Strategic Thinking & Strategic Action

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.

What's it called?

I'm sitting on a conference call with fellow strategic planners under the imprimatur of the Association for Strategic Planning discussing a survey to learn about successful strategic planning practices among not-for-profit 501(c)3 organizations and strategic planning consultants who work with these organizations.

You'd think that asking "what works" for your organization or your clients and "what doesn't work" for your organization or your clients would be simple.

It's not that simple.

Two big hurdles need to be dealt with before we can finish creating a meaningful survey to learn about successful strategic planning practices from the universe of U.S. based 501(c)3 non-for-profit organizations.

• First, we need to address the very obvious issue of respondent bias - organizational leaders thinking their planning processes and organizations are perhaps more successful than they really are or could be, and strategic planning consultants thinking their processes and clients are similarly more successful than they are or laying lack of planning process success not the process but on client failure.
• Second and perhaps harder to deal with is the hurdle of properly sorting out what is included in the respondent's strategic planning process because there is no agreement about what various planning elements are called.

The nomenclature issue has vexed me throughout my planning career, most recently as I prepared to sit for the Strategic Management Professional certification examination.  The study materials and references covered the gamut of planning practices, systems and approaches.  It was obvious that no standard language exists in strategic planning.  (The CPAs and CFOs have it easy, with accounting organizations and governmental bodies promulgating accounting standards.  As long as you know what set of accounting standards you are following, you can look up the term and know what it means!)

Here's an incomplete list of terms used in various planning systems, approaches and processes:

• Mission, Purpose
• Vision, Shared Vision
• Gaps
• Values, Core Values
• Critical Success Factors, Strengths, Core Competencies, Competitive Advantage, Customer Value Proposition 
• Weaknesses, Opportunities, Threats
• Strategies, Goals, Aims, Objectives, Priorities
• Scenarios
• Tactics, Actions, Action Steps
• Initiatives, Programs, Projects
• Timelines, Milestones
• Measurements, Success Measures
• Outcomes, Outputs, Results, Accomplishments
• Assessment, Planning Update, Re-Planning

For our survey we need to ask questions that recognize that differrent processes use different terms for the same thing, as well as realize that not all processes do the same thing.  This is a challenge!

Anyone have a strategic planning dictionary or better yet a translator so we all are speaking the same planning language?  Anyone have the same thought that I do, that people may be unecessarily complicating the process, perhaps because by tossing in different terms one gains advantage as process author or consultant?

Maybe it's time for for an Association for Strategic Planning initiative to standardize or at least align planning language so it's easier to talk about what works in strategic planning and what does not work. 

In the meantime, since one person's objective can be another's goal, I suggest that when speaking about planning processes, systems and procedures, be sure the meaning of the descriptive words used are made clear to everyone up front.  

Otherwise, do you reallly know what I mean when I talk about assuring your organization improves dramatically and achieves much greater success through effective, facilitated strategic planning using a process that addresses vision, gaps, strategies and action steps to close the gaps, implementation, measurement, assessment and re-planning?

 

Focus, people!

Over the past month I have been interviewing stakeholders for a client's strategic planning process.  The interviews have sought feedback on strategic options open to the client.  The options range from "keep on being whatever the client wants us to be" to "identify a few big opportunities and really commit to tackling them."  

The feedback I am getting from these interviews is that most stakeholders believe the organization will grow much faster and have much greater impact and success if it opts to focus on a few big opportunities rather than continue to "be what the client wants us to be."  

Is that a surprise?  Maybe not, but in thinking about most of my client work over the years I recognize that lack of focus has been a big issue.  In fact, I think lack of focus is a bigger barrier to greater success than often recognized. Surely it's a continuing challenge that most of us grapple with. 

Too often we are like children in a toy store, with every shiny thing attracting us.  We are helter-skelter, scattered, all over the map.  Especially in this age when we are continually barraged by communications on all sorts of topics, we are easily diverted and distracted.  But the dysfunction extends beyond us as individuals: Our businesses like ourselves typically chase too many opportunities and get diverted from the best follow-through.  (Organizational ADHD, anyone?  National Institutes of Health: "ADHD is a problem with inattentiveness, over-activity, impulsivity, or a combination.") 

The salient question, whether about ourselves or our businesses, is, how many opportunities can we chase fully and well when we are trying to go down many roads at once?

That's why I see beauty in a well-run strategic planning and implementation process.  Run right, it forces identification of and continuing focus on acting on a tight set of specific strategies designed to offer the highest likelihood of moving the organization forward in the most favorable direction, to the shared vision of future success.  The process lays down roads and puts up fences to keep the organization and those charged with its success from easily straying. 

Backing up a bit more, I can even speculate that many organizations do not recognize and especially do not act on strategic planning as a fundamental priority because they are so distracted by day-to-day activity and all sorts of communications and seeming opportunities to chase.

Focus, people!  Get a process - what I endorse is effective strategic planning and strategic management - and escape from being diverted by so many communications and opportunities.  Focus and act on what will move you to your vision of greater success.

Let's ask the crowd

"None of us is as smart as all of us." - Japanese proverb.

A key aspect of developing transformational strategies is understanding the landscape that needs to be traversed by the organization on the way to greater success.  Strategic planners develop an environmental scan to identify the external factors that are likely to have a large impact on the organization as it goes down the road. Factors to be considered in an external environmental scan might include but are hardly limited to economic indicators and forecasts, legislative and governmental trends, technological developments, energy and ecological factors, social trends and values, agricultural and food forecasts, labor concerns and trends, transportation forecasts, and much more.

The question arises:  Where does one get this information on a timely and comprehensive basis? One source is obvious: Organizations typically look all the time at data that can be instrumental in building the environmental scan.  For instance, talking with a potential client earlier this week, a very successful commercial printing company (yes, there are some that are prospering despite the tough economy and move away from ink on paper), the CEO referenced industry data to which they had access that would be very helpful should we move to developing an environmental scan for this organization.

Likewise, experienced planners have favored sources as starting points.  Here, gratis, are several resources that we use to gain a thought-provoking global overview of the possible future:

World Future Society

The United Nations Millennium Project

Future/Wikia.com

The last link is to a wiki whose premise is that collectively we can pool our knowledge to come up with useful future scenarios.  Whether that is effective is unclear, but the Japanese quote at the top of this post suggests it might be useful.  (No, don't remind me of lemmings blindly following one another off the edge of the cliff.  Let's hope that in this case we are seeing diversity in thinking rather than group think!)  

In any case, it seems that crowd sourcing on a less ambitious scale might be very useful when one is trying to develop an environmental scan so that strategies subsequently adopted are more informed and the organization's plan is more resilient than it would be otherwise.

So here's the question, crowd:  What are your "go-to" resources when you want to try to gain an understanding of the possibilities of the future for an organization?  And, more specifically, how about resources that would be especially applicable to the future for important external factors that are likely to be encountered by high-end sheet-fed printers and packagers? (Fingers crossed that we get the printing company assignment!)

Think before stretching

Talking this morning with a serial entrepreneur whom I highly respect, the question of business scale came up.  What's the right size for your business?  Should you stretch to grow?

In his case, his accountant, spouse and others have been after him to ramp up the size of his Internet-based consumer business.  "No way," he said.  He has steadfastly resisted the lure of "getting really big" because his calculus is that by going for size he would diminish or lose profitability.  "I could quickly be three or four times larger" - this from someone whose annual Google Adwords bill is already $120,000 - "but it could put me out of business."  For his current investment he gets the Google page ranking he needs and quality leads and conversion through his keywords.  Pouring more money into this channel would increase activity but not profitable sales.

My entrepreneur friend understands from his background in face-to-face sales and marketing to support sales that a key factor is the cost of acquiring a customer.  Through long and hard effort and testing he seems to have optimized his yield of quality business from Google search.  If he is going to grow beyond the organic rate that Google is delivering, it will be through other channels and methods.

Many times I have seen organizations stretch for growth, with the customers gained being less profitable and more marginal, and the business negatively affected by the greater level of activity.  Other times I have seen organizations "settle" for their current scale when ripe opportunities for growth are ignored and are instead picked off by competitors.

As a strategist, my role includes helping leaders size up opportunities and whether to stretch for growth.  Multiple factors need to be considered to make the best decision, including organizational capacity, effect on product/service quality, potential diversion of attention from more important considerations, effect on margins, new doors that can be opened through growth, and comfort with being larger.

Here are some questions to address when looking at whether to stretch for more volume. 

When it suddenly changes

Disruption.  Is it good or bad?

While listening to Michael Raynor of Deliotte make a presentation on his great new book, The Innovator's Manifesto, I got to thinking about the two-sided nature of disruption in markets.

One can easily argue that it's bad because it dramatically changes the landscape and the likely outcomes of strategies in place.  MF Global fails and trading accounts are frozen.  If you are a trader, that's bad news!  Child abuse is revealed at Penn State and the college president and worshipped football coach are canned.  If you are a Penn State board member, that's bad news! Greek political turmoil causes Italian borrowing costs to soar.  If you are the prime minister or finance minister of Italy, that's bad news!

But that same sudden shift in landscape and effect on embedded strategies can also be good.  The competitors of the trader with the frozen MF Global account may see new customers.  Incoming students who might have chosen Penn State suddenly favor another school with their acceptance.  Speculators who sold Italian bonds short make a killing.

And then there is the opportunity for "planned disruption," where the strategy is to cause the sudden landscape change to a gain a competitive advantage.  Innovation of this type is difficult to achieve but holds the potential for great competitive success and differentiation.  Think 3D television or carbon fiber airplanes or gene therapy or LinkedIn or the iPad.

So where do my musings lead?  To thoughts of scenario planning, that's where.  Organizational strategists are wise to consider how their major assumptions and strategies can be disrupted and what they might do in advance to mitigate the damage and when disrupted for quickest recovery or new advantage.  They are wise to look at what might disrupt market leaders and offer a new opportunity for competitors.  And if they can find innovation strategies that disrupt the leader's strategies, so much the better!

 

Customer abandonment

What happens when you abandon a customer?

As I was copying a Florentine recipe from a Williams-Sonoma cookbook I purchased at the local company store a number of years ago, I mused that the company had "abandoned" me, a great customer, when it closed its store about a year ago.  I had been a regular shopper.  Now I buy nothing from the company, whose products I still think are great.  

(For those that are interested, the cookbook is Florence: Authentic Recipes Celebrating the Foods of the World and the recipe is for Stracatto al Peppoli, which is Florentine braised beef with Peppoli wine.  It is how they cook it at the Antinori winemaking family's Cantinetta Antinori on Via de' Tourbuoni in Florence.)

I have received a few Williams-Sonoma catalogues since its store was closed, but, otherwise, it does not seem as though the company has tried to embrace me and keep me shopping for its goods.

I don't remember a personalized "reach out" to hold on to me when the store was closing.  I could have been sent a letter or email or even received a call, but I remember none of the above.  There is another not-as-close store in the area: I have not been invited to shop there.  I have not seen a "we have missed you" or "special offer for a former customer" communication, either.

My object is not to kcock Williams-Sonoma, but to caution that you need to be thoughtful when you change your distribution channels, outlets or other customer facing aspects and disrupt relationships with good customers.  You ought to be doing everything possible to hold them in the fold.  After all, we know it is much harder to win a new customer than to keep an old one.

Do you have examples of viable companies leaving customers high and dry and not working on maintaining or re-establishing relationships with them?  What do you think the company should have done?

Beneath the visible iceberg

Last weekend I took the exam for the Association for Strategic Planning's top certification, Strategic Management Professional. (I don't have the results yet - let's hope I passed!)

The body of knowledge for this exam is very comprehensive, covering both strategic planning and strategic management. At the start of this process I wondered how much a seasoned planner, senior executive and Chicago Booth MBA would learn. I can now say, a lot.

I have long understood that strategic planning and strategic management are about successfully adapting to change. A new construct I was exposed to that addresses the difficulties of change management is Stephen Haines' Iceberg Theory of Change. It states that while the focus of change management is almost always on on "what to do" - the 13% of the iceberg that is visible, which Haines calls "content" - the success of adapting to change depends critically on what's not visible.

Haines says what's unseen are:

• "Processes" - how you determine what to do it and then implement it successfully.
• "Structures" - how you are organized to plan and implement the resulting strategies.
• "Culture/commitment" - what your organization believes that may inhibit or embrace change and how the organization will respond to change efforts.

Using Haines' Iceberg Theory of Change, it become more apparent why many organizations do a poor job of strategic planning and implementation, if they plan their response to change at all.

It may be apparent that the environment in which the organization operates is changing. Organizational leaders may have good ideas for how to respond, whether it be increasing competitive advantage, adding customer value, adding products/services, entering new businesses, or any of many other possible actions.

But without an effective strategic planning and strategic management process, organizational structures to support the planning and successful implementation, and people that support the change, the results will likely be poor.