MAKING CENTS — Figuring Out Which 50%
Creating and executing a strategy is much different than in years past. Making the right decisions at the right time is critical to your company’s success.
If you’re currently in a position of leadership, you have obviously proven your skills, talents and capabilities over time. You’ve gotten to where you are through a series of smart decisions, hard work and quite possibly an incredible amount of luck.
Still, as good as you are, your brain is finite and you can’t see all things or know all things. As such, there is no way for you to fully anticipate exactly what, when and how tectonic forces will shake your company, nor to know which windows may crack or ceiling tiles fall when the tremors arrive, metaphorically-speaking.
Setting a Strategy
Planning for adversity and future challenges is an essential duty of any leader, but as the U.S. Army Leadership Manual knowingly states, “No plan survives initial contact with the enemy.” In other words, stuff happens. The economy expands or contracts. Competitors innovate. Technology advances. Key people decide to leave. There is simply no way you can continuously keep tabs on every piece of information, every shift in the playing field and every risk that could threaten your organization.
In addition, as long as you’re using valuable brainpower contemplating what you or others may have done wrong in the past, you can’t fully focus your energies on getting it right for the future. Taiichi Ohno is famous for saying that even a wise man is wrong 30 percent of the time. (Besides having a great last name to illustrate this principle, Mr. Ohno is considered to be the father of the Toyota Production System, which became lean manufacturing in the United States.) More importantly, according to researchers, about 50 percent of the things that we normal people firmly believe are just plain dead wrong. The trouble is figuring out which of the things that we now firmly believe to be true are really false!
That’s also the trick when setting strategy for our respective firms for competing effectively in the marketplace. It is helpful, perhaps, to remember that strategy’s roots stem from military applications centuries ago. Military strategy focuses on setting objectives, collecting intelligence, and then using that intelligence to make informed decisions about how to achieve your objectives (e.g., take that hill, cut this supply line, etc.).
Historically, the battlefield was a place where you could count on at least a few things being constant. The first was that the past was a good predictor of the future. There were years or decades between meaningful shifts in basic variables such as the power of a soldier’s weapons or the range of aircraft. Secondly, good data was scarce and hard to come by.
Scouts and spies had to risk their lives to find and relay information, and had to always be on the lookout for enemy deception. Lastly, lines of communication were unreliable at best. Small numbers of clear directives were a tactical imperative if troops were to act in cohort (hat tip to Stanford Social Innovation Review, Jan 10, 2013 for the military comparisons).
Not surprisingly, after a couple of millennia, military strategy became well adapted to these conditions. However, these constants have fallen by the way-side during the last century. The war zone has changed dramatically and the same can be said of the playing field of business.
The same competitive advantages that your company has spent years honing and have enabled your business to survive the single greatest economic downturn in 80 years are not the same competitive advantages that will carry you successfully into the future.
These observations were spoken of time and time again at the recent Next Level conference in Nashville. Attendees often lamented that they can’t (or won’t) do strategic planning because their operating environment is changing so much so rapidly. There just isn’t enough certainty, they argued, to be able to do strategy effectively.
Let’s explore that hypothesis. If your strategic plan is a thick binder gathering dust on a shelf next to other thick binders from five and 10 years ago, you’re not alone. That’s old school and I would agree that style of strategic planning has no place in today’s business paradigm. Perhaps what’s needed is a better understanding of what strategy is and what it isn’t.
Making the Right Choices
Strategy is about making choices — what to do and what not to do — in delivering unique and superior value. There has been an epic shift in the balance of power in the marketplace and the customer is now the boss. Green industry firms will only survive if they respond aggressively to customers’ wants and needs in this new paradigm in which customers have choices and accurate information as to what those choices are.
Instead of the old approach of making a plan and sticking to it, which led to centralized strategic planning around fixed time horizons, the new approach should be setting a direction and testing it, treating the whole organization as a team that is experimenting its way to success. But experimenting should not be construed as haphazard trialing.
Firms should have a clear idea of their winning aspiration, where they are choosing to play, how they plan to win, what capabilities must be in place and what management systems must be in place to pull the whole thing together. By continuously answering this series of simple, cascading yet reinforcing questions, firms will be heads above the majority of competitors in the marketplace.
This approach wouldn’t surprise anyone in the world of current military strategy, of course. Recent generations of military thinkers have long since moved beyond the tradi- tional approach, most notably famed fighter pilot John Boyd. If you do not know of him, it will be well worth a Google search to read up about his theories.
Boyd saw strategy as a continuous mental loop that ran from observe to orient to decide and finally to act, returning immediately to further observation. By adopting his mindset — with a particular emphasis on the observation and orienting, given our turbulent context — we can get much better at making strategy a self-correcting series of intentional experiments.
In summary, once we accept Dwight D. Eisenhower’s sage advice, “Plans are nothing, but planning is everything,” and we adopt a strategy-making culture that increases the likelihood of making the right choices about our respective businesses, we will be more prepared and ready to adapt to whatever curveballs the twenty-first century sees fit to throw at us in the green industry.