Strategic Thinking & Strategic Action

Out of the wilderness

There are times in my life when I need to take a trek, explore new territory, look at things from different angles, hear new voices, let ideas simmer and stew, start new endeavors and then push them along to see where they go.

That's what I've been doing the past seven weeks rather than blogging on strategic thinking and strategic action.

So what did I learn and stir up that others interested in strategic thinking and strategic action might find useful?

First, I spent the best part of a week at the Association for Strategic Planning's annual conference and scored some great in-depth learning about important tools and approaches.  I will delve more into what I learned and implications in future posts, but here are several things worth sharing now in condensed form.

Balanced Scorecard

I took a deep dive into The Balanced Scorecard strategic planning methodology, in sessions conducted by Howard Rohm and Gail Perry of The Balanced Scorecard Institute.  For those not knowledgeable about the Balanced Scorecard, which was developed by Robert Kaplan and David Norton, it is useful in answering key questions about:

• Opportunities and strengths you need to leverage.
• Weaknesses or threats you need to overcome.
• Your strategy profile areas.
• Processes you must improve
• Capabilities and capacities you need.

The Balanced Scorecard helps you balance the organization's competing needs and interests going forward.  Go to The Balanced Scorecard Institute's website to learn more.

Rohm stressed that the Advanced Balanced Scorecard System goes beyond balancing needs and interests by:

• Becoming a planning and management system that drives higher organizational performance.
• Integrating strategic planning and strategic execution.
• Clarifying and communicating the organization's vision, mission and strategy to employees and stakeholders.
• Aligning day-to-day work to mission and strategy.
• Prioritizing programs and projects.
• Using strategic performance measures and targets to measure results.
• Providing strategic guidance for budget performance and operational planning.

I don't doubt the advanced use of the Balanced Scorecard can deliver the benefits Rohm outlined, but I am concerned about the complexity of application and maintenance of the system.  I hear repeatedly from those using the Balanced Scorecard in its less comprehensive application that it's a lot to implement, maintain and perfect.  Is the typical medium-sized or smaller organization ready for the commitment over time and across the organization that using the Balanced Scorecard as a full-blown planning and management system will take?

Scenario Planning

Those who have followed my blog posts know I am obsessed about risk and how to address it in strategic planning.  That's why I wanted to be sure to take in the session on scenario planning conducted by my friend Diane Meister of Meridian Associates, Inc.

Here's a short summary article from The Economist about scenario planning.  A telling indication of scenario planning's value cited in the article is that the New York Stock Exchange built a second trading floor outside of Manhattan prior to the 9-11 attacks as a result of its scenario planning activities.

Meister advocates using scenario planning to support a three-year strategic risk management plan.  Her approach calls for smaller and medium-sized organizations not to address a plethora of risks but to ferret out one to three high impact risks that could derail current growth strategies and key initiatives.  For each of these risks, develop a simple scenario with a clear name that everyone will quickly grasp.  Spend more time on developing high-level strategies to address each story rather than on perfecting the stories.  Then identify and track predictive indicators and act early if it seems one of the stories is starting to unfold.  Make a small bet when things start to go the wrong way, such as beginning work on a new product development concept.

The idea of focusing on the potential biggest risks seems very wise to me, as does Meister's urging that outsiders be involved in an organization's strategic risk identification process to give it a wider perspective from different viewpoints.

Faster, smarter decision cycles

Leland Russell, co-author of Winning in FastTime, and consultant Joyce Reynolds-Sinclair presented best practice approaches to accelerate and improve decision cycles.  They stress that the "new normal" involves increasing complexity and speed due to information technology, global competition and interwoven financial markets.  We are called on to improve the quality of our organizational strategies and plans and to conceive and act on them in shortened decision cycles.

While their approaches to deal with this increased complexity and speed are too lengthy to describe here, the basics are offered on the FastTime Leadership website.

The call for more robust and agile planning is one we should not ignore. I continue to see lengthy and over-involved planning processes being applied.  The worry, of course, is the ship will have left the dock before the passengers arrive, that the strategies will be obsolete or ineffective by the time they are applied.  

2012 Strategic Leader Survey

Another key activity I undertook in my time away was to develop and issue an e-survey to a wide variety of company and non-profit leaders.  The purpose was to learn about how their organizations plan and make decisions and what they and their organizations need to become more strategic and gain the greater success that strategic planning and strategic management offer.  Here are some important gleanings from the 2012 Strategic Leader Survey, which I just wrapped up:

• A "strategic gap" exists in many organizations.  While 81% of the organizational leaders responding to the survey say strategic planning plays more than a slightly significant role in their organization, only 26% say their organization makes strategic decisions using a formal strategic planning process.  Nearly two-thirds say strategic decisions are made by the CEO or a small group.
• The top three changes that the leaders would make in their organization's approach to strategy development if they only could are: (1) Improve identification of and focus on strategic issues; (2) Develop a method to monitor process again strategic plan; and (3) Improve company alignment with the strategic plan.
• When asked about a multitude of skills that the leaders might think important for strategic management, the five in which the leaders say they are in most need of developing greater competencies are: (1) Identifying market opportunities; (2) Strategy formulation; (3) Communicating vision and strategy; (4) Leading change; and (5) Business planning.

You can learn more about the state of strategic planning and strategic management and how to improve it by getting the full 2012 Strategic Leader Survey Report at http://strategicbusinessleader.com/strategicleadersurvey.html.

Strategy Groups

A final channel of activity has been to explore how peer groups of non-competitive organizational leaders might be combined with information presented by subject matter experts and one-on-one strategy consultations with the participants to help group participants become strategic leaders. 

I have been seeking ways to better promote strategic thinking, planning and action for greater organizational success, to push people and organizations to set and achieve lofty goals.  My quest has led me to the strategy group concept, which I am now ready to roll out as an option for those interested in gaining the greater benefits of strategic thinking, planning and action.  The 2012 Strategic Leader Survey validated the need for such groups and an interest in participation.  You can learn more the strategy groups concept on the Strategic Business Leader website.

 

Hello, Vandelay Industries

Remember the classic Seinfeld episode?  

George Costanza is out of time on his unemployment and he works harder than ever on his scheme to get a 13-week extension. He tells the unemployment office he is close to a job with fictitious "Vandelay Industries." He then gives Jerry Seinfeld's home address and phone number for the employment counselor to check out his story. 

After the interview, George rushes into Jerry's apartment [here's a clip] and asks, "Did anybody call here asking for Vandelay Industries?" He implores Jerry, "When the phone rings, you have to answer 'Vandelay Industries.'" Jerry replies, "I'm Vandelay Industries? What is that?" George explains, "You're in latex."  Jerry asks, "What do I do with latex?" George answers, "I don't know, you manufacture it." Jerry asks, "And what do I say about you?" George explains, "You're considering hiring me for your latex salesman." Jerry responds, "I'm gonna hire you as my latex salesman? I don't think so...If you think I'm looking for someone to just sit at a desk, pushing papers around, you can forget it. I get enough headaches just trying to manufacture the stuff."

Jerry then answers a phone call as George has asked, fronting as Vandaley Industries' office.  Later, Cosmo Kramer wanders into the apartment, picks up the ringing phone, and says, "Hello... What Delay Industries?" George yells from the bathroom, "Vandelay! Say Vandelay!" But Kramer ignores George and says to the caller, "No, you're way, way, way off. Well yeah, that's the right number, but this is an apartment." George rushes out of the toilet with his pants at his knees yelling "Vandelay! Say Vandelay Industries!" He falls down as Jerry enters the room, sees George lying on the floor with his pants at his ankles and says, "And you wanna be my latex salesman?"

This funny story of George's potential employment with Vandelay Industries, part of what is reportedly Jerry Seinfeld's favorite episode of his show, came to mind a few days ago when both Kraft Foods and Abbott Laboratories announced names for their new spin-off companies.

Kraft named its snack foods company spin-off Mondelēz International, Inc.  Abbott named its ethical drug company spin-off AbbVie.

On their face, both names sound as fictious as "Vandelay Industries."  At least to my ear. But they are not fictitious.  They are real.

Mondelēz emerged from 1,500 employee suggestions, with two ideas pushed together, "Monde" picked because it means "world" in French and, according to Kraft spokesperson Michael Mitchell, "lez" being "a play on délice [French for delight] or delicioso in Spanish."  (Here's a Bloomberg Businessweek article on the name.)  So are we to think of Oreos cookies as "world delight international"? 

AbbVie is likewise a conjoined name, this one delivered by a branding firm.  "Abb" of course retains a link to its Abbott derivation and "vie" comes from the Latin root for life. (Here's a Reuters article on the name.) So it's "'whatever Abb means to you' life" for Humira and all the other drugs that Abbott Labs now offers. 

Nonetheless, whatever I think of these contrived names, they may stand the test of time and become second nature to us and connote the excellent products that the companies offer.  (Though Huffington Post is out with a story suggesting that "Mondelēz" means "oral sex" in Russian slang, which, if true, suggests that Kraft may have a bigger issue on its hands than a name that is seen by some as too clever and not easily pronounced.)

Taking a 10,000 foot view of these naming decisions, the message I get is that naming a company or product or service is a fundamental strategic decision.  Brand is the customer-facing, stakeholder-facing embodiment of the organization.  If the name is "off," then the organization is disadvantaged in developing a clear and compelling identity and attracting and cementing those with whom it wants and needs relationships.

Having named many ventures and offerings, I can attest that navigating linguistic, connotative, legal and other obstacles to find a great name can be very difficult.  Just finding a usable URL linking to the name is often a real challenge.

George Costanza thought Vandelay Industries would work for him (and it did until Kramer blew it).  Kraft and Abbott through their best efforts likewise may have crafted names that meet the marks.  I can't say whether in the end they have succeeded.  (Though, again, I suspect "oral sex" was not a desired connotation!)

What I can say is that you need to start and end the "name game" with the question: "Does this name do the best possible job of promoting our strategic objectives and branding our company, product or service?"  If the answer is not a resounding "yes," then best to reconsider the name and keep working to find something better.  

Stop rearranging the deck chairs!

"The future depends on what we do in the present." – Mahatma Gandhi

It happened several times this past week.  I'm networking and meet a business person.  I introduce myself as a consultant dealing in organizational strategy.  The other person responds with something like, "Oh, I'm in strategy, too, I'm in change management."  Yet, when we talk it becomes clear they are not operating at the strategic level, they deal with tactics, facilitating the introduction and development of projects, programs or processes in or between functional areas or departments (IT and accounting, for instance).

No doubt the work of these fellow networkers is of great value to their organizations. But let's recognize two fundamental points:

• Tactics follow strategies: They are not strategies.
• "Change management" and "strategic management" do necessarily equate.

Why don't we get that?

Evidence abounds that we tend not to see that change is often non-strategic and that when we think we are being strategic in pursuing change we often are being tactical instead.

Consider this quote from a change management blog: "Risk assessment of a change management initiative is based on the premise that 'organisational risk' is the inverse of  'change readiness.' In other words, the more ready the organisation is to change, the lower the risk of failure of the change initiative." - "Risk versus Readiness," Strategies for Managing Change.  

No argument that not being ready for change presents a risk of failure for a change initiative.  But isn't the much larger question whether whatever change is effected will appropriately transform the organization?  Looking through a strategy lens, the biggest risk of failure comes not from whether the organization is ready for change, but whether the necessary change will be strategic versus tactical.  "Captain, we have hit an iceberg.  We need to do something!"  "Yes, First Mate, have the crew move the deck chairs to the bow to give the passengers a better view of the iceberg."

In my recent blog post on problems with strategic planning, "Recognize the problem," one strategic planning issue I identified is "confusing strategies with tactics (changing the organization versus making it more efficient)."

Often there is recognition that things need to change.  The issue is the nature of the change we seek or wind up with in the case where change is called for.

Strategic planning facilitators like me will tell you that one of the most important things we can do for organizations is to move the focus from tactical - day-to-day, projects, processes, where we have been and what we do, industry practices and standards, what the competition is doing, and so on - to strategic - how do we fundamentally change the organization to clearly differentiate ourselves, become exponentially better and deliver much greater value to our customers and other stakeholders.

Jan Tucker's Suite 101 blog post, "Types of Change: Developmental, Transitional and Transformational," observes, "The three types of change that occur most frequently in organizations are developmental, transitional and transformational. Change management theories effectively support how to deal with developmental and transitional change, but are less effective at dealing with successfully implementing transformational change."   He explains, "Developmental change occurs when a company makes an improvement to their current business," and "transitional change is more intrusive than developmental change as it replaces existing processes or procedures with something that is completely new to the company." But "when companies are faced with the emergence of radically different technologies, significant changes in supply and demand, unexpected competition, lack of revenue or other major shifts in how they do business, developmental or transitional change may not offer the company the solution they need to stay competitive. Instead of methodically implementing new processes, the company may be forced to drastically transform themselves."

So why don't we recognize that transformational change, not change in tactics or processes, is what strategies need to bring about?  Maybe it's because we are most comfortable with what we know and expect, as opposed to what we don't know and is outside of our experience.  Maybe it's because true transformational change is viewed as risky, while better perfecting what's worked is viewed as less risky.  

Even when the need to change is obvious and the new path is clear, actually changing is hard and faces resistance.  Consider this finding: "Most people are not altering their diets or lifestyles despite knowing how living unhealthily can increase their risk of cancer, a BBC survey finds."

So be discerning when people talk to you about the change they think your organization should pursue. Ask yourself, is this really strategic in nature? Is it transformational change to respond to the demands of a changing environment?  Or are we just improving the view of the iceberg from the deck chairs?

Herding the cats

Does a cat know it's a cat?  If it knows it's cat - or doesn't know it's a cat - how does that influence its behavior?

As a cat owner, I can tell you cats are highly assertive and very effective at getting their way.  Sam the cat has me well trained to meet his needs.  I am not sure what he thinks he is, but he has a strong self identity from which flows the set of actions he takes every day: sleep, eat, play, roam, watch birds, seek affection, bite, and so on.

We humans, of course, have even more self awareness, and how we act and what we do are driven by who we are, what we know and what we want.  In our case, being more highly self-aware, we have the ability to plan and to envision success and pursue results over time.  My cat's planning is tactical and his planning horizon is the time it takes him to sneak up on the rabbit in the garden.  Our planning can be strategic and our time horizon can span years, our expected lifetime and or even future generations.

Further, we have a rich context to draw from when we plan ahead.  To inform our planning we have experience, know facts, can tap others' experience and insights, and can learn about trends, opportunities and threats.  This rich context is magnified when the planning moves from a solo practice to a group process, where a wider body of self-aware people construct a compelling vision of future success for the organization and develop strategies that will move the organization toward the vision, to a better place.

When I facilitate group planning efforts I use Participative Process Consulting techniques I learned through the Institute of Management Consultants.  These techniques are based on the understanding that the consultant's role is to bring and facilitate a process in which the participants, armed with data and other resources, define the problem and find the solution.  The consultant, unless he or she is truly a subject matter expert, does not supply answers.  At the most, he or she generates vital information ahead of the process (organizational or stakeholder survey and environmental scan), supplies insights and facts, and offers checks on "group think," ignored information, faulty reasoning and hidden biases.  

I see few references to the application this form of participative decision-making or consensus decision-making in strategic planning.  Typically the process is merely referred to as "the planning group plans."  Sometimes the value of outside facilitation is recognized, but often it is not.  

My cat may have a simple life, limited options and enough self awareness to seamlessly decide what to do at a given time.  Having been involved in and facilitated many planning processes over my career, I can tell you it's not that simple to get a group of board members and/or executives aligned on a stretch vision and effective strategies.   Aligned they must get for strategic planning to work, but the process can be akin to herding cats.

So what's the message here?  Three points:

• An effective strategic plan is not something imposed on the organization by a consultant, a facilitator or any individual in the organization - Board chair, CEO or any other single leader.
• Effective planning harnesses the knowledge and insights of the organizational leadership team, augmented by whatever relevant information and external insights that can be tapped. The team finds the shared vision and the strategies to move to the organization to the vision.
• Cats don't do a great job of herding themselves and getting anywhere together.  Best to engage an unbiased outside facilitator to be the herder and to supply the process that moves the group to the point of strategy implementation.

 

Recognize the problem

As a strategic planning professional, I'm driven by these questions:

1. How can I be a better strategic planner?
2. What's "state of the art" and "cutting edge" in strategic planning; What are significant strategic planning trends?
3. What are the problems with strategic planning and how can they be addressed to improve planning use, process and outcomes?

I've initiated discussions to try to get at these issues in three LinkedIn groups: Strategic Planning Xchange, Association for Strategic Planning and Strategic Planning Society.  The discussions have been robust, offering great insight on planning issues and trends.

This activity has led me to think about all of the barriers to effective strategic planning and implementation.  In the theoretical world, planning works.  In the real world, planning often fails or under-delivers. In my own strategic planning experience, problems I've had to deal with include timidity to drive change, pre-wired outcomes, lack of environmental awareness, lack of organizational input and, most often, lack of implementation.

With the view that the first step in solving a problem is to recognize it, I have started my list of the big problems that strategic planning as a core business discipline encounters in the real world: 

• Getting organizations to plan in the first place.
• Not developing a dynamic, compelling, "stretch yet achievable" shared future vision of future success.
• Not informing the planning process with input from key stakeholders.
• Not informing the planning process with the fruits of an environmental scan.
• Avoiding having the planning process result in a pre-determined outcome determined by the leader.
• Not using an objective third party to facilitate the planning process.
• Not getting wide buy-in to the plan.
• Not seeking "transformational" and "disruptive" strategies (avoiding "incrementalism" and "staying pat masquerading as strategy formulation").
• Not using planning as the way to make the hard choices about what the organization will not do.
• Having an over-involved, slow planning process.
• Confusing strategies with tactics (changing the organization versus making it more efficient).
• Planning not being an on-going, repetitive process.
• Lack of effective implementation and follow-though.
• Timid leadership that is reluctant to drive organizational change as the road to success.
• Not having the flexibility and agility to deal with unanticipated environmental and competitive change.
• Not accounting for risk factors in strategy formulation.
• No gaming varied strategic scenarios and not having contingencies for these scenarios.

What would you add to the list?

Having recognized these problems, now I'm obligated to examine these issues in more depth to see how best to tackle them for better planning results.  Stay tuned!

10 benchmarks for effective strategies

“All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.” - Sun Tzu

Strategies are the major planned steps that will move the organization across the strategic gap from where it is today and where it otherwise is heading to the brighter future offered by the organization's shared vision of success.

Organizational success most always arises from crafting and executing strategies to move toward a vision.

“The future doesn't just happen – it's shaped by decisions.” - Paul Tagliabue

What’s important is that the organization finds and pursues effective strategies.  Otherwise, while a vision of success may exist, progress toward it will not be realized. 

“Without a strategy, the organization is like a ship without a rudder, going around in circles.  It’s like a tramp; it has no place to go.” - Joel Ross and Michael Kami

As summarized in the graphic, effective strategies meet the following ten benchmarks:

1.   Contribution.  Effective strategies contribute to the achievement of the strategic vision.  They are concerned with “what can be” for the organization.

“Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.” - Miyamoto Musashi

2.   Intentionality.  Effective strategies empower the organization by focusing it on an intentional plan of action.

“You have brains in your head. You have feet in your shoes.  You can steer yourself any direction you choose.” - Theodor Seuss Geisel

3.   Importance.  Effective strategies focus on significant organizational needs.

“Things which matter most must never be at the mercy of things which matter least.” - Johann Wolfgang von Goethe

4.   Impact.  Effective strategies achieve results.

“Even if you're on the right track, you'll get run over if you just sit there.” - Will Rogers

5.   Challenge.  Effective strategies challenge the organization to perform at higher levels and in new ways.

“The task of a leader is to get his people from where they are to where they have not been.” - Henry Kissinger

6.   Specificity.  Effective strategies are well articulated and easily understood.

“No problem can be solved until it is reduced to some simple form. The changing of a vague difficulty into a specific, concrete form is a very essential element in thinking.” - J. P. Morgan

7.    Time.  Effective strategies are framed by a specific time period, typically within one year.  (Multi-year strategies are better broken down into shorter steps.)

“A goal is a dream with a deadline.” - Napoleon Hill

8.    Measurablity.  The results of effective strategies can be monitored and assessed.

“Measure what is measurable, and make measurable what is not so.” - Galileo Galilei

9.   Realism.  Effective strategies can realistically be achieved by the organization within the stated time frame.

“You set your goals to a point where they're attainable, but far enough away you have to really go get them.” - Rafael Palmeiro

10.   Limitation.  Effective strategies by their very nature dictate what the organization will not do during the time period; by limiting the organization they increase its ability to do the things that have the greatest chance of moving it toward the strategic vision.

“The essence of strategy is that you must set limits on what you're trying to accomplish.” - Michael Porter

Bring in 'the implementers'

Want to make a strategist cringe?  These statements can do it:   

• "Come on, let's get down to brass tacks."
  
• "The Devil's in the details."
  
• "Stop talking. Just go for it."
  
• "The solution is obvious.  Why are we dancing around?"
  
• "This is the problem. Let's just solve it!"
  
• "Let's not waste time on this."

The statements are often made by people whose major focus and great concern is on implementation and execution: Getting the job done.

The challenge for these types of people is that strategic planning is a deliberate process.  Strategic planning occurs in a realm that can make operations, sales and other highly tactical, results-focused people very uncomfortable.  Taking a big step back, pushing thought laterally, entertaining other realities, trying to look over the horizon to see what is or will be there, gaming various futures and seeking strategies that will reroute or even upend the organization can be quite unnerving to people who are focused on winning the current battle being fought on the ground.
 
Yet these people are to be celebrated, because they are the implementers.  Without implementing strategies, however elegant the strategic plan and resulting strategies are, the organization will go nowhere and certainly will not change for the better.
 
Here's the not so hidden secret for more effective planning results: The implementers are most effective and valuable for the organization when they "get" where the tactical steps they are implementing come from.  With heightened strategic awareness, implementers can better see what's working and what is not, where the action steps teased out in the strategic planning process need to be altered to reach the strategic goal.  They can be more situational based on the effectiveness of the action steps in getting the organization to its desired destination.
 
This is an argument for bringing the entire organization into the strategic planning process, even those individuals not in strategic, policy roles.  This does not mean that every organization member needs to be on the planning team and or be part of the group that develops the plan or that approves it.  It suggests, however, the wisdom of seeking input from the implementers in the process of developing the plan, consulting with appropriate implementers as action steps are being shaped, and sitting with the implementers and reviewing the plan and plan logic with them before implementation begins.

Let's call the process of bringing the implementers into the strategic planning process in appropriate ways "strategic implementation."   Effective implementation  - indeed, strategic implementation - depends on the buy-in of the implementers.  Be sure to seek and  nurture it! 

Act on your ideas!

There's the idea...and then there's making it happen.  

I think we should be focusing on the "ideas versus execution" challenge.  As venture capitalist Brad Feld posted on Reuters' Entrepreneurial blog:

"Google? Not the first search engine. Facebook? Not the first social network. Groupon? Not the first deal site. Pandora? Not the first music site. The list goes on. Even when you go back in time to the origins of the software industry: MS-DOS – not the first operating system. Lotus 1-2-3 – not the first spreadsheet. The products and their subsequent companies became great because of execution."

The idea is important, but the execution is more important.  Seeing the mountain and saying, "hey, let's climb it" is far different than actually climbing it.

I am reading a good book for people and organizations wanting to be more effective: Making Ideas Happen by Scott Belsky.  He's a former Goldman Sachs leadership development executive who subsequently founded the Behance Network to help creative professionals make their ideas happen.  That's his major point, that creative people are filled with ideas, but lack of or bad execution is the difference maker:

"It's a shame that countless ideas with the potential to transform our lives...are conceived and squandered in the hands of creative geniuses every day.  The ideas that move industries forward are not the result of tremendous creative insight but rather of masterful stewardship."

How many ideas have you had that you have done nothing with?  How many of them really could have had a big impact had you been able to follow through on them?  Don't be modest, we all get brainstorms that could result in something potentially great for us and others if we were to pursue them to fruition.

As a strategic planner, an upfront part of my job is to get the group I am facilitating to generate their vision of the best, most wonderful future for their organization.  This brainstorming and consensus-building exercise, while fact and reality based, is a highly creative process that participants find heartening, exciting and fun.  Creating a compelling future vision is the part of strategic planning that almost everyone likes.

The harder, less attractive and less exciting part of strategic planning is getting down the road to that compelling vision.  Just as individuals with a lot of ideas typically don't follow through on making them a reality, organizations very often have great ideas for a better future that never leave the starting gate.

That's why organizations need a disciplined planning and implementation process and a skilled facilitator to help get them through the process.  A planner with a proven process, strong facilitation skills and an outside, educated perspective can work with the planning group and senior leaders to find and execute key strategies and powerful action steps to move the organization toward that much better envisioned future.

Timing is everything

When should the captain of the Costa Concordia cruise ship have checked charts and water depth and had the crew carefully watch for underwater obstacles?  Obviously, when approaching the island off of which it hit the underwater rocks!

When should Eastman Kodak have fully committed to digital photography?  In hindsight, years ago when it first developed the technology.  By not doing so it took the road to failure.  (Here's a Forbes article on Eastman Kodak's strategic failure.)

When should companies in the nuclear power industry have revisited their strategic plans in the wake of the Tōhoku earthquake and tsunami and Fukushima Daiichi nuclear disaster?  Immediately, of course.

The speed of strategy is not related to calendar time.  Timing for the right market move, investment or shift in focus is predicated on opportunity or threat, and ability, not the start of the quarter or year.  Sometimes the need for commitment to or change in strategy is slow in developing, other times it arises lightning fast.

The annual budgeting and resource allocation cycle is of course a key step in plan implementation.  But it should not drive the strategic planning process.  Finding winning strategies and getting on the road to implementing them should be driven by opportunity, need, threat, change, competition and other similar factors.  Like budgeting, planning should be recurring, but just making it a rote process ahead of budgeting disconnects it from the events that make planning so important.   Fundamentally, the time to plan is when you either don't have strategies that are pulling you to an idealized future vision for the organization or when your strategies are not longer effective or appropriate.

The blogosphere offers many telling observations about the importance of timing in strategy formulation:

Steve Tobak observed in a CBS News business blog post: "Unfortunately, even some of the best and brightest managers and business people consider timing as an afterthought. Their thinking goes something like this: 1) idea, 2) budget, 3) target customers or audience, 4) competition, ... , 27) timing. I have no idea why, but it's true. And sad. Really."  

Leon Gettler wrote in Smart Company: "Invariably, strategies get overtaken by events, market forces, demography, changing consumer patterns and new laws. [Tim Gullifer, a partner at Deloitte Private] says businesses need to follow one rule: fail quickly, fail cheaply. 'If it's not working, then realise it's not working and make some changes to your strategy so that you can get it back on track. Don't let it fail for too long because then it disengages your customers and your people.'"

Venkatesh Rao, author of Tempo: Timing, Tactics and Strategy in Narrative Decision Making,has blogged::"The apparently logical sequence, ready, aim, fire describes a feedforward model. You get your mind in the right place, then you figure out how to be effective (aim can map to waterfall planning at any level), then you take action.  The phrase ready, fire, aim, preferred by the action-oriented in uncertain and dynamic environments, is a response to the analysis-paralysis that can happen if you try to get to ideal starting conditions and perfect information before starting to act.  The absurdity of aiming after firing can only be resolved via appeal to the logic of iteration and feedback. You converge on the successful course of action through feedback from failed actions. This works well as a motto for startup types and others who believe in the release early and often, and fail fast approach to projects."

The important take-away is that strategy formulation should be driven by need and opportunity, not by the budget cycle.  Strategy formulation should be dynamic, not bureaucratic, if it is to be most helpful in pushing the organization to greater success and away from disaster.

 

10 entrepreneurial mistakes

Serial entrepreneurs like me typically retain strong memories of our first big entrepreneurial venture, sometimes great, sometimes not so great. Whatever the outcome, we are best served by learning from what we did, so in future ventures we avoid what did not serve us well.

My first big venture was launching a consumer magazine serving the large, thriving suburban county in which I lived (and still live).  I wrote a comprehensive business plan; raised $750,000 from 27 private investors; recruited a  corporate attorney, CPA firm, the board of directors, 12 employees, and suppliers; launched the publication; and managed the corporation.  We created a great high-quality monthly magazine of substance, generated 365 paid advertising pages from 250 firms, and acquired 9,000 paid subscribers.  But after 15 issues we ceased publication and closed the business.

So what did I learn from this experience that has benefited me and my clients since then, that I have since taught to aspiring entrepreneurs in seminars and that may be of benefit to you?

FOCUS

1. Counting paperclips.

The business plan was extremely thorough.  I did not want to miss anything.  I even itemized the number of boxes of paperclips we needed to start.  LESSON: This level of detail was unnecessary and took time away from focusing on more important success factors.

2. Insufficient delegation.

When you are starting a new business, everything needs to be done at once.  I tried to do or at least oversee too much.  LESSON: In retrospect, I needed to delegate even more than I did, to employees, family, friends, suppliers, volunteers, whomever, so I could focus on what I could bring greatest value to, starting with revenue generation and raising more capital.

FUNDING

3. Thinking the plan shows the amount of start-up capital needed.

The plan contained detailed financial modeling based on a variety of assumptions.  We raised the amount of funding that the "most likely" case showed.  LESSON: From this venture and other subsequent ventures in which I or others have been involved, I've learned that you NEVER have enough capital or cash.  You need to be prepared to raise more, figure out how to live with what you have, or not to proceed with the venture.

4. Choosing not to work on the next round of investment until later.

Out of the gate it became clear that our initial round of funding would not be enough to get us through break-even operations.  But we did not really start to address raising another round until well into the first year of publication.   LESSON: Work on the next round of investment even as you are closing the first.  Odds are very high you will need it sooner than you think.

REVENUE

5. Not lining up customers first.

The market research done for the business plan showed an extensive list of likely potential advertisers.  This was a great comfort factor as we moved to publication.  But it took many months to entice some of these advertisers to use our vehicle and many still were not on board in year two.  LESSON: Allocate a lengthy period of time before start-up (much more than the quarter or so before launch that we allowed) to build relationships with and woo clients.

6. Failing to measure intensity of interest.

The market research done before launch showed a need for the publication from both readers and advertisers.  But the research did not sufficiently address the intensity of interest by various segments, the "want" for the publication.  Especially from potential advertisers we subsequently heard, "Great publication!  Glad we have it as a new option.  But it's just not high on our list of potential vehicles compared to other options."  LESSON: Just because people say your product or service would be "great to have" does not mean they will rush to buy it when you offer it to them.  (Note: That does not mean you should not proceed to create and offer it.  It means that you should be prepared to work to show potential customers how they will benefit from using your product or service.)

7. Not creating a thunderclap at launch.

We issued media releases, courted reporters, touted our preview issue, put county leaders on the cover of the premier issue and held a big launch party at a swanky local club.  This got us some attention, but not enough to start.  LESSON:  Get really creative and work very hard to bring broad attention among your target markets when you start spending your precious capital to bring the product or service to market.  You need revenue fast and having it only slowly dawn on the marketplace that you are around will not serve you well. 

STRATEGY

8. Not making "the worse case" the worst case.

Our "worse case" in modeling was not a good one, but what we actually wound up facing soon after launch was an unexpected recession that cut deeply into the potential high-end advertising that we had counted on and the sudden appearance of new competitive publication that cut into our lower end retail/classified advertising.  LESSON: When modeling, don't even think about dressing up the worst case.  Put it in the plan and then either don't launch because you can't survive it or figure out how to get through it if it emerges.

9. Waiting too long to cut losses.

As the recession took hold and revenue growth slowed to well below necessary targets, our efforts to sell advertising and raise more capital redoubled.  But we ran out of funds before we could turn the tide.  LESSON: Had we stopped and taken a hard, cold look at our situation when it became clear that we were in a recession and had unexpected competition, the low likelihood of securing sizeable new funding and more advertising before we hit the wall likely would have been clear.  We may have been able to suspend and perhaps reconstitute the business rather than have it be nuked.

10. Not trying again.

With an unsuccessful outcome, we did what we could for our suppliers, commiserated with our investors, put the business behind us and moved on to new chapters in our lives.  But there remains a regret that we had a great product that won wide praise and following and yet we could not put it over the top.  LESSON: In retrospect, I think the marketplace would have been forgiving of our missteps, bad timing and ill fortune.  Had we restarted again with a new formulation, using what we learned from the first time around to avoid making the same mistakes, today we might have a successful publishing company, a great publication and happy investors.