Very cool! Have a laser focused weekend.
Tomorrow’s the “big” day. Having both English and Scottish roots makes me hope that the glorious union stays together. While Scots make up only a small portion of the total population, a Britain without Scotland will be like a lion without its heart. Everywhere in the great and noble history of Britain you find Scots at the head of the parade. Great inventors, engineers, scientists, philosophers, theologians, and business leaders carried around the world by the tide of liberal empire. Disunion would be a truly lamentable divorce.
But what about your Midas operation? Your company is humming along and rolling up sales, transaction volume and market share like there’s no tomorrow. The sun is shining and you are rightly out gathering in the hay. When approached about strategy, you put up the hand. “Not now! Don’t need it!”
Well, please be careful. Just when you think you’ve got it all figured out, the winds of change blow in and make a mess of things.
A small amount of thought about your strategy, and a careful look at the things that could derail progress, are likely to pay off in greater success.
Here are three questions you should be asking yourself:
Do we REALLY think the competition bell won’t toll?
I am surprised how many entrepreneurs think they can build and sustain a monopoly. They think their product or service is so great that no one will dare to challenge them. The sad truth is success attracts competition, and the greater the success the greater the attraction.
Just as the visionary sees the promise and works his or her tail off the create the solution, another class of visionaries see the opportunity to capitalize on the first mover’s ideas and success. They let the first guy or gal work out the bugs, establish the concepts and market demand, and develop the business model. Then they move in to optimize or innovate on the original.
The net of it is, competition is unavoidable. No barrier is ever high enough. Competitors come in through the front door, the back door, the windows, or burrow in through the foundation. They confront directly or obliquely. They look like you or they look like something completely new. They come in as better value or better features, or they show up as technology substitutes that obliterate your market.
Strategy is fundamentally about competition. How you will confront it; how you will adapt to it; how you will beat it. The good news is competition will make you stronger and better if you accept it and plan for it.
Does my firm and leadership team anticipate and prepare for the unexpected?
This does NOT mean investing a lot of time and money in futurists, trends work, scenario planning or other projects that promise to lift the veil on the future. The future is and remains unknowable.
What it does mean is that you accept and even welcome change. Companies that look forward to change will thrive more so than outfits that fear it. Therefore, some amount of study and preparation should always be going on.
Someone should be watching those market segments, customers and product lines that you put to the back burner as you focused on the big fish you’re currently swallowing.
Someone should be watching competition for changes in leadership direction and operating behavior or shifts in investment priorities.
And someone should be assessing your execution relative to how competitors are doing and against evolving customer expectations.
A recent study by leadership consultants, Jack Zenger and Joseph Folkman, dug through the performance reviews of 50,000 business leaders to look for common characteristics of bad decision making. Among the most dangerous were: Laziness; Not expecting the unexpected; Indecisiveness; Remaining Locked in the Past; Personal Isolation.
Success often masks these bad habits. Change exposes them. Which bad habit is waiting to trip you up?
Bottom line, it’s easy to ride the wave, but managers and companies that are vigilant for the signs of change will be that much quicker to move to the next wave. The famous Andy Grove quote sums it up: “Only the paranoid survive”.
Are we confusing planning with strategy?
Many successful firms will say they have a plan. They’ve learned to forecast with some accuracy and have thus enabled key managers and operating organizations to get ahead on hiring, inventory, infrastructure or financing. They know when they need capacity and capability and they’ve put detailed plans in place to deliver.
Often, these firms will put all their function or department level plans together and call them “strategic”. But “strategic planning” is not the same as strategy. The “strategic plan” might speak effectively about when the firm needs to secure new financing or when to put sourcing contracts out to bid. But it doesn’t typically tell the company what to do if competition lowers price or new technology appears that alters the customer proposition.
Strategy is the process of understanding change and making choices and new bets to address or harness change. It answers these questions.
However great today is, tomorrow will come and it will be different than today.
So even in the throes of strong growth and success, a brief time out to examine direction, to calibrate aims and objectives, to assess strengths and opportunities, is well advised. They are essential steps if you want your firm to live out Peter Drucker’s famous dictum that “the best way to predict the future is to create it.”
Good item here that should remind you to enjoy your weekend AND do it on purpose!
What this rich life taught him was a kind of inner peace, an equanimity reflecting the robust wisdom known as Stoicism. Charlie was able to separate the things he could control from the things that he could not, and he didn’t fret about matters beyond his power. One of his daughters told us once that she was complaining about an insufferable certain someone we all knew when her father told her to stop. You can’t change people like that, Charlie schooled her. If I let such people irritate me, I would have been dead a long time ago.
He taught me something even more useful in the last months of his life. By then, his superhuman body was finally wearing out. Charlie was nearly blind and mostly deaf, though his mind never faded. More and more of his charming and straightforward conversation has to do with his readiness for death. He wasn’t depressed about the oncoming end. Even less was he angry or fearful. He didn’t pine for days past nor pick scabs of regret and resentment.
True leadership. Great product and service experience. Superior business discipline in terms of maintaining impeccable personnel and operational standards, and upholding strong financial control (i.e., low debt, private ownership, etc.). Best of all, courageous and ever humble in his convictions. A perfect tribute…
This appraisal of the current state of American foreign policy from last Saturday’s Wall Street Journal should be required reading. Brookings scholar Robert Kagan describes America’s (and the West’s) precipitous turn away from the realities of and stomach for power politics:
… in the wake of the wars in Iraq and Afghanistan, it is the U.S. that seems to be yearning for an escape from the burdens of power and a reprieve from the tragic realities of human existence.
For those of us in the strategy business, the lessons Kagan lays out are all too common in the business and economic sphere.
The most prevalent is poor assumptions about competitors and outside actors. Too often I see clients make the fatal mistake of ascribing their own beliefs and worldviews to adversaries and customers. No matter how many times they parrot the idea of “walking in the other guy’s shoes,” they seem unable to accept that others are motivated by different ideas and different objectives…some that may seem completely illogical.
The other parallel I see, especially with large firms, is the utter loss of guts. Executives opt out of the big decisions and longer odds because either they feel they must “protect” the current business or they fear the hard work, emotional turbulence and potential for failure that attends the big moves. The evolution of executive reward and compensation away from long term payout (e.g., stock options) only fosters this defensive posture.
Nations, companies and individuals don’t make their mark on history by shrinking from the contest. But sadly it seems more and more the way of things.
I have a friend who has been building a great technology prototyping business. Over the first couple of years, he exceeded all his expectations in terms of sales and financial performance. He was able to recruit some great engineers and this enabled him to take on more clients and bigger projects. Things were going great.
And then his business hit a rut. Several important clients left. Sales growth slowed. And two of his top employees submitted their resignations. The business was still steady, but my friend couldn’t seem to figure out how to get things moving again.
Does this sound familiar?
Here are four critical signs that you and your business need to take a fresh look at your strategy:
It’s harder to set and achieve goals. All businesses experience a slowdown in growth. You begin to saturate target markets and customer groups, and market penetration plateaus. But in the past you seemed able to pivot to new segments or change your proposition to keep things moving. Now it’s getting harder. You aren’t sure what to shoot for and the targets you do have are being missed.
A common response to the inevitable slowdown is to spend more time working on goals. A lot of strategy frameworks devolve from goal setting exercises. But better goal setting usually misses structural problems growing businesses experience when their business models tap out or copycats and other competitive forces enter the fray. Exhorting sales teams to aim higher, run faster or yell louder, doesn’t address these structural problems. In fact, they might make things worse.
You are being surprised too often. Things start happening that no one expects. Customer requirements change in ways you didn’t anticipate. New competition appears. Suppliers try to muscle in on your action. Outside parties start challenging your business approach or reputation. These surprises put you on the defensive and suck up time you should be devoting to growth.
You don’t know why you are winning or losing customers. You seem to have lost the pulse on your customers … the very thing that set you apart. You used to know your customers in a way that anticipated and delighted their needs. Now you study the CRM data and call reports and can’t make sense of why certain customers are leaving you or why other customers are buying for the first time.
Good people are leaving and you don’t know why. Every growing business experiences talent loss. But when departing employees give cliche’ reasons like “it’s time to move on”, “I’m no longer being challenged” or “I’m not growing anymore,” it may be time to take stock of the situation. Are these excuses? Or is your talent really saying “you don’t listen to my ideas” or “we don’t understand where this business is going?” Talent wants to contribute and wants to be part of a winning team with a clear and compelling game plan.
The good news is strategic therapy doesn’t have to be complicated. What it requires is a brief time-out and an honest and thorough assessment of the situation. While you can certainly call in help (and those of us in the consulting game get to eat), don’t get caught up in clever or involved processes. Seek fresh perspective, not beautiful charts and diagrams.
Also, major surgery is rarely required. What is typically needed is a small number of clear decisions and a dogged determination to pursue them.
Over breakfast one day with my prototyping friend, I suggested it was time he took a fresh look at his strategy. After a couple of “strategy discussions” we identified a critical weakness in his operations and also some huge customer opportunities. With just of handful of “to-do” items, my friend began to figure a pathway out of the rut. His top performers worked out some innovative product ideas. And very quickly the business scored several new clients. Sales started growing again.
Last week I posted George Gilder’s lesson on knowledge based economics. Meantime, LinkedIn Influencer Ron Baker posted an item on Adam Smith’s Theory of Moral Sentiments – The Invisible Handshake. It was a good take-down of the too often accepted thesis that capitalism and free markets are, at best, an amoral, if not downright rotten and immoral set of economic arrangements. SUCH NONSENSE!
Capitalism is actually the MOST moral arrangement of human economic and social affairs. It is the only way humanity gets anything good done. It is predicated on benevolence and giving much more so than on greed and taking. The more freedom, the more manifest gifts are spread.
Here again, George Gilder:
Image comes thanks to Maggie’s Farm which picked it off Ace of Spades. Good blogs both for challenging conventional wisdom.
A tremendous reminder of how the economy creates wealth … and how increasing prosperity requires freedom just as our bodies require oxygen.
Those of us who wish to create and lead, to learn and make new things, would do well to heed Gilder’s call. Be courageous for freedom!