Strategic Planning Analogy #449: Scorekeepers Vs. Score Makers

THE STORY
Today, when you go to a sports arena they have those huge Jumbotrons showing you not only the score, but lots of high definition video in full color. It wasn’t always that way.

There was a time when scoreboards were only what their name implied—boards of wood with the score on them. When the score changed, a person had to physically take down the old painted number sign and put up a new number (by hand).

Those scorekeepers were kept pretty busy changing those signs during the game. But even though they worked hard to change the score on the board, the score keepers did not cause the score to change. They only reported on the action taking place on the field.

Sure, the scorekeeper put the larger score on the board, but if you wanted a larger score, you needed to have a coach with a great game plan and athletes who could execute it. Just because the scorekeeper was closest to the scoreboard does not mean he was closest to the action.

Don’t confuse the scorekeeper with the score makers. Don’t mistake them for being the coaches or the athletes. All he does is put the signs on the board.

THE ANALOGY
Now it may seem silly that someone would confuse the scorekeeper with the score makers. Maybe it wouldn’t happen in sports, but it seems to happen quite frequently in business. And that isn’t silly; it’s tragic.

In a lot of companies, we have employees who are referred to as strategists. Their responsibilities may use terms such as managing strategic planning or strategic plans. But when you look closely at their job descriptions, they are really little more than scorekeepers.

But instead of a scoreboard, they have a spreadsheet. They use the spreadsheet to keep score. First, they keep track of the desired score—the goals of what the company wants to achieve. Then they keep track of the actual score—what the company actually achieves. Finally, they compare the two scores to show a variance score.

Then, if these so-called strategists have a big enough budget, they create fancy dashboards to place on all of the executives’ digital screens to show off the results. These dashboards have lots of fancy colors and dials and charts and traffic lights—sort of like those fancy Jumbotrons.

But as fancy as they all are, the root function is not much different than that old-time scoreboard operator. The primary function is just to keep track of the score.

THE PRINCIPLE
The principle is that scorekeeping is not the same as strategic planning. And if the job description for your “strategists” is basically that of being a scorekeeper, then the task of true strategy is probably lacking—to the detriment of the company.

This is not to belittle the role of the scorekeeper. That is an important job. But it is not strategic planning. You need them both. Just as sporting events would be pretty worthless if only the scorekeepers showed up, all that business scorekeeping is pretty worthless if all the goals and measures being watched are not rooted in comprehensive strategic planning.

Asking the Tough Questions
Comprehensive strategic planning is not merely about coming up with a number. No, it tends to be more like an essay test. Great strategic planning has to answer a lot of tough questions, like:

Where are we going to play in the marketplace?

How are we going to win in that place?

What are the tradeoffs we are going to make to win?

What is the business model best suited for us to win?

What is missing in our resources to accomplish this? How will we obtain what is missing?

What threats are on the horizon which could change the way we need to play to win?

We talked more about the importance of answering these types of tough questions here and here. The key point is that until you answer these questions, there is no way of knowing how to score your progress. You need to know the rules for YOUR particular game before you can properly score it.

Otherwise, it would be like carefully measuring the speed at which you are driving when you have no idea of where to go. If you have not determined a destination and a path, then the speed at which you are driving is irrelevant. Getting nowhere faster isn’t much to be proud of.

To get a handle on where the profession of strategic planning is headed, I spend time looking at the job descriptions posted for “strategic” positions. It is fairly common to see lots of scorekeeping in the job description, but very little about tackling these tough questions. The qualifications tend to ask for people with expertise in accounting and spreadsheet modeling. They don’t tend to ask for people with expertise in positioning, business models, or how to win in a competitive marketplace.

I’m not so sure that accountants are necessarily the best qualified to answer these types of questions. And even if they were, they will be too busy with scorekeeping to spend much time focusing on the questions.

Don’t Merely Rely on the Operators
I’ve talked to some of the people who operate under these types of job descriptions. I ask them how all those tough questions get answered. What I hear is that the scorekeepers rely on the business operators for the bulk of the input. Unfortunately, there are many flaws in this approach.

First, the operators have a personal bias towards getting a large bonus. This can cloud their thinking regarding what a good score would be. A good score for an operator might be a beatable number, rather than the strategically correct number.

Second, operators tend to be highly invested in the status quo. That is their strength; it is what they know. Therefore, they tend to pick goals which are incremental extensions of the status quo. Strategically, the best solution might instead need to be a drastic change…perhaps even selling off that operation. Why would an operator volunteer to see his career path and platform for power go away?

Third, a lot of the best strategic moves are into new spaces. This is often referred to as the Blue Ocean strategy. By definition, new virgin spaces do not have an established operating base. Therefore, there is not an operating division naturally thinking about or fighting for this new opportunity.

Finally, operators tend to be overwhelmed by the Tyranny of the Immediate. In other words, a large percentage of their time is focused on the current crisis of the day. They are spending so much time putting out the current fire that they do not have enough time for the luxury of pondering the long-term. If you are not spending enough time pondering the big picture and the long term, then you will answer the questions in a narrow, short-term way. This leads to sub-optimization.

That is why companies need professional strategists who are not captive to these limitations. They do have the luxury of being able to focus on these big issues. That is, they have that luxury if they are not required to spend nearly 100% of their time as scorekeepers.

This is not to say that the viewpoint of operators is worthless. No, their insights are valuable to the process because they are on the front lines. But, it cannot stand alone. It needs to be balanced by the objectivity and big-picture thinking of a real strategist.

SUMMARY
Keeping score is not the same thing as providing key insights into answering the tough questions of strategy. If you reposition strategic planning as little more than scorekeeping, then a key aspect of strategic planning will be missing. As a result, you may end up with great measurements of nearly random activity which does not lead to a great long-term destination.

FINAL THOUGHTS
Today’s modern spreadsheet and dashboard tools can turn into great toys which are fun to play with. They can start absorbing an ever larger percentage of your time. But let’s not forget that they are only more sophisticated scoreboards. And although they can be very useful, the action on the playing field is still more important than the sizzle of the scoreboard. Keep it all in its proper perspective. The essay test of the tough strategic questions may not have as much sizzle as a scoreboard, but it still needs focused attention.

Strategic Planning Analogy #271: Nuance is Needed

THE STORY
You may remember Hugh O’Brian as the star of the TV show “Life and Legend of Wyatt Earp.” This was a top rated show during its run on ABC from 1955 to 1961. Hugh O’Brian is also known for something else, called HOBY, which stands for Hugh O’Brian Youth Leadership. O’Brian started the organization back in 1958, after being inspired by an encounter with Albert Schweitzer. HOBY is still active today.

The goal of HOBY is to help prepare High School youth to become effective future leaders in society. Every year, HOBY brings together some of the best and brightest high schoolers in the US to central locations for seminars and interactions with some of the leaders in the world. It is a great organization.

Back in the 1990s, I was invited one year to be a leader at HOBY representing the food distribution system. I thought it would be fun to interact with the youth and “impart my wisdom.” Little did I know that I would soon be ambushed.

I got to the location where the meeting was being held and was immediately bombarded with questions from the youth about food distribution in the US. At least they were worded like questions. In reality, they were manifestos, presented in the form of a question. They had already decided that we needed a radical overhaul of food distribution, had concluded what that revolutionary change should be, and were berating me for why the industry had not already made all these changes.

After the initial shock of being ambushed, I pulled myself together and tried to explain a few things. I tried to explain to them that the world is not purely black and white. The current system was not 100% evil and their proposals were not 100% good. There are implications from every decision that ripple out and affect many areas. There can be lots of negative unintended consequences which fall out of what originally appears to be good, and vice versa. You have to look at all the trade-offs of good and bad in your decisions and find the best blend.

For example, many of their proposals were very expensive to implement. I told them that these proposals in total would radically increase the cost of food, putting it out of the reach of poorer people. As a result, instead of giving people better food, their proposals could have the unintended consequence of increasing starvation and malnutrition. Did they really want that?

I told them that some of their ideas about food purity could lead to increased spoilage, food wastage, and increased disease and sickness. Did they really want those unintended consequences?

As a result, I told them that one needs to take a balanced and nuanced approach, trying to create the most good while minimizing the unintended negative consequences.

I could see that I was getting nowhere with this line of reasoning. Their minds were already made up. It was more important for them to act now than to act right. Nuance is not a part of the average High School thought process.

THE ANALOGY
These HOBY leaders-to-be aren’t all that different from some of the leaders of today. They have notions of what look like good ideas, but haven’t thought through all of the long-term consequences.

Leaders today have lots of pressures on them. Every day is full of crises and fires which need to be put out right away. There are pressures to act quickly and decisively. There doesn’t appear to be any room for nuance or for thinking out all of the long-term consequences of a decision (good and bad).

Unfortunately, if this type of thinking is ignored, leaders eventually may come to regret their decisions. For example, Enron came up with what at first looked to be a great incentive system for encouraging near-term profits. It was praised by many management gurus. However, it also had the unfortunate negative consequence of encouraging falsification, deception, and corruption. The unintended negative consequences of this incentive system caused the implosion of Enron.

How can this be avoided? This is where strategic planners can provide one of their most valuable services. Because strategists tend to be a little more removed from the tyranny of the immediate crisis of the day, they have the luxury of being able to focus more on thinking through all the consequences of a decision. They can then present that thinking to top leaders, so that they can make more informed decisions.

Just as I was trying to help the HOBY youth see the bigger picture and all of the consequences and ramifications of a decision, strategists need to the same for their companies.

THE PRINCIPLE
The principle here is that although it is desirable for leaders to look for the unintended consequences and the subtle nuances/ramifications in their decisions, it is essential for strategic planners to do so. No one else is in a better position for this task. (Note: I talked in greater detail on the importance of considering unintended consequences in an earlier blog.)

As mentioned above, leaders are often pulled in many directions and have difficulty sitting back to ponder all the ramifications. This makes it difficult for them to be the key practitioners of this task.

Many of their other top confidants have large empires of power. This can bias their ability to think objectively through all the ramifications, since it could impact their power base, or the power bases of their rivals. Even if they can be objective, that power base can make it hard for them to appear objective to others. Their questionings can appear to be personal attacks. So they are not the best candidates, either.

Outside consultants are useful, but this is typically not an area where they excel. They are often not intimately knowledgeable about your industry in a way that helps them understand the nuances of a particular decision. Also, they are not planning to stick around long enough for the unpleasant ripple effects to appear. Finally, their specialty is usually to bring in hoards of young people to gather data, not to have someone sit back and ponder implications.

No, it would seem that the strategists are in the best position for this important task. They have the most freedom from the daily fires that detract from long-term thinking. Strategists also tend to have fewer ties and biases to the status quo power bases, giving them more freedom to look to look at things objectively. Finally, because they are insiders with a stake in the long-term prospects of the business, strategists can see the nuances and are motivated to make them known.

In medieval times, the court jester was the only one who could openly criticize the king without fear of getting his head chopped off. They could get away with it because it was part of their role, and because it was packaged inside humor.

In many ways, strategists are like the court jester. Strategists are uniquely suited to get away with critical assessment about unintended long-term ramifications, because long-term concerns are a key part of their role, and they can package it inside of strategic assessment rather than personal attack. A friend of mine succeeded well as a strategist because he mastered the role of the court jester, which allowed him the ability to point out these negative ramifications in a way that no one else could.

Most job descriptions for strategists do not include the specific task of being the key point person for pointing out negative unintentional consequences and showing the difficult trade-offs hidden behind many decisions. Even so, it is probably one of the most important things they can do for their organization. Take the time to develop this skill. Then use the skill. Your company’s future depends on it.

SUMMARY
Many decisions which look great upon first glance can actually be terrible strategic decisions after pondering all the hidden long-term ramifications. To make sure a company reaches the right decision, someone in the organization needs to be pro-actively searching for the unintended ramifications before the final decision is made. This involves taking the time to ponder the nuances and interconnectivities of the business and how the decision will impact them. And guess what…usually the person best suited for this role is the strategist.

FINAL THOUGHTS
Earlier, I said I was ambushed at the HOBY convention. Actually, I was ambushed twice. Hugh O’Brian cornered me and wanted as much insight as possible into how he could get a huge donation for his organization from the company I worked for. I pointed him in the right direction.

Analogy #199: Movement vs. Progress

THE STORY
When I was a child, I was fortunate to have teachers who tried to instill in me a sense of the big picture. There was this librarian who kept insisting that before starting to read a book, examine the entire book. See if it has a glossary or index in the back. See what else it has to offer. That way, reading the book will be more fulfilling and we’ll get more out of it.

I had a Social Studies teacher in high school who tried to instill these same principles. On the last day of school, this teacher gave us a final exam. The exam was huge! It was about the size of a small phone directory. There were hundreds and hundreds of questions to answer. Even worse, we only had an hour to complete the exam. There was no way that any human could get all those questions answered in an hour.

When the students saw the size of the exam, they started to panic. Not wishing to waste any of the precious time, most students just dove in and started answering the questions as fast as they could—in sequential order—starting with question #1.

After only a few minutes had passed, one student closed their test and handed it into the teacher. The student and the teacher both had big smiles on their face. At this point, I knew there was some kind of trick here.

As a result, I stopped racing through the questions and took the time to examine the entire test more fully. I noticed that on the last page, there was a special message. The message said that all we had to do was write a particular word on the top of our test and hand it in and we would get an “A” on the test.

Then I realized that the teacher had never said we had to answer all the questions. He just handed out the test. So I wrote the word on the top of my test and handed it in…with a smile.

THE ANALOGY
The business world had a bias towards activity. “Looking good” means looking busy. When trying to hire people, job descriptions will often ask for people with “a bias towards action.” The kiss of death is to appear idle.

However, just because one looks busy does not mean that one is productive. The students taking that exam were extremely busy. They were rushing from question to question, trying to answer as many as possible. Unfortunately, it was an effort in futility.

Had they taken time to pause and reflect on the project before them, they would have seen that all they needed to do was write a single word on the front of the test. Instead, they were so busy “doing the work” that they ended up never finding out what the real work was supposed to be.

It is so easy to fall into this same trap in the business world. We get so caught up in racing to get work done that we never take the time to determine if it is the right work to be doing. Time is wasted. Effort is wasted. Money is wasted. And while we are so busily doing the wrong thing, competition can calmly do the right thing and get a huge advantage.

THE PRINCIPLE
The principle here is that there is a big difference between activity and progress. Sure, all progress requires some activity, but not all activity leads to progress. In fact, too much of a bias to quick action can actually slow down or stop progress.

Sometimes, stopping the busyness and taking time to reflect and ponder can lead to your greatest progress.

Great strategic insights come from looking at the big picture and seeing something which others have missed. It’s hard to see the big picture when your head is down and busily focusing getting some mundane task completed quickly. And it’s hard to see what others have missed when you don’t take time to really sit back and look.

Howard Schultz got the original vision for Starbucks while relaxing at a café in Europe and just watching the human interactions around him. I’ll bet the executives at Folgers and Maxwell House looked a whole lot busier on that same day. However, I suspect that Howard Schultz was a lot more productive that day.

It takes time to synthesize all of the various data inputs and create a point of view about how the world works and how you can find a winning position within it. And given how the world is continually changing, more time is needed to occasionally refresh that point of view. This cannot be done unless you step back from the busyness and ponder.

I was impressed when Gap stores decided this past spring to pull back a huge chunk of their advertising. The reason was because the stores were not ready with much of a compelling reason to shop there. Heavy doses of advertising would just have accelerated disappointment. Instead, the Gap sat back, kept its advertising relatively idle, and reinvented its merchandising approach. Now, with a renewed vision, the Gap is bringing back the advertising again.

This is so different from many companies which, in times of panic, just crank up the busyness in hopes that working harder and faster at what they’ve always done will make things better. Let’s remember that this is the same work which got the company into trouble in the first place. Doing it faster and more frantically won’t change the fact that it is still the wrong work. And while keeping busy doing the work, there is no time to consider how to change the strategy and figure out what would be better work.

A little time spent up-front pondering the big picture can save a lot of grief and wasted effort later on. More of the world is like that Social Studies test than one might think. Spending a little time up-front examining with the big picture may present a far easier solution to the problem (just writing a word on the front) than grinding out busyness the old fashioned way (answering all of the questions).

New solutions can be easier because:

1) It is uncontested territory…it’s almost like having a monopoly.

2) New solutions tend to have higher margins, and less competitive intensity…the path to profits is easier.

Unfortunately, the lure of busyness is difficult to resist. In tough times, there is fear of losing a job. Busy people appear more essential, more valuable…less likely to be laid off.

Also, there is a satisfaction which comes from accomplishing things (even if they are the wrong things). You can point to things you’ve done. You can check things off a list. It can actually be fun.

In the busyness of activity, you don’t have time to ponder all the things that could be wrong with the big picture. Ignorant to the long-term doom, you can be content with “Gettin’ ‘R’ Done.” By contrast, sitting back in a pondering mode can be scary work. It is unstructured…you never know when you are done…and it forces you to come to grips with some very big problems.

The siren call to action may sound great, but often times it must be resisted or your actions will cause your business to crash against the shores.

If you want to hit a target, you must aim before you shoot. Similarly, if you want your business to succeed, you must aim its direction before you act. When you watch someone aim their rifle, it doesn’t look like much activity is going on, but that aiming makes the productivity of the shooting activity so much better.

SUMMARY
Not all activity is productive. In fact, much is unproductive and keeps you from thinking about what would be productive activity. Taking a pause before diving into the work may be the most productive thing you do.

FINAL THOUGHTS
I’ve watched many a hockey or soccer game where there is a lot of action, but not many goals. It’s exciting and fun to watch, but not very productive. Don’t let the fun and excitement blind you to the fact that the teams did not reach their goals.

In the same way, don’t let the excitement of doing deals, updating logos, doing brand extensions, and so on, blind you to the fact that in many cases this work will not get you to your goal. Studies show that most of these great-looking “activities” actually destroy shareholder value. Taking time up-front to sit back, ponder and get the big picture will increase your chances of avoiding the loser activities and doing the winning activities.

Remember: Success is not determined by how many things you do, but by how much value you add. If an activity destroys value, it was not only a waste of valuable time, but it negates any other effort which added value (a double destruction). Even doing nothing is better than destroying value.