Monday, February 27, 2012

Strategic Planning Analogy #440: Mechanic or Designer

Once there was Juan, an owner of a trucking delivery business. Juan took great pride in how efficiently his trucks ran. Whenever there was a lull in his business, Juan would open up a hood and work to make the truck engine was operating as efficiently as possible. He had the heart of a mechanic and saw his mechanical skills as a key to his success. Juan had the best running trucks in the business.

Lately, however, Juan’s business had been seeing a lot more lulls than it used to. In fact, business was virtually non-existent. He popped his head out from under the hood to find out why business was so bad.

Juan discovered that his key customers had stopped shipping their products by truck. They had digitized their product and now sold it exclusively over the internet via downloads. There was no way Juan could operate his trucks faster or cheaper than an internet download.

Maybe if Juan had kept his head out from under the hood of the truck and spent more time looking at the environment, he would have seen this coming and been prepared. Now it was too late. Juan soon went bankrupt.

Based on my observations over the years, it seems that most business leaders tend to have one of two tendencies. Either they have the heart of a mechanic or the heart of a designer.

The “mechanic” business leader is always trying to tweak the business, to improve the status quo. I’ve referred to this in the past as the “More-Better” approach—always looking for ways to make the status quo do more or do it better than before. Like a mechanic, this type of manager focuses on the inner workings of the business (what’s “under the hood”). It’s all about being the best at running the current business model. Juan was this type of leader.

The “designer” business leader takes a different approach. This leader is focused on trying to invent or design the next business model. Their focus is more external. Rather than starting with today’s model and trying to improve it, they start with the marketplace and look for new ways to serve it. Rather than making incremental improvements, the designer leader looks to reinvent the market to their advantage. Steve Jobs was more like this type of leader.

The problem with the mechanic approach is that eventually the status quo becomes obsolete. It doesn’t matter how well you can tweak an obsolete engine. The best-running obsolete engine is still obsolete. Juan’s best truck could never out-deliver a digital download.

And guess who makes the mechanic obsolete? It’s the designer.

If your strategic planning is dominated by a “mechanic” approach, you will be like Juan and have your head under the hood—focused on incremental internal improvements and blind to what is happening around you to reinvent the status quo. Although that approach can work for a period of time, it will eventually lead a company to obsolescence.

The problem is that most business leaders are caught in a mechanic’s mind set, because the engine of their current business model keeps breaking down. The pressures of the immediate crisis force them to focus on an immediate fix. These fixes revolve around making the status quo work better. After all, production lines are breaking down, customers are yelling about late deliveries, key employees are threatening to leave, and suppliers are raising prices. Under this near-term pressure, the thinking goes like this, “If I can only get this process to work a lot better and more efficiently, then all these pressures will go away.”

As a result, the tendency is to act like a mechanic and keep one’s head under the hood, looking for ways to make all these current crises go away.

The Problem When Leaders Are Merely Mechanics
Now it is true that crises cannot be ignored. Problems in the business need to be fixed. That’s why such a large percentage of employees work in business operations. You need lots of “mechanics” on the payroll.

The problem is when your top executives still think of themselves as mechanics. In the story, Juan was running a trucking company, yet he still wanted to spend his time as a mechanic. He was ignoring what leaders need to do—lead their companies into the future.

Leaders need to become less of a mechanic and more of a designer. And this may be a tough mindset to change, since solving near-term crises by tweaking the status quo (mechanic work) is probably what got the person promoted to a leadership position in the first place.

How can you tell when a leader is too much of a mechanic? When times really get tough, a mechanic wants to double down and spend even more effort on trying to fix the status quo so that “it works again.”

Unfortunately, the reason why the engine of your business isn’t working may be because it has become the wrong engine—it has become obsolete. The best response at this point is not to spend more time trying to fix the status quo, but to move on to the next business model. And you won’t find it by staring under the hood. You will only find the next big thing if you have a leader who is leading the charge to find it.

The Necessity of Strategic Planning to Break the Mindset
Helping leaders spend more time thinking like designers is probably the biggest benefit of practicing the discipline of strategic planning. It helps leaders take time out from working under the hood to see the bigger picture. It forces them to question the status quo. It helps them think like a designer.
In particular, there are two principles that strategic planners can use to help create a designer mindset.

1. Change is Usually Not Incremental
Industries rarely evolve along a steady, gradual line. No, it is often interrupted with great upheaval as one business model is rejected and another replaces it. And no amount of tinkering with the old will get you to the new.

Kodak could never incrementally improve analog film to make it turn into digital imaging. No amount of improvements to manufacturing a gas tank will get you to battery-powered automobiles. A more efficient printing press will not save newspapers from the upheaval of digital media.

Change tends to be radical and requires a radical response. Radical responses need to be designed. You won’t find the answer by tweaking the engine under the hood.

Strategists provide a great benefit when they remind people of how industries radically shift (and why tinkering won’t help you bridge the shift). They provide even more value when they help point the way to where the shift is occurring and how to reinvent the model to stay on top.

2. Even Designers Can Fall Into the Trap of Evolving into Mere Mechanics
Usually, it is an outside firm which upsets the status quo. Because they have no vested interest in the status quo, they can boldly attack the status quo with the next big thing and win.

The problem is that, eventually, the radical new thing of today becomes the status quo of tomorrow. And then something radically different upsets the “newer” status quo. The cycle never stops.

Computers used to be the hot new thing. Now they are kind of quaint, with iPads, smartphones, and Kindles taking over. And the hot new things did not come from the leading computer manufacturers. No, they came from places like Amazon (Kindle), Google (via Android), and Apple (a minor also-ran in computing).

The problem is that the new company’s success came from pursuing the new business model. Therefore, they get overly attached to that new model. When it comes time to move on to an even newer model, there is a tendency to stay back and act like a mechanic—trying to fix the old new thing instead of designing the next new thing.

Strategists provide a great benefit when they remind people of how the cycle of business model innovation never ends (making your new design eventually become as obsolete as the old design it replaced). They provide even more value when they help point the way to when the cycle is about to turn again and how to turn to stay on top.

Every company needs “mechanics” to help keep the current business running. But when senior leaders are overly focused on being mechanics, the company stagnates. They are left behind perfecting the obsolete while the rest of the world is moving forward to the next business model. That is why the strategic planning process is so vital. It helps leaders get a broader perspective, in order to:

a) Perceive in advance when it is time for radical reinvention;
b) Figure out how to reinvent the model in order to stay on top.

You can’t stop change. Therefore, take advantage of the change. After all, that’s when the biggest changes in market share occur in an industry. If you take advantage of the change, then your market share will skyrocket. If you ignore change your market share will plummet.

1 comment:

  1. This is my first visit here. I found some really interesting stuff in your blog especially this discussion. Keep up the good work. Strategic Planning