Strategic Planning Analogy #570: The Magic Word

THE STORY

There is a magical word in the English language. That word is “Normal.” Normal represents that which is to be expected: the routine, the average to which everything else is compared. If something is better than normal, we rate it with a positive number. If something is worse than normal we rate is with a negative number. And normal remains the eternal midpoint of 0.

What makes “normal” a magical word? It’s magical because it can change your entire perspective on life. For example, let’s say your life falls into a terrible routine—you’re locked in a prison camp, or you’re living every day in poverty with little to eat, or some such situation. It looks bad. You’d think you’d rate it a low negative number.

But…

If your situation stays like that long enough, it becomes your expected routine. It becomes your normal to which you compare everything else. It is your new reference point of 0. Now it is no longer the definition of bad. Bad is that which is worse than that new normal, no matter how bad the starting point of your new normal is.

That is why people who have lived their entire life in poor impoverished nations often seem so happy. This situation is their normal. It is pretty much all they know. It is their stating point of zero. Since it rarely gets worse, they don’t rate much in negative numbers. And since it sometimes gets better, they have many positive moments.

So, if you find your life taking a bad turn, just pull out that magic word of “normal.” Classify your current state as the new normal. Suddenly, it moves from being a big negative to being your new zero. And zero feels a whole lot better than a big negative number.

THE ANALOGY
Many companies have learned the magic in the word “normal.” When times get bad for a business, they explain it away as being “the new normal.”

“We can’t do anything about this situation,” they say. “It’s just the way things are. It’s the normal way the marketplace will work from now on. We just have to accept it and live in this reality.”

They make it sound so logical. They claim these aren’t really bad times. These are now normal times. This is all that can be expected in times like these. Instead of the situation being rated a negative number, things are now recalibrated to zero.  

And in recalibrating to zero, the business accepts the new status quo. They settle for the new point zero. They stop aspiring for anything much better. It’s okay now to be this way well into the future because it is normal.

And this is where the strategic problem arises. Once you accept a bad situation as normal, you are trapped into thinking that this current situation is the baseline for strategy. It is the norm from which you try to eke out minor improvements. The parameters of your assumptions are bound by the mistaken belief that the events causing your situation to be bad are normal, and therefore nearly impossible to change.

As a result, the expectations in one’s strategy tend to drop. After all, it is difficult to pull off abnormal results when the forces of nature are pulling you back to normal, right?  This causes weak, ineffective strategies which perpetuate a bad situation. Significant improvement doesn’t happen, because you no longer expect it or plan for it. You’ve let the magic of normal lull you into complacency.

THE PRINCIPLE
I first learned about this principle in a college political science class. Although my college professor didn’t quite say it in these words, he believed that most social unrest and political revolts were a result of changes in the perception of normal.

His logic went something like this. As long as the citizens of a nation saw their situation as normal, they were relatively content. You can’t change normal, so you may as well accept it. So even nations with horrible conditions were relatively stable. This is all the people knew and it was all the people expected, because it was their vision of normal. There was no reason to change, because they did not see anything to change to.

But then, in the middle of the 20th century, mass media started penetrating the far corners of the earth. People in the poor, repressive nations started to see how life was lived in other places. They saw how other places had a totally different type of normal life. The normal in these other nations looked MUCH BETTER than what they were experiencing. Suddenly, these nations decided that the superior normal in these other places should be their normal, too.

By accepting this new and better definition of normal, the people in the poor, repressive nations changed their perspective. Now, their current circumstances were no longer rated as zero. By comparison to the new idea of what should be normal, the current situation was a huge negative number.

Nobody wants to live in a highly negative situation, so the people in these nations started to revolt. They were willing to make great sacrifices in order to achieve their much higher expectations of what normal should be. So, according to my professor, mass media and its impact on people’s expectations is what ended colonialism and put the world on a better path.

Application to Strategic Planning  

So how does this principle apply to strategic planning? Businesses can be like those repressive nations before the mass media. Everyone pretty much accepts the current situation. It is all they know and they think it is all that can be achieved. It is the normal we have to live with.

The nations did not revolt and work to improve the situation until they could imagine a potential new normal that was worth fighting for. Without first creating the ability to conceive of a new reality, there was no reason for the people to rock the boat and take radical action.

From this, one of the most important principles of strategic planning can be seen: Before you can convince a company to take on the difficult task of radical change, you must first convince the people that there is a new and much better version of normal that can be attained from that change effort.

Therefore, one of the chief roles of the strategist is this: to help the people within the business redefine their perception of what normal can be. The strategist has to paint a picture of a future which is not only much better than today’s norms, but also something which they can envision as becoming their new norm if they are willing to work for it.

Making Insiders Into Outsiders

This is one of the reasons why most revolutions in an industry are started by outsiders. Because outsiders have not lived inside the industry, they aren’t brainwashed into thinking that the norms of the industry are the way things need to be. Outsiders have an advantage in dreaming up and going after a new definition of normal, because:

·         The minds of outsiders are not clouded by years of living under the old normal. They don’t have to unlearn the old conception to form a new one, because they never lived under the old conception.

·         Outsiders have no vested interest in the current normal. It is not theirs. By contrast, insiders have to change their thinking about their identity, which is tied to the current normal.

·         Outsiders have nothing to lose if the normal of the status quo is upset. By contrast, insiders worry the change will make their situation worse. Kodak didn’t aggressively move from film-based to digital-based imaging because that new normal looked less profitable. What they missed is the fact that bankruptcy from not adapting to the new normal is even less profitable.

Therefore another key role for the strategist is this: to help insiders think more like outsiders. This means helping people look at the industry with new eyes that are not clouded by the past. This helps people to conceive of a better normal.

SUMMARY
One of the enemies of strategic planning is complacency. If people feel the status quo is all that can be achieved, they will resist any effort to change. Therefore, one of the key roles of strategic planning is to help people to do two things: 1) Envision a new and better normal; and 2) Help them believe that the new normal is achievable.  Sometimes, it helps if you can get people to see their industry more like an outsider than an insider.

FINAL THOUGHTS
The inability to envision a better normal is not an excuse to view the status quo as being acceptable. Bad is still bad, even if you cannot see a way to make it better. In these cases, perhaps the best move is to sell out to someone who is willing to accept that poor reality…preferably before an outsider finds a way to make that view of normal obsolete.

Strategy Planning Analogy #563: Strategy by Trickery?

THE STORY
Awhile back I was reading an article about depression. The first half of the article looked at what causes a person to be chronically depressed. It said that based on research, the major difference between the chronically depressed and other people is that the chronically depressed cannot envision a scenario where their situation improves. By contrast, other people can envision the possibility of better times ahead.

That made sense to me, so I decided to read the second half of the article, where they were going to suggest a way to eliminate chronic depression. I expected the article to explain ways for the depressed individual to change their situation so that a better future was more possible. For example, I was expecting suggestions like:

·       Get an education.

·       Get out of unhealthy relationships.

·       Take some risks.

Instead, the article took an entirely different approach. It talked about mental trickery—ways to trick yourself into believing in a better future, even if a better future is not a realistic probability. That might work for a short period, but is that really a long term solution? Suddenly, I was no longer impressed with the article.

THE ANALOGY
Businesses have their own form of depression: depressed sales, depressed earnings, etc. When these types of depressions become chronic, the business is in serious trouble.

I think the cause of chronic depression in business can be similar to what was stated in the article mentioned above: the businesses cannot envision a scenario where the company, in its current state, can improve. After all, if they could imagine a way to improve the current state, they probably would embark on a strategy to do just that.

The remedy, in my opinion, is to change the current state, so that you can find a new path where prosperity is more likely. That could include tasks such as:

·       Changing one’s Position in the marketplace

·       Adding new Capacity or new Competencies

·       Reformulating the Business Model

But instead of this, many companies use an approach more like the one prescribed in the article. They use mental trickery to get themselves to falsely believe that if they just stay the course things will get better. Consequently, they don’t make the changes necessary to reach prosperity. The end result is a failed business.

THE PRINCIPLE
The principle here is that you cannot wish yourself into prosperity. Or, as stated in the title of a book by Sullivan and Harper, “Hope is Not a Method.”

When stated that way, it does sound silly to expect mere wishing or hoping to solve all your problems. But those aren’t the words used by the proponents of this approach. They use trickery and cloak it in terms like “Principles of Leadership.”

I’ve read it in many forms, and it usually goes something like this:       

• When times are tough, leaders are not allowed to show any signs of pessimism. They need to put on a smiley, optimistic face and deceive their underlings into believing that things are really much better than they appear.

•  Then the leaders are to tell their people that all they need to do is work a little harder, a little better and the future will become bright again.

•  Next, the leaders are supposed to set high targets for their people to achieve—a way of showing that the leader believes good results are still possible.

The optimistic pep talk and the high goals are supposed to motivate the team to achieve the impossible and get the business out of its economic depression.

Unfortunately, what we call “the impossible” usually is impossible, and a smiley pep talk full of hope and wishes won’t get the job done.

If your situation is bad, don’t trick your mind (or the minds of your team) into believing the situation is good. The solution is to get out of the bad situation. Find a new situation where the prospects for prosperity are significantly better.

Doing a better job of executing an obsolete strategy does not change the fact that the strategy is still obsolete. For example, no matter how well Kodak executed an analog film business model, it would not win in a world of digital imaging. Rather than work harder on executing a bad strategy, change paths and work on a executing a better strategy.

The solution requires change, and a lot of people are afraid of change. But we shouldn’t let that fear cause us to continue down the current course towards destruction.

Instead of following the prescription above, called “Principles of Leadership”, we should do the following:

·       Be honest with our people and let them know that the current strategy is not valid anymore. Show how a continuation on that path leads to failure.

·       Then, either:

o   Present to the team a valid case for adopting your newer, better strategy; or

o   Get the team involved in building that newer, better strategy itself.

·       Next, get the team to rally behind specific change initiatives needed to get from the current situation to the newer, better scenario.

SUMMARY
Bad times are typically not improved by getting better at doing the same things that got us into the bad situation in the first place. If your strategy is no longer valid, change the strategy. Replace hopes and wishes in the status quo with a serious re-evaluation of how to win in the marketplace and specific change initiatives designed to make the improved strategy a reality.

FINAL THOUGHTS
Denial is never a good approach. As long as we deny the fact that our current strategy is broken, we will never fix it. As they say, the first step in curing alcoholism is to admit that you have a problem. We need to have the courage to say our current strategy has a problem.

Strategic Planning Analogy #524: Forgetting Our Spouses

THE STORY
Back when I was a young boy, my dad used to spend a lot of time driving across the state of Michigan to take care of things for his mother (my grandmother). Sometimes he would take the trips alone. Sometimes he’d take me and my sister along. Sometimes my mom would come along.

I remember one time when we were done visiting my grandmother. My dad was getting ready to begin the two to three hour drive back home. As he started to back down the driveway, I yelled, “STOP!”

My dad stopped the car. Then I said, “Aren’t you forgetting something?”

As my dad sat there trying to figure out what he was forgetting, my mom came out of the house and headed towards the car to go home.

If I had not been there, my dad would have gone home without my mother. And I’ll bet she would have been pretty mad about it.

THE ANALOGY
Businesses can cover a lot of topics as part of their strategic planning. They can look at internal strengths and weaknesses. They can look at their industry, their competition, the economy, and so on.

But how often do they look at the spouses of their key leaders?

Businesses can be like my dad, who was so focused on getting the job done that he was going to forget his wife and leave her feeling abandoned. In the long run, you know that would not have been a good thing for their marriage. And it could curtail the number of future trips my dad made.

The same idea applies to businesses. If they shut-out the spouses and act as if they do not exist, they can create an environment where their leaders are under unnecessary additional stress and become less productive. Their spouses could even talk these leaders into leaving the company if it gets bad enough.

It’s hard enough to implement change in a company when everything else is running smoothly. But if your leaders are undergoing significant stress in the rest of their life, it will impact what they can contribute to the company.

Therefore, don’t forget the spouses as you drive the company down new roads.

THE PRINCIPLE
The principle here is that strategies are implemented by people. And if the external lives of these people are all messed up, then they will be less effective at implementing the strategy. Therefore, do not create a strategy process which needlessly contributes to the stresses of the external lives of those implementing the strategy.

1) The Entrepreneurial Test

Two stories come to mind when I think about this principle. The first story is about a time when I was considering leaving the corporate world and buying a franchise to run. A franchise broker gave me a test. The purpose of the test was to see if I was a good candidate for running a franchise.

After taking the test, I added up my score. If I got an extremely high score, it meant that I would be such a successful entrepreneur that I would not need a franchise to succeed. If I got a score in the wide middle ground, it meant I could succeed in my own business, but only with the help of a franchise. If I got a low score, it meant that I was not cut out for business ownership and should remain an employee in the big corporate world.

One of the more important factors which helped determine your score had to do with friends and family. If you thought you would have the full support and endorsement of friends and family in your business venture, you score went up. If not, your score went down.

The point was that it can be stressful and time consuming to start up a business. If you do not have the support of the people in your lives, you probably succumb to the pressures and quit. Failure is more likely to be your outcome.

I think a similar effect can take place with leaders in a business undergoing strategic change. It is a stressful and time consuming event. If the ones doing the work are not getting support from their outside circle of influence, they will be more likely to fail in their part of implementing the strategic change.

2) Best Buy

My second thought turns to Dick Schulze, the founder of Best Buy Co. Starting by selling audio equipment out of the trunk of his car, Dick created a large and successful corporation. Dick would tell you that a large contributor to that success was the love and support of his wife Sandy.

To quote from Dick’s autobiography, “Without Sandy, and her unflagging support of me and her participation in every aspect of our operation, Best Buy would not be the company it is today.”

Two important aspects of Best Buy’s success can be seen here. First, Dick did not forget his wife as he drove the company forward. Sandy was kept in the loop so that she had an emotional attachment to the business as well. Second, Sandy supported her husband in a way that made it easier for Dick to do what it took to succeed.

For example, when Dick was about to mortgage everything he had to start his business, he went to his wife for support. Sandy responded by saying, “You’ve learned a lot already. You’ll land on your feet.” That support allowed Dick to put together the seed money to get his business started and that support got him through the long hours and stress that come with building a business. I dare say that if Dick did had not kept Sandy in the loop and gotten her support, there would not have been a Best Buy Company.

3) Implications

So how can we apply this to taking a business through strategic change? First, we need to identify ways to make sure our leader’s spouses are partners in the effort rather than enemies of the effort. We need to find ways to get them emotionally involved with what is going on…so that they have a vested interest in its success. They need to feel like partners in the car going on the journey rather than forgotten like what happened to my mom.

How much do you even know about the lives of your leaders outside the office? Are you aware of the support (or lack thereof) that they are receiving at home? Have you ever met their spouses? Have you ever personally acknowledged and rewarded the spouses for the support they gave to their spouse?

Second, we can help rectify some of the issues which can cause unnecessary stress in the lives of the employees we count on. How many company policies do you have which can help minimize life stresses and free employees to be more productive? Benefits like on-site daycare, flex-scheduling and concierge services could make a world of difference in keeping the type of life balance needed for healthy, productive employees.

You wouldn’t want to fill your factory with broken-down tools. Similarly, you wouldn’t want to fill your company with broken-down people. Help them heal. The gratitude will pay back itself many times over.

SUMMARY
Strategic planning often has to deal with implementing major change initiatives. These efforts can be very stressful and time-consuming. If the lives of the people implementing the change have too much stress in their lives and lack the proper support at home, the change effort is likely to fail. Therefore, companies have a stake in ensuring that home life and stress levels are kept healthy. This requires an active effort to reduce stress and increase support from spouses.

FINAL THOUGHTS
An idea may look good on paper, but it really isn’t useful until successfully implemented. Pay attention to ALL the impediments of implementation, which include the emotional well-being of your employees.

Strategic Planning Analogy #488: Two Stories on Change Management

THE PRINCIPLE

Turning a strategy into reality often requires significant change from the status quo. Unfortunately, whenever change is asked for, resistance will occur. If this resistance is not dealt with, the strategy implementation can fail.

In most cases, you should be able to come up with compelling arguments as to why the change is right and necessary. After all, if you cannot come up with compelling arguments, perhaps your change strategy isn’t as good as you thought it was.

But even when the argument is compelling, sometimes the resistance can be strong, particularly if particular groups feel especially threatened by the change. Just think about how strongly the unions in the US have reacted in recent year when state and local governments tried to come up with new solutions to fix the underfunded pensions for government employees. A change is clearly needed, but any change is being aggressively resisted. 

So the question becomes, what does one do when logic and reason will not sway the resisters.  The following are two options.

OPTION #1: EVOLUTION

Option #1 Story

I’m sure most of you have heard the story of the frog in the pot of water. When scientists put a frog into a pot of boiling water, the frog will immediately sense danger and jump out of the pot.  However, when scientists put the frog into a pot of room temperature water, the the frog will stay in the water. And if you head the water slowly enough, the frog will not sense the danger and will remain in the water even as it approaches boiling. The frogs end up dying in that boiling water without jumping, because the change was too gradual for them to notice.

Option #1 Analogy

Like the frog who jumps when thrust into boiling water, people resist when they sense a large imminent threat. The way to keep the frog from resisting was to slow down the change to a pace that was imperceptible. That pace of change was so gradual that the frog did not realize it was eventually being boiled to death. So it did not resist.

In a similar fashion, if you make the timing of your changes gradual enough, you may be able to implement the entire change program over time without resistance. The idea is to package each change initiative in a bundle which is too small to trigger massive resistance. The change is slow and evolutionary. And if you have the luxury of time, this can be an effective tool.

As an example, look at the packaged food industry.  There are many reasons why it could be in the interest of these companies to convert their food products to a more nutritious formulation (less salt and fat). After all, there is the threat of governments creating “fat taxes” to punish non-nutritious foods. Or the governments could ban certain food formulations. Or public interest groups could file massive class-action lawsuits against companies deemed as harming the public through “unhealthy” formulations. The past experience of the tobacco industry in the US could eventually hit the food industry, if they do not change.

Unfortunately, if these companies make massive changes to their formulations, they can turn off their customer base who preferred the old formula. Radical formulation changes like “New Coke” almost ruined the brand.

One alternative is to make a series of small formulation changes over time, making them too small to notice or create an uproar. Then, over time enough salt and fat can be removed from the formula to remove some of the long-term threats mentioned earlier.  And because the taste changed so gradually, the customers were able to adapt without much resistance.  This is the strategy used by many food companies.

Another example of this evolutionary approach is to create change via attrition.  Treat current employees different from new employees.  Over time, the new employees (and their employment relationship) will replace the old in a peaceful manner.  Or gradually fire those executives who resist change and replace them with executives who embrace the change.

OPTION #2: REVOLUTION

Option #2 Story

In 1519, when Spanish Conquistador Hernando Cortez landed in Mexico, one of the first orders he gave to his men was to burn the ships. Cortez was committed to his mission of capturing the treasure in the hands of the Aztecs. Cortez did not want to allow himself or his men the option of quickly giving up and going back to Spain. By burning the ships, he removed this option, and his men were forced to focus on how they could make the mission to capture the wealth of the New World successful.

Option #2 Analogy

If you don’t want your people to resist change by retreating to the status quo, you can stop that by eliminating that option. When Cortez burned the ships, he took away the ability to retreat. So the only option was to move forward.  You can do the same.

For example, if you sell or shut down the status quo business, then you cannot go back.  GE has a long history of selling off the businesses in industries no longer important to its strategy.  Once the business is sold, it’s very difficult to go back. 

Other companies set up the new strategy under a new legal structure.  The people transferred to the new strategy are now employees in the new legal structure and it becomes extremely difficult to get “rehired” back into the old legal structure. In essence, that pathway has been burned. You have to make the new strategy work or you are unemployed.

This second, more revolutionary approach is ideal when you do not have the luxury of time and when the transformation in front of you is rather daunting. The arguments for resisting go away, because even if the resisters could win the argument, it is a moot point. There is nothing to go back to. The option is burned. 

WARNING

These two options seem rather extreme. This may create a desire to try something half-way in-between.  The in-between approach, however, may be the worst option.  If you speed up the transformation into larger, more painful chunks AND provide a path back to the status quo, you have the worst of all worlds:

1.      Irritated Resisters; and

2.      A way for the Irritated Resisters to regain control and take the company back.

No, the extremes are better.

SUMMARY

When the normal process of change management does not appear to be an option, there are two other, more extreme alternatives.  The evolutionary approach is to slow down the change and make it evolve at a pace where each step of change is below the level that would create significant resistance.  The revolutionary approach is to abruptly eliminate the option to stay in place, so that the only option is to move forward. The worst alternative is to take a middle position, as it gives resisters both the motivation to resist and a pathway back to the status quo.

FINAL THOUGHTS

These extreme options may not be ideal, but they may need to be considered when normal approaches appear to be unworkable.