Strategic Planning Analogy #281: The Magic Hammer

THE STORY
Bob was giving Joe a tour of his office building. In the center of the main entryway was a fancy display case. Inside the display case was a hammer.

Bob was very proud of this hammer. He made sure that seeing the hammer up close was the first part of the tour.

“This is the finest hammer ever created,” beamed Bob. “All the research says that if you want to succeed in my industry, you need a great hammer. Since I want to succeed, I bought myself the greatest hammer in the world.”

Joe was a little perplexed. He asked Bob, “If you keep this hammer locked up in a display case, how can it help improve your business?”

Bob replied, “The research said that having better hammers leads to better success. If I went and used this hammer out in the field, the hammer would get worn out. Its condition would deteriorate from what it is now. It would become a lesser hammer. Why would I want to make this a lesser hammer if the research says that better hammers are the ones which lead to success?”

At this point, Joe could see that further discussion about the hammer would be useless, so he asked Bob to show him the rest of the office building.

Bob sighed and said, “There really isn’t much left to show you. I declared bankruptcy last week and sold off all of the office equipment in an auction.”

THE ANALOGY
A hammer is a tool, not some sort of magical charm. For a tool to be useful, it needs to be used properly. Just having the tool on display won’t do much good. It doesn’t provide magical success merely from its presence.

Although Bob owned the hammer that could potentially bring success, his company failed, because he did not properly use the hammer.

In the business world, there are hundreds of management tools available. There are also lots of books and consultants out their proclaiming that their particular management tool is just what you need to be successful. Lots of these books are purchased and lots of these consultants are hired. Yet many companies continue to fail.

Apparently, Bob is not the only one having trouble getting the promised success out of tools. Perhaps, like Bob, we are not using the tools properly.

THE PRINCIPLE
The principle here is my universal law of management tools. It goes as follows: For every management tool available, you can examine the marketplace and find companies falling into each of these four categories:

1) Firms using the tool who are successful.
2) Firms using the tool who are not successful.
3) Firms not using the tool who are successful.
4) Firms not using the tool who are not successful.

For example, I can find firms using centralization that are both successful and unsuccessful. Similarly, I can also find firms using the opposite approach (i.e., decentralization) that are both successful and unsuccessful.

In other words, any given management tool is not a magical charm that makes every company who touches it successful. If used properly, it may be able to help you, but even that is no guarantee. The correlation between any tool and success is typically very weak.

Therefore, when developing strategies, do not make obtaining a particular management tool the centerpiece of the strategy. Your ultimate goal is the quality of what you put in the bank account (profits), not what you put in the toolbox (tools). Good tools are nice, but your strategic approach should give a higher priority to the following three areas:

1) Place
Which of the two petroleum industry scenarios do you think will be most successful:

1) Using mediocre tools to drill into a huge reserve of oil; or
2) Using the highest quality tools to drill into an area devoid of any oil.

Naturally, if you want to be a successful oil producer, you need to apply your tools to places where the oil exists. Good tools help, but if you are located in the wrong place, those tools will not prevent your failure.

Strategy guru Michael Porter says that one of the most important steps in strategy is your choice of place—where you have decided to set up your business model. Not all places are created equal. Some are naturally better suited for success than others.

Some industries have high average profits, while others tend to be perpetually bad for everyone nearly all the time. Some sectors within industries tend to do a better job of absorbing the profitability of their ecosystem than others. Some business propositions (positions) tend to be more compelling than others.

Choosing a poor position in a poor sector of a poor industry will almost guarantee failure, no matter how good your management tools are. Jack Welch was known for using a lot of management tools at GE. However, a great deal of his success was due to identifying places in the GE portfolio where they had little chance for success (typically where they had no chance of being a leader) and divesting of those businesses (and reinvesting in better places). GE has continually morphed its portfolio over time so that it is in the right places (where success is easier to obtain).

As Willie Sutton put it, he robbed banks because that’s where the money was. Therefore, we need to be like Willie Sutton and first figure out where the money is. Then we need to direct our strategy so that it is pointed at that pool of money. Only after making this major decision should we worry about the tools.

2) People
If you give an axe to a skilled lumberjack, you will get a better result than if you give that same axe to an axe murderer. The tool is only as good as the person using it. Poor operators lead to poor results.

In developing your strategy, how much attention is focused on strategies for finding, obtaining, training and keeping the best people? Is it a higher priority than strategies for getting in place the latest management tool?

Online retailer Zappos put nearly all of its energy from day one into optimizing the people side of the business. It let them grow from nothing to being acquired by Amazon for a little under a billion dollars after only a few years in business.

If you truly believe that people are the key to your success, then that should show up as a priority in your strategy formation.

3) Practice
Great companies tend to be perceived as best at delivering a desirable benefit. Becoming the best is typically not an accident. It comes from a continual focus on that point of superiority.

Practice makes perfect. So to keep your edge, keep working the area that makes you great. Get even better, so that others are never able to catch up. Wal-Mart wins by being best at price. It innovates new ways to help it lower prices even more, so that others cannot catch up.

Focusing on the goal of getting better at what you are best at is more important than focusing on the latest management fad. Fads come and go. True staying power comes from staying true to your point of differentiation.

SUMMARY
The correlation between any management tool and success is weak. You can find both successes and failures with virtually all the management tools. Therefore, don’t focus too much strategic energy on getting the latest management tool. Instead, focus on matters more critical to success, such as place (where you choose to position yourself), people (getting, keeping), and practice (getting better at what you are best at).

FINAL THOUGHTS
Beware of magicians trying to sell you their magic hammer.

Strategic Planning Analogy #280: Mother May I

THE STORY
When I was a child, one of the games we played was called “Mother May I.” In this game, one person (called “Mother”) stood facing away from a line of children. The one playing the role of Mother then chose a child (at random, or in order), and announced a direction. These followed a pattern, like, "Bobby, you may take “x” giant/regular/baby steps forward/backward." The child then responded with "Mother may I?"

At this point, Mother then said "Yes" or "No", depending on her whim, and the child complied. If the child forgot to ask "Mother may I?" he/she went back to the starting line. The first one to touch Mother won the game.

THE ANALOGY
The two most important things to remember when playing Mother May I are:

1) You cannot move unless you have permission.
2) If you forget to ask for permission, you have to start all over again.

These two points are also important to remember when developing a strategy:

1) Your strategy probably will not succeed in a space unless you have permission to be there.
2) If you do not ask for permission, the marketplace will punish you and you have to start again.

THE PRINCIPLE
The principle here has to do with the concept of permission. A strategy only works if there is cooperation between your company and its key constituents—the consumers, strategic partners and employees. If your key constituents do not think you have a right to be operating in that space (or in that manner), you will not get the needed cooperation. Therefore, a necessary element to success is gaining permission from your key constituents.

1) Permission from Consumers
Over the last 10 years, Seth Godin has written a considerable amount on what he calls permission marketing. His idea is that un-asked-for one-way advertising (from producer to consumer) is very wasteful. Instead, marketers should first get permission to speak before spouting their marketing message. The idea is to create a relationship, or dialogue, with the consumer first, in order to create credibility. Then, when you give your marketing message, it will be better received, because the customer gave you permission and asked for the message.

This is all very fine and good, but I want to take this to a deeper level. Getting permission to speak is only half the battle. You also need permission to change the mental model inside the customer’s mind.

Consumers have a mental model about how things work and how various brands perform. For example, let’s assume someone wants to buy a new vehicle. Their mental model of choices may go something like this:

“If I want a reliable car, I should get a Toyota; if I want a luxury car, I should get a Lexus; if I want great value, I should get a Hyundai; if I want a truck, I should get a Ford.”

Brands are quickly labeled and slotted into a particular mindset. This mindset is the lens through which they see the world. If you, the producer, make a marketing proposition which is contrary to that mindset, the customer may not give the permission for that proposition to enter their mind.

Ford has been trying to convince people recently that it is not only the place to go for trucks, but also for automobiles. Ford now makes fine automobiles, on par in quality to Toyota and Honda. Unfortunately, the old mental model is so strong that Ford is having difficulty getting credibility as a viable automobile choice. People are not giving Ford permission to enter that mental space in their mind. That space is already filled by Toyota and Honda.

Therefore, before Ford can convince you to purchase one of their cars, they must first convince you that they have a right (i.e., permission) to be considered in your mind as a viable automobile seller.

Similarly, Wal-Mart recently tried to be taken seriously as a source for fashion apparel. It set up a quality fashion design studio in New York. It took out ads in Vogue magazine. It had a fashion show during New York’s fashion week. All that effort failed, however. Wal-Mart was still not taken seriously as a place for fashion. The project was a bust and most of the initiative got shut down.

The problem was not quality. The problem was permission. The consumer would not give Wal-Mart permission to be in that space. It took decades of careful image crafting to get Target to the place where it was seen as a credible source for fashion. Wal-Mart tried to get there in one year. Consumers would not permit it. The mental mindset for Wal-Mart is “Lowest Price.” This is incompatible with fashion ads in Vogue. The mind would not let the message in.

2. Permission from Partners
This same principle applies to your relationship with your strategic partners. Cisco and HP have been strategic partners for a long time. The relationship has been successful for both of them. However, in the past year these two firms have been invading each other’s territory. Cisco has made devices which cut out HP and HP has made devices which have cut out Cisco.

Neither one asked the other for permission to do this. They just did it.

The companies claim that these are rational growth moves and that their partners should understand that and rationally still work together in other areas as they partnered in the past. Unfortunately, we are not 100% rational. Companies, just like people, have an emotional element as well. These emotions get upset when a partner invades their space without permission. They retaliate with products that invade the other person’s space.

I suspect that in a few years all of that great strategic partnering between HP and Cisco will be a memory.

3. Permission from Employees
I know a company where they used to value their employees highly. The employees were considered to be the most important asset and were treated as partners. Then there was a change in command. The new administration started treating employees as a horrible cost to be minimized. They did not ask the employees for permission to make this change. The employees resented this change.

As a result, many of the good employees left the company. The ones who stayed were less devoted to the company. Rather than volunteering to work hard 70 hours per week, they started working only 40-50 hours per week. If they were going to be treated as”just an employee”, the employees would start treating their work as “just a job”. Enthusiasm and morale declined. Productivity was ruined.

Be careful about taking employees for granted. If you act without their permission, they can make your life miserable.

SUMMARY
Just like the game “Mother May I”, if you want to move ahead, you need to ask for and receive permission. Otherwise, you will meet resistance. With customers, one needs to get permission to change mental mindsets. With partners and employees, one needs permission to change the status quo.

FINAL THOUGHTS
Getting permission takes time. It looks like a way to slow down a strategy. However, without permission the strategy goes nowhere. That’s even slower. So factor getting permission into your strategic timetable.

Strategic Planning Analogy #279: Trends Change, Not People

THE STORY
When I was a teen, my observations were that young people drank Coke and older people drank coffee. Now, decades later, it seems that it is the younger crowd that is patronizing the coffee shops and drinking the coffee in large quantities. If anyone is drinking a Coke, it tends to be an older person.

The same with hair color. When I was a teen, I observed that if there was a woman with bright blonde hair, she tended to be a relatively young adult. Older women had more subdued colors. Now, decades later, it seems that the bright blond colors are on the older women and the younger women use more subtle highlighting.

It’s as if all of the rules I learned as a teen no longer apply.

THE ANALOGY
The problem with the rules I came up with as a teen was that I was linking a trend to an age. In other words, I believed that when people reached a certain age, they should act a certain way.

Instead, I should have linked a trend based on date of birth. In other words, people born at a certain time have a particular characteristic they will carry on throughout adulthood. The next generation is not bound by the old trend and so they start their own, which they carry on throughout their adulthood.

It isn’t so much that people’s beverage preferences change completely as they get older. It’s that the “cool” drink in the formative years changes from generation to generation. Depending on that was “cool” to drink at that formative age, that became the beverage of choice you carried with you as you aged.

A couple of generations ago, that cool drink was Coke. Now, it’s some fancy form of coffee (or maybe an energy drink). I suppose in another generation or two, young people will find something else “cool” and it will be the old folks who drink the fancy coffees (who are those same people who picked up the coffee habit when they were young and when coffee was cool).

This concept has been particularly true with beer brands over the ages. A particular beer brand is cool when drinkers are starting out, and they tend to stick with that brand through the rest of their life. The next generation chooses another “cool” beer brand and sticks with it. And so on.

So what does this imply for strategy? Strategies try to find the ideal place for your firm in the future. To find that ideal place in the future, it is important to first have an accurate view of the future.

As you try to imagine that future world, you can fall into the trap I did as a teen and incorrectly assume that younger generations will revert back to the behavior of the prior generation when they get older. I had thought that young people would always prefer Coke and old people would always prefer coffee, no matter when you were born. That was an incorrect assumption.

A better way to predict the future is to look at how each generation forms its habits in those formative years, and use that as a guide for how each generation will adapt to the future.

THE PRINCIPLE
The principle here is that trends change faster than people change. The next revolution in behavior tends to start with the generation still forming its life-long habits. Those who already have long-ingrained habits change far more slowly. As each new generation arrives, there is the opportunity to create a new trend, even if the older folks hesitate to participate.

This principle should lead to the following concepts.

1. Don’t look to the older people of today to predict how the older people of tomorrow will be
Back in the 1980s, I remember reading predictions about shopping behavior. At that time, the older people were shopping Sears, while the younger adults preferred shopping discount stores and specialty stores. Some prognosticators at that time were predicting that when the younger customers became old, they would switch store preferences to Sears, since that seems to be what older people do.

Well, here we are at the point when those younger shoppers from the 1980s are older. And guess what…they did not automatically start switching over to shopping Sears. Sears’ customer count continues to drop.

Those prognosticators in the 1980s made the mistake I did as a teen and associated behavior with an age rather than with when you were born. Sears is losing customers because the ones who were in their formative years when Sears was cool are dying. The next generation stayed with the same basic habits they formed back in the 1980s. They didn’t say they needed to switch to Sears when they got old because “that’s what old people are supposed to do.” Instead, they said, “Sears is the store for my parents, not me.”

Buick has been trying for years to get young people to embrace their brand. Unfortunately, Buick tends to be associated with a much older generation and it is hard to dislodge that image.

For young people, Buick is not the cool brand of their generation. And when today’s young generation gets old, I doubt they will suddenly switch to driving Buicks. They won’t think that “Old people drive Buicks, so now that I am old, I should drive a Buick.” No, unless something dramatic happens, Buick’s fate appears tied to an earlier generation and its best years will die as that older generation dies.

The same is true for newspapers. For awhile, many newspaper folks were not afraid of the internet because they thought that as the young adults got older, they would become more like their parents and switch from the internet to the newspaper. You don’t hear those comments much anymore, as people realize the new generation is never switching to paper for their news as their parents have habitually done.

This is not to say that older people never change their behavior. They do. However, those changes are not because they say “I’ve gotten old now, so I have to start acting like my parents did.” Instead, the changes tend to occur because:

a) Their relative discretionary time versus discretionary money changes over their lifetime (we act differently when we are time rich and cash poor versus when we are time poor and cash rich).

b) Their physical abilities change (older people have poorer vision, weaker stomachs, and are less mobile—perhaps no longer able to drive themselves).

c) Even though they may not be trend-setters, older people will switch to the new if it is found to be vastly superior (for example, the elderly eventually saw the benefit of the internet for their lives). In this case, they are not changing to be more like their parents, but to be more like their children.

2. Don’t look to the younger people of today to predict how the younger people of tomorrow will be
Each generation has its own defining moments. Those who grew up in the depression of the 1930s had a different outlook from those who grew up in the prosperous 1950s versus those who grew up in the turbulent 1960s, versus those who grew up in the materialistic 1980s, versus those who are growing up in the current age of terrorism.

Times change; technology advances. A person who has been tapping on a computer keyboard since the age of three sees technology a lot differently from one who first typed on a computer in their 20s. The “cool” behavior of one generation becomes “the weird stuff my parent’s did” to the next generation.

“Cool” communication has morphed from email to IM to texting to tweeting. We’ve moved the core cool internet page from portals to search engines to social network sites. The cool thing of tomorrow may not even be invented yet. So don’t assume today’s definition of cool will last.

It’s difficult to stay relevant and cool for each new generation. MTV has had to reinvent itself many times over in order to have its brand still be relevant to each young generation (and it appears to be losing the battle). Perhaps a better approach is to emulate Pepsi, who adds new brands to its portfolio in order to be relevant to each new generation, from Pepsi to Mountain Dew to Gatorade to SoBe.

Therefore, when envisioning the future, assume some behavior patterns which do not yet even exist. Better yet, try to create that next cool thing.

SUMMARY
Behavior patterns tend to follow generations. Therefore, it is often a mistake to use one generation’s patterns in order to predict a different generation’s patterns.

FINAL THOUGHTS
All of this change is good, because it provides a competitive advantage to those who know how to exploit it. If things never changed, we’d all still be shopping Sears.

Strategic Planning Analogy #278: Just a Few Words

THE STORY
Let’s say I had some land I wanted to sell. I could put one of two “For Sale” signs on the land. The first option is a sign that says “Farm Acreage For Sale.” The second option is a sign that says “For Sale: Zoned for Future Luxury Condo-Golf Complex.”

I suspect that I would get different results depending on which sign I put out on the land. The “farm acreage” sign would draw in farmers as potential buyers, who would evaluate the land based on its ability to produce crops. The “Condo-Golf” sign would appeal to resort developers, who would evaluate the land based on its luxury appeal.

The selling process would be entirely different, the offering prices would be entirely different, and the resulting use of the land would be entirely different. In both cases, the land is the same. The only thing I changed is a few words on a sign.

Pretty powerful words.

THE ANALOGY
A lot of people pooh-pooh the idea of Vision or Mission Statements. They say they are just a bunch of meaningless words on a piece of paper.

Yes, it may be true that there are some poorly written mission statements. But don’t blame the mission statement; blame the author of the mission statement.

As we saw in the story above, by changing a few words on a sign we can change the destiny of how land is developed. The words on the sign changed the way we looked at the property and how we envisioned its value. One sign caused us to look at the land as a place for growing crops. The other sign caused us to look at the land as a future resort complex. By changing our thinking about the land, each sign changed how people acted with the land.

Same land; different actions. All because of a few words on a sign.

The same is true with vision or mission statements. The words we use can frame the way we look at a situation. Depending upon the point of view those words evoke, we will act differently.

Same company; different actions. All because of a few words in a mission statement.

Some actions are far more profitable than others. As a result, it is important to choose the words in your mission statement carefully, so that they help us envision the right future.

THE PRINCIPLE
The principle here is that how we think about a situation impacts how we act. If you want the right actions, you have to properly frame the way people think about the situation. The mission statement is one way to create the right common mindset among your people, in order to end up with the right actions.

To illustrate how important a mindset is in determining actions, we will look at the Walgreens company. Walgreens recently changed the mindset for management. As a result, the actions now are totally different from before.

In the past, Walgreens envisioned itself as being a convenience-driven drug store company. Today, it sees itself as a consumer-driven health-care professional. By changing those few words, Walgreens has started a significant transformation of the entire company. This transformation is not dissimilar from the difference from seeing a plot of land as a place to grow crops to seeing it as a place for luxury condos.

The Convenience-Driven Drug Store
If your vision is to be a convenient drug store, you look for ways to make your drug stores more convenient. How is that done? Primarily by building a lot of drug stores. The more stores you have, the more convenient you are. So store growth is the key action which came out of that vision.

At its peak in 2008, Walgreens was building stores so rapidly that it was opening roughly one store somewhere in the United States on an average of every 16 hours. Walgreens now has 7,000 drug stores. Now that’s what I call convenience. I have one within walking distance of my house (as do many others).

The second aspect of convenience took place inside the store. The idea was that once they got you in the store, Walgreens would bombard you with as many impulse items as they could. The stores were crammed from floor to ceiling with a hodge-podge of whatever high margin item they thought you might purchase out of convenience. Again, vision dictated action.

Seeing the company as “convenience driven” also meant that Walgreens did not see themselves as “price driven.” This worked reasonably well for years at the pharmacy, where those with pharmacy insurance paid the same out-of-pocket price no matter where they went. However, the rest of the store was relatively non-competitive on price; but when you view yourself as in the convenience business, that is not seen as so bad.

The problem with this strategy is that the marketplace has redefined convenience in a way that puts drug stores at a disadvantage. First, mail order operations like Medco, Caremark and Express Scripts put the pharmacy in your mailbox, which is more conveniently located than the drug store.

Second, supercenter operators like Wal-Mart have redefined convenience from “locational convenience” to “one-stop shopping convenience.” They have all the basic drug store needs plus food needs, plus general merchandise needs all conveniently under the same roof. And this type of convenience is not a tradeoff with price. These supercenters can offer both. In fact, they have started pricing some pharmaceuticals at a lower retail price than the co-pay associated with insurance programs.

Suddenly that vision for Walgreens doesn’t look as good. It’s time for new actions. To get new actions, Walgreens needs a new way to envision themselves.

The Consumer-Driven Healthcare Professional
As a result, the new Walgreens CEO (Jeff Rein) has envisioned a new way to think about Walgreens. Instead of the product being the store, the product is now healthcare. Instead of the key attribute being convenience, the key attribute is consumer advocacy. Once you take down the “convenience-driven drug store” sign off the headquarters and replace it with a “consumer-driven healthcare professional” sign, change happens. New visions dictate new actions.

Here are some of the major changes.

1. Building fewer stores
The store is no longer the star of the show. The idea now is to serve the customer better, no matter where that takes you. Through the Complete Care and Well-Being program, Walgreens is putting pharmacies and health clinics right on employer campuses and worksites.

2. Re-merchandising the stores
When the focus moves from convenience to professional health care, the way the store is merchandised changes. In the new Walgreens test stores, the clutter of convenience-based products that have nothing to do with health are significantly reduced. Areas where health is relevant are expanded, to create destination-based assortments. New health-based categories are added, like the Take Care in-store health clinics, which tackle many of the health care needs that you used to have to go to a doctor for.

Rather than pushing a lot of high-margin general merchandise, the goal is to find ways to reduce overall costs in health care by leveraging the Walgreens infrastructure.

3. Re-deploying the pharmacist
Instead of being primarily an order-filler, the new role of the pharmacist is to be a health care expert and advisor. Walgreens is pushing much of the order-filling tasks upstream to regional centers, so that the in-store pharmacist can do other activities, like consulting with customers, administering immunizations and vaccinations, perform medication therapy management services, and improve patient compliance.

In addition to pharmacists, the stores are adding nurse practitioners and infusion therapists to the service mix. Walgreens is using these face-to-face interactions as a competitive advantage over competing alternatives, which rely on just telephones or the internet.

The new Walgreens currently coming about is quite a departure from the old Walgreens. It took a new way of looking at themselves to get there. Don’t shortchange the process and avoid time in crafting your mission statement. Those few words can be the catalyst to making the change happen.

SUMMARY
Mission statements are important, because they help frame how people look at a situation. People act based on how they view a situation. Therefore, if you want new actions, you need to first change the perspective. By changing a few words in a mission statement, you can change that perspective and accelerate a consensus around the new action.

FINAL THOUGHTS
If you don’t proactively put a stake in the ground and claim the vision for your company, someone else will. And if you let the competition or disgruntled employees/customers do it, you may not like the results.

Strategic Planning Analogy #277: Strategy is Like Dancing

THE STORY
This summer, I did something I have never done before—dance. I did not dance at my own wedding. I did not dance at my daughter’s wedding. But this summer, I danced at my niece’s wedding.

Okay, it was for less than one song, and it was more a kind of swaying on the dance floor than a real dance, but I did it (and it made my wife happy).

Don’t expect to see me on any time soon on any of those dance competition shows on TV.

THE ANALOGY
Dancing well requires a lot of effort and preparation. It takes many hours (even months or years) of preparation beforehand in order to look good for just a few minutes on the dance floor.

On the TV show “Dancing With the Stars,” they show some of the grueling practices in order to prepare for the short performance. If you just get on the dance floor like I did, with no preparation, you are going to look awful.

In the business world, sometimes you have only a brief moment in which to convince consumers to vote for your brand. If they don’t like what they see, they will send you away. If you want your performance to shine, you need to prepare—just like in dancing.

This is the essence of strategy—to properly prepare your business to perform well when it’s show time.

THE PRINCIPLE
The idea here is that strategic planning is a lot like dancing. Great dancing occurs when there is great coordination—coordination with the music and coordination with the dance partner. Strategic planning is a process to create that coordination.

1. Coordination With The Music
Music creates the environment in which you are dancing. If your dancing is out of step with the music, you will look bad, even if your athletic ability is sound. Dancing a fast cha-cha to slow, romantic music will appear inappropriate and will not get you the votes you want from your audience.

The same is true in business. Businesses do not operate in a vacuum. They operate within a business environment. This is the music of the business world. If you want to succeed in your business dance, you’d better be in sync with that business environment. Don’t have a cha-cha strategy when the world is playing a slow waltz.

Take Abercrombie and Finch, for example. During the recent economic collapse, they refused to alter their strategy of charging a top price for their top brand. Abercrombie and Finch were not listening to the music of their environment. The mood had shifted. Due to the economic environment, people were more willing to trade away certain brands in order to get a better price/value. Abercrombie and Fitch lost a ton of market share to firms like Aeropostale, whose pricing strategy was more in tune with the music of the day.

As another example, in many sectors today the music of the business environment now has a “green” rhythm to it. If you are not into environmental sustainability, you are out of step with the beat.

For strategy, this implies that an important function is to always have your ears listening to the music of your environment. Listen for when the song changes, and be ready to dance the appropriate dance that the new song requires. No environment lasts forever. Moods change and tempos change. Therefore, you must change.

a) Environmental Analysis Should Be an Ongoing Process
Therefore, I recommend that your strategy function do two things. First, do not treat environmental analysis as an infrequent event. Instead, treat it as an ongoing process. Never stop listening to the music of your world (or you may miss it when the song changes). Never stop trying to understand your environment better.

Even if the music does not change, one can benefit from getting more intimate with the music of your environment. When I was a teen, I spent a summer working at a public swimming pool. Every morning, all summer long, there was a group of synchronized swimmers practicing for a competition at the end of the summer. Every morning, I had to listen to that same song they were practicing to—over and over again.

The music drove me crazy, but the repetition made the synchronized swimmers better. The better you know the music, the easier it is to stay in sync. Dive deep in your environmental analysis so that you better understand what is going on. And make sure you “play the music” in the office everyday, so your employees do not forget the world in which business transactions are taking place out in the field.

b. Have a Repertoire of Dances
If you only know one way to dance, then you will be unprepared when the music changes. This is where scenario planning fits in. In scenario planning, you look at the environment and how it would play out under different scenarios. This is like looking at how the world could end up playing different songs. Then the job is to prepare a dance/strategy for each song/scenario. That way, you are ready when the song changes.

Procter and Gamble was performing a dance similar to Abercrombie and Finch—premium prices for premium brands. It took them a long time to adjust their dance to the new song, created by the harsher economic environment. They are finally taking some steps to appeal to the new tempo by introducing Tide Basic to the US and converting Cheer to a value brand.

However, the song changed a long time ago and many already abandoned P&G for those brands which were dancing more in step with the times. In fact, with a potential recovery coming, P&G may be getting in tune with this song just when the song may be about to change again. Without more flexibility in their repertoire, P&G could perpetually fall one song behind.

So you not only need a repertoire of dances, but flexibility in your strategic process, so that you can adapt quickly.

This is not to imply that core strategies should be continually changing. No, the core of one’s business should not change very often. However, the way you express that core business should adapt to the rhythm of the times.

For example, Wal-Mart’s core strategy is about being a low cost operator, so that it can offer lower prices. As the music shifted to a “greener” beat, they incorporated environmentalism into the strategy. But they did it in a way that reinforced the core. They used the elimination of environmental waste as a way to eliminate spending waste and thereby save even more money that can be passed on in lower prices.

2. Coordination With Your Partners
Dancing well also requires dancing well with your dance partner. If you are not in sync with each other, the dance will fail. You will step on each others’ feet and fall down. In business, you can have many dance partners—suppliers, distributors, venture partners, outsourcers, and so on. Your successful dancing requires that both of you are on the same page of the strategic dance.

a) Choose Partners Well
Strategy is about more than just choosing the right dance. Strategy has to include a path to performing the dance well. Part of the path involves choosing the right partners. Poor choices lead to poor dancing.

Before choosing a partner, ask yourself these questions: Does this partner have a similar philosophy/approach to business (are the trying to dance the same dance)? Are they an appropriate match in terms of size and capabilities (dancing rarely works if the partners are mismatched in size)? Will you be an important partner to them? How committed are they to making the dance a success?

b) Spend Time Together
It’s difficult to dance well with a partner if you don’t spend time with them. Coordinated dancing requires spending time together. How much time to you spend with your partners? How well do you know them?

Do you ever talk to your partners about strategic issues? Do you invite them to any of your strategy sessions? How can you expect them to dance in sync with you if you keep them in the dark about the type of dance you are trying to perform?

Many successful businesses have developed strong, long-term relationships with their partners, like the partnership between Intel and Microsoft. Frequent shifting of partners rarely leads to good dancing.

SUMMARY
Business performance is a lot like dancing performance. If you want to perform well, you need the preparation of strategic planning to:

a) Get in tune with the music of the environment; and
b) Get in sync with the steps of your partners.

FINAL THOUGHTS
Great dancing is more than just coordinating motor skills and getting the mechanics right. People do not want to watch robots get the steps right, but in a cold and heartless manner. They want emotion, flair, élan—an artistic performance. Never forget the emotional elements in devising and executing a strategy.