Strategic Planning Analogy #526: Big Stick

THE STORY
One time, while vacationing in northern Minnesota, I stopped to see the big tourist attraction in Eveleth—the world’s largest free-standing hockey stick. The stick is 110 feet long and weighs over 5 tons. Next to the hockey stick is a 700 pound hockey puck.

My thought is that, sure, that’s a big hockey stick. But I’ve seen bigger ones in the business world. I’ve seen business graphs with hockey sticks that span millions of dollars!

THE ANALOGY

When a line graph shows a history of slight decline followed by an incredibly fast upward rise, people call that a “hockey stick.” It got that name because the graph has a shape similar to a hockey stick (see chart).

In the business world, I’ve seen lots of hockey stick graphs. The story behind the graph is always the same: Yes, our historical performance has been poor, but you just wait. The magic is about to happen! Soon, everything will suddenly become wonderful and money will come pouring out of the sky!

Just look at the social media world. There are companies who have never made a profit and are actually increasing their burn rate through cash as losses ever widen. Yet they are going public at astronomically high valuations. Why? Because, supposedly, the magic is about to happen when profits will skyrocket. They’ve sold people on the idea that the company is about to experience a “hockey stick” performance.

Given the high valuations placed on these companies, I suspect that their hockey sticks make the one I saw in Eveleth look very small indeed, by comparison.

THE PRINCIPLE
The principle here is that just because you can fill a spreadsheet full of projections and make all sorts of fancy charts about the future does not mean that your scenario will come true. Adding extra decimal points to a wildly optimistic guess does not make the guess any more accurate.

Studies have shown that people are more likely to believe a wild guess is more accurate if the last digit in the number is either a 3 or a 7. But changing a wild estimate from $32,665 million to $32,667 million only gives the illusion of more accuracy. It’s still just a wild guess.

So don’t automatically believe a projection just because it is presented in a way that appears objective and well thought out. People can dress up inaccuracy to look like respectability.

One should be especially skeptical when presented with a hockey stick future. After all, if it is going to be so easy to rapidly improve performance in the future, why is today’s performance going in the other direction?

Where Does the Magic Come From?

There’s an old saying that the definition of insanity is doing the same thing over and over again and expecting a different result. That’s insane because the only way to get a different result is to do things differently.

Hockey sticks assume a wildly different result in the future. So a fair question to ask is what has made things so different to cause a different result. If a truly wonderful and believable change is presented that reinvents the rules dramatically in your favor, then maybe the hockey stick makes sense. Otherwise, the change is nothing more than hoped-for magic. And I’m not going to bet the future on some mysterious magic.

In the social media space, the magic is often referred to as “monetization.” In other words, they say “We currently have no idea how we’re going to make a profit, but once we amass a huge bunch of people, we will ‘magically’ come up with a way to monetize them. Trust us. We’ll find it later.”

I’m not sure I trust the magician.

And even if there appears to be a credible scenario for why a specific type of change will reinvent the rules in my favor, there is still reason to be skeptical. As I mentioned in an earlier blog, I once asked a group of executives what they would do if competition suddenly found a way to take a lot of share from them. They replied that they would get aggressive and do whatever it takes to get the share back. In other words, they would fight to reverse the effect of the change.

Remember, you are not the only one trying to write the rules of the future. So is the competition. Competiton WILL retaliate and try everything they can to pull the line of your hockey stick down. Even if the only thing they can do is copy your change, it gives them a chance to take away about half of the benefit of your hockey stick as they share the benefits of change with you.

What are Their Motivations?

Another thing to look at is the motivation behind the one showing you the hockey stick. How do they personally benefit from having you accept a hockey stick scenario? Is it just a lie so as to advance their career? Is it just a distraction to make you forget about how badly they’ve managed the business in the recent past?

Hockey sticks are hard enough to believe in the hands of those with noble intent. They are almost impossible to believe in the hands of those whose motivations cannot be trusted.

What is their Supporting Data?

All the numbers and math behind the hockey stick can be accurately calculated. But that doesn’t mean that they are accurate conclusions. All the inputs to that math are based on assumptions. If the assumptions are lousy, than it doesn’t matter how accurately you do the math. The answers will still be wrong.

Therefore, instead of arguing the math, you should focus the discussion on the assumptions behind the math. Are the assumptions:

• Believable?
• Doable?
• Able to Withstand a Competitive Response?
• Capable of Creating a True Advantage?
• On an Identifiable Path to Profits? 

Or is it just a bunch of magic?

SUMMARY
Many presentations of the future include a hockey stick—a rapid and large improvement to the business after years of weak performance. Since hockey sticks rarely occur in real life, seeing one on a chart should set off warning bells in your head. Work extra-hard to determine if the scenario should be believed. Look for believable and achievable change in the environment to your advantage. Make sure the presenter has the right motivations. And double check the assumptions.

FINAL THOUGHTS
Hockey is just a game and hockey sticks are a tool to advance that game. Be wary of business people who use hockey sticks to advance their game of deception in order to wrongfully advance their selfish cause.

Strategic Planning Analogy #511: Motivated by Money

THE STORY
Years ago my team was proposing a new business plan to our CEO. In brief, the idea was to stop a competitor’s aggressive move into our markets by making a reciprocal move into their most profitable market. Since we were in a stronger cash flow position than them, we could afford to attack their key source of cash, and they would have to retreat in order to protect their core.

We could inflict great pain on them in their key market with only limited pain on ourselves. And this would cut off the cash they were using to attack us. Hence, we would create a long-term gain for ourselves with only a small immediate hit to ourselves.

The CEO listened to the detailed strategy with a puzzled look on his face. Eventually, he looked up and said, “Don’t give me a strategy. Just tell me how to make money.”

Since the strategy did not immediately make more money for the firm, the CEO rejected it. As a result, the competitor continued attacking our company. Eventually, their cash flow became even stronger, so they became even more aggressive. Over time, this aggressive behavior wiped out a key division of our company, leaving us with a huge loss of earnings.

The CEO’s actions helped us make a little bit more money in the near-term, but wiped out an entire division in the long term. It appears that we would have made a lot more money if we had focused less on making money and more on having a strategy.

THE ANALOGY
In the world of capitalism, making money is a good thing. If you aren’t eventually making money, your investors and other key stakeholders will get upset. However, if your only motivation is to obtain money, then you may make decisions which lead to bankruptcy. The irony is that a single motivation towards money is not usually the best path for achieving the most money.

As we saw in the story, the best path for making the most money involved a time consuming process which caused near-term pain. By rejecting this approach and instead taking steps which created the most money immediately, the company put itself on a long-term path which destroyed a key division of the company.

Key decisions are made based on what motivates us. If “making money right now” alone is the key motivation, then we may end up making the wrong decisions. Other motivators are more likely to make more money.

THE PRINCIPLE
The principle here is that motivations matter. And the singular motive to just “make money” is not the best motivation.

The Principal Applied to Entrepreneurism

Many studies have been done to look at what makes a successful entrepreneur. These studies consistently show that if the primary motivation for the person becoming an entrepreneur was “to make a lot of money,” then they usually failed as an entrepreneur.

Becoming a successful entrepreneur takes a lot of hard work and a lot of sacrifice. It often requires living near the poverty line for quite a while before the business takes off. If all you want is a lot of money right away, then you typically will not put up with the level of sacrifice needed to succeed as an entrepreneur. So you will fail.

In fact, there was a recent stream of articles on Quora.com about people who voluntarily chose to become homeless in order to invest everything they had into their entrepreneurial start-up. In essence, they were looking for ways to become as personally cashless as possible for the sake of building the business. That type of sacrifice requires a different type of motivation than merely wanting to make money.

The studies on entrepreneurism usually show that the most successful entrepreneurs are motivated primarily by a desire to create a superior solution over what is currently in the marketplace. They are more driven to build a better answer for others than build a bigger pile of cash for themselves. Yet, ironically, by not focusing so much on the bigger pile of cash, the entrepreneur is more likely to eventually have that big pile of cash.

The larger, grander, and nobler motive of giving the world a better alternative is needed to motivate the extreme levels of sacrifice needed to create success. It also has a secondary benefit. Customers don’t just want to give you money because you want them to give it to you. The customer wants great value. If you are motivated to provide superior value for the customers, then you are motivated by the same thing that will motivate customers to give you their money.

In other words, an outward motivation to better the lives of others is the best way to get others to voluntarily want to give you the money needed to get rich. This point really reached home to me when watching the recent movie about the life of Steve Jobs. Making money was nowhere near the top motivator for Jobs. He was driven by a motivation to make great products (and got very angry with those who did not share that motivation). Yet, in the end he was very wealthy.

If all you want is a lot of money and aren’t motivated by a larger purpose, then you’re probably better off seeking a life of crime than one of entrepreneurism. In crime you get the money involuntarily from people. Rather than giving them a reason to want you to have their money, you just steal it.

This is not to say that successful entrepreneurs have no motivation for wealth. No, a desire to be rewarded for one’s sacrifices is logical. If there is no potential for a pot of gold at the end of the rainbow, then the entrepreneur will eventually stop the effort of chasing the rainbows. The point is that a money motivation alone is usually not enough. A larger, external motivation to provide the world something better is also needed.

The Principle Applied to Big Business

This same general principle also applies to large corporations. In the story at the beginning of the blog, we saw a large corporation destroy one of its business divisions because it focused too much on looking for easy ways to make money quickly rather than looking at the sacrifices needed to ensure long-term viability.

The grander, market-based motivations help large corporations in many ways. First, they provide a reason for all of the employees to give a strong effort on behalf of the company. Let’s face it. In large businesses, most of the employees are not going to become extremely wealthy. So why should they put in the extra effort?

When you have a business mission based on a larger, nobler goal, you provide a motivator that everyone can rally around. There’s the old story of the government official in the 1960s who was getting a tour of the NASA operations. He was asking people at NASA what they did. When he asked the question to a NASA janitor, the janitor replied “I’m helping to put a man on the moon.” Because the janitor captured the larger vision, he became a more diligent janitor.

Is your mission wrapped in a nobler goal, like putting a man on the moon? This is a great motivator for the masses in your organization.

Second, if a large business does not see its mission in larger terms, then it will not know what to do to succeed. Many large businesses have strategic plans which say little more than “We want to make a lot of money.” Sure, they may disguise it in more “flowery” language and make it sound more tangible by attaching a numeric target to it. But fancy words and numeric targets won’t disguise the reality that these types of “strategic plans” are nothing more than vague wishes for greed.

Just because you can say “We want to make a lot of money” does not mean that you have a clue as to how to make that money. Money is made when you have a solution desired by the marketplace that you can profitably provide because of the unique business model you have designed to deliver that solution. Unless your business has a specific strategy about…

1.     What it is delivering to the marketplace;

2.     Why it is a superior solution; and

3.     How it can be delivered profitably

…then you will not make those big piles of money. Without a reason to succeed, there is no reason to expect to succeed. Therefore, large companies need a planning process to ensure that the reason to succeed is discovered.

Finally, in large companies, you have lots of people doing all sorts of different things. If there is not a common understanding of what your success formula is, then employees will go off in all sorts of different directions. These uncoordinated efforts will be more like random anarchy than a coordinated march to success.

If you want a large company to be successful, you need to everyone moving in the same direction towards that success formula. That requires not only developing the grander plan, but making sure it is widely known and is rewarded when followed. Otherwise, the plan will not reach reality.

SUMMARY
People act based upon their motivations. Ironically, the best primary motivation to create business wealth is not an inner motivation for wealth. Instead, it is an outer motivation to provide a superior solution in the marketplace. This outward focus forces one to create the types of value needed to cause others to pay you for your offering (the source of wealth). It also provides that higher cause which motivates people to work harder. That is why companies need strategic plans which outline what the outward success formula is and put it in words which motivate employees to put it in place because it achieves a higher, nobler goal.

FINAL THOUGHTS
In the movie Wall Street, Michael Douglas (playing the role of Gordon Gekko) famously says, “Greed is Good.” I say “Greed is Not Enough.” You also need a viable plan and an external motivation which transcends greed.

Strategic Planning Analogy #478: Casual Day Stickers

 

THE STORY
I worked at a company where every department in October was expected to come up with a way to raise funds for the United Way charity.  One year, our department decided to sell “Causal Day” stickers.  The idea was that if you bought and wore one of these stickers, you were allowed to wear casual clothes to work on that day of the week (not just on Casual Fridays). 

We went around the company trying to sell these stickers.  In many departments, we were unable to get much interest in buying the stickers.  However, when we got to the IT department, we were treated like heroes.  The IT people were buying as many stickers as we had.  They loved the idea of being casual every day and were willing to pay a lot for the privilege. 

We learned from that experience, and in future years we focused our time in the IT department, so that we were more productive in selling those stickers. 

 

THE ANALOGY
Even though we all worked for the same company, we had different levels of demand for Casual Day stickers.  Some placed a high value on those stickers, while others saw little value to them.

This shows the point that not everyone is wired the same way.  Different things motivate different people.  If we try to treat everyone exactly the same way, we will not get exactly the same results from each person.  What motivates some will de-motivate others.

For strategic planning to be successful, one needs to go beyond merely having good ideas.  One also needs to find a way to motivate people to embrace and implement the good ideas.    And since people are motivated by different things, a one-size-fits-all approach to motivation is not the optimal way to get a strategy implemented everywhere in the organization.  

 

THE PRINCIPLE
The principle here is that strategic objectives and tactics do not have to be treated the same way, and in fact should be treated differently. 

Unified Objectives

The overall strategic objectives need to be relatively unified.  This is because a company is more likely to own a position if everyone in the company is moving in the same direction to support it.  For example, if your strategy is rooted in low cost, low price, then you need the majority of the company’s effort moving in the direction of lowest cost and lowest price.  Otherwise, activities counter to that objective will creep into the company and dilute the objective. 

For example, if half the company is pursuing lower cost and another half is pursuing higher service, then you will probably lose on both fronts.  There will be more focused competitors winning on the low cost front and other focused competitors winning on the high service front.  As a result, by having some people trying to win on both fronts, you end up winning on neither front.

That is why a unified focus is so important for key strategic objectives.  Trade-offs need to be made in order to win competitive superiority on these objectives.  And if the company is not focused on making the same trade-offs, you will not win your objective.  One person’s action will counter another’s action.  This will confuse the customer as to what you stand for, so you will not really stand for anything.

Diversified Motivation Tactics

However, just because objectives need to be the same across the business does not mean that the motivational tools needed to get the objectives accomplished need to be the same across the business.  In fact, as we saw with the Casual Day stickers, an approach which motivates very well with some areas may be totally ineffective in other areas.  If I tried to motivate the entire company to meet an objective with Casual Day stickers, I’d probably get great compliance from the IT department but not from many other areas.

Therefore, tactics to motivate the larger objective need to be customized for the particular people being asked to achieve the objective.

Over the years, I have had the privilege of managing a wide variety of people.  At one extreme, I’ve managed accountants who tend to prefer predictability, rules and the comfort of routine.  On the other extreme, I’ve managed creative-artistic types who hate predictability, rules and routine. What motivated one group de-motivated the other.

I learned that I needed different motivations for all the different types of people I’ve managed over the years.  Some were motivated by money, some titles, some freedom to work on their own pet projects, and some a break from working on any projects.  So the irony is that the best way to get unified outcomes is to have diversified motivations for the inputs.

Freedom Vs. Regulation

Some experts try to frame business issues as an “either/or” argument:  either you promote freedom OR regulation.  But business life is not a unilateral process.  For major objectives, regulation is more desirable; for motivating tactics, freedom is more desirable.

So the question is not Either/OR; the question is Which/When.  In other words, which areas deserve a particular approach at what times?  Yes, freedom and regulation are both valuable tools.  A company using only one approach all the time will sub-optimize.  However, using both approaches randomly sub-optimizes as well.  Each has a place where it is appropriate and where it is not appropriate.  Great companies figure this out and use them appropriately to gain advantage.

I was reminded of this in reading an article put out recently by McKinsey and Company.  In the article, they talked about the success of an “envelope” approach to getting things done.  The envelope approach works like this.  The envelope represents the space in which the company wants to operate.  The dimensions of the envelope are rigidly defined.  You are not to act outside the dimensions of the envelope.

By contrast, great freedom was given for how an area operated within that envelope.  As long as an area of the business stayed within the envelope, there were given great latitude as to how innovate and thrive.  This envelope approach has been successful for those firms which can abandon the either/or approach and embrace which/when. 

So, using the McKinsey language, strategic objectives become the dimensions of your envelope and as long as your motivational tactics fit inside that envelope, you have great freedom to do what works best in your area.

 

SUMMARY
Freedom and rigidity both have their place in business, but it is not the same place.  Rigid structure is needed to define the major strategic objectives.  This same rigid structure needs to hold for the majority of the business.  However, just because rigid universality is needed for defining the objectives does not make it appropriate for everything else.  When it comes to motivating people to deliver on that objective, usually the opposite is more appropriate.  Great freedom and diversity tends to get the best effort towards the major objective.

 

FINAL THOUGHTS
At that same company where I sold Casual Day stickers, our department would always have a big problem this time of the year.  We would try to plan a department Christmas party.  About half of the group wanted to make it a fancy evening affair where we would dress up and bring our spouse.  The other half wanted to make it a simple lunch catered in at the office building (no dressing up, no spouses).  The problem was compounded by the fact that each half tended to hate the preference of the other half.  So even within the same department, motivations and preferences can vary widely.  One person’s pleasure can be another person’s torture.  So be sensitive to the diversity.

Strategic Planning Analogy #460: Who’s the Greatest

THE STORY
If you get sports fans talking long enough, the conversation the conversation will eventually get around to an argument over who was the greatest.  Who was the greatest athlete?  Who was the greatest coach?  Which is the best team?

The problem with these types of arguments is that the individual greatness is tough to separate from the given situation.  For example, there are coaches who were very successful coaching one team, but then did poorly coaching another team.  Same coach with supposedly the same brilliant coaching strategies and skills, but different results.  So is the coach great or not?

The same is true for many athletes.  An athlete might have great success playing on one team but not when playing on another team.  Same athlete with the same skills, but different results depending on the rest of the team.  So is the athlete great or not?

And, of course, most teams can have a streak of very successful years, followed by a streak of poor years.  Is it a great team or not?

THE ANALOGY
In the world of business, one can also find heated arguments about greatness—who was the greatest CEO, the greatest business or the greatest business strategy.  In these discussions, you run into the same problem as with sports—the situation plays a major influence.  Some CEOs have great success at one company but fail miserably at another.  A company regarded by business experts as great in one year may go bankrupt a few years later.  Just like in sports, situations can change, causing otherwise great CEOs and companies to suddenly not look so great (or vice versa).

The one that is most relevant to me is the discussion about great business strategies.  Many times, a great strategy on paper may not work out so well in practice.  So was it a great strategy or not?  Should the strategists be rewarded or not?

THE PRINCIPLE
The principle here is that strategies should not be judged on how great they are.  Instead, they should be judged on how SUCCESSFUL they are.  After all, if the company does not benefit with success from the strategy, what is the point of having it?  Being proud of a “great” strategy on a piece of paper that never gets properly executed (for whatever reason), isn’t much to be proud of in my opinion.

And since success is based on a lot of situational factors (like in sports), strategists need to concern themselves with these factors if they want to see success. The truly great coaches adapt their strategies to the particular situation at hand—the athletes they have, the opponents they play, and so on.  In a similar manner, business strategists, need to look at the larger context in order to be sure that the strategy ultimate leads to success.

Moving from merely having a great strategy to having a successful strategy requires four steps.  These are described below.

1) Moving From Ideas to Actions

It all starts with a great strategic idea—what to be, what winning looks like.  But, if you have no clue how to bring this idea to life, then all you have is an idea.  Dreams are nice, but eventually you have to wake up and face reality.  For example, a sports team can dream about winning a championship, but that’s not enough to secure the championship. The team has to take action—play games, win games.

Moving a great strategic idea from a dream to a reality is the same. You have to convert the dream into action plans.  This doesn’t mean that every detailed action needs to be spelled out in advance.  However, the big action requirements need to be understood. 

A good coach doesn’t just tell his team to “win” and then walk away.  No, he draws up some game plans and set plays.  He devises actions that will increase the likelihood that the team will win.  In the same way, successful strategies are more than just declarations of lofty targets.  They also outline the path of actions needed to get there.

2) Moving From Actions to Skills

So far so good, but this is still not enough.  A great coach could have a great strategy and a great gam plan..  But if the players on the team are incapable of executing the strategy and game plan, then the coach will not succeed.  Somebody has to do the actions.  If the people cannot do the actions, the actions won’t get done.

That is why a great strategy not only includes an action plan, but also a plan for those doing the action.  In sports, it usually boils down three things—having athletes of the proper skill levels, having athletes properly trained, and having the proper equipment and facilities. 

A similar situation exists for businesses.  To execute the action plan you need skilled people who are properly trained and have all the tools and infrastructure they need.  In the past, I have referred to this as the “pursuit" portion of strategic planning.  The idea is that the plans don’t get done by themselves—you have to pursue them.  The pursuit portion of strategic planning makes sure you have all the pieces needed to win—competencies, capacity, and connections.  I spoke in more detail about these in an earlier blog.

Remember, strategic success relies on having the right people properly equipped.  Therefore, strategies need to consider both the human resource element and spending on resources.

3) Moving From Skills to Exploitation

Okay, so now we have a strategy, an action plan and some skilled players.  But that still does not guarantee success.  There have been dream teams in the past with all sorts of skilled players who still had disappointing performance.   Maybe the team chemistry is wrong.  Perhaps there are too many selfish egos in the way preventing teamwork.  Perhaps a key player doesn’t want to be on the team and is sulking rather than playing.  Perhaps the team is not serious about doing what it takes to win.

Whatever the cause, the execution is below the levels necessary to win.  Even if sufficient skills and sufficient training/equipment is there, if the athletes are not sufficiently motivated, the plan will not be properly executed.  The skills need to be exploited to be useful.

That is why great coaches not only work on game plans, but also work on team motivation.  Both are needed if you want the plan to succeed.  It is natural and expected for coaches to do this.  Yet it is not usual and expected that strategists would do this.  I think that is a mistake. 

It is common for strategist to hand off the plan to those executing it and then walk away.  And if the plan fails, the strategist blame “poor execution.” “It’s not my fault,” they say. “It’s the fault of those who are poorly executing that great plan of mine.”  We wouldn’t accept it if a coach used that excuse in sports.  Why do we allow that excuse in business?

No, if you want a truly great strategy, you have to include a process which properly motivates employees to aggressively and enthusiastically execute the key elements of the plan.  Do the people know what you want executed?  Are the compensation systems set up to reward the proper long term strategic behavior?  Are there motivating pep talks?

4) Moving From Exploitation to Strategy

Often times, even having action plans, skilled personnel and motivation is not enough.  For example, on a sports team, a coach may find that the people have skills, but not the right skills or right balance of skills.  Perhaps a star player retired or got injured, leaving a big hole.  Perhaps the matchup with competition is not what is desired.  In these cases, no matter how well thought out, the original plan is in trouble.

Great coaches do not blame these circumstances for their problems and accept failure.  No, they adjust.  If you don’t have the right kind of team to execute the original plan, perhaps you need to adjust the plan to better exploit the advantages you do have.  Look at what you have to find a way to win.

The key is not to have a great strategic planning document, but a successful business.  The environment the company is competing in is fluid and ever changing.  Internal and external changes often require adjustments to the overall plan.  This does not mean that strategies should be in constant flux.  But it does mean that adjustments may be necessary.

Planning is not a one-time event, but an on-going process.  It is a continuous cycle from strategy to action to skills to execution and back again to strategy. 

SUMMARY
The goal is not to have a great strategy, but to have a successful business.  Therefore, the strategist should not just come up with a great idea and walk away.  No, the process needs to be expanded to encompass all the elements needed to convert a strategy from an idea to business success.  That includes the development of action plans, plans to ensure the proper people/infrastructure are in place, and plans to properly motivate the right actions.  And if, going through this larger process you notice that the original plan is no longer most appropriate, take time to reformulate the plan to best exploit the situation at hand.

FINAL THOUGHTS
The greatest strategists are the one who create the greatest company successes, not the ones with the greatest portfolio of mission and vision statements.

Strategic Planning Analogy #428: Changing Tires

THE STORY
Let’s assume there are two people driving along in a car. One is the manager and the other is his subordinate.

As they are driving along, the car suddenly gets a flat tire. After pulling off to the side of the road, the two of them just sit in the car doing nothing.

Finally, the manager says, “Well don’t look at me to change that tire. I like the current tire. It successfully got me everywhere I wanted for the last five years. I see no reason to give up on that tire and change it just because it had one little setback.”

The subordinate says, “Well don’t expect ME to change that tire. It’s not in my job description. It’s not a part of my bonus calculation. I’ll file a complaint if you force me to change it.”

So the two of them sat there by the side of the road for hours with that flat tire, even though there was a spare tire and jack in the trunk.

THE ANALOGY
When a tire goes flat, you need to change it. Similarly, when a company’s current business model goes flat (stops working), you need to change it. Therefore, one might think that all one needs to do when business models go bad is to discover a new business model and a migration path and you’re done. Right?

Wrong. In the story, they had the equivalent of the new business model (the spare tire) and the migration path (the jack). Yet those parts just sat in the trunk not being used.

Why? Because nobody was adequately motivated to use the jack to put on the spare. The manager did not see the need for change and the subordinate did not feel personally responsible for making the change. If nobody wants to do the work, then having the parts is worthless. You’re stuck on the side of the road while the other companies pass you by.

Are companies really as silly about change as those people were with the flat tire? Well, consider research by McKinsey and Co. Scott Keller and Colin Price of McKinsey recently wrote a book entitled Beyond Performance. The book is based on research into thousands of executives at hundreds of companies. Here is what they found.


First, about 70% of change programs fail. In other words, most of those flat tires don’t get adequately fixed. That’s not good news.

Second, the primary reason why those change programs failed is not due to a lack of resources or plans. In other words, it wasn’t for a lack of spare tires and jacks that these change programs failed.

Instead, 72% of the failure could be traced to the people in the organization—nearly half of this amount to management failure to support the change and the rest due to employees resisting the change. In other words, most companies are very much like those people in the story. They sit by the side of the road in failure because management won’t support the change and employees resist the change activity.

THE PRINCIPLE
The principle here is that “change” is an activity, not a concept. You can have the concepts of a new vision or a new strategy or a new business model. You can also have the concept of a plan to make that change a reality. But if equal effort is not also placed behind motivating people to act, you will almost surely fail.

Therefore, a strategist’s job is not done when the business model and migration path are devised. It is only done after equal effort is spent creating an internal environment capable of vigorously acting to bring about that change—quickly and fully. Otherwise, all you have done is put a spare tire and jack into the trunk and left the company sitting by the side of the road unwilling to use the tools you provided.

Getting Management Support
So how do you get management to embrace the need for change? There are several approaches.

First, you can try to get them to see that the status quo is truly broken and cannot be brought back to its former glory. In the story, the manager thought the flat was just a temporary setback for the formerly successful tire and that it would eventually bounce back up on its own like before. Therefore, he was not motivated to change that tire. Similarly, you need to show people that the flat is a major change in the condition of that tire. It will not return to its former glory on its own. It must be replaced.

Second, you can try to convince them that even if they liked that old tire, they’ll like a new tire even more. In other words, if you cannot convince them the old model has gone bad, then convince them that the new business model is so much better that it is worthy to change to get the improvement.

Third, you can appeal to their personal motivators. Most managers have something which drives them to reach the top. For some it is greed for money, for others it is greed for power, for others it is leaving a legacy, and for some it is leaving a mark which makes the world a better place. Whatever the motivator, tie it to the change. Tell them that if they make the change, they will get more money, more power or more whatever, than they had before. It’s sorta like telling a guy with a flat tire ,“If a guy puts slick new tires on his car, all the cute girls will want to ride with him.”

I’ve talked about ideas like this in more detail here and here.

Getting Employees to Make the Extra Effort
In addition to getting the managers motivated, you need to properly motivate the employees. It’s one thing for employees to do the minimum required for their position. But if you want to succeed in the transition for change, employees typically need to put in a much stronger than normal effort.

Keeler and Price refer to this as going beyond merely motivating through normal incentives to tap into “employees’ sense of meaning and identity to harness extraordinary effort.” This is effort which comes from deep in the heart.

This means transforming the change agenda from being “additional work” on top of the day-to-day to becoming “the greater work” which gives meaning to all of one’s efforts.

I’ve spoken about this topic in more detail in several other blogs, including this one.

SUMMARY
A large part of strategic planning has to do with enacting change within the organization. The key roles typically given to strategists are to:

a) Help determine what to change into; and
b) Help determine the best path to get there.

However, research has shown that if that is all that is done, there is a high likelihood of failure. To ensure success, one must do more. One must also make sure that:

a) Management believes in promoting the change; and that
b) Employees are deeply motivated to give an extra effort to make it a reality.

Strategists need to help with these issues as well.

FINAL THOUGHTS
Changing a tire is not a glamorous job. You have to get your hands dirty. But the car won’t get moving again unless you change the tire. In business change, not all tasks are glamorous, either. But if you keep the big picture in mind, you can see that the messy jobs are essential if you want the big prize. So don’t shy away from getting your hands dirty by working on getting the implementation done.

Strategic Planning Analogy #421: Tapping the Power

THE STORY
One year for Christmas I decided to put up a larger than normal Christmas light display in my front yard. I bought all sorts of new items to place in my yard, including a metal deer covered in lights with a motor that made its head go up and down.

Everything worked fine for a few days. Then it stopped working. The lights went out and the motor stopped working. I spent many hours over many days going over everything in the front yard trying to get it to work again. I assumed that something in the display was broken, so all I need do is fix the display and everything will be fine.

So I spent hours looking for the brokenness in the display. I wiggled all the wires in the display. Nothing helped. For the rest of the season, the display at my house was dark and lifeless.

After Christmas, I started to take all of the lights and displays down. It was then that I saw a switch in my garage that I had never noticed before. It was a circuit breaker switch. I pushed the button, and all of a sudden the remaining parts of the display began to work.

If I had only spent a second at the beginning of the season pushing that button in the garage, I could have saved all of those many hours wasted in the front yard trying to get that display to work.

THE ANALOGY
My goal was to have a great Christmas light display. Therefore, that is where I focused my efforts. When my goal was not being achieved, I spent my time looking for a solution somewhere in the display.

Unfortunately, the problem was not hidden within the display. It was back behind the scenes in the garage. Had I only taken my eyes off the goal, I would have seen that the display was fine and that the problem was that there was no electrical power getting to the display. Had I spent more time thinking about the power behind the display, I would have had a working display that year.

A similar situation can occur in strategic planning. We can get so focused on our strategic goal that we forget about looking at how well the goal is connected to the corporate energy source. Since the goal is what we want, we look at fixing the elements of the goal when results fall short. This can all be a waste of effort, since the problem often is a result of insufficiently tapping into corporate energy. Turn on the power of the organization, and the results will come on their own.

THE PRINCIPLE
The principle here is about discerning the difference between power and performance. Performance is the output—it is what we want to happen. It is our goal. Power, by contrast, is the input—it is the energy needed to accomplish the goal.

Strategic planning is usually pretty good about managing the performance. It helps us decide what we want to happen (goals) and how we are going to measure the results (metrics). Many times, however, the process comes up short on managing the power. It doesn’t go behind the scenes to ensure that sufficient energy is focused on the plan.

Power is often just assumed to be there. Just set the goal and the work will get done. Therefore, all the effort is spent on getting the right goal and measuring the progress towards the goal. Nobody bothers to go back into the garage to make sure the power switch is set in the “on” position.

The real problem occurs when performance falls short of plan. If you focus only on the performance, you may not be able to fix the problem, because the cause may be insufficient power.

For example, let’s say that you have a goal to achieve dramatic sales growth for a particular product and performance is falling short. To fix the sales problem, you may look for a sales solution. You may look to change the advertising, or change the pricing, or start a new sales promotion, or some such similar tactic. This would be similar to when I tried to fix my Christmas display by tinkering with pieces of the display. And, like with my Christmas display, all those efforts may not work.

However, if you stepped back to consider the power in your organization, you may have found that there was nothing wrong with the original plan (as far as it went). Instead, the problem was insufficient motivation amongst those required to do the selling (not enough power). Perhaps they do not believe in the product. Perhaps they have put their power behind a different product in the portfolio. Perhaps they just aren’t motivated to work hard because they feel no loyalty to the company. If you fix the power, the performance will come all on its own, because highly motive employees can accomplish much.

Problem #1: No Power
There are two ways in which a company can mismanage power. First, they may not create sufficient power. I have personally witnessed how much performance is impacted by the level of power running through the employees.

For example, I worked with a company that used to have a lot of power flowing through the employees. They were highly motivated to “do whatever it takes to win.” They loved the founder and would go the extra effort in response to that love. The place felt like a family and everyone worked hard for the good of the family. The power was huge and performance was outstanding.

Then something happened—the founder retired and the new leadership destroyed the feeling of family. As a result, work became nothing more than just a job. People went from voluntarily working 70 hours a week (because they loved doing it) to working only 50 hours a week. The energy levels during those 50 hours went down as well (because they didn’t love doing it as much and they didn’t care as much). The power of family love was replaced with unproductive in-fighting. Personal goals replaced doing whatever it takes for the greater good. And, not surprisingly, performance started to suffer.

The company is scrambling to find ways to get performance back up. But the focus in on adjusting the tactics rather than the power behind the tactics. As a result, they are fighting a losing battle.

In essence, the company had unknowingly turned off the switch in the garage, not realizing how much impact that would have on the display out front. And now they are trying to fix the problem by tweaking the display rather than turning the switch back on.

By contrast, I had the privilege to work in the past with the employees of Save-A-Lot, a hard discount, low price food retailer similar to Aldi. When you walked into the Save-A-Lot headquarters, you could feel all the energy and buzz around you. The power switch was on full power.

When you talked to the people, the conversation wasn’t around doing a job of pushing groceries at a profit. Instead, people talked in terms more similar to a religious revival. They talked about the pride they had in providing a higher standard of living to those who society tended to overlook. They talked about bringing “greater dignity” to the poor by packaging the food products to look like the brands the rich people ate. They not only wanted to feed these people, but improve their sense of self-worth. It was as if they weren’t grocers, but missionaries on a mission to save the poor from malnutrition and humiliation. They were united in purpose and focused on this larger, more personal motivation. And guess what? This power lead to great performance.

To achieve high levels of power, you need to supply high levels of purpose. This purpose needs to transcend just working for a paycheck. It requires tapping into the inner desires of your people. This concept seems to be taking on greater significance, as the Millennials who are now entering the workforce seem more focused on this greater purpose than the Baby Boomers they are replacing. If you do not provide a greater purpose, you will lose a lot of the power potential in the Millennial segment.

Strategic Planning can help by infusing a higher purpose into the Vision and Mission Statements. Planners can help ensure that strategic processes not only looks at managing performance, but also proactively manages power. They can make sure that power issues get sufficient attention.

Problem #2: Power Unlinked
Even if the company is full of power, performance may still suffer if there is insufficient connection between the power and the performance. My Christmas display only worked when plugged into the power source in the garage. Similarly, strategists need to connect the strategy to the power in the people.

Strategists need to show how the strategy is connected to the higher purpose. They need to show how achievement of the strategy not only improves performance, but improves achievement of the higher purpose. They need to show that putting effort behind the plan gets them closer to the higher purpose that doing something else.

SUMMARY
Often, the best way to ensure that strategic goals are met is to take your focus off the goals and focus instead on ensuring that the organization is powerfully motivated to achieve the goals. This typically requires bonding with employees at a deeper level (than merely meeting the goals) by instilling a higher purpose into what people do. The higher their motivational power, the more likely the effort will be there to get the task accomplished. If you can connect that power to the task at hand, then the results will pretty much take care of themselves.

FINAL THOUGHTS
This deeper bonding can also work with customers. If consumers identify with your higher purpose, then they will want to support your efforts by purchasing from your company. This can lead to higher unit sales volumes at higher prices.

Strategic Planning Analogy #396: Short Timer

THE STORY
I knew a man who spent his career in retail operations. To advance your career in that field, you have to move around a lot from city to city. First, you are an assistant manager in one store…then you move to be store manager in another city…then you move to become a district manager, then a regional manager, and so on. These people move more often than a career military person.

My friend said that for a large part of his career, he moved on average about every two years. When you move every two years, you become an expert in how to move. This is what he learned:

1) Always buy a “starter” (entry level) home. They are the quickest and easiest to resell when you have to move again.

2) Buy a home where everything is already fixed up to perfection (no “fixer-uppers”). Why? First, you won’t have time in two years to do all the necessary repairs. Second, a home in great shape now will probably still be in great shape two years later when you sell it. This way, my friend never had to bother with painting walls or repairing roofs and still had a great looking house that would be very easy to sell.

By following these rules, my friend made moving in and out as easy and effortless as possible.

THE ANALOGY
When you know you are only going to be somewhere for a short time, you act differently. Before going into the situation you already have a plan for getting out quickly and easily. You make choices that a long-timer would not make.

In the case of my friend, he didn’t get emotionally attached to his homes. He just wanted something easy to buy and easy to sell. He didn’t want the responsibility of investing a lot of time, money and energy in fixing them up. They were just a place to temporarily sleep until he moved to the next temporary location.

A similar situation can occur when people chose where and how they will work. If employees (or even leaders) expect to be with the company for only a short period of time, they will make different choices. They will choose different types of jobs and companies go in with. They will look for places with a relatively easy and effortless way to get out. They will not get emotionally attached. In other words, they will treat the company just like my friend treated his houses.

For example, why try to tackle a difficult strategic repositioning if you only expect to be in the job for a little while (especially if you are a leader)? After all, repositionings are difficult work. And all that effort usually reduces near-term earnings. By the time the new strategy kicks in and financials rebound, the short-time leader will have already planned to move on.
So a short-timers will ask themselves: why put up with the difficult work and get blamed for the temporary downturn, just so the successor can get credit for the rebound? No, short-timers would rather choose a situation where things are humming along just fine and nothing serious needs fixing. They will avoid fixer-uppers…just like my short-timer friend and his houses.

THE PRINCIPLE
The principle here is that long-range strategic plans are difficult to implement in a culture with a short-term orientation. The commitment needed to transform a business long-term just isn’t there when people plan to move on before the task is completed. Consider the fact that for many C-level positions, the average tenure is only three years or less (about the length of time my friend stayed in his home). That doesn’t provide much incentive for aggressiveness on implementing five-year plans.

In these cases, short-term people instead look for the easy, immediate return—something that will bear fruit while they are still around. Unfortunately, near term gains are usually fleeting. Often, they aren’t even true gains—they are merely borrowing from the future.

Remember all those government incentives during the great recession, like “cash for clunkers?” These incentives temporarily increased the sales of cars, appliances and houses, but when the incentives ended, the sales plummeted. As it turns out, that sales bump was not additional sales. It was merely future sales made earlier. A similar situation often occurs when businesses seek a short-term stimulus.

If you want large, transformational improvements which will last, you need to go beyond minor tweaks to the status quo. You need to implement transformational strategic initiatives. And that takes time.

Therefore, strategic planning cannot be satisfied with merely dreaming up a great vision of the future. The plans also need to address the barriers which can get in the way of implementation. And one of those barriers can be a short-term culture.

Here are some suggestions about how to overcome this barrier.

1) Hire Well
When hiring, look for people who not pre-planning their departure as a short-timer. Look for people with longer-term commitments, people who become more emotionally invested in the company. I know that lifetime commitments are a thing of the past, but at least you can weed out the worst short-term offenders.

I have seen this at high profile companies which look good on a resume. They are places people like to say they are from. They are a great step to somewhere else. If the only reason people want to be with you is so that they can use it on their resume to go somewhere else, then you shouldn’t want them on your team. They are merely mercenaries. Avoid them, as I have spoke about in earlier blogs (here and here).

2) Create Bridges to Larger Issues
If you want emotional commitment, give people a reason to get emotional. Create visions which transcend merely making money and embrace larger agendas and causes. Younger employees in particular are concerned about the impact the places they work for have on the greater society. If you link up to these causes, you can get greater commitment to achieve your long-term objectives. Even if they don’t have much emotional commitment to your firm, you can still tap into the emotion around causes that are meaningful to them, no matter where they work. Google has embraced “do no evil.” Wal-Mart has embraced “sustainability.” It can be done.

I spoke more about this topic in an earlier blog.

3) Change incentives
People tend to act based on the way they are rewarded. If you want to encourage long-term commitment, then create incentives which reward long-term gains. Bonuses can be stretched out over time. Rewards can be based on future stock prices. Payouts can be determined in part by outcomes which take place even after a person has moved on. Penalties can be placed on gains which are merely shifting sales forward. Perhaps long-term efforts can be diced up into a series of smaller steps, where achievement of smaller steps are rewarded.

I know these can be tricky to implement, but there are ways to at least put some rewards into a long-term pool which only pays out when long-term goals are achieved. That way, even if people aren’t there for the whole journey, they have a stake in helping make the journey occur.

SUMMARY
Truly transformational strategies take time to implement. In a world where many employees (and their leaders) don’t plan on being around very long, trying to get effort around implementing the transformation can be difficult. Therefore, a portion of the strategic plan needs to address these barriers and find ways to encourage commitment to longer-term efforts.

FINAL THOUGHTS
I worked with a CEO who was close to retiring and did not want to take on major transformational efforts in his final years. Fortunately, the internal person who succeeded him as CEO had been listening and he implemented the strategy once he took over. What I learned from this was that sometimes you have to shift your strategic appeal from the current leaders to the next generation of leaders. After all, the next generation has more at stake in the long-term. So when you are going through the strategic process, make sure you include the future leaders in the discussion. They can be some of your best allies.

Strategic Planning Analogy #383: Showing Up (Part 1)

THE STORY
Just because you are good at moving ON the basketball court does not mean you are good at moving to get TO the basketball court. Former basketball star Isaiah Rider is one such example. Isaiah seemed to get left behind when the rest of his team (the Los Angeles Lakers) were on their way to the game.

In January 2001, he was late and missed the Lakers charter plane to their next game. Isaiah Rider had to catch a commercial flight in order to catch up to his team. In the prior November, Rider missed the team bus to get to a game in San Antonio. In December of 2000, he arrived an hour late for a home game.

For a person who had so much trouble getting to his rides, it’s ironic that his last name was Rider.

THE ANALOGY
Just think of what the sporting world would be like if all the athletes had as much difficulty getting to games as Isaiah Rider. It’s impossible to perform well on the court if the team doesn’t show up. All the effort to charter planes and buses and to arrange all of the other transportation issues is a waste of time if nobody bothers to use them.

The same thing can happen in the world of strategy. You can put a great deal of effort into creating the perfect strategic position and an ideal plan to get there. But, if the employees do not show up, the plan will never succeed.

Even if the employees show up physically, if their desires and emotions are not with the plan, then the plan will probably fail.

That is why strategic planning has to deal with more than just how to win in the marketplace. It also has to deal with getting the company to accept the plan and be willing to fight for it in the marketplace. In other words, you need to sell the plan to the employees, so that they will show up willing to execute the plan to the best of their abilities.

THE PRINCIPLE
The principle here is that the level of strategic success is often correlated to the level of buy-in that the employees have for the plan. If significant numbers of employees disagree with the plan (or are not fully committed to it), then the likelihood of success drops considerably.

I was reminded of this in looking over the work of Chris McGoff. After spending a lifetime consulting with governments and businesses, he has discovered that if you want to successfully get things done, you first need to understand how people interrelate and how groups function. After all, the work gets done by groups. If the groups are dysfunctional, then so will be their output. McGoff has summarized his learnings into 32 “Primes.” You can read about it here.

Much of his work talks about trying to knock down those roadblocks which keep a team from backing the plan. In other words, he tackles the barriers which keep people from showing up completely committed to making the plan succeed. I have reworked some of his ideas into my own list. If you have a team that cannot rally behind your plan, consider these items as areas to address in order to get the teams back on track.

I have seven points on my list. We will look at three of them today, and the remaining four in the next blog.

1. Motivation
A good coach will tell you that a team performs better when there is greater motivation to win. Perhaps what your team needs to get on track is greater motivation. Since people are motivated in different ways, we need to use multiple methods to ensure that everyone on the team is properly motivated. This means using multiple flavors, multiple targets, and multiple communication tools.

Motivation comes in two flavors—Positive Motivation (an inspirational outcome of a great higher purpose if you succeed) and Negative Motivation (great harm and evil if you do not succeed). Positive motivation converts work from merely being a job to being a mission for greatness. An example of a positive motivation occurred back in 1983 when Steve Jobs motivated Joh Sculley to leave Pepsi and take over Apple by asking him if he wanted to “sell sugar water for the rest of your life or come with me and change the world?” We’ve talked about this concept here, and here.

Negative motivations try to show that what we are working on is extremely important. Too much is at stake to not take this seriously. It is worth the sacrifice. An example of negative motivation would be in how countries motivate people to go to war. The logic is that if we do not go to war against this great evil, it will overcome us and we will lose everything we hold dear.

These two flavors can be pointed at three targets—the head (logic), the heart (emotion) and the wallet (finances). All three need to be addressed, since some individuals are only motivated by one of these targets. To reach all, you need to address all. Use logical appeals, emotional appeals, and financial appeals.

Finally, some people think visually, some think numerically, and others think verbally. Therefore, use a variety of tools to communicate the motivation—pictures/charts, numbers, and stories.

2. Core Beliefs
In today’s political environment, it seems that people want to position the opposition as stupid. In other words, if you do not agree with me, you must be an idiot. It’s hard to resolve differences when you have no respect for the intelligence of the opposition. This same situation can happen when a business discusses strategy. Cooperation breaks down because we have trouble dealing with “idiots.”

My experience is that those opposing us are not stupid. Their conclusions are not baseless. There is sound logic behind their conclusions. It’s just that they are working from a different set of core beliefs. And until you specifically address the core beliefs, you are wasting your time arguing the outcomes of those core beliefs.

Until you understand these core beliefs, you will not know how to reach a solution which addresses those beliefs. Perhaps you can find common ground where the core beliefs overlap. Perhaps most importantly, understanding core beliefs will increase the respect people have for each other. Rather than assuming the opposition cannot think, one now can understand how they think, making it easier to work together to make the plan a reality.

So if a discussion bogs down over an issue, consider redirecting the discussion towards an understanding of the core beliefs behind people’s differing conclusions. Ask people to explain the beliefs which lead them to their conclusion. For more on this idea, go here.

3. Perspective
We can only react to that to which we have been exposed. Different parts of the organization have been exposed to different things. Therefore, it is not surprising that each area comes to different conclusions. If you want people to come to similar conclusions, then you need to have exposure to a similar perspective of what is going on.

This is like the old story of the blind men and the elephant. One blind man was only exposed to the elephant’s leg, so he thought he was dealing with a tree (and needed a tree strategy). One blind man was only exposed to the trunk, so he thought he was dealing with a snake (and needed a snake strategy). One was only exposed to the tail and thought he needed a rope strategy. And so on.

So first of all, that requires sharing our experiences with each other—a mutual perspective from all angles. As in the story of the blind men, each blind man needs to share their perspective with the others. Similarly, the people at headquarters need to know what is going on out in the field and vice versa. For example, someone out in the field may be arguing for redirecting resources to shore up a weakness not knowing that headquarters has already decided to shore up that weakness with an acquisition, making that redirection unnecessary.

Secondly, one needs to have a large enough perspective—large enough to encompass the context needed to reach the proper conclusion. If you want an “elephant” strategy, then you need a large enough perspective to encompass the entire elephant, not just the legs. In other words, if you want people to back a big plan, then you need them to see the big picture. Take the time to show how all the pieces fit together. Otherwise, people will separately try to maximize the results in their own little areas, creating sub-optimal results for the whole of the business.

Therefore, if people are coming to different conclusions, check to make sure that everyone has a complete enough and large enough perspective on the facts relevant to the discussion. If not, fix the perspective before moving on.

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 three of them:

• Motivation – Does the team see the higher purpose; do they see what is at stake; do they feel it in their head, heart & wallet; has the communication captivated them at their point of interest (stories, pictures, numbers)?

• Core Beliefs – Does the team understand what is driving the logic behind each other’s conclusions; do they have respect for how others think; are they looking for common ground?

• Perspective – Does the team have a shared perspective, so that we all know what everyone else knows; do the team have a large enough perspective, so that they can see everything necessary to grasp the entire vision?

FINAL THOUGHTS
Woody Allen once said that “Eighty percent of success is showing up.” If you want to win the battle in the marketplace, make sure your people show up—physically, mentally and emotionally—ready to fight hard for the success of the strategy.

Strategic Planning Analogy #379: Strategy Leash

THE STORY
Young dogs seem to think that everything outdoors is an exciting invitation for investigation. Every object, every smell, and every other animal seem to call out to their wilder nature. The young pups want to run and see it all, smell it all, chew it all or leave their mark on it. This makes taking a young, untrained dog on a walk quite a challenge.

My daughter has a young, relatively untrained dog named Stella. Stella is large enough and strong enough to make holding her back a challenge and a half. Whenever I take Stella for a walk, I am constantly fighting her urges to leave the path. She always seems to dragging me with her leash over towards something to put in her mouth—be it a paper food wrapper she finds on the ground, or an old mitten, or an abandoned toy.

Other times Stella struggles against her leash to get across the street to sniff another dog locked up in its backyard. Of course this gets the other dog all worked up and barking as well. And if Stella sees a squirrel, all bets are off. She will practically drag me down the sidewalk to get to that squirrel.

My action with the leash is not just to pull her back. Sometimes I have to drag her forward. Many of the trees and bushes have interesting smells and Stella will freeze in her tracks for what seems like forever to smell them (and to leave a smell of her own). In those cases, I have to try to use the lease to drag her away.

Although the purpose of those walks is to exercise Stella’s legs, I think my arms get even more exercise trying to control Stella with the leash.

THE ANALOGY
The purpose of strategic planning is to design a path to reach a more prosperous future and help the company move up that path. Unfortunately, a lot of companies are like that dog Stella. They have trouble sticking to the path.

Sometimes companies get distracted by exciting looking opportunities off the path and they want to leave the path to pursue them (like Stella seeing a squirrel). Other times, companies resist the change of moving forward and are as hard to budge as when Stella gets busy sniffing a tree.

The only way I could get Stella under control was by aggressively using a leash. As a strategist, you need a leash to control your company as well.

THE PRINCIPLE
The principle here is that it is not enough for a strategist to just draw the map and show how to get to the future. The strategist needs to be right alongside for the entire journey—to keep the firm moving along the path—like I needed to do with Stella. And to do that, you need a strategy leash.

What is a strategy leash? Well, just as a dog leash connected me to Stella, a strategy leash connects a strategist to strategy implementers. By being connected, one has more control over the actions on the other end of the leash.

In many companies, there is no leash connecting the strategy to the implementers. The implementers run loose like Stella would if I didn’t control her with a leash (and I know that would cause all sorts of major problems if Stella got loose).

Too Many Companies Lack a Leash
Back in October of 2005, Kaplan and Norton had an article in the Harvard Business Review, called “The Office of Strategy Management.” In this article, they discussed some statistics about the lack of connection between strategic plans and implementers:

a) 60% of companies do not link strategic priorities to the budget.

b) Two-thirds of HR and IT organizations develop strategic plans not linked to the organization’s strategy.

c) 70% of middle managers and more than 90% of front-line employees have compensation not linked to strategy.

d) The vast majority of executive teams spend less than one hour per month discussing strategy.

e) 95% of employees in most organizations to not understand their organization’s strategy.

It is no wonder that most companies are disappointed in how their strategies are executed. They’ve let the dog loose without a leash and then wonder why the dog doesn’t stay on the trail.

Here are three reasons why a strategy leash improves execution.

1. It Keeps a Firm on Focus
Just as lots of sights and smells would entice Stella to run off the path (if not on the leash), business implementers get enticed to stray off the strategic path. There is always some hot, new thing trying to grab their attention. However, not all hot new things are appropriate for your business.

Just because the new iPad is hot or Facebook is hot does not necessarily mean that your company should abandon everything it is doing and try to imitate these products. First of all, those strategies are already taken and it is unlikely you could unseat the current leaders. Second of all, the capabilities needed to succeed in that space may not have anything to do with your own internal capabilities. You my not have what it takes to win there. Third, why try to become an also-ran in a hot (but crowded) space if it means abandoning a strategy designed so that you can win?

Even though Stella wants to get loose and chase every squirrel she sees, Stella does not ever get the squirrel. They are too good at escaping up a tree. Just as the squirrel eludes Stella, most of these hot new things will elude your company if you run after them. Not only will you not catch the squirrel, you will no longer be on the path to catch your own strategy. Instead of both, you have neither.

To win, one needs a winning plan and a focus on achieving it. A firm’s limited resources need to be aimed at the strategy. If the resources get diluted into too many random decisions of the moment, there will not be enough power to win.

That is why you need a strategy leash connected to whenever meaningful decisions are being made about how to use those resources (time, people, money). You need to be there when actions are being determined so that you keep the company on the path, rather than being off in the distance, watching them hopelessly trying to run after every squirrel they see. If you only have a voice once a year during the planning cycle, then you cannot stop the firm from running around like a dog on the loose the rest of the year.

2. It Keeps Things Moving
Many people in business are reluctant to change. They do not want to move into the unknown. They resist moving forward just like when Stella refuses to stop standing still to sniff a tree. You need a strategy leash to tug on to get them moving forward.

The “tyranny of the immediate” tends to freeze people into the present and make it harder to focus on getting to the future (see here, here, and here). That is why strategists need to be connected on a regular basis to help people get beyond the tyranny of the immediate and think about long-term issues.

3. It Allows Flexibility
The goal here is not to dictate every move made by every implementer. Implementers need flexibility to use their skills in adapting the strategy to the environment. That is why, so long as Stella stays on the path, I give Stella a long leash. She is free to move around as she sees best, so long as those movements are consistent with moving forward on the path.

The same applies to business. Strategies work best when implementers are free to use their expertise as part of the implementation process. So long as they are moving down the path at a good pace, give them enough leash to add their improvements.

How to Create A Strategy Leash
So how do we create strategy leashes? One way is by making sure strategists have a voice at the places where day-to-day implementation decisions are being made on a daily/weekly/monthly basis. They need to be invited to the meetings where choices are made about what to do, even if none of it sounds very “strategic” at the moment. After all, a journey consists of all the steps one takes. Every step which leaves the path hurts the overall journey.

Second, link self-regulating tools to the strategy. People tend to act in accord with how they are rewarded, how they are reviewed, and how their budget is set up. Use budgets, reward systems and other such tools as a leash by making sure that the motivation tools motivate people to implement the strategy. Stop those awful statistics mentioned by Kaplan and Norton by making sure everyone knows the strategy and is rewarded for implementing it.

Third, Kaplan and Norton go even further to suggest forming a new Office of Strategy Management—a small team of people whose sole purpose (and only job) is to act as the strategy leash. This may or may not be appropriate for your situation. However, the general principle is sound—the more the strategy leash is seen as a valid part of a job description, the greater the chance it will be used.

SUMMARY
To make sure strategies are properly implemented, one needs a strategy leash—a strong connection between the goals of the strategy and daily decisions about what gets done. The leash holds back company desires to stray off the path, tugs people to move forward when they want to stand still, and provides some freedom of movement when moving along the path. This can be done by getting strategists more involved in the daily decisions and by connecting motivational tools more tightly to strategic goals.

FINAL THOUGHTS
Years ago, I had a dog of my own to take on walks. Her name was Barkee. I did a good job of training her, so that eventually I could take Barkee on walks without a leash (and she still stayed near the path). If you can train your company to naturally think strategically, you might be able to loosen up on the leash as well.