Thursday, December 10, 2009

Strategic Planning Analogy #298: Don’t Do That

I heard a story about a hotel located along the gulf coast of Texas. The balconies overlooked the gulf. One time, one of the guests thought the balcony was close enough to the water that he could fish from the balcony. Therefore, he put a heavy weight on his fishing line so that he could cast the line a long way. Then he tried casting the line out into the gulf.

Unfortunately, the gulf was farther away than he thought. The line did not go out that far. Instead, the line swung back towards the hotel. The heavy weight on the end of the line crashed through one of the hotel’s glass windows, creating an expensive and dangerous mess.

Although this had never happened before, the hotel officials wanted to make sure that it never happened again. Therefore, they put signs on all the balcony windows saying “Do Not Fish Off the Balcony.”

When future guests saw these signs, it put the idea into their head that perhaps it is possible to fish off the balcony. Suddenly, lots of people were trying to fish off the balcony. And lots of windows were being broken.

Not knowing what else to do, management took the “Do Not Fish Off the Balcony” signs off the windows and threw them away. Immediately, the fishing off the balcony stopped.

Normally, one of the outcomes of a strategic plan is a desire to get people to act in a particular way, be that employees or customers or the government or competitors, etc. As we saw in the story, sometimes the direct approach will fail. Telling people not to fish actually increased the fishing.

The direct approach often fails with business strategies as well. Telling competition not to attack you in a particular way rarely stops them. In fact, it may make them want to do it more, because your insistence makes you appear vulnerable in that area. Worse yet, if you work too directly together with your competition, you could face criminal charges of collusion.

As a result, often the best way to get people to act in a particular manner is through indirect persuasion. Rather than directly mandating or banishing certain behavior, use a tactic which indirectly results in the behavior you want.

The principle here is that the fastest way from point A to point B may not be a straight line. If people can see you coming straight at them in a straight line, they can build up defenses to your path. However, if you come after them indirectly, they may not be able to perceive what your ultimate objective is. Not knowing the ultimate objective can reduce resistance to the behavior change you are trying to create.

I was reminded of this principle in reading an interview with Ryanair’s chief executive Michael O’Leary in the Wall Street Journal. O’Leary was talking about their leadership in being one of the first airlines to charge a fee for checking in baggage. This was not a direct ploy to get more money out of its passengers. No, it was an indirect ploy to dramatically reduce total fees, thereby improving Ryanair’s strategy of having by far the lowest prices.

The idea was that one of the more expensive aspects of the airline business is running the check-in counters at the airports. Ryanair knew that if they could eliminate these costs, they could increase their relative value. However, if they would have directly commanded people to no longer carry bags and no longer use a check-in counter, there would have been a revolt. People resist such direct orders to change behavior. Such a direct banishment would have been as effective as those “Do Not Fish Off the Balcony” signs.

Instead, Ryanair started charging fees on checked baggage so that people VOLUNTARILY stopped checking in bags. Without bags to check in, Ryanair could eliminate the labor at the check-in counter. It is now 100% web-based. Rather than creating a revolt, the customers are happy because they no longer have to wait in long check-in lines and ticket prices were kept low.

Now, Ryanair is considering the idea of charging money to use the lavatories on the airplanes. Again, the idea is not to get additional income off the toilets. Instead, it would be an indirect means to change behavior. The thought is that this would cause passengers to voluntarily use the lavatories at the airport prior to boarding. This would reduce the demand for toilets during the flight, allowing Ryanair to reduce the number of lavatories on the plane. Fewer lavatories would mean room for more seats. Having more seats per flight means they would need to charge less per seat to make a profit. Hence, the strategy of having the lowest fares would be strengthened.

Another example occurred in the attempt to stop smoking among youth in the United States in the 1990s. The direct approach of telling teens “Do not smoke” was not working. Therefore, the anti-smoking advertisers switched to an indirect approach. They used fellow teens to tell the youth that the evil big-business tobacco companies had no respect for them and were trying to manipulate them with lies.

Well, no teen wants to be manipulated by adult authority figures, so the new message got teens angry with the tobacco companies. To “punish” these companies, the teens decided on their own not to smoke. This indirect approach was more effective in cutting down teen smoking than the direct approach.

So how do we apply this principle to your strategy?

Step #1: Identify the New Behavior Required by the Strategy
The first step is to determine what behaviors are needed to make your strategy a reality. What different behavior is required by your company and its employees? What different behavior is desired from your supply chain? Your customers? Your competition? Your shareholders?

If you cannot easily identify the new behaviors then how do you expect those behaviors to happen?

Step #2: Look for Incentives That Indirectly Create Voluntary Behavior Change
The next step is to use the Ryanair approach and look for ways to make people voluntarily want to do what you desire. This usually requires an indirect approach that prioritizes what is in the best interest of the people whose behavior you want to change. The idea is to find that ideal intersection where their selfishly desired behavior just so happens to be the same behavior you selfishly desire.

Then appeal to their selfishly desired behavior. This will indirectly get you your selfishly desired behavior without ever having to mention it. Ryanair selfishly wants to put more seats on the plane, but the appeal is by making it in the passenger’s selfish best interest to use the lavatories at the airport.

Step #3: Integrate Indirect Incentives Into Your Strategic Action Plan
If you want something to happen, spell it out and make it known. So once the indirect incentives are figured out, spell it out in the strategic action plan. Don’t make the indirect tactic a mystery. Just because it is an indirect tactic does make it less critical to your success. The link to your success is direct even if the customer/employee/supplier cannot see the connection.

People often resist direct appeals to change their behavior. In fact, they may rebel and do more of the opposite of what you want. Therefore, the best approach is often to appeal to them indirectly—get voluntary compliance by finding something in their best interest which indirectly is also in your best interest.

When people are asked to do something, a common response is WIIFM (What’s In It For Me?). The more you appeal to their WIIFM, the more likely you’ll also get what’s in it for yourself.


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