STRATEGY CENTRAL

How does arriving where you’ve already been sound?  Depends I guess.  If you like where you’ve been, you might want to go there again.  After all, there are places we’ve been that we love going back to.  At the same time, as a metaphor for vision…most of us are dreaming of arriving somewhere we’ve never been.  And arriving where we’ve already been is the last thing we’d set out to do.

And yet…when it comes to strategic planning, we’re often hung up by the fears of the agents of status quo who prefer consistent, predictable outcomes.  “Will it pay for itself?”  “Will we get buy in from the core?”  “Are you sure this will work?”  Sound familiar?  These are the sound bites of those seeking reliability and “the goal of reliability is consistent, predictable outcomes (p. 37, The Design of Business).”

On the other hand, if you’re dream of arriving somewhere you’ve never been, a desired objective,…then you’ll be looking for a different route than you’ve taken so far.  You’ll be looking for a path that goes to a different place than you’ve been before.  That route or path is found in the search for validity, not reliability.  And the discovery of what is actually valid is the only way to get from where you are to where you want to go.

Keeping an eye on the effectiveness of strategy is essential.  Clarifying what a win is and launching strategic steps designed to produce that win are essential to organizational success.  Evaluating effectiveness is just as important.

Have you ever slowed down long enough to evaluate whether your strategy is actually working?  Most organizations never really get around to it.  Why?  I’m finding Roger Martin’s The Design of Business very helpful in teasing out one of the most basic reasons.

It has to do with the fact that most organizations that have had any amount of success become really good at repeating the steps that led to their previous success.  In a sense, they’ve refined and perfected a set of procedures that successfully produce a certain product.  Martin refers to this as developing an algorithm (an explicit, step-by-step procedure for solving a problem).

The advantage that an algorithm offers is significant.  In the same way McDonald’s produces a quality product with very little variation, developing effective strategies that can be used again and again make it possible to repeat previous success.  The dependability of the algorithm reduces the risk that operator quirks will derail the effectiveness of the organization.  The organization can produce what the customers wants every time.

As long as what the customer wants doesn’t change.

What happens when what the customer wants changes?  You’d better go back to the drawing board and develop a new strategy.  What do most organizations do?  Keep running the same algorithm and hope the outcome was a fluke or that customers will come to their senses and return to seeing the world as it used to be.

“What organizations dedicated to running reliable algorithms often fail to realize is that while they reduce the risk of small variations in their businesses, they increase the risk of cataclysmic events that occur when the future no longer resembles the past and the algorithm is no longer relevant or useful (p. 43, The Design of Business).”

Scary?  Should be.  See yourself?  Hope not.  What do you need to do if you realize that your organization’s future no longer resembles the past?  Don’t hope for a mindset change on the part of the customer.  Go back to the drawing board.  Begin developing a better understanding of your customer.  Tip?  The people you’re currently reaching are not the customer you ought to be trying to reach.

One of the key concepts in Roger Martin’s The Design of Business is the notion that the pursuit of reliable or predictable results keeps many organizations from the kind of exploration that pursues the next opportunity (or the more current opportunity).  This is big for all of us, but to really catch the significance you need to think about how an understanding of what works develops.  I detail it in this discussion of the difference between heuristic and algorithm.  Trust me…I know this sounds way technical…but it is worth the journey.  Take 5 minutes and check it out right here.

Once you’ve caught on, the next step is recognizing that when the stakes are high, it is much more palatable for most organizations to settle for tried-and-true and predictable…even when the world has changed.  That’s why so many of us are still doing what worked in the 80s and 90s (or 60s and 70s)…even though we shake our heads when it doesn’t quite work the same way now (or anywhere close).  We want to explain is away, but we have a harder and harder time.

Need an example?  Think about McDonald’s being late to the healthier-menu-item game.  Their sense of reliable kept them focused on the path that had been so successful in the past.  Their next steps were based on what had always worked.  And when Subway burst on the scene with a healthier fast food concept, McDonald’s was caught unprepared.  It was some time before they conceded that the world had indeed changed.  Only when they recognized that the tried and true no longer worked did they begin to “emerge from the trough.”

An example from my world?  There was a time when participating in the activities of a church was an all day affair.  Church-goers rode into town on a wagon, attended a worship service as a family, went to a Sunday School class, stayed for dinner-on-the-grounds, worshiped together again at an evening service, hitched up the horses and went home.  Although that time is clearly in the past, many churches still operate with that worldview still intact.  Shaking their heads, they wonder why churches are growing that offer a more streamlined approach.

Settling for reliability is guaranteed to miss the main chance when the world changes.  On the other hand, the pursuit of validity is a high-stakes gamble that doesn’t always produce a big win (or even a win).  It’s risky.  It’s a venture into the unknown.  It seems crazy.  And yet, you cannot move to a new trajectory without the willingness to search for validity; an understanding of what is actually happening.

One of the highlights of Drive ’08 was Andy Stanley’s talk, Random Thoughts On Leadership.  I’ve referenced it before and it is a great talk.  Really one of those talks that the audio hangs in the consciousness for years.  The basic gist was that Andy took 5 memorable quotes that had affected his thinking and riffed on how they were impacting his leadership and North Point’s front-of-mind decisions.  I highly recommend that you purchase it and listen to it over and over.  Great insights to be had.

In the 18 months since it was delivered Andy and the North Point crew have taken the talk and dealt it out in its 5 key ideas, the random thoughts, in 5 podcasts that were part of their Andy Stanley Leadership Podcast series.  You can find out how to download the most current additions right here.  Unfortunately, the podcasts aren’t archived permanently.  Being an enthusiast…I’ve archived them right here.  Here are the quotes and the audio:

What no one else is doing.  “To reach people no one else is reaching we must do things no one else is doing.” Craig Groeschel, Senior Pastor, LifeChurch.tv

Become a Student:  “The next generation product almost never comes from the previous generation.”  Al Ries, Focus: The Future of Your Company Depends on It

Breaking Paradigms “What do I believe is impossible to do in my field but if it could be done would fundamentally change my business?”  Joel Barker,  Paradigms: The Business of Discovering the Future

Assumptions “If we got kicked out and the board brought in a new CEO, what would he do?  Why shouldn’t we walk out, come back in and do it ourselves?”  Andy Grove, Former CEO, INTEL

When memories exceed your dreams:  “When your memories exceed your dreams the end is near.”  Chuck Bentley, President of Crown Ministries

In developing a design-thinking toolbox, one skill that must be added is abductive thinking.  First, I know.  I had to add the term to my dictionary.  A concept introduced by Charles Sanders Pierce in the twentieth century, here’s the idea:

“It is not possible to prove any new thought, concept, or idea in advance; all new ideas can be validated only through the unfolding of future events.  To advance knowledge, we must turn away from our standard definition of proof–and instead stare into a mystery to ask what could be.  The answer, Pierce said, would come through making ‘a logical leap of the mind’ or an ‘inference to the best explanation’ to imagine a heuristic for understanding the mystery (p. 25, The Design of Business: Why Design Thinking is the Next Competitive Advantage).”

That’s a lot…I know, but you need to get this.  This is HUGE!  And it affects all of us, or at least the many of us who are part of organizations that are more comfortable doing again what used to work, even though we know deep down that it is not really working anymore.

Here’s where abductive reasoning comes into play.  Standard operating procedure for most organizations is to fall into the trap of analytic thinking.  Proof that something ought to be done is based on past results.  This becomes the default because intuitive thinking, “knowing without reasoning,” is too scary.  It’s about protecting against the outcome that you can’t possibly know.  As Glen Frey said in Life in the Fast Lane, “Are you with me so far?”

It leads to “worshiping at the altar of reliability (p. 24)” as opposed to pursuing validity.  How does this come into play?  If in your organization you find yourself defaulting over and over again to “we’ve always done it this way” and shying away from exploring new opportunities…then you’re probably settling for reliable over the hard work of searching for validity.

I don’t know about you, but I am a sucker for a beautiful phrase.  I tripped across this one while working my way through Change by Design.  “A team that understands what is happening will not feel bound to take the next logical step along an ultimately unproductive path (p. 17).”  What do you think?

The section I’m reading has to do with the way design thinking works in that it doesn’t progress in a linear fashion.  Instead, design thinkers start with an inspiration, move into the ideation phase where they’re beginning to generate, develop and test ideas…and then, just when you think they’d move on to implementation…they discover something unexpected and circle back to the drawing board.

Stop and think about the way you tend to work it.  What do you do once you’ve begun to move to implement?  What do you do once you’ve moved just past ideation, put a plan in place, and then begin to see a wrinkle?

If you’re like many, you simply determine what the next logical step is, even though it might actually be an unproductive path.  What should you do?  What should we do?  Not be afraid to stop in mid-implementation and return to the drawing board.

Interesting how ideas converge.  A week ago I was considering Steven Levitt’s statement that we need to “forget about what we want to be true or what we fear may be true and just look at what is actually happening.”  Bringing that into line with Andy Stanley’s statement that “path, not intent, determines destination,” it all makes sense.  Rather than taking the next logical step along an ultimately unproductive path, we need to just look at what is actually happening…and move over to the path that leads to the destination we desire.

If only it were that simple.

What doesn’t work?  The next logical step.

Want to come along on the journey?  You can pick up your copy of Change by Design right here.

One of the best things about weekends is that there is usually time to pull a new book off the stack and spend some time between the covers.  And every once in a while I find one that pulls me right in and really catches my attention.  Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation, by Tim Brown is that kind of book.

Why am I reading a book about design thinking?  Better yet, why should you be reading a book about design thinking?  Easy.  All of us are in a business in which missing the point has serious consequences.  Don’t kid yourself either.  The consequences aren’t just for the customer (or the prospective customer).  In a real sense, there are consequences for me and you as well.  Don’t believe me?  Read The Parable of the Talents in Matthew 25.

Who’s Tim Brown?  Only the CEO of the celebrated design and innovation firm IDEO.  Think he might have anything to say?  I did too…so when I ran across the title a few weeks back I had to add it to my wishlist.

The first thing I noticed about the book was the whiteboard drawing on the inside front and back cover.  That kind of thing always grabs me.  This one is very cool and it turns out that it sketches out the path the book takes you on.  I don’t know if you can pick this up in the drawing here, but if you start with “Design Thinking” and then move to the Intro and then follow the path clockwise you can keep up with where things are going.  Very cool…and fascinating at the same time.

If the first 50 pages are any indication, this is going to be a really marked up book.  Want to come along?  You can pick up your copy right here.

What is it that separates corporations like McDonald’s from so many others?  According to Roger Martin there’s more to it than hard work.  Design thinking…a kind of analysis that takes something from mystery to heuristic and then to algorithm…is the real secret.  Best of all?  You can learn how to do it.  But first, a little dictionary work.

A heuristic “represents an incomplete yet distinctly advanced understanding of what was previously a mystery (p. 12, The Design of Business: Why Design Thinking is the Next Competitive Advantage).”

An algorithm is an explicit, step-by-step procedure for solving a problem.

Returning to the McDonald’s example, company founders wondered “what and how the mobile, leisured, mass middle class of southern California want to eat (p. 16)?”  That was their mystery.  The heuristic they developed was “a quick service restaurant with strictly limited menu options (p. 16).”  When Ray Kroc came along and bought McDonald’s from the founding brothers, he developed a precise algorithm and the reward was “a massive gain in efficiency.”

Simple way to understand the reality of winning organizations.  Start with a mystery (i.e., how to reach this market niche?), begin to develop a heuristic, and then an algorithm.  Think you’ve solved the mystery but not hitting it out of the park?  Maybe you’ve got the wrong heuristic!  Maybe it’s time to go back to the drawing board and work to solve the mystery.

Looks like a great book.  Want to come along?  You can order yours right here.

I continue to find the idea of meaning a very interesting concept.  One that all of us ought to become familiar with and then begin to spend time thinking about…as it pertains to our business.  In Design Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean, meanings “reflect psychological and cultural dimensions of human beings (p. 52).”

One key to the idea of meaning is that they can change  over time.  For example, there was a time when watches were thought of as jewels and purchased in jewelry stores.  The introduction of quartz technology allowed cheaper production, mass production, and watches became thought of as a tool and added all kinds of functions that they never had before (calculators, stopwatch, calender, etc.).  The development of the Swatch brand moved the meaning of a watch again…to fashion accessory.  Not necessarily expensive.  Swatch watches often retailed for less than $40.  But fashion.

Follow so far?  Here’s why understanding the idea of meaning is important.  With the introduction of quartz technology, the Swiss share of the low end watch marketed plummeted.  “Almost 1,000 of 1,600 Swiss watch companies closed within ten years (p. 68).”  Jewel to tool as meaning caused that.  The tool to fashion move created an opportunity for Swatch.

How does it affect all of us?  What if the meaning that underlies what we do is due for a change?  What if it is overdue?  Think about the Swiss watch companies closing.  Sound familiar?

For more on the idea of meaning take a look at yesterday’s post.  And come back to follow along.

Had a four hour flight recently that allowed me to dig deep into Design Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean.  I continue to believe that all of us are in organizations that have limited understanding, often an antiquated understanding of why people really buy what we’re selling.  Why does this happen?  What are the consequences?  It’s serious and it happens to all of us.

A limited understanding of why people buy what we’re selling comes into play and has serious consequences when we continue to offer incremental innovations of a product that attracted a market share based on an outdated meaning.  An example of this might be the transition of music listening from large console pieces of furniture to modular and then modular to portable.  On the other hand, Apple unleashed a new meaning when they launched the iPod and iTunes, allowing consumers to create their own playlists, share their own music.

We can break out of an old mold when we practice design-driven innovation.  In design-driven innovation several questions can be asked to ignite a process (from Design Driven Innovation, page 220):

• What is the deepest reason people will buy our product?
• What meaning could they be looking for?
• How can we gratify them and make them more content by providing products that suggest new meanings?

This is a version of what Clayton Christensen described in his framework based on the “job to be done.”  In a design-driven innovation sense he has “supported the importance of targeting meanings and understanding what people are really trying to achieve when they buy products (p. 28, Design Driven Innovation).”

So, an example from our world?  Many of our organizations are still operating on the notion that people (our customers) buy what we’re selling because they know intuitively that what they need is God and God is found in a church.  Reality?  What if the deeper meaning is that people aren’t looking for God but for contentment or joy?  Does the market share lag have more to do with a tired or inaccurate meaning than anything else?  I suspect it does and encourage you to probe deeply into the deepest reason people will buy your product and what meaning they are really looking for.  That is the way to next.