Tuesday, December 4, 2012

Strategic Planning Analogy #478: Casual Day Stickers

I worked at a company where every department in October was expected to come up with a way to raise funds for the United Way charity.  One year, our department decided to sell “Causal Day” stickers.  The idea was that if you bought and wore one of these stickers, you were allowed to wear casual clothes to work on that day of the week (not just on Casual Fridays). 

We went around the company trying to sell these stickers.  In many departments, we were unable to get much interest in buying the stickers.  However, when we got to the IT department, we were treated like heroes.  The IT people were buying as many stickers as we had.  They loved the idea of being casual every day and were willing to pay a lot for the privilege. 

We learned from that experience, and in future years we focused our time in the IT department, so that we were more productive in selling those stickers. 

Even though we all worked for the same company, we had different levels of demand for Casual Day stickers.  Some placed a high value on those stickers, while others saw little value to them.

This shows the point that not everyone is wired the same way.  Different things motivate different people.  If we try to treat everyone exactly the same way, we will not get exactly the same results from each person.  What motivates some will de-motivate others.

For strategic planning to be successful, one needs to go beyond merely having good ideas.  One also needs to find a way to motivate people to embrace and implement the good ideas.    And since people are motivated by different things, a one-size-fits-all approach to motivation is not the optimal way to get a strategy implemented everywhere in the organization.  

The principle here is that strategic objectives and tactics do not have to be treated the same way, and in fact should be treated differently. 

Unified Objectives
The overall strategic objectives need to be relatively unified.  This is because a company is more likely to own a position if everyone in the company is moving in the same direction to support it.  For example, if your strategy is rooted in low cost, low price, then you need the majority of the company’s effort moving in the direction of lowest cost and lowest price.  Otherwise, activities counter to that objective will creep into the company and dilute the objective. 

For example, if half the company is pursuing lower cost and another half is pursuing higher service, then you will probably lose on both fronts.  There will be more focused competitors winning on the low cost front and other focused competitors winning on the high service front.  As a result, by having some people trying to win on both fronts, you end up winning on neither front.

That is why a unified focus is so important for key strategic objectives.  Trade-offs need to be made in order to win competitive superiority on these objectives.  And if the company is not focused on making the same trade-offs, you will not win your objective.  One person’s action will counter another’s action.  This will confuse the customer as to what you stand for, so you will not really stand for anything.

Diversified Motivation Tactics
However, just because objectives need to be the same across the business does not mean that the motivational tools needed to get the objectives accomplished need to be the same across the business.  In fact, as we saw with the Casual Day stickers, an approach which motivates very well with some areas may be totally ineffective in other areas.  If I tried to motivate the entire company to meet an objective with Casual Day stickers, I’d probably get great compliance from the IT department but not from many other areas.

Therefore, tactics to motivate the larger objective need to be customized for the particular people being asked to achieve the objective.

Over the years, I have had the privilege of managing a wide variety of people.  At one extreme, I’ve managed accountants who tend to prefer predictability, rules and the comfort of routine.  On the other extreme, I’ve managed creative-artistic types who hate predictability, rules and routine. What motivated one group de-motivated the other.

I learned that I needed different motivations for all the different types of people I’ve managed over the years.  Some were motivated by money, some titles, some freedom to work on their own pet projects, and some a break from working on any projects.  So the irony is that the best way to get unified outcomes is to have diversified motivations for the inputs.

Freedom Vs. Regulation
Some experts try to frame business issues as an “either/or” argument:  either you promote freedom OR regulation.  But business life is not a unilateral process.  For major objectives, regulation is more desirable; for motivating tactics, freedom is more desirable.

So the question is not Either/OR; the question is Which/When.  In other words, which areas deserve a particular approach at what times?  Yes, freedom and regulation are both valuable tools.  A company using only one approach all the time will sub-optimize.  However, using both approaches randomly sub-optimizes as well.  Each has a place where it is appropriate and where it is not appropriate.  Great companies figure this out and use them appropriately to gain advantage.

I was reminded of this in reading an article put out recently by McKinsey and Company.  In the article, they talked about the success of an “envelope” approach to getting things done.  The envelope approach works like this.  The envelope represents the space in which the company wants to operate.  The dimensions of the envelope are rigidly defined.  You are not to act outside the dimensions of the envelope.

By contrast, great freedom was given for how an area operated within that envelope.  As long as an area of the business stayed within the envelope, there were given great latitude as to how innovate and thrive.  This envelope approach has been successful for those firms which can abandon the either/or approach and embrace which/when. 

So, using the McKinsey language, strategic objectives become the dimensions of your envelope and as long as your motivational tactics fit inside that envelope, you have great freedom to do what works best in your area.

Freedom and rigidity both have their place in business, but it is not the same place.  Rigid structure is needed to define the major strategic objectives.  This same rigid structure needs to hold for the majority of the business.  However, just because rigid universality is needed for defining the objectives does not make it appropriate for everything else.  When it comes to motivating people to deliver on that objective, usually the opposite is more appropriate.  Great freedom and diversity tends to get the best effort towards the major objective.

At that same company where I sold Casual Day stickers, our department would always have a big problem this time of the year.  We would try to plan a department Christmas party.  About half of the group wanted to make it a fancy evening affair where we would dress up and bring our spouse.  The other half wanted to make it a simple lunch catered in at the office building (no dressing up, no spouses).  The problem was compounded by the fact that each half tended to hate the preference of the other half.  So even within the same department, motivations and preferences can vary widely.  One person’s pleasure can be another person’s torture.  So be sensitive to the diversity.

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