Strategic Planning Analogy #524: Forgetting Our Spouses

THE STORY
Back when I was a young boy, my dad used to spend a lot of time driving across the state of Michigan to take care of things for his mother (my grandmother). Sometimes he would take the trips alone. Sometimes he’d take me and my sister along. Sometimes my mom would come along.

I remember one time when we were done visiting my grandmother. My dad was getting ready to begin the two to three hour drive back home. As he started to back down the driveway, I yelled, “STOP!”

My dad stopped the car. Then I said, “Aren’t you forgetting something?”

As my dad sat there trying to figure out what he was forgetting, my mom came out of the house and headed towards the car to go home.

If I had not been there, my dad would have gone home without my mother. And I’ll bet she would have been pretty mad about it.

THE ANALOGY
Businesses can cover a lot of topics as part of their strategic planning. They can look at internal strengths and weaknesses. They can look at their industry, their competition, the economy, and so on.

But how often do they look at the spouses of their key leaders?

Businesses can be like my dad, who was so focused on getting the job done that he was going to forget his wife and leave her feeling abandoned. In the long run, you know that would not have been a good thing for their marriage. And it could curtail the number of future trips my dad made.

The same idea applies to businesses. If they shut-out the spouses and act as if they do not exist, they can create an environment where their leaders are under unnecessary additional stress and become less productive. Their spouses could even talk these leaders into leaving the company if it gets bad enough.

It’s hard enough to implement change in a company when everything else is running smoothly. But if your leaders are undergoing significant stress in the rest of their life, it will impact what they can contribute to the company.

Therefore, don’t forget the spouses as you drive the company down new roads.

THE PRINCIPLE
The principle here is that strategies are implemented by people. And if the external lives of these people are all messed up, then they will be less effective at implementing the strategy. Therefore, do not create a strategy process which needlessly contributes to the stresses of the external lives of those implementing the strategy.

1) The Entrepreneurial Test

Two stories come to mind when I think about this principle. The first story is about a time when I was considering leaving the corporate world and buying a franchise to run. A franchise broker gave me a test. The purpose of the test was to see if I was a good candidate for running a franchise.

After taking the test, I added up my score. If I got an extremely high score, it meant that I would be such a successful entrepreneur that I would not need a franchise to succeed. If I got a score in the wide middle ground, it meant I could succeed in my own business, but only with the help of a franchise. If I got a low score, it meant that I was not cut out for business ownership and should remain an employee in the big corporate world.

One of the more important factors which helped determine your score had to do with friends and family. If you thought you would have the full support and endorsement of friends and family in your business venture, you score went up. If not, your score went down.

The point was that it can be stressful and time consuming to start up a business. If you do not have the support of the people in your lives, you probably succumb to the pressures and quit. Failure is more likely to be your outcome.

I think a similar effect can take place with leaders in a business undergoing strategic change. It is a stressful and time consuming event. If the ones doing the work are not getting support from their outside circle of influence, they will be more likely to fail in their part of implementing the strategic change.

2) Best Buy

My second thought turns to Dick Schulze, the founder of Best Buy Co. Starting by selling audio equipment out of the trunk of his car, Dick created a large and successful corporation. Dick would tell you that a large contributor to that success was the love and support of his wife Sandy.

To quote from Dick’s autobiography, “Without Sandy, and her unflagging support of me and her participation in every aspect of our operation, Best Buy would not be the company it is today.”

Two important aspects of Best Buy’s success can be seen here. First, Dick did not forget his wife as he drove the company forward. Sandy was kept in the loop so that she had an emotional attachment to the business as well. Second, Sandy supported her husband in a way that made it easier for Dick to do what it took to succeed.

For example, when Dick was about to mortgage everything he had to start his business, he went to his wife for support. Sandy responded by saying, “You’ve learned a lot already. You’ll land on your feet.” That support allowed Dick to put together the seed money to get his business started and that support got him through the long hours and stress that come with building a business. I dare say that if Dick did had not kept Sandy in the loop and gotten her support, there would not have been a Best Buy Company.

3) Implications

So how can we apply this to taking a business through strategic change? First, we need to identify ways to make sure our leader’s spouses are partners in the effort rather than enemies of the effort. We need to find ways to get them emotionally involved with what is going on…so that they have a vested interest in its success. They need to feel like partners in the car going on the journey rather than forgotten like what happened to my mom.

How much do you even know about the lives of your leaders outside the office? Are you aware of the support (or lack thereof) that they are receiving at home? Have you ever met their spouses? Have you ever personally acknowledged and rewarded the spouses for the support they gave to their spouse?

Second, we can help rectify some of the issues which can cause unnecessary stress in the lives of the employees we count on. How many company policies do you have which can help minimize life stresses and free employees to be more productive? Benefits like on-site daycare, flex-scheduling and concierge services could make a world of difference in keeping the type of life balance needed for healthy, productive employees.

You wouldn’t want to fill your factory with broken-down tools. Similarly, you wouldn’t want to fill your company with broken-down people. Help them heal. The gratitude will pay back itself many times over.

SUMMARY
Strategic planning often has to deal with implementing major change initiatives. These efforts can be very stressful and time-consuming. If the lives of the people implementing the change have too much stress in their lives and lack the proper support at home, the change effort is likely to fail. Therefore, companies have a stake in ensuring that home life and stress levels are kept healthy. This requires an active effort to reduce stress and increase support from spouses.

FINAL THOUGHTS
An idea may look good on paper, but it really isn’t useful until successfully implemented. Pay attention to ALL the impediments of implementation, which include the emotional well-being of your employees.

Strategic Planning Analogy #523: Why Let Facts Get in the Way?

THE STORY
A retailer once asked me to look at the data to see how much sales increased after his stores were remodeled. After examining the data, I concluded that for most of the remodeled stores, sales did not change at all as a result of the remodel.

The response by the CEO of the retailer? “I don’t believe the data.” He went on to spend a bunch of money on further remodels.

Another retailer asked me to study their idea to add a new product category to their stores. I wrote a memo—with lots of facts and numbers—showing that adding this product line would be an incredibly stupid idea.

The response of the retailer. “We had no intention of ever not adding this category. We already signed the deal and are going to do it anyway. We just wanted some paperwork in the files to help justify the deal we already intended to do. If your paperwork won’t support the project, then we’ll just do it without support documents on file.”

I’m reminded of the Mark Twain quote, “Never let facts get in the way of a good story.” Or in this case, it should read “Never let facts get in the way of a pre-conceived notion.”

THE ANALOGY
Business leaders have to make a lot of decisions. Most claim they want their decisions to be based on facts. The problem occurs when those “facts” contradict the pre-conceived notions of the business leader.

Do you ignore the facts and go with your gut (as they did in my stories)? Or do you ignore your gut and go with the facts?

As we will see in this blog, there is no automatic answer that works in all cases, but there is a process to figure out what to do in every case.

THE PRINCIPLE
The principle here is that there is a difference between facts and insight. A fact is an isolated nugget of truth. Insight is having sufficient understanding of the situation in order to make the proper decision.

Not all facts lead to insight. For example, I might have a fact that my grass is tall. From that fact, I might conclude that it is time to cut the grass. But true insight would have also known that at that very moment my grass was wet, the ground was soft & mushy, and that it was a pitch-black night outside. Under those conditions, it was not a good time to cut the grass.

Was my fact on grass length incorrect? No, but that fact did not give enough insight to make the right decision.

My gut intuition can also be insufficient for insight, particularly if my experience is not very relevant for the current decision.

So how do I gain insight when facts and intuition disagree? Here are three suggestions.

1) Question the Fact-Giver

There’s a Samuel Butler quote which says “Figures never lie, but liars often figure.” In other words, a person with a personal agenda can selectively use facts to promote their agenda rather than true insight. They present a false insight, distorted by what they choose to disclose and what they choose not to disclose.

It has been said that you can prove just about anything with the Bible if you are willing to take the words out of context. And that’s what these “liars” (people with an agenda) do. They start with their preconceived agenda and let that bias dictate how they present the facts. Their goal is to sell their position rather than provide true insight into what is going on.

You see this all the time in politics, where each extreme position uses facts to “prove” their agenda is true. How can the use of so-called “true facts” come to such different conclusions? It’s all in the packaging.

Several decades ago, U.S. News and World Report Magazine looked at some of the political hot-buttons of that time, like abortion and gun control. They showed that, depending upon how a survey question is worded, you can get a majority of the people to agree with either extreme.

Therefore, when the facts contradict your gut, one can start by questioning the motives of the one presenting the facts. Do they have a hidden agenda? Is their objective unbiased insight or something else?

Ask yourself these questions:

1. Are ALL the facts clearly moving in only one direction? (Rarely is the world that neat and tidy—there are probably relevant facts not being shown)
2. What does this individual gain or lose personally depending on how the decision goes?

Actions you can take:

1. Ask for all the data collected (not just what is in the Powerpoint deck).
2. Have an independent third party (with no agenda) look at the data.
3. Spend less time discussing the conclusions in the deck and more time discussing the assumptions behind those conclusions.

2. Question the Fact Receiver

The feelings of your gut are based on a lifetime of experience. This experience has exposed you to a lot more facts than just what is in front of you with today’s Powerpoint deck. This experience can help expand your insight and provide a better context for making decisions than just dealing with facts presented at the moment. The gut may indeed be more insightful than the facts.

But, then again, your gut may be way off base. You may have your own hidden biases, which impact your gut (even if you are not aware of them). Perhaps your experiences are irrelevant to the question at hand. Perhaps you’ve spent so much time living detached from the real world and surrounded by “yes-men” that you are out-of-touch with how your customer really lives (I spoke more about that here).

Often times, situations when facts and intuition are add odds with each other occur when a company is going through a crisis. Things are going badly. The old approaches aren’t working any more. Is this really a good time to rely on past-based intuition when the successes and tricks of the past don’t appear to be working?

Therefore, before going with your gut, ask yourself these questions?

1. Is my past experience really relevant for today’s decision?
2. Have things changed enough that the rules of the past no longer apply?
3. Do I have a hidden bias? Does my personal situation change depending upon how I decide?
4. Is my gut based on true insight or desperation and panic?

Actions you can take:

1. Have some confidants outside the industry that you can bounce ideas off of.
2. Spend more time out in the field talking to customers and seeing how the world works out on the front lines where your business interacts with the marketplace.

3. Look for the Story Behind the Facts

An individual fact is like an individual word. It can only tell you so much by itself. However, if you can string a bunch of words together into a story, then you really have something—insight.

All of that intuition you have has been strung together into a wondrous story of how the world works. The problem occurs when the new facts don’t fit into your story of how things work.

The problem may be that the facts have been distorted (as mentioned earlier). In that case, it may make sense to stick with the story in your gut.

However, times may have changed and your story may no longer fit how the world of today (or tomorrow) works. It may be time for a new story of how the world works.

So, when looking at facts which don’t conform with your story, ask yourself these questions:

1. Is there sufficient proof that times have changed enough to make old assumptions irrelevant?
2. Do the new facts string together to make a coherent and believable alternate story more in tune with the times? (or is there no story found within the facts).

Actions you can take:

1. Try to build an alternative story that holds the new facts together and compare that story to your old story.
2. Spend more time discussing what has changed in the environment and WHY.

I knew a company who held a story that the disgruntled customers who complain a lot are at high risk to leave because they are the ones most frustrated. They ran their business based on that story. However, facts showed that it was more often the quiet customers who left. This puzzled them until further analysis came up with a new story. They discovered that the noisy customers really wanted the relationship to work and were actively making noise in order to make the relationship better. The quiet ones had given up on the company and were ready to move on to the competition. Since the new story better fit the facts, they adopted the new story and ran their business accordingly.

SUMMARY
Many times, decision makers are faced with facts that disagree with their gut. Rather than always going with the gut or always going with the facts, do some further investigation. Check to see if the fact-presenter has a biased agenda. Check to see if your intuition is relevant to the situation at hand. Check to see if the facts tell a better story than the story you already cling to. Based on this further analysis you can determine when to go with the guts and when to go with the facts.

FINAL THOUGHTS
In the case of the store remodel research mentioned earlier, the CEO had a story in his head that if you make a store better, customers will like you more and reward you with more sales. In most cases this is true. And that is why he stuck with his gut and ignored the facts. But times had changed and this store concept was becoming irrelevant. This created the need for a new story: When you make an irrelevant store nicer, you don’t make it relevant. You just have a prettier irrelevant store. This new story fit the facts. Today, this retailer no longer exists because of its irrelevance.

Strategic Planning Analogy #522: Timeless Timepieces

THE STORY
I used to work with a retailer who sold low-end watches. Suddenly the sales of these watches plummeted. Was it because someone had suddenly become better at selling low-end watches than this retailer? No.

What had happened was that one of the primary customers of this retailer was early adopters of cell phones. They were using their cell phones to tell time, so they stopped wearing watches…which meant they stopped buying watches.

This retailer wasn’t the only one seeing portions of the watch market vaporize due to people using their phones to tell time. Look at watch ads today. Watches are no longer sold as functional timepieces. They are either sold as a piece of jewelry or as an heirloom to be passed on to future generations.

Think about it…timepieces being sold as the epitome of timelessness. It can’t get much more bizarre than that.

THE ANALOGY
Watches were originally designed as a portable way to tell time. They were the superior solution to solving that problem. But then along came the cell phone. For a large sector of the population, the cell phone became a superior solution to the problem of portable time-telling.

When watches became an inferior solution to the problem, the demand for them dropped. It wasn’t that the phones became less effective at what they did. They were as good as before. It’s that a totally new solution appeared that was superior. Suddenly, a watch’s biggest threat came from phones.

This problem does not just impact watches. All businesses succeed by providing a superior solution to a problem. As a result, businesses tend to work diligently on perfecting their solution. They want to keep getting better, faster, cheaper with their solution offering.

But then…BAM! Something from out of the blue blows your solution out of the water. It no longer matters how good of a watch you make. The best, most accurate watch suddenly became an inferior portable timepiece to the phone. Making a better, faster, cheaper phone won’t get them back. The rules have changed.

This can happen to any business. A solution from an entirely different industry can make your industry irrelevant. The best, fastest, cheapest obsolete item is still obsolete.

Watch out for the unrelated industry (like phones) which can make your entire strategy (like watches) suddenly obsolete.

THE PRINCIPLE

The principle here is that while problems can be eternal, particular solutions to these problems can have a short time span of viability. This poses a risk to any business with a product mindset. While your product may be a great solution today to a given problem, that does not ensure that it will be the best solution tomorrow—no matter how well you execute on delivering that product.

Examples:

1. Laser Surgery has made eyeglasses an inferior solution to vision correction.
2. Digital communication of news has made paper-based communication of news (newspapers and magazines) an inferior option.
3. Every few months, somebody comes up with a new solution for losing weight. The solutions come from a wide variety of industries, from new food solutions to new exercise solutions to new surgical procedures to hypnosis to pills to whatever. Each solution’s time of relevance is so short that we call them “fads.”

Now you may be saying that this risk does not affect your business, because you are not product focused. You are “solution-focused.” You are always working to be a better solution for your customers.

Well, that may be true. But how broadly do you approach that solution? Do you only look for solution improvements within your industry? Are you only looking for better portable time solutions within the watch industry or are you considering solutions from different industries like phones?

Consider the situation facing GM which we talked about in an earlier blog. Teens and young adults used to look to cars as the superior solution to their desire for freedom. Suddenly, the youth of today fulfill their desire for freedom via their cell phone. Cars are no longer something to lust after to satisfy this freedom urge for this demographic. To many of them, cars are just a means of transportation. And given that the young adults of today often prefer to live in city centers, cars aren’t even seen as a particularly good solution to them for that solution. Mass transit, taxis and new car-sharing options like Zipcar appear cheaper and more convenient in an urban environment.

As a result, car ownership (and driver’s license ownership) is down in this demographic.

So GM is not just competing against other cars. On one front, it is competing against anything else that can do a better job of satisfying the urge to be free. On another front, they are competing against an urban lifestyle (where cars can be seen as a burden). And they are competing against new options to transportation ownership made possible through cell phones (like Zipcar). And they are competing against trends which reduce the need for transportation in the first place (working at home, shopping on-line, visiting via Skype, etc.).

Will traditional car ownership eventually fall victim to some form of the same fate as watches? I would certainly have some concern if I was in that industry.

Even teen/young adult clothing sales are down, due in part to a shift of spending from clothing to gadgets (like iphones and ipads). It used to be that clothing for teens was a superior solution for trying to be “cool” with their peers. Now, spending that money on gadgets creates a superior coolnesss. So gadgets get the money that used to go towards clothing.

So what does this imply for strategists?

1) Look Broadly for Solutions

First of all, if you want to own a solution over time, you’d better be prepared to look way outside your conventional industry, because the next leap in superiority may come from somewhere totally different.

Think about Bausch & Lomb. They used to be in the lens business because that was the superior way to improve eyesight. But they could see that non-lens solutions could do a better job at some eyesight solutions, so they diversified into areas far afield from lenses, like laser surgery and eye vitamins.

Proctor & Gamble used to look to chemistry for their cleaning solutions. Then they thought more broadly and looked to physics for cleaning solutions. The result is a number of new cleaning innovations like the Mr. Clean Magic Eraser.

How far afield from your core are you looking to find superior solutions to your core? Do you only read publications in your own industry and only go to trade shows in your own industry? You won’t find it there until it is too late.

2) Be Prepared to Redefine Solutions

Sometimes, if your product is no longer the best solution for a problem, you can reposition the product to be the right solution for a different problem. As mentioned above, watches are repositioning themselves as jewelry and heirloom solutions rather than timepiece solutions.

In the 1800s, circuses were the superior way for small communities to learn about the latest and newest things. When that no longer worked, they repositioned themselves to be a great solution for nostalgia. I talked about that here.

When Hamburger Helper was introduced, it was a superior solution for dinner convenience because it could be made much faster than a conventional dinner at that time. Later, when other alternatives (microwave, take-out, etc.) could provide dinners more conveniently (faster & with less effort), Hamburger Helper was no longer the winner on convenience. General Mills has tried to come up with other solutions for Hamburger Helper such as:

1. The convenience meal your kids will actually eat; or
2. The convenience meal you can feel better about serving because you actually took part in preparing it with your own fresh beef.

I’m not sure any of these tactics are working, but at least they are trying. You may need to do the same in order to stay relevant.

SUMMARY

Problems may be eternal, but the best way to solve the problem changes over time. Often the superior replacement solves the problem in an entirely new way from an entirely different industry with entirely different skills, technologies and business models. It is not an incrementally better status quo, but rather something which makes anything remotely similar to the status quo obsolete. The long term solution is to either: a) Keep an eye outside the industry to discover solutions which can keep you from becoming obsolete; or b) Find a way to redefine your product so that it can be the superior solution to something else (where it can still be relevant).

FINAL THOUGHTS
The best timepiece on the wrist” is not a solution. It is a description. The solution is at a higher level—portable time-telling. If you don’t define the problem at the higher level, you will miss some of the creative ways to solve the problem.

Strategic Planning Analogy #521: Abdication

THE STORY
There’s an old science tricks kids love. First, you take a glass bottle and put a lit piece of paper in it. Then you place a peeled hard-boiled egg on top of the bottle.

Eventually, the flame will go out on the paper in the bottle. Shortly thereafter, the egg will get sucked into the bottle.

The kids are amazed because the mouth of the bottle is so much smaller than the egg. They can’t push the egg through the hole, so how did it get in there?

THE ANALOGY
The science experiment works on the principle of air pressure. The flame on the piece of paper uses up the oxygen in the bottle. This causes the air pressure in the bottle to be so low in comparison to the air pressure outside the bottle that the vacuum inside sucks the egg into bottle.

Businesses seem to be creating a vacuum as well. It is caused by not spending enough time working on strategy. The lack of strategy effort creates a “strategy vacuum” within the business. This vacuum then sucks in strategic alternatives offered from the outside. Like the egg that doesn’t fit but still finds a way in, alternative strategies from the outside often do not fit the company, yet still find a way in.

And then you are stuck with a strategy that doesn’t belong and hard to get rid of, like that egg in the bottle.  

THE PRINCIPLE
The principle here has to do with abdication. If you abdicate your responsibility for developing and implementing a strategy, someone from the outside will fill the vacuum and supply a strategy for you. Sometimes it will come from an activist investor like Carl Icahn, Bill Ackman or Nelson Peltz. Sometimes it will come from another company which starts a hostile acquisition of your firm. Other times, a big private equity firm will decide to step in and make a lot of changes. Or maybe your debt holders step in with a strategy if your strategy vacuum causes you to break your debt covenants.

Many times their strategic suggestions make about as much sense to you as having an egg trapped in a bottle. But there it is…that egg is in the bottle anyway. And with these outside strategists, once they start filling your strategic vacuum, they are hard to get rid of—like that egg. And now you suffer the consequences.

Narrow Perspective

So what’s wrong with getting strategic help from outsiders? Isn’t help a good thing?

The problem is that these outsiders tend to be more interested in what is best for them than what is best long-term for the business. Occasionally, what they perceive as best for the outsider is also best for the company long-term. But in most cases, it is not.

For example, activist investors and private equity funds are usually looking for a very quick way to take a lot more money out of a business than they put in. All that money they take out has to come from somewhere. Often, it comes out of the balance sheet. They suck out the cash and fill the balance sheet with tons of debt.

Then the outsiders leave with their cash and you are stuck trying to move the company forward with all the debt. Rarely is a company’s strategic position improved when overburdened with high risk debt.

Remember, all that cash the outsiders suck out had to come from somewhere, and the cash they take out is cash no longer available to invest in a strategy for the future (once the outsiders leave). Yes, the company may temporarily get a bump in its stock price during the outside intervention. But once the dust settles, the price usually falls back (and then some).

And the debt holders tend to be even worse. They really don’t want to run the business and don’t care that much if the business continues to run. They are not even necessarily looking for a big profit. They just want to find enough cash to settle what’s owed them. This can lead to selling off and liquidating whatever is salable, no matter what the strategic implications. The result is that the company is often left as a hollow shell of only the properties that were difficult to sell because they aren’t worth much. How’s that for a strategy?

Just ask TWA how that type of dismantling worked for them. Oh, that’s right. You can’t ask them because they no longer exist.

Who is the Customer?

These outsiders also have a different opinion about who the customer is. For example, activist investors see themselves as the company’s customer—the one the company should focus on pleasing.

Private equity funds tend to see the next investor in the company (the one the private equity fund wants to eventually sell its equity to when it leaves) as the customer. They dress the company up for resale rather than invest in strategic projects with long paybacks. These private investors are like the people who “flip” houses for a living. They buy distressed homes and fix up only the cosmetic things most pleasing to the next one to buy the home—their customer—and ignore the structural issues.

The bankers tend to see the customer as whoever will take an asset off their hands and put money in their pocket.

As you can see, most outsiders never give much attention to the customer of the on-going business strategy—the one buying the goods and services being offered by the business model. I don’t see how ignoring or downplaying this customer improves one’s strategy.

Solution

So what is the solution? How do we keep these bad eggs from getting sucked into our bottle? How do we keep good strategies in place? There are three things one can do.

First, don’t abdicate your responsibility for designing and executing a great strategy. If you don’t create a strategy vacuum, then those eggs can’t be sucked in. Make having a great strategy a high priority. That way, you will be so successful that outsiders will be hard pressed to find excuses for why your strategy should be replaced with theirs. Even if you don’t like doing strategy, think of it as the lesser of two evils when compared to outside intervention.

Second, target the right partners. Not all investors are created equal. Some want a quick grab and run. Others want to be associated with enduring companies over the long term. Seek out the second type and court them. Make them your primary investor.

It can be done. There are people like Warren Buffett who invest for the long term. Amazon has cultivated an investor base which is willing to forego near-term profit bursts and instead prefer a longer-term strategic perspective. If you surround yourself with partners who want your long-term strategy to win, then they are less likely to try to replace your strategy.

Third, if you are a professional strategist, perhaps you should consider spending more time working with these outside private equity people. After all, if companies are willing to abdicate their responsibility for strategy and let it fall into the hands of outsiders, then the best way to influence strategy is by working with the outsiders.

One of the largest sources of income in my strategy consulting practice comes from the private equity sector. They often seem more interested in talking strategy than the companies. I try to help them see the bigger picture better. My desire is to help them see that they are better off if they help build enduring businesses rather than just grab and go.

SUMMARY
If a company abdicates its responsibility for strategy then an outsider will step in and provide one. In most cases, you will not like the strategy imposed upon you. Therefore, keep them out by doing it right in first place.

FINAL THOUGHTS
There’s an old saying that “Nature Abhors a Vacuum.” You should, too, especially when it comes to strategy.

Strategic Planning Analogy #520: Whiteout!

THE STORY
I’ve been suffering through this winter like most everyone else here in the United States. A couple of days ago, it was snowing and blowing so bad that we had “whiteout” conditions.

A whiteout occurs when there is so much snow blowing in so many directions that you cannot see anything but a wall of “white.” It’s like being locked in a totally dark room where you can see absolutely nothing—except instead of total blackness, you have total whiteness.

I’ve been caught in whiteouts when driving on expressways. It is extremely dangerous because not only can’t you see the road, you cannot see what the other drivers on the road are doing. You may as well be driving blind.

THE ANALOGY
Businesses can also experience a form of whiteout. Except instead of being blinded by snow, they are blinded by an excessive flurry of data. With unending streams of data flying from all directions with no end in sight, it is easy to get lost.

There are those who say “the more data, the better.” But like snow, too much data can be a dangerous thing. It can overcome businesses and make it impossible to find the way forward. One can become so bogged down in looking down at data that looking up to make forward progress comes to a halt.

THE PRINCIPLE
The principle here is that obtaining data should not be the goal. The real goal is to discover and reach your vision. Data is only useful in this endeavor if two things occur:

1.     It is converted into knowledge:

a.      Insight to help discover the vision;

b.     Insight to deliver the promises of the vision; and

c.      Monitoring knowledge to make sure you are on track.

2.     It does not bog down forward progress towards your strategic destination (paralysis of analysis).

In other words, if all you have is a big pile of data, you have nothing. In fact, it is worse than nothing because of all the wasted time and effort to gather it and stare at it. Instead, what you want is a smaller pile of knowledge.

Knowledge is like a small map you can take in your car telling you where to go. The knowledge map is useful because it distills the vast outdoors into just what you need to motor along. By contrast, data is like all that snow that is still blowing around outside. Instead of giving knowledge of where to go, it prevents you from knowing where to go.

We can learn three things about how people deal with snow to help us understand how to deal with data for strategic purposes.

1. Look at Radar, Not Individual Flakes

If you really want to understand how to deal with snow, you need knowledge. And what knowledge is that? As I’ve stated in previous blogs, strategic knowledge of the environment usually boils down to three things: Magnitude, Direction & Speed. If you know this about a trend, then you typically know what strategic action to take.

For example, household car ownership in the US peaked in 2007. The current direction in the percentage of households owning cars is moving down. If we add to this the best knowledge on the anticipated magnitude of this trend (how low will car ownership go) and the speed (how fast will ownership drop), then we can build an intelligent strategy to deal with this trend.

The same is true of snow. If you know Magnitude (size of the storm), Direction (where it is coming from and where it is going) and Speed (how fast the storm is moving), then you will know how to deal with that snow storm. This is what the TV weathercasters talk about—magnitude, direction and speed—because they know this is the knowledge you need to make the right decisions.

They don’t get this knowledge by looking at individual snowflakes. In fact, they don’t have to really look at any snow at all. Instead, the weathercasters get this knowledge from understanding the big picture. And the big picture comes from looking at radar images rather than snowflakes. Radar captures the entire storm at once and lets you measure magnitude, direction and speed.

Strategists need to do the same. They need to stop obsessing with individual data factoids and look at strategic radar which lets one see the big picture—big enough to show direction, magnitude and speed.

You won’t get the big picture on car ownership by staring at everyone’s driveway one at a time. You need to get broader—and look at something other than cars and driveways. For example, what are the key “driving” forces behind choosing not to own cars. Is it:

1.     Population migration to dense urban centers?

2.     A different attitude towards car ownership among younger adults?

3.     A growing concern for the environment?

4.     A poor economy?

5.     Advances in car sharing options (like Zipcar)?

6.     Less need to travel due to being able to get tasks done at home via the internet?

7.     A combination of the above?

Get the big picture on this (via strategic radar), and you can start to make educated projections on the direction, speed and magnitude of car ownership. Now you have knowledge instead of data.

2. Plow Away the Unneccessary

Snow on the roads is considered a bad thing. Therefore the plows are brought out to clear away the snow on the road. The drivers of the snowplows do not stop to examine every snowflake on the road to determine which ones are good and which are bad. No, the drivers previously determined that if it is on the road, it is bad and needs to be plowed away. No further examination needed.

The same is true in business. A lot of data is strategically worthless. Its speed, direction and magnitude have no relevancy to advancing my strategy. Therefore, rather than spend time examining it, I should just plow it away so that I can move forward.

For example, Walmart’s strategy centers around owning the low cost, low price position. Therefore, Walmart can focus their attention on only dealing with finding knowledge of issues impacting Walmart’s ability to own the low price position.

When Walmart determined that:

a)     Warehouse clubs and supercenters had the potential to offer lower prices than Walmart discount stores; and

b)     Consumers were starting to prefer these formats (direction, speed and magnitude moving their way),

Walmart changed its strategy and diversified into warehouse clubs and supercenters.

Recently, they made the same determination about internet shopping and are quickly and aggressively moving in that direction.

Everything else was plowed away so that they could focus on what really mattered—owning low price. By knowing where to focus, they could ignore and just get rid of all the debris that does not impact that focus. This allows Walmart to efficiently and effectively own its position over many decades.

That is why focus is so important to strategy. Focus lets you know what to look at and what you can ignore. As I mentioned in a prior blog, it is often more important to know what your strategy isn’t than what it is, because there is a lot more data which is worthless than is worthwhile. Defining what is outside your strategy lets you know what is worthless and can just be plowed away.

3. Fly Above the Clouds

No matter how bad the snowstorm, airplanes can usually avoid the turmoil by flying above the clouds. It’s always sunny and snow-free above the clouds. And that leads to quick and easy travel to the destination.

A similar situation exists in the business world. Current business fads and daily crises can cause all sorts of turmoil. Bouncing from fad to fad or crisis to crises is like bouncing around in a jet going through a storm. It slows you down and keeps you from your intended destination.

Strategists need to get companies to rise above these current temptations which suck up a company’s time, just like jets rise above the clouds to escape turmoil. Once you get above the clouds, you can see clearly. The same is true in business. If you stop getting bogged down in the petty distractions of the moment, you can see more clearly what is truly important.

Rather than follow the current fad, follow the larger game plan. After all, one rarely wins a strategic position when following others to get to the same location as they are. Winning comes from differentiation, not imitation. Rise above the fray to clear the path to your intended destination—the place where you can win.

SUMMARY
Although some data can be useful for strategy, most is just a wasteful distraction. And even the useful data only becomes useful if it is converted into knowledge. Therefore, instead of wasting time trying to absorb as much data as you can, follow the tricks used to deal with snow:

1. Focus on the Big Picture by looking at “Strategic Radar” (showing direction, magnitude and speed) rather than looking at every snowflake (piece of data).
2. Just plow away all the data not relevant to your task of moving forward towards your winning point of differentiation.
3. Fly above the clouds of current fads and distractions so that you can easily see the final destination.

FINAL THOUGHTS
Remember, the winner is not the one who captures the most data, but who gets to the right destination first with the right offering. Don’t let competitors in snow plows pass you by while you stop to look at every snowflake.