Archive for August 2008

On Choosing Vice Presidential Candidates and Strategic Thinking

August 31, 2008

The recent selection of Delaware Senator Joe Biden to be the Vice Presidential running mate of Democratic Presidential Candidate Barack Obama and the selection of Alaska’s Governor Sarah Palin to serve in a similar capacity by Republican Presidential Candidate John McCain are extremely interesting when perceived through the prism of strategic thought and principles. In fact when viewed in this strategic context, one could easily argue that both presidential candidates made an inappropriate choice in the selection of their running mates.

Senator Obama, a self-proclaimed candidate of change who has also been characterized as lacking experienced chose a Washington insider. Senator Biden, a career politician with 30 years of Washington political experience, was selected to compensate for the perceived weaknesses in Senator Obama’s “resume.” Senator Biden adds foreign policy know-how to another perceived limitation in Senator Obama’s background.

By selecting Governor Palin, Senator McCain, a self-proclaimed candidate of experienced leadership who had also been characterized as someone who would continue the older and more established status quo approach to governing this country, hoped to alter perceived limitations in his background. To counterbalance this perception, he chose Governor Palin, an individual who is younger than Senator Obama, is also a reformer who is not part of the Washington establishment yet is someone who lacks the experience and foreign policy expertise that would make her a clear-cut choice.

In making these choices, the two presidential candidates and their parties have blurred the distinctions between their two messages. The Democratic change agent is in partnership with the insider while the Republican man of experience is in partnership with someone, who like his Democratic rival, is light on accomplishments.

While both presidential candidates have legitimate reasons for selecting their running mates, these reasons fly in the face of more traditional strategic thinking.

Most people think of strategy as optimizing what they already do and being the best at it. This leads them to conclude that there is a singular best way to compete.

However, strategy is really about choosing to differentiate one’s product, service or brand from one’s competition. By doing so, they encourage choice and their appeal to a particualr consumer or constituency.

In the business world, failing to differentiate one’s brands, products or services from one’s competitors creates destructive competition. When there is no perceived differentiation, the only distinction becomes price. Price competition is never sustainable and is typically unwinnable.

Which brings us to why these two leaders might have made their respective choices.

For one possibility, we can turn to a book called “The Discipline of Market Leaders” by MichaelTreacy and Fred Wiersema. These two authors assert that all businesses must at least maintain threshold levels regarding key elements that a customer requires. As an example, if price was above the threshold level of what a consumer might be willing to pay, the other elements of value would not matter in the selection process. The consumer would eliminate the choice simply because it did not meet the threshold level.

It is therefore very possible that Senator Obama felt that his leadership experience was below the threshold level that the electorate might be willing to accept. Senator McCain might have believed that it was critical that he counterbalance his role in Washington with an outsider in order to compete effectively.

Still, it remains to be seen how the electorate will respond to the choices made by the two presidential candidates to blur rather than accentuate their differences.


Baseball, Pennant Races, the Mets and Strategy

August 28, 2008

Besides strategy, one of my personal passions is baseball. Boy, do I love watching a good baseball game.

I think that is because there is an element of strategy and tactics wrapped up in every single game. In fact, if you spend some time thinking about it, you would be surprised at how complementary baseball and strategy truly are to one another.

Like strategy, a baseball team measures its success by how it ranks relative to its industry. Is it in first place or the middle of the pack?

Understanding the competition and how it will react to various scenarios is also very evident in our national pastime. And baseball teams, to be successful, must have a healthy supply chain (aka farm system) and excel at talent management and growth. Of course, it must have solid management who can communicate effectively internally and externally.

Baseball teams must have a management philosophy, or a set of operating principles on how it will treat teammates and the opposition, and even the fans. And of course, is there any other sport or business, for that matter, that has quite the same amount of statistical success measures.

On the business side, it must be very clear who its customers are, what customer experience they truly value and what makes them want to return time and again. And with salary caps in place, teams most certainly must know how to budget.

Which brings us to the National League East…

Two nights ago, the New York Mets, my favorite team, went to battle against their chief rivals, the Philadelphia Phillies. As I watched a seven run lead begin to evaporate, my mind shifted to the concept of scenario planning. The Mets bullpen, its Achilles heel all season, was unraveling.

Thoughts then turned to scenario planning and the concept of seasonality. Hmm…with September just four days away and the ability to call up fifteen additional player reinforcements from the minor leagues, would it have not made sense to bring in a powerful starting pitcher to nail down a victory.

Clearly, not something one would be likely to consider in the heat of battle, but with advance planning and a better understanding of seasonality, it sure would have represented a very interesting option, don’t you think?

But I have a business plan…isn’t that enough?

August 26, 2008

Strategic and tactical plans are different from business plans.

Business plans are often used to sell the company to potential investors and financial backers. In order to do so, they must come to grips with the realities of the company, the marketplace, the existing corporate products and services, the strengths and weaknesses of the management team including its ability to deliver results, and the company’s finances. As a result, the business plan should be the foundation upon which the strategic and tactical plans rest. A strategic and tactical plan that fails to confront the realities represented in the business plan is unlikely to succeed.

While business plans are often externally published documents, strategic and tactical plans, focus on how one will sell the organization’s products and services in the marketplace. These plans are internal to the organization and should not be shared with the public or one’s competitors. They are designed to guide organizations along a path. As a result of determining organizational priorities in the tactical plan, corporate financial commitments are determined.

Business, strategic, and tactical planning are primary responsibilities of leadership. The strategic and tactical plans are iterative, that is, they must be reviewed and revised at regular intervals. The marketplace is dynamic and it is imperative that we plan and adjust for the challenges posed by social and business trends, competitive offerings and changes in our working environment.

The Art of War and the Art of Battle

August 22, 2008

The goal of a business strategy is clear-cut:

Win the customer’s preference and create a sustainable competitive advantage, while providing sufficient return for owners or, in the case of a publicly held company, the shareholders. A strategy defines the direction the business will take and positions it to move in that direction.

A strategic plan outlines how the war will be won. It defines the critical hills that must be taken. With that information in hand, the generals must determine how the resources – people, equipment, finances, timing and focus – will be allocated. If those resources are insufficient or lack the ability to win the war, the leadership must plan to supplement its army.

The allocation of these resources and the timing for deploying them is in essence the art of battle. It is how we will win the war. In business, we refer to this as the tactical or operational plan.

One of former President Dwight David Eisenhower’s favorite sayings was “In preparing for battle I have always found that plans are useless, but planning is indispensable.”

At the World Business Forum in New York City, New York City Mayor Rudolf Giuliani said, “You have to be prepared for the worst things that can happen in order to get people through things. My mentor in the Attorney General’s offices said that I should always prepare four hours for every hour I planned to spend in court. When you’re prepared, the unanticipated is just a variation on the anticipated.”

Mayor Giuliani recounted that at the turn of the millennium, the entire world undertook massive preparations for what was termed the Year 2000 problem. Private and public sector leadership were concerned that all computer systems would no longer function accurately when the calendar turned from 1999 to 2000 because of the way that calendar years had been coded. There was a widespread concern that banks would no longer have access to funds, patient age records in hospitals would be completely inaccurate, traffic systems would cease to work and even prisons would find themselves without secure systems.

Billions of dollars were spent to recode software applications, and still, there was a widespread fear that catastrophe loomed somewhere as certainly, some application must have been overlooked. To be certain, The Mayor challenged his management team to create extensive plans to ward off this possible catastrophe. In effect, he charges his management to plan for an eventuality where New York could no longer function.

On January 2nd, 2000, leadership throughout the world breathed a collective sigh of relief. There was no computer-spawned catastrophe and while there were some inconveniences, these inconveniences were quickly remedied.

Mayor Giuliani might have felt that this massive investment in contingency planning might not have been all that valuable, given the limited scope of the challenges that appeared in January 2000. After all, nothing significant happened. But, as he explained, it was our Y2K preparations allowed us to be ready for September 11th, 2001 when an unthinkable tragedy brought New York to a standstill.

Indeed, it is difficult to anticipate the exact scenario and match the plan to the anticipated circumstance. Yet, the very act of planning provides us with the means by which we can anticipate responses and adjust our actions accordingly.

Yes but…why should every company have a strategic plan?

August 19, 2008

Here’s what we know.

We know that the pace of change seems to be accelerating.

We know that competitors arrive on the scene very rapidly (and often disappear as fast).

The question then is: “Given the complexities of the marketplace and the speed of change, how can one write a meaningful strategic and tactical plan? Why should one write a plan, given these circumstances?”

To be candid, it is exactly for these reasons a strategic plan is a must.

First, in today’s environment it is very easy to be seduced by opportunities. A strategic and tactical plan helps to retain focus and makes it easier to decide what is in and what is out, what to pursue and what not to pursue. The strategic portion places boundaries on what opportunities are appropriate to pursue and the tactical portion focuses on the important tasks that will result in the achievement of strategic goals.

Second, the process of writing these plans allows inconsistencies, gaps, unknowns and implausibility to be determined and, in the process, builds agreement and alignment among the key professionals on the strategy, disseminates information about it, and builds enthusiasm for achieving its goals.

Here’s a quick list of the benefits that a well-conceived plan will provide:

  • An anchor: A strategic plan provides a means for measuring progress and incorporating changes as a company’s goals shift over time
  • A look to the future: It forces leadership to look ahead. It’s natural to assume that the future will be an extension of the past, probably the recent past. With markets changing as rapidly as they are, a forward-looking approach is imperative.
  • An understanding of consequences and trade-offs: To achieve a goal or objective may require years of effort. Knowing what steps must be taken and the consequences of skipping or eliminating a step help leadership to stay on course and avoid a seductive opportunity that would compromise an important goal.
  • A focus on key marketing issues: The plan provides a framework for getting at the big picture, those things that really matter and on which we should concentrate our energies. With a plan, there is alignment as everyone is working on the key goals and understands the implications of being effective at implementing them. Everyone is watching the important measures. The result is clear and laser-like focus throughout the organization.
  • A timetable: A strategic plan leads to an implementation timetable. This assures that management doesn’t drift away from the plan’s goals into the immediate concerns of day-to-day business. When people know that tasks and goals have to be completed by certain dates, they tend to stay focused on the key issues.
  • Management: An organization’s leaders can manage the organization from a well-written strategic and tactical plan. After all, it contains all the key tactics and the underlying reasons why they are so important.

Why doesn’t every company have a strategy?

August 15, 2008

Over the course of my career, I’ve had the honor of providing strategic guidance to small companies as well as to many of the more recognized corporations in the United States. In many cases, the smaller companies (less than $100 million in sales) do not have a formalized written strategy.

Logically speaking, it would seem that every organization would want to have a strategy and a tactical plan defined and shared throughout the organization. Truth is though, many middle market firms don’t, and in many larger firms, if a strategy is in place, it is not shared.

The first question to ask then is why don’t all organizations prepare a strategic plan?

The second is why isn’t leadership comfortable with delivering and sharing their strategic and tactical plans with their own people?

I’ve concluded that the primary reason that many companies do not create a strategic plan is not because leadership does not want to have this map but rather it is not versed in how to create one. In short, leadership would create a strategy if it could – it just may not know how.

This is because most companies evolve from a good idea executed and promoted effectively at the right time and place. As entrepreneurs, we are not taught about alignment between strategies and tactical plans or how to build a tactical plan that supports a strategy.

Instead, we build something or offer a service for a particular client. It is received well and we think someone else in a same or in a related industry might value it as well. More often than not, that is how a new business is born.

There isn’t a formal discussion about trends in the industry, where competition fits, what the compensation plan should reward or how the company should react to various scenarios or changes in the business environment. It is simply about doing something well and then adding another feature or tweaking the existing product or service – if another client wants a slightly different kind of solution.

As to why strategies aren’t shared even when they are created, I think that there are a lot of reasons for that.

To begin, I think every leader relies on his or her own credibility to effectively lead. If a strategy proves to be ineffective – and sometimes the strategy can be correct but the wrong people are in place to implement it – the leader feels that it diminishes his or her stature and therefore the capability to lead. (Surprisingly, even if the strategy does not “work” out of the box, having one improves the leader’s stature – more on that in my next post.)

In some cases, there is a paralyzing fear, that someone will share the strategy with a competitor. That’s a real concern but not only can that risk be mitigated,  it is also a risk that must be taken.

In either case, however, the leaders of these organizations are not fulfilling one of their primary responsibilities: developing the next generation of leaders. They are, therefore, putting their companies at risk.

Questions to Ponder:

  1. Why do you think some companies don’t have a formal written strategy, and for those that do have one and don’t share it with their employees, why do you think that is so?
  2. How would you address those concerns?

I think therefore I…strategize?

August 14, 2008

It took me a very long time to have the courage to begin this blog. I’ve received a lot of encouragement from friends and family and especially my 15 year old son, Eli (he has a blog too). I’ve also tried to learn how to write in a way that I hope will inspire others as I have been inspired by the people in my life.

The “tipping point” for starting to write this blog was reading an excellent book titled “Naked Conversations” by Robert Scoble and Shel Israel. They helped me to understand the whys and the hows of blogging and by the time I was done reading much of it, I decided it was worth the effort to <gulp> take the plunge.

I hope neither of us regret this 🙂

So here’s why I’m doing this.

The single most important thing that I’ve learned over the last 25 years of consulting (see About page) is that companies and organizations would do a lot better and make a much more meaningful contribution to society if they took the time or learned to answer four questions:

1. Who are we?

2. What are we?

3. What do we want to be?

4. What can stop us from getting there?

These questions are the core questions not only of creating any strategy but of being successful and, I think, happy.

I’m hoping that I can contribute to a dialogue that gives people a way to get at the essence of these questions and in doing so, help make a difference…because if companies get better at answering these questions, there should be better and more rewarding jobs, more growing communities and generally speaking, a better and happier world.

A pretty bold and lofty goal, huh? I think so too but I also think that the rewards justify the risk and investment of having this conversation.

Anyway, here’s my plan.

I’m planning to write — pretty regularly. I’m planning to present methods that I have found to be useful. I also want you to get to know the people in my life who, by virtue of their passion or some element of their character , teach me every single day a valuable insight that I try to make core to what I do and how I personally contribute. Lastly, from time to time I expect I’ll take a left turn and apply strategy to what is going on around us such as the management principles that made it necessary for the Packers to move Brett Favre. (yup, at a certain point they really had no choice.)

So that’s what I am signing up for.

And here’s what will be asked of you. I’m hoping that you’ll teach, challenge and make me smarter. I can promise you that I’m a pretty good listener and I catch on quick. Together I hope we’ll make one plus one equal at least three.

More tomorrow…and so the journey begins.

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