Strategic Planning Analogy #152: Stuffed Shirt

THE STORY
One time, I was the keynote speaker at a luncheon. The audience consisted mostly of small, independent grocers. I walked up to the podium, and just as I was about to say my first words, one of the independent grocers stood up and shouted me down.

He said, “Before you start to speak, first convince me that you are worth listening to and that I wouldn’t be wasting my time by staying.”

Well, needless to say, nothing like that had ever happened to me before (or ever happened again). I replied by saying that my first job out of college was working at a small, independent family-run retail business. Now, even though it was not the grocery business, the experience allowed me to experience first-hand the problems faced by small, independent retailers.

I guess what I said was good enough to convince that man, because he sat down and allowed me to give my speech.

THE ANALOGY
There are lots of symbols that should have helped create credibility for my speech at that luncheon. I was an executive with a title from the largest and most successful food wholesaler in the country (the company who they had chosen to supply them with groceries). I was also designated as the keynote speaker, a position usually reserved for the best presentation.

Yet, in spite of these external credentials, that man in the audience was not convinced. He had never met me before and was suspicious of “stuffed shirts” from corporate headquarters. To him, we were guilty of being worthless windbags until proven otherwise. I had to convince him that I had more than just superficial credibility. He needed to know I had “street cred,” the credibility that comes from having been out there on the front lines with an independent retailer.

A similar problem can plague a strategic planning process. If the person leading the process does not have the respect of the people out in the field who have to implement it, the results will not get the respect necessary to carry them out. The strategy will die at the point of implementation.

THE PRINCIPLE
The principle here is that strategic planning is severely hampered when those leading it lack credibility with the people in the field. At some point, it does not matter that you know you are right in your strategic plan. If those implementing the plan are not equally as convinced that the strategy is right, there is a good chance they will not pursue the strategy fully enough to succeed. As we saw in the last blog (“Pursue, Pursue”), strong pursuit is as important as having the right plan. Your credibility can have a direct impact on how committed the troops are to pursuit.

Equally problematic, if the field organization does not respect the people in the strategy development process, they will not fully cooperate in ensuring that you have a proper strategy in the first place. Good strategies are based on good insight. The people in the field are your eyes and ears as to what is going on. Their insight is needed to ensure that the right choices are made. If they do not respect you, they will be less cooperative and less concerned about being fully forthright in sharing their perspective.

Result? Without respect, you will be seen as a stuffed shirt—not worthy of serious time and effort. They will humor you while the strategy is being developed and give lip service at the time of implementation, but ultimately ignore you.

It’s sort of like how the career civil servants treat the politicians inside the beltway in Washington DC. They see the politicians as a bunch of stuffed shirts that come and go. It really doesn’t matter who they are or what political party they belong to. The career civil servants know that they will outlast them, so they humor the politicians and then do as they please.

I believe that one reason strategic planning is a bit out of favor at the moment is because too many stuffed shirts have ruined the respect for the process.

Without respect, it still may be possible to coerce people into greater cooperation through fear (threats of being fired) or bribery (incentives linked to strategy implementation). However, as we saw in an earlier blog (see “Soulless Capitalism”), unless people are emotionally committed to a strategy, it will be difficult to get cooperation when the going gets tough (and at some point, it always does). Then, instead of plowing through the rough patch, they will blame the stuffed shirt strategist for giving them a bad strategy (and then abandon it).

Therefore, not only is it important for the strategy to have credibility, it is important for the strategist (and strategy leaders) to have credibility. Just as I had to persuade that man at the luncheon that I had enough credibility to be worth listening to, you have to persuade your people that you have enough credibility to be worth listening to regarding strategy.

How do you create this credibility?

1) To Create Street Cred, Spend Time on the Street
As mentioned in a prior blog (see “Do You Do Breakpack”), we talked about the benefits which come from spending time with the people out in the field. One of the best ways to break down credibility barriers is to show that you do not spend all of your time hidden away in an ivory tower. Firsthand experience on the front lines can go a long way.

The Nordstrom company has had a longstanding policy that all the executives must spend at least some time each year working a store sales floor, all the way up to the CEO. When I was at Best Buy, we had all the executives spend time at the call center listening in to customer complaints so they could hear firsthand what customers were saying. Then they all had to go to a store in a remote location to get a feel for how it all played out on the sales floor.

2) Park Your Ego At the Door
Yes, you want to gain the respect of the people in the field as being qualified. But that does not give you the right to beat them over the head with it. If your ego gets too large, it can appear as if you give no credibility to the people in the field. If you treat them like dirt, they will put up barriers to working with you.

This is a two-way street. If you want their respect, then you have to give them some respect.

3) Bring Something to the Table
Equally important, if you want respect and credibility, add something of value to the process. If all you do is coordinate meetings or call in consultants, then you truly are nothing more than a stuffed shirt. Prove your worth by making worthwhile contributions.

SUMMARY
Strategies are most effective when the troops are emotionally committed to making it a reality. This is far more likely to occur if you have developed credibility with them as someone worth paying attention to.

FINAL THOUGHTS
One of the potential problems to outsourcing your strategic planning process to a big consulting firm is that they may not have credibility with the troops. Yes, they benefit from their global reputation. And given how much they cost, they must be adding value somewhere, right? But they still could be perceived as outsiders who are clueless about the nuances of your company if the engagement is not managed properly. In that case, they are merely stuffed shirts wearing slightly nicer shirts.

Strategic Planning Analogy #151: Pursue, Pursue

THE STORY
Once upon a time, there was a man being chased by a wolf through the forest. The man knew that if he could just outrun the wolf and get to the town on the other side of the forest, he would be safe.

As he was running through the forest, the man came to a fork on the path through the woods. He knew that eventually either fork in the path would get him out of the forest to safety at the town on the other side. However, he did not know which path would be the most ideal way to get to the other side.

Not wanting to make a poor choice, the man stopped to carefully consider the two alternatives. One path was slightly shorter, but it was hillier and not as well developed. The other path was wide and smooth, but required running a longer distance.

While the man was standing there contemplating the merits of the two alternatives, the wolf caught up to him and ate him.

THE ANALOGY
Life is full of choices. For example, when a person get up in the morning, they have to choose what to wear, what to eat for breakfast, what tunes to listen to on the ipod during the morning commute, and so on. However, although there are many choices in life, not all critically important.

In the story, the man had a major choice to make—how to best avoid getting eaten by the wolf. He decided that his best alternative was to quickly get to the town on the other side of the woods before the wolf could catch him. Then he had a lesser choice to make—which path to take to get through the woods. In trying to optimize the lesser choice (which path), he lost sight of the greater choice (outrun the wolf). By stopping to over-think the lesser decision, he was no longer outrunning. As a result, he was eaten.

In reality, stopping to ponder his path choice was not the best use of his time. Even if he took the longer path, the wolf would follow the scent and have to take the longer path as well. The need to run quickly was more important than the path chosen, since both would have gotten him to the desired endpoint (if he continued to run fast enough).

In the business world, we can sometimes fall into the same predicament as the man in the woods. We can become so obsessed with optimizing minor choices that we lose sight of the larger goal.

In the case of the man in the woods, success would be determined more by his ability to outrun the wolf than his ability to choose which path to take. In other words, execution was more important than optimization. The man did not execute well on the running (he stopped). As a result, he did not succeed on the larger plan.

This is also often true in business. Our ability to execute can be more critical to success than ensuring that every fork in the road is optimally taken.

THE PRINCIPLE
The principle here is that degree to which we pursue our strategy can be every bit as critical to success as the choice of which strategy we pursue.

Many times throughout my career, I have been asked what I believe to be the best strategy for a retailer. The way I answer that question is as follows:

There are lots of strategic options for retailers. And for virtually every one of them, I can find you a retailer who is succeeding extremely well with that strategy as well as a retailer who is failing miserably with that same basic strategy. Since each strategic option can produce both winners and losers, there must be something more than just strategy choice which creates success.

At some point, it doesn’t really matter which strategy you choose. So long as you meet the following criteria, any strategic option can be good enough:

1) It must provide a solution desired in the marketplace;
2) It must be a solution your firm is capable of profitably winning at versus other alternatives available to the customer;
3) It must be a large enough business to provide a sufficient return.

If these criteria are met, then the battle shifts to pursuit. It is the firm that best pursues this strategy which will win. Out-pursuing the competition tends to involve several elements:

A) Speed – Am I the first to hold the position in the mind of the marketplace? Am I the first to build sufficient capacity to support the solution? Am I able to outrun the competition as the solution evolves over time? Am I considered a leader in the business?

B) Magnitude – Am I building a large enough capacity to satisfy demand? Am I putting enough resources towards the solution in order to outperform the competition? Am I building such a strong position that others find it difficult to attack?

C) Efficiency – Am I doing things in a manner which reduces waste (of time, of money)?

D) Effectiveness – Am I focusing my efforts in the direction which noticeably improves my ability to best satisfy the solution (and not diverting attention and resources to activities superfluous to the solution)?

If you can out-pursue on these four factors, then you can win the battle. Conversely, if you let someone out-pursue you on these four factors, it becomes almost irrelevant which strategy one chooses, because you will end up losing.

And finally, if you spend all of your time sitting back contemplating which is the single best strategic option (and never get around to pursuing any of them), I can assure you that you will never win in this manner, either.

This is not to imply that effort spent in choosing a proper direction is a total waste of time. You still need to discover a path meeting the three criteria mentioned above (desirable, winnable, and sizable solution). Out-pursuing in an area that is undesirable, unwinnable, or too small is a path to failure as well.

Sometimes, finding a strategy meeting these three criteria can take some time and research. This is time well spent. After all, although many strategies could be potentially successful, many may not. You have to eliminate the options where you could never win, no matter how much you pursue. But after that, just choose one from the set of potential winners, get out of your chair and pursue, pursue, pursue.

Now, let’s look at this principle in action. Back in the late 1950s and early 1960s, it was becoming obvious that the discount department store was going to become a large, profitable solution in the retail marketplace. During that time, a number of firms got into the business and built their first discount store. This list included K Mart (1962), Wal-Mart (1962), Target (1962), Woolco (1962), Shopko (1962), Ames (1958), Hills (1957), Bradlees (1958) as well as a host of others like Zayre, Turnstyle, Spartan-Atlantic, Shoppers Fair, and so on.

Virtually none of these companies survived. Is it because the discount department store strategy was a failure? Of course not. Wal-Mart and Target are doing quite well, thank you. Why did Wal-Mart and Target survive while most everyone else failed? My contention is that Wal-Mart out-hustled or out-pursued everyone on the low end and Target out-hustled and out-pursued on the high end.

Their dedication to speed, magnitude, efficiency and effectiveness was legendary. They didn’t just sit back and say, “Well, I’ve got stores in a winning format, so I guess that makes me a winner.” Instead, Wal-Mart and Target did a superior job of:

1) Working hard to pursue excellence in delivering the solution (always looking for ways to be better than everyone else)
2) Working hard to blanket markets with stores so as to capitalize on their position
3) Using their economies of scale to further their pursuit.

So yes, Wal-Mart and Target were correct in choosing a good strategy. But that only allowed them to play the game. To win the game, they had to out-pursue others in the same space.

SUMMARY
At the end of the day, the ultimate goal is not to pick the optimal strategy. The goal is to win with whatever strategy was chosen. So although it is important to pick a good strategy, it is as important (if not more so) to design your organization so as to out-pursue others in making that strategy a reality. There may be several strategies which could equally work for your firm. Don’t paralyze your actions by spending endless years trying to figure out which one is slightly better. Instead, just pick one and then move your focus to pursuit.

FINAL THOUGHTS
Yogi Berra once said, “When you come to a fork in the road, take it.” This would have been good advice for our man in the woods being chased by the wolf. By not taking any fork, he ended up standing around and getting eaten by the wolf. Running down either fork would have been a better alternative.

Strategic Planning Analogy #150: Where’s the Groom?

THE STORY
About 6 months ago, my daughter got married, so I know a bit about all of the time and effort that goes into preparing a wedding. Imagine for a moment that you are the bride-to-be and are preparing your wedding.

A lot of time and effort and money go into preparing a wedding. There’s arranging the ceremony, the reception, the flowers, the videography, choosing the wedding gown, preparation for the honeymoon, and so on. It’s not something thrown together in a day. It can often take 18 months to prepare for.

So let’s say you went through all of this preparation for your special wedding day. Finally, the day you have been preparing for is here. You arrive at the church. Everything looks just right.

You walk down the aisle in your beautiful wedding dress. Then, as you are standing at the altar, it suddenly occurs to you…there is no groom. You were so busy preparing the wedding that you did not take time to seek out a marriage partner.

THE ANALOGY
It seems foolhardy to think that someone would go to all the trouble of planning a wedding without spending time to find a marriage partner. However, businesses do something similar all the time.

In the business world, there are all sorts of partnerships. Some are strategic alliances, some are outsourcing arrangements, and others are joint ventures. To a large extent, your success is dependent upon the success of your partners.

Businesses can spend a lot of time in strategic planning, similar to the time and effort which goes into wedding planning. Yet, while it seems unconscionable to plan a wedding without the marriage partner, businesses often go through their entire strategic planning cycle without inviting their business partners to the discussion.

How can you optimize your performance if your planning is not in sync with your partners?

THE PRINCIPLE
The principle here is that strategic planning needs to incorporate its partners into the process. This is even more important now than in the past. We have moved into the networked economy, where ever fewer companies internally control all the aspects of their business. Instead, many aspects of the business are farmed out to others.

For example, a US company in the networked economy may:

1) Outsource manufacturing to a company in China
2) Outsource its call center to India
3) Pay a licensing fee for the cartoon characters which appear on the box
4) Have distribution outsourced to a 3rd party distribution company
5) Use a strategic partnership to obtain a European sales force
6) Form a joint venture with a local firm in Japan in order to penetrate that market

As more of one’s business falls into the hand of these various partners, the less direct control one has over his/her future. Three major areas where less control can create problems if not planned for properly revolve around capacity, conflict, and contribution.

A. Capacity
You may have a desire to grow at a particular pace. However, your partners may not have the capacity to grow with you at that same rate. Taking the US company mentioned above, it may have a strategy for very rapid growth. However, what if:

a) Its partner in China cannot grow its manufacturing capacity at that rate, or
b) Its distribution partner does not have capacity to grow distribution at that pace, or
c) The European partner does not have a large enough sales force to handle your planned growth there.

If your partners cannot grow at that pace, then perhaps you cannot, either. Your strategy may be flawed in its expectations, because your partners cannot support it.

Perhaps these partners could have geared up to support your growth if you had given them more of an advanced notice of your intentions. That is why you need to not only consider the capacity of your partners in your planning, but also get them involved in your early planning discussions so that they can have time to mesh your capacity needs into their own planning process. And if you cannot resolve the capacity issues, there is time to seek alternative sources of capacity.

B. Conflict
Now let’s assume that your long range plan calls for you to expand into new adjacent product categories. However, what if:

a) The manufacturing partner in China already manufactures this new type of product for someone else and is restricted from manufacturing it for anyone else.

b) The call center in India already has a US partner in this new space, and is prohibited from doing business with anyone who also competes in this space. Hence, not only can’t they help you on the new business, but they would no longer be able to work with you on the former business.

c) Your partners in Japan already have a position of their own in this new business, so they are unwilling to also support your effort in this area.

d) Your new product appeals to customers which your European partner’s sale force do not call on, nor have any desire to call on because of non-compete arrangements they have with other European sales forces.

e) The company which owns cartoon characters you license does not want their characters associated with your new product for fear it will damage the image of these characters.

As you can see, the diversification may make perfectly good strategic sense for your particular business, but it may not make any sense for your partners. They have strategic interests which are in conflict with yours. It is important to understand potential conflicts early in the planning process in order to either:

1) See if you can iron out the conflicts with your partners;
2) Seek out alternative partners for the diversification; or
3) Alter your diversification strategy.

C. Contribution
Just as there can be problems if you keep your partners out of your planning process, there can be missed opportunities if your partners exclude you from their planning processes. Going back to our US business example, what if:

a) The Chinese manufacturing partner had developed new technological capabilities which would be useful in your plans, but were not included because you did not know about them.

b) The distribution partner has just expanded into Mexico, which could have had an impact on the timing of your planned entry into Mexico had you known about it in advance.

c) Your Japanese partner is looking for distribution of one of its products in the US. This is the same product that you wanted to diversify into. Had you known about this in advance, perhaps you would have sold the Japanese product under your name in the US rather than separately develop a competing product.

d) Your cartoon licensing partner is releasing a new movie. Had you worked more with your partner when the movie in its development stage, perhaps you could have gotten involved in movie tie-ins which would have been superior to the marketing plan you had devised.

e) Perhaps there are things you are doing in-house which can be done less expensively if they are outsourced. By not examining new outsourcing opportunities in the planning process, one plans cost cuts in another area which otherwise would not have been needed.

The more you know about what your current (and potential new) partners are up to in their planning, the greater you can take advantage of that information in your own planning. There may be many more contributions available from your partners which you had not dreamed of, but would have come to light if you had been a greater part of your partner’s planning.

SUMMARY
In today’s networked economy, planning can no longer be done in isolation. The planning process needs to include your partners. This way, you can avoid some of the problems of a partner’s lack of capacity or strategic conflict. Not only that, one can benefit from additional partner contributions which come from knowing more about how a partner can help you. Just as weddings are rather meaningless if only one of the partners shows up, planning sessions can lose a lot of their power if your key partners are excluded.

Sure, the greater inclusion of partners into the planning process may require more trust, openness, and transparency. However, is it not true that marriages tend to be more successful if there is more trust, openness and transparency?

FINAL THOUGHTS
The pace of change in business seems to be getting faster. Time lost creates ever increasing opportunity lost. By incorporating your partners into your planning process sooner, one can resolve issues sooner. Less time is lost. If you wait until your planning is over to bring in your partners, you may find a need to plan all over again. More time is lost.

Strategic Planning Analogy #149: Reaping in Recession

THE STORY
Potter Palmer got into the department store business in Chicago back in the mid 1800s with a store called P. Palmer & Company. When compared to other retailers of his day, Potter Palmer was quite an innovator. He was an early pioneer of having sales, which he called “bargain days.” Palmer instituted free home delivery of all purchases. In addition, he was a one of the first to offer money back guarantees regardless of reason, and having a policy that “the customer is always right.”

He was also one of the first department stores to actively go after the female customer. His store was the one place in Chicago where women could go unescorted.

In addition to all of these customer-oriented innovations, Palmer innovated in the back-room portion of his business. The Chicago economy in the second half of the 19th century had wild and frequent swings from boom to bust. Many of the busts originated with fires, like the great Chicago fire of 1871. Others were due to credit issues. Regardless of the reason, it seemed that about every three years or so the economy in Chicago during the mid 1800s would get very bad.

At each of these cycles, many of Palmer’s competitors and suppliers—who were highly leveraged into debt—would declare bankruptcy. Palmer tried to stay liquid and did not over-borrow during the good times. As a result, he always had cash during the bad times. As others around him were declaring bankruptcy, Potter Palmer was buying up their assets at pennies on the dollar. As a result, when the next boom time came, Palmer was in a stronger position than in the prior cycle.

Each economic cycle gave Palmer the ability buy low during the downturn and sell high in the subsequent boom. If it weren’t for his poor health, he could have kept this up for a long time. However, because of his health he sold the department store business in 1865. In 1881, one of the people Palmer sold to changed the name of the store to his own name—Marshall Field.

THE ANALOGY
Economic Cycles are not a new phenomenon. Booms and busts have been around for generations. If you believe all of the press, there is a high likelihood that the next economic downturn into recession will happen in 2008.

Potter Palmer faced tough economic times as well. Yet, rather than have recessions hurt his business, Palmer found a way to use recessions to become an even stronger company. In this blog, we will look at what we can learn from Potter Palmer to help firms proper in the recessions to come.

THE PRINCIPLE
The idea here is that if one acts strategically, one can often find ways to benefit from economic downturns. Here are three principles to help make recessions a positive impact on your business.

1) Don’t Assume Straight Lines Forever
Poor decisions are often the result of believing that the good times will last forever. The current housing loan crisis is due in large part to a false belief that housing prices would in general continue to rise forever.

Trends, however, do not last forever. Events rarely happen on an unending straight line angled slightly upward to ever bigger and better results. Life tends to be curvilinear, with both ups and downs.

When people think the good times are virtually forever, there is a tendency to borrow heavily to exploit the good times. When the good times end—and they always do—the debt cannot be paid. That happened in Potter Palmer’s time and it is happening today.

Palmer, however, did not assume that the good times would last forever. He tried to maintain a financial cushion to protect himself when the bad times came. Palmer was like the smart squirrel, who gathered nuts in the fall when they were plentiful and stored some away for the harsh winter coming ahead.

Strategic planning can be useful to help us protect ourselves from falling into the straight-line trap. First, it can help us take a longer-term perspective to our decision-making. The longer the perspective, the more likely a non-linear perspective will be entertained.

Second, strategic planning provides the opportunity for scenario planning. This gives a company time to contemplate the impact of various economic conditions on the business, so that one can prepare in advance for the down times.

Finally, strategic planning forces us to come to grips with our strategic weaknesses. The more we understand our vulnerabilities, the easier it is to foresee a time when someone could exploit our weaknesses and put us into an economic downturn. This provides incentive to shore up our weaknesses or take other actions to protect ourselves from the bad times.

2) Don’t just Ride the Crest—Build a Differentiation
During the good times, it is tempting to relax and just go along for the ride. Pretty much all companies do better in the good times, so long as you don’t do something stupid. Therefore, just don’t do anything stupid and ride the crest of good fortune.

Unfortunately, if all you are doing is riding that wave, you will end up riding it for the full cycle—crashing when the wave crashes. The good part of the cycle provides the time and cash for investing in a business model which favorably differentiates one’s self in the marketplace. Then, when the times go bad, the weaker players will be the ones losing out and you will survive based on your positive differentiation.

Potter Palmer invested in a number of differentiating strategies to stand out in the marketplace. These included free delivery and unconditional money-back guarantees. He didn’t need to do this. His competitors weren’t doing this. The customers were not demanding it. In addition, these differentiating strategies tended to increase his cost structure.

Yet Potter Palmer knew that if he invested in a strategy that “the customer is always right,” it would pay huge benefits in the long run. It gives people a reason to prefer your firm over the competition. That may not seem as essential when there is more than enough business to go around. But when the pickings are slim, it will ensure that you get a disproportionately higher share of the business available.

One of the primary benefits from strategic planning should be the discovery of the best path to create positive differentiation for your firm. This is one of your best protections in a down cycle.

3) Exploit the Unique Opportunities Only Available in a Recession
Not everything in a down cycle is bad. Potter Palmer found that he could use his cash during down cycles to accumulate inventory and other assets at remarkable savings. When fires destroyed portions of Chicago (including his store), Palmer could take advantage of the situation and build better stores in nicer locations.

One of the biggest advantages of an economic downturn is that it gets people’s attention and causes them to rethink what they do. It is one of the easiest times to increase market share, because economic hardship is a great incentive to change behavior. Customers will seek out greater value. Businesses may be more willing to outsource some peripheral activities. Those who relied on a firm that has now gone out of business need to find a replacement.

Studies have shown that those who out-invest their competition during down times have the greatest up tick in sales/market share when the economy rebounds. To those who are prepared, a recession can be a great long-term ally. With the proper planning, one can prepare in advance on how to exploit some of the unique benefits which a recession brings.

SUMMARY
Business cycles are inevitable. Recessions will come. You can benefit from recessions if you a) accept the inevitability of recessions, b) build positive differentiation into your business, and c) exploit the unique opportunities available during recessions. However, you will miss many these opportunities if you do not plan for them in advance.

If done properly, it can become a virtuous cycle. Differentiating activity in the good times provide the market strength and cash to survive the downturn. Then, using the cash and strength during the down time, one can invest to build a stronger position for the next good time. This then allows you to afford even stronger competitive differentiation in the good times, which better positions you for downturn opportunities, and so on.

FINAL THOUGHTS
One of the greatest threats to this virtuous cycle is the temptation to take too many profits out of the business too quickly. If you suck out all of the cash during the good times, there is nothing to sustain the business during the bad. Prudent investments into the business can often provide greater long-term profits than if all the money is taken out today. (For more on this topic, see the blog “All Executives Should Have a Balloon in Their Office”.)

Strategic Planning Analogy #148: Here’s Mud in Your Eye

THE STORY
Back when I was in 7th grade, I was taking an art class. One day, the art teacher was trying to teach us how to make a clay pot on a spinning wheel. In order to keep my clay moist and pliable while spinning, I had doused it in quite a bit of water. Unfortunately, my attempt to make a pot was a failure, so I collapsed the clay into a lump—a lump filled with water.

The art teacher could see I was having difficulties spinning a pot, so he took over my chair and was going to demonstrate what to do at the wheel himself. I tried to warn him that the clay wasn’t fully prepared to be re-spun, but he was too intent on teaching to hear me.

He got that clay spinning really fast and then stuck his thumbs into the clay to start pulling up the sides. At that point, his thumbs tapped into the water reservoir inside the lump of clay. Dirty, clay-colored water sprayed everywhere—but mostly onto the white shirt and face of the teacher.

Let’s just say that the teacher wasn’t particularly pleased with me from that point on.

THE ANALOGY
In order to form a lump of clay into a beautiful pot, the clay needs to be moist and pliable. If it is hard and dry, you cannot do anything with it. The same is true with companies. If a company is pliable, then you can change it into something beautiful. If it is hard and stiff, then change efforts will be futile.

Quite often, strategy is about change. It is the act of trying to take the current business condition and reform it into something more desirable. However, no matter how wonderfully one designs the future state in the minds of the executives, if the company is hard and resistant to change, the strategy will not successfully come to pass.

To make a successful clay pot, you need three things: moist clay, an idea of what type of pot you want to make, and a skilled artist at the wheel. To successfully achieve a strategy, you need something similar—a pliable business culture, an idea of what the strategic outcome should look like, and skilled employees.

Sometimes, we can focus on the strategic design and talent pool, yet forget about properly preparing the organizational culture for change. The clay on my wheel in 7th grade was not properly prepared, and it left mud on the face of the teacher. Be mindful of the condition of your organizational “clay” or you may end up with mud on your face as well.

THE PRINCIPLE
The principle here is that change requires a pliable culture which embraces change. Usually, such a condition does not occur naturally. Those in power are typically benefiting from the status quo condition. Change can put that current power structure at risk, so change tends to be resisted.

Even if some in the organization will benefit from change, an increase in their power usually comes at the expense of someone else’s power base. Those losing power will resist giving it to others. On top of that, most organizational cultures create multiple layers of approval, any one of which can reject the change with a simple “no.”

This structural inertia makes change difficult. Therefore, to create change, one must proactively plan a strategy for it. Usually, this requires a modification to the corporate culture. This cultural change typically needs to precede the actions that are a part of strategic change.

I was working with a company one time where the leader wanted to institute significant change. When I assessed the situation, I realized that this organization was like hardened clay—not ready for change. I told the leader that it was too early to try to move the company forward. They were not ready for it yet. The culture needed to be changed first.

If you try to push a change agenda too early in a hard clay environment, the ideas will be totally rejected and your leadership position weakened. You may not get a second chance to introduce the change.

However, if you first spend some time softening the clay, then it will become more receptive to the new agenda. You may not get everything you want at first, but with some early victories, you can continue down the path to change.

There have been many books written on the subject of developing a culture receptive to change, so I will not try to cover the entire topic here. Listed below are just a few key pointers.

1) Create Dissatisfaction With the Status Quo
It is difficult to create a desire to change if people are satisfied with the way things are today. Therefore, it is important to make the status quo appear less desirable. Although there are several ways to make the current situation appear less desirable, they typically have something to do with pointing out that the environment has changed, making the status quo less relevant. By blaming a changing marketplace rather than internal activities, it keeps the discussion from being perceived as a personal attack on people within the organization. People are more willing to participate if they feel like victims of change, rather than causes of failure.

2) Eliminate the Bad Apples
Some people will never be willing to change. If they are spoiling the culture for everyone else, they may need to be let go.

3) Get Buy-in From Pivotal Players
Some people in your organization are more influential than others. The key influencers need to buy into the change before you can get others to follow. Therefore, spend extra time with these individuals.

4) Create Easy, Early Wins
The best way to get people to endorse change is to have them see positive results from change. Therefore, do not start with long, difficult projects. Instead, find quick, easy tasks which give rapid, positive results. This reinforces the benefits of change and makes people more willing to continue the task, even when the going gets tough.

SUMMARY
Often times, strategic activity fails because the organization resists the change required to meet the strategic goals. Therefore, if you desire success, one must tackle the barriers to change. One of the first tasks is to assess how hard the clay is in your organization. If your culture is not soft and pliable—ready to enact change—then a culture change may need to be incorporated into the early stages of the strategic process.

FINAL THOUGHTS
There’s a story about a rural community that was going through a severe drought. Unless it rained soon, the farmers’ crops would be lost. Therefore, the local community decided to meet at the church to pray for rain.

When it was time for the prayer meeting, the pastor went up in front of the crowd and said, “I’m sorry, but there will be no prayer tonight. Please go home.”

The crowd was confused and upset. They demanded to know why the pastor cancelled the prayer meeting called to ask for the desperately needed rain.

The pastor replied, “None of you brought umbrellas. Obviously, you do not have faith that the prayers would work. Until you have faith, we will not pray.”

Similarly, if there is no faith in your organization in the benefits of change, there is little point in implementing a change strategy.