Friday, November 7, 2014

Strategic Planning Analogy #540: Three Novelists

Consider three types of novelists.

The first author wrote a great novel once. He liked the book so much that he would rewrite the same book every year. A few parts might be added and subtracted each year and maybe a couple of sections would be updated. But essentially it was the same story. He is currently working on the tenth edition of this book, ten years after the first edition. He is so busy with these updates that he hasn’t had time to ever write a second novel.

The second novelist was all over the map. Each new novel went in an entirely new direction with entirely new characters and subject matters. The writing styles and topics would vary so much between novels that there was no guarantee that if you liked one book that you would like another. And it was difficult to get used to all the new characters all the time.

The third novelist wrote a mystery series. The lead character detective was the same in all the books, surrounded by a familiar cast of characters. Although the style was familiar in each book, the plots in each book in the series had enough novelty to keep them unique and interesting. Over time, the lead detective came to be thought of like a familiar old friend to the readers, who anxiously waited to hear about his next adventure.

So which author do you think sold the most books?

Strategists are a lot like novelists, except instead of writing novels, we write strategic plans. And I have seen all three of the types of authors mentioned above in strategic plan writing.

The first type of author is often found in companies with a rigid, but unimaginative annual planning process. Every year, they go through the same boring process. Each business unit submits what they want to do, which is essentially the status quo. Then all the “same as ususal” business unit plans are rolled up together, creating a broad affirmation of the status quo.  Although it may appear as if the annual process is creating a new plan every year, it is really just slightly re-editing the same plan, year after year after year. We’ll call this the “One Book” approach to strategy.

The second type of author is like companies who switch their strategic planning personnel a lot or use a lot of different strategy consultants. As each new author of the strategy walks into the role, they try to put their unique stamp on the process to prove their worth. As a result, each new strategic plan is a radically different approach, totally unconnected to the plans of the past. The company’s role in each plan is so different, that it is hard to imagine that it is the same character. We’ll call this the “Annual Reinvention” approach.

The third type of strategy author (who is like the one who wrote the mystery series) falls somewhere in between the first two. Unlike the Annual Reinvention approach, there is the continuity between each successive plan. It builds on the character’s past and works with its habitual strengths and weaknesses. Yet, unlike the One Book approach, each plan is a new story for the new reality being confronted. We’ll call this the “Series” approach.

And just as novelists who write series tend to sell the most books, strategists who take a “Series” approach tend to have the most successful strategies.

The principle here is that an individual annual plan is not an isolated event, but one book within a series. Or, to use another metaphor, it is like a single screen shot from the middle of a movie. If you keep repeating the same screen shot for the entire movie, you have a lousy movie (like the “One Book” approach). Similarly, if you radically change the plot of the movie for each successive screen shot, you have a lousy movie (like the “Annual Reinvention” approach). Great movie scenes build from what came before and point to the changes ahead (like the “Series” approach). So when writing your individual plans, think like a series writer.

The Problems with the One Book Approach
The biggest problem with the one book approach is that it assumes a static environment—no changes. If you assume the future will be just like the past, then what worked in the past will also work in the future. Therefore, continuation of the status quo makes sense; reissuing the same basic plan every year makes sense.

However, we all know that the future will not be identical to the past. There are too many elements of change to allow history to continue as before. Change can come from a multitude of sources, from inside the business to inside the industry to outside the industry. Changing government administrations, changing technologies, changing competitive landscapes, changing economic conditions, changing customer moods, and a host of other areas all serve to alter the marketplace in which you compete.

Therefore, the same strategy book from 10 years ago will not work today, even if you update it a bit each year. A continuation of the status quo will lead to ruin.

The role of the strategist has to be more than just a scribe who takes the status quo words from each business unit and just writes them down verbatim into the annual plan. No, the strategist needs to add value to the process by:

  1. Helping the business units see how the future is going to be different from the past.
  2. Helping the business units discover the best ways to adapt to the new future.
  3. Helping the corporation see big picture of how all the individual business units line up against the changing future, creating a need to alter the business unit portfolio. In a changing future, the best role for a particular business unit may be to shut it down (no longer relevant), and that type of advice will rarely come from the business unit itself when submitting its plan.
The Problems with the Annual Reinvention Approach
The opposite approach from one book—the total strategic reinvention—isn’t much better. It creates a whole lot of action, but it never leads to very much benefit, because the direction of the action changes every year.

A key part of strategy is positioning. To win in the marketplace, you have to stand for something—your position. Winning such a position takes time and consistency. If you keep changing your position each year to something radically different, then you really end up standing for nothing.

When you change who you want to be all the time, your employees get confused about what you stand for, so they don’t know what to do. Worse yet, your employees may take the attitude that “this too shall pass” so they will ignore the latest strategic initiative. After all, why work hard on implementing something if you know that next year the company will want to implement something else? Neither confusion nor apathy in the employee ranks creates an effective strategy implementation program.

And then there are the customers. If your customers get confused about what you stand for, they will never know if you are the right solution for their problem. It is like the author who radically changes her style from book to book. You never know if the next book will fit your preferences.

It takes time to build the competencies and capabilities necessary to pull off a strategy. If you keep changing the strategy, your competencies and capabilities will never be at optimal levels for the strategy of the moment. By contrast, if you keep a relatively consistent direction over many years, you can develop competencies and capabilities which will make you best at delivering your position and blow away the competition.

The Benefits of the Series Approach
The series approach takes the best from each extreme while eliminating the worst. First, it understands that a company has a heritage, a past, a preconceived reputation in the marketplace. You are not working from a blank slate each year. You are building on what came before. This has an impact on what the best future path should be. Like the mystery series of novels, you have the same lead detective in each book, and the prior novels in the series impact what you can effectively do with the character in future novels. Yes, the character can change and grow up, but too many radical changes from book to book ruin the series.

So continuity is important. Build from past strengths. Ignoring your strategic heritage while looking forward is a dangerous path.

On the other hand, the series approach doesn’t re-write the same plot each year. It understands that the marketplace is continually changing, so you need a new story line to adapt to the change. It is the idea of being able to adapt what already makes you great to the new realities of the future.

Just as each murder in the mystery series requires a different solution, each year has its own strategic problems to solve. The variety in plots keeps the individual story in each book in the series fresh and relevant. Yet each solution relies on the historic strengths of the recurring detective. The same should be true of your strategic plans.

Strategic plans are like novels. And the best strategic plans tend to be like individual novels within a series. First, they provide continuity between the stories in order to take advantage of the past and build competencies and capabilities for the future. Second, each novel’s story is different, because times change.

I’m currently helping a company with its new five-year strategic plan, and the starting off point is its prior five-year plan. You have to look backwards before you can look forwards.

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