Why Most Strategies Fail: Reason #3

BACKGROUND

I recently saw a blog by the Cascade strategy software company entitled “The 5 Reasons Why 70% of Strategies Fail.” You can read it here.

Since I disagree with their conclusions, I decided to write my own blogs on why strategies fail. I came up with three major reasons. The first reason why most strategies fail is because they are too internally focused at the expense of an external orientation. I covered that topic in the first blog.

The second major reason why strategies fail is because they focus too much on “doing” rather than “being.” That was covered in the second blog on this topic.

The third reason I feel most strategies fail is because they fall victim to the “Tyranny of the Immediate.”

PROBLEM #3: FALLING VICTIM TO THE TYRANNY OF THE IMMEDIATE

I feel so strongly about the evils in the tyranny of the immediate that on my blog site you can see links to 15 other blog entries I have done on the topic. In fact, I wrote an entire book on the topic which you can download for free here.

What is the Tyranny of the Immediate

So what is the tyranny of the immediate? Think of it as the daily fires at your business which demand your immediate attention.  It could be something like an angry customer, or a production line mistake, or a disgruntled employee, or a bad report in the media. Not a single one of these types of minor crises will permanently cripple your business. So why see them as a major source of strategic failure?

The reason is because there are so many of them. Executives typically encounter at least one of them a day. If the executive is not disciplined, he or she will find themselves totally consumed with putting out the fire of the day.  And therein lies the tyranny. We become captive to their demands on our time every single day. If getting the immediate crisis resolved captures too much of our time, then there is no time left for long term strategy.

In a sense, any strategy is worthless and bound to fail if people in the organization are such a prisoner to the tyranny of the immediate that nobody has enough time to adequately put the strategy into practice.

Successful Strategies Take Time

In the classic strategy book “Competing for the Future,” Prahalad and Hamel say:

“As a benchmark, our experience suggests that to develop a prescient and distinctive point of view about the future, a senior management team must be willing to spend about 20 to 50% of its time, over a period of several months. It must then be willing to continually revisit that point of view, elaborating and adjusting it as the future unfolds.”

Unfortunately, Hamel and Prahalad’s research found that most executives spend less than 3% of their time to building that corporate perspective of the future. It is no wonder that strategies fail when so little time is devoted to them. And in my opinion, the tyranny of the immediate is the biggest culprit causing so little time to be devoted to this core act of strategy.

Tripped Up By Distractions

That is why I wrote the book “Tripped Up by Distractions.” I wanted people to see all the subtle ways in which time and effort are stolen away from doing the work of strategy. They may only look like minor distractions, but when you add them up they can rob us of the time needed to do strategy properly. Until we tackle the distractions, we cannot build successful strategies.

In the book, I identify five major sources of distractions:

1. Having our head down looking at individual numbers so much that we lose sight of the big picture; 
2. Sending so much time trying to produce perfect documents or in trying to check off the items on the documents that we don’t have time to anticipate and adjust to realities surrounding us.
3. Putting the wrong people in the wrong places doing the wrong things.
4. Getting so focused on accumulating money today that there is no time left to strategize about how to build an enduring money-making enterprise.
5. Spending so much time reacting to change that there is no time to anticipate change and build a strategy to take advantage of change.

Some of these look at first like innocent activities. But when you add these issues to the normal crises of the day, you can see why companies have a tendency to spend insufficient time on building and executing a good strategy.

The book then has three major recommendations of better ways to spend one’s time:

1. Spend more time asking questions. If you ask the right questions, you can more efficiently get to the root of what is strategically important.
2. Spend more time on broad issues rather than narrow crises. If you get the big issues right, a lot of the daily crises disappear.
3. Change your actions. Not all activity is equally productive in tackling strategy effectively. If you keep doing what you did before (falling victim to the tyranny of the immediate), don’t expects your outcomes to get any better.

Warning Signs that Your Strategy is on a Path to Failure

So, what are the warning signs that one is falling victim to the tyranny of the immediate?

First, do a time study of what your executives do. Is core strategy work closer to Hamel and Prahalad’s ideal of 20 to 50% or is it closer to their findings of less than 3%? The lower the number, the harder it is to build and execute a successful strategy.

Second, look at what your company chooses to put as top priority regarding where time is spent. What do people get most in trouble for if they don’t spend time on it? What are the consequences if someone spends too little time on strategy? People will spend the time on that which they perceive management wants them to spend time on. Send the right message. Reward good strategic behavior. 

Punish those who fall victim to the tyranny of the immediate.

Third, is strategy work treated like a real job or more like a hobby you do on the side in your spare time? If there is never enough time in the day to do your day job, how can you expect much from tasks relegated to doing in your spare time? If you truly believe that designing and executing the right strategy is the difference between long-term success and failure, then intentionally carve out time for it. Have people on staff for whom this is their full-time responsibility Make at least some of the strategic work the day job of people.

Finally, how well do your executives delegate the little crises so that time is freed up for the work of strategy? If delegation is not occurring, then strategic work is not occurring either.

SUMMARY

Depending on which study you look at, somewhere between 60% and 90% of strategies fail. If we don’t address the deep-seated reasons why strategies fail, we will not be able to raise the percentage of strategic successes. I believe that there are three major reasons why strategies fail and my reasons do not always agree with conventional wisdom. The third reason I believe most strategies fail is because not enough time is being spent on the subject. Real success occurs when a company takes the time to get strategy right and keep it relevant. Without a proactive commitment to spend the time it takes to get strategy right, the tyranny of the immediate and a whole host of other distractions will get in the way. If your strategy is a half-hearted effort barely worked on to accomplish, you will get what you deserve: failure.

FINAL THOUGHTS

Thomas Jefferson said, “All tyranny needs to gain a foothold is for people of good conscience to remain silent.” As a strategist, it is your responsibility to be noisy and fight so that the crisis of the day and other such distractions do not become tyranny to your organization.

Strategic Planning Analogy #520: Whiteout!

THE STORY
I’ve been suffering through this winter like most everyone else here in the United States. A couple of days ago, it was snowing and blowing so bad that we had “whiteout” conditions.

A whiteout occurs when there is so much snow blowing in so many directions that you cannot see anything but a wall of “white.” It’s like being locked in a totally dark room where you can see absolutely nothing—except instead of total blackness, you have total whiteness.

I’ve been caught in whiteouts when driving on expressways. It is extremely dangerous because not only can’t you see the road, you cannot see what the other drivers on the road are doing. You may as well be driving blind.

THE ANALOGY
Businesses can also experience a form of whiteout. Except instead of being blinded by snow, they are blinded by an excessive flurry of data. With unending streams of data flying from all directions with no end in sight, it is easy to get lost.

There are those who say “the more data, the better.” But like snow, too much data can be a dangerous thing. It can overcome businesses and make it impossible to find the way forward. One can become so bogged down in looking down at data that looking up to make forward progress comes to a halt.

THE PRINCIPLE
The principle here is that obtaining data should not be the goal. The real goal is to discover and reach your vision. Data is only useful in this endeavor if two things occur:

1.     It is converted into knowledge:

a.      Insight to help discover the vision;

b.     Insight to deliver the promises of the vision; and

c.      Monitoring knowledge to make sure you are on track.

2.     It does not bog down forward progress towards your strategic destination (paralysis of analysis).

In other words, if all you have is a big pile of data, you have nothing. In fact, it is worse than nothing because of all the wasted time and effort to gather it and stare at it. Instead, what you want is a smaller pile of knowledge.

Knowledge is like a small map you can take in your car telling you where to go. The knowledge map is useful because it distills the vast outdoors into just what you need to motor along. By contrast, data is like all that snow that is still blowing around outside. Instead of giving knowledge of where to go, it prevents you from knowing where to go.

We can learn three things about how people deal with snow to help us understand how to deal with data for strategic purposes.

1. Look at Radar, Not Individual Flakes

If you really want to understand how to deal with snow, you need knowledge. And what knowledge is that? As I’ve stated in previous blogs, strategic knowledge of the environment usually boils down to three things: Magnitude, Direction & Speed. If you know this about a trend, then you typically know what strategic action to take.

For example, household car ownership in the US peaked in 2007. The current direction in the percentage of households owning cars is moving down. If we add to this the best knowledge on the anticipated magnitude of this trend (how low will car ownership go) and the speed (how fast will ownership drop), then we can build an intelligent strategy to deal with this trend.

The same is true of snow. If you know Magnitude (size of the storm), Direction (where it is coming from and where it is going) and Speed (how fast the storm is moving), then you will know how to deal with that snow storm. This is what the TV weathercasters talk about—magnitude, direction and speed—because they know this is the knowledge you need to make the right decisions.

They don’t get this knowledge by looking at individual snowflakes. In fact, they don’t have to really look at any snow at all. Instead, the weathercasters get this knowledge from understanding the big picture. And the big picture comes from looking at radar images rather than snowflakes. Radar captures the entire storm at once and lets you measure magnitude, direction and speed.

Strategists need to do the same. They need to stop obsessing with individual data factoids and look at strategic radar which lets one see the big picture—big enough to show direction, magnitude and speed.

You won’t get the big picture on car ownership by staring at everyone’s driveway one at a time. You need to get broader—and look at something other than cars and driveways. For example, what are the key “driving” forces behind choosing not to own cars. Is it:

1.     Population migration to dense urban centers?

2.     A different attitude towards car ownership among younger adults?

3.     A growing concern for the environment?

4.     A poor economy?

5.     Advances in car sharing options (like Zipcar)?

6.     Less need to travel due to being able to get tasks done at home via the internet?

7.     A combination of the above?

Get the big picture on this (via strategic radar), and you can start to make educated projections on the direction, speed and magnitude of car ownership. Now you have knowledge instead of data.

2. Plow Away the Unneccessary

Snow on the roads is considered a bad thing. Therefore the plows are brought out to clear away the snow on the road. The drivers of the snowplows do not stop to examine every snowflake on the road to determine which ones are good and which are bad. No, the drivers previously determined that if it is on the road, it is bad and needs to be plowed away. No further examination needed.

The same is true in business. A lot of data is strategically worthless. Its speed, direction and magnitude have no relevancy to advancing my strategy. Therefore, rather than spend time examining it, I should just plow it away so that I can move forward.

For example, Walmart’s strategy centers around owning the low cost, low price position. Therefore, Walmart can focus their attention on only dealing with finding knowledge of issues impacting Walmart’s ability to own the low price position.

When Walmart determined that:

a)     Warehouse clubs and supercenters had the potential to offer lower prices than Walmart discount stores; and

b)     Consumers were starting to prefer these formats (direction, speed and magnitude moving their way),

Walmart changed its strategy and diversified into warehouse clubs and supercenters.

Recently, they made the same determination about internet shopping and are quickly and aggressively moving in that direction.

Everything else was plowed away so that they could focus on what really mattered—owning low price. By knowing where to focus, they could ignore and just get rid of all the debris that does not impact that focus. This allows Walmart to efficiently and effectively own its position over many decades.

That is why focus is so important to strategy. Focus lets you know what to look at and what you can ignore. As I mentioned in a prior blog, it is often more important to know what your strategy isn’t than what it is, because there is a lot more data which is worthless than is worthwhile. Defining what is outside your strategy lets you know what is worthless and can just be plowed away.

3. Fly Above the Clouds

No matter how bad the snowstorm, airplanes can usually avoid the turmoil by flying above the clouds. It’s always sunny and snow-free above the clouds. And that leads to quick and easy travel to the destination.

A similar situation exists in the business world. Current business fads and daily crises can cause all sorts of turmoil. Bouncing from fad to fad or crisis to crises is like bouncing around in a jet going through a storm. It slows you down and keeps you from your intended destination.

Strategists need to get companies to rise above these current temptations which suck up a company’s time, just like jets rise above the clouds to escape turmoil. Once you get above the clouds, you can see clearly. The same is true in business. If you stop getting bogged down in the petty distractions of the moment, you can see more clearly what is truly important.

Rather than follow the current fad, follow the larger game plan. After all, one rarely wins a strategic position when following others to get to the same location as they are. Winning comes from differentiation, not imitation. Rise above the fray to clear the path to your intended destination—the place where you can win.

SUMMARY
Although some data can be useful for strategy, most is just a wasteful distraction. And even the useful data only becomes useful if it is converted into knowledge. Therefore, instead of wasting time trying to absorb as much data as you can, follow the tricks used to deal with snow:

1. Focus on the Big Picture by looking at “Strategic Radar” (showing direction, magnitude and speed) rather than looking at every snowflake (piece of data).
2. Just plow away all the data not relevant to your task of moving forward towards your winning point of differentiation.
3. Fly above the clouds of current fads and distractions so that you can easily see the final destination.

FINAL THOUGHTS
Remember, the winner is not the one who captures the most data, but who gets to the right destination first with the right offering. Don’t let competitors in snow plows pass you by while you stop to look at every snowflake.

Strategic Planning Analogy #492: Straight Line Nearsightedness

THE STORY

Imagine two executives who were told to get from point A to point B. The first executive wanted to be very efficient in his task. He knew that the shortest distance between two points was a straight line, so he drew a straight line between points A & B.  “This straight line,” said the first executive, “will be my path to success.”

Unfortunately, his straight line was drawn directly through the middle of a large zoo. This posed many challenges to his straight line approach. Following the line, this executive first had to find a way to break into a lions’ cage. Then he had to find a way to get around the man-eating lions in that cage without being eaten. Then he had to find a way out of the lion’s cage on the other side. This process was repeated as he had to get through the cages of poisonous snakes, hungry crocodiles, and other wild beasts.

These challenges were very difficult, but each time, the first executive found a workable solution.

As the first executive reached point B on the other side of the zoo, he was very proud of himself.  He thought, “I’m an excellent executive. I found the shortest path to point B. Then I successfully found an answer to every challenge on that path. I overcame every obstacle and reached my destination without any serious injuries. My boss will call me a hero.”      

However, there was nobody waiting for this first executive when he got to point B.  He later found out that the second executive had gotten to point B days earlier.  What she had done was called a taxi and had the taxi driver drive around the zoo to the other side.  It took less than an hour. 

The first executive did get a response from his boss, but it was not to be called a hero.  Instead, his boss called him an idiot, told him he was fired and that he would have to personally pay for all the damages he made to the zoo.

THE ANALOGY

The first executive considered himself to be a hero because of all the great accomplishments he performed. He made a quick decision on finding the shortest path and then found solutions to all of the problems along that path. And since they were difficult and dangerous problems, his ability to solve them without injury was that much more remarkable. Yes, he had quite the long list of impressive achievements.

Yet, his boss called him an idiot. Why? Because it was an expense, destructive and excessively time-consuming way to get to Point B. The goal was not to achieve a long list of impressive feats of management, but to quickly and efficiently get to the other side of the zoo. That could be done with a quick taxi ride.

I see a similar type of occurrence in the world of strategic planning. We set a strategic goal to get from point A to point B. Then we set loose the executives to go down that path. Once the executives get moving along the path, they lose sight of the big picture and only see the obstacles immediately in front of them. Then, one by one, they tackle each of those daily obstacles.

The big picture gets lost while attention moves to the obstacles immediately in front of us. At the moment each obstacle is conquered, we may feel like a hero. But all that “heroic” effort is really a waste of time, because it is unnecessary,

That first executive could have saved a lot of time and effort by waking around those cages rather than trying to go through them. Or better yet, he could have followed the second executive’s approach and just taken a cab around the zoo. It may make for a much less impressive list of accomplishments, but the big strategic goal is accomplished a whole lot faster and easier.

THE PRINCIPLE

The principle here is that the importance of the task is often correlated to distance. In other words, achieving the big strategic goals off in the distance are usually far more important to the ultimate success of the business than conquering the crisis of the day. Yet in practice, we tend to operate in the opposite direction. We spend most of our time tackling the challenge immediately in front of us. Like that first executive, we get so intent on finding a way through the lions’ cage in front of us that we miss the quick and easy path to the bigger goal on the other side of the zoo.

We can call it nearsightedness, because the executives lose site of the distant goal and can only see the challenge immediately in front of them. In the past, I have referred to it as the tyranny of the immediate.  The immediate becomes our master and tortures us into submitting to its wishes rather than freeing us to achieve the larger, more distant (and more important) goal.

So how can we minimize activities like the first executive in the story and may our executives act more like the second executive? Here are some suggestions.

1.  Keep the Distance Continually in View

When executives become nearsighted, we need to help them by giving them corrective vision so that they can see the bigger goal in the distance all the time. If the only time your company focuses on the distant goal is at an annual off-site meeting, then the battle is lost. The near-term challenge will win the daily battle for the limited executive’s time. The distant goal will be forgotten until the next year’s annual meeting, when people wonder why they are no closer to the goal.

There are several ways to get the distant goal clearly visible on a daily basis.  For example, you can change the culture so that a simple question is asked at EVERY meeting and when important daily decisions are made.  That question is this: Does your decision get us closer to achieving our big goal or not?  Or perhaps it can be worded like this:  What decision gets us faster to where we want to ultimately be?

Another way to do it is by linking the goal to a position or philosophy.  For example, if your goal is to win via innovation, you can look at daily decisions about what to tackle as a choice to focus on those activities which most support innovation. 

I was very impressed when I recently visited the Walmart headquarters.  When I listened in on how daily decisions were being made, it was obvious that the long term goals, positions and philosophies were deeply ingrained into the process.  Every decision seemed to go through the same filter:  Is this going to help Walmart bring lower prices to their targeted consumers so that they live better lives on their limited incomes?  The challenge of the day did not seem to overpower the drive to spend time on what was most critical to their long term success.

So be a pest and make sure the big vision become imbedded in the daily grind.

2. Watch What You Reward

We like to reward “heroic” levels of effort which overcome huge challenges.  It’s human nature.  But often times, that effort is just foolishness in disguise. That first executive in the story overcame numerous challenges in that zoo.  But it was all an effort in foolishness that kept him from achieving the important goal.

Spending a lot of time and effort to overcome a huge challenge is huge mistake if the challenge can be avoided. You don’t need to fix problems if you can avoid them in the first place (like going around, rather than through a lions’ cage). And some problems aren’t worth the effort to fix them (the cost benefit ratio is wrong). And then there are the opportunity costs…all that effort to fix that problem is effort that was unavailable for more important tasks.

Therefore, don’t automatically reward great effort which overcame a challenge. First, find out if the problem could have been avoided or whether the problem was worth the effort or whether the effort prevented more important accomplishments.  If this is the case, then perhaps punishment is more appropriate.

People do what gets rewarded.  If overcoming challenges is what gets rewarded, then people will find (or even create) lots of challenges to work on.  They will be like the first executive in the story—busy on the wrong things, but looking good while doing it. That second executive didn’t look all that heroic (all she did was take a taxi).  But she was the one who got the important big picture stuff accomplished. That is what should be rewarded.

The more you link rewards to achieving the big picture, the more likely folks will focus on that.  Remember, standing on your head while juggling may take more effort and look more impressive than walking, but it will never get you to your destination.  Those who just keep walking towards the goal are the real heroes, not the jugglers of the inconsequential “crisis of the day.”    

3. Just Say No

Although it is tempting to want to roll up one’s sleeves to tackle the challenge of the day, it may be more heroic to just say no.  Don’t spend any time focused on it at all.  This can be done in two ways.  First, one can set up rules in advance for how issues are to be handled.  That way, the old crisis of the day is no longer a crisis because we have established the protocol in advance for how to handle it.  Instead, the old challenge requiring executive effort becomes a routine event that just goes through the system based on the established protocol. You’d be surprised at how many crises are just routine events that are merely missing a protocol.

Second, one can delegate the problem to someone else lower in the organization.  This will free up your time to devote to more critical long-term issues that only you can solve. 

I’m reminded of what management guru Peter Drucker said in his book “The Effective Executive: The Definitive Guide to Getting the Right Things Done.”  In the book, Drucker says, “Effective executives concentrate on the few major areas where superior performance will produce outstanding results. They force themselves to set priorities and stay with their priority decisions. They know that they have no choice but to do first things first—and second things not at all. The alternative is to get nothing done.”

This is what my second executive in the story did.  She ignored the zoo entirely and only did the important thing—getting to point B quickly and effectively by taxi.

SUMMARY

Although the challenges immediately in front of us may appear at the moment to be the best use of our time, that is rarely true.  Instead, it is getting to those more distant major strategic goals which is the most effective use of our time.  To help get executives focused on the bigger picture, we need to a) keep the distance in view on a daily basis, b) stop rewarding great effort focused on the wrong thing, and c) just say no to the crisis of the day.

FINAL THOUGHTS

If you look at a newspaper from a week ago, you may find that what seemed important enough to put on the front page then no longer seems all that critical if read today.  The same can be said about most of the crises of the day.  A week later you may wonder why it seemed so important then.

Strategic Planning Analogy #469: Mirror, Mirror

 

THE STORY
I knew a woman who didn’t like the way she looked.  She wanted a quick and easy way to solve the problem…and she found one.

She took all the mirrors out of her house.

 

THE ANALOGY
Yes, getting rid of the mirrors meant that she could no longer see the way she looked.  And yes, by not seeing the way she looked, she no longer was reminded of the way she looked, so it did not bother her anymore.  But it didn’t change the way she looked.  The problem was merely avoided, not eliminated.

Company leaders often take a similar approach.  They are uncomfortable with their long-term prospects (or how to deal with them).  As a result, they only focus on what they are comfortable with—the near-term issues (the crisis of the day).  They never take the time to examine the firm with a look at the long-term.  The long-term views are eliminated like mirrors, so that you can no longer see how dire the future might be.

Although that may be the comfortable way to eliminate dealing with the issue, it doesn’t solve the problem.  It merely avoids the problem.  Eventually, long-term issues will catch up with you.  And if you haven’t dealt with them in advance, they can destroy your business.

 

THE PRINCIPLE
The principle here is that the future is will come, whether you are paying attention to it or not.  The more you pay attention to it in advance, the better it will be.

Back in the 1980s, Gary Hamel and CK Prahalad wrote an article for the Harvard Business Review saying that senior executives should be spending about a third of their time looking into that future mirror.  Instead, what they found was that senior executives were only spending about 3% of their time looking into that mirror.  I don’t think those numbers have changed significantly since then. 

The tyranny of the immediate always seems to win over gazing into the long-term.  And there is a serious price to pay for this.

Why ignoring the future is a mistake:

1) The Future Determines Your Valuation

The value of a company or business is not based on what happened in the past or what is happening now.  It is based on what will happen in the future.  Companies are cash flow machines and today’s value of the firm or business is roughly the sum of its future cash flows brought back at some discount rate.

Look at the social media firms like Facebook.  Their extremely high stock valuations cannot be justified by what is happening today.  They can only be justified by future expectations.

If you want a high valuation for your firm or business, then you need to have a compelling story about the future and future cash flows.  And you won’t have that story if you ignore the future and only concentrate on the here and now (by throwing away the long-term mirrors).

The question is not what have you done for me lately, but what are you going to do for me tomorrow.  And a great tomorrow won’t happen by accident.

2) Others Are Still Looking at Your Future

In the story, the woman no longer fretted about how she looked because she could no longer see what she looked like.  However, throwing out the mirrors did not stop others from looking at her.  And if they were turned off by her appearance, she would still have problems.  It could hurt her social life, hurt her career and lead to a less desirable life.

The same is true in business.  Consumers look at you; bankers look at you; private equity looks at you; parent companies look at you; clients look at you; vendors look at you; competition looks at you.  If they don’t like your future prospects, they can make your life miserable.  They will take away funding.  They will take away business.  They will assume you are a higher risk and charge you more for their services.  As a result, you will have even more near-term crises and more dire future prospects.

3) Others Are Preparing their Future

If everyone was equally blind to the future, we would all be similarly handicapped.  However, there are always those companies who seriously work to optimize their long-term prospects.  Their proactive approach will help define how the future unfolds.  And since they are working for their own advantage, the future will not unfold to your advantage.  You will become weaker as they become stronger.

Remember that if you don’t define a place for yourself in the future, someone else will define it for you…and you probably won’t like the results.

4) The Future is not Always Incremental

The future does not roll out as a smooth continuous line of incremental improvement.  Major disruptions can occur.  Just ask anyone in the analog business who got wiped out by the digital revolution (like Kodak, traditional newspapers, etc.).  So just trying to get better at the status quo will at some point break down.

So if your head is only looking down at what is in front of you today and all you are trying to do is make it incrementally better, faster, or cheaper, then at some point you will have the best, fastest, cheapest obsolete item on the market.

Only by looking to the future will you have the foresight needed to adapt to the non-incrmental change (which is inevitable)—hopefully with enough advance notice in order take advantage of the leap rather than be a victim of it.

So What is the Solution?

If top management has a little trouble finding sufficient time (or desire) to stare into the mirror, then someone else needs to be doing it for them.  That would be a key role of a strategic planning group.  By being freed a bit more from the tyranny of the immediate, they can spend more time looking into the mirror and pondering what the future looks like.  

Then, as a trusted advisor (and a bit of a nag), the strategy group can ensure that the voice of the future is at the table when decisions are being made.

 

SUMMARY
The future will come, whether we are ready for it or not.  And the future will be better if we are prepared in advance.  After all, that’s where today’s value comes from—our potential future prospects.  And if top management cannot carve out enough time to do so, then strategic planning can add significant value by doing much of it on behalf of senior management.  That alone should make every executive team want to have a vibrant strategic planning unit.

 

FINAL THOUGHTS
There’s an old saying which goes something like this:  “Blessed is the company which never does any long-term planning, for their inevitable demise will come as a complete surprise to them (and they won’t have wasted all that time in worry about it).”  A better blessing would be to properly prepare for the future so that you can be rewarded with long prosperity.  Look into those long-term mirrors.

Strategic Planning Analogy #450: Pushing the String

THE STORY
Here’s an experiment. Take a long string and stretch it out on the floor. Go to one end of the string and try to push the string across the floor. That effort will essentially be a failure.

Now re-stretch the string on the floor. Go to one end of the string and try to pull it across the floor. This should be a great success.

Conclusion: It is much easier to pull a string across the floor than to push it.

THE ANALOGY
What was the difference between pulling a string (success) and pushing a string (failure)? When you pull a string, you are in front of the string. When you push a string, you are behind it.

You organization is like a string. Strategic planning tries to move an organization to a better place, sort of like trying to get a string across the floor. Just as getting in front of a string (to pull) is the best way to move the string, getting a strategy in the hands of the person in front of the organization is the best way to get the organization to a better place.

By definition, followers need leaders up in front. Strategic leadership, then, is a pre-requisite to strategic followership. Trying to move the organization from another position is far more difficult.

THE PRINCIPLE
The principle here is that strategic planners are not typically positioned at the front-most end of the organization. Therefore, if strategic planners want to effectively move the organization forward, they need to work through those people who are at the front and capable of pulling the string—top management. This becomes their primary audience.

Like it or not, strategists are not in front of the string. In most cases, they are usually further down the ladder. It is common for them to report to a CFO, who then reports to a CEO. Without the mantle of top leadership, strategists cannot directly pull the string.

If the primary force for change in an organization is the strategist, then the effort to move the organization is more like trying to push the string. The string will not respond as desired, because the effort is coming from too far back in the organization.

Mistake #1: Having the Strategist Lead
There are many reasons why having strategist lead the strategy movement is sub-optimal. First, consider the audience—the organization. They will ask themselves a few questions:

1) If this is the person we should be following, then why aren’t they in a position of leadership?

2) Since they are not the leader, what gives them the right to ask me to follow?

3) If this were really important, wouldn’t the real leader be leading us?

They will think: I’ve got enough responsibilities on my plate handed down from my direct superiors to worry about. Why worry about the ranting of someone who has no direct control over me?

Therefore, the organization will not wholeheartedly follow the strategist. It will be like trying to push a string.

Now think of it from the position of the real leader of the organization. Leadership from anywhere else can be seen as a threat to their power. Most leaders don’t like potential threats to their power. Consequently, they will not abdicate enough power to the strategist to really be able to effectively pull the string on their own. Others in the organization will see that the power has not been handed down to the strategist. Therefore, the strategist will not have enough power to pull the string. They can only push.

Mistake #2: Having the Strategist Merely Keep Score
So if the strategist cannot lead, should we just take them out of the leadership equation? No. As we’ve talked about many other times in these blogs, the strategist provides an important leadership function. They can provide a unique perspective which can be gained almost nowhere else, because:

1) Strategists are the least vested in the status quo. Therefore, they can most objectively look at the status quo versus alternatives.

2) Strategists are the least captive to the “Tyranny of the Immediate,” those daily crises that tend to capture the immediate attention of the operators of the business. This allows the strategist to focus on long-term implications more than anyone else.

3) Strategists spend the most time focused on understanding the big picture (and where it is heading). They can look for the holes in the marketplace yet to be filled. As a result, they can offer an important perspective not available elsewhere.

Therefore, it is mistake to lower the position of the strategist to little more than a mere scorekeeper (as we saw in the prior blog). To do so will be to lose the power of these insights.

Solution: Become the Strategy Whisperer
So how do we take advantage of the needed leadership of the strategist while understanding they do not have enough leadership power to pull the string? I refer to it as becoming the “Strategy Whisperer.”

The idea is based off of the book The Horse Whisperer by Nicholas Evans (which was made into a movie starring Robert Redford). The book and movie made popular a form of horse training known as “natural horsemanship.”

The basic idea of natural horsemanship is that wild or unruly horses will become more effectively useful to their riders if they are approached with respect rather than with force. The idea is to work sympathetically with a horse in order to obtain cooperation (rather than submission). Instead of trying to destroy the horse’s will by overpowering it, you gain its respect so that the horse’s natural power is voluntarily given over to the desires of the rider.

And this is an effective analogy for strategists. Their goal is not to overpower the leaders of the organization. The task is not to break the will of the leader. No, the strategist needs to come to the leaders showing great respect for their power. Rather than posing as a threat to the leader, the strategist merely seeks mutual respect in return. And once gaining that non-threatening respect, the strategist can then whisper into the leader’s ear what he or she needs to hear from the unique perspective of the strategist.

As a result, the leader is still the unquestioned leader. Their power to pull the string is not threatened by the presence of the strategist. Yet, because the leader is listening to the whispering of the strategist, the leader is pulling the string in a direction which is more strategically correct.

The Strategy Whisperer approach may not come naturally to the strategist, especially if the strategist wants to be the one with the hands on the string. But if you want to effectively help move the company, this can be the best approach.

SUMMARY
The best way to move a company in the proper strategic direction is to get the leader of the organization to want to lead the organization in that direction. This requires positioning the strategist as far more than just a scorekeeper, but far less than a threat to the power of the leader. The optimal spot is that of a Strategy Whisperer—a respected advisor who has the ear of the leader.

FINAL THOUGHTS
It’s better to have your hand on the shoulder of the real leader (so you can whisper in his/her ear) and let them effectively pull the string in your desired direction than to insist that the string be put in your hand and only be able to ineffectively push it.

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 #419: Get Into the Flow

THE STORY
I used to work with a company that would go into a panic the week before the quarterly board meeting. They acted as if they were totally surprised that a board meeting was coming up. They never seemed prepared. As a result, there was always a last minute rush to get ready (with lots of overtime).

I was always flabbergasted by this lack of preparedness. After all, the board meetings were put on the calendar almost a year in advance. They were mandated by law to be held quarterly and they had been holding these quarterly meetings for decades. I wondered why everyone seemed to act as though the meetings were a surprise.

I used to joke that these people are so out of touch with the rhythms of the business that they are probably shocked every morning when the sun rises in the east. They probably say to themselves, “Wow! The sun rose in the east AGAIN. What a surprise! I wasn’t ready for that. Didn’t it just do that yesterday? I wonder when it will do it next time.”

THE ANALOGY
There is usually a rhythm or flow to a business. It is the way things get done on a recurring basis. Some activities seem to effortlessly mesh with the flow of the business. Others seem like a major disruption to the flow.

At the company mentioned above, board of directors meetings were treated as a disruption to the business flow. The normal flow had to stop while panicked people altered their routine and rushed to get the director’s meeting job done. After the board meeting, the normal flow returned and people acted as if the board had never met.

When it comes to strategic planning activities, we have a choice. We can either build a structure where strategic planning meshes into the regular flow or we can have it appear as a disruption—like those board meetings. As we will see below, strategic planning is better off when part of the normal flow.

THE PRINCIPLE
The principle here is that strategic planning is more effective when incorporated into the daily flow of business. This will not occur on its own, since the “tyranny of the immediate” tends to naturally push longer-term strategic issues out of the daily flow. Therefore, if you want strategic planning to be part of the daily flow, you have to actively work to make it so. Otherwise, you will end up with a dysfunctional mess like I saw with those board meetings.

Why Strategic Planning is Less Effective When Seen as a Disruption
There are several reasons why strategic planning is less effective when seen as a disruption. First of all, the reality is that a company moves in the direction of the daily flow. It is the sum of all those little decisions and daily actions which causes a company to become what it is. You can put a business mission or vision statement in a fancy frame and place it on the wall, but if it is not a part of the daily flow, it will have no impact on the business. You may as well frame a picture of a dancing bear and put it on the wall for all the good it would do.

For example, if your strategy calls for radical change and the daily flow doesn’t change, then the change strategy will never take root and become reality. The simple truth is that you are what you do. If the implications of the strategy are not integrated into the daily flow of what gets done, then the strategy will never succeed. So if you want an effective strategy it must move beyond disruption status and get integrated into the flow, where the real decisions are made.

The second problem with strategy-as-disruption is that it is often not taken seriously. After the disruption of an annual strategy session, people go back to their routines. It’s sort of like taking a vacation or going on holiday. It can be a fun diversion—a pleasant disruption of the routine—but afterward, the old routine returns. Or it can be seen as an unpleasant disruption, like getting the flu. Once the illness is over, the goal is to get back to the normal routine as soon as possible. Either way, the connection between the disruption and the routine isn’t made because the disruption is not taken seriously enough to cause any real lasting change.

It reminds me of what the civil servant government employees in Washington DC are known for. Tradition has it that they frequently say, “Government administrations come and go. Sometimes they are Democrats; sometimes they are Republicans. They make all kinds of pronouncements about grand new programs and new ways of doing things, but in a couple of years they are gone. Then another administration shows up with their own pronouncements. Well, we were here before these administrations, and we will be here long after they are gone. So we will keep doing whatever we want, just like we have always done before.”

In other words, the government doesn’t change much, because the everyday workers of the bureaucracy reject the disruptive calls which come from the outside politicians. The daily flow stays the same because the pronouncements aren’t taken seriously, and the grand strategies go unimplemented.

Steps to Get Strategy Into the Flow
Since it is critical to get strategic planning into the daily flow, it is prudent for the strategist to take steps to ensure that happens. The first step would be to create visibility at the point where daily decisions are made. If the key decision-makers only see the strategists once a year at an annual planning meeting, then the strategists will only be a small, maningless distraction. If you want to impact the daily decisions, you have to be visible all the time—to be there when the regular decisions are being made.

Get on the calendar of as many of the decision making bodies as you can. Go to the meetings. Steer the discussions to consider the strategic implications of what they are considering. If they won’t let you into the meetings, get to the meeting members prior to the meeting. Make sure the strategic context is top of mind and part of the normal decisions within the flow.
The second step is to provide a link between the conceptual and the practical. Business Missions and Vision Statements can provide a great conceptual framework for where you want to take the company or brand. But that doesn’t mean that everyone can intuitively understand how it impacts their own day-to-day actions.

For example, let’s say that your strategy is to become a leader at providing some functional attribute, like service, or quality, or speed. That sounds nice, but how should a salesman do his or her daily task differently in order to expedite this strategy? How should someone on the shop floor act differently as a result of that mission statement? Where should R&D efforts be directed to make the strategy a reality? How should a secretary answer the phone as a result of this strategy?

Unless you can provide a link between the words on a paper and what the average person does on an average day, they may never make the link. Don’t assume people will figure this out on their own. Help them to make the connection. Help them to see that the everyday actions of everyday employees impact strategic success. Help them to find ways to act in support of the strategy rather than (unknowingly) against it.

Ask people to visualize how the daily flow should look when the strategy is fully operational. Then help them figure out how to change their processes in order to get in line with that visualization.

Finally, pay attention to metrics. Metrics are the way we measure the daily flow. If you want the daily flow to move in concert with the strategy, then use tools which measure how well the flow is moving with the strategy. Don’t expect the daily flow to support the strategy if the measurement tools and benefit packages reward a different type of performance. For example, if you want to win on quality, don’t focus on cost control metrics and rewards

Some people use a version of the Balanced Scorecard to accomplish this. However, it might just be as simple as making sure that once everybody sees the link between what they do and the strategy, to measure how well that link is getting done.

SUMMARY
Strategic execution is most likely to be successful if the strategic planning process is integrated into the daily flow of how things get done in the business. Otherwise, you end up with strategic planning as being a minor disruption which gets ignored when the real work is resumed. To ensure that the strategy is integrated into the daily flow, consider the following actions:

a) Increasing the visibility of strategists and strategic thinking throughout the year at the places where routine decisions are being made.

b) Helping employees at all levels of the organization see the link between their everyday activities and the overall strategy.

c) Using metrics to measure and reward how well the daily flow is reinforcing the strategy.

FINAL THOUGHTS
There’s been a lot of talk over the years about how ineffective many Boards of Directors are. I think a lot of that has to do with the fact that they are often seen as a disruption rather than as part of the daily flow (as we saw in the story above). Unless you want your strategic planning

Strategic Planning Analogy #411: Strategic Pep Rallies

THE STORY
Back when I was in high school, we used to hold a big pep rally for our football team. All of the students would leave their classes to go to the gymnasium and sit on the bleachers. The band would play peppy music.

There would be speeches about how wonderful the football team was. The team would come out on the gymnasium floor. The students would scream with excitement. It was a fun time of camaraderie filled with inspiring speeches and things designed to boost everyone’s emotions regarding the coming football season.

These pep rallies were done because it was felt that it built up fan support and made the team feel more confident about winning. All of this was to help increase the success of the football season.

THE ANALOGY
High School football teams are not the only ones looking for success. Businesses want their strategies to succeed as well. So maybe companies should also hold pep rallies.

In a way, many companies do. Think about those annual strategy retreats. They’re a lot like pep rallies. People leave their offices to congregate together. There is lots of camaraderie and lots of inspiring speeches. People get more emotionally tied to the strategy. Enthusiasm to win is increased.

A lot of people complain about these types of strategy retreats. They think they are a waste of time because not a lot of serious strategic activity takes place. But consider this…you don’t see the football coaches doing serious planning activities at pep rallies. They aren’t sitting there at the pep rally developing their playbook. They are not designing their plan of attack against the next opponent.

I’m not even sure that such activities could even be possible with the band playing loudly and the students screaming in the background. Yet schools continue to hold pep rallies because they see value in the activity.

So maybe there is even value in a strategy retreat when strategy is not created at the event.

THE PRINCIPLE
The principle here is that strategic success requires more than just a well thought out mission and viable plan of attack. At the end of the day, strategies have to be properly implemented by people in order to succeed. Ignore the people element, and even well thought out plans are usually doomed.

People are both rational and emotional beings. And for most of them, strategy work is layered on top of a full burden of day-to-day activities (with lots of pressure to get them accomplished). If you do not break through the clutter of the day-to-day and create enthusiasm for the plan at both a rational and emotional level, the strategy will lose the battle for attention against the day-to-day. Implementation will suffer.

Studies show that strategies typically fail due to weak implementation. Strategy retreats can help “rally the troops” around the strategy in a manner which increases the enthusiasm for the plan. This improves the level of commitment in the people and increases the likelihood of successful implementation.

Here are some suggestions about how to make the best use of a strategic retreat.

1) Don’t Try to Use Strategy Retreats to Create Strategy
As it turns out, strategy creation is a complex, time consuming process. Great strategies cannot be created over a weekend once a year. Besides, not everyone is great at strategy creation. It takes a different kind of thinking to be great at strategy creation. Therefore, trying to create strategy at a strategic retreat is a waste of time. Don’t even try.

Instead of trying to get people to “create” strategy, try to get them to “react” to strategy. As I’ve mentioned in a prior blog, most people are better at reacting to ideas than creating them. Therefore, use the retreat to deal with reactions. Find out:

a) Where the rational and emotional resistance lies among those required to implement it.
b) How the strategy can be improved.

By incorporating this feedback into the plan, you give the people a sense of having participated in creating the plan without actually having a creation session. This minimizes implementation resistance and increases emotional commitment in a very efficient manner. And efficiency is important if all you have is a weekend at your disposal.

Pep rallies don’t create strategies. Follow their lead.

2) Use Strategy Retreats to Break Through the Daily Clutter
It is difficult to get enthusiastic implementation from people who do not fully understand or comprehend what it is they are being asked to implement. Lack of comprehension can be one of the biggest enemies of implementation. Therefore, use the retreat to maximize comprehension and understanding of the strategy.

It often takes time for all the rationale and all of the nuances of a strategy to sink in. It cannot be done in little “sound bites.” Back at the office, where all the daily pressures take place (the “tyranny of the immediate”), about all the time the strategy can get is little sound bites—spoken when the audience is only half-listening. The real benefit of the retreat is that it pushes away the tyranny of the immediate, so that the ears have the time and the attention levels necessary to fully comprehend and embrace the strategy.

Use that time to fully explain why the strategy is so critical to future viability and success. Explain how the environment is forcing a need to change and why this is the best change to take. Explain the dire consequences of the status quo. Show how its importance truly eclipses the day to day. Show why this strategy is worth becoming a priority in their life. Make them BELIEVE in the rightness of the strategy, both rationally and emotionally.

This is more than just lecturing. Make it come alive through demonstrations and role playing. If you let them play the part of the competition who seeks to destroy the company, they will quickly see the vulnerability of not embracing the right strategy. Show them interviews with disgruntled customers. Let them experience the competitor’s products first-hand. Appeal to all the senses—seeing, hearing, touching, experiencing.

Keep the daily pressures as far away as possible. Ban electronic devices. Prevent digressions into daily problems. Don’t let them communicate with the office. That way you have the full attention of all the senses. Then you can make the strategy truly come alive and become something more than just a clever slogan. It is then something real which can be understood, believed and embraced.

3) Use Strategy Retreats to Break Down Silos
Not only does strategy implementation require people, it requires people to cooperate. Cooperation relies on three elements:

a) A willingness for people to set aside personal agendas for the greater good.
b) A willingness to trust others and work together.
c) An understanding of how your role fits within the larger picture—what you are responsible for and how that interacts with what others are responsible for.

Strategy is not a “corporate” thing. It is an “everybody” thing. If people don’t understand how they fit into the implementation plan (and make it a priority), they cannot fulfill their part of making the implementation a success. It has to get very personal at all levels.

Strategic retreats are a good time to break down those individual silos and improve cross-departmental cooperation. After all, this may be one of the rare times when these executives get to interact with each other in a neutral environment where daily pressures don’t get in the way. It is a time to build bonds of trust.

It is a time to show how all the pieces fit together…a time to for people to see how they fit into the plan and what they need to do. Never let a strategy retreat end without people seeing how their role fits into the strategy implementation. You may never get a better opportunity.

Pep rallies break down own individual concerns and get us thinking about the entire school and the entire football team. It makes us want to do whatever we can to help the TEAM win. That sounds pretty good for businesses, too.

SUMMARY
Although strategy retreats are not great places for strategy development, that doesn’t mean they are a waste of time. Strategy retreats are a great place for improving the rational and emotional commitment of people to the strategy. And that goes a long way towards improving strategy implementation. Use them to increase understanding, get feedback and increase cooperation.

FINAL THOUGHTS
Pep rallies are not the only time students think about football. They also go to where the games are played each week. The support follows where the action goes.

The same principle should apply to businesses. The strategy cannot be isolated to a remote location once a year. It needs to come along to where the game is being played every week. Regular interaction is needed so that people are reminded of the strategic implications of their daily decisions. I think that strategists should have an audience with senior management at least once a month in order to keep the commitment to strategic implementation strong all year long.

The retreat should just be one small piece in the larger context of influence.

Strategic Planning Analogy #390: Hide the Scores

THE STORY
Imagine you are an athlete and they changed the rules of the game you play. The first change is that the place where points are scored cannot be seen by the players. It is obscured from their view. For example, if you play hockey or soccer, you cannot see anything that happens near the goal area. Once the ball or puck enters the goal area, you cannot see where it went. Similarly, if you play basketball, you cannot see anything that happens near the hoop. Once you shoot the ball, you cannot see if it went into the hoop or not. Scoring becomes a mystery.

The second rule change would be that the referees, who are the only ones who can see the scoring, have up to five years to determine if any scoring occurred.

As a result of these changes, the athletes would have no immediate feedback. They would have no idea if their actions were successful. Player statistics would be virtually non-existent. Worse yet, the players might have to wait up to five years to find out if they even won the game. With the way players switch teams today, they more than likely would have switched to a new team before they even know if they were successful on the prior team. And, of course, without up-to-date statistics, it would be difficult for the players to negotiate salaries. No, I don’t think the athletes would like these rule changes.

The fans wouldn’t like the situation, either. It’s hard to get excited about going to watch a game where you don’t know the score and won’t know the results until five years after watching it.

These rules would be hated so much that I can assure you that they would never be enacted.

THE ANALOGY
Unfortunately, as bad as these rules are, they are very similar to the rules executives face every day in the game of business. For many of the tough decisions that CEOs and strategists make, there is no immediate feedback. They cannot see if it was successful right away. It can take up to five years before one knows whether that tough decision was made correctly or not.

For example, Cisco’s decision to use the Flip camera as part of a push to diversify into consumer electronics initially looked very promising. The Flip camera was loved by the market when introduced and when purchased by Cisco in March 2009. Initial sales were very promising. It wasn’t until years later that the ultimate results of that diversification decision were in. The decision to diversify into consumer electronics was a complete failure for Cisco. They couldn’t even find a buyer for the Flip camera business and just shut it down two years after purchasing the business. And, of course, the decision to diversify was made well before making the purchase of Flip, making this around a three year feedback cycle.

And this three years was a relatively quick feedback (best case scenario). Consumer electronics tends to reward winners and losers much faster than most other industries. And most companies probably would have waited a couple of years longer than Cisco for even more feedback before pulling the plug.

Given that the average tenure for a CEO or strategist is less than 5 years, executives can move to a new company before knowing whether they were ultimately successful at the prior company. Trying to put together any kind of up-to-date statistics on CEO performance can be fairly meaningless, because it can take many years before the full impact of the really big decisions can be seen. That is why it is so difficult to determine what fair compensation for top executives should be.

Like the athletes in the story, CEOs tend to hate this condition of uncertainty. And like the fans, stock analysts and stock traders also hate this uncertainty. It’s hard to recommend or buy stocks when you won’t know the complete score for past actions for up to five years.

Yet, even though it may be hated, this is reality.

THE PRINCIPLE
The principle here is that successful CEOs and strategists need to resist the temptation to act based solely on immediate feedback. Instead, they need to focus a significant part of their time pursuing long-term visions, even when it is difficult at the time to know how those decisions will turn out.

There is a tendency to try to avoid these uncertainty issues and try to make business rules more like sports rules. Compensation packages look for ways to immediately score a leader’s performance. Stock analysts find all sorts of near-term scoring to look at in order to rate a company. As a result, you get companies so focused on the next quarter’s performance that critical long-term decisions get pushed aside.

Decisions are made to increase near-term statistics rather than to win the long-term game.

HBS Study
I was reminded of this situation by a recent study reported by the Harvard Business School. The study was trying to correlate the day to day activities of a CEO with company performance. The scoring mechanism used by the study was productivity. What they found out was that:

1. The more hours a CEO was at work, the higher the productivity

2. If most of that CEO working time was focused internally on employees, productivity went up.

3. If most of that CEO working time was focused externally on customers or the marketplace, there was no impact on productivity.

Hence, one might conclude from this study that CEOs should spend a lot of time in the office dealing with employees.

Wrong Focus
However, I see a major problem with this conclusion. In particular, the scoring methodology is all wrong. We’re measuring productivity in this study, not long-term success.

Isn’t productivity more the responsibility of the COO (Chief Operations Officer), not the CEO? Naturally, if all you want is greater productivity, spend a lot of time pushing your employees. But there’s a big problem with this approach. You can end up having the most productive process for an obsolete solution.

Kodak spent a lot of time perfecting productivity on analog film and totally missed the transition to digital imaging. Blockbuster perfected productivity on moving DVDs through stores and missed out on winning the transition to receiving movies via direct mail and digital streaming.

Focusing on getting better and better at doing an old task gets you nowhere when that task is no longer needed. And trust me, all business models eventually become obsolete. That is why efficiency (doing things well) is not enough. You also need effectiveness (doing the right things).

That’s why CEOs and strategists should spend considerable time looking beyond the tasks of today. They need to look for where the company needs to be tomorrow. Time should be spent addressing issues like:

1) What needs to be added to the portfolio?
2) What needs to be deleted from the portfolio?
3) What will make our current business model obsolete?
4) What will be the next big thing to threaten our core?
5) Where are the gaps in our competencies when transitioning to the business model of the future?

These questions won’t get answered by spending all day in the office putting pressure on your employees. To answer these questions requires getting away from the daily grind and spending time alone in thought. It requires getting out into the field to talk to customers and see what is going on. It requires broadening your horizons. It requires putting up blinders around those near-term measures, so that you are not fixated on them all the time. It requires making bold moves, even though you may not know the outcome of those moves for a long time. It requires ignoring the results of that HBS research.

In other words, it requires resisting the temptation to focus only on an instant score like an athlete. Instead, it requires taking responsibility for those actions which only CEOs and strategists can answer—what do we need to transition to and how to we make that transition.

SUMMARY
Successful CEOs and strategists need to break away from the temptation to fixate on near-term measurements and instead spend a considerable amount of their time making decisions about key factors where the results of those decisions may not be known for another five years. Otherwise, they may find themselves perfecting the obsolete.

FINAL THOUGHTS
Yes, CEOs cannot completely ignore the tyranny of the immediate—the fires which need to be put out right away. But one cannot ignore the long-term either. Most experts seem to feel that CEOs should spend about a third of their time on long-term issues. Yet most studies show that CEOs spend far, far less time than that on long-term issues. The only way to increase the time is to back away from such a strong focus on near-term scoring.