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 #454: Strategy Cut-Outs

THE STORY
A couple of years ago, I was at a tourist location while on vacation.  There was a section of the area devoted to souvenir shops.  These shops had quite a variety of souvenirs to offer—everything from T-shirts to antiques.  Most of the items had something printed on them referring to the phenomenon which drew tourists to the location in the first place.

But there was one store which stood out.  It was selling life-sized photographs of famous celebrities, cut and mounted on wood so that you could have them stand next to you.  In particular, the store was pushing life-size cut-outs of Justin Bieber, the hottest celebrity of that moment.

I thought it might be interesting to have one of these in my home (until I saw how expensive they were). 

But it got me thinking.  What if I had one of these Justin Bieber cut-outs in my house and suddenly the real Justin Bieber showed up?  The natural reaction would be to ignore the cut-out and pay attention to the real person.  All that money paid for the cut-out would have been a waste, because it has very little value when you have access to the real thing.

And if you saw someone ignore the real Justin Bieber to spend time with the cut-out photograph, you’d think they were a little bit crazy.

THE ANALOGY
Sometimes, I think strategic planners can get a little crazy, like someone who would rather hang out with a photograph of Justin Bieber than the real person.

Strategic plans are an attempt to represent what is going on in the environment and how we would like to change it for our company’s benefit.  They are not reality themselves, but merely a representation of that reality (and the future reality we desire).  They are a “cut-out” rather than the real thing. 

But, as strategist, we tend to love those planning documents.  There can be great joy in getting such a document completed.  And sometimes strategists can get all caught up with all their other documents, and data, and graphs, and spreadsheets.  There’s just so much of it to occupy our time that there is no need to ever leave the office.

But reality takes place outside the office out in the marketplace.  We can go out there and see our real Justin Bieber (the world we compete in) any time we want.  But instead, we seem content to embrace our hand-made cut-out version of Justin Bieber and never leave the office.

Yeah, the cut-out is nice, but isn’t visiting the real thing occasionally even nicer?

 

THE PRINCIPLE
The principle here is that great strategic planning goes beyond dreaming up great theories in offices or in printing up thick strategy books.  The best strategies are most in tune with the marketplace.  Therefore, it is helpful if the planning process spends time interacting with the marketplace where the strategy gets played out.

1) Get Out in the Field

When was the last time your strategists went on a sales call with your sales team, or spent time listening in at the call center, or visited (or worked at) the factory, or spent time in direct contact with your customers?  These are the types of places where your strategy either succeeds or fails.  The better you understand them, the better you can prepare to win there.

At most of the retail companies where I have worked, I have insisted that whenever my team traveled on business, they should carve out extra time to get out and experience the local marketplace.  I told them to visit our stores, the stores of competition and even stores that had nothing to do with us.  After all, you never know where you will learn something new that will be useful in strategy.

I was appalled one time when a retailer I worked for opened up the first prototype for a new retail concept.  The top executives got on the corporate jet and then drove directly to the store.  They cut the ribbon for the grand opening and then went directly back home.  No time was spent observing or talking to customers.  No time was spent visiting the competition.  What a missed opportunity to learn.

When H. Ross Perot was placed on the board of directors for General Motors, one of the first things he did was go to a GM dealership to buy a car.  He wanted to experience what consumers experienced when buying a car.  He also wanted to own and drive a GM car to better understand the product.  Later, Perot was shocked to find out that many of the other board members no longer bought cars—they were given to them by the company.  And most of them no longer drove cars—they had drivers.  And at least one no longer even had a valid driver’s license.  How do you build strategies for the marketplace when you are so out of touch with the marketplace?

Granted, you cannot go everywhere and see everything.  But you should at least spend some time experiencing the world of the line employees and your customers.  This gives you some “real life” context for evaluating strategic options.  And just as you can learn more spending time with the real Justin Bieber than you can with a photo cut-out of Justin Bieber, you can learn things out in the field that would never show up just looking at numbers and documents in your office.

And to supplement personal experience, include more input from those who live out in the field.  Invite input from line employees, customers, suppliers and distributors.  With all the social media tools out there, it has never been easier to include all the voices of the marketplace in your planning process.  Not only will this allow you to learn more for strategy design, but it will create greater buy-in and cooperation from the field during strategy execution (because they were part of the design process).

2) We’re Not in the Publishing Business

A lot of strategists get upset when all of their strategy documents and presentations get ignored.  After the strategy meetings, everything given to the leaders gets put on their shelf, never to be touched again.

Why does this happen?  To a lot of the leaders, all that material is like the photo cut-out of Justin Bieber—not quite fully real to their regular day job.   After the planning meeting, they have to go back to living life out in the field with the real Justin Bieber.  And given the choice of spending time with the cut-out or the real thing, they naturally opt for the real thing. 

Remember, a company’s strategy is not what is put in a book, but is the result of all the daily decisions made throughout the organization.  If the written strategy is not made real at the point where all the decisions are made, then it is not the real strategy.

Strategists are not publishers.  Our end products are not books, Powerpoint decks, budgets and so on.  Our end product is a transformed company which is moving in the direction of the vision.  Therefore, to succeed, we need to make our strategy relevant in the minds of the people making the daily decisions.  To do that, the strategy needs to get translated into the context of the reality of where decisions are made.

To do that, strategists need to spend time at the beginning out in the field so as to understand that

context.  In addition, strategists need to spend time out in the field after the strategy is crafted, helping the decision-makers see how to relate the strategy to their daily decisions.  And that cannot be done by just hanging around your office.

SUMMARY
Successful strategies are the ones which impact what happens out in the marketplace.  That impact is increased when a) the strategy is built upon the knowledge of the realities of the marketplace; and b) those who are making the daily decisions out in the marketplace understand how the strategy is relevant to the choices they make.  This requires that strategist do more than just produce books, spreadsheets and Powerpoint decks.  They need to spend time out in the reality of the marketplace.

FINAL THOUGHTS
All of this is not to imply that analytics, budgets, spreadsheets, presentations, strategy books and vision statements are a waste of time.  No, they help to quantify and communicate the core strategy.  They also help to flesh out strategic insights and concepts.  But unless one has a deeper, more intimate knowledge of the reality of the marketplace—something that cannot be found just studying sterile numbers—you will not fully comprehend the context and relevancy of that information.

It is like designing a house without understanding the terrain the house is to be built on.  It may look great on the blueprint, but it cannot become a reality because it is inappropriate for the terrain.  First, go out to the site and learn the terrain, so that the house you design on the blueprint can actually be built and be the right structure for that location.

Strategic Planning Analogy #299: Work Worth Doing

THE STORY
Many years ago, just before I was to receive my MBA, I met someone I did not know in the hallway at the University. He was also about to graduate.

Although I was trying to ignore him, he came up to me and started talking with a big grin on his face.

He said, “Do you know why I am graduating with a degree in accounting and getting a CPA?” He didn’t wait for a response and immediately answered his own question, “Accountants get one of the highest starting salaries right out of business school, and people who make the most money get the most sex.”

THE ANALOGY
Here was someone who had a personal “strategic” plan. However, it seemed a little bit one-sided to me. It was all about what was in it for him (money and sex). There didn’t seem to be much concern for the people who would be paying him that money or the people he would have sex with.

At some point, I would suspect that if the only reason he was an accountant was for the money (and he had no love for the profession) that the joy of money would decline and the hatred of accounting would increase. Similarly, if he was only able to get sex because of the money, then over time the joy of the sex would decline and the futility of the meaninglessness of that sex would increase.

This individual’s focus appeared to go straight to the ends (money and sex) without considering the means (the nature of the work and the quality of the intimate relationship). Over time, I think he will lose some of the joy for those ends because of not attaining them in a meaningful or satisfying manner.

This can also happen in business strategies. If the focus of the strategy is on one-sided ends (e.g., get huge bonuses, put big numbers on the bottom line) and ignores the means of how to get there (what the business does), it can lead to a long-term disaster.

THE PRINCIPLE
The principle here is that long-term success is more likely if you focus on the “means” rather than the “ends.” Therefore, strategic plans need to focus more on the means than the ends.

For most “for profit” enterprises, the end is to grow profits, i.e. make more money and improve the return on investment. Although this is not a bad goal per se, it is a lousy strategic focus.

A strategic mission statement saying, “We want to make a lot of money” is not very useful. It provides no guidance as to what to do. It doesn’t rally the troops around a particular type of work. And worst of all, it does not provide an incentive for potential customers to give you their money.

Business is a two-way street. In order to sell something, someone else has to purchase it. These purchasers typically have multiple options. They do not have to give you their business. They can give it to someone else. If your strategy does not focus on a way to get customers to prefer you, that ultimate goal of making lots of money won’t happen.

This is especially true today. Consumers are so angry at the perceived greed of business people, that they now are expecting even more accountability from them. More than ever, they want to patronize companies that have a social conscience, who are good corporate citizens. And thanks to the internet, they will find out how sincere you are. You cannot hide. The type of corporate citizen you are will help determine whether they buy from you. This is not a fad. This is part of the new normal.

That is why one of the most important strategic questions you can ask is “What can we do for our customers that will cause them to prefer us over their spending alternatives?” You can see this line of thinking in Proctor & Gamble’s new mission statement—“to touch and improve more people’s lives, in more parts of the world, more completely.”

This new mission has opened up a world of new sources of profits to P&G in places where they never went before. As C.K. Prahalad shows in his book “The Fortune at the Bottom of the Pyramid,” there are a lot of profits to be made among the poor if you focus on ways to improve their lot in life. This is what P&G is doing. But it only works if your focus is on bettering the poor rather than bettering yourself.

Here is the great irony. The more your strategic effort focuses on your customers (and the less it focuses on your rewards), the greater your rewards tend to be. There are three reasons for this.

1. Right Focus
When you focus on what the customer wants, you end up focusing on the “means”—the nature and process of what you do. You look for ways to meet the customer’s needs and desires. And when customers see you as the better alternative for them, they will give you their money.

Strategy is about helping you figure out what to do. Do the right things and the rewards will come. The right thing to do is to create a positive differentiation versus your competition on attributes important to a potential customer segment. This comes from focusing on what you do for others.

Unfortunately, this is not what all strategic planning processes do. I’ve seen businesses use their strategic planning session primarily to set a numeric goal as to how much money they want to make. The discussion is around how big of a number (Sales, Profits, Return on Investment, EVA) they want to achieve by a certain point in time in the future.

This is selfish one-way thinking. Just because you can build an elaborate spreadsheet and graphs showing what this type of goal looks like does not mean it will automatically happen.

What I’ve seen happen is panic set in when the company gets close to the goal year and is nowhere near hitting the numeric goal (because the plan never focused on the means for achieving the goal). Desperate measures are taken to hit the numbers. These desperate measures rarely lead to long-term success.

The better focus is to set goals for specific operational outcomes that are customer-centric (improving quality, reducing costs, improving the business model, adding features, etc.). The idea is to focus on making a better two-way street. Focus on finding ways making customers prefer you, and the ends will come.

2. Right People
If the only thing you offer people is a means to satisfy their greed, then you will attract greedy people. Overly greedy people tend to destroy the long-term viability of a firm. I saw a study several years ago which asked investment bankers if they would still be in that profession if it stopped paying exorbitant wages. Over 80% said no. They were only there for the money. They didn’t care much about the products they dealt with, the risks they took or the people getting mortgages they couldn’t afford or the people insuring those risks. And that attitude I believe had a lot to do with how we got into the big financial mess we are in today.

I was talking to an executive of Enron before its demise. We were discussing how Enron expected very high levels of effort, but rewarded people very well if they succeeded. I asked him if it was difficult to get people like that. He said that most of their hires came from investment banking and were used to that type of culture. Well, we saw what happened when you get too many people of that attitude at Enron.

However, if everyone sees you as a company focused first on the customer, you will attract the people who like putting the customer first. These are the people who are most useful in building a strong, lasting company, a place where customers want to spend their money.

3. Right Motivation
What do you think motivates the rank and file employee more—lining the pockets of the top executives with big bonuses, or making the world a better place? P&G’s new mission talks about making the world a better place. So do many other firms (see this prior blog for examples).

A noble purpose causes people to care more about what they do. When they care more, they tend to perform better. There is a greater motivation to do well, because it has more meaning to what is being done.

Strategic mission statements should provide that type of inspirational motivation, because people highly motivated to serve customers tends to lead to great results.

SUMMARY
If you want great financial results, don’t focus your strategic planning process on getting great financial results. Instead, focus on how to give customers greater benefits than they can get anywhere else. Customers are the ones who control much of your financial success. If you convince them that you are their best option, they will give you their money (making you financially successful).

FINAL THOUGHTS
This Christmas season brings to mind the idea of giving. If you keep this giving attitude all year ‘round, you have the foundation for a successful plan.

Analogy #234: Context

THE STORY
Awhile back, I needed to purchase a refrigerator for my house. As part of the search for a refrigerator, my wife and I went to one of those warehouse appliance stores.

There is a reason why these places are called “warehouse” appliance stores. The building was little more than just a huge warehouse. There were no interior walls, no finished ceiling…just a mammoth open area, with row after row after row after row after row of refrigerators.

Eventually, my wife and I agreed on a refrigerator from this store and made a purchase. At the time, I thought we had made a great choice. But then came the shock when the refrigerator was delivered to our house.

The refrigerator was HUGE. It barely fit into the spot designated for refrigerators in the kitchen. When I started filling it with food, it seemed like there was no limit to how much it could hold. I could probably stock enough food in it to meet the needs of a large army of hungry teenagers. And I only needed to meet the needs of my wife and myself.

My first reaction was to double check to make sure they delivered the correct refrigerator. They did.

So then I tried to figure out how I ever convinced myself that this Paul Bunyan-sized refrigerator was such a great choice. Finally, it came to me…

In that large, cavernous warehouse store, all the refrigerators looked small. None came anywhere near touching the high, unfinished roof on the warehouse. There was no kitchen-sized reference point to compare the refrigerators to.

Now, if the inside of my home looked like the inside of a cavernous warehouse, with no interior walls or finished ceilings, I suppose that refrigerator would have looked in my home just like I remembered it at the store. But my home is not a warehouse. So now I have this over-sized white monster in my kitchen.

On the plus side, it’s easy to see where everything is in the refrigerator.

THE ANALOGY
The problem with my refrigerator purchase was that the context in which I purchased my refrigerator (a huge warehouse) was different from the context in which I use it (my small kitchen). The wrong context of the warehouse distorted my thinking and my judgment about the appropriateness of the refrigerator in my kitchen.

The same thing can happen in strategic planning. A supposedly great idea dreamed up by a bunch of old, rich white guys at a strategic planning off-site at a resort (after playing a round of golf) may not seem as great to the targeted customer: a young Hispanic woman who is struggling to make ends meet and has screaming children tugging on her jeans.

These two groups are living two entirely different lives. Their thinking comes from distinctly different contexts. Dreaming up a strategy in one context and implementing it in another may create a mismatch many times worse than my refrigerator problem.

THE PRINCIPLE
The principle here is that strategies work best when they are designed to operate in the context in which they will be implemented. Just as I would have made a better refrigerator decision if I had done it in the context of a kitchen, strategies should be evaluated in the context of where they will be practiced.

We will look at three aspects of strategic context.

1. Environmental Context
Your strategy will not be executed in a vacuum. It will have to fight for supremacy against competitors. As mentioned in an earlier blog, all successful strategies work by taking share from someone else and you should expect counter attacks form the ones who are losing that share. In other words, the mere entry of your strategy will inevitably change the environmental context. Therefore, you must not only design your strategy for today, but also so that it will work in the new context created by your entry.

Strategies succeed by winning a position in the marketplace. If you don’t incorporate the marketplace into your strategy, how will you ensure your ability to win? For example, if your strategy depends on winning with price by having prices 15% below competition, what will you do if competition decides to match your prices? In this case, one needs to understand the pricing context they are putting their product into—how stable is the pricing? Do you have a cost advantage that can sustain itself in this environment?

What if someone larger copies your strategy? As we saw in an earlier blog, this can be devastating.

Just as chess players study the mind of their opponent to determine the best moves, you must study the minds of the opponents in the marketplace.

2. Consumer Context
You would think that it would go without saying that your strategy should be designed to be desirable to the chosen customer. However, given the extremely high failure rate for new products, there must be a flaw in here somewhere.

Companies say they spend a fortune on consumer research and testing. Supposedly, all of this knowledge gathering is supposed to mitigate much of the risk. Just listen to the consumer via web 2.0 technology and you’ll know exactly what to do. At least that’s what people say.

The problem is that much of that research is done under the wrong context. Consumers are often put in sterile, unfamiliar surroundings and asked questions in an abstract form with a professional researcher watching them. This is not the environment in which the item will be purchased or used. It is like asking me in that giant warehouse if I think that refrigerator is too big. The context is wrong, so the answers you get are likely wrong. The closer your research can mimic the context in which a product is bought or used, the more reliable your results will be.

Sometimes, a new product or strategy will be so radically different that the customers have no reliable reference point in their lives to judge it. Sure, they will answer your question, but because they have no internal context for judging it, the answer will be wrong.

Most radical departures which eventually become huge successes were first viewed very skeptically by the consumer marketplace. Because it was so different from their past behavior, they had trouble imagining it within their future behavior. Computers, microwave ovens and other such items might never have come to the market if the decision was entirely based on initial consumer response. Therefore, if your strategy/product is too far outside the context of the consumer’s past, it may not be worth your time to even do the research (unless the research allows people time to interact with the product over a long period of time in the customer’s own environment—long enough to develop hands-on context).

3. Employee Context
Your employees are the ones that have to implement the strategy. If they cannot envision how the strategy works within the context of what they do every day, they will probably fail to execute the strategy well. When explaining the strategy to the troops, be sure to use words that put it into the work-world context. Tell them how their behavior fits into the larger context of the strategy—what is good behavior, what is bad behavior.

The entire context for the employee—job descriptions, rewards, punishments, promotions, etc.—should be linked to the strategy. That way, right behavior for the employee is right behavior for the strategy. Their context is your context.

SUMMARY
Strategies do not exist in a vacuum. They only succeed if they make sense within the context of the way people will interact with it on a daily basis. Therefore, don’t evaluate them in isolation outside of that context. Keep in mind the way competitors, consumers and employees naturally live their lives—what motivates them, how they react to change, how they derive satisfaction. Anticipate how your strategic change will change that context. Then communicate the strategy with language relevant to that context. As part of your strategic planning, try to plan tactics that keep this context in your favor. Take nothing for granted.

FINAL THOUGHTS
I used to work for a furniture retailer whose store was in a giant warehouse building. However, unlike the warehouse store in my story, this furniture warehouse store was divided with walls into 200 little rooms, fully furnished and accessorized, with lamps, paintings, fake windows with curtains and everything. You felt like you were in a 200 room house rather than a warehouse. It was easy to get a feel for how the furniture would look in your home. They were able to make a warehouse building achieve the right context. You can do the same.

Analogy #209: Draw A Bigger Circle

THE STORY
Once upon a time, there was a politician who wanted to clean up water pollution in the local rivers. He decided that he would have greater success if he started small. Therefore he took a map of a large river in his district and drew a circle over a portion of that river.

“There,” he said. “I will start by making all the river water within this circle pollution-free. Once that is done, I’ll move to another circle until the whole river is clean.”

The politician passed all sorts of laws making it impossible for anyone to do any sort of polluting within the boundaries of that circle. Proud of himself, he later went to check on the quality of the water within that circle. To his dismay, the politician discovered that the water was more polluted than before.

“How can this be?” the politician cried out. “I banned all polluting activity within that circle.”

Upon further investigation, he discovered that:

1) There were factories on the shore of the river just outside his circle that were pouring tons of pollutants in the river.

2) There were tributaries to this river that were bringing polluted water into the river. These tributaries were also outside the area in the drawn circle.

3) There were polluting activities upstream from the circle that flowed into the area inside the circle.

At this point, the politician realized that he could not solve the problems of the water inside his circle without also tackling issues occurring outside the circle.

“I guess I drew my circle too small,” sighed the politician.

THE ANALOGY
The strategic planning process is a tool to help improve the performance of our business. This is similar to the politician’s goal of trying to improve the quality performance of that river.

The politician’s mistake was that he tried to fix the problem by only looking at the area inside the circle. He failed to realize that his little portion of the river is connected to a lot of other areas. These other areas had a significant impact on the quality of that river’s water. By ignoring the outside influences, he was unable to control the internal results.

The same is true in business planning. Our goal may be to improve our firm (or brand or division or product’s) performance. However, not all of the factors which influence that success fall within the direct control of the firm (or brand or product). Outside influences are important.

Therefore, as we develop our strategic planning, it is important that we do not draw our circle of planning too small. The process needs to be inclusive enough to cover not only our own internal team, but the major influencers as well.

THE PRINCIPLE
The principle here is that interconnected solutions work best if all the interconnected pieces are a part of the planning process. So the question we must ask ourselves is this: How big is the circle of people involved in our planning process? Is our circle large enough?

In this blog, we will look at four groups you may want to consider adding to the list.

1) Employees
There are two reasons why it is important to get employee feedback into the planning process. First, employees are your eyes and ears out in the areas where your products/services are produced and sold. They see things that may never make it to the secluded offices at corporate headquarters. They know things you do not know. This knowledge and insight can be very valuable in creating a strategy most appropriate for the “real” world (which may look different from the “perceived” world in the minds of the leaders at the top). Take advantage of that resource.

Second, the employees are the ones who have to do a lot of the work to make the plan a reality. If they are not solidly behind the strategy, they may not be as effective at implementing it. By contrast, if they had a stake in creating a strategy, they are more emotionally attached and motivated to making it come to life.

2) Partners
Today’s business activities are far more interconnected. Larger pieces of the business are outsourced to various outside partners. In addition, financial partners have a desire to become more active and involved in how the business is run. More and more of your success is dependent upon these partners over which you do not have full control.

If you do not invite your partners to the planning table, they may not be able to fulfill their role in making your strategy a reality. For years, Microsoft and Intel worked closely to ensure optimal performance for their own individual business. Microsoft knew that if Intel did not supply sophisticated enough chips, there would not be the ability for computers to run the next generation Microsoft software. Similarly, Intel knew that if Microsoft did not invent more complex software, there would not be demand for their more sophisticated chips.

Since each company’s success was dependent upon the actions of the other firm, there were benefits to working this out together.

The new Boeing Dreamliner airplane is being built with cooperation of an extraordinarily large number of outside partners. Significant delays are occurring due to the difficulties of coordinating the activities of all of these outside partners. The better you can jointly plan these activities, the smoother the cooperation.

3) Suppliers
The same principle applies to suppliers. In this just-in-time world, it is difficult for a supplier to meet the demands of your plans if they are not aware of what the plan is. Even more important, if you let the suppliers in on the planning process up-front, they may have suggestions on how to do it better, based on their unique perspective and superior knowledge in their own field. This point may be even truer with partners.

The Japanese auto industry shows some of the advantages of working more closely with suppliers.

4) Customers
In today’s environment, customers are demanding a greater say in the operations of the businesses they patronize. Digital technology is making it easier to create interaction between customers and companies. For example, Dell has used web 2.0 consumer conversations to help them understand what the customer really wants. Dell’s latest product introductions are a direct result, offering some of the most wanted features.

There are many ways to include the customers in your planning process. The good news is that the more the consumers are involved in the brand, the greater the emotional attachment to the brand. This should improve customer loyalty. In addition, it’s no small benefit if the interactions create a strategy more in tune with the marketplace where the money is made.

This is not to imply that all of these people (employees, partners, suppliers and customers) need to be a part of the entire planning process. Yet, it amazes me how often these players are not a part of any of the planning process.

Who do you invite into your planning circle? What is the list of people invited to sit at the planning table? Is it big enough?

SUMMARY
Individual company/brand/product success depends not only on the internal actions of your business, but also upon the actions of numerous parties on the outside. Your chances of success in having a successful strategy improve if these outsiders are invited to the planning table. First, they bring knowledge and insight from their unique perspective. This knowledge can improve the quality of the plan design. Second, by being a part of the plan, they should be better able to execute their portion of the plan.

FINAL THOUGHTS
Some problems are so large that it may be necessary to even work together with your competitors. For example, it may be beneficial to get the government to change its stance on issues related to your industry. Therefore, industry associations and lobbying groups may also be people to include in your planning circle.