Strategy Planning Analogy #561: I’m Going to be Rich and Famous

THE STORY

One time, I was talking to an expert on the subject of marketing to teenagers. She said research shows that most teenagers believe that in a relatively short time, they will become rich and famous.

The rationale for why most teenagers thought they would become rich and famous went something like this:

a)     They looked at all the rich and famous people in teenage pop culture.

b)     They decided that most of those famous ones are only marginally talented or skilled.

c)     They saw that most of these rich and famous people were also messed up jerks in real life.

d)     They looked at themselves and concluded that they were at least as talented (if not much more talented) than the rich and famous ones AND they had it a lot more together in their personal lives than the rich and famous ones, too.

e)     Therefore, the teens concluded that if those “losers” could become rich and famous, then a more talented and more “together” person such as themselves would have an even better chance of becoming rich and famous. Hence, the teens felt that they were going to become rich and famous.

That’s teenage optimism for you.

THE ANALOGY

If you look at the total number of teenagers alive today (about 25 million in the US alone) and compare that to how many of them actually become rich and famous in teen pop culture (probably much less than 100), the odds of any US teen becoming rich in famous this way is less than 1 in 250,000. In other words, the likelihood of one of these teens becoming rich in famous is less than 0.0004%.

Yet, despite these terrible odds, most teenagers believe they will be one of those rich and famous ones. That seems like foolish optimism, right? Only teenagers would be silly enough to think this way, right?

Well, consider the fact that most business people think they are going to be successful. Most companies adopt strategies that they think will succeed. If you read the press releases or public filings of companies, they almost always seem to talk positively about future success. Even companies with a horrible track record and huge piles of losses talk about how their new strategy will turn things around.

It looks like that silly teenage optimism is contagious. Many businesspeople have caught that same crazy notion that THEY too will beat the odds and be one of the successful ones. After all, why would entrepreneurs put in all the effort to start businesses if they didn’t think they would succeed? Why would companies work hard to implement strategic plans if they thought they would fail?

The logic in the business world tends to be as flawed as in the teenage world. Many think that:

a)     My ___________ (company, strategy, idea, product, people, myself, etc.) is as good or better than a lot of those successful companies out there.

b)     Therefore, if they can be a success, then I should become a success, too.

Yet, we know that most new businesses fail and that a large number of older businesses go into decline, retraction, bankruptcy or some other path that cannot be defined as a major success. Companies fall off the Fortune 500 list all the time. So, is this optimism justified?

THE PRINCIPLE

The principle here is that most truly successful businesses get that way by exploiting the benefits of being a leader. And as we all know, each category can have only one leader. The rest are followers who typically struggle to just stay alive. Therefore, most companies will not be truly successful.

Since the odds are stacked against success, one shouldn’t be like teens who blindly believe that success will naturally come to them. One needs to have their eyes wide open and realize how tough their prospects actually are. Just having a written strategy is not enough. Just doing things well is not enough to ensure success, either.

You have to plan carefully and not only work exceptionally well, but exceptionally differently. This is explained below.

1. Unseating an Established Leader is Exceptionally Difficult

As Al Ries and Jack Trout have pointed out in their many books (most particularly “Positioning,” “Marketing Warfare,” and “The 22 Immutable Laws of Marketing”), established leaders are hard to topple. They have lots of inherent advantages, including:

a)     They own the category in the minds of the consumers.

b)     They have economies of scale.

c)     They have preference in the supply chain.

d)     Habitual patterns are on their side.

e)     Image is on their side (Why would anyone buy from a loser? Doesn’t that make you a loser? Winners buy from winners.)

As a result, Ries and Trout said that just being a little better than the leader is not enough to take that position away from them. In fact, they concluded that one needs to be about three times better than the leader in order to take away their position as leader. Given the unlikelihood that you can imitate the leader and do it three times better, this is a suicide mission. Blind teenage optimism cannot overtake these odds.

Most of the Ries and Trout work was written before the economy was taken over by social media, apps, and digital networking. The laws of networking make unseating a leader in this economy even harder. A network, like Facebook and LinkedIn, gains its power exponentially as their network grows. The value of the business is directly related to the number of connections.

Therefore, to unseat one of these new economy leaders, you have get huge numbers of people to simultaneously abandon the current leader and sign up with you. After all, it’s no fun to join a new network if everyone you want to network with is still with the leader. Even if everything about the way your network works is better than the leader’s, it is worthless if nobody is connected to you. Customer switching costs are so high to leave the leader (where the connections are), that your odds of unseating the leader are as bad as a teenager becoming rich and famous.

Therefore, if you blindly try to unseat the leader at its own game, you will most likely fail, no matter how hard you try, how much better you are or how optimistic you are.

2. Being Different is Better Than Trying To Outdo the Leader

The solution, according to Ries and Trout, is to find a new place to win. Rather than try to outdo the leader at their game, play a different game where the advantages are more in your favor. For example, rather than trying to beat the top burger chain by doing what they do better, do something different, like:

a)     Change the product (Chicken instead of Beef, like Chick Fil A)

b)     Change the image (go further upscale, like Umami Burger or Larkburger, or go further downscale, like Rally’s and Checkers)

c)     Change the customer (go after the health conscious, like Lyfe Kitchen  or go after those who want the best tasting basic burger, like Five Guys or Smashburger)

d)     Change the business proposition (Burger King in Asia does home delivery)

3. Make the Differences a Key Part of Your Plan

Just claiming a new position doesn’t mean you will win. New positions typically require a new business model. Southwest Airlines did not win at the low price differentiation by merely imitating the major airlines and charging a lower price. No, it created a different business model which made lower pricing more profitable, including:

a)     Flying point to point rather than hub and spoke.

b)     Not transferring luggage.

c)     Flying out of secondary airports.

Therefore, your strategy needs to do more than just identify a point of differentiation. It must design a different business model which exploits that point of differentiation and makes the differentiation profitable.

Being different requires acting different. Both differences need to be in the strategy to make it work.

4. Follow Through

A great strategy poorly executed is really a lousy strategy. Don’t be like the teens who think fame will come naturally. Do the hard work to make it happen.

5. Don’t Rest on Past Success

Even if your strategy succeeds today, that does not ensure success tomorrow. Times change, tastes change, technology changes, customers change, regulations change. These changes can make your current strategy and business model obsolete. Being the best carbon paper provider in the age of digital documents is of no benefit, because carbon paper is obsolete. (For those of you too young to remember, carbon paper was used to make multiple copies on a typewriter.)

Just as teen idols come and go, so do successful strategies. Don’t rest on past success.

SUMMARY

Just being good is not enough. Almost everyone operating a business is good or they would already be gone. To be truly successful, change your focus from being good to being different (in positioning and the business model which supports the position). Rather than trying to outdo the leader at their own game, find a new place to lead with a new game plan. Otherwise, you will most likely fail, no matter how optimistic you are.

FINAL THOUGHTS

Just as most teens who thought they could be the next “American Idol” failed at this attempt, most businesses fail at achieving major success. Don’t assume success will come naturally. Do the hard work to find your point of differentiation.

Strategic Planning Analogy #494: The 3 Keys to Success (Part 1)

THE STORY

When I was a young boy, I owned a Piggy Bank. It had two holes. The first hole was a slot at the top, used to put money INTO the piggy bank. The second hole was on the bottom. It was used to take money OUT OF the piggy bank.

My problem was that I tried to take money out of the bottom of the piggy bank more often than I put money into the top of the piggy bank. As a result, my piggy bank was almost always empty. That made it a fairly worthless bank.

THE ANALOGY

Businesses are a lot like that piggy bank. Money comes into the business through sales.  It is like putting money into the piggy bank’s top slot. Money is taken out of the business through events like salaries, profit sharing and dividends. That is like taking money out of the bottom of the piggy bank.

If you take money out of the business faster than you put it in, the result is similar to my empty piggy bank. It becomes worthless.

Most traditional small entrepreneurs I’ve met get this principle. They put a major emphasis on cash flow, to make sure that money coming in the top slot exceeds money going out the bottom hole. They realize that if the money is not coming in the top, there will be no money for them to buy groceries to eat. 

This principle, however, seems to get lost in a lot of modern digital/social businesses and large enterprises. The connection between inflows and outflows becomes less obvious. After all, there are digital/social businesses out there valued at huge sums of money (and making their owners rich) which have little or no source of income coming into the top slot.

Without strategic concern for both holes, the business (piggy bank) eventually becomes empty and worthless.  This is why you ended up with the bubble bursting on the original dotcom boom and many stock market disappointments in the current digital/social boom. The private equity contributors to the piggy bank eventually want to get their money back out. But since more money was coming out the bottom than was going in the top, there was not enough to satisfy everyone.

THE PRINCIPLE

In this blog (and the next two), I will be talking about the keys to real success in business. I’ve spent a lifetime in the business world and have witnessed first hand (and second hand) a large number of successes and failures. 

Based on what I have seen, it appears to me that there are three key differences between the big winners and big losers. So in this and the next two blogs, I will be looking at these three characteristics which differentiate the winners from the losers. 

Passion for the Business Model

The first characteristic has to do with passion—that which captures the attention and focus of the leaders (and their followers). In the losing companies, the passion and focus tends to be on wealth.  The focus is on profits or personal wealth—making them as large and as quick as possible. By contrast, the passion of the successful firms tend to focus on the business model. The focus is on making the model ever better at serving the customer.

Does this mean that profits are bad? Is it wrong to want your business to have larger profits? Of course not. But if you are more passionate about profits than the business model, then you are like me when I kept taking money out of the bottom of my piggy bank without putting money in the top. Eventually, the model falls apart and the business becomes a worthless empty shell.

If you ignore the business model, then the only way to keep taking money out of the bottom is by “financial engineering.”  This is essentially the idea of putting other people’s money in the top so that you can keep on taking out money from the bottom. As a child, that financial engineering would be to convince my father to loan me some money beyond my allowance, so that I could keep on taking out money beyond what I earned. In the business world, this consists of taking on extra debt or equity, either private equity or public equity. 

The problem is that these types of contributions to the piggy bank come with strings attached.  These contributors also want a turn at taking more money out of the bottom of the bank than what they put in the top. And, as it turns out, it is impossible for all of you to take out more from the bottom than you put in the top if the business model is not sufficiently multiplying the money.

By contrast, if you have a passion for the business model, you will be always looking for ways to improve the way the business fulfills its position in the marketplace. This leads to efficiencies (a less expensive way to serve) and effectiveness (a more valuable service for customers). This makes the money in the piggy bank grow by getting satisfied customers to contribute to your success in ever more profitable ways.

Hence, the irony. If you want a lot of profits, don’t focus on profits; focus on the business model.  Focusing alone on profits can lead to bad behaviors, such as:

1. Underinvesting in the business model;
2. Ruining the Balance Sheet;
3. Short-term gains which ruin long-term prospects;
4. Ruining the relative value for the customers (as you give more value to yourself than to your customer)

These actions all cripple your ability take money out of the bottom of the bank over the long haul.  However, if the passion is about improving the business model, the profits will be there for years to come and the piggy bank will never be empty.

Example #1 Euro Zone

Just look at the economic challenges in Europe.  Rather than a passion for building a solid business model for a continental economy, the Euro Zone has been plagued by governments and citizens who keep taking more out of the bottom of the piggy bank than is put in.  To fund this passion of taking money out, the governments took too much of other people’s money in the form of debt. Now the piggy bank has nothing but debts that cannot be paid. And the governments seem unwilling to make the tough choices on how to fix the broken business model.

The exception is Germany.  And guess what—the Germans have focused for decades on building a solid economic business model. This business model passion means that more is going into the piggy bank than is coming out. Germany is solid

Example #2: Formica

Awhile back, I was in discussions with the top executives of Formica about doing some consulting.  They explained to me the history of the company. Decades ago, Formica had been a strong brand with great profits. They essentially owned the countertop industry. 

But then, Formica was bought by people whose passion was profits. They started taking more out of the bottom than was coming in at the top. This caused two problems. First, the countertop marketplace was changing and they underinvested to meet the challenge of the change. This hurt the status quo business model, weakening the ability of Formica to fund obligations. Second, taking too much out of the bottom required loading up the balance sheet with debt, thereby increasing obligations. Eventually, since they couldn’t make ends meet, they sold the company to others.

The “others” also had a passion for profits and continued these practices. In due time, they sold the business, too. After several iterations of this process, Formica had been so weakened, that it had become an empty shell full of IOUs that could not be paid.

Eventually, Formica ended up in the hands of Fletcher Building of New Zealand. This was a company which had a passion for the building materials business. They focused on the business models within the industry they loved. As a result of their passion for the business model, they are bringing back Formica from the dead.

Example #3: Amazon

Recently, I had discussions with some executives at Amazon. In my discussions with them, they never really talked about profits. Their talking pointed to their passion for the Amazon business model. All they wanted to do was improve that model by making it faster, easier and cheaper for customers to interact with Amazon.

As a result, the Amazon business model keeps getting better and better. This is increasing their competitive advantage in the marketplace. Yes, the near-term profits have recently suffered a bit, but that was because of extra investments in the business model, not a failure to win in the marketplace. Amazon is on strong, solid footing. It survived the dot com bust and the digital/social slump. And it has the big box stores around the world panicking as they continually lose share to Amazon. Founder Jeff Bezos was the 2012 Fortune Businessperson of the Year. This is a company built for long-term success.

SUMMARY

Long-term winners tend to have characteristics that are different from long-term losers. One of those characteristics has to do with where the passion lies. The losers tend to have a narrow passion focused around rapid personal wealth-building. This usually leads to bad behaviors which choke the prospects for long-term business success. They prematurely empty out the piggy bank.

The winners, by contrast, tend to have a passion for the business and its business model. They are more concerned with improving how the business works in the marketplace than how much they can pull out of the business for themselves. They get interested in all the little details about how to make the business better. They build piggy banks which are full for a long, long time.

FINAL THOUGHTS

Now that I am grown up, I have an electric bank which sorts coins and puts them into the appropriate paper rolls.  And when the rolls get full, I take them to the bank rather than spend it right away. That is the better path for the long term. Is your corporate culture promoting actions like what I did with my boyhood bank or my adult bank?

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 #407: Standing at the Road

THE STORY
Back when I was in college, I sometimes got around by hitchhiking. One time while hitchhiking, a driver got me started on my long trip by taking me as far as an exit on an interstate highway.

It was great to get to the interstate highway. I had planned on taking that highway for quite a distance. Unfortunately, I was left at an exit which received virtually no traffic. I stood there quite awhile with absolutely no cars driving by.

After a very long wait, I eventually found someone willing to pick me up. That was quite a relief, because after a couple of hours, I had only seen three cars on that entrance ramp.

THE ANALOGY
The good news was that the first ride on that hitchhiking trip got me to the road I wanted to take. The bad news was that it took hours before I could get moving on that road. I could see that road in front of me, but I had no way to take advantage of it.

Sometimes, a similar thing happens in strategic planning. The strategy process will determine the right strategic path to take and then consider the strategy job to be finished. It was now up to someone else to implement the process to get down the path.

It’s as if the strategists see their job as being like the first ride I had on that trip. That first ride got me to the road and just left me there. I quickly learned on that trip that being at the road was not the same thing as being able to take advantage of that road. I knew it was the right path, and I could see it in front of me, but I was making no progress, because my first ride abandoned me as soon as I got to the highway.

If all your strategic process does is get the company to see the path, and does not help it move down the path, then your company may get stuck for a long time, just as I was stuck at that entrance ramp.

THE PRINCIPLE
The principle here has to do with how one defines success. Since we tend to work in such a manner as to achieve success, then the nature of how we define success has a great determination on what one actually does.

For example, if a company defines success for the strategist as merely coming up with a fully-designed strategy, then “success” is achieved the moment the strategy design is concluded. By this definition, strategy implementation is not necessary to achieve “success.” Just having a plan is reason enough to celebrate a successful conclusion, even if it is poorly (or never) implemented.

It’s easy to see why such a narrow definition of success comes about. After all, it seems reasonable and fair to reward people based upon outcomes which are under their control. And the strategists have meaningful control over the strategy design process.

Similarly, it seems a bit unfair to hold people accountable for outcomes which are out of their control. And strategists are rarely the primary driving force in charge of strategy implementation. So why hold a strategist accountable for an outcome they do not manage?

The problem though, as we will soon see, is that this narrow definition of success may not be in the best interest of the company. It also may not be in the best interest of the strategists.

Bad For the Company
They are many ways in which defining success for strategists as merely creating a plan is bad for a company. First, it tends to focus the strategist on the quality of the process rather than the quality of the output. After all, if success is achieved at the moment a plan is approved, then success is achieved faster (and more efficiently) with an efficient planning approval process. The focus shifts to creating a slick, standardized process. Just fill in the forms, hold the meetings, make the presentation, and then you are done! Success!!

It’s easy to put together a process to create an impressive-looking planning document if you don’t have to worry about how good the plan is, or how difficult it will be to implement, or if the strategy will work after implementation. Unfortunately, these latter issues are very important to the company’s ultimate success.

A company succeeds only if the plan succeeds. And a plan only succeeds if it is both a) worth implementing; and b) is actually implemented. Otherwise, the plan is worthless.

If you broaden the definition of success to include these other issues, then strategists will spend more time on them. I would suspect that the type of plan you get would be different. The process might get messier, but the plan will be better. Even if the strategists have only a minor role in the actual execution, if they are held more accountable for execution, they will create a plan which is easier to execute. Similarly, if they are held more accountable for the effectiveness of the plan when executed, they will create a plan which is more effective if implemented.

A second problem with the narrow definition of success is that it tends to isolate strategic planning from the rest of the business. Creating a strategic plan just becomes another thing which needs to get done (and not the primary responsibility of the operators of the business). Once the plan is designed, you can check it off the “to do” list as a successful completion. Then the focus of the company moves on to the next item on the list. It is just sort of done and forgotten, because no connection is made between making the plan and running the business.

If the day-to-day decisions are totally divorced from planning decisions, then the contents of the plan become irrelevant. After all, a company’s long-term execution is merely the sum of all the decisions it makes on a daily basis. If the daily decisions ignore the strategic implications, then the strategy never becomes a part of how things get done. As a result, the company never benefits from the plan, because it merely sits on a shelf, rather than being a major influence on how the company acts on a daily basis.

The strategist needs to be present not only at the place where the plan is designed (getting to the road), but at the place where key operational decisions are made (driving down the road). Otherwise, the company may end up like a hitchhiker stuck in place because it can’t find the right way to get down the road.

Bad for the Strategists
It’s not just the company which suffers under the narrow definition. The strategists suffer as well. First, if the rest of the company sees strategists as primarily responsible for the strategy process, then that is how the strategists will be measured. Bonuses will be based on things like making sure all the parts of the process get done and get done under budget. This can be a horrible way to make strategy and it wastes a strategist’s resources.

Good strategic positions and broad strategic objectives shouldn’t change all that often. For example, the basic plan for Wal-Mart is low cost/low price. That hasn’t changed in decades. The basic plan for Apple is cool devices doing cool things in cool ways. That hasn’t changed in years, either.

Going back to square one every year to complete the entire planning cycle in these cases is a waste of time and effort, because the core strategy will not change. You are better off rotating through key strategic issues related to the enduring plan already in place. But if the strategist is judged on revisiting the plan every year (and concluding it is still good), then the time for getting at the key strategic issues is lost. The strategist’s talents are wasted.

Worse yet, if companies see the plan in place as rather enduring, and they believe that putting the plan in place is all a strategist is good for, then they will see no need to keep strategists around. The idea would be that as long as “low cost/low price” is working for Wal-Mart and “coolness” is working for Apple, there really is no need to even have any strategists around. In this case, the strategist is fired.

It is like that hitchhiker story. Once the driver (the strategist) gets you to the road, they are cast off as unnecessary. The company (as the hitchhiker) will find another way to get down the path without you. And as long as they keep traveling down that same road, they will see no reason to get another strategist.

The strategist then loses his/her ability to influence the actions because they are not around. So, not only is the strategist unemployed, he/she is unable to keep the plan relevant. That makes the actual plan seem even less valuable, making it harder to get rehired to do it again.

Solution
As a result, it is in the best interest of both the company and the strategist to keep planning work and daily operational work more intertwined. That way, the company gets a better implementation of a better (more relevant) strategy. In addition, the strategist gets a more fulfilling (and longer-lasting) job. And the best way to keep the work intertwined is to use a broader definition of success for the strategist which includes aspects of implementation.

SUMMARY
The value of a strategy is not in having a plan on a piece of paper. No, the true value of a strategy is in its ability to improve the outcome of the business. Therefore, strategic success should be defined based on how well a plan improved a business instead of on how efficiently it was designed.

FINAL THOUGHTS
If the company sees no need to take the strategist along on the journey, then the company will not get timely information about problems up ahead on the road. By the time they realize that the road they are on is no longer any good, it may be too late to get back on track.