Monday, April 1, 2013

Strategic Planning Analogy #496: The 3 Keys to Success (Part 3)

I heard a great story long ago from a preacher. He was describing a fishing club.  Every week, the club members gathered to hear lectures about how great it is to go fishing. Everyone at the meeting agreed that fishing was great (and loved hearing stories about fishing), but none of the members had ever actually gone fishing. 

A new, younger member of the group listened to the lectures and decided he would go fishing. So he did, and he caught a big fish. The following week, he brought the fish to the weekly fishing club meeting. The audience was excited.  Most had never seen a real fish before.

After that, the fishing club insisted that the young fisherman repeatedly tell stories about his one fishing trip. Of course, this kept the young man so busy that he could no longer find time to fish anymore. So the fishing club was back to not having any members who fished.

The preacher was using his story to compare the weekly fishing meeting to the weekly church service.  Many people at church are like the members of that fish club: They like to hear stories every week about conversions to Christianity (catching fish), but never go out to evangelize on their own. Many may not have ever even seen a new convert to Christianity. His point was that just as odd as it would be to join a fishing enthusiast’s club yet never fish, it should seem odd for a professing Christian to love conversions but never participate in seeking them.

A similar analogy could be made in the business world. A lot of business leaders profess to be enthusiastic about many great business principles, like serving the customer, making employees the most important asset, having a business strategy, and so on. They may talk about these great business principles on a regular basis. The leaders may even convince their followers to also believe in these principles.

But, if nobody in the company actually does anything to support these principles, they become just hollow slogans with no impact. The company becomes as silly as a fishing club that never goes fishing.

We are currently on the final blog in a three-part series on the three characteristics which tend to determine whether a business is a great, lasting winner, or a long-term loser. In the first blog, we looked at “Passion” and saw that the winners have a passion for the business and the intricacies of the business model which makes it work in the marketplace. The losers focus their passion on the money that comes out of the business and are only tangentially concerned about the details in how it is made.

In the second blog, we looked at “Direction” and saw that losers choose a direction which follows—either the rules of the status quo or the actions of the leader in the industry. By contrast, winners choose a differentiating direction—either a new business model to better solve an old problem, or an entirely new value equation for a new industry.

In this blog, we will look at “Action.”  The principle here is that winners have a bias towards taking action regarding what they believe. The losers, by contrast, are more like that fishing club. They talk a good story, but never get around to acting upon it.

It’s All About Culture
A bias towards action tends to get to the root of a company’s corporate culture. Some cultures naturally encourage action—a bias towards “yes.” Other cultures have natural barriers which naturally discourage action—a bias towards “no.”

A culture with a bias towards action tends to have the following characteristics:

  1. Curiosity
  2. A Passion for Experimentation
  3. A Tolerance of Small Failures
  4. Willing to Take Calculated Risks
  5. Allow People Out in the Field Some Independence
  6. Permit “Skunk Works” (independent projects)
  7. Reduce the Red Tape to Get Things Done
  8. Get Tired of Just Talking and Settle Disagreements By Trying Something
  9. Put Their Investment Money Where Their Passions Lie.

Of course, if a company is all action with no direction, all you have is confusion and anarchy. So what you want is action focused around a general direction, the direction of strategic intent. You want to get those things done which have the greatest impact on moving the strategy.

This is why all three characteristics of success tend to be linked together.  Without a passion for how the business works, you won’t know what actions to take to improve it. Without a strategic direction in how you want to stand out in the marketplace, you won’t know where to experiment. It all goes together.

Three Types of Actions   
Successful companies tend to focus their actions in three areas.  First are the “tinkering” actions.  This is the idea of never being content with the status quo. The culture is one of never declaring “We’ve Made It!” The thinking is that there is always room for improvement and we should try to find ways to improvement all the time.

You can never just relax and put your feet up on the desk and say we’ve perfected it and we can relax.  The problem with resting on your laurels is that the world is constantly changing. The best for yesterday is not good enough for today.  If you stop improving, a competitor will pass you by.

Therefore, successful companies are always acting to tinker with the current approach to make it better. They ask themselves questions like:

  1. What Worked?
  2. What Didn’t Work?
  3. How Can We Do This Better/Faster/Cheaper?
  4. What is the Customer Feedback?

Wal-Mart is a master of the art of tinkering. They are never content; always stretching to improve.

But it doesn’t stop there.  If all the action was on small incremental improvements, companies would never make the major strategic leaps. Therefore, these successful companies also devote a significant amount of time to bringing the future to life. I call this “Big Picture” actions.

Think of Google. Their big picture vision is to advance the consumption of knowledge in a superior manner for consumers, in a way that also offers additional opportunities to leverage their digital advertising strengths. But this is not mere talk. At Google, they do it. 

To get more ads on mobile, Google created an entirely new mobile ecosystem around the Android operating system. To get more ads related to geographic search they invented a whole new approach to geographic search, including sending cars everywhere to take street-level photographs of everything. Google Glass allows people to see the internet all the time in glasses (that will also support ads). Heck, they’ve even invented cars that drive themselves so that passengers can be freed up to spend more time online to see Google’s ads.

Google saw the big picture and made big actions over large sectors in order to pave a path for their strategy. They didn’t wait for these markets to evolve; Google created them themselves in order to control the destiny of their strategy. 

Similarly, Amazon wanted to protect its ability to continue selling books once books went digital, so they acted to create the Kindle ebook devices. They saw the big picture and did what was necessary to protect their strategy. They weren’t talking about fish—they were fishing.

Finally, the third type of action revolves around just doing the things that businesses should do. I call this “Doing What the Experts Say to Do.” Starting with Peter Drucker and moving through the decades to today, there have been a number of experts saying what good companies should do. It involves things like:

  1. Finding a Position
  2. Investing In Your Infrastructure
  3. Investing In Your People
  4. Listening to Customers
  5. Communicating Well
  6. Delegating Properly
  7. Organizing Around Competencies
Good companies don’t just read about this stuff—they actually do it. How many companies say they care about their people, yet do nothing to show they care? The good companies make these principles come to life by focusing actions to make it happen. We don’t need a lot more books on what businesses should do. Instead, we need more business who make it a priority to do what is in the books already written.

I remember going to a business roundtable of retail strategists years ago. The mix of retailers represented covered the full spectrum—from very successful firms to very unsuccessful firms. We started the meeting by going around the table asking each strategist to say what was their biggest challenge. 

For the successful firms, there was a variety of high-level problems that were being tackled.  However, for the troubled companies, the challenge was always the same. They said their biggest challenge was in getting people to actually implement the strategy. The losers could only talk about fishing; the winners were actually doing it.

It could not be any plainer. If you can’t implement things, you are doomed to failure. If you can, then the challenge is to pick which successes to go after.

One of the key differences between business winners and losers is the ability to turn ideas into actions. If your corporate culture has a bias towards actions, you are more likely to succeed. The three types of actions are:

1.      Tinkering—Always looking for ways to do things better
2.      Big Picture Actions—Building the future reality of your grand strategy
3.      Doing What the Experts Say to Do—Putting the principles of good business into action.

So success boils down to just three things—Passion for the Business (and business model), Direction Towards Meaningful Differences, and a Bias Towards Action. Where do you stand in these three areas?

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