Strategic Planning Analogy #472: Watering Seeds

 

THE STORY
This past summer was unseasonably hot and dry.  My lawn suffered from the harsh weather.  As a result, I needed to plant some grass seed this fall to fill in the dead spots. 

Getting grass seed to grow takes a lot more effort than just throwing some seeds on the ground.  First you have to loosen the soil.  Then you have to keep watering it on a regular basis for several weeks.  Then you have to fertilize it.  That was tough work.  Tossing the seeds on the ground was the easy part.

At first, I thought I wasn’t watering the grass enough.  But then I saw a cardinal giving himself a bird-bath in a puddle where I had watered.  So I guess I watered enough.

And now, my lawn is covered with new grass.

 

THE ANALOGY
Strategy is like grass seed.  It is something new sown into the business with the hope of increasing the growth and value of the company.  And if you want to take the analogy further and think of US dollars as “greenbacks,” strategies are the grass seeds that create that green (money).

The problem is that just because one throws seed on the ground does not guarantee that the growth will occur.  If the ground is hard and dry, the seeds will just sit there until the birds eat it.  Similarly, if strategy is just thrown at a company, there is no guarantee that the strategy will take root. Just as it took a lot more than just tossing seeds to get grass, it takes a lot more than just delivering a strategy in order to achieve a strategy.

If you see the role of strategy as merely delivering a fancy document with all the clever ideas on it, then all you have done is just toss seeds at the company.  The document will then most likely just end up on a shelf and never be touched again.  It’s as if the birds ate all your seeds.

No, if you want a strategy which gets implemented, you have to get involved in all the other work—the ground preparation, the watering and the fertilizing.

  

THE PRINCIPLE
The principle here is that strategies only succeed in a company which is committed to making it succeed.  And that does not usually happen naturally.  In fact, there is usually active resistance to strategies because they require changing the status quo—and that bothers those who are comfortable or have power in the status quo.  Therefore, if you want to successfully implement a strategy, you can’t just give it to the company—you have to actively counter that resistance as part of the strategy process. 

We will refer to those actions as preparing the soil, watering, and fertilizing.

1. Preparing the Soil

In grass-growing, you prepare the soil before planting the seed. The idea is to loosen the soil so the seed can penetrate and get buried in the soil.

A similar activity needs to take place in strategy.  Before presenting the strategy, you need to first prepare the audience so that the strategy will penetrate their wall of resistance.  Since that wall of resistance is in their minds, then the mind is where you need to prepare the soil.

The core idea is very simple.  People act based on the way they think.  Therefore, if you want to change the way they act, you must first change the way they think.  In other words, if you want the leaders embrace and willingly implement the strategy, then you must first get them to think that it is right to abandon the status quo and embrace the new strategy.

There are several ways to change that mind.  The first approach is “The Burning Platform.”  This is where you change how people think about the status quo.  The idea is to convince them to believe that remaining with the status quo is not a viable option for the long term.  It does not work in the changing environment.  Instead, it is like being on a platform which is burning up.  It is only a matter of time before it is all burned up.   And if we do not jump off that platform, we will burn up as well.  It is only a matter of time.  So we may as well jump as soon as possible.

The second approach is “The Locked Door.”  The idea here is to paint a picture of a glorious and prosperous future—a place so desirable that it makes your executives salivate with anticipation when thinking of it.  Then you convince them that there is a locked door between them and that glorious future.  That locked door is the status quo.  It is impossible to reach that future as long as we cling to the status quo, because that approach cannot get you there.  It is only by tearing down the status quo that we can enter that glorious future.

The first approach of thinking prevents actions of turning back and the second approach of thinking increases enthusiasm for actions moving forward.  Depending on the nature of your soil (type of resistance) you may need one of these or some other thinking approach to prepare them for proper acceptance and action.

2. Watering the Soil

Watering the soil is an intensified effort for the period immediately after planting the seed.  It is not a one-time act, but needs to be done continually until the grass seed has fully sprouted.  The strategic planning equivalent is working intensely with executives until they see the connection between the long-term strategy and their daily actions.

If executives do not see a connection between their daily decisions/actions and the long term strategy, then they will not change their daily decisions or actions.  And, as we all know, if the daily actions don’t change, then the long-term outcomes will not change.  The real strategic outcome of a company is the cumulative result of all those daily actions (not the result of that document on the shelf).  So if you want to get the new strategy implemented, if must be meaningfully represented at the point when daily decisions are made.   Watering the seed then means that strategists need to be present when daily decisions are being made—to teach people how the new strategy should influence how those decisions are made.

For example, new strategies are typically about winning a particular position.  And in order to have enough emphasis in the winning area, one usually needs to makes trade-offs with areas less critical to that success.  Therefore, our daily actions need to make the right trade-offs so that we choose in the direction of the winning position.  And if intensive effort is not placed on training people to make the right trade-offs, then wrong trade-offs will occur.

Think back a few years ago to the crisis at Toyota.  Their strategy was built upon winning in dependability.  However, for awhile, management’s daily decisions were not keeping dependability at the forefront.  Ideas of growth, expansion, and low prices got in the way.  As a result, dependability suffered (numerous crashes, lawsuits and recalls) and Toyota had a huge set-back.  Management had to go back and re-water the soil—to get everyone to realize that dependability is top priority and must penetrate every decision made on a daily basis.  Once the soil was sufficiently watered with that intensive effort, dependability came back and so did the prospects at Toyota.

3. Fertilizing the Soil
Fertilization is a brief activity which takes place at set intervals.  For example, many recommend fertilizing grass 5 times a year.  The equivalent activity in strategy is the strategic review.  The idea here is that just as periodic fertilization keeps the grass on track to grow, periodic strategic reviews help keep the strategy on track to proper implementation.

There are several methods to do this.  One is the dashboard approach.  The idea is to set desired near-term outcomes related to the strategy.  These are usually referred to as KPIs, or key performance indicators.  You then measure actual performance against the KPIs and display them on a dashboard.  Periodically you look at the performance on the dashboard and make the appropriate adjustments to get back on track.  Depending on how broadly you want to measure the strategy you will end up with different dashboards.  In the broadest approach, you end up with something like a Balanced Scorecard.

A strategic review which will occur less frequently is the review of assumptions.  The idea here is to periodically go back to the core assumptions behind the strategy to ensure that they are still relevant.  If they are no longer relevant, then it is time to modify the strategy.  Sometimes, this process makes use of scenario planning.  In scenario planning, several potential environmental assumptions are examined.  Strategies are developed for the most like sets of assumptions.  Then, at the periodic reviews, one looks to see which scenario is coming to pass, so that  one will know which path to take.

A third approach for strategic review is known as stage-gating, or real options.  The idea here is that large strategic initiatives are broken down into smaller parts.  Each part optimizes the strategy based on what is known at the moment the stage is started.  Then, based on what is learned over the interim of that stage, you choose the proper next stage, and so on.  The periodic reviews occur for each stage.

An example would be in oil drilling, where one buys an option to drill well before drilling begins.  Then one examines in more detail the likelihood of that being a good place to drill.  If yes, the next stage is to prepare drilling.  If no, you let the right to drill lapse.  The idea is to maximize action while minimizing risk.

 

SUMMARY
Just having a strategy does not guarantee that the strategy will become a reality in the business.  To increase the likelihood that the strategy comes to pass, you also need three other activities:

1. Preparing the Soil--Changing the way the company thinks, so that they naturally want to work hard to make the strategy come to pass.
2. Watering the Soil—Intensive effort up-front to teach people how to incorporate the essentials of the strategy into everyday decision-making.
3. Fertilizing the Soil—Periodic strategic reviews in order to make sure everything is on track, that the assumptions still hold, and that periodic adjustments can be made.

 

FINAL THOUGHTS
You can’t prepare the soil, water the soil and fertilize the soil if you are locked up in the ivory tower at corporate.  No, you have to get your hands dirty and get out into the field where the soil is.

Strategic Planning Analogy #449: Scorekeepers Vs. Score Makers

THE STORY
Today, when you go to a sports arena they have those huge Jumbotrons showing you not only the score, but lots of high definition video in full color. It wasn’t always that way.

There was a time when scoreboards were only what their name implied—boards of wood with the score on them. When the score changed, a person had to physically take down the old painted number sign and put up a new number (by hand).

Those scorekeepers were kept pretty busy changing those signs during the game. But even though they worked hard to change the score on the board, the score keepers did not cause the score to change. They only reported on the action taking place on the field.

Sure, the scorekeeper put the larger score on the board, but if you wanted a larger score, you needed to have a coach with a great game plan and athletes who could execute it. Just because the scorekeeper was closest to the scoreboard does not mean he was closest to the action.

Don’t confuse the scorekeeper with the score makers. Don’t mistake them for being the coaches or the athletes. All he does is put the signs on the board.

THE ANALOGY
Now it may seem silly that someone would confuse the scorekeeper with the score makers. Maybe it wouldn’t happen in sports, but it seems to happen quite frequently in business. And that isn’t silly; it’s tragic.

In a lot of companies, we have employees who are referred to as strategists. Their responsibilities may use terms such as managing strategic planning or strategic plans. But when you look closely at their job descriptions, they are really little more than scorekeepers.

But instead of a scoreboard, they have a spreadsheet. They use the spreadsheet to keep score. First, they keep track of the desired score—the goals of what the company wants to achieve. Then they keep track of the actual score—what the company actually achieves. Finally, they compare the two scores to show a variance score.

Then, if these so-called strategists have a big enough budget, they create fancy dashboards to place on all of the executives’ digital screens to show off the results. These dashboards have lots of fancy colors and dials and charts and traffic lights—sort of like those fancy Jumbotrons.

But as fancy as they all are, the root function is not much different than that old-time scoreboard operator. The primary function is just to keep track of the score.

THE PRINCIPLE
The principle is that scorekeeping is not the same as strategic planning. And if the job description for your “strategists” is basically that of being a scorekeeper, then the task of true strategy is probably lacking—to the detriment of the company.

This is not to belittle the role of the scorekeeper. That is an important job. But it is not strategic planning. You need them both. Just as sporting events would be pretty worthless if only the scorekeepers showed up, all that business scorekeeping is pretty worthless if all the goals and measures being watched are not rooted in comprehensive strategic planning.

Asking the Tough Questions
Comprehensive strategic planning is not merely about coming up with a number. No, it tends to be more like an essay test. Great strategic planning has to answer a lot of tough questions, like:

Where are we going to play in the marketplace?

How are we going to win in that place?

What are the tradeoffs we are going to make to win?

What is the business model best suited for us to win?

What is missing in our resources to accomplish this? How will we obtain what is missing?

What threats are on the horizon which could change the way we need to play to win?

We talked more about the importance of answering these types of tough questions here and here. The key point is that until you answer these questions, there is no way of knowing how to score your progress. You need to know the rules for YOUR particular game before you can properly score it.

Otherwise, it would be like carefully measuring the speed at which you are driving when you have no idea of where to go. If you have not determined a destination and a path, then the speed at which you are driving is irrelevant. Getting nowhere faster isn’t much to be proud of.

To get a handle on where the profession of strategic planning is headed, I spend time looking at the job descriptions posted for “strategic” positions. It is fairly common to see lots of scorekeeping in the job description, but very little about tackling these tough questions. The qualifications tend to ask for people with expertise in accounting and spreadsheet modeling. They don’t tend to ask for people with expertise in positioning, business models, or how to win in a competitive marketplace.

I’m not so sure that accountants are necessarily the best qualified to answer these types of questions. And even if they were, they will be too busy with scorekeeping to spend much time focusing on the questions.

Don’t Merely Rely on the Operators
I’ve talked to some of the people who operate under these types of job descriptions. I ask them how all those tough questions get answered. What I hear is that the scorekeepers rely on the business operators for the bulk of the input. Unfortunately, there are many flaws in this approach.

First, the operators have a personal bias towards getting a large bonus. This can cloud their thinking regarding what a good score would be. A good score for an operator might be a beatable number, rather than the strategically correct number.

Second, operators tend to be highly invested in the status quo. That is their strength; it is what they know. Therefore, they tend to pick goals which are incremental extensions of the status quo. Strategically, the best solution might instead need to be a drastic change…perhaps even selling off that operation. Why would an operator volunteer to see his career path and platform for power go away?

Third, a lot of the best strategic moves are into new spaces. This is often referred to as the Blue Ocean strategy. By definition, new virgin spaces do not have an established operating base. Therefore, there is not an operating division naturally thinking about or fighting for this new opportunity.

Finally, operators tend to be overwhelmed by the Tyranny of the Immediate. In other words, a large percentage of their time is focused on the current crisis of the day. They are spending so much time putting out the current fire that they do not have enough time for the luxury of pondering the long-term. If you are not spending enough time pondering the big picture and the long term, then you will answer the questions in a narrow, short-term way. This leads to sub-optimization.

That is why companies need professional strategists who are not captive to these limitations. They do have the luxury of being able to focus on these big issues. That is, they have that luxury if they are not required to spend nearly 100% of their time as scorekeepers.

This is not to say that the viewpoint of operators is worthless. No, their insights are valuable to the process because they are on the front lines. But, it cannot stand alone. It needs to be balanced by the objectivity and big-picture thinking of a real strategist.

SUMMARY
Keeping score is not the same thing as providing key insights into answering the tough questions of strategy. If you reposition strategic planning as little more than scorekeeping, then a key aspect of strategic planning will be missing. As a result, you may end up with great measurements of nearly random activity which does not lead to a great long-term destination.

FINAL THOUGHTS
Today’s modern spreadsheet and dashboard tools can turn into great toys which are fun to play with. They can start absorbing an ever larger percentage of your time. But let’s not forget that they are only more sophisticated scoreboards. And although they can be very useful, the action on the playing field is still more important than the sizzle of the scoreboard. Keep it all in its proper perspective. The essay test of the tough strategic questions may not have as much sizzle as a scoreboard, but it still needs focused attention.

Strategic Planning Analogy #436: Distracted Driving

THE STORY
Today’s technology can do a lot of great things. It can entertain us, inform us and keep us connected with the ones we love. It can also cause problems if we combine all that technology with driving.

Between the technology gear we bring into the car, and the technology gear already in the dashboard of the car, we have all sorts of opportunities to become distracted from our driving. Here are a few statistics on the subject I found on a web page:

• Talking on a cell phone causes nearly 25% of car accidents.

• About 6,000 deaths and a half a million injuries are caused by distracted drivers in the US every year.

• Over 1/3 of drivers (37%) have sent or received text messages while driving, and 18% said they do it regularly.

• Forty-one percent of adult drivers have set or changed a GPS system while driving, and 21% do it “more frequently.”

• While teenagers are texting, they spend about 10 percent of the time outside the driving lane they’re supposed to be in.

• Talking on a cell phone while driving can make a young driver’s reaction time as slow as that of a 70-year-old.

• Answering a text takes away your attention for about five seconds. That is enough time to travel the length of a football field.

Yes, you can do a lot of really cool things in a car these days. The sound systems are great; the communication systems are great. The dashboards are full of interesting things to look at and play with. But for safety’s sake, perhaps we should take the wheels off the car and enjoy all this stuff while sitting still in our garage.

Better yet, let’s remember that the best screen in the car is not on your smart device or your dashboard, but the WINDSHIELD!

THE ANALOGY
Cars aren’t the only places full of cool technology. So is today’s workplace. A lot of this technology can be very useful. However, like in the car, much of this technology can also be distracting.

Here are some work-related statistics:

• Nielsen’s quarterly Three Screen Report on U.S. media usage showed that approximately 44 percent of all online video is being viewed in the workplace.

• More than 21 million Americans – or 29 percent of working adults – now access adult websites from work computers.

• Some employees said they accessed their Facebook accounts as much as two hours a day on the job, with 87 percent of those surveyed admitting that they had no clear business reason for using the social network.

• An oft quoted study says that Facebook reduces office productivity by 1.5% overall.

As disturbing as this might be, I’m even more concerned with the official gadgetry produced by the company itself. Just as cars provide cool distractions on the dashboard, many companies have their own “dashboard” devices. These company dashboards are software applications which show lots of cool performance indicators. Like a car dashboard, they provide data to let you know how you are doing. And like a car dashboard, this information can be useful.

However, there is a lot more to driving than just staring at the dashboard. You need to look out the windshield and see the world you’re driving in. The same is true for strategists. It can be very dangerous if the focus at the company is too much towards the internal dashboard and not enough looking at the external world through a strategic “windshield.”

THE PRINCIPLE
The principle here is that it is already difficult enough to get companies focused on the long term, given all the near-term distractions. Let’s not allow a preoccupation with cool gadgets and company dashboards contribute to that distraction.

Yes, company dashboards can be a useful tool, especially to keep day to day operations on track. But if a strategist’s time is distracted by focusing too much on dashboards, then their work will suffer, increasing the likelihood of a company “accident.”

One of the key strategic problems with most dashboards is that they tend to focus on performance. They are typically a tool which looks at how well a company is performing on Key Performance Indicators (KPI).

Now, at first one might think that it is good for a strategist to focus on performance and KPIs. However, I see four major problems if performance is the primary focus of a strategist.

1) Performance Focuses on the Score, Not the Game Plan
As I’ve mentioned in prior blogs (here, here, and here), outcomes are like the score of a sporting event. They can tell you if you are winning, but they are worthless at telling you how to win. Yelling at the scoreboard won’t change the score. Yelling at your people to score more points is worthless advice. If a coach stares at the scoreboard (the outcomes) during the game instead of focusing on what’s happening on the playing field, they become a fairly worthless coach.

Even if you know you are losing, that does not mean you know how to fix the problem. The score provides virtually no insight into why you are losing or how to change the score’s direction. It is just a number.

If you want to win, you need to focus on the clipboard where you write up the winning game plans. Games are won by having a superior game plan that is properly executed. That is where the strategic focus needs to be.

By the time you know the score of a game, it is too late to affect its outcome. But if, instead, you focus on the game plan, you’ll pretty much know what the score will be before the game is over, and have time to still influence the outcome with a revised game plan.

2) Performance Tends to Ignore the Real Battleground for Success
Customers act based on the way they think. Therefore, if you want them to act in a particular way, you need to first get them to think in a particular way. Hence, the key battleground for success takes place in the minds of your consumers.

Most company dashboards, if they measure customers at all, measure what they do (like “sales”), not how they think. As a result, the dashboards are ignoring the key battleground for success.

In a prior blog, we talked about the difference between “being” and “doing.” Strategic positions are about what you want to BE—how you are defined in the mind of the customer. Dashboards are about DO—what has already happened to your company.

If you want to improve strategically, you need to focus on the BE; you need to probe the consumer’s mind to find out if you are becoming properly positioned in the key battleground. This would be far better information to focus on than the outcomes of a dashboard.

3) Strategic Planning is Most Valuable at Times of Discontinuity
Dashboards are based on tracking past performance over time. The implied assumption is that the past is the best indicator of the future. Yet we all know that the world is full of change. The future often has little resemblance to the past. There is too much discontinuity.

That is why one of the chief values of strategy is to look forward—to anticipate future discontinuity and formulate a plan in advance to prepare for and take advantage of that discontinuity.

By the time a dashboard displays discontinuity, it is often too late to properly react. The change has already occurred. All the dashboard can do at that point is track precisely how quickly the discontinuity is destroying the company.

If you want to anticipate and prepare for discontinuity, you need to be looking up out the windshield rather than looking down at the dashboard gadget.

4) Performance Tends to Denigrate Strategic Planning into a Financial Scorekeeper Role
If the determination and measurement of KPIs becomes the primary responsibility of strategic planning, then the role of strategic planning becomes little more than that of a scorekeeper.

Just because a person keeps score does not mean they influence the score. In their new stadium, the Dallas Cowboys football team has one of the most sophisticated scoreboards in the world. But it hasn’t helped them win more games or get to a championship.

There has been a trend to redefine strategic planning as “Financial Planning & Analysis” and make it a small sub-department in Finance. The role is little more than that of a scorekeeper, with the dashboard being their scoreboard.

You don’t make great strategic leaps into the future by keeping track of the past. Great insights come from looking ahead and looking beyond today’s results. But if the new objective for strategists is to look for KPI performance variances (instead of looking ahead), then they are no longer doing true strategic work. By redefining the role, this great value is being taken away.

SUMMARY
It is hard to get companies to focus long term, because the “tyranny of the immediate” pressures executives to focus on the crisis of the day. That is why strategic planners are so valuable…they provide a longer term balance. However, if the strategists are primarily focused on measuring KPIs, then they get caught up in the tyranny of the immediate as well. The balance is lost; and much of their value is lost. And the company suffers.

The irony is that if you want better future outcomes, the best methodology is to not focus on prior outcomes. Instead, focus on the factors which influence the future. And those are rarely found on dashboards.

FINAL THOUGHTS
A strategist looking down at a dashboard is like a teen looking at a text while driving. Do I hear a crash?