Strategic Planning Analogy #569: Strategic Multivitamins

THE STORY

My most recent blood test showed I was low in vitamin D, so I went to a healthy food store to look for vitamin D supplements. The man at the store said that to get the maximum benefits of vitamin D, you need a supplement that also includes vitamin K. Others say that vitamin D needs to be paired with calcium, because calcium is absorbed better when paired with vitamin D.

There are lots of other pairings in vitamins and supplements. Folate needs to be taken with B12 if you want it to work properly. Potassium needs to be paired with sodium to keep things in balance in your body. The list of pairings go on and on.

As a result, I did not leave the store with a vitamin D supplement. Instead, I got a multivitamin supplement.

THE ANALOGY
Many of the tools used in strategic planning, like KPIs and tactical outcome targets, are a lot like vitamins. They help make a business stronger and healthier. Regular emphasis on them keeps a business from feasting on the bad “junk food” which leads to poor performance.

The problem with that these strategic vitamins is that we tend to focus on only one or two at a time. When that happens, a company can get out of balance. Just as some vitamins need to be paired with other vitamins to work most effectively, most KPIs and targets work most effectively when paired with other KPIs/targets. The singular focus can get a company out of balance and turn a good tool into a business health nightmare.

Therefore, companies need to apply strategic multivitamins, so that everything stays in balance.  

  

THE PRINCIPLE
Yes, it’s true that one of the key benefits of strategic planning is the advantage of getting a company more focused.  However, there are dangers in getting TOO focused.  Vitamin A is important for health, but if all you take is vitamin A, you will suffer in two ways:      

•  You will starve yourself of other vital vitamins;
•   You will get vitamin A poisoning.

Similarly, if you narrowly focus a company on achieving just one thing, you can starve it of other essentials and turn that one good thing into a poison for your company. KPIs and targets need to be balanced and paired.

Although Warren Buffett did not use the vitamin analogy, he said something very similar at the latest annual meeting for Berkshire Hathaway. Buffet said that profits need to be paired with growth. If you only focus on profits, Buffet says that you will take too much money out of the company today and starve it of future opportunities. For a healthy business, you need to pair the two (profits and growth). That way, a company is healthy both today and tomorrow.

Pairing Efficiencies With Investments

A similar pairing would be efficiency and investment. A focus on efficiency is a good thing. It helps root out waste. It makes your efforts more productive.

However, if too much effort is placed on efficiency—at the expense of everything else—then problems occur. It moves beyond rooting out waste and starts eliminating or delaying every expense possible in the organization. Maintenance is postponed and investments are eliminated. This can result in increased injuries and product failures. The Samsung smartphone disaster may have been caused by eliminating too many costs associated with testing in the mistaken guise of getting to market more efficiently.

The irony is that by eliminating virtually all expenses today, we just create problems later which cost even more in the future...or even cause business failure. That would be efficiency poisoning.

That’s why efficiency needs to be paired with investments. We can’t simply cut our way to prosperity. We also need to invest in our strategic future. We need to invest in maintenance, equipment, safety, new lines of business, advertising/promotions, etc. A healthy future requires balanced nutrition from both efficiency and investments.

Pairing Internal With Extermal

Another important strategic pairing would be a combined focus on both internal and external factors. It is easy to fall into the trap of getting too focused only on the internal. After all, the internal is far more under our own control. It’s easier to achieve our targets in places where we have more control. And don’t our executives want achievable goals?

As a result, we can put on blinders and only worry about perfecting our internal business model. But what’s wrong with perfecting our business model you may ask? Well, if you do this while ignoring external factors, you can miss shifts in the customers or in what competition is doing. Customers may no longer want what your model offers or competitors may have come up with a superior business model.

Consequently, an internal-only focus can lead to perfecting an obsolete business model. No matter how grandly you’ve perfected the obsolete, it is still obsolete and worthless.

Just look at Blockbuster. It was trying to perfect the traditional movie rental business model. Unfortunately customers were moving to better business models offered by new competitors (Netflix and Redbox). Now Blockbuster as we knew it is gone.

And what about the current disaster at Wells Fargo? Wells Fargo has been so internally preoccupied with a focus on its culture of pushing its model of multiple accounts to the extreme that it lead to corruption and a public relations disaster. Had they balanced this internal focus with an external focus, they would have understood better how the internal tendencies were hurting their external relationships with their customers. That would have led to a stronger long-term strategy.

Balanced Scorecard

This is where tools like the Balanced Scorecard come in. Although I have never been the biggest fan of the particulars surrounding the balanced scorecard, I do appreciate its intended goal.

The goal of the balanced scorecard is to create a more balance blend of KPIs/targets. It takes into account a lot of pairings, like internal and external, efficiencies and investment, profits and growth. It forces a company to stay away from being too narrow in its focus. You can look at the balanced scorecard as being a company’s multivitamin.

Just as there are many types of multivitamins, there are many ways to achieve balance in the KPIs and targets you focus on. The important thing is to get on the multivitamin approach.

SUMMARY
One of the benefits of strategic planning is getting a company focused on where it needs to be. And that’s a good thing. However, if we get too focused on the tactics we use to get there, we may never reach our intended destination.

Life is complex. To make it work properly, we need a balance of nutrients. In a similar fashion, the business world is complex. To make our business work properly, we need a balance of KPIs/targets. If we get these out of balance for too long, disaster is almost inevitable.

Examples of balance would be pairings like profits and growth, efficiency and investment, & internal and external.

FINAL THOUGHTS
When I bought my multivitamins, the label said I should consult my physician before taking the pills. Similarly, I believe companies should consult a strategist before taking a strategic multivitamin.

Strategic Planning Analogy #550: Adapt Our Strategy

THE STORY
I knew an executive who got a big bonus because he hit all his numbers. Unfortunately, he hit his numbers by totally ignoring the strategy.

His strategic mandate was to spend a lot of money converting his division to a radically different position—one more suited to the future. Instead, he did not spend that money, so it fell down to his bottom line, making his profits far higher than the goal.

Unfortunately, because he did not reposition the division, it was no longer able to succeed in the marketplace. In the following year, losses were huge and the division was sold at a huge loss. The division was destroyed, but the executive got to keep his big bonus from the prior year.

THE ANALOGY
Execution is important in business. But not just any execution, just execution which leads to strategic success.

In the story, the executive executed in a way which maximized his bonus. However, that execution also destroyed the business.

Although this example may be extreme, it is common for corporate strategies to not get properly executed, even though there are mechanisms in place to encourage right behavior.

Hence, it is not enough to just focus on getting the strategy right. One must also make sure the strategy is executed properly.

THE PRINCIPLE
The principle here is twofold. First, without proper execution, a strategy is fairly worthless. Second, the traditional business tools of execution are not working. As a result, strategies are failing.

These findings were discussed in the March 2015 issue of the Harvard Business Review. The article, by Donald Sull, Rebecca Homkes, and Charles Sull, was titled “Why Strategy Execution Unravels—and What to Do AboutIt.” They started by looking at a study of 400 CEOs who said that their number one challenge was “executional excellence.”

The authors then did their own research and found out that most companies were doing a pretty good job of implementing the standard tools of execution. These included things like translating strategy into objectives, cascading those objectives down the hierarchy, measuring progress, and rewarding performance. More than 80% of managers surveyed said that their goals were limited in number, specific, and measurable and that they had the funds needed to achieve them. Yet, in spite of this, good strategic execution eluded them.

The authors then did further research to figure out what was going wrong. Here’s where the article started to get a bit murky and meandering. As a result, I took their findings and repackaged them into something I feel is more actionable and easier to understand.

Wrong Definition of Execution

First of all, the authors found that businesses had the wrong definition for execution. In its simplest form, I would say that the definition used by businesses to define execution would be “Hit My Numbers.” The idea was that if the strategy was successfully cascaded down into individual numerical objectives, then if everyone did their part and hit their numbers, everything would be okay.

Unfortunately, that is the wrong definition of execution. I think a better definition would be “Adapt Our Strategy.” As will be seen below, by changing these three words, we get closer to the root of the problems in execution and pointed in the direction of how to fix it.

1. Priortization

There is only so much a person can do on top of their everyday responsibilities in order to execute a strategy. Therefore, one needs to be clear on what is most important to focus on for execution. Priorities must be made. In the old definition, the priorities would focus would be on specific numbers (hit the NUMBERS). Instead, the definition should be focused on specific strategic outcomes (adapt out STRATEGY).

The article (and my experience) find several problems with the numbers focus, such as:

• There are usually way too many numbers to hit, coming from too many different sources, including the everyday non-strategic numeric goals, all jumbled together.
• People usually do not understand the linkage between the numbers and the strategic intent, so they aren’t sure how to achieve the numbers in a way that advances the strategy. Hence, they could find ways to achieve the numbers without achieving the strategy (as we saw in our story). In fact, effort to achieve the numbers can become effort taken away from execution of the greater strategy.
• Numeric goals tend to get frozen in time and not get adjusted to changing conditions in the marketplace. Hence, they eventually become out of step with what you really need to accomplish.
• Too much focus on numbers can lead to micromanaging and locking down on the minutia rather than trying to achieve the big picture.

By contrast, if you focus your priorities more on the strategy and strategic outcomes, you are more likely to properly execute the strategy. This is a focus on what the company is supposed to look like in the future—what it stands for, how it is perceived, what products it delivers, what its position is, and what are the right trade-offs to make with limited resources. These should be the priorities, and they can be measured. This moves the management from number chasing to building a winning formula for success.

2. Agility

In an ever-changing and dynamic world, a rigid process is your enemy. Unfortunately, the current state of execution principles tends to be rather rigid. Budgets get locked down; personnel get locked down; numeric goals get locked down. People are rewarded with promotions and bonuses based on their ability to hit what is locked down rather than their ability to adapt to the environment.

In fact, being agile and adapting is practically punished, because it upsets the rules of execution. You are no longer sticking to the script; you are changing the rules of engagement. It is risky for your career to be agile, because you are no longer in lock step towards hitting the numbers.

Yet, without agility, it is impossible to effectively execute a strategy in today’s environment. Therefore, it should not surprise us that our rigid process is hindering our execution.

The HBR article found two main problems with the rigid process. First, it caused adjustments and adapting to come way too slowly. Slow reaction can lead to strategic death today. Second, because there was no mechanism for incorporating change into the system, there was no way to ensure that the changes moved in the direction of the strategy.

Shockingly, the authors’ studies found that 51% of the executives said they could find financing for projects outside the scope of the overall strategy. In other words, change was not linked to strategic objectives. Over time, hundreds of these little exceptions to the “official” strategy become the de facto strategy. After all, your strategy is the result of what you do, not what you say. So if your change mechanism allows you to do anything, you strategy becomes “do anything.” No wonder execution of the stated strategy is so hard to come by.

The solution is to first build agility into the process. Encourage it; reward it. Second, keep agility from turning into anarchy and randomness by building mechanisms into your execution process to ensure that the changes bring you closer to your desired strategic outcomes rather than further away.

In other words, instead of focusing on “HITTING a number,” which implies attacking a fixed location, focus on “ADAPTING our strategy,” which implies agility in order to get closer to achieving one’s desired strategic outcome.

3. Cooperation

The authors found out that the current state of execution processes are pretty good at getting activities to work properly within a particular bureaucratic silo (the vertical dimension). Unfortunately, they tended to fail at getting cooperation between silos (the horizontal dimension).

Unfortunately, excellence in strategy execution requires horizontal cooperation. This issue needs to be fixed. Part of the problem is that we have done such a good job of targeting the numeric goals at what the individual silo can control, that we have frozen out cross-functional accountability.

People get rewarded for hitting THEIR numbers. Since they are not collectively OUR numbers, we tend to ignore the issues of other silos. Some experts may argue that you shouldn’t hold people accountable for things not totally under their control. My counter to that argument is that there is no better way to foster cooperation than to make it impossible to hit a goal unless you cooperate with others. We have to move the mindset from reaching MY goals to reaching OUR company’s desired outcome.

When you broaden the prioritization from individual numbers to corporate outcomes, you get people focused on the big picture—the overall strategy. Is it no wonder that we get poor execution on the overall strategy when all the individuals are working on optimizing something else? Hold people accountable (at least in part) for the big picture. You’d be amazed how much influence people have on other silos when their personal success is dependent upon it.

SUMMARY
Poor execution can make strategic planning useless. Therefore, we need to focus more effort on getting the execution right. The problem with the current state of the art in execution is that it:

1. Doesn’t get the proper priorities understood or adapted out in the field;
2. Doesn’t allow for the flexibility to adapt to the changing environment in order to meet the strategy; and
3. Doesn’t sufficiently encourage cross-silo (horizontal) coordination.

To rectify these problems we need to redefine execution from “Hitting My Numbers” to “Adapting Our Strategy.”

FINAL THOUGHTS
Next time you see someone get a fat bonus check, look to see if the company’s strategy was also rewarded.

Strategic Planning Analogy #547: Tasks or Goals

THE STORY
Earlier this week, I was working out at my exercise club. They have a sign at the club asking everyone to wipe down the exercise machines after using them. To aid in the task, they have a table with wipe-down cloths and bottles of disinfectant spray.

A young gal was using a machine next to mine. When she finished using it, she took a cloth and just barely touched it to the machine. So I guess, technically, she “wiped the machine when finished.”

But she missed the point. The purpose of putting the sign and the cloths in the club was not to see if people would wipe, but to help prevent the spread of germs in the club. She accomplished the task, but completely missed the goal.

So, before using the machine after her, I gave it a more thorough wipe-down.

THE ANALOGY
There is usually a purpose behind what we do. Depending on our purpose, we will do act differently. If your purpose for wiping down an exercise machine is just to say you did the task, then you will do a quick, half-hearted effort (like that girl). If your purpose for wiping down the exercise equipment is to prevent the spread of germs, then you will do a more thorough wipe-down (like me).

This applies to all the actions in our life. We can either be task-oriented in our purpose (I wiped down the machine) or goal-oriented in our purpose (I prevented the spread of disease).

For example, children may be told they have to brush their teeth, so they barely touch the brush to their teeth—just enough so they can tell their parent they did the task (the task oriented approach). They missed the goal of brushing one’s teeth—to prevent cavities and tooth decay. Had they been pursuing the goal, the brushing would have been more thorough.

Unfortunately, I see this same dichotomy in the business world. Some people approach strategic planning with a task-orientation—they see it as a series of tasks that have to get done. Other business people approach strategic planning with a goal-orientation—a desire to move a business to a more desirable position in the marketplace.

As one would expect, these two orientations tend to lead to different behaviors and outcomes. The task-oriented approach to strategy may result in pretty PowerPoint decks, but little more. Unless one has the larger goal in mind while doing strategy (i.e., business transformation), it will probably never happen.

We need to go beyond just “touching” our business machine with a strategy “cloth” to really wiping it down so that we can keep the company healthy and strong.

THE PRINCIPLE
The principle here is that unless you focus on the goal when doing the task, doing the task won’t get you to the goal. That sounds simple enough, but it can be so easy to get off track.

For example, there are a lot of tasks associated with strategic planning. Some of these include:

1. Environmental Analysis
2. Internal Analysis
3. Competitive Analysis
4. Business Missions/Visions
5. Goal-setting
6. Opportunity Screening
7. Creating long term financial statements
8. Determining KPIs (Key Performance Indicators)
9. Creating Action Plans
10. Communicating the Strategy to the Organization

None of these tasks are bad per se, if you are using them to proactively transform the company. But if they are only seen as a list of unrelated tasks that need to get done, then you will have an organization full of people like that girl I saw at the exercise club. They will put in the minimal effort to say the task got done and miss the entire reason for doing the task in the first place.

There is no magic to just doing a few strategy tasks. You won’t suddenly have a transformed company just because you “got a few strategy tasks done.” It’s no different than at the exercise club. There is no magic to touching an exercise machine and suddenly having it disinfected. The tasks are merely tools to help people think and act more strategically. If the strategic thinking and acting doesn’t accompany the tasks, then you are wasting your time.

1. Focusing on the Goal During Set-Up

Therefore, when it is time to undertake a new planning cycle, make sure everyone is focused on the goal rather than the tasks. This includes both the professional strategists and the rest of the company.

It’s easy for a professional strategist to get caught up in task-orientation on strategy. After all, strategy is their job…it’s what they get paid for, right? The strategy tasks are listed in their job description. So to do their job, they have to do the tasks, right? If they don’t do the tasks well they will get a bad annual review.

That’s ineffective thinking. It leads to perfecting the activity rather than improving the company. The real role of a strategist is to be a catalyst in moving the company to a better position. All those tasks are merely tools to help make it happen.

Here’s my way of looking at all those tasks. I ask myself, “How thorough and complete do all those tasks need to get done?” My answer, “Only to the point where we know where to direct the company and how to get there. Anything beyond that is a waste of time.”

So instill in your planning staff the notion that their primary job is to improve the company, not perfect the tasks of strategy.

This also applies to the rest of the company which participates in the planning cycle. Since running the strategy cycle is not part of their job description, it is easy for them to write it off as just a silly task they have to do which gets in the way of their “real” job.

And you know what? If all they do is halfheartedly participate in the task like that girl at the club, they’re right. It’s a silly waste of time.

You need them to see that the activities are a step to transforming the company. And that can have a big impact on their “real” job. In fact, if the strategy is done wrong, the company may suffer to the point that they no longer have a job. And if the strategy is done right, greater job opportunities may present themselves.

By personalizing it in this way, participation will go up and the company will be better off.

2. Focusing on the Goal During Hand-Off

The second place where goal-orientation is important is at the point of hand-off—when the strategy development ends and the strategy implementation begins.

If the implementation tasks are seen as just a bunch of committees or task forces assigned to do something, then those groups may do the something they were tasked to do. However, it probably won’t transform the company. After the committees and task forces are disbanded, the status quo will tend to return. No major transformation will have occurred, because nobody was really trying to transform. They were just trying to get the assignment done so they could go back to their “real” job.

Therefore, we need to help these committees and task forces see that their real role is to transform the company. Their real task isn’t completed until the transformation takes root. Stopping before that is not an option.

And we need to empower these groups so that they have the ability to fight the forces trying to maintain the status quo. Without power, the tasks lose their ability to transform.

Strategists can help with the hand-off in two ways. First, they can help set up the hand-off so those participating in implementation understand the greater goal and are empowered to make it happen. Second, strategists can act as watchdogs to ensure that these groups stay on track and continue through to the completion of the goal.

SUMMARY
Strategy isn’t to be done just because it involves tasks that are interesting tasks to do. It is to be done in order to find a better direction for the company and a way to make this transformation come to life. If this larger purpose is not consistently put in the forefront of the minds of those working on the process, the process can denigrate into just doing a bunch of unrelated tasks. Then they become worthless, even if well done, because they did not lead to company transformation. Focus on the goal, not the task.

FINAL THOUGHTS
They should change the wording on the sign at the exercise club. Instead of asking people to “wipe down the equipment” (a task) they should ask people to “leave the machine in a sanitary condition for the next user” (a goal).

Strategic Planning Analogy #467: The Flavor Conspiracy

THE STORY
There’s a global conspiracy out there which is trying to get you to believe a lie.  I call it “The Flavor Conspiracy.” 

Think about those artificial flavors.  You can find “cherry” flavor in hundreds of items, from candy to cough syrup.   And every item which claims to have the “cherry” flavor tastes exactly the same.  If everyone is claiming that to be cherry flavor and they all have the same flavor, then that flavor must be the flavor of a cherry, right?

WRONG!  If you were to bite into a real cherry and it tasted like the so-called cherry flavor, you’d spit it out and say that it tasted funny.  Real cherries don’t have the flavor of what manufacturers call cherry.  It’s a lie!

That artificial banana flavoring is even worse.  The flavor doesn’t even come close to that of a real banana.  But every manufacturer uses that same imitation flavor and calls it “Banana Flavor.”  Just because they are all telling the same lie does not make it true.  It’s merely a conspiracy—the flavor conspiracy.

 

THE ANALOGY
A similar conspiracy is taking place in the world of strategic planning.  There is a lie out there that strategy is little more than setting numeric goals and then tracking progress against those goals.  Just shout the numeric goal and plot the progress on some dashboards and spreadsheets and you are done.  Your strategy is complete (except perhaps for additional shouting when the goals are not met).

In more and more companies, this is pretty much how strategy planning is defined.  It is a small offshoot from accounting, where being a CPA is considered a primary prerequisite to working in strategic planning (since those people are skilled in tracking numbers).  If you don’t believe me, go to a job openings site like www.indeed.com and search for strategic planning positions.  Most of the job descriptions tend to move in that direction.

But just because everyone is calling that “strategy” does not make is so, no more than claiming that artificial banana flavoring tastes like bananas makes it so.  It is still a lie.  The conspiracy of having large numbers of people promoting the lie may make it harder to go against the flow.  But that doesn’t mean the majority is right.

Just as those artificial flavors do not accurately represent what the true fruit flavors are, this idea of strategy as merely goal monitoring does not represent what true strategic planning is.   

 

THE PRINCIPLE
The principal here is that unless the planning community stands up to the goal monitoring conspiracy, real strategy will fall away.  It will be like people who never got to taste the real fruit, so they have no reason to reject the false artificial flavors.  Similarly, unless we show the business community what real strategy looks like, the false notion about strategy will be all they know, so they will have no reason to reject it.  They will not know what they are missing.  And they will be missing a lot.  In this blog, I will refer to what is missing as the three R’s.

1. Missing A Reason

Numerical goals are nice, but if you have no reason for why the goal is attainable, then there is no reason why you should assume the goal will be attained.  For example, I could have a goal of wanting to be seven feet tall (2.13 meters).  But I have no reason for why my mature body should suddenly become so much taller.  Therefore, I am unlikely to reach my goal.

Similarly, expecting a mature business model to suddenly jump significantly in sales or profits without any underlying reason is also highly unlikely.  Without a reason, that goal is rather worthless.  And improving the accuracy in your tracking of that goal does not make the goal any more reasonable. 

In my latest book, The Most Important Question, I talk about how the most important question in strategy is “Why should a customer naturally prefer me over the alternatives?”  If you have no reason for why a customer should prefer you, then they will not prefer you.  There will be no reason to expect results to suddenly get better and reach much higher numbers because you have not given customers a reason to reward you with higher numbers.

Sure, you can work a little harder and a little longer at the same old approach and perhaps squeeze out a few drops of extra performance.  But this has a very limited impact.  Any advantage from working harder is usually met with a competitive response which negates the advantage.  And the extra pressure could chase away your best employees or cause them to create more errors due to fatigue. 

 

Also, as markets change, you may find that your old status quo position is becoming less relevant.  And working harder at an obsolete approach doesn’t make it more relevant.  If you are not looking for reasons to succeed, you may not even notice the drift away from a relent reason to exist.  You will only see that goal.

Sure, you can overcome no reason to be preferred a bit by “bribing” the customer with lower prices or better deals.  This may increase sales a bit, but lower profits due to the cost of the added incentives.  And since most of these types of bribes or incentives are easy for competitors to copy or neutralize, they may not even improve sales.  Finally, since there is no underlying reason for why they customers should stay, you could lose those gains as soon as the “bribing” is stopped.

That is why true strategy doesn’t start with a numeric goal.  It starts with defining a position where you have a reason for being, a right to win.  It examines the marketplace to look for viable positions which are desirable, attainable and winnable.  It looks at both rational and emotional drivers of consumer behavior (something not found on a CPA exam).  It dreams up ways to be different from everyone else (whereas accounting tries to achieve conformity in rules with everyone else). 

And most importantly, true strategy questions the status quo to make sure you continue to have a reason to win in a changing marketplace.  It is willing to abandon old rules and adopt new ones.  It is a creative exercise more than a tracking exercise.

2. Missing Reinforcements

True strategy is about making strategic decisions regarding resources.  Where should I put extra resources; where should I take away resources?  Just having a numeric goal doesn’t tell you how to make those choices.   

Michael Porter says the essence of strategy is making the right trade-offs.  In other words, what do I de-emphasize, so that I can afford to create superiority somewhere else?  To answer that, you need to know:

 

       a)      Where you are trying to win (your reason);

b)      What business model makes winning possible;

c)      What attributes are most critical to that business model;

d)     How all the various parts of the business work together to reinforce the winning position.

True strategy isn’t just about telling the people you have today to go out and reach for a goal.  It may first be about eliminating lots of activities (and people) who need to be traded away so that investments can be made in new competencies and capabilities (and new people) that don’t currently exist in the business. 

Until you get the right infrastructure in place, shouting the goal may be shouting at the wrong people.  To win, you need to reinforce the areas of the business most critical to success.  To fund the reinforcement, you need to take funding away from less critical areas.  A true strategy points the way to how those trade-offs are made.  This is a complex task, requiring cooperation and a reduction of political in-fighting and turf wars (particularly from the areas being de-emphasized).  You won’t get that from just shouting a numerical goal.

3. Missing Restrictions   

Strategy is more than just saying which way to go.  It is also about saying which way not to go.  Strategy is about getting alignment around a proper go-to-market strategy.  It is about moving the company in a common direction, so that actions reinforce the reason for being. 

That means that there are more actions which can be wrong than can be right.  And if you are not specific about which activities are wrong, you will not stop them from occurring.   

There are lots of ways to hit a numeric goal.  And a lot of those ways can do harm to the long term prospects of a company.  For example, you can increase profits for a little while by:

a)      Eliminating necessary investments in maintenance or infrastructure;

b)      Destroying quality or damaging services;

c)      Raising prices to non-competitive levels.

In the long run, these actions can destroy a business.

If all you emphasize is hitting a goal, you can end up with all sorts of actions which hit the near-term goal, but destroy long-term prospects.  That is why a true strategy puts restrictions on activities to prevent wrong actions.  True strategy is more about doing the right thing than in hitting a number.  Because if you keep doing the right things, it is easier to hit good numbers year after year after year.  But if all you do is try to hit today’s number by any means possible, there may not be any future.

 

SUMMARY
Just because nearly everyone is doing the same thing doesn’t make it right.  Even if everyone says that imitation banana flavor tastes like bananas, it does not make it true.  Similarly, if most businesses are defining strategic planning as just goal setting and monitoring, that does not mean they are right.  True strategic planning is much more.  It involves determining a reason for winning, a well-thought out trade-off analysis about where to make reinforcements, and restrictions on bad behaviors.

 

FINAL THOUGHTS
Richard Rumelt, in his book Good Strategy/Bad Strategy, says that a goal monitoring approach is bad strategy.  More specifically, Rumelt says that this type of bad strategy “is not the same thing as no strategy or strategy which fails rather than succeeds.  Rather, it is an identifiable way of thinking and writing about strategy that has, unfortunately, been gaining ground.  Bad strategy is long on goals and short on policy and action.  It assumes that goals are all you need. It puts forward strategic objectives that are incoherent and, sometimes, totally impractical.” 

In other words, this approach is not just doing strategy poorly.  It is taking on an approach which is the enemy of true strategy and poisons the mind so that true strategy cannot occur.  We need to fight this conspiracy.

Strategic Planning Analogy #426: The Gotcha Guys (Part 2)

THE STORY
There’s an old saying that “absence makes the heart grow fonder.” That may be true, but absence certainly does not make the relationship easier.

My son works the day shift. His fiancée works the night shift. As a result, they do not see as much of each other as they would like and that adds difficulty to the relationship.

I can empathize with that. When I first moved to Columbus, my wife stayed back in Minneapolis for awhile (about 750 miles away). That was tough.

THE ANALOGY
For a relationship to thrive, there needs to be interaction. This is not only true with marriage. It is also true with the various aspects of one’s business. In particular, I am thinking about the people in charge of long range strategic goals and the people in charge of monitoring near-term financial targets (like annual budget and bonus targets).

If these two groups are not interacting together on a regular basis, they can get out of sync with each other. It can get as dysfunctional as when married couples drift apart and no longer interact on a regular basis.

If the near-term monitors and the long-term strategists are not in regular communication, their agendas may no longer be compatible. Achieving the near-term targets may no longer move the company towards the long-term goals. They might even do the opposite and move the company further away from the long term intent.

As we saw in the previous blog, many problems can occur when the near-term monitoring of the “Gotcha Guys” loses the context of the long-term goals. The Gotcha Guys can end up rewarding bad behavior and punishing good behavior. They can also stifle the creativity needed to achieve ambitious long term goals.

In this blog, we will look at some suggestions to help avoid these problems (and keep that context in place).

THE PRINCIPLE
The principle here is that long-term goals are only achieved if they are part of the daily discussion when near-term targets are being decided and monitored. Therefore, it is essential to have frequent interaction between the near-term Gotcha Guys and the long-term strategists. Here are some ideas to help make this a reality.

Suggestion #1: Set More Strategic Targets
Most of the near-term targets used by companies are simple financial metrics, like “sales” or “expenses.” As we saw in the last blog, it can be easy for people to “game the system” and use tricks to achieve these types of simple metrics in ways that have nothing to do with achieving strategic goals.

Some try to avoid this problem by trying to make the metrics more complex by using ratios. Then you might have metrics like “Sales per Labor Hour” or “Expenses as a Percent of Sales.” But, as we saw in an earlier blog, even ratios can be abused and lose their link to the bigger strategic picture.

Therefore, I suggest that some of the near-term targets avoid numbers altogether. Instead create some monitoring questions which are more subjective—requiring more of a yes or no type of answer.

In its roughest form, the question would be “Did this area take the desired steps to move the company closer to its strategic objectives?” Now this is probably too vague to use in this form. But if you have a well thought out strategy, you should be able to figure out what types of key activities need to take place to make it a reality. Then you can determine which areas of the business need to participate in each activity and how they can impact it. Some examples of key activities might be:

a) Adding some specific capacity where it is lacking.
b) Adding some specific capability where expertise is lacking.
c) Convincing consumers to believe in the claims of your positioning.
d) Creating superiority in a particular attribute essential to winning in the marketplace.
e) Properly resolving a key strategic issue.

By holding people accountable in the near-term for specific activities directly linked to the long-term strategy, one is more likely to get the long term strategy achieved. These types of questions are more difficult to “game” because you are more directly measuring actual long-term activities.

Now some people will take this one step further and try to create fine-tuned metrics around these activities. This is usually referred to as a balanced scorecard. Although having a balanced scorecard is better than just the simple metrics mentioned earlier, it may still be less ideal than the more vague and abstract version of the question “Did you move us closer to our goal?”

I have two reasons for saying this. First, if you keep the question more vague, it requires more interaction between the long-term folks and the Gotcha Guys in order to interpret the target and the performance. And as we said at the beginning of the blog, more interaction is a good thing.

Second, the more we try to push this into a metric rather than a question, the easier it is to sever the linkage between near- and long-term. The temptation is there to focus on just “hitting the number” rather than “doing what’s right.” Why provide that type of temptation?

Now I’m not saying that all the targets should be in this format. Just do enough so that the near-term and long-term people are forced to work together to ensure that people are rewarded on their activities in a long-term context.

Suggestion #2: Use Scenario Planning
As we said in the last blog, near-term targets can get out of sync with long-term goals when the environment changes (or we learn of a need to adjust our assumptions). One way to get around this problem is to analyze various scenarios in the beginning and think through their ramifications to the desired metrics.

Then, if the situation changes, the long-term people can tell the short-term people to shift the program to the alternative scenario and its alternative metrics. By using this process, it gives more opportunities for the two groups to work together (when setting up the scenarios and when changing scenarios). In addition, it is a quick way to keep everyone in sync when times change.

Suggestion #3: Force Interaction
Finally, if these other suggestions do not create enough interaction, then mandate it through policy.
Mandate periodic cross-functional meetings. Rotate people between the two departments. Put them on project teams together. Make increased interaction one of their goals. Have them sign-off on some of each other’s work. Do whatever it takes to ensure that the short-term Gotcha Guys are confronted with the long-term context.

SUMMARY
It is easy for near-term targets to get out of sync with long-term goals. To help prevent this from happening, it is a good idea for the groups responsible for near-term and long-term to interact on a regular basis. Three suggestions to do this are:

1) Add some abstract action-oriented questions to the near term criteria (“Did you do what was required to get us closer to our goal?”);

2) Use Scenario Planning;

3) Force interaction through policy decisions.

FINAL THOUGHTS
If couples stop communicating altogether, they can end up getting a divorce. Let’s keep our communications frequent between the near-termers and the long-termers to prevent an ugly divorce in our business.

Strategic Planning Analogy #383: Showing Up (Part 2)

BACKGROUND
In the last blog, we began a discussion around strategic success. We said that strategic success requires more than just having a great vision and a great plan. One also needs to have employees united around making that plan a reality.

Unfortunately, people do not always naturally unite around a plan. Due to different thoughts and agendas, there can be differences of opinion. People may not see a reason to fight for plan. In fact, some may want to sabotage the plan.

Strategies typically involve change. Not everyone sees the benefit in change. Many will resist change.

Unless you deal with these roadblocks of resistance, your strategy will die before you have a chance to implement it. Therefore, a key part of the strategic process is working to get everyone on board, to show up and be committed to the plan.

In the last blog, we looked at three areas where roadblocks can occur (Motivation, Beliefs, and Perspective). In this blog we will look at four more.

MORE POTENTIAL AREAS FOR ROADBLOCKS

4. Goals
In a race, people run towards the goal. If there is a disagreement about what the goal is (or should be), then everyone will be running in different directions. For a united effort in a singular direction, you need an agreement on what the goal should be. So what should that goal be?

One way to choose a goal is to say “We should do what is right.” Although this sounds good, it is actually a terrible goal. The problem is that it assumes there is only one right thing and that everything else is wrong. This causes people in a discussion to focus on trying to prove that everyone else is wrong. And of course, nobody wants to be proven wrong, so they fight back to prove you are wrong. This leads to discord rather than unity. In the end, nobody wins.

Worse yet, this assumption just isn’t true. There are a lot of divergent points of view which are all “right.” It is right that a company focus on the crisis of today. It is also right that a company focus on tomorrow. It is right that individual departments need to fight for their needs. It is also right that sometimes departments need to give up something for the good of the whole company. It is right for a company to provide financial returns today for its stakeholders. It is also right for a company to invest money for the future. And the list goes on and on.

Therefore, instead of fighting for what is right (and what is wrong), a better goal is to “do what is best.” This way, everyone can save face in the discussion, since their positions are not necessarily viewed as wrong. They are still right—but just not the best right thing to focus on at this time. Instead of attacking, people are comparing.

So how do you determine what is “best”? As I mentioned in the last blog, I am adapting many of my thoughts from the writings of Chris McGoff. McGoff suggests that groups choose between three methodologies:

a) Ends-Based: Best = What Does the Greatest Good for the Most People.
b) Rule-Based: Best = The Best Universal Standard
c) Care-Based: Best = Best Outcome for the One Most Impacted by the Decision

After choosing a methodology, the best goal tends to be rather apparent to most people.

At this point, another roadblock can appear. That is the roadblock of then assuming that you need 100% agreement on this decision (or any other decision) before moving on. An old friend of mine who used to do consumer research liked to say that if you survey a large enough population, you will always find 5% who will believe almost anything. His point was that there will always be a fringe group holding divergent views. They will never be swayed to change their mind. If you wait for 100% agreement, you will be waiting forever. That is not the path to winning in the marketplace.

Therefore, instead of having a goal of 100% agreement, strive for a goal of having 100% willing to live with and commit to the decision. If you want people willing live with and commit to a decision, McGoff suggests two principles:

a) Have a process which people agree was explicit, rational and fair.

b) Make sure everyone in the discussion was treated honorably and that their points were heard and considered. The good news is that switching the orientation from “right” to “best” tends to help with this principle.

5. Balance and Separation
As we noted above, there can be multiple truths in an organization. Many of these multiple truths appear to be bi-polar opposites:

a) Individual/Department Needs Vs. Corporate Needs
b) Near-term Concerns Vs. Long-term Concerns
c) Improving the Current Business Model Vs. Transforming to a New Business Model
d) Analysis Vs. Action

The goal is not to only do one pole and not the other. Instead, the goal is twofold:

a) Find a balance of time between the two poles. Both need an adequate share of your time. For example, if all your time is spent on Analysis, you will never get anything done (paralysis of analysis). Conversely, if you only spend time on Action, you will likely do the wrong things because there was no prior analysis.

b) Make a separation of time between the two poles. Don’t try to work on both of them at the same time. The conflicting objectives will create chaos.

If a discussion hits a roadblock, it can often be because the balance or separation is not working. Either one of the poles has been ignored for too long or the discussion is confused because both poles are being worked on at the same time. Check to make sure that the principles of balance and separation are not violated.

6. Focus
Not everything is bi-polar. There are some things which deserve far more time than others. For example:

a) Focus on what you can control (Empowerment) instead of what you cannot control (Victimization)

b) Focus on The Future (What we can do to improve) rather than The Past (Where we can place blame)

c) Focus on that which impacts our stakeholders rather than that which is just internal bureaucracy.

d) Focus on what advances the Vision.

e) Focus on Results.

Perhaps your roadblock can be fixed by getting more on focus.

7. Culture
What you tolerate becomes your culture. If you tolerate bad behavior, you will get bad behavior. The bad behavior will take over your culture. However, if bad behavior is not tolerated, then it is less likely to dominate your culture.

It is harder to reach unified commitment if people do not trust each other and there is no respect for each other. Toleration of gossiping, back-stabbing, lying, slander, and irresponsibility are a poison to any strategic discussion. You cannot discuss in good faith when you have no faith that there is any good.

If discussions are bogged down, perhaps it is because a poisonous culture has gripped your company. Remember, culture is determined by what is tolerated, not by what is on a piece of paper. Enron had a great culture on paper, but it tolerated poisonous behavior. To eliminate a poisonous culture, you need to have severe negative consequences for bad behavior (including termination). This roadblock can take awhile to fix.

SUMMARY
To be a success, you need more than just a great strategic vision and a great plan to achieve it. You also need to have your employees united around making it a reality. If the employees don’t show up with enthusiasm to achieve this common purpose, the rest of the work is a waste of time. There are seven roadblocks to achieving this employee commitment to the plan. In today’s blog, we looked at four of them:

• Goals – Seek what is Best rather than what is Right; Seek what people can live with rather than 100% agreement.

• Balance & Separation – Balance significant time between both bi-polar truths; Focus on each pole separately (at different times).

• Focus – Focus on what you can control, the future, what advances the vision, what impacts stakeholder, and results.

• Culture – Don’t tolerate poisonous behavior.

FINAL THOUGHTS
It’s hard enough to compete in the marketplace when all your resources are put into the battle. Don’t make it worse by handcuffing your people with unnecessary roadblocks.

Strategic Planning Analogy #305: Act to Win

THE STORY
For Christmas, I received from my son a new board game which I had never heard of before. My wife and I opened up the game to see how you play it. Unfortunately, we did not immediately find any set of rules.

I assumed that the goal of the game is to win. Winning is nice. But if I have no idea of what I have to do to win, then the goal is pretty meaningless (and I cannot play the game).

Fortunately, I eventually found a piece of paper with the rules of the game on it. Now I know what to do.

THE ANALOGY
Strategic planning is about finding a way for your company to win. Lots of the goals or mission statements companies write essentially express this desire to win. They aspire for things like being a “leader” in something, being “the best” at something or providing the “most satisfaction.” These are the way the companies define winning.

The problem is if you stop there. Then you are like the situation I was in with the game I got for Christmas. I knew I wanted to win the game, but I had no idea what I was supposed to do in order to win.

Just as that game was worthless without the rules of play, your business missions and goals are worthless if those in your company do not know what behaviors are needed to win.

Just because you tell people that the company needs to win by creating excellence at something does not necessarily mean that they will know what to do to make that excellence come about. You need to connect the goal to desired behaviors.

THE PRINCIPLE
The principle here is that effective strategic plans outline and measure not only the final outcome (what winning looks like), but also provide an action plan of how to make this goal a reality (what to do).

To me, this seems pretty obvious—figure out what needs to happen and then make sure those things happen. Apparently, it is not all that obvious. The folks at Deloitte today held a web conference to teach what they called “Behavior-Led Strategy Execution” (BLSE). It’s a fancy name for saying that strategies need to be executed in order to be effective.

The BLSE process goes like this:

1) Make sure everyone understands the strategic goal.
2) Figure out what critical events need to happen to achieve the goal.
3) Figure out who are the key people or key departments in your organization that are most responsible for making these events happen.
4) Determine the key behaviors you want these key people to do to accomplish the key events.
5) Track and measure to see if the key people are doing the key behaviors.

In other words, give people the rules of play so that they know how to play to win. The typical rules of play that come with a board game tend to have five parts. We’ll look at each of those five parts and show how they would apply to a comprehensive business strategy/action plan (and help accomplish the BLSE).

1. Goal
Usually, the first thing the rules of play discuss is how you win the game. Usually winning comes down to either:

a. Getting the most (or least) points;
b. Getting the most money;
c. Finishing the game first; or
d. Outlasting your opponents.

Business equivalents could be something like:

a. Getting credit for the strongest brand image or most market share points;
b. Getting the most sales;
c. Being the first to capture a new market;
d. Consolidating the market in your favor.

If you don’t explicitly explain what winning looks like, then don’t be surprised when you don’t win.

2. Resources
Next, the game will tell you what all the pieces and parts are for playing the game. This will include things like the game board, playing pieces, decks of cards, dice, or whatever. You cannot effectively play the game unless you know what all the pieces are.

The business equivalent would be an understanding of the resources available to you and to others. Do you understand your own strengths and weaknesses? As in the Deloitte model, do you know who all of your key players are? Do you know how much manpower and financial resources you have at your disposal to achieve this goal? Do you understand the resources of your competition? Do you understand the “lay of the land” for the marketplace in which you are playing (your game board)?

The resources are all you have to win the game. Learn what they are and how to use them to your advantage.

3. Boundaries
Next, the rules of play for a game typically tell you what you can do whenever it is your turn to play. Certain actions may be allowed on that turn. Other actions may be unlawful. For example, in chess, you learn that each type of piece can only move in certain ways. A bishop can only move diagonally (any number of open spaces), but a king can move only one space at a time (but in any direction).

The business equivalent is an understanding of what behaviors are within acceptable bounds and which behaviors fall outside those boundaries. These boundaries may vary by individual in the organization. In the Deloitte model, it is an understanding of expectations for each of your key people (proper actions, improper actions).

It can also be an understanding of how far an individual can move before needing to seek approval. The idea is that movement is necessary for success. Unless the expectations for that movement are clearly outlined, you may not get the movement you desire.

This is not to say that you have to articulate every single step in minute detail. This is not about micromanaging. It is about setting boundaries and expectations.

4. Outcomes
The next section in a game’s rules of play is typically a description of how particular actions impact your ability to win. For example, if the goal of the game is to accumulate the most points, this section will explain all the ways you can gain (or lose) points. If the goal is to make money, it will explain all the ways to earn (or lose) money. If the goal is to finish first, it will tell you what actions speed up (or slow down) your progress.

The business equivalent is an understanding of which moves get you closer to your strategic goal, and which moves are counterproductive. In the Deloitte model, this would be understanding which behaviors you want your people to accomplish.

The idea is to connect actions to outcomes. This allows people to see which types of actions are most likely to lead to outcomes consistent with winning.

5. Keeping Score
If you want to know who won the game, then you’d better keep score. Keeping score during the game lets you know how well you are doing during the game (and how successful your style of play is). If your score is low, you may want to change your style of play.

Therefore, the rules of play let you know how to keep score.

In business, this is the idea of keeping track of how well you are achieving the desired actions. Are you getting closer to achieving your goal? A lot of businesses track financial performance. However, how many track action performance? Are the right things getting done? Who’s keeping score? This is also the important last step in the BLSE model.

SUMMARY
Winning in business is a lot like winning when playing a board game. If you want to win in a board game, learn the rules of play. If you want your business to win, use your strategic planning process to create your rules of play. Before you can win at a game, you have to first play the game. Similarly, strategic planning needs to go beyond just defining success, but helping a company to play the game.

FINAL THOUGHTS
Over the Christmas holidays, I played a different game with my daughter which I had never played before. I studied the rules of play before playing, but it wasn’t until I actually started playing that I fully understood the rules. The idea here is that you will not perfect your playing skills by just studying the rules. You have to get in there and play the game. At some point you have to stop fine-tuning the plan and start playing the game.

Strategic Planning Analogy #304: Ignore Complaints?

THE STORY
Back in the 1800s, hospitals tended to create death almost as often as preserve life. Take childbearing, for example. Healthy mothers-to-be would come into the hospital, yet up to 25% of these mothers would die in the hospital from “Childbed Fever.”

A lot of time and effort went into caring for these women suffering from childbed fever. Later, much effort had to go into finding ways to raise the children without mothers. There were all kinds of problems needing solutions.

In the late 1840's, Dr. Ignaz Semmelweis was an assistant in the maternity wards of a Vienna hospital. There he observed that the mortality rate in a delivery room staffed by medical students was up to three times higher than in a second delivery room staffed by midwives.

What was the difference? The medical students had multiple duties and would often rush into the maternity operating room right after dissection lessons in the autopsy room. By contrast, the midwives would only come in to treat expectant mothers. Semmelweis suspected that the students might be carrying infections from the autopsy room into the maternity room, thereby infecting the birthing mothers.

To test his theory, Semmelweis ordered the doctors and medical students to wash their hands with a chlorinated solution before examining women in labor. This was a radical idea at the time, since doctors in the 1800s did not wash hands or change bloody gowns between patients. After mandating the hand-washing, the mortality rate in Sennelweis’ maternity wards eventually dropped to less than one percent.

It took many decades after this for the idea of routine hand-washing to gain widespread acceptance among doctors. The doctors resisted the idea that their hands might be causing disease to spread. This stubbornness lead to many more decades of unnecessary death. (You can read more about handwashing here.)

THE ANALOGY
Problems seem to pop up all the time in the world of business. Every day seems to bring a new crisis demanding a solution. Precious time must be diverted to finding solutions to all of these problems.

The hospitals of the 1800s also had lots of problems. At least that is how it appeared to them. In reality, however, they had just one real problem—a lack of cleanliness. When doctors started washing their hands, a lot of the other problems disappeared.

Nobody was complaining about cleanliness. Nobody was fretting about what might be on the doctor’s hands. As a result, this was not an area of concern or attention. Instead the attention was on the patients with the diseases that were unknowingly caused by the dirty hands.

The problem was not with the patients. It was with the process. A simple fix to the process (wash hands) eliminated a huge number of problems with the patients.

This could be the same situation as your business. Perhaps you don’t have as many crises as you think. Instead, you may just have one bad process. A simple fix to the process might eliminate all those other problems.

THE PRINCIPLE
The principle here is that strategic success is improved if you focus on goals rather than complaints.

Problems With Complaints
Complaints come at the end of the chain of activities. Something is wrong with the final outcome and people complain about it. It could be an internal complaint from the CEO, like “sales came in below plan.” It could also be an external complaint from customers, like “your product doesn’t work as planned.”

Complaints are typically resolved by trying to fix the outcome that came out of the process. If the complaint is about sales, then sales-boosting solutions are looked for to fix the problem. Recommendations could be to have a sales-boosting contest for your salespeople, or to lower prices, or to issue coupons, or some other sales-boosting tactic.

If the complaint is about how the product works, then solutions are looked for in ways to improve the product. Features could be tweaked or software could be modified.

The problem with focusing on complaints in this manner is that it is like hospitals in the 1800s focusing on dead patients. By the time you get to the end of the process, it may be too late to really make meaningful improvements. To really fix the issue, you have to go upsteam to alter the process and attack issues that nobody may even be complaining about (like unclean hands).

For example, all the sales-boosting strategies of the world are useless if your process is delivering a product or service nobody wants. Your patient (the product) is already dead, and sales contests won’t bring it back to life.

Similarly, modifications to a product out in the field that is inappropriate for its customer base seldom miraculously converts that product into something appropriate. The product is already dead.

Focus on Goals
Rather than focusing on complaints, a better approach is to look at goals. In general, the strategic goal of a company is the following:

Find a unique way (or process) to deliver a product or service which provides both a superior outcome for the customer and profits for the company.

When you focus on a goal such as this, you are forced to look at the entire process—the big picture. It is a focus on building an integrated business model and how it impacts the life (or business model) of the customer. It forces you to repair things upstream, before the complaints occur.

It is only when you examine the entire process that you find the importance of cleanliness in hospitals. It is only in examining your entire business model/process that you will find the superior strategy.

External Implications
There is a lot of talk these days about using web 2.0 technology to have more conversations with your customers. However, to make these conversations most beneficial, it is important to talk about the right things. Don’t focus the conversation around complaints. Instead, focus the conversation around the goals and outcomes desired by your customer.

The Corporate Strategy Board published a paper in 2009 about a company who took this approach. Traditional conversations, like focus groups and satisfaction surveys, had not been very useful, because they tended to focus on complaints about the mess coming out of the current process, rather than on how to build a better process.

To fix the conversation, this company focused on trying to understand the desired outcome goals of their customers, i.e. what were each of the jobs at the customer’s company trying to accomplish (and what would success look like for these jobs).

By changing the conversation to goals, they stopped trying to improve the product and instead tried to improve the outcomes of the customer. This change lead to radically different approaches and radically different products which benefitted everyone (company and customer).

Examples in the Corporate Strategy Board paper included the following:

1) Customers complained that they needed better automobile brakes. In the old days, they would have just tried to fix the complaint by designing bigger brake pads. However, when they asked about the desired outcome goal, they discovered the customer needed to minimize breaking distance in slippery conditions. Therefore they abandoned the old break pad mindset altogether and focused on antilock braking technology.

2) Customers complained that angioplasty balloons were not smooth enough. In the old days, this would lead to focusing on ways to lubricate the balloons. However, a deeper discussion on goals discovered that the true desired outcome was minimizing the recurrence of artery blockage. That moved the process away from lubricants to collapsible stents.

Internal Implications
Internal conversations need to change as well. Instead of complaining about sales, move the conversation to designing a business model so powerful that sales almost take care of themselves.

Rather than addressing each problem individually and sequentially, look for common threads which point to a systemic issue with your business model. Seek out your version of the “unclean hands,” where a simple process change can eliminate a wide range of downstream problems, even if nobody is complaining about the process.

And take a holistic approach to examining the business model. The Edsel was designed by trying to optimize every piece of the automotive design individually. Nobody bothered to realize that when all the individual pieces were put together, the entirety of the car was a disaster. Look at how the parts interrelate to impact the greater goal of superior outcomes for the customer.

SUMMARY
If you want to make major improvements to your strategy, don’t focus on complaints. Instead, focus on the bigger picture goal—a better internal business model providing superior outcomes for the customer. Focusing on the big problem can save you from dealing with a lot of little problems (and complaints) later.

FINAL THOUGHTS
There was still some resistance to hand washing by doctors as late as the early 20th century. In 1910, Josephine Baker, M.D. started a program to teach hygiene to child care providers in New York. Thirty physicians sent a petition to the Mayor protesting that "it was ruining medical practice by...keeping babies well." It is narrow thinking like this that leads to failure.