Challenging your assumptions: finding the fatal flaw

For many years, I have talked about the importance of incorporating the practice of challenging outcome-determining assumptions into strategic planning. Unchallenged assumptions are often corporate blind spots, and inherent in blind spots are the difficulty in finding them.
Your business plan is based on a bunch of commonly agree-upon thoughts about how your operating environment is going to evolve. Inevitably, the accuracy of these assumptions change over time, hence the criticality of systematically assessing them to make sure your next business plan is not based on outdated beliefs.
This is a great article that explains this concept, within the context of the sudden shift in oil prices.
http://www.innosight.com/innovation-resources/strategy-innovation/finding-the-fatal-flaw-in-your-strategy.cfm#.VMLE8zMnd4A.linkedin

Staying the course with the wrong strategy

One of the toughest things to do as a leader is to kill a strategy or a project that isn’t working. There’s something in how people are made that hates the idea of accepting what we know about sunk costs. In truth, good strategy is about making choices of what you’re not doing, as much as what you will do. And leadership enables you to act on those choices, and sharpen the focus for your organization. So why do some leaders hesitate, and drag things out? Obviously the optics don’t feel good. Having said that, it’s worse to show avoidance, once you know it’s necessary.

This moment is not unlike dialing a phone. When you look back on the screen and realize that the second number out of ten is incorrect, you know that it’s not going to send you where you want to go. Sometimes it’s faster to hang up and start from scratch, other times it’s faster to back up and correct the mistake. Either way, every number you dial after the recognition of an error is a waste because it’s not going to send you anywhere productive.

Aiming (your organization) before you pull the trigger

Business planning. Is it exciting, or a painful management exercise you should hope you’re sick for?

It’s one of the most important things that (senior) leaders do. There are no guarantees that you’ll do it right, other things can unexpectedly come into your environment and mess with your plans, your team could screw up the implementation, and it’s easier to just keep doing what you’re doing.

Enter: leadership; not management, not people in leadership positions, but leadership.
Leaders live between two worlds. The one you’re standing in, and the one they are working to bring about. They can taste what the future will be like, and they understand the challenges of getting there.

When the pressure is on, it feels like DOING is the most productive thing you can spend time on. Sometimes this is true. But the more strategic your job is, the more conceptual and nebulous the challenges you’ll face, and the more impact you have. This is why aiming before you pull the trigger is totally essential. Leaders affect change by unleashing the resources of the aligned workforce. The choices they make flow through many people, and have the potential to create tremendous impact.

Putting the work in up front, crafting a strategy that has been deeply considered, pays off in spades as the resources of an entire organization come online to implement.

The impact of your leadership

Leadership can sometimes feel counter-intuitive. It requires a balance between putting your efforts into tasks you can accomplish on your own, and enabling the efforts of those you lead.

Enter: The strategic responsibilities of the leader.
When stressed, many pull back to the projects or tasks they can personally control and have impact on. However, nowhere do leaders have a greater impact than when they conduct the activities that enable the efforts of the whole team. These include:
• Making decisions about how to reposition for the future
• Prioritizing where to focus effort
• Choices about when to start AND stop effort in a certain direction
• Solving difficult problems others don’t want to touch
• Helping employees understand future and current direction
• Enabling other leaders to become greater

The impact you have individually can be great. The impact you can have through proficient leadership is exponential.

leadership

Double your value

One of my favourite questions in business planning is simply “What would it take to double the amount of value you create?”

I like it because it:
1) Gets people’s attention – what might this mean?
2) Helps cut through the fluff of what is really important – what value do you create that is most meaningful?
3) Shuts down incremental improvement thinking – more of the same equals missing opportunities
4) Shifts the focus to transformational options – bigger options exist, always
5) Makes people question whether this goal is possible – this is the point of planning

Planning to change the world doesn’t take any more time than planning to be run of the mill or even to slip into a decline. It just requires more leadership and vision.

My strategy is to …

Delineating between a strategy and all the other kinds of objectives is sometimes difficult. Why? Because it’s something that is easily confused, but if you work in leadership it’s completely essential to understand the difference.

One way of looking at competitive strategy is to see it as the selection of a desired position within an industry, that is likely to result in competitive advantage. It is a set of choices. Your strategy, then, is to achieve this advantageous position, it’s not the specific actions or tactics describing how you achieve this position. Clouding all of this is the tendency for organizations to use the word strategy for any actions it perceives as being “kind of a big deal”.

A strategy contains the logic of why something will benefit the organization, by repositioning you for greater advantage. If your “strategy” is simply an action plan, it’s likely that you haven’t yet identified how you’re going to generate a competitive advantage. How would you know when you should change tack if the plan is simply to implement the plan?

A few considerations:
• Generating increased operational effectiveness is not a strategy
• Strategy always describes unique activities or approaches
• A strategy is a description for your how you’ll achieve a unique position that drives competitive advantage and profitability
• A strategy is never simply a description of a structural change (our strategy is to merge or downsize)

If your “strategy” leaves questions of why this matters, or what it gets you, you haven’t finished building your strategy yet.

Test:
• My strategy is to internationalize (why, and how does this contribute toward the achievement of a unique position?)
• My strategy is to consolidate back-office (operational, however may form an important tactic as part of a strategy)
• My strategy is to increase R & D (why?)
• My strategy is consolidate an industry (structural change that nets you what?)

In your quest to build strategy, it’s often natural to first identify tactics, just don’t stop there. The action you take to achieve an advantage is not a strategy, it’s the position that generates competitive advantage that is the strategy.

Making sustainability (CSR) and marketing strategy friends

Much debate exists on whether marketing and sustainability strategy are compatible concepts. Do these priorities need to be diametric or are they easily aligned? (Can CSR create long-term business value, or is it simply a bleeding heart cost centre?)

There are many definitions of marketing. On one end of the scale we have the inherently untrustworthy description of being a discipline involving gimmicks designed to convince people to buy things they don’t need. At the far end, it can be seen as satisfying customer needs profitably. This second definition is more compatible with the view that these two areas of focus are complimentary. “Sustainability is a collective term for everything to do with responsibility for the world in which we live. It is an economic, social and environmental issue. It is about consuming differently and consuming efficiently. It also means sharing between the rich and the poor and protecting the global environment while not jeopardizing the needs of future generations.” (McCann-Erickson, 2007) At first blush, sustainability and CSR both promise to drive up the cost of products, and reduce profit. Shareholders and CFOs cringe at this point. However, they do a much better job of protecting long-term profit opportunities, and potentially positioning an organization more favourably with stakeholders ranging from employees, customers, and communities / governments. But with the shareholders holding the biggest stick, is there enough of a value proposition to sell it?

Academically, is this a chicken and egg issue? A common debate is whether these issues have anything to offer each other, rather than simply competing. What can marketing offer the field of sustainability / CSR strategy in terms of taking a concept that generally increases the cost of products, and creating demand despite the premium through consumer education? What can sustainability offer the field of marketing, recognizing that consumption is outpacing what the earth can sustain long-term? They’re not unrelated, but they’re also not generally well understood.

It’s an interesting debate including a lot of facets:
– Do corporations have a responsibility to maintain a triple bottom line? (people first, planet, and profit)
– Can a CFO and a CMO or manager of CSR speak the same language on this issue?
– Is CSR useful in a capitalist profit-oriented corporation, even only as a tool to ingratiate an organization to the public, new international markets, employees that value social impact? (cause marketing)
– How much risk exists in creating a sustainability program that is profit-motivated, but positioned as an authentic pursuit, in the case where you can’t deliver at a level that is believable or doubt is cast?
– How far should an organization go down the path of CSR / sustainability expense? How do you know when you have gone far enough? Is it simply when the CMO has a feel-good moment or when the CFO’s ulcer goes away?

I propose that the answer lies in being clear on:
– Understanding why are you doing this
– Measuring whether the impact is satisfying the underlying reason for the investment
– Acknowledging the stakeholders that care, and the ones that don’t
– Discussing the risks of going too far or not far enough, as it relates to each stakeholder group
– Discussing the risks of creating expectations, and then losing focus later

The answer is that there is no single right answer. Every organization needs to make its own stand on this issue. BUT, if you can’t explain why, you’re going to have a hard time marshalling resources to support it, having credibility within the organization, or leveraging the expenditure to capture the stakeholder value you just generated (because you don’t know why you’re doing it). When you understand this deeply, you can explain it simply. At this point, you can measure if you’re doing enough of it, and anything that requires capital also requires measurement of impact because it’s not just an issue of whether you’ve done too much but whether you’ve done enough.
– Many employees care about the values of the organization they work for. If this is why you’re doing it, measure it with that group.
– Many organizations find that cause marketing opens up a loyal base of customer. If this is why you’re doing it, then measure it there.
– Etc…

Whatever you choose, in order to gain real support, your approach has to be explicable in its purpose from a business standpoint, because it costs money.

Michelangelo and a beautiful analogy for creative vision

An incredible and inspiring quote and perspectives about creativity and vision was when Michelangelo said:

“In every block of marble I see a statue as plain as though it stood before me, shaped and perfect in attitude and action. I have only to hew away the rough walls that imprison the lovely apparition to reveal it to the other eyes as mine see it.”

The world is filled with blocks of stone and marble that people ignore as they walk beside every day, not recognizing the potential that lays within. Visionaries see what could be, not as it is, but as a potential future version. There are different kinds of visionaries; some see potential in markets, product innovations, people, or organizations.

Visionaries see how things can be better, different. Leaders helps others see this vision of potential and know how to create collective motivation. Mentors see potential that exists in people, and know how to grow and develop aspects of them. Potential for greater things surround us all day long.

Michelangelo wasn’t starting with a statue and polishing it, he was taking a boulder and turning it into a masterpiece. This is, perhaps, the most powerful dimension of this analogy; that it doesn’t matter where you start from, incredible things are possible.

Rather than waiting for the next Steve Jobs to get hired into your industry, have you considered the possibility that it’s you?

Viewing problems as gold

Doesn’t it feel great to get a pat on the back? And do you get a sick feeling in your stomach when something goes wrong at the office or you find a problems? How much of your reaction to identifying problems is learned, and are those views serving you well?

Management both sets the tone for culture, and teaches others how to react to problem identification. One of the tenets of lean management is being hard on the problem/process, and easy on the people. This is the basis for continuous improvement, because your employees are better positioned to identify and solve problems as they arrive than you are! They are often closest to the customer, and the processes that create value.

So think about the culture in your workplace. Does your organization see problems as gold, or something to avoid? What role do you play in changing that? Are you propagating a stronger culture?