investments during this period.

© 2018 Definitive Business Solutions. All Rights Reserved.

John Sammarco has thirty-five years of experience leading, managing, and consulting to top public and private sector organizations, and has over twenty years of experience in facilitating complex group decisions. John founded Definitive Business Solutions in 2003, which provides world-class group decision-making solutions to increase efficiency, boost ROI, and reduce risk associated with business and technology investments. In 2016, John developed Definitive Pro™, which helps groups build consensus and make multi-criteria decisions.

Make Better Decisions with Intellectual Humility

New research published in the journal Psychological Science finds that those who sincerely aim to make themselves better people may excel at taking an objective look at themselves and their biases, which could also lead to better personal decision-making and long-term success.