Monday, August 15, 2011

Strategic Planning Analogy #407: Standing at the Road

Back when I was in college, I sometimes got around by hitchhiking. One time while hitchhiking, a driver got me started on my long trip by taking me as far as an exit on an interstate highway.

It was great to get to the interstate highway. I had planned on taking that highway for quite a distance. Unfortunately, I was left at an exit which received virtually no traffic. I stood there quite awhile with absolutely no cars driving by.

After a very long wait, I eventually found someone willing to pick me up. That was quite a relief, because after a couple of hours, I had only seen three cars on that entrance ramp.

The good news was that the first ride on that hitchhiking trip got me to the road I wanted to take. The bad news was that it took hours before I could get moving on that road. I could see that road in front of me, but I had no way to take advantage of it.

Sometimes, a similar thing happens in strategic planning. The strategy process will determine the right strategic path to take and then consider the strategy job to be finished. It was now up to someone else to implement the process to get down the path.

It’s as if the strategists see their job as being like the first ride I had on that trip. That first ride got me to the road and just left me there. I quickly learned on that trip that being at the road was not the same thing as being able to take advantage of that road. I knew it was the right path, and I could see it in front of me, but I was making no progress, because my first ride abandoned me as soon as I got to the highway.

If all your strategic process does is get the company to see the path, and does not help it move down the path, then your company may get stuck for a long time, just as I was stuck at that entrance ramp.

The principle here has to do with how one defines success. Since we tend to work in such a manner as to achieve success, then the nature of how we define success has a great determination on what one actually does.

For example, if a company defines success for the strategist as merely coming up with a fully-designed strategy, then “success” is achieved the moment the strategy design is concluded. By this definition, strategy implementation is not necessary to achieve “success.” Just having a plan is reason enough to celebrate a successful conclusion, even if it is poorly (or never) implemented.

It’s easy to see why such a narrow definition of success comes about. After all, it seems reasonable and fair to reward people based upon outcomes which are under their control. And the strategists have meaningful control over the strategy design process.

Similarly, it seems a bit unfair to hold people accountable for outcomes which are out of their control. And strategists are rarely the primary driving force in charge of strategy implementation. So why hold a strategist accountable for an outcome they do not manage?

The problem though, as we will soon see, is that this narrow definition of success may not be in the best interest of the company. It also may not be in the best interest of the strategists.

Bad For the Company
They are many ways in which defining success for strategists as merely creating a plan is bad for a company. First, it tends to focus the strategist on the quality of the process rather than the quality of the output. After all, if success is achieved at the moment a plan is approved, then success is achieved faster (and more efficiently) with an efficient planning approval process. The focus shifts to creating a slick, standardized process. Just fill in the forms, hold the meetings, make the presentation, and then you are done! Success!!

It’s easy to put together a process to create an impressive-looking planning document if you don’t have to worry about how good the plan is, or how difficult it will be to implement, or if the strategy will work after implementation. Unfortunately, these latter issues are very important to the company’s ultimate success.

A company succeeds only if the plan succeeds. And a plan only succeeds if it is both a) worth implementing; and b) is actually implemented. Otherwise, the plan is worthless.

If you broaden the definition of success to include these other issues, then strategists will spend more time on them. I would suspect that the type of plan you get would be different. The process might get messier, but the plan will be better. Even if the strategists have only a minor role in the actual execution, if they are held more accountable for execution, they will create a plan which is easier to execute. Similarly, if they are held more accountable for the effectiveness of the plan when executed, they will create a plan which is more effective if implemented.

A second problem with the narrow definition of success is that it tends to isolate strategic planning from the rest of the business. Creating a strategic plan just becomes another thing which needs to get done (and not the primary responsibility of the operators of the business). Once the plan is designed, you can check it off the “to do” list as a successful completion. Then the focus of the company moves on to the next item on the list. It is just sort of done and forgotten, because no connection is made between making the plan and running the business.

If the day-to-day decisions are totally divorced from planning decisions, then the contents of the plan become irrelevant. After all, a company’s long-term execution is merely the sum of all the decisions it makes on a daily basis. If the daily decisions ignore the strategic implications, then the strategy never becomes a part of how things get done. As a result, the company never benefits from the plan, because it merely sits on a shelf, rather than being a major influence on how the company acts on a daily basis.

The strategist needs to be present not only at the place where the plan is designed (getting to the road), but at the place where key operational decisions are made (driving down the road). Otherwise, the company may end up like a hitchhiker stuck in place because it can’t find the right way to get down the road.

Bad for the Strategists
It’s not just the company which suffers under the narrow definition. The strategists suffer as well. First, if the rest of the company sees strategists as primarily responsible for the strategy process, then that is how the strategists will be measured. Bonuses will be based on things like making sure all the parts of the process get done and get done under budget. This can be a horrible way to make strategy and it wastes a strategist’s resources.

Good strategic positions and broad strategic objectives shouldn’t change all that often. For example, the basic plan for Wal-Mart is low cost/low price. That hasn’t changed in decades. The basic plan for Apple is cool devices doing cool things in cool ways. That hasn’t changed in years, either.

Going back to square one every year to complete the entire planning cycle in these cases is a waste of time and effort, because the core strategy will not change. You are better off rotating through key strategic issues related to the enduring plan already in place. But if the strategist is judged on revisiting the plan every year (and concluding it is still good), then the time for getting at the key strategic issues is lost. The strategist’s talents are wasted.

Worse yet, if companies see the plan in place as rather enduring, and they believe that putting the plan in place is all a strategist is good for, then they will see no need to keep strategists around. The idea would be that as long as “low cost/low price” is working for Wal-Mart and “coolness” is working for Apple, there really is no need to even have any strategists around. In this case, the strategist is fired.

It is like that hitchhiker story. Once the driver (the strategist) gets you to the road, they are cast off as unnecessary. The company (as the hitchhiker) will find another way to get down the path without you. And as long as they keep traveling down that same road, they will see no reason to get another strategist.

The strategist then loses his/her ability to influence the actions because they are not around. So, not only is the strategist unemployed, he/she is unable to keep the plan relevant. That makes the actual plan seem even less valuable, making it harder to get rehired to do it again.

As a result, it is in the best interest of both the company and the strategist to keep planning work and daily operational work more intertwined. That way, the company gets a better implementation of a better (more relevant) strategy. In addition, the strategist gets a more fulfilling (and longer-lasting) job. And the best way to keep the work intertwined is to use a broader definition of success for the strategist which includes aspects of implementation.

The value of a strategy is not in having a plan on a piece of paper. No, the true value of a strategy is in its ability to improve the outcome of the business. Therefore, strategic success should be defined based on how well a plan improved a business instead of on how efficiently it was designed.

If the company sees no need to take the strategist along on the journey, then the company will not get timely information about problems up ahead on the road. By the time they realize that the road they are on is no longer any good, it may be too late to get back on track.

1 comment:

  1. Gerald Nanninga, great post as usual. This post is consistent with the saying that the slowest step determines the arrival time. Likewise; the longest wait determines the time of arrival. Reaching a road that keeps you waiting for a long time will not ensure the timely arrival. I fully agree with you