Wednesday, October 28, 2009

Strategic Planning Analogy #287: List Vs. Recipes

Let’s assume for a moment that you ordered a new cookbook over the internet. When the package arrived, you eagerly opened it up, expecting to get some great cooking ideas.

Instead, you were horrified to find that the cookbook was nothing but a long list of food ingredients. They were listed alphabetically, with no reference to amounts or what to do with them. It just said things like:

Balsamic Vinegar
Brussels Sprouts

“This cookbook is worthless,” you declare. “What was the author thinking?!” To find out, you read the book’s preface. Here, the author says:

“In this book, I have listed my favorite ingredients. All of my great meals have been made from ingredients on this list. My hope is that you will be inspired by this list and use items from it to create your own great meals.”

Yes, it is true that great meals are made using food ingredients. However, if all you have is a list of the ingredients, it does not mean that you will necessarily create a great meal. The secret to a great meal is the recipe—the instructions on how to convert the ingredients into meals.

Recipes give you additional information, such as:

1) Purpose – The type of meal being made.
2) Priority – How much of each ingredient is used.
3) Sequence – What order are the ingredients combined
4) Process – How the ingredients are combined (and cooked)

This all seems so sensible when considering writing a cookbook. Fill the book with recipes, not ingredient lists. However, when writing a strategic plan, I have seen people fall into the trap of just producing lists.

For example, a section on external environmental factors might just be a list of 20 or so things going on in the environment. Sections on internal strengths and weaknesses might just be long lists of topics—half under a strengths column and half under a weakness column. Consumer insights could just be a list of demographic “fun facts” or a list of various consumer segments, or a list of summary tables from some consumer research.

At the end of the day, if that’s what you’re doing, then you have not created a strategic cookbook. All you have are worthless lists, providing no guidance in how to make a proper meal to strategically nourish the organization.

The principle here is about context. Context is the structure which provides meaning and insight to random lists. Recipes provide the context for ingredients. One of the most important values that a strategist adds to an organization is the ability to convert lists into strategic meaning via context. In fact, at one company where I worked, I was sometimes referred to as the VP of Context.

The three main weaknesses in providing a list without context are the following:

1) The Illusion of Equality
In a list, everything looks about equal in importance. They are all written in the same size of type and take up about the same amount of space on the page.

In reality, however, we all know that not every possible environmental factor is of equal weight in developing our strategy. Some are more important than others. In food recipes, we use bowlfuls of some ingredients and spoonfuls of others. If you get these measurements confused, the meal is ruined.

The same is true in strategy. As strategists, we need to provide the context telling people what is truly the most important and most meaningful. Strategic success depends upon focus. Without context, one does not know what to focus on.

2) The Appearance of Isolation
By putting each item on a separate line, it appears that each is a separate item. It looks like each can be addressed one-at-a-time.

In reality, however, factors are connected. If you change something in one area, it will impact other areas as well. For example, a decision to lower production costs can impact quality, brand image, value perception, and so on. It can also cause a rise in other costs (like returns, defects, and repairs), causing no real net savings.

If you ignore the interconnectivity, you will fall victim to unintended consequences, which we have discussed in prior blogs.

3) The Overcapacity of Agenda
The human mind can only comprehend a limited number of ideas at the same time. And unless you have the rare mental capacity of a gambling card counter, the number of concepts you can hold at the same time is very small. There is a reason why seminaries teach young pastors to try to keep their sermon points to approximately three per sermon. Any more than three and the audience starts becoming mentally lost.

If you give someone a list of 20 internal strengths and 20 internal weaknesses, you have given them something they cannot comprehend all at once. The list is too large. The inter-relationships will be lost. The “big picture” will be lost. The ability to find a grand strategy grinds to a halt.

If this is the case, then how should a strategist convert lists into recipes? There are three steps (see how I’m keeping this down to three problems and three solution steps?):

1. Collapse/Nest into Systems
Although the human body is made up of many hundreds (if not thousands) of parts, you can collapse the list into a smaller number of integrated systems, like the digestive system, circulatory system, or respiratory system.

You can do the same with strategic planning lists. Look at how all the parts inter-relate to discover the various (relatively) closed systems. Then nest all of the sub-points under the relevant system.

For example, I recently was reading a book about consumer shopping. The book listed 14 motivators to get people to buy something. That list was too long to comprehend all at once. The list was also confusing, because the definitions of each motivator tended to overlap with the definitions of others (proof that there is no isolation and that systems were in play). After examining the list, I saw two main systems at play in motivating purchases—Joy from the Shopping Process and Joy from Product Ownership. I then collapsed (i.e., “nested”) all of the key elements of that list of 14 under these two systems. Now that’s a lot easier to comprehend.

Systems can be found in strategic inputs (like consumer behavior) as well as potential strategic outcomes. We usually refer to potential outcome systems as Strategy Scenarios.

Collapsing is not the same as simplifying. Simplifying provides less information. Collapsing provides more information, because it provides the context of the system to which the item belongs.

2. Explain How the System Works
Stories are more memorable than lists. They are also more powerful and persuasive as a communication tool. That is why my blogs start with a story. Once you collapse the lists, you need to build a story around the systems to show how they work. For example, Scenario Planning is the process of building stories around various potential strategic outcomes.

If you cannot explain the systems in a story, then you probably do not understand them. So it is also a good test of your own understanding of what’s going on.

3. Relate Everything Back to the Strategic Question at Hand
The ultimate goal of a strategic planning process is not a book of lists, but a vision and path to a better future. Therefore, everything needs to be seen in light of how it helps achieve that goal. Show how the information impacts your ability to succeed. This will help you prioritize the information by relevancy to the task. If it doesn’t relate, cut it out.

Strategists add value by bringing context to the wealth of data that is out there. Rather than just giving management long lists of data, give them the strategic insights which only come from placing that data into context. This is done by collapsing data into systems, explaining the systems, and showing the relevancy to your strategic issues.

There is the story of a man who built a great library, but only put one book in it. The one book was an unabridged dictionary. Why just the one book? His response: “Every other book just uses the words already included in the dictionary. Since all the words for all the other works are already in the dictionary, it would be redundant to have any other book in the library.”

This man misses the point. Just having the words is not enough. The value is in how the words are combined into a compelling story. Similarly, your value is in how you combine ideas into a compelling strategic story.

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