Strategic Planning Analogy #535: Only the Experienced Need Apply?

THE STORY
Of all the Help Wanted ads out there, I think the most inconsistent ones come from the advertising industry. They wax on about how they want a diverse workforce. They say that creative minds can come from any background and that they want to find all that diversity of creativity in order to serve their clients. Therefore, they claim to be open to looking at people from all walks of life to fill their job openings.

However, at the bottom of the advertising agency help wanted ads they always say that only people with 6 years or longer experience in an ad agency should apply for the job. Some say you need at least 10 years of ad agency experience.

How can you hire a diverse group of creative people from all walks of life if you only look in one place (inside other ad agencies)?

I pointed this inconsistency out to an ad agent executive who was hiring people, and her response was, “Yeah, we tend to do that.”

She didn’t say it was wrong, or a mistake, or apologize for it. She only admitted the hypocrisy was true.

It makes you wonder how an industry so full of professional advertising copywriters could write such bad Help Wanted ads.

THE ANALOGY
I understand that there are some benefits to hiring people who already have experience within that industry. But there are also some drawbacks. This is especially true if the key criterion for success is diversity in creative thought.

If you keep drawing your talent out the same pool of candidates, who are trained in doing things the same way, you are never going to get diversity. It’s like inbreeding. That leads to nothing but disease.

And if everyone is creative in exactly the same way, is that truly creativity or is it just repetition of the way things have always been done in the past?

I think a similar dilemma can occur in strategic planning. Great strategic planners are skilled in strategic thinking. This is a skill somewhat akin to creativity. It is a particular way of approaching problems that really isn’t related to a particular industry. Strategic thinkers can come from all sorts of diverse backgrounds.

Yet, when you look at Help Wanted ads for strategic planners, they almost always put a high premium on finding people who spent a large part of their career within the industry of the hiring company. Just because I spent a long period of time in an industry does not mean that I can think strategically about that industry.

Strategic thinking is either a skill that you have or a skill you do not have. If you have it, then you can help a business with its strategy, pretty much no matter what industry it is in or where your background is. Conversely, if you don’t have the skill, then you cannot help the business do strategy, even if you have decades of experience in that industry.

So why do so many firms look for strategists within the industry pool rather than the strategic thinking pool?

THE PRINCIPLE
The principle here is that if the critical success factor in strategic planners is strategic thinking, then hiring companies should put a higher priority on finding strategic thinkers then on finding people who know their industry.

Yes, I know…everyone will tell you that their industry is different. It has all sorts of quirks and idiosyncrasies, so you need to hire someone familiar with all of that.

Well, I’m here to tell you that it is a lot easier for a person gifted in strategic thinking to figure out your industry than it is for an industry veteran to learn strategic thinking if they are not naturally gifted in it. So go with best thinkers, regardless of their industry, because they can usually pick up the industry part pretty quickly once they are hired.

It reminds me of an old saying in the retail industry: “It’s better to hire someone naturally gifted in customer service and teach them retailing than to hire a retail veteran who doesn’t get customer service.” The idea is similar. If you get people with the right natural skills for success, you can teach them the industry. But if the natural skills are missing, then industry knowledge isn’t very useful.

Change Agents

I think this principal is especially true for strategic planners because of their common role as change agents. It often falls to the strategic planner the responsibility of figuring out how to change a business, so that it no longer continues the status quo.

This change can take many forms:

1. Diversification or transformation from a declining industry to a growth industry.
2. Reinventing the business model to be more in tune with a changing environment.
3. Looking for ways to positively differentiate one’s business from the competition by doing something different than what everyone else is doing.
4. Looking for competitive “white spaces” or “blue oceans”, i.e., new places where industries have not previously operated.

In all these cases, intimacy with the status quo is not of much use, because success is created by leaving the status quo to move in a new direction. If fact, too much experience in the status quo might blind you to all the new possibilities. Spending too much time perfecting one way of doing things may make it harder to think of other ways to do it.

By contrast, hiring a strategic thinker with a more diverse background may be better able to envision new ways to break away from the status quo. Because they are not bound by conventional industry wisdom, they are freer to envision better possibilities for change.

The Innovator’s Dilemma

In The Innovator’s Dilemma, Clayton Christensen talks about how most industries are revolutionized by those outside the industry rather than those on the inside. Those currently in the industry tend to focus on how to do the status quo better. Those from outside the industry look for radical new ways to better serve the customer. The outsiders then become the agents of change.

In the transformation from analog businesses to digital, it is the rare exception of a company that successfully maintained its leadership both before and after the transformation. Instead, the typical path was that the incumbent was replaced by an outsider.

The leaders in travel agencies were replaced by outsiders like Orbitz and Expedia. Kodak was replaced in imaging by outside firms like Apple and Instagram. Status quo brick and mortar retailers are losing out to outsiders like Amazon. One of the rare exceptions would be Staples, who is transferring its leadership from one space to the other. The rarity of exceptions tends to prove the case.

Given the preponderance of evidence that change tends to originate on the outside, why would you want to hire a change agent (strategist) whose majority of experience is from the inside? Looking outside seems to make sense.

SUMMARY
When hiring a strategic planner, there is often a bias to hire someone with industry experience. This can be a mistake for three reasons. First, strategic thinking for a strategist is a more critical skill than industry knowledge. Therefore, hire for strategic thinking and then teach them the industry.

Second, strategic planners are often the agents of change. Experience in the past is not very relevant when looking for ways to reinvent for the future. In fact, it may be a hindrance.

Third, history shows us that most revolutionary change comes from industry outsiders rather than insiders. Therefore, it can make sense to bring some of those outsiders into your company, so that you can better adapt to revolutionary change.

FINAL THOUGHTS
You probably don’t want an entire company to be filled with outsiders, but if there is any place where outsider thinking is beneficial, I would think it would be in strategic planning. Therefore, be careful of what you ask for in your Help Wanted ad. You may get what you ask for rather than what you really need.

Strategic Planning Analogy #531: Would You Want an Auto Mechanic to Cut Your Hair?

THE STORY
Would you want an auto mechanic to cut your hair? Think about it for a moment. Auto mechanics are very skilled at using tools to accomplish a task. Isn’t that what hairdressers do?

Hmmmmm…

Okay, I thought about it for a moment. No thank you. I think I’d rather go to a hair-cutting professional than an auto mechanic to get my hair cut.

THE ANALOGY
Just because someone is skilled at using automotive tools to repair an engine does not mean they would be skilled at using scissors to cut my hair. First of all, the tools are different. Second of all, the objective is different. Third, knowledge needed is different. Fourth a good hair stylist has a great intuitive sense of style and fashion, something not needed to be a great auto mechanic.

It seems so obvious. Give the task to the person who is skilled, trained and has a natural affinity towards it.

But that is not what I see in many areas of business today, particularly in the world of social media and other digital businesses. There seems to be this notion that nearly all tasks in the business should be done by engineers. After all, engineers are supposedly good at solving problems. Therefore, if everything is done by engineers, then all the problems will be solved. Right?

Well, to me that makes about as much sense as saying that because an auto mechanic is good with tools, I should give them scissors and have them cut my hair.

Even being the best mechanic in the world does not ensure that the person is any good at cutting hair. Similarly, being one of the best engineers gives no guarantee that the person has a clue about what it takes to be a great marketer, great strategist, great leader, etc.

No thank you. I think I’ll stick with the specialists.

THE PRINCIPLE
The principle here is that the skill sets needed to be great in disciplines such as strategic planning are not the same as the skill sets needed to be a great engineer. Therefore, do not fill those roles with engineers. Here are four reasons why.

1. Different Problems

Yes, engineers are good at solving certain types of problems, but that doesn’t mean they are good at solving all problems.

In particular, engineers tend to be good at the “how” questions:

• How do we get this done?
• How do we overcome this design roadblock?
• How do we turn an idea into a prototype?

However, there are a lot of questions that don’t begin with the word “how”:

• What problem should we be solving?
• Where is our competitive differentiation?
• Why should we win in the marketplace?
• Who is our key consumer and why will they prefer us over the competition?

In other words, engineers may excel at getting things done, but there are others who are probably better trained and more skilled at knowing which things should get done. Or to put it another way, engineers may be good at answering questions, but strategists are better at knowing which questions to ask.

Engineers like to talk about speed in execution, using buzzwords like “scrum” or “agile”. It’s as if speed is all that matters. But moving faster in the wrong direction does not get you closer to success. This is what I call the “lottery strategy”: the sooner I scratch more losing lottery tickets, the sooner I will scratch a winning ticket. That’s not strategy—that’s relying on luck. The odds are so low that you will most likely lose more money on what you spend on the lottery tickets than what you win.

No matter what many engineers may believe, success is not getting something done. Success is building an enduring business built upon a business model which is designed to win in the marketplace. Without the winning position and business model, all you may have succeeded in getting done is failure. Where’s the pride in that accomplishment?

Strategists are skilled in asking the right questions—to focus businesses on activities where they are more likely to succeed. Strategists can help engineers move from games of luck to games where the rules are in their favor.

2. Different Place

Engineers tend to spend their time focused on the lab. People like marketers and strategists focus their time in the marketplace.

In the lab, everyone is an engineer. They think all this technology stuff is cool just because it is technological. So putting the functionality of a smartphone into a watch is cool to them just because of the technological challenge. And since there is no dissention in the lab, they press on.

Out in the marketplace, things are different. There are problems which need to be solved. There are images which need to be maintained. And there are lots of firms offering a wide variety of options for solving these problems.

Consumers want to consume the best solution to their problem. To them, it is irrelevant whether the solution comes in a watch or in a magic orb. They will consume whatever is best for their needs. And it may just be that putting the functionality of a smartphone on a watch is not the most compelling solution—no matter how cool the engineers think the technological feat is.

Yes, you need people like engineers focused on the lab. But you also need people like strategists who are focused on the marketplace.

3. Easier to Learn Industry than Discipline

I’ve talked to a lot of people in retail store operations over the years and they all say the same thing. They’d rather hire someone with good people skills and train them in the retail industry than hire someone with lots of retail experience who has no people skills.

The reason is because some people are more naturally gifted in certain skill sets than others. These gifts are difficult to train to someone who doesn’t naturally have them. Without the right natural skill sets for a particular function, knowing the industry where you want to apply those gifts is not very useful. In fact, training about the industry to the right person is far easier than training in skill sets gifts to those who are in the industry but don’t have the gift.

As we’ve already seen, great engineers tend to be naturally gifted differently than marketers, strategists and others. Yet, these engineer-driven companies are hesitant to bring in non-engineers to help, because they are afraid they will not understand the industry.

Trust me, it is easier to hire great, naturally-gifted strategists and marketers and teach them your business than to take engineers who know your business and train them to think like marketers and strategists.

4. Remember the Failures

I have heard people say in response to the line of argument in this blog: “But look at all those successes like Google. They are engineer-driven and it worked. So I should be, too.”

My answer is this: For every successful firm like Google, there are thousands of failures using that same engineer-driven approach. Evidence would show that the engineer-driven model has produced far, far more failures than success. I see no evidence that the odds of success are improved when engineers are placed in positions for which they are not naturally gifted.

SUMMARY
Just because an engineer is smart and good at getting things done does not mean that engineers should take over nearly all the functions of a business. Like everyone else, they have blind spots. By hiring a diverse set of people with different skill sets, you eliminate the blind spots and get people who are more naturally gifted in each particular job. Hiring a real strategist to run strategy is an asset because they can help focus engineers on getting the “right” things done.

FINAL THOUGHTS
Just as you wouldn’t want to have an auto mechanic cut your hair, I don’t think you’d want an auto mechanic defining how others should cut your hair. Yet, when I look at some job descriptions for strategists, it appears as if the job was defined by an engineer. The strategist position is defined as more of a project manager (engineering mindset) than as a strategic thinker (strategic mindset). If you leave out the natural giftedness of the strategist from the job description, you won’t get true strategy. You’re designing failure.

Strategic Planning Analogy #472: Watering Seeds

 

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

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

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

And now, my lawn is covered with new grass.

 

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

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

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

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

  

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

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

1. Preparing the Soil

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

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

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

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

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

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

2. Watering the Soil

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

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

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

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

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

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

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

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

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

 

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

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

 

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

Strategic Planning Analogy #449: Scorekeepers Vs. Score Makers

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

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

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

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

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

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

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

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

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

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

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

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

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

Where are we going to play in the marketplace?

How are we going to win in that place?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Strategic Planning Analogy #301: Management by Voting?

THE STORY
We Americans love democracy. The idea of dictators dictating orders without a vote is not in our DNA. That’s why the USA likes spreading democracy around the world.

However, I’m not sure that putting everything to a vote in all situations is always the best idea. What if parents were barred from taking any action unless voted on and approved by their children? And what if parents had to do what ever their children voted on for them to do? I think that would cause a bit of a mess.

And what if every employee had the sole vote in how their individual career was managed (how much they got paid, what their title was, what work they did, whether they could get fired, etc.)? Probably the closest we ever came to that was the high levels of unionization in Detroit, and we can now see how that helped eventually destroyed Detroit’s economy.

And what if, in the middle of a war, soldiers refused to take any military action until all of the soldiers could have time vote on it? Military “orders” would merely be propositions to be voted on. With enemy bombs coming in your direction, reaction tactics would have to wait until a sufficient time for campaigning and voting occurred. And if each military unit independently voted on what tactic to take, there would be no unified military action…only chaos.

No, I think some areas of life need more balance between the input of the people and the wisdom of the leaders.

THE ANALOGY
Businesses are not true democracies. Most items are not put to a vote of the Board of Directors, the Employees or the Customers. Instead, business leaders tend to determine what they think is best and get the company to follow.

The advent of Web 2.0 technology has made it easier for businesses to gather the input from a wide variety of stakeholders. This makes it easier to, in essence, put all management decisions up for a vote with customers and employees.

Many are hailing this as a great and wonderful thing. There are even books and business pundits declaring that Web 2.0 requires business leaders to relinquish control of the business to the customers, who have now supposed taken control of all the power.

Indeed, having access to all of that Web 2.0 interaction can enrich the decision-making process. The input is very valuable. However, I’m not ready to abdicate all business leadership to “the will of the people.”

Just as children need good parenting and soldiers need good commanders, businesses need good, strong leaders. And just as employers need to consider more than just the will of their employees, businesses must consider more than just what the latest Web 2.0 feedback says. And just as there are times when children need to obey their parents and soldiers need to obey their commanders, there are times when “voting” needs to be set aside so that business leaders can be obeyed.

THE PRINCIPLE
The principle here is that all the exciting new Web tools are just that—tools to be used in the hands of leaders. They are not substitutes for leadership—especially when it comes to strategy.

About a month ago or so, I was reading a story in Fortune magazine about Best Buy. There was a quote in there from current Best Buy CEO Brian Dunn.

“One of my roles as CEO is to be the chief listener. I don't believe that the model is any longer that there are a few really smart people at the top of the pyramid that make all the strategic decisions. It is much more about being all around the enterprise, and looking for people with great ideas and passionate points of view that are anchored to the business and connected to things our customers care about.”

At first, this quote sounded good to me. Dunn was using the wisdom of others to help make more informed decisions. Then I thought about it for a second longer. This is more than just getting input. This was starting to sound like abdicating responsibility for creating strategy. Strategic leadership seems to have been banished from the organization. Rather than having tactics derived from strategy, strategy appears to be belittled to nothing more than the culmination of a series of independent and unconnected tactical decisions made “by the people.”

Tactics shouldn’t drive strategy. Strategy should drive tactics.

Dynamite can be a very useful tool, but without skilled dynamite users, the tool can destroy you. Similarly, feedback from others is a powerful tool, but if you eliminate the role of professional strategists at the top of the organization to properly apply it, it can destroy your company.

You need both—the tool (feedback) and the professional tool handler (the strategist). Eliminating the strategist can lead to the following problems.

1. Mistaking Ideas for Strategy
Interaction with stakeholders is a wonderful way to get ideas. Ideas are great, but they are not strategy. Strategy gets to the heart of the matter: What business should I be in? What is my competitive advantage? What business model should I use? How do I win in the marketplace?

Not all ideas are appropriate for all companies under all conditions. Good ideas are the ones which support the strategy. Great strategic leaders understand their strategic thrust and can cull out the best ideas for their particular firm from the others. Leaving it up to a vote gets what’s popular, not what’s appropriate. For example, consumers may all want low prices, but typically only one firm in an industry is the lowest-cost operator. For everyone else, a priced-based strategy is probably not going to win, regardless of what the people say they want.

2. Missing the Big Picture
One of the major benefits of business strategy is getting “the big picture” vision correct. Great “big picture” visions rarely materialize out of merely following the whims expressed in a series of votes on minor tactics. Creating these visions cannot be fully abdicated to others. Leadership needs to take possession and ownership of visioning process.

Your big picture goal is to optimize the opportunities for your firm. That is not the same goal as your stakeholders. Your customer’s goal may be to get everything, perfectly, instantaneously, and free. If all you do is try to serve their selfish need, you will not be optimizing your own goal. Their objectives are not always in complete alignment with yours. You need to filter their ideas through your objectives.

In addition, the people you talk to only have limited knowledge of a small part of your overall situation. Hence, their ideas are biased towards their limited perspective. You need professional strategists to bring all of the knowledge together in order to create a comprehensive and complete picture of what is going on in the world. Only when you can see the big picture will you see the best strategic alternative.

Finally, great strategy, according to Michael Porter, is about choosing the right trade-offs. Your customers may not like it when you make trade-offs (they want it all), but it is often the only way to create excellence at some point of differentiation. You need to be a strong strategic leader and determine where those trade offs will be. Then you need the fortitude to stick to the principles of your tradeoff and not fall victim to the trap of trying to do everything well and failing to do anything well.

3. Missing Discontinuous Change
Change in the marketplace tends to revolutionary, rather than evolutionary. New categories and business models seem to spring out of nowhere. On-line travel firms like Orbitz, Expedia, and Travelocity gave a death blow to traditional travel agents almost overnight. Bottled water came out of nowhere to become a huge industry. Digital everything destroyed analog everything. Mobile phones, microwaves and laptop computers changed the entire nature of how people live and work, impacting almost every other industry. Newspapers used to be one of the most profitable industries in the world. Now they are bleeding badly. The recent recession quickly changed the fortunes and the rules for a lot of industries, particular in the financial arena.

As long as the marketplace is stable and the rules and players don’t change, it is easy to forget about strategy. Just talk to all of the stakeholders who are comfortable with the current situation and you will get all kinds of ideas for useful tactics to tweak the system.

However, when radical change occurs, this management by talking becomes far less useful. There is no consensus in your stakeholders as to what to do. They have no direct experience in the change for you to benefit from. Mere tactical improvement suggestions won’t succeed when all the rules are changing.

Professional strategists are needed to:

a) Help anticipate the discontinuous change
b) Develop scenarios in advance so as to be prepared when change occurs
c) Help the company to become proactive in change and help bring about change in a fashion which disproportionately benefits your company.

Apple doesn’t wait to react to change. They didn’t “take a vote” of the world before introducing change. They lead the change. Ipod and iTunes reinvented the business model for music. Iphone reinvented smart mobile devices and the selling of aps.

As Henry Ford put it, “If I’d asked my customers what they wanted, they’d have said ‘a faster horse.’” Suggestions from the masses tend to be extensions of what they know, which is the old business model. They are not very useful in proactively getting to the discontinuous new. And unfortunately, the discontinuous new is all around us. This is where professional strategists are most valuable.

SUMMARY
Although there are many tools available for mining the ideas of your stakeholders, this is no substitute for having professional strategic leadership activity at the top of your organization. The best of all worlds is to have both—the insights of your stakeholders put into proper perspective by professional strategists.

FINAL THOUGHTS
Benjamin Franklin once said, “When the people find they can vote themselves money, that will herald the end of the republic.” Similarly, when users of Web 2.0 tools find out how to manipulate the system, it could herald the end of the current fashion of capitalism (of abdicating strategy to the masses), because they will suck all the money out of the business model, leaving you with the losses.

Strategic Planning Analogy #288: Bourne to Run

THE STORY
One of my favorite movie franchises is the Jason Bourne series. These movies have some of the best car chase scenes ever filmed.

Typically, Jason Bourne is driving at dangerously high rates of speed on congested city streets being chased by multiple drivers. Jason Bourne is rapidly weaving around traffic and making quick, hairpin turns. He frequently shifts from forward to reverse and back. The action is moving very quickly and there are accidents and crashes all around Jason Bourne. Yet Jason Bourne manages to escape.

Sometimes the action gets so scary that someone in the audience might be tempted to close their eyes during the chase scenes. Just think of what would happen if Jason Bourne closed his eyes during the chase scenes. The chase scenes would end a lot sooner and Jason Bourne would not survive.

THE ANALOGY
These days, the world of business is appears to be coming more like those chase scenes in the Jason Bourne movies. Everything seems to be moving more quickly. You feel like you are being chased by numerous forces out to get you. You feel like you have to continually change the direction you are steering your business. There are business casualties all around you and it seems like you have to act fast in order to avoid becoming a casualty yourself.

Some are using this as an excuse to stop planning. After all, when driving through a fast-paced chase scene, who’s got time for to make a plan?

To me, the idea of operating a business without a plan would be like driving through one of those chase scenes with your eyes closed. Planning provides the sight in order to see your way through to the other side. The faster you drive, the more dangerous it becomes, so your vision becomes even more essential. Hence, planning becomes more essential.

THE PRINCIPLE
The principle here is that rapid change does not eliminate the need for strategic planning. The type of planning being done may need to change, but the function does not go away. In fact, I believe it becomes even more essential. We may need to plan more like Jason Bourne.

I think there are three strategic planning principles to be learned from the Jason Bourne movies.

1. Never Get Lost in the Crisis de Jour.
Every day has its share of crises. Jason Bourne had more than his share in those movies. Everywhere he went there was a new threat to deal with. However, in spite of all those pressures, Jason Bourne never lost site of his primary goal. He was extremely focused and never forgot the big-picture agenda.

Rather than getting lost in the day-to-day threats and car chases, he saw them for what they really were—just a series of obstacles between himself and his ultimate goal. They were not his primary focus. They were just something he had to work through in order to get to “the other side,” where his true objective was.

Jason Bourne did not try to fix or fully finish up every problem thrust at him. That would be a waste of time. In fact, he often left things pretty messed up behind him. He just did enough so that he could put the threat behind him. He never forgot that the plan is not to loiter at the crisis, but to get through so that the larger task can be put back on track.

This should also apply to us. We should never let the daily crisis so overwhelm us that we lose site of the big picture. The goal is not perfectionism on the daily nuisance. The goal should be to find a way to get it behind us quickly, so that we can once again renew the larger journey.

2. Planning is a way of Living for All, Not an Annual Event for Some
The planning mind of Jason Bourne never stopped. He was always planning. He would grab maps, look at train schedules, grab building diagrams, watch things through binoculars, and examine his environment—all the time. He never could shut it off. He was always gathering intelligence, always processing it in his mind.

Jason did not shut his eyes to planning and stop doing it. Quite the opposite—he did it continuously. This doesn’t mean that he was continually changing his goals and visions or changing his business mission. Those tended to remain fairly constant. What changed where the adjustments he had to make to get through the daily crisis in order to get to the other side.

It was a continual exercise in planning the daily detours to get back on track. If you ignore planning, not only is there no daily path, but also no track to get back to. Then you are just aimlessly wandering from one crisis to the next. Without the planning goals, you are like a pinball bouncing around. If you are clever, you can endure longer, but eventually all the balls fall to the bottom and disappear. Planning gives purpose to the way you approach the daily bouncing and lets you find the path to the larger prize.

There is a reason why the car dashboard is inside the car rather than sitting on the desk in your office. Adjustments are made while you are driving, and the information on the dashboard helps you make those adjustments while you are on the move. It would be very impractical to have to drive back home to your office every time you wanted to look at the dashboard.

What does this mean for your organization? First, don’t limit intelligence gathering and analysis to a small block of time once a year. Make it a continual process. Second, get planning out there in the field where the action is happening. Use the field people to continually gather information on what is going on. Use their eyes and ears to gather data.

In addition, feed the information you have in the office to the people out in the field. Make sure their dashboard is with them out there where they have to make adjustments. Help them see the larger picture so that they can work on getting through rather than just bouncing around. It’s easier to give your people freedom to adjust to the pressures of the moment if you are comfortable with their ability to make adjustments which keep your firm on track with the grand strategy.

Strategies and information should not be secrets hoarded from your field personnel. The value increases as it spreads through the organization. Wouldn’t it be great to have all your field people working as strategically as Jason Bourne did—all the time?

3. Have Contingency Plans
With all of the constant motion in your world making each day feel like a car chase scene, it is easy to see how your original plan can get sidetracked. When that happened to Jason Bourne, he did not stop the car and go complain about his problems. No, he just put the car in gear and took a slightly different path.

Jason Bourne lived his life assuming that problems would crop up. As a result, he was always looking for alternative paths out. He wanted to have as many contingency plans as he could. He didn’t wait until the current path was blocked before looking for alternatives. He looked for alternatives before they were necessary.

To quote Jason Bourne:

“I come in here, and the first thing I'm doing is I'm catching the sightlines and looking for an exit…I can tell you the license plate numbers of all six cars outside. I can tell you that our waitress is left-handed and the guy sitting up at the counter weighs two hundred fifteen pounds and knows how to handle himself. I know the best place to look for a gun is the cab of the gray truck outside, and at this altitude, I can run flat out for a half mile before my hands start shaking.”

Contingency planning became natural to him. It should be for us as well. Planning for today’s environment means planning contingencies for the inevitable barriers we will encounter. It needs to be a way of life.

I have a friend who has a brother who worked as an agent for the federal bureau of Alcohol, Tobacco, and Firearms. When his brother was on the job, his life was in constant danger. Preparing for that danger became a way of life. My friend said that it was a little odd spending time with his brother after that, because whenever they were out, his brother’s eyes were watching all the windows, watching all the movements of the people around him, always looking for potential danger and a way out. He couldn’t turn it off. Your people need to have a bit of that attitude in them—always watching and planning contingencies.

SUMMARY
Just because the pace of the business world get faster does not mean that planning becomes obsolete. Just the opposite, it becomes even more critical. It does, however, require a particular type of planning. This type of planning blends a focus on the big picture with continual planning of ways to get through the crisis of the day in order to get back on track to the big picture. The planning is continuous, rather than episodic, and needs to get out into the field where the action is. Finally, it needs to look for contingencies, so that there are fewer crises of the day to deal with.

FINAL THOUGHTS
Jason Bourne was never half-hearted about what he did. He gave it his all and played to win. Not a bad way to go.

Strategic Planning Analogy #272: Exercise Your Mind

THE STORY
Last year, the exercise club I was using declared bankruptcy and shut its doors. There was no advanced notice—just a note taped to the locked doors. Well, it was getting close to the Christmas season, so I decided to enjoy the holidays and not look for a replacement exercise club until the following January.

Apparently, I must have “enjoyed the holidays” a little bit too much. When I got to the new club in January, I was woefully out of shape. I had gained a bunch of weight and could not exercise anywhere near the same levels of intensity I could at the old club. Even my blood pressure was higher.

It took several months of intense work at the new club to get back to the level of physical abilities I had before taking the time off. It was amazing how just a few weeks of neglect caused many, many months of effort just to get back to where I was before, let alone make any progress.

THE ANALOGY
Without continual exercise, muscles suffer atrophy. They whither back to a weaker state. Unfortunately, it takes more time to get them back into shape than the time it took for them to get out of shape.

It’s sort of like a balloon. It is a lot faster and easier to let the air out than it is to later put the air back into the balloon.

As a result, the best way to exercise is on a continual basis—a little bit done frequently—rather than binge exercising every once in a great while. Continual exercise keeps the muscle tone in shape, so that you are always ready to use them when needed. I regret not having kept up my continual exercise through the Christmas season. I paid the price.

Although this concept seems logical for our physical muscles, it seems to be ignored by many when it comes to our strategic mental muscles. During the recent economic crisis, there have been many companies that have taken time off from strategic thinking, just as I did with exercise at Christmas. If any strategic thinking is going on, many of these companies are doing it on a binge basis, at infrequent strategy sessions.

Strategic thinking has a lot in common with exercise. If you don’t do a little bit on a frequent basis, those skills go into atrophy. And it takes a lot longer than you think to get good at it again.

THE PRINCIPLE
The principle here is that strategic thinking is more important than strategic planning. What good is it to have a great planning process if the participants have let their strategic thinking skills go into atrophy? Great outcomes depend on great input. Great strategic input comes from those who are exercising those muscles on a regular basis.

When companies use excuses like the current economy to abandon strategic thinking, several things happen. First, the time horizon for framing issues shrinks. It’s all about getting through the next week/month/quarter. Long-term implications of short-term decisions stop being considered. That skill goes into atrophy.

Second, short time horizons cause people to look at the world as a snap shot rather than as a moving picture. Wayne Gretzky famously attributed his hockey success to skating to where the puck is going to be, rather than where it currently is. He instinctively knew that his world was in motion and that the way to win was to anticipate the motion and use it to his strategic advantage. That is strategic thinking.

However, when you get too focused only on the here and now, you lose the skill of anticipating the motion. The world becomes a snap shot. You focus on where the puck is now, rather than where it is heading. By the time you get to that spot, the snap shot has changed, so you enter a new crisis of getting to that new position. This leads to a cycle of perpetual catch-up crisis thinking, rather than proactive, anticipatory strategic thinking.

Third, abandonment of strategic thinking usually results in incremental thinking. Improvements are only seen as coming from small, incremental changes to the status quo (what you know and are focusing on), rather than bold, sweeping change (which is no longer being pondered).

Small incremental changes to film photography will never get you to digital photography. Small, incremental changes to carbon paper will not lead to photocopying. Itunes did not come out of little tweaks by the recording industry, but by bold, radical moves by an outsider not bound by the industry’s status quo.

Revolutionary ideas come from revolutionary thinking. Revolutionary thinking is not something you can conjure up on a whim. It is a way of life that you must practice on a regular basis.

Finally, abandonment of strategic thinking tends to minimize all sorts of other thinking. The mindset is focused on getting the “task of the day/week/month/quarter” accomplished. No time to question the validity of the move—just “git r done.” Motion becomes more important than direction. It doesn’t matter where we are headed as long as we are progressing on the task at hand.

Soldiers may be great at following orders, but their success depends on having the proper orders to follow. Proper orders come from good strategic thinking. Take that away, and all the great action of the soldiers is wasted effort. If all of your daily time is spent focused on following orders, you never develop the skill to develop what the next order should be.

Formal strategic planning meetings get a very small percentage of management’s time. If strategic thinking is not exercised on a regular basis, management will not be prepared to take full advantage of those meetings. All the time will be spent trying to unthink the thinking process of the rest of the year and getting geared up to think in a different way. And since those muscles are not used very often, they will not be functioning at peak form.

Worse yet, since the rest of the year seems to abandon strategic thinking, it makes whatever occurs at the planning meeting seem irrelevant to the rest of the year. It is no wonder that many strategies just sit on a shelf and don’t get put into practice. If you do not value strategic thinking all year long, why should someone pay attention to the results of a one-week effort in strategy put together by people not in peak strategic shape?

The solution?

1) Incorporate long-term strategic thinking into the daily routine. Make sure that people get into the regular habit of considering the strategic implications of all their decisions, all year long. Continually ask “How does this decision impact our strategy? What are the greater implications of this move?” Ask it so often that people mentally prepare an answer in advance because they know the question is coming.

2) Make sure people keep “watching the movie.” If strategy is about anticipating future movement, spend time throughout the year looking into where the future is heading. Stop focusing just on the snap shot and have regular discussions/presentations on where you think the “movie” of your industry is headed. Talk often about where you think your “hockey puck” is going to be—changes in consumer desires, changes in regulatory environment, changes in economy, and so on. Educate people about trends throughout the year, rather than just at an annual planning meeting. Let it soak in, so that it becomes a natural part of the ongoing dialogue.

3) Match incentives to desired behavior. People tend to act in ways that maximize their incentives. If you want strategic thinking, reward that behavior. If all compensation is based on near-term results, all you will get is near-term thinking.

SUMMARY
Strategy loses its effectiveness if it is compartmentalized into only one week in the year. Good strategic plans come out of good strategic thinking. Good strategic implementation comes out of good strategic thinking as well. Therefore, spend time throughout the year building up those strategic mental muscles so that you are strong and capable for the task ahead of you and can execute well on a daily basis. Otherwise, all your strategic planning efforts are for naught.

FINAL THOUGHTS
Exercise helps you lose fat in two ways. First, the activity burns up calories, which comes from burning your fat. Second, the activity builds muscles. The bigger your muscles, the more calories it takes to move them. Hence, future exercise is made more productive because those muscles make your body more efficient at burning calories faster. The same is true with strategic thinking. Not only does continual strategic thinking make your current decisions better (less negative “fat”), it places your company in a better overall strategic position (stronger “muscles”), which provides a better and easier launching point for more strategic opportunities.