Strategic Planning Analogy #444: Beware of One Choice

THE STORY
Imagine what it would be like if car dealers had only one model of car available to sell. Regardless of who I am or what type of one model they had, I’m sure the salesperson would have a rationale for why that was the perfect car for a person like me.

And if the next customer was completely different from me, that salesperson would have a rationale for why that same car was the perfect match for them as well.

In fact, I’m sure that salesperson would have a rationale for almost anyone as to why that was the perfect car for them. After all, he only has one model to sell, so he has to convince you that this is the model for you to buy. Even if it is really not the car for you.

Beware of the salesperson with only one choice.

THE ANALOGY
Although car dealers have lots of models to try to sell you, there are many businesses which have only one or two items to sell. Included in that second list is often many business gurus and consultants.

Often times, they have had success with a particular business approach in the past. They’ve probably written a book about it. Now they want to use that same approach at your business. They are like the car salesman with only one car to sell. They will try to convince you that their approach is just right for you. They will point out their prior successes to “prove” that you should do it, too. After all, it is the only thing they have to sell, so sell it they will—regardless of who you are.

Of course, the problem is that businesses are a lot like people. They aren’t all alike. Just as there is no one-size-fits-all automobile, there is no one-size-fits-all approach to business strategy.

There’s a reason why car dealerships have a variety of models to sell. Not everyone needs or wants the same thing. And all businesses should not need or want the same strategic solution.

Beware the business consultant with only one choice.

THE PRINCIPLE
The principle here is that there is no one best strategic solution for everyone. And that’s a good thing. After all, if there was only one strategic solution, then you would only need one company within an industry—the one operating that one strategy best. Everyone else would be an inferior redundancy. And if you are not that one company, then there would be no reason for your company to exist.

Fortunately, the variety within the marketplace allows for a variety of go-to-market strategies. This provides viable options for lots of participants.

Start With the Right Question
So, to begin the strategy quest, be sure to start with the right question. The wrong first question to ask is “What is the best strategy?” That’s a bad question because there is no best strategy. Just as there is no one best car for everyone, there is no one best strategy for all businesses.

The right strategy for a small entrepreneur may be very different from the best strategy for a huge Fortune 100 multinational firm. They have different resources, different strengths, different capabilities. Forcing them to take the same approach to achieve the same ends would be a mistake.

Instead, the right first question to ask is “What is the best strategy for my business?” The point is that who you are is just as important as what you do. There must be a fit between the two. Until you understand who you are in relation to the marketplace, you don’t know what moves make the most sense for your business.

Strategies are about finding places where you can win. If you are short, you will not win at basketball, no matter how successful basketball may be for tall people. You need to find the sport where your talents have the best chance of winning.

So if a business consultant comes in saying “I have the best strategy solution,” tell that consultant they are answering the wrong question.

Judge a Salesperson by their Questions
How can you tell if a business consultant is answering the right question? Check to see if their opening moves are more about telling or more about asking. If they immediately start out by telling you what must be done, this probably means that they have a preconceived notion of what is best and they are going to shove it down your throats whether it is appropriate or not (like the car dealer with only one car).

By contrast, if they start out by asking a lot of questions about your business and your company, then they realize that the best solution depends on how it fits with who you are. Therefore, they need to ask you a lot of questions about who you are in order determine the best solution for you.

This is what a good consumer-centric car salesperson will do. They will ask you a lot of questions, like how you plan to use the vehicle, what are critical concerns, etc. Only after they first understand your situation will they begin to make a recommendation.

Beware of “Proof by Example”
The one-solution consultant will often try to impress you with how superior their solution is via examples. They show how others used this process to great success. Therefore, it should work for you, too.

But here is the problem with examples. Yes, you can find examples of businesses which succeeded with a particular approach. But if you look long enough, you can find examples of companies which failed with that same approach. In addition, you can find examples of successes and failures for all of the approaches. Consequently, an example of a success by one company with a particular approach does not guarantee that you will have a similar success with that approach. And it doesn’t prove that you wouldn’t have even more success with an alternative approach.

That is why in the US, the law requires that advertisements for weight loss products must put a disclaimer on their examples and say that not everyone will lose as much weight as those shown in the examples. Otherwise, the examples can be deceptive.

I remember reading about a company which had an inferior product that most customers didn’t like. They received lots of complaints. However, one day they got a letter from a satisfied customer (their first ever). They used that one satisfied customer in their advertising, and sales rose dramatically (even though the product was still bad). Yes, it was an example of success. But it was not a fair representation of reality.

So beware of blindly accepting examples as proof of future success. Ask yourself how similar your situation is to the one in the example. Check to see if there have been failures. Find out what the differences were between the successes and the failures.

Leaders Aren’t Imitators
Finally, there is the concept of “first mover advantage.” The principle is that those who stake an early claim to a strategic position tend to have an advantage over late-comers. Early participants have a better opportunity to claim ownership of the position in the consumers’ mind, because the consumer has no preconceived leader already in their head. These early arrivers easily claim the customers looking for this position at a time when there is less competition.

By the time the late-comers arrive, customers are already satisfied with the early arrivals. The customers now already have a firm leader in their mind (one of the early arrivals) who owns the space. The late-comer has to work harder to steal away well-entrenched market share. As a result, the early arriver tends to be more successful.

If the business consultant is proposing an approach which succeeded in the past, that success may have been a result of first mover advantage. Others following in their path will be late arrivers and not see the same advantages. Therefore, the approach may not work as well anymore. I spoke more about this concept here.

If you want success, that often requires staking out new claims in new territories with new business models. And this won’t happen if you are always trying to imitate successes of the past. If you imitate the leader, then you will always be a follower. And followers rarely have the advantage. So beware of consultants who want you to blindly follow old rules and will not take risks to be innovative with you.

SUMMARY
Strategic planning is a very personal thing. The right strategy depends on the particular company and their particular situation. It is not a one-size-fits-all process. Therefore, it can be a mistake to just pull a strategy “off the shelf” which worked for others and expect it to work for your firm. If you call in a strategy consultant to help you with your strategy, make sure they understand this principle. Become very nervous if the consultant has a preconceived notion about a single approach that they want to force on every client.

FINAL THOUGHTS
There’s a reason why car salesmen and consultants are often held in low esteem by society.

Strategic Planning Analogy #353: Warning!

THE STORY
Awhile back, I was awakened in the night by beeping smoke detectors. It wasn’t the high pitched squeal warning me of fire. It was just the beep to warn me that the batteries were low. But it woke me up anyway.

This was a newly built house which still had the original batteries in the smoke detectors. I didn’t even know how many smoke detectors were in the house. As I stumbled around half-asleep, I discovered six smoke detectors and took out their batteries (for one I needed a ladder). But I could still hear a beeping. As it turns out, there were seven smoke detectors, and it took me forever to find that seventh one.

Then I got dressed and went to a store open all night in order to purchase replacement batteries. When I got home, I had to remember where those seven smoke detectors were, so that I could put in the new batteries (which wasn’t easy). By the time I was done, I had trouble getting back to sleep.

Why can’t these things happen in the middle of the day?

THE ANALOGY
The purpose of a smoke detector is to monitor the environment. If it detects the early signs of a fire, it gives a warning so that you can escape to safety before it is too late.

The strategic planner serves a similar function. One of the roles of a strategic planner is to monitor the environment, looking for early signs that the environment is changing. Ideally, the planner will then make key executives aware of the problem early enough so that the company can adapt to the change before it is too late.

Smoke detectors are such valuable warning tools that there are laws mandating that they be placed in houses in key locations (which is why my house has seven of them). Let me tell you, if it weren’t for those laws, I would have been tempted that night to yank out some of those pesky detectors that were keeping me awake.

Fortunately for me, those laws are there to keep me safe. Unfortunately for businesses, there are not similar laws mandating that businesses have enough strategic planners to adequately monitor the business environment to keep them safe.

If you cannot make a compelling case for having “strategic smoke detectors” at your business, you could miss the early warning signs and your business could be destroyed by the fires of change.

THE PRINCIPLE
We live in a world where the idea of having full-time, on-site strategic planners is becoming ever rarer. To many, the idea sounds quaint and obsolete. Yet, just as smoke detectors are still relevant and critical to ensuring the long term security of the building occupants, full-time strategic planners are still relevant and critical to the long-term security of the business.

If we treated smoke detectors the same way many companies treat strategic planning, we would be seen as reckless fools (as we shall see in the three examples below). Let’s stop the foolishness! Mandate the full-time staffing of strategic monitors.

1. Wait Until There Is a Fire to Buy A Smoke Detector
What if someone said “Fire detectors are only useful when there is a fire, so I won’t buy one until I know there is a fire.”? You’d probably think that person was a bit crazy.

By the time your nose or eyes could detect a fire (without the aid of a smoke detector), the fire may already be quite large. It might be too late to escape. This is not the time to think about running out and buying a smoke detector. At this point, about all you can do is frantically try to keep from dying.

As silly as this sounds for smoke detectors, I have seen a similar approach to strategic planning. The comment goes something like this:

“I don’t need a full-time strategic planner. I’ll just wait until I get into a jam and then bring in a strategic planning consultant.”

The problem with this line of reasoning is that by the time a company is already in a jam, it may be too late to bring in strategic planning. You may not see the signs of problems in your income statement or balance sheet until competing forces and consumer change have already engulfed your business in the flames of your own obsolescence. The world has already passed you by with superior go-to-market strategies which are more relevant to the new environment.

The best time to adapt to a changing environment is early on, when you still are operating from a position of strength and relevancy—when you still have the time and the cash flow necessary to adjust. This type of situation requires having strategic planners on site all the time, monitoring and adjusting in the early stages—when things may still look good to the naked eye. If you don’t bring in the strategic planning until the time and cash flow are nearly gone, there is little the strategist can do to help you prosper. At this point, about all you can do is hope to escape without dying.

Have you ever noticed that whenever a company issues a press release saying that they have recently hired a strategic planner to help them “examine strategic alternatives” that the end result is usually either selling the company or declaring bankruptcy? That’s because if you wait until the fires of change have already made your company irrelevant before looking for alternatives, then bankruptcy or selling out (to someone who adapted sooner and better to the change) are about the only alternatives left.

2. Complain When the Smoke Detector Doesn’t Make a Sound
What if—on that night when I was changing batteries in my smoke detectors—I had said, “These smoke detectors are worthless. They have never once warned me about a fire. They cost me money as well as the time and expense of replacing the batteries. I think I’ll get rid of them.”

If I said that, you’d think I was pretty short-sited. Just because my house had never caught on fire does not mean that the smoke detectors were worthless. They were still faithfully monitoring the environment. They were still ready to act the moment they detected change. Had there been a fire, I would have been protected. Taking the smoke detectors out makes me vulnerable to any future fires.

Eliminating smoke detectors is silly and short-sighted, but a similar approach is often taken with strategic planning. Things may be going well at the business and there may be little need at the immediate moment for drastic strategic change. Therefore, a business might conclude that strategic planning isn’t doing much or isn’t needed much. As a result, they eliminate the department.

Just because the alarm has not yet sounded does not mean that you should eliminate the alarm. Change is inevitable. Some day you will need that alarm. Having strategic planning on site all the time is the only way to ensure that you will have the alarm when you need the alarm.

Do we get angry when we live another day and do not yet need our life insurance? No…we are happy in knowing we are still alive and in knowing we are prepared just in case. The same is true of strategic planning. It is insurance against change. Eliminate the planners and you no longer have that protection. Sometimes strategic advice to “stay the course” is the best advice a strategist can give. Be happy that the strategy is still working for another day. Don’t fire the strategist because he has no new strategic change agenda.

3. Complain When the Alarm Sounds
What if my house caught on fire and my smoke detectors started blaring away in the middle of the night. Wouldn’t you think I was a bit crazy if I started getting upset over all the noise from the alarms and hated them for waking me up? Instead, I should be grateful that they woke me up so that I could get to safety.

Yet, I have seen similar reactions to strategic planners. Part of the role of strategic planning is to help companies change to adapt to the changing environment. Their call for change is often essential if I want my business to be in a safe position for the future. However, instead of the leaders being grateful for the wake-up warning, they complain. The leaders grumble about being woken up from the daily grind and commanded to change. They don’t want to change. They label the planners as excessive worriers who have too much of a negative attitude. As a result, they stop listening to the warnings.

If we want to be successful as strategic planners, we need to manage our image so that our warnings are properly heeded. An alarm clock is worthless if the user just turns off the alarm and goes back to sleep. We need to sound our alarm in such a way as to keep management from just turning us off and going back to sleep.

SUMMARY
There are many businesses today which do not fully appreciate the value of having a permanent strategic planning department on site. This attitude is like not wanting to have permanent smoke detectors on site. Just as eliminating smoke detectors leaves you vulnerable to fires, eliminating strategic planners leaves a company vulnerable to obsolescence. If you do not make a strong case for having such a permanent planning department, you can be putting your company at significant risk.

FINAL THOUGHTS
Not only will this current trend put businesses at risk, it also puts your career at risk if you are a strategic planner. That should give you added incentive to make the case for keeping permanent strategic planning departments.

Analogy #201: Cockroach Infestation!

THE STORY
Cockroaches are pesky pests. They are almost indestructible. Scientists believe they have survived over 300 million years of calamities.

Once a home gets infested with cockroaches, they are extremely difficult to get rid of. They just keep on breeding, making the situation worse. In some urban areas, about half of the children who see a doctor for ear problems have a cockroach in their ears. The rise in asthma among children in urban areas is attributed to breathing in too many cockroach body parts and feces.

One time, I started working at a company and was introduced to the team of consultants who had been working with the company for a number of years. When I shook their hands, I said, “So you are the cockroaches.” I think my straightforwardness surprised them a bit.

I’m no longer associated with that company, but I understand that this large consulting firm still is. Like I said earlier, once infested, it’s hard to get rid of cockroaches.

THE ANALOGY
There are parallels between cockroaches and consultants. Both are hard to get rid of once they find a way in.

However, given today’s environment, most companies do not keep a large in-house strategic planning function. Instead, they like to get assistance from one of those large consulting firms (like McKinsey, Booz, Bain, Accenture, A.T. Kearney, Bearing Point, Monitor, Boston Consulting, Strategos, Capgemini, etc.). So the consultants are let in the door.

I’ve worked with nearly all of these large consulting firms at one time or another. And yes, they have some very intelligent people who can be useful to the strategic success of your firm. But, remember, they can also be like cockroaches—persistent pests who drain your checkbook.

THE PRINCIPLE
The principle here is that consultants need to be managed well in order to achieve the benefits and avoid the infestation. Listed below are see key rules to keep in mind to manage them properly.

Rule #1: Remember that Their Goals Are Different From Yours
Your goal is to quickly and efficiently develop and implement a successful corporate strategy. The consultant’s goal is get as many billings and fees from you as they possibly can. These two goals are not always compatible. Remember: Once they “fix” the problem, the gig is over. “Quick and efficient” is not always in their best interest.

I had a friend who was hired out of business school to work for one of these consulting companies. He said the first thing they did was send him to consulting classes. When I asked what they taught, he said it had nothing to do with teaching him something useful for the client. They were classes in how to get as many billings and fees from the client as possible.

Rule #2: Manage the Menu
When it comes to conflicting goals, you want it to be your goals which win. The way to do that is by spending an inordinate amount of time on the “Menu”—the contract for services.

Consultants will want to do two things to the interpretation of that contract:

a) Increase the Scope of the Overall Problem (The bigger the problem, the bigger the fee for solving it)
b) Decrease the Scope of the Current Contract (Make the acceptable deliverables as small as possible)

By doing these two things, they guarantee that meager output of the current contract cannot possibly fix the newly redefined larger problem, so you have to sign them up for a lot more contracts (each with its own large fee) in order to get the job done.

To avoid this, you have to actively manage the wording of the contract up front and hold them to it (or dock their pay). First, clearly define exactly what the problem is that they have been hired to solve (for this contractual engagement). Second, clearly define what the acceptable deliverables are (what they specifically have to do in order to get fully paid). Third, hold them to the contract.

Rule #3: Date Before You Marry
Once you realize that these folks want to partner up with you and be around forever, you realize that this is less like a one-night stand and more like a marriage. Long-term compatibility can become an issue. Different consulting groups have different philosophies and operating personalities. Find the firm whose personality is most compatible with your company.

Choose them as you would a marriage partner. Go on some dates and get to understand how compatible you are. Or, to switch metaphors, as long as you are going to be infested, find the cockroaches that are the least objectionable.

Rule #4: Ask for Farms, Not Food
There’s an old saying that if someone gives you a fish, you eat for a day. But if they teach you to fish, you can feed yourself forever. Consultants tend to want to keep giving you fish—today’s answer for today’s problem—forever (with a fee on each delivery). You’re better off having them teach you how to fish so that you are no longer dependent on them.

As part of the contract, make sure that the consultant’s knowledge is transferred to you and that they teach you how to deal with this type of problem on your own in the future. Getting the whole farm (and the knowledge to farm it) is a lot more valuable than just one batch of crops.

Rule #5: Get the “A” Team
In reality, you are not hiring the entire consulting company. You are hiring the people they are sending to work on the project. Like all companies, they have some great people (the “A” team) and some lesser people (the “B” team). Make sure you get the “A” team.

Sometimes you see the “A” team up-front (when they pitch you for the business) and at the end (for the final presentation of results), but nowhere in the middle. Make sure you find out who is doing the work and guarantee you get the people you want for the stated amount of time.

Rule #6: Give Them Your Watch
There’s another old saying that the role of a consultant is to steal your watch and then tell you the time. In other words, they get paid to tell you the knowledge you already had in your possession.

I was talking to another consultant about this and he admitted that they brought very little new knowledge to the project and that we basically already knew what to do. However, he claimed that most internal bureaucracies are resistant to change. Without the catalyst of an outside consultant, it is tough to create that change. Too many barriers are put up.

They allow you to tell the skeptics, “Look, we hired the experts and paid them a whole lot of money, so we’d better do what they say.” This can often be more effective than saying, “Do it because I want us to do it.”

If this is true, then use it to your advantage. Tell the consultants exactly what you want to do and then use them as a catalyst to get the change you desire. Prophets are not respected in their home town, and your internal strategy people may not be as respected as out-of-town consultants. So don’t be afraid to give the consultants your watch—provided you have set the time on it to be exactly what you want.

Rule #7: Do the Work
Usually, the end result of a consulting engagement is a recommended list of things to do. If you want to benefit from the recommendation, you have to do the things on the list. It shocks me how many times a company will hire a consultant, get a list of things to do, and then not do them. They think that if you pay the consultants enough, the problem will go away. The end of the engagement is the beginning of implementation. Don’t expect magical results if you don’t do the work of implementation.

SUMMARY
Although I could have said a lot more, I think by now you get the idea. Because consultants have a different agenda than yours, you have to carefully manage them. If you leave them alone and let them set the rules, you will usually be disappointed (and have spent more money for that privilege). However, if you set the rules, the process can be very beneficial. You’re the customer. Act like one and demand satisfaction. Otherwise it will feel like you’re dealing with cockroaches.

FINAL THOUGHTS
I know someone who was interviewing for a job at a new company. To impress him, the company showed him their relationship with their consultants. This man quickly found out that this was the same basic consulting team doing the same basic work that they did for the company where he used to work.

However, there was a big difference. At his former company, the executives managed the consultants well. Work was done in a timely fashion and implemented as recommended. The company received many benefits. By contrast, this new business managed the same consultant poorly. The process was taking forever, it cost a whole lot more for the same work, and nobody implemented anything, so they got no benefit.

After seeing this, my friend did not pursue the job opportunity with as much gusto.
So next time, when you are dissatisfied with a consulting engagement, don’t just rush to put all the blame on the consultant. Perhaps you didn’t manage them as well as you could have.