Strategic Planning Analogy #405: Three Steps to Success

THE STORY
Awhile back, I wrote a book on strategic planning and sent it off to the publishers. Below is a very rough and condensed paraphrase of the type of ongoing dialog I had with the publisher.

Publisher: Your book is very comprehensive and integrated. In one place, it provides a complete approach as to how to do strategic planning.

Me: Thank you for the compliment.

Publisher: No, that was a criticism. Business leaders do not want to buy an all-inclusive, integrated, comprehensive approach to planning.

Me: Why not? Isn’t a comprehensive, all-inclusive, integrated approach the best way to do planning?

Publisher: Maybe so, but for a business person to buy into YOUR comprehensive approach, it requires the reader to abandon THEIR current approach. Business leaders have big egos. They’ve been successful in the past…which is why they are currently a business leader. Therefore, they think they already have a pretty good idea as to how to do things well. All they are looking for is a handful of useful tips they can add to their knowledge base to make them a little better at what they already do. Your book does not do that.

Me: So lists of simple tid-bits about planning sell, but writing about comprehensive planning approaches fail?

Publisher: That’s right.

It was not too long after that conversation that I got the idea to write about planning as a series of short, stand-alone articles. Each would be based on a little story with an analogy. It lead to my book “Strategy is Like Barbeque Sauce,” which in turn lead to my starting this blog.

THE ANALOGY
This same idea for books on planning applies to any other communication about planning. Just as a great integrated book on planning is of little value if the audience doesn’t want to buy it, a great integrated plan is of little value if those who have to implement it don’t want to buy into it.

In writing my first book on planning, I made the mistake of confusing the principles of good planning design with the principles of good planning communication. Well designed plans tend to be complex and integrated—a holistic approach. The idea is to design something where the power of the outcome exceeds the sum of the individual parts. Tradeoffs are made throughout the organization in order to get everything aligned in the direction of competitive advantage. This creates a synergistic strength which is stronger than any individual action and difficult for others imitate.

A great example is Apple. Their success is due to taking a complex and integrated approach to their strategy. They didn’t just introduce another mobile phone. They introduced an entirely new integrated business model—phones, apps, app store, and Apple stores, with cool design and easy integration holding it all together.

My mistake was to think that just because plans should be complex, integrated and holistic, so should be the communication of the planning process. But this fails to take into account the stakeholders of the strategy. Stakeholders like things to be simple and easy. For example, the approach used to introduce the iPhone was very simple and focused on ease of use.

And, as the publisher said, you don’t want to insult the implementation stakeholders or bruise their egos, either. They just want simple lists to add to what they already know.

THE PRINCIPLE
The principle here is that two separate skill-sets are needed to ultimately succeed in planning. One is the skill-set for plan design and the other is the skill-set for communicating the plan execution. The characteristics of these skill-sets are different, and you will have significant difficulties if you confuse the two.

The Two Skill-Sets
The skill set for plan design is all about a holistic, integrated approach. It is about finding a unique way to put all the pieces together in order to win.

On the other hand, the skill set for plan execution is all about simple check lists. It is about dicing up the work into easily managed (and measured) chunks which can be assigned to people (and easily added to their daily work load).

If you don’t believe me about the power of lists, just look at the business web sites which provide lists of their most popular articles. There always seems to be a disproportionately higher number of articles with a number in the title—a number referring to a small checklist. For example, current articles in the American Express Open Forum include:

• The Leader's Checklist For The Startup Manager

• The Best Advice I Ever Received: 3 Top Executives On Tips That Count

• Top 10 Excuses For Not Going Global

• 4 Marketing Ideas That Are Sure To Make A Splash


The problems arise when the checklist approach is applied to design or the integrated approach is used for execution.

Problem #1: Checklists Used During Design
If check lists are so popular why not use them during the design stage? I’ll tell you why. It doesn’t lead to a good plan design. You can put all sorts of steps on a planning checklist—looking at strengths, looking at weaknesses, looking at the environment, writing mission statements, and so on. If you do each one separately and just check it off when it is done, then the work is not building to a creative solution. At best, you will get some small incremental improvement.

No, if you want truly innovative and revolutionary strategies, you need to change your world view and your thinking on complete business models. You need to rethink the entire process, as Apple did with the iPhone. It is a messy and creative process, requiring one to hold a lot of concepts in one’s head simultaneously. It is not a series of discrete tasks that can be done one at a time. There is a back and forth tug on various trade-off options and scenarios. The secret is in the gestalt—how the parts play together—not any individual piece or pieces.

Just remember the Edsel. Each part of the design of that automobile was individually optimized, like a checklist. The grill was designed separately from the headlights or the hood, or the tailfins, and so on. Although each part was designed well on its own, when all of it was put together on the car, it was a disaster. There was no gestalt. As a result, there was no success.

Problem #2: Integrated Approach Used During Execution
However, just because a holistic approach is necessary for design, it does not mean that the approach needs to continue to dominate through execution (as I discovered with my book). Although the integrated approach may allow people to envision what the whole picture should look like, they may not have a clue as to what their particular role is to make it a reality. The end result can be anarchy. Although a little anarchy is good in the design stage, it is poison during execution.

Unlike the Edsel example, if you instead start by first designing the whole (the gestalt), you can then later begin chopping up the tasks into each part which needs to get done (the opposite of the approach used for the Edsel). The constraints of the gestalt are already known, so the individual work on execution of each part will still work towards creating the greater whole.

By chopping up the tasks into lists, one gets several advantages. First, you can assign responsibility for each task. That way, everyone knows what they are to accomplish. Confusion is eliminated. Second, with responsibility comes accountability. Management knows who to deal with when the execution falls short of intended results. Third, it is easier to develop metrics for each task. That way, you can better measure performance. Fourth, by chopping up the tasks into modules, you can create a more sophisticated time-line for execution. Finally, it is easier to develop a motivational incentive plan when the tasks are more narrowly defined and more specifically assigned.

SUMMARY
The skills needed to design strategy are different from the skills needed to implement the strategy. Strategy design requires a holistic gestalt approach—simultaneously building the design of the entire business model. Strategy execution requires cutting the gestalt into its component pieces (and put on a checklist), so that responsibilities and accountabilities can be assigned and measured. Therefore, strategy design and execution should each be approached differently—using the approach consistent with its unique characteristics. Problems ensue when the approaches are flipped. For example, the individualized checklist will never lead to revolutionary, innovative strategy design. At best you will get incremental advances. At worst, you will design the next Edsel. Similarly, if the implementation is left at only the gestalt level, you will end up with confusion and anarchy, not efficient execution.

FINAL THOUGHTS
Did you notice I titled this blog “Three Steps To Success”? If that’s the kind of title that appeals to people, then I’ll use it. Think about that when giving a title to your strategic execution. I know that a lot of successful firms select about three key strategic items they want to accomplish that year and then give them a fancy title like Key Result Areas or Key Strategic Initiatives. If you give a great title to the checklist, it will get more attention during discussions.

Analogy #236: Check List

THE STORY
Recently, the New England Journal of Medicine published an interesting article. Some hospitals were given a checklist of 18 items to do before surgery. It was sort of like the checklists that pilots go through before starting an airplane flight.

Over the course of a year, the hospitals using the checklist saw their death rates fall by over 40% and their rate of complications drop by more than a third. That’s pretty impressive. It is even more impressive considering what the 18 items were on the checklist.

They weren’t earth-shattering activities. For example, one of the items was to have each of the people on the operating team introduce themselves to each other prior to beginning surgery and describe their function.

In fact, when each of the 18 items was examined separately, there was nothing that stood out as particularly influential on creating the success. The conclusion was that rather than looking at the individual items on the list, one must look at the process of regularly doing a preset list as the primary source of the success.

THE ANALOGY
As this study illustrates, dramatic improvement does not always require dramatic change. Sometimes, all it takes is the institutionalization of a lot of very small tasks (via a list). The list ensures that a lot of little things, which tend not to get attention, get the attention they deserve every time. Nothing falls through the cracks.

Pilots do it. The military does it. It reduces mistakes and saves lives. And now it looks like it works in a medical environment.

How about in a business strategy environment? The old traditional strategic planning process has been downplayed a lot recently. Business gurus claim that the world is moving too fast for traditional planning, the process is too rigid (not flexible enough for flexible times), and it tends to exclude too many stakeholders from the decision making.

Some are claiming that the process of strategic planning is obsolete and should be abandoned. In a web 2.0 environment, just let the customer “drive the bus” of your strategy. Rather than having strategy lead the activities, empower people in to act and let whatever happens become your strategy.

I’m not sure we would take that same approach with hospital surgery. I wouldn’t want to be operated on by people who have no preset plan and empower everyone to do whatever they want. Relying on the judgment of the patient to drive the operation sounds a bit scary to me as well, particularly if I am unconscious during the critical parts.

The systematic process of following a list of procedures has benefits. Even if you cannot see the benefits in any given item on the list, the discipline itself can be very beneficial. The same is true for strategic planning. Even if all the parts are difficult to justify individually, there is a benefit to the gestalt of running through all the key pieces of the traditional strategic planning process on a regular basis.

THE PRINCIPLE
The principle here is that the discipline of going through a strategic planning check list on a regular basis has value. It helps ensure that nothing gets missed. It can reduce mistakes and keep you on your toes. A lot of those old items found in traditional strategic planning processes should not be abandoned. Instead they should be institutionalized on a list.

So what would I put on a Strategic Planning check list?

1. Continual Ongoing Surveys
Don’t wait until things start to go awry to talk to your customers. Have a regular, ongoing dialog through surveys that sample your base at all times. That way you can detect problems in their early stages and begin strategic adjustments when it is still easy to make course corrections. If you’re not doing it all the time, you’ll probably not be doing it at the time when it is needed most.

2. Environmental Assessment
The conditions of the external environment are fluid—ever changing. Assumptions at one point in time may no longer be as relevant at a later date. By forcing a more detailed environmental assessment somewhere into your annual calendar, you ensure that changes in the environment don’t surprise you. It’s better to be proactive than reactive, and by putting it on the checklist, you are being proactive.

3. Company Assessment
Just as the external environment changes, so does the internal environment at your company. The two are also linked…changes in the external environment may cause what you are doing to become obsolete or antiquated. Strategic success usually requires leadership in some area. It’s good to annually check to make sure you are not losing ground or no longer failing to lead.

4. Strategy Assessment
A good strategic plan should not change very often. It should act as a long-term guide for all you do. However, all strategies eventually do fall out of favor and fail. It’s not a bad idea to check on an annual basis to see if the strategy is still relevant for the environment.

5. Implementation Assessment
One of the most common causes of strategic failure is at the point of execution. Great strategic ideas are worthless if you cannot put them into action. Just as one should continually track consumer opinions with surveys, one should continually monitor performance on strategy implementation. Some sort of dashboard of metrics is needed to let you see how well things are going. Are the right things being done (on time and under budget)? Are they having the intended impact on company performance? Don’t assume that the work is getting done. Measure it regularly.

6. Key Issue Management
As mentioned in a prior blog, effective strategy implementation requires focus. As a result, companies can rarely be effective if they try to do more than about three major initiatives at a time. Somebody has to manage the key initiatives and keep up the visibility and momentum. Otherwise the tyranny of the regular day work will drown it out.

7. Positioning Assessment
Winning strategies have winning positions that answer the 8 questions. Like overall strategies, winning positions should not change very often. But change is sometimes necessary. You will never change at the right time if you never spend time considering if this is the time.

8. Linkage Map
Strategies, activities, budgets and resource allocation (people, capital) should all be working together. If the resources and activities are not linked to the strategy, then the strategy is just a worthless batch of words and numbers. Someone needs to ensure that activities, budgets and resources are pointing in the same direction as the strategy with the same priorities. It may as well be you. Every time these actions change, double check to make sure it links to the strategy.

9. Innovation/Creativity/Big-Picture Time-out
Left unchecked, the tyranny of the immediate will absorb all available time. However, great strategic thinking requires breaking away from that day to day mindset. A large block of time is necessary to contemplate the larger issues, and creatively build a future that is not just an extrapolation of the present. Unless you proactively put those blocks of time on your annual checklist, the tyranny of the immediate will freeze them out. Don’t wait until it is convenient to do so. It is never convenient. Build big-picture creativity time in as a mandatory event on the calendar.

10. Monthly Face Time With Top Executives
It does no good to do steps one through nine if the implications are not a part of the regular decision making of the company. Knowledge is only power if the powerful people have the knowledge and are forced to deal with it. These issues need to be in front of top executives on a regular basis, like monthly. The topics may rotate from month to month, but by forcing strategic issues onto the regular monthly agenda, one helps ensure that their implications aren’t ignored when everyday decisions are being made. If it is not made mandatory, my experience has been that they are one of the first things bumped off the agenda when time gets tight.


SUMMARY
Using a checklist for your strategic planning process is a good way of ensuring that nothing falls through the cracks. It also minimizes the risks of one’s strategy falling out-of-step with the environment. Many of the items on that check list will be variations of some of the things associated with classic strategic planning, although perhaps in a slightly different form. Although the classic process may no longer be as valid as practiced earlier, that is no excuse for abandoning regular, mandated time on strategic issues.

FINAL THOUGHTS
Activity is not the same as progress. Just because people are busy does not mean that a strategy is being properly implemented. Without a strategy checklist, you could be running around like a chicken with its head chopped off. That random running around may look impressive, but will not create forward progress in the direction of the strategy.