Thursday, January 29, 2009

Analogy #236: Check List

Recently, the New England Journal of Medicine published an interesting article. Some hospitals were given a checklist of 18 items to do before surgery. It was sort of like the checklists that pilots go through before starting an airplane flight.

Over the course of a year, the hospitals using the checklist saw their death rates fall by over 40% and their rate of complications drop by more than a third. That’s pretty impressive. It is even more impressive considering what the 18 items were on the checklist.

They weren’t earth-shattering activities. For example, one of the items was to have each of the people on the operating team introduce themselves to each other prior to beginning surgery and describe their function.

In fact, when each of the 18 items was examined separately, there was nothing that stood out as particularly influential on creating the success. The conclusion was that rather than looking at the individual items on the list, one must look at the process of regularly doing a preset list as the primary source of the success.

As this study illustrates, dramatic improvement does not always require dramatic change. Sometimes, all it takes is the institutionalization of a lot of very small tasks (via a list). The list ensures that a lot of little things, which tend not to get attention, get the attention they deserve every time. Nothing falls through the cracks.

Pilots do it. The military does it. It reduces mistakes and saves lives. And now it looks like it works in a medical environment.

How about in a business strategy environment? The old traditional strategic planning process has been downplayed a lot recently. Business gurus claim that the world is moving too fast for traditional planning, the process is too rigid (not flexible enough for flexible times), and it tends to exclude too many stakeholders from the decision making.

Some are claiming that the process of strategic planning is obsolete and should be abandoned. In a web 2.0 environment, just let the customer “drive the bus” of your strategy. Rather than having strategy lead the activities, empower people in to act and let whatever happens become your strategy.

I’m not sure we would take that same approach with hospital surgery. I wouldn’t want to be operated on by people who have no preset plan and empower everyone to do whatever they want. Relying on the judgment of the patient to drive the operation sounds a bit scary to me as well, particularly if I am unconscious during the critical parts.

The systematic process of following a list of procedures has benefits. Even if you cannot see the benefits in any given item on the list, the discipline itself can be very beneficial. The same is true for strategic planning. Even if all the parts are difficult to justify individually, there is a benefit to the gestalt of running through all the key pieces of the traditional strategic planning process on a regular basis.

The principle here is that the discipline of going through a strategic planning check list on a regular basis has value. It helps ensure that nothing gets missed. It can reduce mistakes and keep you on your toes. A lot of those old items found in traditional strategic planning processes should not be abandoned. Instead they should be institutionalized on a list.

So what would I put on a Strategic Planning check list?

1. Continual Ongoing Surveys
Don’t wait until things start to go awry to talk to your customers. Have a regular, ongoing dialog through surveys that sample your base at all times. That way you can detect problems in their early stages and begin strategic adjustments when it is still easy to make course corrections. If you’re not doing it all the time, you’ll probably not be doing it at the time when it is needed most.

2. Environmental Assessment
The conditions of the external environment are fluid—ever changing. Assumptions at one point in time may no longer be as relevant at a later date. By forcing a more detailed environmental assessment somewhere into your annual calendar, you ensure that changes in the environment don’t surprise you. It’s better to be proactive than reactive, and by putting it on the checklist, you are being proactive.

3. Company Assessment
Just as the external environment changes, so does the internal environment at your company. The two are also linked…changes in the external environment may cause what you are doing to become obsolete or antiquated. Strategic success usually requires leadership in some area. It’s good to annually check to make sure you are not losing ground or no longer failing to lead.

4. Strategy Assessment
A good strategic plan should not change very often. It should act as a long-term guide for all you do. However, all strategies eventually do fall out of favor and fail. It’s not a bad idea to check on an annual basis to see if the strategy is still relevant for the environment.

5. Implementation Assessment
One of the most common causes of strategic failure is at the point of execution. Great strategic ideas are worthless if you cannot put them into action. Just as one should continually track consumer opinions with surveys, one should continually monitor performance on strategy implementation. Some sort of dashboard of metrics is needed to let you see how well things are going. Are the right things being done (on time and under budget)? Are they having the intended impact on company performance? Don’t assume that the work is getting done. Measure it regularly.

6. Key Issue Management
As mentioned in a prior blog, effective strategy implementation requires focus. As a result, companies can rarely be effective if they try to do more than about three major initiatives at a time. Somebody has to manage the key initiatives and keep up the visibility and momentum. Otherwise the tyranny of the regular day work will drown it out.

7. Positioning Assessment
Winning strategies have winning positions that answer the 8 questions. Like overall strategies, winning positions should not change very often. But change is sometimes necessary. You will never change at the right time if you never spend time considering if this is the time.

8. Linkage Map
Strategies, activities, budgets and resource allocation (people, capital) should all be working together. If the resources and activities are not linked to the strategy, then the strategy is just a worthless batch of words and numbers. Someone needs to ensure that activities, budgets and resources are pointing in the same direction as the strategy with the same priorities. It may as well be you. Every time these actions change, double check to make sure it links to the strategy.

9. Innovation/Creativity/Big-Picture Time-out
Left unchecked, the tyranny of the immediate will absorb all available time. However, great strategic thinking requires breaking away from that day to day mindset. A large block of time is necessary to contemplate the larger issues, and creatively build a future that is not just an extrapolation of the present. Unless you proactively put those blocks of time on your annual checklist, the tyranny of the immediate will freeze them out. Don’t wait until it is convenient to do so. It is never convenient. Build big-picture creativity time in as a mandatory event on the calendar.

10. Monthly Face Time With Top Executives
It does no good to do steps one through nine if the implications are not a part of the regular decision making of the company. Knowledge is only power if the powerful people have the knowledge and are forced to deal with it. These issues need to be in front of top executives on a regular basis, like monthly. The topics may rotate from month to month, but by forcing strategic issues onto the regular monthly agenda, one helps ensure that their implications aren’t ignored when everyday decisions are being made. If it is not made mandatory, my experience has been that they are one of the first things bumped off the agenda when time gets tight.

Using a checklist for your strategic planning process is a good way of ensuring that nothing falls through the cracks. It also minimizes the risks of one’s strategy falling out-of-step with the environment. Many of the items on that check list will be variations of some of the things associated with classic strategic planning, although perhaps in a slightly different form. Although the classic process may no longer be as valid as practiced earlier, that is no excuse for abandoning regular, mandated time on strategic issues.

Activity is not the same as progress. Just because people are busy does not mean that a strategy is being properly implemented. Without a strategy checklist, you could be running around like a chicken with its head chopped off. That random running around may look impressive, but will not create forward progress in the direction of the strategy.

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