Saturday, October 16, 2010

Strategic Planning Analogy #358: Another New Strategy

Here’s a headline you probably will never see: Company Hires New Head of Marketing Who Doesn’t Change Anything.

Instead, we’ve seen the opposite happen hundreds of times. A new marketing head is hired and suddenly there is a new advertising agency with a new advertising slogan to match a new marketing strategy. And given that heads of marketing seem to only last about two to three years before being replaced, that’s a lot of new advertising slogans and marketing strategies.

That is why I was impressed by an article in Mediaweek last September about Tim Mahoney, Chief Marketing Officer at Subaru. In the six years prior to his return to Subaru in 2006 (after having been away for 9 years), Subaru had gone through five different ad slogans and marketing strategies (with two different agencies). In just the one prior year to Mahoney’s return, Subaru had used five different print ad layouts.

When Mahoney got back to Subaru, one might have expected him to change everything yet again. Instead, he kept the most recent slogan (from his predecessor), picked a singular ad layout, and started working on perfecting its execution. He told the ad agency to not even try to change them.

They have now had the same slogan and marketing approach for four years. The consistency is strengthening the brand. And as a result, Subaru has been doing very well and is picking up market share.

Marketing is not the only place where this type of problem happens. Executive turnover is high all over the spectrum. And it is very common for the executives in all areas to reject what the former executive did and go in a new direction. As a result, not only do marketing strategies wobble all over the place—all strategies seem to be in flux.

Not only is the tenure for marketing executives short; CEOs don’t seem to last very long, either. This just accelerates the changing of the strategy. How do you build a long-term strategy with enduring impact on the marketplace when the strategy itself does not endure?

In the case of Subaru, sticking with an ad strategy for multiple years has had a positive payback. The same is true for corporate strategies.

The principle here is that you will never complete a long-term journey if you keep changing where you want to go. If you want long-term success, you need continuity on the objectives and the follow-through.

Sure, sometimes things change so much that it is time for a wholly new strategic approach. Most of the time, however, all we need are a few tweaks to a long-standing game plan. The temptation to keep changing the strategy needs to be resisted. We can see the consequences of falling victim to the temptation to change in the example below.

The Consequences of Ever-Revolving Strategies
I know of a retail brand that, for more than a decade, changed presidents about every two years. Each new president wanted to make a good impression—prove they were worthy of taking over the helm. As a result, each new president would reject major portions of the strategy of their predecessor and create a new strategy for the company.

The logic was a follows. If the former president had been doing a good job, he would not have been let go after only two years. Something apparently was wrong with what the former president did. Therefore, the new president feels compelled to do something different. And, as part of doing something different, each new President did something new to the strategy.

Unfortunately, all these changes to the strategy had consequences:

1) Employees at headquarters became confused as to what they should be doing, because the priorities and the expectations changed so often. This made it very difficult for them to excel at their jobs. Rather than getting better at what they were doing, they always seemed to be doing “transition” work—undoing the old and starting the new.

2) Many employees out in the field started ignoring headquarters and their various strategic changes and began to do whatever they felt best. After all, it’s hard to hold the people in the field accountable when the leaders and the expectations change so often. The employees in the field knew they would outlast the leader and whatever his “strategy of the day” was. Therefore, they tended to ignore it, figuring “this too shall pass.”

3) When leaders know that their time may be short, their strategic emphasis often shifts to changes with quick returns. Long-term investments with longer paybacks are not a strategic priority. When long-term investments are delayed for over a decade, the basic infrastructure needed to run the business becomes tired, outdated, broken, obsolete, or terribly inefficient. It is difficult to compete against newcomers with the latest and greatest stores and management tools when yours are old and tired.

4) Consumers became totally confused as to what the store stood for. Various swings between standing for quality or price, upscale or downscale, left consumers unsure about what the stores were trying to be. It’s hard enough to get customers to love you when you solidly stand for something. It is almost impossible to get customers to love you when they have no idea of what you stand for. As a result, store traffic dwindled, year after year after year, as customers defected to stores with a stronger position in the marketplace.

As a result of all of these consequences, this retail chain is no longer in existence.

What do I Change?
Here’s the dilemma. Often times a company can be underperforming, creating a perception that change is necessary. However, if you keep changing the strategy, you can make things worse rather than better, as we saw in this retail example. So then, what should one do?

In general, we need to do more like what Tim Mahoney did. Rather than change the direction, he changed the execution. In other words, often times a strategy fails not because it is a bad strategy, but because either it was executed poorly or abandoned too soon. Therefore, rather than change the strategy, keep the strategy and change the execution.

Assuming the strategy is essentially sound, think about what could be holding back strategic success. Perhaps the company is missing some key components such as expertise, capacity, infrastructure, connections, technology, or whatever. If so, then instead of abandoning the strategy, focus tactics on obtaining what is missing. You wouldn’t send a soldier out to battle with a gun, but no bullets. Similarly, don’t try to execute a strategy which is missing key components.

Then, once the tools are in place, the emphasis should shift to improving the execution. Just as athletes get better with practice, so do employees. Keep at it, so that execution gets better. Keep pounding at the key essence of the strategy so that EVERYONE gets it—employees, customers, potential customers, supply chain partners, etc. Keep pounding at the essence of the strategy so that everyone instinctively knows what the right thing is to do. It’s better to have people know instinctively what to do than to either:

a) Have to stop the world and begin long debates every time something comes up;

b) Have to write down hundreds of pages of rules to follow that will never keep up to date with what’s going on; or

c) Have employees go off and do things somewhat randomly and contradictory, because they have no sense about what the company is trying to accomplish.

If you think change is in order, I think these suggestions are often a better place to start rather than automatically throwing the current strategy away.

When times get tough, or when a new executive is put in place, there is a temptation to quickly reject the old strategy and start afresh. Although this may occasionally be a good thing to do, usually frequent strategic change causes more problems than benefits. If you feel a need to change, consider instead changing the tools or the execution.

For your legacy, would you rather be known as the person who changed the objectives or the person who changed the results?

1 comment:

  1. Gerald Nanninga, I concur with this excellent post. Changing strategies frequently is like trying to shoot a moving target. We make our target unreachable and unavailable. Turning a long-term goal into a short-term objective is a temptation for short wins, but losses at the extreme end. Turning long-term jobs into short term ones has the same effect. We create the problem and we celebrate quick wins, only to regret the coming failures. This prompts the change of executives and the vicious cycle turns on. Strategy is looking into the future direction and not to make the future almost the present direction.
    You wrote an excellent post, Gerald.