Strategic Planning Analogy #539: Great Players Make Lousy Coaches

THE STORY
Have you ever noticed that top athletes usually make for lousy coaches?

The reasoning behind this is simple. The great athletes have natural skill and abilities far above the norm for the sport. They are naturally good because they are naturally gifted. It all comes too naturally for them. They don’t even really have to think about it. They just naturally perform well.

As a result, top athletic performers have no real connection with the struggles of the average athlete. The top athletes never had those kind of struggles. They never had to think about how to overcome them.

As a result, the top athletes are relatively clueless as to how to coach the average player through all of this. Their coaching can sound a little silly to the average player when they say things like:

“Just hit the ball to where you want it to go, like I used to do.”

“Just run a little faster, like the speeds I used to go.”

“React faster to the action around you, like I did.”

“I don’t know how I did it. I just did. So you do it, too.”

That’s why average players usually make better coaches. They’ve had to struggle. They’ve had to think of ways to overcome the struggles. They’ve had to find ways to motivate themselves when times were tough. They’ve had to listen more closely to the teaching of their coaches. They’ve had to try a lot of different approaches to the game in order to find their edge.

The journey of the average player is usually a better learning ground for gaining the skills needed to be a coach. So don’t hire the superstar player to coach your team. Hire average.

THE ANALOGY
The CEO is sort of like the coach of a team. Sometimes when looking for the next CEO, we look for the replacement among the best performers in the company. Since they are such great performers, then they will be a great CEO, right?

But that’s like saying the best athlete will be the best coach. It is not necessarily true and is most likely a false assumption.

Therefore, we need to be very careful when choosing our business leaders. The pool of our best performers may not be the best place to look.

THE PRINCIPLE
The principle here is that different roles require different core competencies. Therefore, excelling in one role may make you unsuitable for another role if the needed competencies are radically different between the two roles.

For simplicity’s sake, we will illustrate this principle by dividing a company’s work force into three layers: The Frontline, Mid-Management, and Leaders. As we will see, excelling at one lever does not ensure success at another level.

The Frontline

The frontline is where the basic work of the business occurs—the manufacturing of the manufacturers or the service of the service industries. Success at the frontline is all about doing your task and hitting your numbers. If you have a specialty, success is about being the best at doing that specialized work.

Therefore, the core competencies to excel at the frontline are twofold: a) understanding your task, and b) doing it at the speed and quality required (if not better). Do that well, and you will be a frontline superstar.

Mid-Management

Mid-management is the connection between the leaders and the frontline. Mid-management tries to appease the leaders by making sure the expectations of the leaders are met by the frontline.

Therefore, the core competencies to excel at mid-management are to: a) understand what the leaders want, b) motivate the front line to get it done, and c) report the results back to top management. Do that well, and you will be a mid-management superstar.

Leaders

Leaders run the company. Their job is to decide what the company should be doing and make sure the business has the competencies, capabilities and resources to pull it off.

The core competencies of leaders are: a) Vision, b) Communication, and c) Appeasing all the conflicting demands of the various stakeholders (shareholders, bankers, employees, the community, etc.). Do this, and you are a superstar leader.

The Difficulty of Moving Between Layers

Although these are very simplified descriptions, they do show how each layer in an organization is different. The core competencies are different as well.

The top frontline performers are great doers of a task. But that doesn’t mean they will continue to be top performers if promoted to mid-management. Mid-managers are not expected to be great doers of a task. They are expected to be able to motivate large numbers of other people to do a task. That’s a different skill entirely.

It is like automatically expecting an athlete who was naturally great at throwing to be naturally great at teaching others to throw. As we saw above, that tends not to be the case. And so is the case in the business world.

Since the top frontline person succeeded by doing, they tend to revert to that when a mid-manager. The result is unhealthy micro-managing—an attempt to continue doing rather than motivating.

Similarly, if you find a top mid-manager, that does not necessarily mean that they will excel at leadership. Mid-managers excel at getting someone else’s goal accomplished. Leaders, by contrast, are the ones that have to dream up what is to be accomplished.

The skills needed to get a task accomplished are far different from the skills needed to determine what should be accomplished. Therefore, promoting a top mid-management performer to leadership does not guarantee success.

Therefore, when a top mid-management performer is promoted to leadership, they resort back to their old skills of getting someone else’s vision accomplished. So they take the vision already in place and keep pushing that agenda, even if that agenda is no longer relevant. They don’t change the vision with the times, because they weren’t skilled at that vision thing. So the company becomes obsolete and dies.

Relevancy for Strategy

Great strategies rely on great insights, great vision, and an ability to think outside the box. These are not qualities needed to be a superstar at the frontline or mid-management. Therefore, if you promote from the top of the frontline and mid-management ranks to get your top leadership and strategic leadership, there’s a very good chance you will not get those necessary qualities. Therefore, you run the risk of having lousy strategies.

It drives me crazy when I see companies promote people into key strategy positions who do not have the core competencies for strategy. They may be great at budgeting, financial models, implementation, or operations, but that doesn’t mean they have a clue about insights and visioning.

There are three ways to mitigate this problem, First, hire for the part. If you want a great leader at the top or in strategy, hire people with the skills needed for that part. Instead of looking backward to see how well a candidate was at doing or implementing, look forward to see how they are at visioning and insights. So what if they were only mediocre at doing or implementing, so long as they are great at what the new role requires.

Second, train your leaders to be better at the skills of leadership. There are ways to make people better at the skills of visioning and insight. Invest in your leaders to shore up these key competencies.

Third, don’t be afraid to bring in the experts. There are all sorts of strategy experts out there who would be happy to consult with you. They have the proper skills. Take advantage of them.

SUMMARY
Just because one is a top performer at one level of an organization does not mean that person will excel when promoted to the next level. Since the core competencies needed at the new level are different than the former, there is probably a greater likelihood that the person will no longer be a top performer after the promotion. To minimize this problem:

1. Promote people based on the new skills rather than the old.
2. Train people to become better at the new skills.
3. Hire experts/consultants to help.

FINAL THOUGHTS
Don’t hire a superstar athlete when what you need is a superstar coach.

Strategic Planning Analogy #516: Avoiding Driveways

THE STORY
My wife and I disagree on which types of roads are safer. I think expressways are safer. She thinks city roads are safer.

My logic goes like this: Accidents happen when the unexpected happens (like someone turning off or entering the street) or when change occurs (like a change in speed). By that reasoning, on a city road every driveway, every parking lot entrance/exit, every intersection, every stop sign, every traffic light is a place where an accident can happen, because they are potential sources for the unexpected or change. So, in a few miles of city driving, you may drive past literally thousands of these potentially dangerous locations.

By contrast, on an expressway, I only have to worry about the few cars immediately surrounding me and the rare entrance/exit ramp. That’s a lot fewer potential accident triggers.

My wife’s logic is simpler. The higher the speed, the more dangerous the accident, so drive on slower roads to be safer.

THE ANALOGY
Business strategies can take you on many journeys, including acquisitions, joint ventures, start-ups, brand extensions, new geographies, new customers, and so on. And statistics show that most of these actions end up as failures. There is no safe alternative—acquisitions, joint ventures, start-ups and other business changes all are statistically more likely to fail than succeed.  

It’s like driving when you know that you are more likely to have an accident than not. It’s enough to make one hesitant to get in the car.

But if you don’t get in the car, you will never reach your strategic destination. And because of all the changes in the environment, the status quo will eventually become obsolete. Therefore standing still is not an option, either. It too will eventually be a failure—a horrible accident.

So the business strategy dilemma is similar to the one in the story: What is the safest route to take to avoid terrible accidents?

THE PRINCIPLE
The principle here is that tactics like acquisitions, start-ups, joint ventures, and diversifications are not by themselves the salvation of your company. In fact, they statistically increase your risk for failure. Instead of being your salvation, they are merely tools—and dangerous ones at that. To be successful, one needs a strategy for how to use these tools—a path which optimally avoids most of the accidents which often accompany these tools.

So which path should one take:

1. My wife’s approach (go slow in the city to avoid the biggest accidents);
2. My approach (go fast on the expressways which avoid the uncertainties which increase accidents by avoiding driveways and intersections);
3. Or a combination of paths?

Going Slow

Applying my wife’s advice, the answer would be to go slow. In some cases, that is good advice. Remember, the strategic goal is not to be the first to arrive, but the first to succeed. A strong and savvy follower is often more successful than the reckless trailblazer. As the old saying goes in US westerns, it is the advance scout who gets hit with the most arrows.

For example, Coke did not invent diet cola or cola in cans or caffeine-free cola or sports beverages or pretty much any other beverage innovation in the last 50 years. Yet, Coca Cola is a leader or strong player in just about any non-alcoholic beverage segment currently in existence. Why? Coke is a great fast-follower. By building superiority in distribution, points of customer contact and marketing, Coke can overcome the small innovators over the long haul. Coke lets everyone else take all the risks and then—once a successful innovation becomes apparent—they swoop in and eventually take over. They let other, faster people have all the accidents.

There are several effective tools in the “go slow” approach, like stage-gating and real options. The basic idea is to chop up a grand goal into smaller sub-goals. You aim for the nearest sub-goal. Depending on the success of that early effort, you will make changes in subsequent sub-goals or perhaps halt the project completely. This keeps all your accidents small.

A similar approach is doing a lot of beta-testing. Rather than speeding as fast as possible down a path, you pause to consumer-test the concept and make adjustments based upon the tests. Amazon is famous for doing a lot of testing.

However, the “go slow” approach often has its limits. Sometimes, the dynamics of the market do not provide the luxury of going slow. Faster competitors can get too much of a first-mover advantage (not all of us have as much power to overcome as Coke).

And even the “go slow” approach can eventually require big moves into big acquisitions, big joint ventures, big divestitures and the like. So even though you have eliminated some of the potential accidents, there can be many more that the go slow approach cannot avoid. So going slow it may be part of the solution, but it is not the whole answer.

Avoiding Driveways

So that leads to my go fast approach on the expressways. Accidents are minimized on the expressway because many of the causes for accidents are taken away—driveways, intersections, stop signs and traffic lights.

The business equivalent to avoiding driveways is to look at where the inherent risks are in each business tactic and then try to eliminate them. For example, key sources of accidents in joint ventures come from items like divergent objectives, conflicts between core businesses and the joint venture, governance issues, power issues and so on. The more you can eliminate these sources of accidents up front, the fewer the accidents. These are joint venture equivalents to driveways, intersections and stop signs. The more you can specifically eliminate risks in these areas, the less likely your joint venture will have an accident.

Similarly, in acquisitions many of the risks have to do with things like over-evaluating synergies, paying too much, poorly integrating the two companies, dealing with divergent corporate cultures, underestimating negative customer reactions, and so on. If you can eliminate these sources of accidents, your acquisition is more likely to be successful.

The folks at McKinsey did research and discovered that the companies which are most likely to avoid accidents in acquisitions are the ones who do a lot of acquisition and have built core competencies in how to do acquisitions well. In other words, the successful acquirers have enough experience to know where all the driveways and intersections are and have competencies in finding paths to avoid them (their expressways).

So the idea here is to first understand the key sources of risk in whatever tactical tool your choose. Then, take a path of implementation which avoids these sources of risk (Better yet, make understanding and avoiding core competencies of the firm).

For example, don’t even try to do a joint venture with someone who has a radically conflicting strategic agenda. That’s like driving the wrong way on a one-way road. You are just begging for an accident. Instead, take the expressway where that intersection doesn’t even exist.

A Combination

In reality, a combination of the two approaches can often work best. Don’t be so hasty that you take needless risks. Taking time out for stage-gating or beta testing can be very prudent. On the other hand, large, gutsy moves may eventually be required to reach a better tomorrow. Rather than delay them too long, move forward quickly, but smartly by proactively avoiding specific areas which are most likely to increase the risk of a failure/accident.

SUMMARY
Tactics like acquisitions, start-ups, joint ventures, and diversifications are not by themselves the salvation of your company. Instead, they are necessary, but dangerous tools which increase one’s risk of failure if used improperly. To improve one’s likelihood of success with these tools, consider the following:

1. Before rushing full speed ahead, take time to de-risk the overall strategy. Consider additional tools like stage-gating, real options, and beta-testing to make sure your ultimate goal is correct.
2. Consider building competencies which can make you a great fast-follower towards good strategic goals “proven” by riskier firms.
3. When implementing tools like acquisitions to reach the goal, understand the risks inherent to the particular tool. Then specifically address those risks prior to acting, so that those risks can be avoided.
4. Consider building core competencies in handling these tools before using them.

FINAL THOUGHTS
So, in a way, I guess my wife and I are both a bit right in our approaches to safe driving.