Why Most Strategies Fail: Reason #3

BACKGROUND

I recently saw a blog by the Cascade strategy software company entitled “The 5 Reasons Why 70% of Strategies Fail.” You can read it here.

Since I disagree with their conclusions, I decided to write my own blogs on why strategies fail. I came up with three major reasons. The first reason why most strategies fail is because they are too internally focused at the expense of an external orientation. I covered that topic in the first blog.

The second major reason why strategies fail is because they focus too much on “doing” rather than “being.” That was covered in the second blog on this topic.

The third reason I feel most strategies fail is because they fall victim to the “Tyranny of the Immediate.”

PROBLEM #3: FALLING VICTIM TO THE TYRANNY OF THE IMMEDIATE

I feel so strongly about the evils in the tyranny of the immediate that on my blog site you can see links to 15 other blog entries I have done on the topic. In fact, I wrote an entire book on the topic which you can download for free here.

What is the Tyranny of the Immediate

So what is the tyranny of the immediate? Think of it as the daily fires at your business which demand your immediate attention.  It could be something like an angry customer, or a production line mistake, or a disgruntled employee, or a bad report in the media. Not a single one of these types of minor crises will permanently cripple your business. So why see them as a major source of strategic failure?

The reason is because there are so many of them. Executives typically encounter at least one of them a day. If the executive is not disciplined, he or she will find themselves totally consumed with putting out the fire of the day.  And therein lies the tyranny. We become captive to their demands on our time every single day. If getting the immediate crisis resolved captures too much of our time, then there is no time left for long term strategy.

In a sense, any strategy is worthless and bound to fail if people in the organization are such a prisoner to the tyranny of the immediate that nobody has enough time to adequately put the strategy into practice.

Successful Strategies Take Time

In the classic strategy book “Competing for the Future,” Prahalad and Hamel say:

“As a benchmark, our experience suggests that to develop a prescient and distinctive point of view about the future, a senior management team must be willing to spend about 20 to 50% of its time, over a period of several months. It must then be willing to continually revisit that point of view, elaborating and adjusting it as the future unfolds.”

Unfortunately, Hamel and Prahalad’s research found that most executives spend less than 3% of their time to building that corporate perspective of the future. It is no wonder that strategies fail when so little time is devoted to them. And in my opinion, the tyranny of the immediate is the biggest culprit causing so little time to be devoted to this core act of strategy.

Tripped Up By Distractions

That is why I wrote the book “Tripped Up by Distractions.” I wanted people to see all the subtle ways in which time and effort are stolen away from doing the work of strategy. They may only look like minor distractions, but when you add them up they can rob us of the time needed to do strategy properly. Until we tackle the distractions, we cannot build successful strategies.

In the book, I identify five major sources of distractions:

1. Having our head down looking at individual numbers so much that we lose sight of the big picture; 
2. Sending so much time trying to produce perfect documents or in trying to check off the items on the documents that we don’t have time to anticipate and adjust to realities surrounding us.
3. Putting the wrong people in the wrong places doing the wrong things.
4. Getting so focused on accumulating money today that there is no time left to strategize about how to build an enduring money-making enterprise.
5. Spending so much time reacting to change that there is no time to anticipate change and build a strategy to take advantage of change.

Some of these look at first like innocent activities. But when you add these issues to the normal crises of the day, you can see why companies have a tendency to spend insufficient time on building and executing a good strategy.

The book then has three major recommendations of better ways to spend one’s time:

1. Spend more time asking questions. If you ask the right questions, you can more efficiently get to the root of what is strategically important.
2. Spend more time on broad issues rather than narrow crises. If you get the big issues right, a lot of the daily crises disappear.
3. Change your actions. Not all activity is equally productive in tackling strategy effectively. If you keep doing what you did before (falling victim to the tyranny of the immediate), don’t expects your outcomes to get any better.

Warning Signs that Your Strategy is on a Path to Failure

So, what are the warning signs that one is falling victim to the tyranny of the immediate?

First, do a time study of what your executives do. Is core strategy work closer to Hamel and Prahalad’s ideal of 20 to 50% or is it closer to their findings of less than 3%? The lower the number, the harder it is to build and execute a successful strategy.

Second, look at what your company chooses to put as top priority regarding where time is spent. What do people get most in trouble for if they don’t spend time on it? What are the consequences if someone spends too little time on strategy? People will spend the time on that which they perceive management wants them to spend time on. Send the right message. Reward good strategic behavior. 

Punish those who fall victim to the tyranny of the immediate.

Third, is strategy work treated like a real job or more like a hobby you do on the side in your spare time? If there is never enough time in the day to do your day job, how can you expect much from tasks relegated to doing in your spare time? If you truly believe that designing and executing the right strategy is the difference between long-term success and failure, then intentionally carve out time for it. Have people on staff for whom this is their full-time responsibility Make at least some of the strategic work the day job of people.

Finally, how well do your executives delegate the little crises so that time is freed up for the work of strategy? If delegation is not occurring, then strategic work is not occurring either.

SUMMARY

Depending on which study you look at, somewhere between 60% and 90% of strategies fail. If we don’t address the deep-seated reasons why strategies fail, we will not be able to raise the percentage of strategic successes. I believe that there are three major reasons why strategies fail and my reasons do not always agree with conventional wisdom. The third reason I believe most strategies fail is because not enough time is being spent on the subject. Real success occurs when a company takes the time to get strategy right and keep it relevant. Without a proactive commitment to spend the time it takes to get strategy right, the tyranny of the immediate and a whole host of other distractions will get in the way. If your strategy is a half-hearted effort barely worked on to accomplish, you will get what you deserve: failure.

FINAL THOUGHTS

Thomas Jefferson said, “All tyranny needs to gain a foothold is for people of good conscience to remain silent.” As a strategist, it is your responsibility to be noisy and fight so that the crisis of the day and other such distractions do not become tyranny to your organization.

Strategic Planning Analogy #545: It Depends on Timing

THE STORY
When I was in college, I had a friend who was starting up a hobby of making wine. His early attempts were pretty bad.

First, he would get impatient and stop the fermentation too soon. That lead to odd-tasting juice rather than wine. To keep from making that mistake again, he poured a bunch of sugar into the mix to make the fermentation last longer. That lead to the fermentation ending before the sugar ran out, so the end result was too sweet to drink. 

I suppose he would have had good wine if he ever got the timing right, but after the early attempts, I never wanted to sample his wine again.

THE ANALOGY
Over the years, I have had people show me a strategy and then ask me if I thought it was a good one. Usually, I would say “that depends.” He reason I say that is because the same identical strategy can be both good and bad depending on some other factors.

Two of the biggest factors are: 1) Who’s doing the strategy; and 2) When is the strategy being executed. In the next blog we will be looking at who’s doing the strategy. In this blog, we will be looking at the timing of the strategy. As we will see, if you get the timing wrong, a strategy can be a disaster, but if you get it right, you are a hero. Same strategy, but different outcomes depending on the timing.

As my friend found out in winemaking, being too early and being too late can both destroy your results. The same is true with strategies. Yes, there are advantages to being early, but history has shown that if you are too early, your venture will die before the idea catches on. You didn’t let the idea “ferment” enough.

Similarly, it’s nice to wait until you have everything figured out, but if you wait too long, you can miss out on getting in on the opportunity. The opportunity to “ferment” has already ended and all you have is a sweet gooey mess.

THE PRINCIPLE
The principle here is that the timing of your strategy can be just as important as the content of your strategy. Therefore, spend as much effort on making sure you get the timing right as you do on the content.

Too Early

The primary problem with being too early has to do with the fact that strategies are not executed in a vacuum. You are typically part of a larger supply chain. On one side are your suppliers and on the other side are your customers. If your suppliers and/or customers are not ready, then your strategy will not work, no matter how “brilliant” it is.

For example, I was talking with the Netflix guys when they were just starting out. They said their original strategy was to do streaming of video over the internet. That’s why they called the company Netflix. However, they knew that the internet infrastructure was not ready yet for mass streaming of movies. The supply side was not there yet to send all those movies digitally and the customer did not have the tools to receive files that large. It was “too early.”

Therefore, Netflix initially went the route of putting DVDs in the mail, so that they could build a brand and some loyalty while waiting for the timing to be right for their real vision. If Netflix had not waited on internet distribution, it would have gone bankrupt long before the market was ready.

So was Netflix’s original strategy great? It all depends on when it would be put into effect. Fortunately, Netflix waited, so the results turned out well. But that same strategy could have been a disaster if they executed it too soon. They had to wait for the market to “ferment” to the right level.

Too Late

One way to avoid being too early is to wait until everything is in order—to wait until the whole supply chain is fully developed and the customer is fully ready to consume. But if you wait that long, your strategy can be just as much a disaster as being too early—because now you are too late.

Executing a strategy is a lot like working with clay. When the clay is soft and moist, you can mold it into lots of different shapes. But once the clay gets dry and hard, you cannot change its shape.

That’s what happens when you wait too long to enter a market. While you were waiting, others were getting involved, molding the market in their direction while the clay was still moist. But if you wait until the market is fully established, the clay is now hard. The channels are already established. Brand preferences have already been made. Habits are already in place. The new status quo has been formed and hardened. It’s too late to make your move.

Consider Facebook. Facebook was not the first social media site. There were others, like Friendster and MySpace, already out there when Facebook started. But the market was still early enough that the clay was moist. There was still time to make a big move. And Facebook made that move at the right time.

It was not too early, because it let others pave the way to get consumers and infrastructure in place to accept the strategy. But it got in before everything was settled. That’s good timing.

If someone were to take Facebook’s strategy and do an identical implementation today, it would probably be a horrific disaster. It’s too late. Another mass oriented, general sharing site for the internet is not needed or wanted. Thanks to network effects, the cost of switching out of the established networks to go to an upstart network is too large. Even if people grumble about the problems with Facebook, they don’t switch, because Facebook is where all the connections are. They clay is hard and holding the people inside Facebook.

Times have changed. To make a move today, you have to do something different than what Facebook did. You have to move to where the clay is still moist.

There’s a great quote by comedian Garry Shandling: “They should put expiration dates on clothing so we men will know when they go out of style.” You could say the same thing about strategies…they have expiration dates, too. Good luck to your financial health if you use a strategy past its expiration date.

Managing the Time

So are we totally at the mercy of factors outside our control when it comes to timing? Is it only luck that puts us in the right place at the right time?

No. There are things we can do to alter when the timing is right. But that will only happen if we incorporate “adjusting the timing” into our strategic plan.

Consider the Apple iPod, considered to have been a great success in digital music. But success was not guaranteed. There were dozens of companies who tried to build a business in digital music players before Apple attempted it. They had all failed. There were plenty of reasons to think that Apple would also fail.

The problem was that all the necessary pieces in the supply chain were not in place. You could have the most perfect mp3 music player in the world, but if the artists and music labels weren’t ready to sell mp3 files and the customers did not have an effective way to buy mp3 files, then the device is fairly worthless. And that was the situation Apple was walking into.

Therefore, the Apple iPod strategy had to incorporate more than just designing a great player. It also had to design a way to make sure the rest of the supply chain was ready for the player. In other words, Apple had to proactively adjust market timing.

So Apple found a path to get the artists and music labels ready. Then it designed a retail outlet (iTunes), so that consumers had a way to buy the music. Then Apple spent a fortune on advertising to create the demand. These efforts made the timing right for the iPod device. Without those efforts, the iPod would have been a disaster like all of the other players that came before it.

And because the Apple solution was a closed system, it effectively closed out competition from being able to fully participate in the market Apple developed. In other words, the same movements that made the timing right for Apple also served to quickly harden the clay so that others could not take advantage of the market Apple built. The strategy effectively opened and closed the timing so that only Apple could optimize the timing in the market for digital music.

SUMMARY
You cannot just look at a strategy in a vacuum to determine if it is good or bad. You have to look at in within a context. One element of that context is timing. If the timing is right, the strategy can be very good. If the timing is wrong, that same strategy can be very bad. Therefore, timing issues need to be incorporated into your strategy. This involves two issues: 1) making sure you are not too early or too late; 2) Getting proactive to strategically alter timing more to your favor.

FINAL THOUGHTS

Gallo wines used to have a slogan: We will serve no wine before its time. That slogan works for strategies, too.

Strategic Planning Analogy #492: Straight Line Nearsightedness

THE STORY

Imagine two executives who were told to get from point A to point B. The first executive wanted to be very efficient in his task. He knew that the shortest distance between two points was a straight line, so he drew a straight line between points A & B.  “This straight line,” said the first executive, “will be my path to success.”

Unfortunately, his straight line was drawn directly through the middle of a large zoo. This posed many challenges to his straight line approach. Following the line, this executive first had to find a way to break into a lions’ cage. Then he had to find a way to get around the man-eating lions in that cage without being eaten. Then he had to find a way out of the lion’s cage on the other side. This process was repeated as he had to get through the cages of poisonous snakes, hungry crocodiles, and other wild beasts.

These challenges were very difficult, but each time, the first executive found a workable solution.

As the first executive reached point B on the other side of the zoo, he was very proud of himself.  He thought, “I’m an excellent executive. I found the shortest path to point B. Then I successfully found an answer to every challenge on that path. I overcame every obstacle and reached my destination without any serious injuries. My boss will call me a hero.”      

However, there was nobody waiting for this first executive when he got to point B.  He later found out that the second executive had gotten to point B days earlier.  What she had done was called a taxi and had the taxi driver drive around the zoo to the other side.  It took less than an hour. 

The first executive did get a response from his boss, but it was not to be called a hero.  Instead, his boss called him an idiot, told him he was fired and that he would have to personally pay for all the damages he made to the zoo.

THE ANALOGY

The first executive considered himself to be a hero because of all the great accomplishments he performed. He made a quick decision on finding the shortest path and then found solutions to all of the problems along that path. And since they were difficult and dangerous problems, his ability to solve them without injury was that much more remarkable. Yes, he had quite the long list of impressive achievements.

Yet, his boss called him an idiot. Why? Because it was an expense, destructive and excessively time-consuming way to get to Point B. The goal was not to achieve a long list of impressive feats of management, but to quickly and efficiently get to the other side of the zoo. That could be done with a quick taxi ride.

I see a similar type of occurrence in the world of strategic planning. We set a strategic goal to get from point A to point B. Then we set loose the executives to go down that path. Once the executives get moving along the path, they lose sight of the big picture and only see the obstacles immediately in front of them. Then, one by one, they tackle each of those daily obstacles.

The big picture gets lost while attention moves to the obstacles immediately in front of us. At the moment each obstacle is conquered, we may feel like a hero. But all that “heroic” effort is really a waste of time, because it is unnecessary,

That first executive could have saved a lot of time and effort by waking around those cages rather than trying to go through them. Or better yet, he could have followed the second executive’s approach and just taken a cab around the zoo. It may make for a much less impressive list of accomplishments, but the big strategic goal is accomplished a whole lot faster and easier.

THE PRINCIPLE

The principle here is that the importance of the task is often correlated to distance. In other words, achieving the big strategic goals off in the distance are usually far more important to the ultimate success of the business than conquering the crisis of the day. Yet in practice, we tend to operate in the opposite direction. We spend most of our time tackling the challenge immediately in front of us. Like that first executive, we get so intent on finding a way through the lions’ cage in front of us that we miss the quick and easy path to the bigger goal on the other side of the zoo.

We can call it nearsightedness, because the executives lose site of the distant goal and can only see the challenge immediately in front of them. In the past, I have referred to it as the tyranny of the immediate.  The immediate becomes our master and tortures us into submitting to its wishes rather than freeing us to achieve the larger, more distant (and more important) goal.

So how can we minimize activities like the first executive in the story and may our executives act more like the second executive? Here are some suggestions.

1.  Keep the Distance Continually in View

When executives become nearsighted, we need to help them by giving them corrective vision so that they can see the bigger goal in the distance all the time. If the only time your company focuses on the distant goal is at an annual off-site meeting, then the battle is lost. The near-term challenge will win the daily battle for the limited executive’s time. The distant goal will be forgotten until the next year’s annual meeting, when people wonder why they are no closer to the goal.

There are several ways to get the distant goal clearly visible on a daily basis.  For example, you can change the culture so that a simple question is asked at EVERY meeting and when important daily decisions are made.  That question is this: Does your decision get us closer to achieving our big goal or not?  Or perhaps it can be worded like this:  What decision gets us faster to where we want to ultimately be?

Another way to do it is by linking the goal to a position or philosophy.  For example, if your goal is to win via innovation, you can look at daily decisions about what to tackle as a choice to focus on those activities which most support innovation. 

I was very impressed when I recently visited the Walmart headquarters.  When I listened in on how daily decisions were being made, it was obvious that the long term goals, positions and philosophies were deeply ingrained into the process.  Every decision seemed to go through the same filter:  Is this going to help Walmart bring lower prices to their targeted consumers so that they live better lives on their limited incomes?  The challenge of the day did not seem to overpower the drive to spend time on what was most critical to their long term success.

So be a pest and make sure the big vision become imbedded in the daily grind.

2. Watch What You Reward

We like to reward “heroic” levels of effort which overcome huge challenges.  It’s human nature.  But often times, that effort is just foolishness in disguise. That first executive in the story overcame numerous challenges in that zoo.  But it was all an effort in foolishness that kept him from achieving the important goal.

Spending a lot of time and effort to overcome a huge challenge is huge mistake if the challenge can be avoided. You don’t need to fix problems if you can avoid them in the first place (like going around, rather than through a lions’ cage). And some problems aren’t worth the effort to fix them (the cost benefit ratio is wrong). And then there are the opportunity costs…all that effort to fix that problem is effort that was unavailable for more important tasks.

Therefore, don’t automatically reward great effort which overcame a challenge. First, find out if the problem could have been avoided or whether the problem was worth the effort or whether the effort prevented more important accomplishments.  If this is the case, then perhaps punishment is more appropriate.

People do what gets rewarded.  If overcoming challenges is what gets rewarded, then people will find (or even create) lots of challenges to work on.  They will be like the first executive in the story—busy on the wrong things, but looking good while doing it. That second executive didn’t look all that heroic (all she did was take a taxi).  But she was the one who got the important big picture stuff accomplished. That is what should be rewarded.

The more you link rewards to achieving the big picture, the more likely folks will focus on that.  Remember, standing on your head while juggling may take more effort and look more impressive than walking, but it will never get you to your destination.  Those who just keep walking towards the goal are the real heroes, not the jugglers of the inconsequential “crisis of the day.”    

3. Just Say No

Although it is tempting to want to roll up one’s sleeves to tackle the challenge of the day, it may be more heroic to just say no.  Don’t spend any time focused on it at all.  This can be done in two ways.  First, one can set up rules in advance for how issues are to be handled.  That way, the old crisis of the day is no longer a crisis because we have established the protocol in advance for how to handle it.  Instead, the old challenge requiring executive effort becomes a routine event that just goes through the system based on the established protocol. You’d be surprised at how many crises are just routine events that are merely missing a protocol.

Second, one can delegate the problem to someone else lower in the organization.  This will free up your time to devote to more critical long-term issues that only you can solve. 

I’m reminded of what management guru Peter Drucker said in his book “The Effective Executive: The Definitive Guide to Getting the Right Things Done.”  In the book, Drucker says, “Effective executives concentrate on the few major areas where superior performance will produce outstanding results. They force themselves to set priorities and stay with their priority decisions. They know that they have no choice but to do first things first—and second things not at all. The alternative is to get nothing done.”

This is what my second executive in the story did.  She ignored the zoo entirely and only did the important thing—getting to point B quickly and effectively by taxi.

SUMMARY

Although the challenges immediately in front of us may appear at the moment to be the best use of our time, that is rarely true.  Instead, it is getting to those more distant major strategic goals which is the most effective use of our time.  To help get executives focused on the bigger picture, we need to a) keep the distance in view on a daily basis, b) stop rewarding great effort focused on the wrong thing, and c) just say no to the crisis of the day.

FINAL THOUGHTS

If you look at a newspaper from a week ago, you may find that what seemed important enough to put on the front page then no longer seems all that critical if read today.  The same can be said about most of the crises of the day.  A week later you may wonder why it seemed so important then.