Thursday, November 6, 2008

Analogy #219: Repair Vs. Prepare

Yesterday, I went to the hospital to visit a friend who had broken his leg. Now, when you break a leg, you have a true emergency on your hands and you have to get the leg repaired quickly. But I started thinking, how often do people end up in hospitals and emergency rooms for other types of problems which could have been easily avoided if preventative measures had been taken?

I used to live in a smaller community that had a shortage of doctors. I could not find any doctors who were accepting new patients, so if I needed health care, I had to use the emergency room at the hospital. It was a very inefficient way to get health care. As a result, I started to spend more time on preventative care, like:

1) Joining an Exercise Club
2) Treating Early Symptoms Quickly with Over-the-Counter medications, before the problem got worse.

Studies show that a few preventative lifestyle changes, such as a proper diet, exercise, sufficient sleep, and avoidance of things like tobacco, alcohol and the like can help avoid all sorts of medical issues in the future. It won’t stop broken legs, but at least it will stop a lot of other things.

The goal of strategic planning is to help move a company from its current situation to a better condition. At the very least, strategic planning should help a firm avoid falling into predicaments where the situation can get worse.

This is somewhat similar to the field of medicine. There, the goal is to move a person from an unhealthy situation to a healthier condition. And if you are already healthy, the goal is to help you remain healthy.

The two approaches to medical treatment are “preventative” and “curative”. The curative approach it to detect disease and then fine a way to cure the patient who has the disease. The preventative approach is to find ways to promote healthiness so that the disease never occurs in the first place.

Following this analogy, we could take two approaches to how we focus our strategic effort. We can take the curative approach—use strategic thinking to fix the problems our company already finds itself in. I call this “repair” strategy—trying to fix the mess we are in.

We can also use the preventative approach—use strategic thinking to avoid getting into the mess in the first place. I call this “prepare” strategy, since it prepares us in advance for what the future holds, so we can better withstand any threats.

Sometimes, life throws situations at us that no amount of preventative medicine can prevent, such as a broken leg. At those times, we have to resort to repair tactics. However, as we will see in this blog, one is usually better served if the bulk of the effort is placed on prevention.

The principle here is that a “prepare” approach to strategy tends to be better than a “repair” approach. This is even more true in strategy than in medicine.

Here are some of the reasons why this is so.

1) Some Damages Leave a Scar
One of the biggest problems with a repair approach is that even if you can fully correct the problem and make things right, the memory of the problem lingers. It’s like a scar…you know you are healed, but the scar reminds you that you were once ill.

Take the “Made in China” brand image. Given the problems with tainted milk, tainted dog food, tainted eggs, poisonous toys, poisonous toothpaste and other such issues, China has severely damaged its brand. I am confident that China will work to minimize these problems. That may repair the process, but it won’t immediately repair the reputation and image. They have lost the trust of the consumer. They have lost the trust of Wal-Mart, one of their top purchasers. They still see the scar.

Fixing something that has gone wrong does not erase the memory of the wrong that went on before. So if you use the repair approach, not only do you have to fix the problem, but you also have to fix the reputation and image.

If you are good all the time, you will earn a good reputation. However, if you slip up, you have to become extra good just to regain a good reputation. You will not get full credit for your efforts. Thus the repair approach can be very inefficient over the long run.

2) Prepare is Simpler than Repair
If you over eat, you can increase the odds for getting all sorts of illnesses, like as high cholesterol, high blood pressure, diabetes, heart problems, and so on. Therefore, obese people have to be on the lookout for all sorts of problems which can come from many different directions. To “cure” these problems, the obese may have to take all sorts of different medications for the rest of their lives and deal with many nagging issues.

By contrast, a preventative approach is simpler. All you have to do is concentrate on one thing—weight control—and you can significantly reduce the odds of having to deal with dozens of potential problems. Weight control is one focus, which is pretty much under your control. This is much better than the alternative, which is many nagging problems that come at you in an uncontrolled manner.

The same is true with the prepare approach to strategic planning. With this approach, the first step is to know what the key attributes are at the core of your strategy. Then you simply focus on preparing to excel and stay on the leading edge with these attributes. This is one thing pretty much under your control. And if you can control it, then your strategy will be productive for a long time.

While K Mart is frantically running all over the place trying to fix all of its problems (repair approach), Wal-Mart is focusing on just doing what it takes to excel at low prices (prepare approach). As a result, Wal-Mart has a strong strategy that is working quite well. By contrast, K Mart is not really building up a strength at much of anything. Being “less bad” is not a strategy. K Mart is too busy fixing little things to have time to focus on the one big thing.

3) Prepare is More Future Oriented
As I said at the beginning, the goal of strategy is to build a way to get to a better situation in the future. Strategy is future-oriented. The prepare approach looks forward into the future and tries to prepare the company so that is optimally positioned for that future environment.

The repair approach, by contrast, is backwards looking. It looks at what you did in the past to get into your current mess. Then it tries to build a short-term strategy (or isolated tactic) to get rid of the mess. As long as your focus is on the now and the past, you will not have sufficient time to look forward. It is only by looking forward that you can get ahead of the situation and build strategies to prevent potential future messes.

So Why Don’t We Do It More?
All that being said, it would seem obvious that the prepare approach is superior to the repair approach. Yet, when I look at the business world, it seems like the primary focus is on fixing the crisis of the day, rather than preparing for the potential glory of the future. In an earlier blog, we talked about the Tyranny of the Immediate. This is the idea that we become a prisoner to the problems of the immediate, so that we do not feel free to break away and look ahead.

Yes, someone needs to deal with the problems, but it doesn’t always have to consume the time of the leaders. Delegate most of it and turn your focus forward. That way, you can prepare, so that there will be fewer problems ahead. Break the cycle!

Yes, every company will have to face problems from time to time that are unavoidable. But that doesn’t mean that your strategic focus should be to just solve problems. Winners create strategies focused on building strengths around a point of strategic differentiation. They look forward to anticipate threats to that differentiation and prepare a path to eliminate the threats.

Fixing bloated expenses or some other internal problem is not a strategy. Customers typically don’t care about your internal mess. They just want to get their needs met at a good value. Problem fixing is inefficient. Problem avoidance is priceless.

So, when allocating your time, put the emphasis on prepare rather than repair.

Time spent getting repaired in a hospital is time which cannot be devoted to moving forward. Avoid the hospital by investing time in preemptive, preventative strategic efforts.

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