Wednesday, June 27, 2007

Every Intersection is Not a Crossroad

One time, a colleague and I were talking about how some companies do their strategic planning. Once a year, they bring together a large gathering of their executives for an offsite planning meeting. At the meeting, a big announcement is made that the company is “at a crossroad” in their strategy and that major changes are needed to get back on track or to choose a new direction.

It got me thinking. In the average city there may be 12 blocks to a mile. If you are able to maintain an average speed of 30 miles per hour, you will drive past an intersection about every 10 seconds.

You would think a driver was rather crazy if he stopped his car every ten seconds, got out of the car, and started telling everyone excitedly that he was at a major crossroad. Then, if he held a long business meeting to decide which direction to go every time he came to an intersection, you would really think he was mad. At that pace, it would take him all day to get across town.

So I turned to my friend and said, “When you’re driving across town, you will go past hundreds of intersections. You can’t call every one of them a major crossroads.”

Automobiles are like companies, driving towards their future. Intersections along the road are opportunities—opportunities for a company to change its strategic direction. Just because every intersection provides an opportunity to turn does not mean that you need to turn at every intersection. In most cases, a driver ignores the majority of the intersections and does not even consider them while driving, because he knows that they will not lead to his destination.

In the same way, every opportunity presented to a company does not require a rethinking of strategy. Most opportunities can be ignored. Instead of leading to someplace special, they will just take you on a detour that goes nowhere, while at the same time keeping you from reaching your intended strategic destination. These “opportunities” turn out to only be opportunities to get side-tracked, waste resources, and fail in achieving a lasting strategic success.

Often times, the most important aspect of a strategy is not what it tells you to do, but in defining the greater list of things you are not supposed to do. Knowing what you can ignore can free you to better focus on the few essentials needed for strategic success. The likelihood of success becomes much easier, because you can focus on only those things that help you reach your strategic destination. Using the driving analogy, let us say that your strategic destination is Paris. As you are driving along, you can ignore all of the roads that do not lead to Paris and only focus on the smaller subset of roads that moves in a direction towards Paris. As a result, you will get to Paris sooner and enjoy it longer.

Of course, just because you can ignore many of the intersections does not mean that you can ignore every intersection. If you stay on any single road long enough, eventually it will lead to a dead end. The same is true with strategy. It never runs exactly in a straight line. You may need to drive around a roadblock set up by your competition. You may need to make a small side trip to acquire new competencies for the journey ahead.

Therefore, ether extreme will get you in trouble. If you turn at every possible intersection, you will end up driving in circles and end up getting nowhere. At the same time, if you never turn, you will end up running out of road before you reach your destination.

Effective strategic planning has three elements:
1. A vision of an attainable position where you can win/prosper in the future.
2. A path showing the steps necessary to get from where you are today to the vision.
3. A feedback loop to ensure that you are going in the right direction once you start the journey down the path.

The Vision
Creating a vision that properly motivates your team to act properly has a lot to do with getting the right perspective on timing. If you have chosen a vision that is too far into the future, the people in your business may not know which path to take to get there, because they cannot find the link between where they are today and where the future vision is. For example, if you told the driver in our analogy that the ultimate destination is to go to the moon, he may have no idea how to get his automobile closer to the moon. Worse yet, he may think your goal is too outrageous and is impossible to achieve, so he stops listening to you and drives wherever he wants. Now, not only are you no closer to the moon, you no longer have a team.

Goals that your people cannot relate to because they are too far away or too different from what they understand fail to motivate. Instead, they may have the opposite effect of paralyzing the troops or leading them into chaos or defection.

Now it may be true that for your business, it is necessary to build a future that eventually takes you as far away from where you are today as the moon is distant from the earth. But, to make the vision real for the team that you want to take there, you may need to break it down into smaller chunks. For example, instead of just saying you are going to the moon, tell the team that the first goal is to get to Florida, where the Cape Canaveral space launching pad is located. Now this is something they can find on a roadmap and draw a path and a plan to get there.

Of course, there is a different problem if you break down the vision into too small of a block of time. If the timing around your vision is too short, you will not be able to build a suitable path. For example, let’s say that instead of telling people we are going to the moon, all you tell them is that the vision is to back the car out of the garage. This is something the team understands and can easily accomplish, so they rush out to the car and back it out of the garage. Then they get out of the car and come back to say, “We’ve accomplished our vision! We’ve reached our goal!” This is followed by a celebration.

Well, now you need to give them a new vision, so you tell them to get back into the automobile and back down the driveway to get to the street. So the team goes back to the car and gets to the end of the street and start to celebrate again. This is starting to sound like our earlier example, where the man sets his goal only a block away at a time, requiring a need to stop every ten seconds to set a new vision. At this pace, you will never get to the moon.

Worse yet, because the team has no idea of the larger vision, they will only prepare for the shorter vision. If all you think you are doing is backing a car out of the garage, you may just hop into the car quickly and do it, without bothering to even put on a coat or shoes. You certainly wouldn’t be thinking about packing a suitcase with spare clothing, bringing along snacks to eat, or checking to make sure the engine is in fine working order. However, if you knew that you were eventually driving 1000 miles to get to the space launching pad in Florida, you might prepare differently. Without proper preparation, you may never reach your goal.

Therefore, the ideal vision should describe a destination that is far enough away from today that people will adequately prepare for the journey (further away than just getting to the end of the driveway), but not so far away that they have no idea how to prepare for the journey (not as far as going to the moon).

The Migration Path
Once the vision is described, the task moves to designing the migration path to get there. Designing the migration path would be like getting a map and determining the best roads to take to get to Cape Canaveral in Florida. Just as the perfect vision requires getting the right balance in terms of timing (not too short, not too long), the perfect migration path needs to get the right balance in terms of detail (not too much, not too little).

The team should not spend years on trying to design the absolute perfect path to get from here to Cape Canaveral. That level of detail is impractical. After all, there may be detours along the way. Changes in weather may affect which route is the best. Unexpected road construction may occur. There may be unexpected problems with the automobile. All of these occurrences will create a need to alter your route, no matter how much time you spend perfecting it.

In the business world, you cannot entirely control your destiny. Therefore, acting as if you can and spending too much time designing perfection into your plan is a waste of time.
On the other hand, if you do not prepare at all, your vision will never be reached. You will be reacting to your environment, rather than helping to direct how the future evolves. If you do not try to help direct how the future evolves, your competition will, and I can assure you that they will try to form a future that advantages them over you.

Hence, you need a balance in your migration path—enough detail to show what big activities need to be accomplished to help control your destiny and reach your vision, but not so much detail that there is no room to flex with the inevitable change.

Feedback Loop
As you start implementing your plan, you need to monitor your progress through a feedback mechanism, in order to:

• Ensure that you are not unintentionally deviating from the vision and migration path; and

• Determine whether changes in the environment necessitate modifications to the vision and/or migration path.

The beauty of driving past a new intersection every ten seconds is not that you have to stop at every intersection. The beauty is that if you find out that you are off course a little bit, you are only ten seconds away from an opportunity to readjust your direction to get back on track. Each intersection should not be seen as a major crossroad requiring a new strategic initiative, but as an opportunity to adjust to stay on plan.

Strategic planning is about determining a destination for your business (a vision) and a means to get there (a migration path). If you find yourself frequently making major changes to your vision or migration path, then you have probably:

• Set your destination too close to where you are today (and thereby never make any meaningful forward progress); or

• Set your destination so far away or made your migration path so vague that the team members do not understand what to do to get there (and thereby get nowhere); or

• Not monitored your progress through a feedback loop often enough to see when current actions need to be adjusted to get back on track (before it is too late).

It’s okay to adjust the focus of the company every year based on where it is along the migration path, but if your business reinvents its overall strategic plan and migration path every year, then you really do not have a plan at all. You just have a series of unrelated tactics.

We might laugh at a person driving across town one block at a time, stopping every ten seconds at each intersection to replot his course. However, this is not that different from a company that only plans out one quarter at a time, stopping every three months to plot a new course.

In general, if your long-term destination is correct, most of the quarters along the way will be successful. However, if you only look out one quarter at a time, the cumulative direction of all of your quarters strung together rarely moves in a positive direction, and your business will “run out of gas” before reaching a more desirable future.

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