Wednesday, February 24, 2010

Strategic Planning Analogy #308: Personality Matters

Back when I was a teenager, and had just gotten my driver’s license, I caused a three car accident. As a result, I was forced to appear at traffic court.

Wanting to make a good impression on the judge, I got to traffic court early. This allowed me to hear several other traffic court cases before my own. Although there were slight variations in each case, they all went something like this:

COURT: You have been accused of doing [such-and-such]. How do you plead?

DEFENDANT: Not guilty, your honor.

COURT: But isn’t it true that you actually did [such-and-such]?

DEFENDANT: Yes, sir, I did. BUT there were extenuating circumstances which make me not guilty.

I could see that the judge was getting rather angry. Case after case involved somebody who acknowledged breaking the law yet still claimed to be innocent. There was no sense of remorse or guilt. It was as if the defendants all felt they were “special” and that the law did not apply to them.

When it was finally my turn, it went something like this:

COURT: You have been accused of doing [such-and-such]. How do you plead?

ME: I’m guilty, your honor. I did it and I’m sorry.

The judge was so happy that I was honest and took responsibility for my actions that he let me off very lightly.

Everything we do is seen by others within a particular context. This context affects the way we react to what we see.

In the courtroom, the judge reacted not only to the facts of each case, but also to the context surrounding those facts. In every case before the traffic judge that day, the fact was that everyone had broken the law. Yet the context surrounding my case was different from the others, causing the judge to act differently.

For the others, the actions of the defendants made them appear to be selfish liars who took no personal responsibility for obeying the law. Within this context, the judge became angry and gave harsh sentences.

In my case, the judge saw someone who was honest and willing to take responsibility for his actions. Within this context, he gave a lighter sentence.

This same principle applies to strategy. You can create the most brilliant strategy on earth. However, if the context of the way you run your business is negative or not authentic, the strategy will fail. Your employees will not embrace it and/or your customers will not believe it.

Businesses are more than just machines making products for other machines. Businesses have personalities and the customers act like that judge, altering their behavior based on those perceived personalities. Ignore the context of your personality at your own peril.

The key principle here is that strategic planning needs to consider context. This is important at both ends of the strategic planning process.

At the early end of the process, when you are evaluating the environment, evaluate how your company personality is perceived. Your suppliers, employees and customers are all going to treat you in a particular way, based upon your personality. Therefore, strategic success depends on either;

a) Creating a Strategy Consistent With That Personality Context; or
b) Creating a Strategy Plan to Change People’s Perception of Your Firm.

Do you even know how people perceive your brand/firm? I’m not talking facts, here. I’m talking perception. Are you seen as Trustworthy and Authentic, or are you seen as Selfish and Deceitful?

If you want customers to trust you, be seen as worthy of that trust. If you want to be attractive to the best employees, have an attractive personality. If you want the best suppliers to want to prefer to work with you, portray yourself as being a good partner.

Great strategies leverage a strength. That strength usually depends on some sort of special skill or relationship. That special skill or relationship can get stronger or weaker depending on how you structure the context around it.

Take, for example, Dow Chemical. During the Vietnam War, Dow produced the napalm used during the war effort. Being associated with one of the biggest killing factors of an unpopular war changed the context of how Dow Chemical was perceived. Only gung-ho military types were attracted to working for the company. Other potential scientists and engineers had no desire to work there.

After the war, Dow had a very difficult strategic problem. First, the internal corporate culture was being adversely impacted by this context. The regimented military mindset was not very conducive to the open, experimental, consumer-oriented culture they felt important to inventing the products of the future. Second, Dow’s strategic success depended upon having great scientists and engineers. However, because of the contextual residue from the Vietnam War era, many of the best and brightest would not consider working for Dow.

As a result, before Dow could optimize its strategy, it had to first change its perception. A great deal of time, effort and money went into creating a new perception of Dow—one more in tune with their strategic imperatives. This involved not only public relations efforts, but actually changing the way things were done at Dow. They had to change not only the way they talked, but the way they walked. Otherwise, the overall strategy would fail.

Context is also important at the end of the strategic process. The way you deliver your individual tactics will color your perception and your effectiveness. Therefore strategic planning needs to not only look at what tactics are important, but also the manner in which those tactics are delivered.

Let’s look at two examples—Toyota and Domino’s Pizza. Toyota has had some product recall issues and Toyota has worked to remedy them. Those are the facts. However, what is the perceived context around those facts? The initial impression appears to be that Toyota was slow, selfish and uncaring; they appeared insincere and secretive—not forthright and open. All of this has colored the way people are accepting the Toyota remedy—mostly to the negative.

Toyota’s core strategy has been to leverage the idea of superiority in product dependability. The context around the way Toyota initially handled the crisis destroyed much of the way consumers are perceiving product dependability at Toyota. Toyota may never fully recover that core strategic strength, no matter what they do factually, because the relationship with the consumer has changed. The trust factor has been seriously damaged. The context is not what it used to be. Customers will judge them more harshly from now on (like the judge in the story).

On the other hand, look at what Domino’s Pizza here in the USA did. Based on consumer research, Domino’s found out that many people thought their pizzas had a horrible taste—the crust was like cardboard and the sauce was as bland as ketchup.

So what did Domino’s do? They showed the public video clips of the research and then let the president of the company get on the air in a very open and transparent way. He apologized for past behavior and vowed to make a better pizza worthy of the public. They added 40% more spices to the sauce, improved the cheese and coated the crust with a garlic flavoring.

The context surrounding the advertising campaign was very open and transparent. You felt like these were good people trying to make up for past sins. They didn’t wait until the government stepped in or there was a consumer revolt. It was all voluntary.

I was so impressed that I went out and bought some Domino’s Pizza, something I had not done for years. This was also the first time in years my behavior had changed based upon a TV commercial. Bravo to Domino’s!

Toyota and Domino’s both fixed a problem. However, because Domino’s did a better job of managing the context as part of the strategy, its approach was far more successful.

Strategy is more than just deciding what to do. It needs to also consider how those actions impact the way the brand/firm personality is perceived. If the perception does not match up with the strategy, the strategy will fail. Therefore, a firm needs to both a) understand their current perception before choosing a strategic direction, and b) choose their tactical approach in a way that reinforces the type of perception needed to enhance strategic success.

I only had to go to traffic court once. Your firm, however, is being judged every day. People are always watching, and in this web 2.0 world, people will talk about what they see. Your context needs to be a daily concern.

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