Tuesday, April 27, 2010

Strategic Planning Analogy #321: Do-Be-Do-Be-Do

The Wall Street bankers are having a hard time trying to describe to the government what they did leading up to the financial crisis. I think part of the problem is that even the bankers themselves didn’t fully understand what they were doing. The financial transactions were so complicated that I’m not sure anyone at the time understood all the activities.

Just imagine trying to explain all that stuff to your little children when they ask you what you do.

Maybe that’s why when children dream about growing up, they talk about what they want to “be” rather than what they want to “do.” Children do not understand what grown-ups do, so they talk more abstractly about what they are—what their identity is.

They may say, “When I grow up I want to BE a ballerina.” They don’t say, “When I grow up, I’m going to DO so much practicing every single day dancing on my toes, that my toes will become distorted and bleed.”

Maybe it’s a good thing that children don’t know what we do. Otherwise, they might never want to grow up.

In many ways, I think most business people think in a way that is the opposite of how children think. When children look to the future, they tend to focus on what they want to be rather than what they want to do. By contrast, businesses tend to look at the future and focus on what they want to do rather than what they want to be.

In business, it all seems to be about “getting the job done”—making the numbers, doing the tasks. If you’re a manufacturer, the focus tends to be on making the manufacturing process more efficient—making more for less. If you’re in the service industry, it is about how to more efficiently serve your customer.

It is as if how you are defined as a business is set in stone, so all you can focus on is what to do to be better at that type of business. For example, you may define yourself as a baker, so you focus on the general tasks of baking.

However, what if we were like children and did not assume that what we are is set in stone? What if we were like them and spent more time pondering from all the possibilities of what we wanted to be? What kind of baker do you want to be? How would you like to be known? What would bring pride to your identity as a baker? If you were a famous baker, what is it that causes your fame? Or maybe you don’t even want to be a baker after all. Maybe you’d rather be a chef.

One of the roles of strategic planning is to help companies create a better future. In that role, I think strategists need to help companies become more like children. We need to get companies to daydream about what they want to be in the future. It is not set in stone. We have choices, and how we choose can have a large impact on our success.

The principle here is that most businesses do not have a reason for existing. By this, I mean that most businesses have not created a position in the marketplace which makes them so essential that it would be extremely difficult for the market to continue as we know it without them. Perhaps what you are offering is essential, but is your particular company’s version of that offering essential? Is your particular business essential?

Consider this: What if your particular business/brand/service no longer existed? Would the world really miss not having you around? In most cases, customers will quickly find a reasonable substitute and move on with their lives. We talked about this in an earlier blog.

If you have no reason for existing, then there is no reason to assume that you have a right to be successful. After all, if there are many reasonable substitutes, then about the only way to draw business to yourself is through reducing your profitability by either offering more than others or selling it for less. These can lead to lower than needed returns on investment.

Instead, the best guarantee of success is in designing a strategy which makes your particular business essential to others. This is a focus on BEING—How do I become an essential business which has a reason for existing.

Just doing things well does not guarantee success. A focus on doing does not necessarily create a reason for existing. We can see this in a comparison of Apple vs. Sony. Apple tends to have more of a focus on what they wanted to be. For example, they wanted to be the essential cool solution for music. To become that, Apple realized they needed an integrated market approach:

a) A cool device
b) Cool, easy to use software
c) Cool apps to run on that software
d) Cooperation of the content providers
e) A cool, easy way to access and purchase content and apps

This integrated approach caused Apple iPod/iTunes to become an essential cool way to get music. The digital music ecosystem would not exist as it does today without them.

By contrast, during the same time, Sony saw themselves as a consumer electronics manufacturer. Therefore, they focused on what consumer electronics manufacturers do—make consumer electronics devices. They tried to excel at “doing”—engineering and building music devices. Much of that engineering and building was very good. It lead to good consumer electronic devices. But it did not make Sony essential (or successful). The products did not sell.

If you focus on what you need to be, you will discover the right things to do (as Apple did). But, if you only focus on doing things, you may not do the things that are right to create what you need to be (as Sony did).

Let’s apply this principle to the strategic planning process.

1) Goal-Setting
When setting strategic goals, do they focus on “things to do” or on “positions to be”? A “doing” goal could be like hitting a certain level of sales. This is an activity—selling. There are lots of ways to try to hit a selling goal that do not lead to becoming an essential business. You can end up selling at a loss. It doesn’t tell you how to create something essential for others to buy. “Sales at any cost” tends to result in activities that cost you dearly.

Instead of a sheet of paper with only financial “doing” goals, how about some non-financial “being” goals, like:

a) Designing a new business model in which your company becomes essential.
b) Achieving a particular essential position in the mind of the customer
c) Creating a particular “Blue Ocean” opportunity.
d) Becoming vendor of choice with your most profitable customers

These types of goals can only be achieved if you transform the business into becoming a more essential player in the marketplace. Although perhaps a bit more abstract, they can still be meaningful, measurable goals (with accountability) that can create far greater success than merely chasing some financial targets. It all starts by asking “What do I want this company to be when it grows up?”

2) KPI’s (Key Performance Indicators)
When tracking your process, do you measure what is being done or what you are becoming? One of the benefits of something like the Balanced Scorecard is that it helps us to see beyond mere financials to encompass a broader approach to the business. Your KPI’s need this type of broader approach, including measures on whether or not you are becoming what you want to be.

For example, let’s assume you want to lose weight and become more attractive. You can measure your progress through “doing” KPI’s like caloric intake or time spent exercising. However, calories and exercise are not the whole story. You might take in so few calories that you become skinny to the point of being sickly and unattractive. Or you might exercise a part of your body so much that the muscles bulge out in an unattractive manner. To make sure the effort leads to attractiveness, you need “being” KPI’s which also measure degree of becoming attractive.

Once you determine your “being” goal, make sure at least one of your KPI’s directly measures how well you are becoming what you want to be.

Successful companies tend to be firms which own an essential position in the marketplace. Essential positions are achieved by focusing effort on becoming essential, rather than on just doing well. Therefore, long-term goals and KPI’s should define and measure your success at “becoming” rather than just “doing.”

A focus on “becoming” does not eliminate the need to care about what you do. You won’t become anything at all if you sit around doing nothing (except maybe become a failure). But unless you give becoming the priority, you will never properly focus on the right things to do, nor ensure that the doing is effectively leading to the becoming you desire.

1 comment:

  1. Gerald,
    Spot on! Business need to know their moiety to act in its accordance and do what is relevant. By knowing what to be you shall know what to do.