Wednesday, April 7, 2010

Strategic Planning Analogy #317: Changing Your Thoughts

Curly Lambeau was part of the founding of the Green Bay Packers football team back in 1919. Lambeau started as a player but spent most of his 31 years with the team in the role of coach.

At the time, US football was considered to be a running game. Forward passes were virtually non-existent. Curly Lambeau, however, was fascinated with the concept of the forward pass, and by the late 1920s he was making it a key part of the Green Bay Packer offense.

Since virtually nobody else in the league was using the forward pass much, teams did not prepare much of any defense for it. As a result, the Packers had a competitive edge and won a lot of games. They were the national champions in 1929, 1930, 1931, 1936 and 1939.

Eventually, other teams caught on to the idea of the forward pass, and now it dominates the offense for virtually all teams in the National Football League.

A large part of strategic planning is about change—what to change into and how to change in order to make that a reality. The key question here is “what is the most effective way to achieve that change within the company?”

One school of thought is that big strategic change requires focusing on big organizational change. This means things like changing the corporate culture, changing the organization chart, changing the key players, and other such large alterations to the systemic way in which the company gets things done. I call this the “reconstruction” approach—tearing things down and constructing a new replacement organization.

The other school of thought is to basically leave the organizational structure in tact and just change the way people think about what they do within that structure. I call this the “reorientation” approach—thinking differently about how you apply the current structure.

Curly Lambeau used the reorientation approach. He did not change the rules or structure of football. He did not abandon the traditional football league and start a new league. He still had the same number of players as everyone else in the same positions as everyone else. All he basically did was change the way his players thought about football. Instead of thinking “run,” he taught his players to think “pass.”

Once Lambeau got the players to think differently about the game, the new actions naturally followed. The change evolved out of new thought rather than starting with new structure. As a result of the new thinking, the Green Bay Packers won a lot of national titles and the city of Green Bay was nicknamed “Titletown.”

Compare this to the people who have tried to reinvent the entire structure of American Football, from the indoor Arena League to the XFL. The XFL lasted only one season (2001) and the Arena League teeters on bankruptcy and had to cancel the 2009 season to reconsider how to keep the league alive.

I believe that when it comes to change, too many companies flock to the reconstruction approach when reorientation is all that is needed. We need to be more like Curly Lambeau and focus on getting the current organization to think differently rather than blow up the status quo and start all over.

The principle here is that it is usually more effective to change outcomes by focusing on changing thoughts rather than by focusing on changing structure. Yes, sometimes a company is so messed up that the only path to success is to blow up the status quo. In most cases, however, I believe that such a radical approach is counter-productive, especially when compared to the success one can gain by merely changing the way people think.

Here are four reasons why I believe this.

1. Changing Thinking Is Easier Than Changing Entire Belief Systems
Organizational culture is a complex belief system—beliefs in how the world and the organization should work. It is almost like a religion. Changing the organizational structure is like trying to get people to change religions—not a particularly easy task.

Changing thoughts is a lot easier. You’re not changing the belief system, but only reorienting how one thinks about the current system. It is like telling someone “Here is a new way to think about glorifying God within your Christian context” is easier than “Here is why you should abandon Christianity for Buddism.” The resistance is lower; transformation is more likely.

2. Much is Lost in Reconstruction
Structural reconstruction is a major disruption to the business. This disruption gets in the way of progress. During the reconstruction, productivity and time is lost. If changed behavior cannot happen until the new structure is in place, this transition period is a costly loss of time and fruitful activity.

In addition, big disruptions can lower morale and confuse people about how to get things done (or even what should be done). Productivity goes into reverse.

By contrast, if you start with new thinking, new activities can begin right away within the old structure (just think “pass” within the current game, rather than first building a new league). New thinking tends to create fast success stories (1929 world championship), which help invigorate, rather than demoralize and confuse.

3. Organizations are Complex
In all large organizations, there is both a formal structure and an informal structure. The formal structure is what you see on the org charts. The informal structure is the way things really get done. By focusing on structure you can get too focused on just the formal structure and end up failing to change how things really get done informally.

If you start changing the informal structure, you are started to change the belief system, as we talked about earlier. This all becomes very difficult and complex to get all the parts of the system to change properly at the same time.

4. If You Start With Changing Thinking, The Better Structure Will More Naturally Evolve. If You Start With Changing the Structure, All You May End Up With is Rebellion
People act based on what they think. If you think that passing is a better approach to football, you will act in a way that makes for more effective passing and catching. Over time, these new actions may naturally evolve into a better organization—in a healthy and less-resistant manner.

However, if you start with structure first, resistance and rebellion set in. Without a compelling need to change (through new thought), people will resist the change. The new actions may never materialize.

An Example
My experience at Best Buy is a good example of this principle in action. At the time, in the late 1990s/early 2000’s, Best Buy ran only one type of retail store, only in the US. I knew that for Best Buy to reach its full potential, it would have to go beyond this narrow definition of who they were. Thinking needed to be changed.

We told management that they had the potential to become a $100 billion company (at the time, sales were closer to $15 billion). However, to get there, they would need to rethink who they were. They could no longer see themselves as just a US retailer, selling products in one way. Instead, they would have to see themselves as a major player in the entire global digital ecosystem.

They would need to get active in the entire value chain—working differently upstream with vendors to help direct how technology involves and working differently downstream with customers in how they interact with technology. They would need to stop thinking about selling items and to think about selling solutions and services. They would need to go to different countries and use different formats. In essence, they had to think of themselves as a global industry market-maker rather than as a retailer.

Eventually the mindset changed. Executives thought differently about the role and the potential of Best Buy. Without changing the culture or structure, the company took actions based on this new way of thinking. They expanded internationally, got into new formats (like Best Buy Mobile), bought the Geek Squad and put the service in all the stores, and started working more closely with vendors to more actively help determine how technology would evolve. Revenues are now around $50 billion (on the way to $100 billion).

In the First Quarter 2010 issue of NYSE magazine, Best Buy CEO Brian Dunn said, “Retailing is a noble endeavor. But I don’t think Best Buy is a retailer anymore.” The rethinking process was a success. They no longer see themselves as a retailer. They caught the larger vision. Great success has followed. Any structural change was evolutionary and a result of the change, rather than the source of the change.

When strategy dictates a need for a large change in outcome, don’t automatically start by trying to make a big change in structure. Instead, consider if you can get all the change you need by merely changing the way people think about the business.

There is always more than one way to think about a business. Rather than copy someone else’s thought vision about a business, find the unique thinking orientation which works best for you. Curly Lambeau and the Packers won games precisely because they had a unique thought orientation to the game (rather than complying with the conventional wisdom of the day).

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