Strategic Planning Analogy #506: Perspective

THE STORY

Let’s assume that a government transportation committee examined whether to add more lanes to an urban highway. 

The conclusion of their study went something like this:

Yes, we concede that during a brief period of the day (rush hour), the highway becomes highly congested and traffic stops moving. However, outside of rush hour, the highway is operating well below capacity and flows very smoothly. Since the highway is well below capacity for approximately 85% of the day, we see no reason to add any lanes. After all, 85% efficiency for a highway is quite acceptable.

The response from a consumer group advocating extra lanes went something like this:

The reason why the highway flows well outside of rush hour is because that is not the time when the highway is most used and most needed. According to our research, 85% of the cars using the highway use it during the congested rush hour period when cars greatly outnumber the current highway capacity. Since the highway is well above capacity when 85% of the drivers are on it, we see a clear justification for adding more lanes to the highway. After all, 85% inefficiency for a highway is quite unacceptable.

So is the current highway 85% efficient or 85% inefficient?

THE ANALOGY

Strategy creation involves making decisions. Facts are a key input for making those decisions. In fact, I had a boss once who on a daily basis would say that he would not make any decisions unless they were “fact-based.”

But how reliable is the “fact-based” approach? In the story above, two groups used facts to reach a conclusion. The transportation committee used facts to “prove” that the highway was 85% efficient. The consumer group used facts to “prove” that the highway was 85% inefficient. These facts lead each group to come to a different conclusion about adding lanes to the highway.

Was one group’s facts right and the other group’s wrong?  No, both groups had equally true facts:

a)     85% of the TIME OF DAY the highway had excess capacity.

b)     85% of the TIME OF DRIVERS using the highway was during times of inadequate capacity.

So what is the right “fact-based” decision? Obviously, we need more than just these facts to reach an acceptable decision. And when it comes to strategy we need more than just facts as well.

THE PRINCIPLE

The principle here has to do with perspective. Facts alone do not automatically lead to the proper conclusion. It is only when we place those facts within the context of the proper perspective that we see what is the right thing to do. Therefore as much care and effort should be given to developing the proper perspective as is given to acquiring the right facts.

Perspective depends on two items: Where one is looking from and what one is looking at. In strategic analysis there are usually multiple places to look from and multiple items to look at. If you miss out on examining some of these options, you may come to the wrong conclusion.

Perspective #1: Where One Is Looking From

From the eyes of the transportation officials looking at the highway from afar, what they saw was smooth operations nearly all day long. From the eyes of the drivers on the highway, nearly all of them saw congestion nearly every moment they were on the highway. Their different perspectives cause them to see the situation very differently.

A similar situation can occur in developing your strategy. From the eyes of the executives inside your organization, you may see a particular strategic option as ideal for your bottom line. But how does that option look from the perspective of other eyes?

Perhaps your decision places added burdens on your suppliers, causing them to no longer want to supply you or only supply you if they get added compensation for those added burdens. That added compensation might wipe out a lot of the original advantages you saw from the internal executive eyes. A similar situation could also occur with your distributors.

Or perhaps your decision triggers an adverse reaction from your customers when they see it. This problem could not be seen with the internal executive eyes, but was quickly apparent to the customers’ eyes.  The unperceived adverse consumer reaction could make that original strategic option no longer as viable as first seen.

Or perhaps when your competition sees the strategy, they perceive it as a bigger threat than you thought and they react far more aggressively than anticipated. This aggressive reaction wipes out your perceived benefit.

Or maybe when those ideas from headquarters get down to the factory floor, they cannot be operationalized as smoothly as one thought. Something gets lost in the implementation on the factory floor which hurts the strategy’s effectiveness.

Therefore, before making a decision, step away from the pile of facts and look at the situation through other sets of eyes. How will the decision be seen by all the other relevant parties (suppliers, distributors, customers, competition, front line employees, the government, etc.)? How will their perspective affect their behavior, and how will that behavior impact your strategy?

You may find a need to modify your strategy in order to get all of the players see the situation in a manner which moves them all in a favorable direction for your business.

In addition, consider how you communicate your decisions, so that you can help influence how others see it. How the decision is communicatted may be just as important as the decision itself when it comes to implementation.

Perspective #2: What One Is Looking At

In the story, everyone was looking at the same issue: what is the proper number of lanes to have on the highway.  It assumes that the only way to address congestion is by looking at lane-count for the highway. Is this a fair assumption?

Perhaps there are other solutions one could look at, like:

a)     Increasing use of public transportation;

b)     Convincing more people to use alternate routes;

c)     Getting businesses to stagger the hours employees work;

d)     Reallocation of traffic direction for the current lanes depending upon time of day (e.g., more inbound lanes in the morning and more outbound lanes in the evening).

e)     Financial incentives for carpooling.

f)      Building a separate road nearby.

How do you know you are making the right decision if you have not fully explored all potential options? All those facts you’ve gathered may only be applicable to examining one particular option. If you look at the problem in a different way, you may find that you need a different set of facts altogether.

Remember, business success usually depends on offering a superior solution to your customers’ problems. There may be many distinctively different ways to solve that problem. Unless you examine many alternatives, you may not offer the right solution.

Perfecting the obsolete is not a path to success. After all, even a mediocre smart phone is far superior to the best Morse code telegraph solution, no matter how much time you spend trying to perfect it.

So don’t frame your strategic discussion too narrowly. Before deciding on the best way to do something, first make sure it is something worth doing. First frame the discussion around finding the best solution rather than just finding ways to improve the status quo.

SUMMARY

Facts are useful, but facts alone are incomplete. Facts are only useful if seen from the proper perspectives. Therefore, before deciding a course of action, improve your perspective by:

a)     Looking at the problem through all the eyes of the various people who have an influence on the successfulness of the strategy (suppliers, distributors, customers, competition, front line employees, the government, etc.).

b)     Looking at multiple ways to solve the problem. Creative, superior solutions may look nothing like the status quo.

FINAL THOUGHTS

Great strategic solutions may take you into uncharted territory—doing things in a way they have never been done before. There won’t be a big pile of facts to help you in uncharted territory. And if you wait to act until you can get a big pile of facts, someone else will have already captured that strategic space. Perspective helps fill in the holes when facts are hard to come by.

Strategic Planning Analogy #493: The Blame Game

THE STORY

Recently, I was at a technology conference. One of the presenters wanted to demonstrate their technology on a large screen. Unfortunately, they could not get the technology up on the screen to demonstrate it.

At first, the presenters were panicking. Then they came to the conclusion that the problem was not with their technology, but with the technology used to get it up on the screen. So they told everyone that their inability to do the demonstration was the fault of someone else’s technology. Then they merrily continued their presentation without showing us the demonstration of their product.

My first reaction was “why are these presenters so happy?” Their ultimate goal was to try to sell me on the merits of their product. Yet, that attempt was seriously destroyed by the inability to demonstrate the product to me. 

Apparently, they had lost sight of that bigger picture. They were fixated on the smaller picture: As long as they or their product was not to blame, then the presenters were okay. And if they were okay, then everything was okay.

But everything was not okay. The audience was denied the most important part of the presentation and the technology company was denied the opportunity to fully sell their product.

THE ANALOGY

Very few companies are fully self-sufficient. Instead, companies rely on many other partners to get their work done.  It could be depending on suppliers for parts. It could be depending on distributors for getting the product sold. And in today’s economy, it could also be outsourcing almost everything in-between, from payroll to call centers to manufacturing to key pieces of design and technology.

Look at how much of the Apple ecosystem is outsourced. Apple does not manufacture the hardware. Apple does not create most of the apps.  Apple does not create the music. Apple does not operate the cell towers which allow everything on the iPhone to actually work. The portion of the ecosystem actually produced by employees of Apple is quite small.

Everything from all the partners needs to work in order to accomplish the strategy. If one of the partners really messes up on their part of the grand design then the whole grand design is at risk.  Just ask the folks at Boeing about how their grand design for the Dreamliner is faring as a result of the problems with an outsourced battery.  All the planes are grounded.

In the story, the presenters were happy because they could blame their problems on someone else.  Since they did not feel “at fault” then they felt satisfied.  However, I don’t think that the audience or the technology company was happy.  The purpose of the presentation had failed.

What if the executives at Boeing had been like those presenters and said, “Nothing Boeing did in-house on the Dreamliner is at fault.  Therefore, we should all be happy and just move on.” Nobody would have accepted that behavior. Boeing is being held accountable and the planes were not allowed to fly.

You should not accept that behavior, either.  In the big picture, if the grand design doesn’t work, then you have failed. And blaming a strategic partner doesn’t make the failure go away.

 

THE PRINCIPLE

The principle here is that just because you can blame someone else for a problem does not make the problem go away. Your customers really don’t care all that much which of your strategic partners is at fault. All they know is that something is wrong. They are angry and they want YOU to fix the problem.

There is no room for smugness is the fact that none of your own people were directly at fault.  Everyone is in this thing together. As the old saying goes, a chain is only as strong as its weakest link.  It doesn’t matter if your link is strong when the link of your partner is weak. The whole chain will fail.

Since modern business models seem to be adding ever more outside links to the strategic chain, the potential for outsiders to mess up the chain for everyone increases. And to compound the situation, consumers are being ever more demanding about the social consciousness of the companies they do business with. So even if your outside partner produces its link in the chain well, it could still create a failure if the WAY they produce their link violates the societal and ethical demands of your customers.

And thirdly, the social network exposes more disappointments, more quickly, to more people than ever before. This make mistakes harder to hide and more damaging when discovered.

As a result, the potential for strategic disaster in this area is increasing exponentially. Partnership management can no longer be tangential to strategy. It needs to be integral to strategy.

So what can one do to minimize partner problems? Here are some suggestions.

1. Choose Your Partners Well

The best way to fix a problem is usually by preventing the problem from occurring in the first place.  And one way to prevent partner problems is by choosing the right partner. And what makes a partner “right” has to be more than just “can they get the job done cheaply.” 

Remember the thoughts of astronaut Alan Shepard as he was flying through space: “It's a very sobering feeling to be up in space and realize that one's safety factor was determined by the lowest bidder on a government contract.”  Cost is important, but it isn’t the whole story.  Here are just a few of the other issues to consider:

a)      Will their practices upset the ethical and societal expectations of your customers?

b)      Are their practices consistent with the strategic intent of your business model?

c)      Can they scale at the rate needed for the grand design?

d)     If they are to achieve their strategic intent, will it make it difficult for them to provide what you are looking for?

e)      Will they protect company secrets?

f)       Which of you has more power/clout in the negotiation process?

g)      Will they have concerns or issues about being tied in with your other partners?

h)      How will working with this partner impact your competition?

When you tie up with a partner, you get more than just their output (if they are the provider) or their money (if they are the client). You get the personality, practices and principles of the partner. Is that something you or your customers want you to be associated with?

2. Set Up the Partnership With The Grand Design In Mind

If you want a partnership to work well, it needs to be structured in a way which increases the likelihood of that occurring.  Set up expectations in advance and get a sign-off.  Create incentives (positive and negative) which encourage strategic compliance. Think about the big picture (the grand design) when creating the small picture (individual partner arrangement) so that compliance with the small supports improving the big.

3. Monitor Your Partners

Don’t assume everything is fine once the deal is signed.  If you are going to be held responsible in the customer’s eyes for something the partner does, then make sure the partner does the right thing.  Have the right to monitor progress and principles.  Have systems in place to detect problems early, so they can be fixed with the minimal amount of down-side implications. Test output to see if it meets requirements.

In many ways, treat the partner as if they were your own employees that you were responsible for. After all, if they disappoint, they can hurt your reputation and business as much as if they were your own employees.  Don’t blindly assume compliance with a “hands off” approach. 

This is not to say you don’t trust your partner.  Rather, to quote Ronald Reagan, “Trust, but verify.”

4. Put Solving Ahead of Blaming

Finally, when problems do occur, put the main focus on finding the solution rather than finding the blame.  Yes, a problem cannot be solved until they source of the problem is discovered. And yes, the process of finding the source of the problem will touch a little on finding who and what is to blame.  So blame cannot be ignored. 

But the main focus cannot be put on assigning blame.  The main focus initially needs to be in solving the problem.  Full assessment of blame can come later, once the problem is solved.  The problem with too much focus initially on blame is that:

1) Those that work hard to “prove” they have no blame will be more reluctant to pitch in and help solve the problem.  Because they feel no obligation to the problem, they feel no obligation to the solution.  Unfortunately, the problem hurts everyone in the chain, regardless of blame, so everyone should be incented to help solve it. 

2) In addition, a lot of the problems do not clearly fall in one camp or another.  For example, problems can occur at the point when one partner hands off to another. Interpretations and assumptions can vary among partners.  So it is often not immediately clear where the blame lies.  Time spent sorting all of that out at the beginning is time spent not solving the problem.  And the longer the problem goes unfixed, the worse it can become.  How time was wasted, and how much oil leaked out into the Gulf of Mexico while BP argued with its partners over who was to blame for their massive oil leak? 

3) The blame game tends to increase the friction among partners rather than the goodwill needed to create stronger, more effective partnerships.  When trust is broken, the entire chain suffers.

Yes, I know people worry about the eventual lawsuits and that is why they are so concerned about blame. But if potential lawsuits are your primary worry, then get some of the ground rules written into the original partnership agreement.  That way, the general resolution is already in place before the problem happens.  And it gives you a chance to get a resolution which works best for everyone in the chain at getting problems resolved quickly.

SUMMARY

In today’s economy, ever more of a company’s fate is in the hands of its partners, including its customers.  Therefore, the way those partnerships are formed and are operated increasingly impacts our strategic success.  And just because my firm is not directly at fault when problems occur does not mean that I do not suffer from the problem.  Therefore our strategies need to take these partnerships seriously and look for ways to a) prevent problems in the first place; and b) when problems occur, focus more on solving the problem than in assessing blame.

FINAL THOUGHTS

There’s an old saying that “Success has many fathers, but a failure is an orphan.”  This means that if you focus on finding who is the father of the problem, you may end up finding no one.  It is far more productive to focus more on just fixing the problem.

Strategic Planning Analogy #432: Shifting to Stay in Place

THE STORY
The university where I got my MBA used to send me annual updates of what the school was up to. My favorite statistic was the one showing which jobs the current graduating classes were taking. Over the decades, the top jobs kept shifting.

In the early 1980s, the most popular jobs taken by MBA graduates were in working for large industrial corporations. Then, starting in the mid 1980s, the most popular destination was in working as management consultants. During the 1990s, the most frequent career path moved to dotcom entrepreneurism. Then, after the dotcom market blew up, the most popular career path was investment banking. Now that investment banking has seen a bump, it seems that the shift is moving to international.

I learned two things from watching these statistics over the years. First, I learned the constant—no matter which year you looked at, the students flocked to where the money was. Second, I learned the non-constant—where the money was shifted over time.

So the irony is that if you want to stay in the same place (where the money is), you have to keep moving (since the money keeps moving).

THE ANALOGY
This idea does not just apply to careers. It also applies to strategic positioning. Successful strategic positions are located where they optimally satisfy some high consumer demand. This high demand could be for something like “status” or “convenience” or “self-worth” or “freedom” or some similar basic need or emotion. These, like the MBA’s desire for a high-paying job, are a constant. They never go out of fashion. Just as you can count on most MBA graduates to desire a high-paying job—decade after decade—you can count on a large number of customers seeking one of those basic needs and emotions mentioned earlier.

However, the primary means by which these basic needs and emotions are satisfied does change over time. For example, what constitutes status changes frequently like fashions. In rapidly-developing third world countries, status in the past might have been best indicated by how many goats you had. Now, it may be the type of mobile phone you have.

So, just as the type of job which pays the most for an MBA shifts over time, the best way to achieve status or freedom shifts over time.

Therefore, strategists are stuck with the same dilemma as the MBA graduate. If they want to keep their positioning in the same place (in the middle of satisfying a core need), they have to keep moving the position (since the way people satisfy core needs keep changing).

THE PRINCIPLE
The principle here has to do with positioning. The dilemma is determining what to do when your formerly solid position begins to move out of step with a shift in how consumers want to satisfy that position. Do you shift your offering to retain hold of the former position or do you reposition the offering to something more appropriate after the shift?

At first, one might think that the easiest option is to try to make minor adjustments to your offering in order to keep the old position. Unfortunately, some of the shifts are so dramatic, that minor modifications are not enough to hold the position. Instead you are forced to either completely change the offering or completely change the position.

Example #1: Clothes Vs. Gadgets
Let’s look at three examples. First, it used to be that one of the key ways for teens to establish status was with their clothes and their hair. Wearing the right fashion labels in the most current styles was the primary way to establish that teen status.

But then there was a shift. The primary indicator of status shifted to digital gadgets. The type and brand of smart phone or digital pad became a stronger driver than the brand of jeans. Just watch the status buzz when a teen has a newer, better gadget than their peers.

So what do you do if you sell teen clothing and your old position was to own the best solution for teen status? You cannot make minor modifications to a pair of jeans to turn it into the hottest smart phone. Many teen-based apparel manufacturers and retailers have been suffering because a lot of the teen status money which used to flow their way now goes to Apple brand stores. For the price of a wardrobe of fancy jeans, you can get a lot of cool gadgets with more status power.

Some of the more popular young fashion retailers today (like H&M and Forever 21) are shifting the positioning of teen clothes from high-priced status to value-priced fun (save money so you have more to spend on gadgets). This may be the easier move than trying to go head-to-head against cool gadgets (which is now a direct competitor for status money).

Example #2: Cars Vs. Facebook
Second, let’s look at young adults and cars. An article in the January 16, 2012 issue of the Detroit News talked about how a shift was hurting cars sales with youth. According to the article, cars used to be a key way for teens and young adults to satisfy their need for freedom, a way to get away from parents to be with friends. It fit that position well. However, recent research has shown that more than half of this consumer group now would actually rather meet up with their friends in cyberspace than face to face. The car is no longer needed to obtain the freedom they want.

In the article, John McFaland, senior manager for global marketing at Chevrolet said, "There's simply new and better and, frankly, more efficient alternatives to communication and getting that freedom that [young adults] used to rely on the auto industry to provide."

The car was losing out at being the best alternative for freedom to the internet. You cannot make minor modifications to a car and make it a superior Facebook. The auto manufacturers needed to consider taking a new position.

The article says that GM decided to shift its young adult position from being the powerful symbol of freedom to being the more practical way enable you to do things with friends. The new emphasis is on practicality and fuel economy, not flash or power.

Example #3: Malls Vs. Words with Friends
There was a time (especially back in the 1980s), when people loved to spend hours and hours every week in the shopping mall. Why? It was the best solution at the time for social entertainment. You could hang out with friends at the mall and be entertained by window shopping, eating in the food court, playing games in the arcade, and people watching.

Now, there are far more efficient ways to have social entertainment. Between You Tube, Netflix, home entertainment centers, 300 channels of cable TV, Facebook, and apps like Angry Bird, Farmville, or Words with Friends, you can have a lot better social entertainment by staying at home. The old mall arcade is inferior to the X-box in the living room.

Malls are left with only the primary function of being a place to buy something. And even there they have lots of competition from stay-at-home shopping options like Amazon. That is why the mall industry is in so much trouble today. Can malls take back the position of being the best social entertainment site from today’s digital home? I doubt it. They need to look elsewhere for a position of superiority.

So What Should Strategists Do?
Given this dilemma, what should strategists do? First they need to look ahead to see if shifts are starting to make your solution to a problem inferior. Is a wholly different offering starting to replace your offering as the best solution? Are you the clothes losing out to gadgets, or the cars losing out to Facebook, or the malls losing out to smart phone apps?

If that is beginning to occur, then one needs to make a choice. Do you:

a) Change your offering to recapture the solution? or
b) Shift your offering to meet a different solution? or
c) Sell out quickly, before the shift has made you obsolete.

SUMMARY
Although basic, core needs and desires never go away, the way people satisfy them changes over time (like getting freedom via the internet instead of via a car). As a result, your offering, which may be best positioned to satisfy that need now, will eventually fall out of favor. Usually the replacement is not a minor variation of the past, but a radically different offering. Thus, it may be difficult to change enough to recapture your position. The better alternative may be to either find a new position/solution or to sell out before the shift fully takes place.

FINAL THOUGHTS
Movies often do a great job of capturing the culture of the time. However, if you look at that movie decades later, it can seem so out of touch with today’s culture that it is laughable. I remember laughing at an old movie where a teen got status and was the envy of the neighborhood because he was one of the first to have the old Atari game and could play Pac Man. Now, such a teen would be laughed at as out of date rather than be seen as having superior status. If you don’t want your business to be laughed at as out-of-date, then keep modifying your offering to be more appropriate for the times.

Strategic Planning Analogy #394: Leaky Roof

THE STORY
As I look out my window at today’s rain, I am reminded of a house I used to live in. It had a leaky roof. Whenever it rained, there would be water dripping from the ceiling in the house near the front door.

While it was raining, there was not much I could do about fixing the leaky roof. I would tell myself that after the rain stopped and everything was dry, I would go and see about fixing the leak. Of course, by then I had forgotten about the leak. I would not be reminded of the leak again until the next time it rained (when once again it was too wet to fix it).

This went on for awhile until the leak caused a slight water stain on the ceiling. Now that I could see everyday, so it reminded me to finally get the leak fixed when everything was dry.

THE ANALOGY
Businesses can be like that house. They may be based on business models which don’t work as well as they used to and money (or market share) is leaking out. If not taken care of, eventually that small leak will lead to a larger one and the entire business model will be totally destroyed.

At first, the leaks in the business model may only show up during crisis situations, when the business model is being stretched to its limits. During the crisis, you are so busy just trying to survive that you don’t have time to experiment with tweaking the business model. You tell yourself that you’ll re-evaluate the business model once things settle down.

Unfortunately, when better times return, the business model (though still broken) seems to be functioning reasonably well. Other, more immediate issues grab your attention and you forget about that defect in your business model. It isn’t until the next crisis comes that you are reminded again of the need to repair the business model (and again are too busy to address it).

And the longer you wait to repair the business model, the more broken the business model becomes. Eventually tweaking may no longer be enough. You may need to abandon the strategy altogether.

THE PRINCIPLE
The principle here is that strategies are best modified when times are good. However, during the good times, there is little pressure to motivate us to want to change our strategy. After all, why try to fix something when it does not appear to be broken?

The problem is that while the business model may not “appear” to be broken during the good times, a serious flaw may still exist. Like that leaky roof I had, you may only see the leak when it rains, but that doesn’t mean that the structural defect goes away when the weather is dry. The cause of the leak still exists—even when the weather is dry. And the structural defect may be getting worse during the dry times due to the shifting of the house as it settles over time. Then, when the next rains come the leak is a lot worse than before. The whole house might collapse.

Why Modify Strategies When Times Are Good
There are several reasons why strategies are best modified during the good times:

1) This is when you are most loved and trusted by your customers. This love and trust will make them more accepting of the change. By contrast, if you wait until your customers are already upset with you, then they will be more suspicious of your motives. And if they were so upset that they had already switched to a competitor, they may not notice or care that you improved things.

2) This is when you have the most resources available to address the problem. During the good times, there tends to be a greater luxury of money, time and manpower. You can apply these resources to analyzing your strategy, developing alternatives, and implementing change. Conversely, if you wait until times turn bad, you will be under extreme pressure to act quickly with more limited resources. The analysis may not be as thorough and you may not have enough resources to adequately implement the change.

3) This is when you have better strategic options. Just as it is easier to fix a leaky roof when the leak is small, it is easier to fix a broken strategy when the break is small. All you may need to do is create a one-year strategic initiative to shore up that small weakness. Then you are back on track to move forward in strength. When in a position of strength, there can be many strategic options for leveraging that strength. You can leverage that strength into new markets, new customer segments, new products, and so on. If the problem deteriorates until you fall into a position of weakness, there is little one can do. “Survival” is not much of a strategic alternative, but it may be all that’s left at that point.

4) This is when clearer heads prevail. During a time of crisis, the pressure can be quite intense. Panic can set it. Rash moves may be taken. By contrast, during the good times one can take the time to thoroughly think through all the alternatives. Thoughtful discussions can occur. Differing points of view can be tolerated and addressed. Unintended consequences can be evaluated. A better outcome can occur, one which encompasses a broader perspective and longer time frame.

5) This is when you have time to create meaningful change. Meaningful, game-changing change takes time. It takes time for R&D to pay off. It takes time to create a new infrastructure, a wholly different approach to business. If things are already broken, then one loses that luxury of time. Rather than reinventing the rules of the industry in your favor, all you have time for is incremental improvement. This is like quickly putting a small patch on the leaky roof during the storm rather than really repairing it for good when times are dry. That patch is only a temporary fix at best. It doesn’t make the problem go away. It only delays the inevitable.

So How Do We Get Companies Motivated to Change While Times Are Good?
If good times are the best times for strategic change, how can we convince others to change when times are good? How do we get beyond the attitude of “Don’t fix what isn’t broken”?

One way is to convince them that things really are broken, even if you cannot see it now. You need something like that water stain on my ceiling, which reminded me that even when nothing was leaking, I still had a roof problem. One way is by doing tracking studies which watch leading indicators.

For example, I worked with a retailer whose sales trend looked relatively stable. However, my tracking studies showed that for more than three years, the retailer had been losing store traffic and that the remaining customers were buying fewer items per visit. These are leading indicators of bad times. The only reason why the sales trend didn’t look worse right now was because the company had been hiding the unit declines by raising prices. A shrinking customer base and rising prices is not typically a recipe for good times ahead. Every chance I had, I would show off these charts to any executive who would listen. I wanted them to know that the business model was broken and we needed to fix it NOW, before more customers defected. It was like that stain on my ceiling, a constant reminder that the business model isn’t as strong as you think. There are severe, underlying issues which must be addressed right away.

The second approach is to get the company excited about a better future. Even if the company appears comfortable with the status quo, you may be able to excite them to change if you can paint a picture of an even better future when one changes. I used this approach at another retailer to convince them that they could do much better than the status quo if they changed their strategy. The executives started salivating when they saw how much greater things could be, so they changed the company strategy in order to reach that greater vision.

SUMMARY
Just because right now things on the surface may appear okay does not automatically mean that everything is fine. The business model may still be seriously broken. You just can’t see the beak now because it is covered up by good times. And once the good times go away, it may be too late to fix what is broken. Therefore, the best time to adjust a strategy is when the times are still good. To get companies motivated to change during the good times, it helps to either: a) constantly point out the underlying breaks beneath the surface and/or b) show an even brighter future if change is enacted now.

FINAL THOUGHTS
Many times, I have seen companies enter bad times and then watch the executives come up with all kinds of excuses as for why they couldn’t turn the company around. And some of the excuses have merit. After all, if you wait until the house is almost completely broken, it is true that it may be almost impossible to repair. However, smart executives don’t wait until the house is completely broken before starting home improvements. They successfully navigate a path to a brighter future because they start the journey while still in a position of strength.

Solutions Are Your Job

CHRISTENSEN IS WRITING A NEW BOOK
It seems that Clayton Christensen is in the process of writing a new book. You may recall that Christensen is a professor at the Harvard Business School and the author of popular business books like “The Innovator’s Dilemma.”

His new book will be on the topic of “jobs-to-be-done” marketing. You can read about it at the Harvard Business School site.

In summary, Christensen’s point is this.

1) Most marketers currently target their offerings based on either customer segmentation or product segmentation.

2) This methodology is flawed because it looks at people or products, rather than particular purchase decisions.

3) The reality is that people purchase something because they want it to do a job for them. When it comes to segmentation, the particular job desired from the product is more important than the person buying it or the product category purchased from.

4) Therefore, marketers should segment based on jobs to be done.

GREAT CONCEPT
I wholeheartedly agree that basic premise. People spend money because they want something in return. And in most cases, what they want is not the stuff they buy, but what the stuff will do for them.

For example, people don’t buy Slimfast milkshakes because they are the best milkshake. That isn’t what they want. They don’t hoard them in their refrigerator because they like collecting cans of Slimfast. No. What they want is weight loss. That is the job they want the Slimfast milkshake to perform.

If the Slimfast milkshake is not getting the job done for them (that is, not causing them to lose weight), they don’t switch to a McDonald’s milkshake. No, it’s not about milkshakes. They switch to a different item which claims to do the job of weight loss better. It could be a diet pill, joining an exercise club, surgery, hypnosis, or any number of other things which have nothing to do with milkshakes.

It’s all about the job the person wants to get accomplished. Sometimes the job is rather esoteric, like wanting to improve the prestige of their image with their peer group. For this, they may consider luxury cars, fancy clothes, the latest in technology gadgets, going on an exotic vacation, or many other things.

The point is that if you don’t know what job someone wants to accomplish with their spending money, then it is very difficult to convince them to spend that money on you. Therefore, when building a strategic position, frame it around a job for which you can own superiority. Once you own that job, work to strengthen that ownership, even if it means abandoning old products for something entirely new.

For example, Bausch & Lomb wants to own the better eyesight solution. That’s the job they’ve chosen—to improve your vision. Originally, that meant manufacturing lenses. However, now there now many other ways to improve eyesight, so to fulfill the mission of their job, they have diversified their product mix to include eye surgery products, eyesight related medicines and vitamins and other such products. Although the product mix has diversified, the focus on the job to be done is still the same. They’re just finding better ways to do that job.

If you stick with an old product too long (like Kodak did with analog film), then you will be made obsolete when someone else finds a way to do the job of personal imaging better by using something which does the job better (digital imaging). Focus on winning the job rather than perfecting the obsolete.

NOT A NEW CONCEPT
Although this is a great concept, it is not a new concept. Marketers (and strategists) have been using it for decades. I’ve used the concept since back in the 1980s. The only difference is that instead of calling it “jobs-to-be-done”, I called it “solution selling.”

Back in the 1990s I wrote a book on strategy and devoted an entire chapter to the topic. You can read it here. Or, you can check out these prior blogs I have written on this topic (here, here, and here).

However, it seems that Christensen has found this to be a relatively novel new idea. Perhaps, that is because his specialty is Operations Management, not Marketing. It’s as if he just discovered that marketing can have value.

SUMMARY
Well, regardless of whether this is new news or old news, it is valuable news. Frame your strategy around superior solutions to consumer problems. Find a place where you can perform that job better than anyone else. That, my friends, is the job-to-be-done for strategists.

Strategic Planning Analogy #339: Simple Solutions

THE STORY
Back in the 1960s, the United States and the USSR were in a race for dominance in outer space. Each country wanted to prove its superiority by achieving more in space than the other, like being the first to land a man on the moon.

There were a number of difficult challenges in getting a man to the moon and back. For example, in outer space there is no gravity, which makes it impossible to use a standard ball point pen. Things need to be written down while in outer space, so what do you do to solve this problem?

Well, the United States took a number of years and spent millions upon millions of taxpayer dollars to invent a pen that does not require gravity. It was quite an achievement. By contrast, the Russians found a different way to solve the problem. They decided to use a pencil (which costs practically nothing).

THE ANALOGY
Government waste is nothing new. That multi-million dollar pen is not the first time governments have taken the expensive route when a much cheaper answer is available…and I’m sure it won’t be the last.

This is not just a problem with governments, however. Businesses also face all kinds of difficult problems. Just as in the case of the multi-million dollar pen verses a cheap pencil, there can be a tendency for business people to believe that complicated problems require complicated solutions. Well, many times you can solve a complex problem with a simple and inexpensive solution.

Before embarking on a long and expensive strategic journey to design a complex solution (like a pen that works in zero gravity), take a moment to consider whether there is a quick and simple solution (like a pencil). After all, just like the space race, businesses are in the race to win the hearts and minds of their customers. And in the business race, being slower to market with a more expensive alternative can destroy a company’s chances for success.

THE PRINCIPLE
The principle here is that just because a problem may appear complex, that does not mean that the solution needs to be equally complex. Many times, there is a simple answer. In addition to the story of the multi-million dollar pen versus the pencil, here are some other examples of that principle in action.

Empty Boxes
There was a cosmetics company in Japan which had a problem. Occasionally, the assembly line where their soap was inserted into boxes failed. Customers could purchase a box of their soap at the store and then be disappointed when they got home and found that their box was empty. The soap never got inserted into the box on the assembly line.

The Japanese cosmetic company put its best engineers on the case to solve this problem. Their solution? They devised an X-ray machine to check every box going down the assembly line. The X-ray machine would take a picture of each box so that two technicians could see into the inside of the boxes to detect whether or not the box had soap in it. This was a complex and expensive solution which slowed down the assembly line, created a need for expensive equipment and the hiring of more people, and could create potential radiation problems in the factory.

By contrast, one of the rank and file people on the assembly line found a simple solution. He bought a strong industrial electric fan and pointed it at the assembly line. The wind from the fan blew against each box as it passed by the fan. If a box was empty, the fan blew it off the assembly line, leaving only the boxes with soap in them. This solution was cheap and did not slow down the assembly line.

Big Trucks
And you’ve probably at some time heard the story of the large truck which got stuck under a bridge. Apparently, the truck was taller (or the bridge lower) than expected, so there was not enough clearance. Engineers were looking at all sorts of complex solutions for getting the truck unstuck—including taking apart parts of the bridge or cutting off parts of the truck.

A little boy walked by, looked at the situation, and suggested that all they need to do is let some of the air out of the truck’s tires. This would lower the truck enough so that it could be simply driven out from under the bridge.

Rough Road
This past weekend I was on a long road trip. I was starting to get tired and was worried about getting so tired that I would accidentally swerve off the road into a ditch. I started thinking of ways to prevent this problem. My first thought would be to put laser beams along the side of the road. If a car swerved off the road, it would break the laser beam. This would then send a signal to a sensor that would activate a series of lights and horns to alert the driver that they had crossed over the edge of the road.

Of course, then I remembered that this problem had already been solved. The road crews had cut out narrow little strips of concrete from the edge of the road. When a car crosses over the edge, the tires will go over these places where the narrow strips were missing. This would shake the car a little and make a loud rumbling noise that would get the driver’s attention. It was a cheap and simple way to solve the problem…much better than my idea.

So what can we learn from these stories to help up avoid making poor choices in solving problems?

1. Look at how You Define the Problem
Before you start to solve a problem, make sure you have properly defined the problem you are trying to solve. With the space story, the US had defined the improperly defined the problem as “How do I design a pen to work in zero gravity.” The USSR had more properly defined the problem as “How can I take notes in outer space.” By pre-supposing that the answer required a better pen, the US ignored the possibility of a simple, non-pen solution.

In the story of the truck, the engineers were trying to solve the expensive problem of “how to untangle a tall truck from a low bridge” rather than using the boy’s approach of “how to eliminate the tangle altogether by changing the relative height of the truck to the bridge.” The engineer’s question caused them to look up for a solution, while the boy’s question caused him to look down (at the tires) for the solution.

In other words, how you frame the question will determine where you focus to find the solution. Poorly worded questions tend to look at process improvement (better pen) or cleaning up a mess (truck stuck on bridge). These questions almost by default tend to create complex and expensive solutions.

By focusing on improving a process, you are eliminating the option of seeking out different options, like eliminating a process or substituting a radically different process. By focusing on fixing a mess, you are missing out on options which eliminate the mess in the first place.

Better worded questions look at outcomes (ability to take notes) and solutions (truck no longer under bridge) rather than the immediate problem at hand (bad pen, stuck truck). Take time to phase your question properly, so that you are working on discovering solutions rather than fixing problems and processes.

2. Look at what You are Trying to Accomplish
In the case of the Japanese soap box engineers and my approach to solving drowsy driving, we both made a fatal mistake. We assumed that prior to solving the problem, there needed to be intermediary steps. We both added steps around detection and segregation.

The Japanese engineers wanted an expensive process to first detect which boxes needed special treatment (X-rays). Then they would segregate those empty boxes and treat them differently. My road process wanted expensive lasers to detect which drivers were driving poorly before segregating them for special treatments of noise and lights.

The simple solutions avoided the prior steps of detection and segregation. For the soap boxes and the fan, nobody needed to pre-determine which boxes had no soap in them and the boxes did not have to be separated for different treatment. Instead, every box was treated the same all the time. With the fan, empty boxes disappeared all on their own, without prior detection.

With the cut grooves in the road, there was no need for an expensive laser detection system. And you didn’t need a process to turn off and on warning sounds based on that detection. All cars were treated the same, and if a car was veering off the road, the system took care of itself.

In other words, before tackling a problem, make sure to examine what you are trying to accomplish. Sometimes we try to accomplish a series of steps which require events like gathering knowledge, detecting differences, and treating things differently based on these differences. Perhaps you do not need to accomplish all of those intermediate steps in order to solve the original problem. Again, one needs to focus on the solution rather than the process. By focusing on all the steps in a process, you may fail to see the benefit from eliminating steps or using a different process with simpler steps.

3. Look at who you ask to Solve the Problem
As we pointed out in an earlier blog, “to a hammer every problem looks like a nail.” In other words, we tend to create solutions based on our backgrounds and our strengths. An engineer will tend to look for solutions which require expensive engineering, because that is what they do for a living. In the case of the pen, the X-ray and the dismantling of a bridge, engineers were looking for engineering solutions. The idea for the fan came not from an engineer, but a worker on the line. The idea to let air out of the tires came from a little boy.

When you are looking for solutions, who do you have on the solution team? Consider having a diverse group, including people on the front line, customers, new employees, and people from diverse backgrounds and disciplines. It’s hard to find out-of-the box solutions if you keep turning to people in the same box to solve them. Make sure your team includes people whose occupation is not tied to expertise in creating complex solutions.

SUMMARY
Just because a problem is large does not mean that the solution automatically needs to be large, complex, expensive, and take a lot of time. Often, there can be a simple solution. To find the simple solution, a) frame questions around solutions rather than problems; b) don’t get hung up on solving a number of unnecessary intermediate steps; and c) have a diverse team working on the solution.

FINAL THOUGHTS
Sometimes problems do require complex solutions. To determine whether a more complex solution is required, ask your self these questions:

1. Am I just treating a symptom or the root cause of the problem? If you are just treating a symptom, then you need to broaden the solution.

2. Is this problem intertwined with lots of other issues in a system where actions in one area can ripple out into dozens of unintended consequences in other areas? If so, then you probably need a broader systemic approach.

Strategic Planning Analogy #290: Strategy is A Location

THE STORY
What if we thought of our mental condition as being like a location on a map? Then, if someone said “I am in a state of confusion,” we could just tell them to “Get in a car and drive to a different state, like the state of Contentment.” The United Mental States of America could have all sorts of interesting states. I think we already have a lot of politicians from the state of Denial.

Just think of how much money you could make selling maps showing the best path for getting from a bad mental state (like the state of Despair) to more desirable locations (like the state of Bliss). Wait a minute! Isn’t that basically what travel agencies do? Isn’t that what all those psychological self-help books try to do? Is Dr. Phil nothing more than just a seller of maps?

Continuing with this idea, if someone said “I think I am going crazy,” you could reply “How can you be going to a place where you already live? You’ve been in the land of Crazy for years.”

THE ANALOGY
Strategic planning tends to deal with a lot of abstract concepts. This is particularly true when it comes to strategic positioning. To make these abstractions easier to understand and work with, it can be useful to follow the example in the story.

In the story, the idea was to take abstract mental conditions and treat them as physical locations on a map. In the same way, I think there are benefits to looking at the abstract concepts of strategic planning as if they were positions on a map.

THE PRINCIPLE
The principle here is that strategies may be easier to understand and create if we think of them as being a location. In fact, there are three different ways to apply this principle.

1. Strategic Success Depends Upon Locating Yourself Properly on the Consumer’s Mind Map
Consumers act based on how they think. Hence, if you desire a certain consumer behavior, one needs to first get the consumer to think in a particular way about that behavior. In other words, you need to locate your product or brand in a specific location in the consumer’s mind if you want your strategy to succeed.

Where is that ideal location in the brain? It will vary based upon your strategy, but all successful locations will address the three S’s. The first S stands for “slot.” Different parts of the brain are used, depending upon the type of problem the brain is trying to solve. One of your first strategic tasks is to decide what problem your product is trying to solve.

Perhaps you are trying to solve the problem of “what’s for dinner?” Or maybe you are trying to solve the problem of preparing the customer for retirement. Then again, the problem could be trying to lower the cost to run your client’s factory.

There are all sorts of problems to choose from. As part of your strategy, you need to choose the problem you are trying to solve. And I don’t mean an internal problem like “How can I make my company more profitable?” The problem is to be a problem held by your potential customer. This is an important decision, since if you cannot help a consumer with a problem, then you have no relevancy to that customer.

Once you have chosen the problem, you need to make sure that your brand/product is “slotted” into the location of the consumer’s brain concerned with that problem. In other words, whenever that problem turns up for that consumer, you want your name to fire up in that part of the brain. This is done by communicating in a manner which continually associates your brand with that problem.

For example, Crest has spent decades associating its toothpaste brand with the problem of cavity prevention. It is now solidly slotted in the brain, so that when the problem of cavities comes up, the brain immediately thinks of Crest.

The second S is “solution.” Your strategy needs to provide a solution to that problem. What is it about your product/brand that makes it capable of solving that problem? Again, there are often many ways to solve a problem. You have to choose one.

This solution choice includes both the process and the performance. By process, I mean the general approach to solving the problem. For example, if the problem is weight loss, the choice of process could include exercise, diet, surgery, pharmaceuticals, hypnosis, and many others. By performance, I mean the type of attribute emphasized in the process you choose, such as being fastest or cheapest or most comprehensive, etc.

The third S is for “superiority.” It is not good enough to just be located in the brain where the problem is being addressed. You need to be seen as the superior solution to the problem. In Al Reis and Jack Trout’s excellent book Positioning, they refer to this as being a rank ordering, like rungs on a ladder. You want your brand to own the top rung (the best) in the mind of the consumer. So, another role of strategy is to locate your brand on the top rung on the problem ladder. You have to have a convincing argument (both rationally and emotionally) for why you should own that location.

Whenever I work with someone on developing a strategy, I usually end up at some point asking the question “Why should a customer prefer your product over all the other options?” If you have difficulty answering that question, the consumer probably has even greater difficulty coming up with an answer. And if you are not perceived as being the best alternative, they will choose someone else.

For example, for the problem of dependable transportation, Toyota has firmly cemented itself to the top rung location. It is perceived as best at automotive dependability. Through years of effort, Toyota has created a strategy which gives them ownership of that location in the brain of most consumers. They are slotted as the superior solution.

To summarize, your strategy needs to develop a superior means of solving a relevant problem and then place that information on the top rung in the relevant problem-solving location in the consumer’s brain.

2. Strategic Success Depends Locating Yourself Properly on the Competitive Map.
A strategic position is not created in a vacuum. The position plays itself out in the competitive marketplace. You can think of this marketplace as being like a map. Each competitor has a location on that map. The viability of your strategic position depends in large part on where you are on the map relative to everyone else.

For example, let’s say that you are a retailer with a strategy is based on owning the low price solution. Your ability to own the low price position depends a lot on your location on price versus competition. Wal-Mart recently has started a number of price wars in areas such as toys, books and DVDs. As long as Wal-Mart is driven to be closer to the lowest possible price location on the map than you are, you cannot own the low price position, no matter where you set your prices.

So when creating the action plan for your strategy, do not think primarily in terms of absolutes. Instead, think in terms of relativity—where you are relative to others on the map. In other words, if you want to own quality, it is not good enough to just set a high absolute quality level. You need to have higher relative perceived quality than the competition. That can be a moving target.

Often times, it is best to locate yourself on the competitive map is a place that is relatively empty. For example, if everyone else seems to be fighting for space on the quality area of the map, you may be better off going to the price area of the map, which is more wide open. The lest contested a space, the easier it is to own in the mind of the customer.

Right now Chevrolet is trying to convince people that it has the highest quality, most fuel efficient cars available. That is a hotly contested space, already owned by Toyota and Honda. Chevy will have a hard time unseating those entrenched positions. It would have been better off trying to go after a less contested space.

Although Ford would also like to be seen as high quality and fuel efficient, its approach has been less of a direct assault on Honda and Toyota. Instead, Ford is trying to establish itself with superiority in high-tech enhancements. This space is less contested on the competitive map. Once Ford owns this space, it can use high-tech superiority as a justification for a secondary claim at superiority in quality, safety and fuel economy (caused by unique technology).

And when you are building this competitive map, make sure you include every competitor attacking the same problem. For example, if the problem is weight loss, you need to include every process aimed at that solution. You may claim to be the fastest exercise solution for losing weight, but if there is a pill you can take that works a lot faster at losing weight than any exercise, you have not really captured the “speed” space on the map.

3. Strategic Success Depends Upon Locating Yourself Properly on the Map of the Future
Strategy is often about creating a better position in the future than you have today. It is often easier to communicate where you want to take the company if you can visualize that future state on some sort of map. Then, not only can you show the desired future location, but also today’s location and the path you must take in order to get from the one to the other. The mind map or the competitive map may be good templates to show the new destination and transition path to get there.

SUMMARY
Complex concepts can often be better understood, worked with, and communicated if thought of visually—like positions on a map. In strategy, some of the more useful maps would be a consumer mind map, a competitive landscape map, and a future map.

FINAL THOUGHTS
If your strategy cannot be easily translated into a visual map, then it is highly likely that your troops will get lost in strategy execution (and you will not reach the desired destination).

Strategic Planning Analogy #257: Dated Thinking

THE STORY
The dating process has always seemed a bit odd to me. In many cases, people are dating in order to find the person that they want to spend the rest of their life with, someone compatible with their lifestyle. Yet, when these people are on a date, they are acting differently than their normal lifestyle.

For example, they may be a slob, but they dress up and clean up their place for a date, something they would not otherwise do. They may drink the cheap beer when alone, but consume the good stuff on a date. They may love to spend their evenings watching TV, but endure the theater and museums on a date.

How are you supposed to find someone compatible with your lifestyle, if you never live your normal lifestyle in their presence? It makes me wonder how many businesses would go bankrupt if people stopped acting differently on dates. And it does not surprise me that many are disappointed after getting married, because their new spouse stops the unusual activity from the dating and go back to their “normal” ways.

I am reminded of a story I heard from my high school guidance counselor. He said there was a woman who didn’t want the man she was dating to know she was wearing braces, so before her dates she would yank out her braces. After the date, she would push them back in. Ouch!!

THE ANALOGY
Dating is an occasion where people can act differently from “normal.” As it turns out, it is not the only one. It could be time of the day—like drinking coffee in the morning, but never in the evening, for example. It could be time of the month—depending on how close it is to when you last got paid. Behavior can change between when you are with your friends at home versus with your boss at work.

As it turns out, there typically really isn’t a “normal” way of life for a particular individual. The behavior changes based on the occasion. Each occasion creates its own type of normalcy. It is as if we take on a different role depending on the particular occasion. I may have my “Dating” role, my “Being at Work” role, my “Being a Parent” role, my “Being with Friends Role,” and so on.

There is actually more consistency in behavior based on a particular occasion/role than there is in the total life of an individual. For example, behavior on a date may be different than behavior when not on a date, but the behavior when dating is relatively consistent whenever the dating occasion comes up.

Therefore, when creating a strategy, it is better to target the relatively consistent needs for a particular occasion than to target inconsistently-acting individuals.

THE PRINCIPLE
The idea here is that strategies focused on occasion-based solutions tend to be more effective than strategies which target individuals. Individuals slip in and out of roles depending on the occasion. Their needs and desires change based on the occasion. If you try to target one individual all the time, your appeal will have varying degrees of success, depending on which role the individual is playing at a particular time.

As a result, even though there is much talk these days about being customer-centric, real success comes from being solution-centric.

Restaurant Example
For example, let’s look at how an individual, let’s call him “Bob,” uses restaurants. When Bob is on a date, he may be looking for a restaurant that is romantic, that would impress his date. When Bob wants a meal to eat while working late at the office, he may be looking for convenience, low price, and delivery services.

If Bob is having an important business dinner, he may want someplace which is quiet, where they don’t mind if you linger, and shows off his financial strength (i.e., expensive and snooty). When eating out with his children, he may want a restaurant that is moderately priced and kid-friendly. If Bob wants a meal when alone at home, he might skip the restaurant altogether and just nuke something in the microwave.

As a restaurant owner, what would be the best restaurant approach if the strategy is to target Bob? The restaurant would need to be romantic, quiet, kid-friendly, snooty, expensive, cheap, moderate, quick, lingering, and sells things to take home and microwave. Good luck on that one.

There is no single ideal restaurant strategy to target at Bob, because Bob’s needs and desires change based on the occasion. He wants a different type of restaurant for each occasion. If you try to create one restaurant appropriate for all of those occasions, it will not be able to be the best at any particular occasion. The irony is that a single restaurant specifically designed to meet all the restaurant needs of Bob would most likely be a restaurant Bob would hate to visit, because it would never be the best option for any of his occasions/roles.

A better restaurant alternative would be to stop targeting particular people and instead start targeting a particular occasion, like being the ideal restaurant for dating. That way, when Bob is going on a date, your restaurant will be the best choice for that occasion. It doesn’t matter that Bob would never choose you for his other roles, because you are no longer targeting Bob. You are targeting anyone who is looking for the ideal dating restaurant at a particular moment. If there are enough people drifting into the role of looking for a dating restaurant solution, then you don’t have to worry about missing the other occasions.

By choosing a particular occasion, you can focus on being the best at delivering the attributes most important to that occasion. You can downplay attributes less important so that you can afford to do a better job on the ones which are important to the occasion. For example, a dating restaurant could afford to do a more effective job of being romantic, because it does not have to worry about also trying to be kid-friendly. Your brand is strengthened, because it stands for something—the best choice for a particular occasion.

Other Businesses
This principle does not just apply to consumer activities, like eating out. This also can work in pretty much any business, including industrial businesses. For example, a steel supplier could focus any one of a number of occasions:

a) When you need a problem solved in a hurry/emergencies;
b) When you need highly customized and unique solutions;
c) When you need basic commodities;
d) When you are having cash flow challenges;
e) When your project is in a particular area, like the Middle East.

By focusing on one of these occasions, the steel supplier may not get all of the total business from Bob’s Construction Company, but they have a better shot at getting all the business from Bob’s Construction Company when it falls into that particular occasion.

Portfolio of Brands
If you want to satisfy more than one occasion, it is usually better to do so under multiple brands, with each brand owning a different occasion segment. That way, each brand can specialize and own that occasion in the mind of the customer. The individual brands stay pure and don’t get diluted by trying to stand for too many things.

For example, the Lettuce Entertain You Group operates 38 separate restaurant brands. Each brand has its own name and specializes in something different. There are brands for formal occasions, casual occasions, convenience occasions, and so on. Each brand is well known in its location for its occasion segment. And none of the customers really know about or care about the parent company name.

By contrast, the Chevrolet brand is slapped on cars meeting all sorts of different needs, from economy (Aveo) to sports car prestige (Corvette). For many of the cars in the Chevrolet lineup, I’m not sure I even know what need they are trying to solve (Cobalt?). Blandness and lack of brand focus is not a path to success.

SUMMARY
Successful strategies are usually based on being the best at solving some sort of problem for the customer. Consequently, even though there is a lot of talk these days about being customer-centric, real success comes from being solution-centric (or occasion centric). By focusing on a solution/occasion, one can become the best at the attributes most important to that occasion. The same cannot be said of a consumer focus, since consumers tend to drift in and out of problems, depending on the situation of the moment. There is no single strategy that is right for a consumer under all the different situations they encounter, and to try to meet them all under one brand can be a disaster.

FINAL THOUGHTS
Eventually, people like Bob may settle down, get married, and no longer be a part of the dating scene. Life-stage changing events like these can drastically change what someone like Bob is looking for. Therefore, trying to follow Bob through his life changes can be difficult, because it would require you to make drastic changes over time (for which you may not be capable of being the best at) and which might confuse the brand. It is probably better to stick to being known as the best dating restaurant, abandon Bob, and get the next generation of daters. For more on this, see prior blog.

Strategic PlanningaAnalogy #246: The Dreaded Science

THE STORY
Decades ago, I knew someone who worked in the automotive industry. The company he worked for was having a serious problem: The paint was flaking off the cars not long after purchase. His job was to fix the problem, so that the paint would no longer flake off.

The first thing he did was go to the lab where the paint’s adhesiveness was being tested. He talked to the engineers. They were puzzled, because in the lab, the paint adhered very well. It never flaked off the metal.

So my friend asked them where they got their metal samples to try the paint on. He was told they special-ordered it from an independent metal shop. He examined this special-ordered metal and could see that it was a more refined grade than what was used to build their automobiles.

So the next thing my friend did was get the engineers metal samples which came right off the assembly line. Now, they were testing the paints on the same metal that the paints would go on in real life. As a result of this change, they were able to resolve the problem.

THE ANALOGY
Tests in artificial environments are not always useful in predicting outcomes in the real world. The conditions are often not similar enough to the real world. As we saw in the story, the metal bought from a specialty shop was different enough from the metal on the assembly line to make all of their testing with it useless.

Speaking of useless, there are a lot of people in the business world who characterize strategic planning as useless. I’ve been reading a number of blogs lately from others who talk about strategic planning. The impression I get is that the reputation for strategic planning being a useless waste of time comes from their personal experiences. They’ve seen strategic planning as something that:

a) Takes them away from their important work via off-site meetings; and

b) Has them work on planning exercises that either make no sense to them or seem irrelevant to what they do for a living (too abstract, impractical).

I’ll have to admit. I’ve seen things like that and there is some truth in what they say. The problem, however, is not the idea of strategic planning. The problem is how the strategic planning is practiced.

These people experienced strategic planning like that automotive paint laboratory. The laboratory was isolated from the real world and worked on metal that had no relevancy to the metal on the assembly line. The result was failure. Similarly, many off-site strategy meetings are too isolated from the real world and work on concepts having little to no relevancy concerning how things really get done. Again, the result is failure.

As strategists, we need to put real “assembly line metal” into the hands of the people designing the strategy. Then the strategy will “stick” to the business after the meeting is over, like quality paint.

THE PRINCIPLE
The principle here has to do with relevancy. The more relevant you can make the strategic planning exercises, the more committed the people will be during the exercise, and the more buy-in there will be to the strategy once the exercise is over.

To make sure you are relevant, we will look at two ideas:

1) Use Real Metal in the Lab
Off-site or dedicated strategy meetings are often like laboratories, where you can play around with potential strategic options. Strategic planning work at these meetings tends to come in three forms:

a) Abstract/Conceptual: Mission Statements, Vision Statements, Position Papers, 2x2 Grids, Scenario Development, and so on.

b) Numeric: Mathematical Simulations, Financial Reports and Projections, Regression Analyses, Graphs, Big Fat Books of Numbers, and so on.

c) Problem Solving: Dealing with specific problems facing the company, looking for specific solutions.

All three are important. The abstract provides the context for everything you do, giving general direction as to what is right and wrong for your company. The numeric lets you see how the abstract impacts your output. The problem solving is what actually takes place to make the strategy real in the marketplace.

The problem comes in balancing the mix. The types of strategic planning complained about in what I read tend to be too focused on the first two types of work and not enough on the third.

Let’s face it. If we do our jobs right, the abstract work shouldn’t change that often. Wal-Mart has had essentially the same conceptual strategy for over thirty years—win with a low cost, low price strategy. Sure, the flavor of that strategy changes every once in awhile, but even that doesn’t change all that often. At Wal-Mart, the early flavor of that strategy revolved around distribution excellence. Then it moved to data management excellence. Now it is moving to lowering costs through sustainable environmental practices. As important as it is to get these big decisions right, once you are finished you really don’t need to spend a lot of time on reinventing them at every meeting.

The purpose of the numerical work is to make us more intelligent about what future outcomes might look like. We all know that this is imprecise work. There are too many variables outside our control. Events will continually change. Therefore, why waste time sweating out all the numeric details to deep precision at a strategy meeting? As I’ve said in a prior blogs (here, here, and here), the idea is to only get precise enough to ensure that you are generally going in the right direction. Too much precision can actually cause problems. Just look for three things: Direction (is the trend going up or down), Magnitude (is it moving a little or a lot) and Speed (is it happening quickly or slowly). That is often all the numerical analysis you need to know to make the right strategic decisions.

This leaves problem solving, for real, live problems impacting the company. These are like the real assembly line metal—a practical place to test the stickiness of your strategy. This is where most of the time should be centered. Now you may fear that if too much time at strategy meetings is on practical problems, the meetings will get too tactical and long-term issues will not get proper attention.

My response is that businesses are going to spend most of their time trying to solve problems anyway. It is the sum of all of these little practical action plans (not your words) that ends up being your real strategy in the marketplace. Therefore, if you want all of these actions to represent your strategy, what better place is there for discussing them than at a strategy meeting? This is your best shot at getting actions to match up with strategy.

Not only that, it makes the meetings more relevant to your executives and lets them see how to apply strategy to their everyday problems when the meeting is over. Hence, it’s a win-win for both of you.

Businesses can only focus on so many big projects at a time. As we saw in a prior blog, if all you can accomplish in your meeting is an agreement on which projects deserve the highest priority, you have done a lot, since you have gotten work priory linked to strategic priority.

2) Get out of the Lab
I’ve written close to 250 of these blogs on strategy. Looking back, I have only rarely ever mentioned dedicated strategic planning meetings. Why? The real work is out in the field. If you want to be seen as relevant, go out to where the work is being done and show people how strategy can help them solve their problems.

My automotive friend had another problem to solve. To test the quality of the manufactured metal, the company had to take samples from the assembly line back to the lab. This forced them to stop the assembly line for sample-taking. It was also a timely process back in the lab, causing feedback and corrections to be very slow.

My friend changed the process so that the metal could be tested right on the assembly line in nearly real time. This saved the company millions and millions of dollars.

The more real-time you can be out there in the field, the more valuable you will be, and the better the reputation will be for strategic planning. Don’t just sit in the “ivory tower” dreaming big dreams. Get your hands dirty out in the field.

SUMMARY
Strategic planning has a bad reputation with many in the business world. It is seen as abstract and irrelevant. To ensure that strategic planning gets its proper emphasis and respect in the business, spend most of your time on proving its relevance by using current problems as the basis for strategic discussions.

FINAL THOUGHTS
Economics is called “the Dismal Science” because economists are never in agreement and are usually wrong in their forecasts. It’s just a lot of work by a lot of smart people which gets us nowhere near the truth. If strategists fail to become more relevant, they will go down the same path, becoming “the Dreaded Science.”