Strategic Planning Analogy #341: Trophy or Pet?

THE STORY
The Roy Rogers and Dale Evans Museum in Branson, Missouri closed back in 2009. The Museum honored the life of cowboy singer/actor Roy Rogers (and his wife Dale), who made movies and had a popular television show back in the middle of the 20th century.

With the museum closed, the contents of the museum were auctioned off on July 16th of this year. Two of the more interesting items auctioned off were Trigger and Bullet. Trigger was the palomino horse Roy used to ride on the show. The horse died back in 1965. Bullet was the German Sheppard that appeared on the show, and was also Roy’s family pet. When Trigger and Bullet died, Roy Rogers had them stuffed by a taxidermist, so that they could be remembered and put on display.

Rural cable television station RFD-TV purchased the stuffed horse Trigger and the stuffed dog Bullet at the auction. They paid $266,500 for Trigger and $35,000 for Bullet. Bullet and Trigger will now be proudly displayed at the new Omaha headquarters of RFD-TV.

THE ANALOGY
I don’t know about you, but I find the idea of stuffing one’s pet after it dies to be a little bit disturbing. Putting one’s dead pet on display like a trophy seems a bit unnatural and creepy to me.

Although this may seem like an odd thing to do to pets, it is not that uncommon for companies to do something similar with their strategies. Instead of caring for the strategy as a living document, they put it on display, like a dead, stuffed animal. Fancy strategy books are placed on the shelf like a trophy. They may even be commemorated with coffee cups, plaques, or T-shirts, with the company logo and the strategy theme emblazoned on them. The coffee cups and plaques also get displayed on the shelf like a trophy.

And there they sit…on display. They may be looked at and admired every once in awhile, but for all intents and purposes, the strategy is treated as if it were dead…a representation of a frozen moment in time past. To me, this is just as disturbing as a stuffed pet.

THE PRINCIPLE
The principle here is that strategies should be viewed as and cared for more like a living, breathing pet than as a lifeless trophy. In particular, there are three ways in which a pet approach is more appropriate than a trophy approach to strategy.

Principle #1: Trophies Come at the End; Getting a Pet is Just the Beginning
Trophies usually come at the end of an activity, to reward the conclusion of some endeavor. For example, after an athletic competition is over, the winner gets a trophy in honor of having won. It is a reminder of the success of prior event—a celebration of a job well done.

Getting a pet is just the opposite. The day you receive the pet is just the beginning of the activity. Now you have to start the work of feeding and caring for the animal. Rather than a celebration of a conclusion, getting a pet involves the promise of much work in the future. One time I got a pet from the humane shelter and they would not let me take home the pet until I promised I would spend appropriate time and money to properly care for it (I even had to sign a document attesting to that).

Getting a strategy should feel more like receiving a pet than receiving a trophy. True strategies are not end-points, but starting points. The primary purpose of a strategy is to help a company achieve a better future state. It is a roadmap to future actions, not a celebration of past activities.

Does your company treat strategy formulation more as an end (like a trophy) or as a beginning (like a pet)? Here are some clues. If people act as if creating a strategy is just a task be done—something to check off on a “to do” list—then they have a trophy attitude. If people say, “Boy, I’m really glad we finally got that done” when the strategy formulation is over, then they have a trophy attitude. If they see the strategy document as proof of task completion, then they have a trophy attitude.

By contrast, if people see the strategy as the first step on a long journey of future activity, then they have a pet attitude. If they see the strategy as a formal commitment and promise to take particular future actions, then they have a pet attitude.

Principle #2: Trophies Sit on a Shelf; Pets are a Part of Your Daily Life
There’s not a lot one can do with a trophy once you receive it. It just sits there like a dead, stuffed animal. You can put it on display and dust it off every so often, but that’s about it.

Living pets are totally different. They require daily care and attention. They need to be fed and exercised on a regular basis. If you have a dog, you soon find that feeding them, walking them, and letting them out to do their thing quickly becomes a regular part of your daily routine. But that’s not all. Pets also need to be checked to make sure they do not get sick. And if they do get sick, you have to provide medicine to cure them. And if you do not take care of your pets on a regular basis, the police can have you arrested for animal neglect and cruelty.

Strategies also need to become incorporated into your daily routine, just like a pet. If strategies do not impact how you act on a daily basis, then why do them? A strategy is like a roadmap. Just knowing where I want to go is not enough. I need to take actions on a daily basis which get me closer to my desired destination. Otherwise, I will never reach my destination.

If you do not regularly care for a pet, it will die. Similarly, if you neglect a strategy, it’s relevance will die. I’d love to see the police arrest executives for cruelty and neglect towards their strategy, just as they do for neglect and cruelty towards animals.

How often is the strategy considered when decisions are being made and actions are being taken at your company? Daily? Monthly? Quarterly? Never? Is consideration of the strategy integrated into the daily routine? Do people even see any relevance or connection between what they do and what the strategy implies? Is the strategy just left on the shelf to be admired like a trophy? Could your employees be arrested for strategy cruelty and neglect?

Principle #3: Trophies Don’t Change; Pets Do
Trophies are typically made out of strong, durable materials. You can put them on a shelf and they will stay there, unchanging, for a long, long time.

Pets, however, change over time. They grow up. They get sick. You need to detect these changes and then adapt to them in your actions. For example, as you see your pets getting older, you may need to change what you feed them. You may need to change the exercise routine.

Strategies are living documents which are to be acted out in a dynamic, changing environment. One needs to become aware of the changes that are taking place and adapt the strategy to the changes, just as you would adapt your actions with a living pet. Otherwise, your actions will be out of sync with your environment and the strategy will sub-optimize.

The original strategy document should not be viewed like a trophy, which always stays the same. It is a work in process. Rather than being like a hard, unchanging metal/wood/plastic trophy, think of your strategy as being more like soft clay. It has a definitive shape, but it can still be modified a bit as conditions change.

This is not to say that you should be changing your strategy as often as you change the sheets on your bed. We’re not talking about strategy abandonment, but strategy modification. Just as we keep the same pet for years and work with it through the changes, we keep the same strategy for years, and work with it through the changes.

Once a strategy formulation process is completed, how often does your company:

a) Scan the environment for changes; and
b) Adapt the strategies/actions to optimize in this changing environment.

Is your strategy etched in unalterable stone, or is it written with a pencil? Is it seen as a living document? Do you ever go back and modify it?

SUMMARY
Strategies should be viewed as being more like living pets than like dead trophies. Trophies celebrate an end, whereas strategies should be seen as a beginning. Trophies sit on a shelf, whereas strategies need to be integrated into your daily routine. Trophies do not change, whereas strategies need to adapt to change.

FINAL THOUGHTS
My wife and I recently went back to visit the college she and her brothers attended many decades ago. We went to the athletic building to look at the trophy case. There were trophies from back in the years when my wife and her brothers attended. There were photos next to the trophies showing the players on those teams, including a couple of photos of one of her brothers. The problem was that the photos were so old and faded that you could barely recognize the players.

That’s the problem with trophies. Over time, the source of that trophy fades away from memory. Time marches on, and if you stop planning for the future, you’ll stop getting new trophies.

Analogy #226: Dealing With Roadblocks

THE STORY
This morning, driving to work, I came to a place where traffic was stopped...a place where traffic is not normally stopped. I could see a police car up ahead flashing its lights. Therefore, I concluded that there must be a big accident up ahead.

I had three options. First, I could sit and wait until the police were done stopping traffic. Second, I could turn left and drive a few blocks along a path parallel to my normal path, except one block further east. Then I could return to my normal path once past the police car. The third and final option would be to turn around and take an entirely different path to work.

Well, it looked like traffic wouldn’t be moving for awhile, so I decided not to do option #1 (stay and wait). Then I figured that an entirely new path to work would take me so far out of my way that I would probably lose more time, so I opted against option #3 (entirely new path). As a result, I went with option #2 (modified original path). It worked out just fine and I lost very little time.

THE ANALOGY
As mentioned in our last blog, strategic planning is about finding paths to our destination. In today’s story, I had a great path for getting to work, but I was temporarily blocked by an unusual occurrence. The same can happen to businesses. They may have developed a great strategic path which normally works, until an unusual event occurs.

For example, the severity of the current economic crisis can cause many formerly good strategies to suddenly stop working, just like that police car stopped my ability to get to work. So then the question arises: what do I do to my strategic path when there is a temporary blockage, like a recession?

Similar to my commute, you have three options. First, you can keep your strategy in tact, change nothing, and wait it out. Second, you can pretty much maintain your core strategic path, but make a small temporary adjustment. Third, you can look for an entirely new strategy which is specifically designed for the new temporary conditions.

As we will see below, typically the best response is option #2—small modifications to the path.

THE PRINCIPLE
The principle here is that strategic success finds the proper balance between consistency and adaptability. Strategic consistency is very important. If you keep changing your position regarding what you stand for, you will end up standing for nothing in the mind of the consumer. By contrast, consistency reinforces your position over time, making it stronger.

Unfortunately, temporary events, like a recession, may cause your position to become far less relevant for the times. You may be shouting a consistent strategy of “quality” or “prestige” at a time when your customers are mostly focused on “low price.” Therefore, one may need to become adaptable to the changing times.

The question is how to adapt to the short-term while not destroying the long-term strength of your brand consistency. As we will see in a moment, this balance between consistency and adaptability is done via “context.”

But before we get there, let’s look at a real, live example in the marketplace—apparel retailing to teens. In the current economic recession, apparel sales to teens have dropped considerably. The old paths aren’t working like they used to. If I were an apparel retailer, what should I do?

Well, Abercrombie & Fitch opted for option #1 (stay and wait). They have not lowered prices or gone into any sort of panic promotions. They are acting as if nothing has changed. They are remaining consistent to their prestige “cool” image.

There is some logic to this approach. If they start shouting “price” and promote like crazy, they can potentially destroy the strategic foundation of the entire company. To quote CEO Michael Jeffries, “Promotions are a short-term solution with dreadful long-term effects.”

Unfortunately, this consistency places Abercrombie & Fitch in a position of being temporarily out of touch with its customers, causing them to leave and start shopping the competition. In November, sales for stores open at least a year at Abercrombie & Fitch were down about 28% from the prior year. A more promotional competitor, like Aeropostale, was down only 5% and more price-oriented The Buckle had an increase of 15%. At least for now, Abercrombie is losing market share and there is no guarantee that it will come back when the recession is over.

So, is option #3 (total strategic change to a price orientation) a better option? Not especially. To achieve those lower prices, these other firms had to significantly lower their gross margins, which tends to wipe out any of the profitability that the short-term sales boost provides. If you have built your reputation on prestige rather than price, you probably don’t have an infrastructure to support those lower margins. Therefore, you may not be much further ahead near-term in profits. In addition you may have destroyed your ability to return to your prestige pricing once the recession is over, so the long term is also destroyed.

So the trick is to find that balance in the middle, where you show enough adaptability to still be relevant to your customer, without changing so much that the long-term strategy is destroyed. To do that requires context.

For example, rather than looking at it as a dichotomy between two opposites (prestige versus promotional), look at how to make prestige more desirable in tough economic times. In other words, look for ways to increase the value while retaining the prestige context.

Beauty companies have done this for years. Rather than destroy their pricing image through heavy discounts, they go the other direction. They retain the same basic price point for the item, but add large gift boxes full of other beauty products for “free” with the purchase. This type of promotion retains the prestige pricing context, yet makes the value stronger in times of recession. As an added bonus, it can expose a customer to more of the company’s beauty products, which can lead to more future sales for the products that were originally received for free.

There can be lots of ways to increase value without losing context. Perhaps the prices stay high, but financing options are improved. Perhaps a purchase can gain the customer access to other relevant products/services/events that they could not otherwise have access to. In other words, make the prestige or exclusivity even greater for the same price.

Hence, the best option when you hit a temporary roadblock is most likely option #2. You essentially stay on the same basic path (the context), but make a small adjustment to make that context more relevant. This way, you help keep customers from defecting during the rough patch without destroying the long-term strength which comes through consistency.

SUMMARY
When times get tough, there is the temptation to abandon one’s strategy and do whatever it takes to get sales in the door. Unfortunately, when you are looking for sales in the worst way, you often end up using the worst way to get sales. Remaining consistent to the context of your long-term strategy is usually the best approach, both for near-term and especially long-term profits. However, within that context, look for ways to make it more relevant to the current times through minor adaptations.

FINAL THOUGHTS
Standing one’s ground, like Abercrombie & Fitch, can sound very noble, like the sentries at Buckingham Palace. However, that makes one like a motionless statue, rather than a living being. And we all know what birds do to statues…and it is not pretty. Better to move a little bit and wave one’s arms to keep the ill effects of the birds away, provided one does not abandon one’s post.