Friday, September 3, 2010
Strategic Planning Analogy #349: Seasons of Life
Way back when I was in college, I took a class in communication. At the time, I believed that successful people need to be good communicators, so I wanted to learn how to communicate well.
One day, we had a guest lecturer who specialized in the advertising communication of pharmaceutical companies. He brought in numerous examples for the lecture. I will never forget one of the pharmaceutical ads. It was an ad for an anti-depressant. The ad was directed towards doctors and was placed in a medical journal.
The advertisement talked about a number of sad situations, such as a major tragedy or the loss of a loved one. The ad then told doctors that if a patient comes to them saddened by one of these occurrences, that the doctor had an obligation to prescribe their anti-depressant, since these were not appropriate times to be sad.
After reading the ad, the guest lecturer (who was incensed by the implication that people shouldn’t be sad and grieve over tragedies like the loss of a spouse) asked, “If these are not occasions when it is appropriate to be sad, then when is it appropriate? Since when is grieving something evil to be avoided at all cost?”
That question still haunts me all these decades later.
The implication of the pharmaceutical ad was that people have a right to be happy 100% of the time. Even in the midst of horrific circumstances, there is no need (or reason) to grieve. Just take a pill and be happy.
Yet deep down we all know that grieving is an important part of healing and moving on after a tragedy. To ignore this part of the process is to ultimately delay lasting health. Sometimes, it is good to be sad for time. It is a natural part of the seasons of life and a valid way to cope with tragedy.
Many times in the business world, I see companies inappropriately acting like the advertising copy for that anti-depressant. They act as if all news all the time about their company and its products should be happy. They do not consider any tragedy large enough to derail their “happy talk.”
In these companies, strategic plans always project a future wildly growing sales and profits—year after year after year—regardless of the seasons of life that company is going through. Forget about recessions. Forget about product malfunctions. Forget about market saturation and life cycle maturity. Forget about tragedies the customers may be going through. Let’s be happy, optimistic and push for ever higher sales in the current quarter.
Just as avoiding grieving in our personal lives can harm long-term emotional healing, avoiding dealing with the tragedies surrounding a business can harm a company’s long-term health.
The principle here is that strategic planning needs to consider the seasons of life the company is currently in.
This is not to say that a company is just a victim of its circumstances and has no control over its destiny. On the contrary, the primary reason for strategic planning is to better control one’s destiny. Strategic planning is the attempt to create a better future by proactively choosing the best path (and then making it a reality through execution). By proactively choosing a path, one increases their control over how the future evolves (hopefully in one’s favor). This should lead to superior results versus letting the circumstances of the world fully dictate the future (without proactive intervention).
This also is not to imply that companies should radically change their strategy with every little momentary change in the environment. A good strategy should pursue a strong position which transcends minor variations in the environment. If you are changing your strategy every quarter, then you really don’t have a proactive strategy. You are just in a reaction mode, never catching up, let alone getting ahead. If you want to win by owning a position in the mind of your customer, you need to stick with that position over a long period of time.
Yet, that being said, we cannot blindly ignore the seasons of life a company is going through. Minor adjustments may be needed to have actions appropriate to the times. Without some of these minor adjustments, your strategy can quickly become irrelevant to the moment and actually damage your long term prospects. Just as the death of a loved one requires momentary grieving, there are times when companies need momentary adjustments in order to be in tune with the times.
Here are three examples of how being out of tune can be damaging.
1. Ignoring Tragedies
In spite of good intentions, sometimes bad things happen to companies. Recent examples include performance problems with Toyotas, manufacturing problems at Johnson & Johnson, and the problem with drilling in the Gulf of Mexico by BP. How a company reacts to these tragedies can significantly influence long-term prosperity.
The wrong reaction is to ignore the tragedy and continue the “happy talk” as if nothing happened. Instead, an adjustment is needed. These are tragedies and tragic times need an appropriate response. BP and Toyota lost some serious credibility because they continued their happy talk and did not adjust rapidly to “grieve” about the tragedy.
When tragedy strikes, the strategy quickly needs to adjust. First, quickly (and publicly) acknowledge that a tragedy has indeed occurred. Don’t pretend nothing serious happened. Don’t ignore the problem in hopes it will go away.
Second, take responsibility for resolving the tragedy. Don’t waste time pointing fingers at who is to blame. Instead of trying to deflect the cause of the problem, focus on resolving the problem, regardless of who caused it. Make resolution your responsibility, regardless of who caused it.
Third, quickly create a viable plan to get the tragedy resolved and put the resources there to make it a reality. In fact, as part of normal strategic planning, it may be a good idea to have a tragedy back-up plan in place, so when tragedy strikes, all you have to do is pull out the back-up plan and adjust it, rather than start from scratch.
BP and Toyota did not embrace these three actions and lost a lot of equity in their image (and are paying a high price to get that image back). By contrast, Johnson & Johnson has historically embraced these actions, not only in the recent manufacturing issue, but back when Tylenol was tampered with. By acting quickly and decisively, Johnson & Johnson has done a better job of weathering these storms.
2. Fighting Against Lifecycles
Growth is fun. Growth is exciting. Being in the growth phase of the lifecycle can be a pleasure for both you and your shareholders.
Although there are some tricks to lengthen the growth phase of a business, one cannot stay there forever. Eventually growth phases end and are replaced by maturity, followed by decline.
If a company gets too focused on the happy talk of growth, it can end up mismanaging the company through these transitions. For example,
a. You can set growth targets that are no longer realistic. That can lead to overinvesting, creating the problem of excess capacity. It can lead to taking ever more drastic steps to get the overly aggressively sales targets, which can cause growth that is highly unprofitable. It can lead to building an infrastructure that can no longer be supported, because the projected growth to support it was a fantasy. When aggressive growth targets are no longer met, employees will stop getting bonuses and good, but frustrated people will leave. Each phase of the business lifecycle requires a different approach to organization, investment and compensation. If you ignore the changes in the cycle, you will end up with an inappropriate structure.
b. You can delay looking for “the next big thing.” One of the main reasons why an industry moves into maturity or decline is because a new innovation has taken its place. New industries make old industries obsolete. If you surround yourself only with happy talk, you will not be as concerned as you need to be with potential obsolescence. Instead, you can start to believe that your industry will keep growing forever. You will not invest enough into the innovations that will replace your current position. As a result, someone else with come up with the innovation that makes your industry obsolete, leaving you with nothing. It is better to plan your own demise (as tragic as that may be) and have a replacement innovation than to be left with nothing.
We’ve talked more about trying to stay in tune with your lifecycle in prior blogs, like here and here.
3. Failure to Empathize With Customers
Many times your customers may be going through their own tragedies and grievings. If you do not come along side your customers and grieve with them, you will be out of touch with your customers. Your happy talk will appear as crude and disrespectful. The customers will switch allegiance to companies whom they feel better understand them.
During the recent great recession, there were many companies which failed to empathize enough with those customers who were having great difficulties trying to cope. These companies acted as if everything was still wonderful in the lives of their customers. There was no sense of empathy to the tragedies their customers were facing. Some of these companies, like Abercrombie & Fitch or Proctor & Gamble, lost a lot of market share which may never fully come back.
Without customers, you have no business. Therefore the seasons of life for your customers are very relevant to your business. Your strategy needs to adjust when the seasons of life change for your customers, so that you are seen as relevant and understanding.
Although strategic planning helps you control your destiny, there can still come major changes in the seasons of life for your business which can trigger a need for adjustments. Whether it is a sudden tragedy within your company, a change in your business’ lifecycle, or a tragedy for your customer, they all need to be addressed—quickly and decisively. Otherwise, you will be out of sync with the world around you. And who wants to buy from a company who is out of sync with the buyer? Setting aside happy talk for awhile and implementing a strategy of “grieving” can sometimes be the best thing you can do.
The Bible says that Solomon was one of the wisest men who ever lived. In the book of Ecclesiastes, Solomon says that:
“There is a time for everything, and a season for every activity under heaven: a time to be born and a time to die, a time to plant and a time to uproot, a time to kill and a time to heal, a time to tear down and a time to build, a time to weep and a time to laugh, a time to mourn and a time to dance, a time to scatter stones and a time to gather them, a time to embrace and a time to refrain, a time to search and a time to give up, a time to keep and a time to throw away, a time to tear and a time to mend, a time to be silent and a time to speak, a time to love and a time to hate, a time for war and a time for peace.”
In other words, the appropriate actions depend on the season of life you find yourself in. Get in tune with your season of life, so that your strategy is appropriate.