Sunday, August 21, 2016

Strategic Planning Analogy #566: Regimented Plans

Way back when I was getting my MBA, the accepted rules for success in marketing went like this:

1.     Get an MBA in marketing from a top-tier business school.
2.     Immediately go work a few years for Proctor & Gamble (P&G).

The idea was that if you had a top tier MBA and P&G experience on your resume, you could go and do almost anything in marketing. Your long term career was set for life.

There was a woman in my class which took these rules to heart. She made them her life plan. She was currently getting her MBA like me from a top tier school. Then her plans were to immediately go to work for P&G.

As you can imagine, she was very excited when the P&G recruiters came to campus. Actually, she was a little bit too excited. For years, this next step had been a part of her life plan and she could hardly contain her excitement and nervousness.

A short time after the P&G visit to campus, I noticed that I hadn’t seen that woman around campus recently. I asked someone what had happened to her. I was told that she had suffered a nervous breakdown and would probably not be returning.

I guess her experience with P&G had not gone as planned and she took it a little hard.

Strategic planners tend to like plans. The idea is that if you have the right business plan, and follow it to the letter, your company will have success for a long time. This is similar to the thinking of that student. Follow the plan (top-tier MBA, experience at P&G) and your career will have success for a long time.

The problem this woman had was that she apparently did not get the job at P&G. Her plan could no longer be completed as designed. Since she did not have a back-up plan, she lost her composure and had a nervous breakdown. In the end, she didn’t get the MBA or the P&G job and probably ended up with a career far less desirable than the one she had planned for.

The potential for this type of negative outcome can also confront strategic planners and their plans for their business. Their plan may be meticulous and well thought out, but for some reason, not all the pieces come together as planned (for any number of reasons—controllable or uncontrollable). If you are too emotionally attached to the original details or have no backup if something goes wrong, things can get pretty messy for the business. Instead of getting even a portion of the success dreamed of, you end up with nothing.

The principle here is that the goal of planning is not to make perfect plans. We live in an imperfect world. When a perfect plan encounters an imperfect world, the plan is usually the first to crack. Setbacks are not a rare occurrence…they are the norm. Therefore, if your entire future is predicated on everything going exactly as planned, you’re in trouble. You have nothing to look forward to, except perhaps a nervous breakdown.

Well, if the main job of planners is not to create perfect plans, what is their role? The role of the strategist is to:

Facilitate the process which causes the long term future of the company to be better than what would naturally occur if a company only focused on opportunism or fixing the immediate concerns.

The goal is not perfect plans, but a better future. Companies tend to get fixated on attending to the immediate crisis of the day. By being held captive to today’s pressures, little time is left for long-term concerns. I refer to this as the Tyranny of the Immediate.

The strategist’s role is to create more balance between the near-term and the long-term. By getting more long-term thinking into the daily decision-making process, the future will arrive in better shape than what would otherwise occur.

Yes, this process usually includes making plans. But the plans are merely tools to help create the real objective of a better future. And because the future is messy, the plans will be a little messy, too.

Problem #1: Placing Tactics Over Goals
The problem with focusing on executing the perfect plan is that tactics can mistakenly become more important than the objectives. We can become so focused on doing each step of the plan exactly as conceived, that we end up failing to recognize that there may be other, better ways to obtain the larger objective.

My fellow student was so focused on the tactic of getting the job at P&G that she forgot about the greater goal of having a great career in marketing. When the tactic failed, she gave up. In reality, there are many paths to a great career in marketing. She should have focused on the larger picture and found another way to achieve the greater goal.

For example, I know of a retailer that wanted to enter the Nevada market. The tactic in the plan was to purchase a retailer who already had a presence in Nevada. Unfortunately, another retailer ended up purchasing this company. If you only focused on the tactic, you would now walk away defeated, like the woman missing out on getting into P&G.

But here’s what happened. As it turns out, the retailer who bought the company had already started retail development in Nevada on their own. They no longer needed this. So the company that lost out on buying the firm purchased the development in progress from the company that did purchase the firm. In the end the strategic objective was met with a different tactic. They didn’t give up; they merely found another way to achieve the greater goal.

Plans are not to be written in stone, unable to be altered. There needs to be room for flexibility to adapt to the changing situation.

Problem #2: Mistaking Opportunism for Flexibility
So let’s say you get over the idea of creating perfect plans and decide to become more flexible. You can still run into problems if you get too flexible. Too much flexibility results in abandoning planning and just chasing the latest hot opportunity. The problem with chasing opportunistic fads is that if you bring no strategic advantage to the opportunity, you will end up failing.

It doesn’t matter how “hot” the opportunity is. In the end, the market will consolidate, leaving most of the participants as losers. If you do not bring a competitive advantage to the space, you will lose. 

Look at the smartphone industry. It was a very hot space. Lots of firms jumped into the space. Only Apple and Samsung made any money. Everyone else lost. Building social media platforms was also a hot space. Lots of people opportunistically jumped into the space. But when you get past a few firms, like Facebook and Linkedin, you see that most of the people who jumped in lost.

Being flexible is not the same thing as being opportunistic. Being flexible means being willing to alter tactics to achieve a previously chosen strategic goal. Opportunism, by contrast, is just chasing whatever is hot at the moment. If you have no strategic advantage in that space, you are just pouring money at the problem. Money is relatively easy to get, so a lot of people will be pouring money into the hot space just like you. In the end, you are just pouring money down the drain, because you have not brought any strategic justification for winning in the space against all of the others chasing the same hot opportunity.

The better approach is to first build strategic superiority by focusing efforts on improving expertise in a particular area. Then, when an opportunity pops up which matches your point of superiority, you jump in. Now you’ve moved from mere opportunism to exploiting strategic advantage in a place where you can win.

Apple won in smartphones because they brought a lot more than mere money. Apple had a great brand image in that space, they knew how to source the product, they knew how to design a more appealing product, they had distribution in place, they had the right connections with content providers, they knew how to build a closed system to surround the product, and so on.

If Apple had gone after another hot space, like craft beers, I doubt they would have had as much success, because it was not as good of a strategic fit.

You will never have superior strategic fit if you don’t plan for it. So planning is still essential. You need a plan that builds a reason you can win. Flexibility does not negate that chore. But never forget that the reason you build a way to win is so that you can eventually win. The path to get there may not be as straight a line as you want, and there may be detours along the way. Don’t give up when the detours come along. Just pick yourself up, adjust, and continue towards the greater goal that you have planned for.  

Strategy is not about building perfect plans. The world is too messy for perfect plans to survive fully intact. Setbacks will occur. Don’t let the setbacks create a nervous breakdown. Instead be prepared for flexibility on the way to your ultimate goal. But don’t let a desire for flexibility result in the complete abandonment of planning to be replaced by opportunism. Opportunism only works when you already have a plan in place for how you can create strategic superiority in that space. Without the prior planning to create a winning advantage, you will lose, no matter how “hot” the opportunity appears.

It’s easy to fall into the trap of focusing on building and executing the perfect plan rather than focusing on building the better future. After all, it’s easier to show off your contribution and easier to measure your progress on getting something done when “checking off the tactics on your list” becomes the goal. But don’t confuse getting tactics done as the same as moving your company into a better future. It’s a bit more complicated than that.

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