Crimes Against Strategy

Prosecutor: “Your honor, ladies and gentlemen of the jury. Today we’ll prove that the defendant did knowingly and willfully kill his business strategy in what can only be described as a complete and utter disregard for human intelligence. On the morning of June 7^th, 2010, where exactly was your business sense?”

Defendant: “Hmmm…we had just finished another meeting where I skillfully avoided any accountability for two floundering initiatives. Not wanting to jeopardize my ascension up the corporate ladder, I then passed another decision I should have made onto the group in the guise of ensuring we had “consensus” on the issue. To further confuse and delay the process, I concocted several sub-committees to further explore the issues. Naturally, we left the meeting with absolutely no progress at all on any of the important agenda items.”

Prosecutor: “So you admit that you have in fact killed the business strategy?”

Defendant: “On the contrary. I have built a strategy of innovation. In the meeting in question on June 7th, I spent 45 minutes running a lively discussion of what type of logo coffee mug we should be giving away at the financially draining trade-shows we mindlessly agree to attend each year. I suggested giving away a logo coffee mug without a handle, to show the market exactly how innovative we are.”

Prosecutor: “You are also being charged with the crime of trying to be all things to all people. Why exactly hasn’t your business made the trade-offs necessary to focus your resources on specific customer groups to grow revenue?”

Defendant: “You obviously haven’t spent much time in the real world of business. In order to make the types of strategic trade-offs you’re referring to, we’d have to take time out from our adrenaline-jazzed fire fighting, running around with our heads cut off, tactical goose-chases. Next we’d have to choose the right questions, frameworks, and models to strategically think through the four key areas of market, customers, competitors and company. Then we’d have to take those insights and channel them into an action plan that meets our goals and objectives. Finally, we’d have to communicate this strategy to the people who actually implement it on a daily basis. Now do you see how ridiculous the idea of developing and executing strategy really is in a typical company?”

Prosecutor: “One final question: your company manages to survive each year but profits continue to dwindle at an alarming rate. How do you account for this?”

Defendant: “That’s simple. Our corporate attorneys have said that we need to be environmentally conscious or friendly or eco-something. I then read an article my daughter, a freshman at Cal-Berkeley, sent me from The Economist that said being green could actually help companies make money. So by creating a strategy-free business environment we’re reducing our level of profit emissions and saving the planet.”

Prosecutor: “I rest my case.”

Destination Unknown

A feature on many of today’s automobiles is the voice navigation system. Here’s what it might sound like if the voice navigation system (VNS) were applied to a business:

VNS (alluring female voice): Please enter a destination.

Manager: I’d like to grow market share and increase shareholder value.

VNS: Please enter a valid destination.

Manager: I’ve already told you I want to grow market share and increase shareholder value. Oh yeah, and we want to be a leader in innovation…as long as we can reduce costs by 15% this year.

VNS: Very well. Proceed one-half mile and then turn left, right, straight and reverse, all at the same time.

Manager: But that’s impossible. I can’t do all those things at once.

VNS: Precisely. You haven’t really honed in on what your business is trying to achieve. Where exactly is your destination?

Manager: Uummm…

VNS: Where exactly is your destination?

Where exactly is YOUR destination? One of the disadvantages of our reliance on computing technology is the atrophy of our creative, spatial insights. Such insights are critical to envisioning where we want our businesses to be a year, or five years, from now. Simply spitting out numbers relative to EBIDTA, operating margins and return to shareholders is not good enough and does little to energize the organization. Our efforts to set strong strategic direction inherently depend on a clear understanding of the aspirational components of the business: mission, vision, goals, and objectives.

If you have any examples of great or just plain awful ones, let’s take a look.

A Common Seuss Approach to Strategy

People like to make strategy complex. I don’t. It’s essence is as simple as a Dr. Seuss book:

I am strategic. Strategic I am.
Do you like to think strategically?

I do not like to think strategically,
not in an office
not in a tree.

It’s more fun to think tactically,
stuff I can touch,
stuff I can see.

I do not like to think strategically,
I haven’t the time
to be so leisurely.

Setting good plans, I’ll leave to others.
Gotta check my Blackberry.
Even in bed, under the covers.

I do not like to think strategically.
Growing business and beating competitors,
simply isn’t for me.

10th place in the market isn’t so bad,
especially when you consider,
it’s the best we’ve ever had.

No, I do not like to think strategically,
I prefer the adrenaline rush,
of mindless reactivity.

You do not like to think strategically,
so you say.
Try it, try it and you may.

Say! I do like to think strategically.
In the office and conference room too,
new ideas and insights are clearly in view.

While others around me only fight fires,
I’m focusing my resources,
taking the business higher.

I’ve scheduled time, just to think.
Now my goals and strategies,
are in perfect sync.

I do so like to think strategically,
creating differentiated value
my customers can clearly see.

Thank you, thank you!
Strategic-I-am.

Strategy as Part of “the Big Picture”

We often refer to strategy as “the big picture.” What we need to remember is that strategy too is part of a bigger picture. I had the pleasure of speaking with Wharton professor of management Stewart Friedman about a leader’s ability to manage the whole. Stew has written the bestselling book Total Leadership and has a thought-provoking blog simply titled “Stew Friedman’s blog.”

One of the points I found most interesting in our conversation was Stew’s belief that leaders need to “be real, be whole and be innovative.” When we consider strategy, these same elements are equally important. As I’ve written before, strategy inherently is about being different, not better, than the competition (be real). It’s also about the continual awareness of the four key areas of the business: market, customers, competitors and company (be whole). And finally, good strategy continually challenges old assumptions and adds new value to customers (be innovative).

Understanding that our strategy is also part of a bigger picture is critical. People, culture, organizational structure, compensation, processes, suppliers, and systems all play a role in how effective our strategy is. Taking time to assess and manage these elements of the strategy ecosystem can improve your picture–no matter how big it is.

Strategy Speak

I had the pleasure of speaking with Daily Herald business columnist Jim Kendall on the evolving role of strategic planning in today’s economic climate. Jim’s article entitled, “How to Develop a Strategic Plan, Then Make it Work,” focused on the challenges many of us face today when it comes to setting a course for our business.

Jim astutely pointed out that few companies are willing and able to both develop great strategy and then execute that strategy on a continual basis. The biggest obstacle cited is a lack of time. Many managers simply feel they don’t have time to step back from their flurry of activity to actually think about the business in a methodical and comprehensive way.

A good first step to overcome the issue of a lack of time is to begin adding strategy as an agenda item to the weekly/monthly staff meeting. Then build in a few strategic thinking tools and frameworks to those discussions to get people thinking in new and fresh ways about the business. Before you know it, people are thinking and acting strategically, and doing so more than the typical once-a-year at the offsite meeting. The sooner you transform strategy from a pilgrimage to a dialogue, the quicker you’ll get to profitable growth.

What tools and techniques have you found successful in developing and executing your strategic plan on a regular basis?

The Strategy Sandwich

Ever feel like you’re in the middle of a strategy sandwich? Boy, that peanut butter is hard to get off.

In a number of organizations I’ve facilitated strategic planning sessions with this year,  the issue of managers getting pushed by strategy on both sides has come up. Mid-level managers say they are asked by senior management to implement strategy and then are also held accountable for strategies acted out in the levels below them. Hence, the strategy sandwich phenomenon. It’s characterized by a feeling of “I don’t have any control over strategy!”

In many organizations, it’s true that mid-level managers are required to execute strategies they have had little input on. Is this frustrating? Hell yes! What we need to realize though, is that managers in this position are still responsible for their strategies–the ones they are intentionally or unintentionally practicing based on how they allocate their resources (time, talent and budget). While you may not have control over “strategy from the top,” you certainly have a say in your strategy, whether it’s formally acknowledged or not. Instead of constantly pushing back on the bread, find the areas where you can leverage your strategy with the others and spread it on thick.

How have you handled being in the middle of the strategy sandwich? Speak up or forever hold your mustard.

“Play Ball!” Strategy Spring Training

Top 5 SWOT Analysis Traps

As with any business model, the reason a SWOT analysis is performed is to generate insights about the business and drive planning efforts. There are five SWOT traps that we need to be aware of to prevent our efforts from being an exercise in futility:

1.  The Laundry List
When listing the individual elements under each category, careful thought should be given to the importance of each item. A laundry list of 7-10 factors for each category is fine in the first draft. However, only the elements with significant impact on the business should be recorded in the final analysis (approximately 3-5). Marshaling the mental discipline to create a tight SWOT analysis enables you to move into planning mode with greater clarity and focus—two keys to strong strategy.

2.  Generalities
There is a fine line between the factors in the SWOT analysis being brief and being meaningless. How many times have you seen a SWOT analysis with “quality” listed under the strengths or weaknesses column? That’s about as useful as putting down the word “the.” The factors listed need to be specific enough so that someone reading the analysis without the creator sitting next to them can understand to a reasonable degree what is meant by the factor. Recording “manufacturing line breakdowns” rather than “quality” as a weakness is much more helpful because it alerts the reader to the specific cause of the issue.

3.  Special “Effects” Only
Another common mistake is listing the effect rather than the cause of a strength or weakness. An example of a strength often listed is “#1 market share.” What would be much more helpful is to list the cause of that
#1 market share—i.e., consultative selling skills of sales reps, 3:1 advertising spend ratio versus the competition, etc. Listing the cause also plays another important role by allowing managers to more easily identify and share best practices among the group. Knowing what’s driving market share leadership can be usefully applied to other groups within the organization.

4.  Mistaking Influence for Control
Despite the clearly defined lines of strengths/weaknesses being internal and controllable and opportunities/threats being external and influenced, factors are often mistakenly placed in the model. The rule of thumb is if you can allocate your resources to a factor and control it, it is a strength/weakness. If your resource allocation can influence but not necessarily control the factor, it is an opportunity/threat.

5.  Not Quantifying Opportunities & Threats
Think way back to those lectures on Einstein’s theories of general and special relativity (as painful as that might be). In modern physics, the mass of an object is a relative quantity. In the world of SWOT analysis, the size of opportunities and threats are relative quantities as well. Managers of two different brands both might list the opportunity of “large Medicare population” for their biotech product. However, “large” for one manager might mean a $2 million opportunity while “large” for the other manager might mean a $20 million opportunity. If we haven’t quantified the opportunity in the SWOT analysis then how will we know? More importantly, how will any of the other key players in the organization know? Quantifying opportunities and threats allows you to more confidently allocate your limited resources to those that will provide the greatest return on investment. Sometimes we don’t have all of the necessary data to make an exact quantification of the opportunity/threat. That’s when your expertise comes into play so go ahead and ballpark it—give a rough percentage or ratio (i.e., competitor ad spending is 2:1 in this market segment).

What other traps or pitfalls have you seen in doing SWOT Analysis? Would enjoy hearing about them.

SWOT Analysis Gone Wrong

Like most things utterly familiar, SWOT analysis has been taken for granted to the point that it has become perhaps the most misused tool in the manager’s box. A good SWOT analysis is one of the cornerstones of sound strategy. A half-baked SWOT analysis (and most of them are) prevents businesses from realizing their full potential and weds them to mediocrity.

The acronym SWOT stands for strengths, weaknesses, opportunities and threats. Strengths and weaknesses are internal factors we generally have control over. Opportunities and threats are external factors that we can potentially influence.

The SWOT analysis model helps us answer two fundamental questions:
1. What do we have (strengths and weaknesses)?
2. What might we do (opportunities and threats)?

Below is a humorous look at some of the most common errors in performing a SWOT Analysis:

Love to hear some of the funnier things you’ve seen in strategic planning sessions, including SWOT Analysis.

Time: Are You Spending or Investing?

Friday is almost in the rear-view mirror. How much time did you spend talking about strategic issues this week?

Research published in the Harvard Business Review showed that 85% of executive leadership teams spend less than one hour per month discussing strategy, with 50% spending no time at all. Contrast that with Amazon.com. Amazon’s CEO Jeff Bezos (recently rated the 7^th best performing CEO in the world in a study by INSEAD) said that his senior management team spends four hours every Tuesday discussing strategic issues. Not budget. Not tactics. Not operations. Strategy. He expects those strategy discussions to happen throughout the organization. This type of discipline has played an integral role in Bezos’ ability to increase the wealth of Amazon.com’s shareholders by $37 billion over the past 13 years. In fact, while many organizations are continuing to blame the economy for their mediocre performance, Amazon.com just posted record profit and sales (WSJ article: “Amazon’s Profit Soars”).

While investing four hours every Tuesday to discuss strategic issues may not seem realistic for you, there should be a happy medium between four hours a week and once-a-year for two days at the strategic planning off-site meeting held at the Holiday Inn. Bring a notebook to your next manager’s meeting and jot down the topics and time spent on them. Afterwards, classify each of the items with the following designations: S: Strategic, F: Financials, O: Operations, T: Tactics. What does your breakdown look like?

What other ways have you found helpful in facilitating strategic conversations?