Monday, September 13, 2010
Strategic Planning Analogy #351: Does Your Strategy Smell?
The human senses fall into two categories—dependent and independent. By dependent, I mean that the use of these senses are dependent on us directing them to sense in a particular way. The dependent senses are sight, taste and touch. For example, sight is a dependent sense, because we only see what we proactively choose to look at. If we do not want to look at anything, we can close our eyes. It all depends on us.
Conversely, the remaining two senses—hearing and smelling are independent. Independent senses are always on and taking it all in, without our control. We will hear every sound in our environment, whether we want to or not. We cannot turn it off or be very selective in what we choose to hear out of the environment. I experienced this the hard way a couple of weeks ago when the people next door decided to have a party in their backyard with extremely loud music (loud enough to shake the house I was in). I could not escape the sound unless I left that environment (which I did, along with most of the other families in the neighborhood until the party was over).
The same is true of smell. This was made painfully clear to me recently when a car ran over a skunk in my neighborhood, causing me to smell the awful skunk odor all day, whether I wanted to or not.
Having both dependent and independent senses ideally suit humans in their ability to live in a dangerous environment. The independent senses (hearing and smell) will alert us to dangers even when we are not actively seeking them out. For example, we could be asleep, and the sound of an intruder or the smell of a burning house will wake us up so that we can protect ourselves. They make for an excellent early warning system.
On the other hand, the dependent senses help us to focus our attention on particular specifics in order to better proactively assess potential dangers. For example, if a sound wakes us up, we can then focus our vision in the direction of that sound to better evaluate exactly what is going on there (is it friend or foe). Dependent senses are excellent analytical tools, because we can direct them to specifically analyze a particular area.
The power is in having a combination of both independent and dependent senses.
Our senses help us survive in the environment we are in by helping us become more aware of the nature of that environment (where the rewards and the dangers are). Similarly, strategic planning’s goal is to help companies succeed by better understanding and adapting to the environment the business is in. That is why traditional strategic planning spends a lot of time trying to understand the environment and predict what the future environment will look like. This activity helps the business understand where its rewards and dangers are.
Just as there are advantages to having both dependent and independent senses, there are advantages to having both dependent and independent planning systems. Independent planning systems are like hearing and smelling—always examining the environment without the need for us to actively intervene. They act as an early warning system, tipping us off to environmental changes even when we are not actively looking. Many dashboard planning systems act like independent senses, always monitoring the state of the environment in near real time—even while we sleep.
By contrast, dependent planning systems are more like seeing or touching. Examples would be actions such as specific in-depth environmental analysis projects, where a planning team focuses on specific issues, like competitive actions or the impact of recent government regulations. By focusing on key issues, one can better understand the cause and effect in the environment, making for better forecasts.
Having both in your planning arsenal will give you the best of both worlds.
The principle here has to do with balance. Are your planning systems sufficiently balanced between dependent and independent planning tools? Do your planning systems smell as well as see? You will not have a complete picture of your environment unless you achieve this balance. You will not be able to respond quickly unless you have both, either.
All Eyes, No Ears
The strategy process is weakened if all of the effort is imbalanced and placed on dependent processes (all eyes, no ears). Although there is great benefit from proactively studying specific issues in depth (using our eyes), it does not tell the whole story. In particular, there is the problem that you will only gain knowledge in the areas where you look. Other environmental issues will come as a complete surprise, because you were not monitoring them.
In talking with people in the food industry, I’ve been amazed at the level of detail they knew about how their products were used out in the environment. A gentleman from Pillsbury once was telling me about how much of their logs of uncooked cookie dough get eaten raw at slumber parties by girls with oversized spoons. And the things the Cheerios people know about how those little o’s are purchased and consumed would boggle your mind.
This is all well and good. But it is not enough. It provides great depth about what is on their agenda to study. It says nothing about the places where they are not looking. Eyes can only see what they are looking at. They need the ears to hear everything, even things not being looked at.
For example, what is the benefit of knowing how a cereal fits into breakfast at home if people decide to no longer eat breakfast, or decide to eat breakfast from a restaurant? Changes tend to start at the fringes, outside the periphery of where our sights are focused. By the time the change has impacted our field of vision, it may be too late to properly react. Precious time is lost.
Therefore, we need to balance out focused looking with unfocused hearing. We need data gathering and monitoring of the background noises throughout the environment, to pick up the sounds of change on the fringes. We need early warning systems to wake us up to changes while there is still time to react.
Does your planning system routinely monitor the bigger picture to hear the rumbling on the fringes? Do you have a daily dashboard to warn you when the status quo is shifting away from its norms?
Most strategies are only viable if assumptions stay within a narrow range of possibilities. If assumptions fall outside that range, the strategy is no longer valid. Do you know the environmental trigger points at which point your strategy is no longer valid? Do you have “always on” independent sensors monitoring the situation to determine and alert you when assumptions are moving towards the trigger points? If not, your focused efforts could be leading to great insights in areas that are no longer relevant.
All Ears, No Eyes
The opposite type of imbalance is also dangerous. As we have seen, listening for changes is a good thing. However, if that is all you do, you have only half the data you need. You are missing the depth of insight that comes from focused research.
It’s great to know that a trigger point has been reached, but without an in-depth knowledge of related issues, you will not know how to react to the change. It is like someone whose nose wakes them up to the smell of a burning house, but they still die because they never researched what to do when a house is burning.
The moment of crisis is not the time to become educated. It is the time to act. Education needs to be processed in advance. If you have no idea how to act at the point of change, then you have gained little advantage from having your advance warning system. Time is wasted.
This is where tools like scenario planning come in. It is a focused effort to try to understand how certain types of changes impact outcomes. It allows you the depth of understanding to properly react if these types of changes eventually occur. Without in depth knowledge, it is difficult to even know which trigger points are even worthy of monitoring. How much time to you spend learning about specific nuances of your environment which are critical to strategic success?
Directed focus provides the context, so that you know which noises are friends and which are foes (and which are relevant and which are not). Lose the context, and all you have is a lot of noise.
Successful strategic planning needs both direct and indirect knowledge gathering processes. The indirect processes provide an early warning of what is happening on the fringes of change. The direct processes provide the depth and context so that you know what to do when the early warning alarm goes off. One is not very useful without the other.
Of course, the worst thing to do is neither type of information gathering. Sticking your head in the sand and ignoring the environment is not the path to sustained success. “See no evil, hear no evil, speak no evil” does not make the evil go away. The only thing which goes away in that situation is your business’ future.