STRATEGY CENTRAL

Peter Drucker’s classic question, "What business are you in?" is a classic because it’s at the core of a fundamental understanding we all need to have about the "business" we are in.  Like the railroad industry of an earlier day not realizing that they’re actually in the transportation business, sometimes we can miss the reality of the business we are in.

That ever happen to you?  I think it has to many of the organizations I’ve been part of…sometimes without anyone knowing it.  How can you figure out what business you’re really in?  Asking "why customers buy your products or service can provide a more accurate and more expansive answer to the question, ‘What business are we in? (p. 32, The Innovator’s Guide to Growth).’"

Here’s the thing.  Whether that happens formally or informally, we’re kidding ourselves if we’re not really drilling down to figure out if people are buying what we sell for the reasons we think they are.

What comes first?  Strategy or resource allocation?  For most of us, the question is a little bit moot…because we’re in organizations that are already in business.  Whether the organization is 10 years old or 100, most of us come into the picture after the budgeting process is well established and defined.  What is more common is that after a while there is at least an attempt at a strategy change.  Maybe a big one, maybe a small tweak…but a strategy change designed to kick start organizational effectiveness is very common.  After all, if you realize that you’re not heading in the right direction, the only thing that makes sense is a new strategy.  And that’s where there can be a significant problem.

Problems often arise when a new strategy is laid on top of a preexisting budgeting process.  Legacy programs that expect to be funded can be tough to eliminate (or even decrease).  The temptation is to simply fund the new strategy and continue to fund the old.  Truth?  It rarely works cleanly.  Much more common in this compromise is that by sustaining the old the new strategy isn’t quite funded sufficiently.

Sound familiar?  Here’s a line from The Innovator’s Guide to Growth: Putting Disruptive Innovation to Work  that grabbed my attention:

"Remember, it is not your strategy that determines how you allocate resources; rather it is how you allocate resources that determines your strategy.  In other words, the way in which you spend your time and money reflects your priorities.  Claiming that innovation is important is meaningless if you and your organization don’t allocate appropriate resources to that end (p. 33)."

Moral of the story?  Don’t kid yourself.  Budgets and resource allocation are the truest reflections of priorities.

What gets us to our destination?  Vision?  Mission?  Good intentions?  Actually…none of the above.  What gets us where we’d like to go is moving forward on a path that leads to there.  It’s really two-fold.  Being on the right path…and moving forward.  I like what Andy Stanley says about the first part: "Path, not intent, determines destination."

I like what my friend Eric Swanson says about the second part: "You need to have a system that operationalizes your values.  Otherwise, they’re really only sentiments."

Want to get to there?  It will take more than intention. 

Thanks to Steve Bradley for the link to the quote!

Ever found yourself in an un-winnable situation?  Maybe you’ve tried to succeed at something only to realize that the game was basically rigged and only the house could win…unless you changed the rules?

Without a doubt one of the most helpful and provocative books I’ve read in a very long time was Mavericks at Work: Why the Most Original Minds in Business Win.  For me you can always tell how interesting it was based on the number of marked up pages.  Simply an amazing book.  If you haven’t read it, you have totally missed out on a great read.

The authors, Bill Taylor and Polly LaBarre have a blog that is the source of some great stuff as well. In an article earlier this week Taylor wrote about how Pixar had succeeded by "changing the game in their field."  While virtually everyone else in their industry works on a contract basis and changes fluidly changes projects and teams, the Pixar version: "a tightknit company of long-term collaborators who stick
together, learn from one another, and strive to improve with every
production."

Now, that in itself is an important insight into our work…but that’s not really the point today.  The point here is that Pixar is winning by changing the game.

Got some areas where you’re just not able to win under the current rules?  You may need to change the game.  Want more?  You can order your copy of Mavericks at Work RIGHT HERE

One of the quotes I refer to almost daily is that "your organization is perfectly designed to produce the results that you’re currently experiencing."  Something I picked up from Andy Stanley, a very smart guy.  It’s a simple statement.  Not a head scratcher.  So obvious that you can’t even argue with it.

Tripped across an article today over at the McKinsey Quarterly that might be related to the source of Andy’s thinking.  The article was about a concept called the SCP Framework (Structure, Conduct, Performance) and explains how your structure determines conduct and your conduct determines performance.  Very interesting, complete with some great illustrations.  You can check it out right here.

By the way, one of the main reasons that StrategyCentral is so important to me is that it allows me to show the connection between current business theory and practice…and what all of us do.  You get that.  That’s why you’ve bookmarked this site.

One of my favorite newsletters is the McKinsey Quarterly.  Based on the writing and practice of McKinsey & Company, the Quarterly regularly has an article that catches my eye or that little corner of my brain that says, "hmmm…this is like that.  This will help with that."

One of the great stories in modern business is Southwest Airlines.  No question about it, no getting around it, that company is just a great story.  Fun to hear about and fun to talk about and at the root is the amazing story of founder Herb Kelleher and his relationship with the employees.  There were two quotes from a recent New York Times article that tell part of the story behind the story:

The Southwest pilots union is in the process of negotiating a new
contract with management (as is American Airlines). But not only did the Southwest pilots not set
up a picket line, they took out a full page ad in USA Today thanking
Mr. Kelleher for all he had done. “The pilots of Southwest Airlines
want to express our sentiment to Herb that it has been an honor and a
privilege to be a part of his aviation legacy,” said the union
president, Carl Kowitzky, in a statement.

(Later in the meeting) when he (Kelleher) brought up the pilots ad — and when he talked about how much
the company’s employees meant to him — he wept. “I’m Lucky Herbie for
having all of these years with all of you,” he said. More than a few
people in the audience wept right along with him.

If you want to read the whole New York Times article you can click here.

Thanks to the 37signals blog for the link to the article.

At the heart of successful connection with the customer is the ability to see what they’re seeing and feel what it’s like to walk in their shoes.  Can’t relate?  Never going to really connect.  Love this quote from Big Ideas to Big Results:

Denial is the opium of losers.  Nothing guarantees fatal errors faster than seeing only what you want to see.  Winning is all about realism, accepting truth, and acting on it quickly and more effectively than your competitors.  Seeing things from the market or customer perspective, from the outside-in, that’s what matters (p. 33).

Part of the problem for many of us is that we dream of connecting with a customer that is different than the one we actually end up with.  Or we’ve got a mix.  We still talk about connecting with the customer we aspire to reach, sometimes we talk as if we’re already doing, but in reflective moments we acknowledge that it’s not happening.  We have customers…they’re just not who we hoped they’d be.

How honest are you about your connection with the customer you seek?  Is there room for a gut-check?  Are you able to really see things from your aspirational customer’s perspective?

Think you can please everyone?  Uhhhhh…no.  You can’t.  But you can choose who you are willing to offend.  Not only can you choose, but wisdom is in the choosing.  If you don’t choose, it still happens.  It  just won’t be you doing the choosing.  Want to know the heart of the issue?  The failure to choose almost always means that you’re choosing against the very people you hope to reach.

Thanks to Scott Hodge for the concept.

It may be a sickness…but sometimes I come across ideas that are just so prophetic I have to share them.  This morning was one of those times.  Working my way through Competing for the Future (published in 1994) by Gary Hamel and C.K. Prahalad.  Only on page 18, but already can tell this is so relevant to our world.

In a section on how Xerox led the copier pack in "underexploited innovation," Hamel and Prahalad wrote that in order to exploit its innovation stockpile Xerox would have had to create new businesses and to do that it would have had to "regenerate its core strategy and reinvent its very concept of self (p. 17)."

I don’t know about you, but when I read lines like that I can’t help but think about the organizations I serve.  It can be disheartening.  At the same time it is what makes me suit up for the game.

Writing about the 90s trend to spin off business units in order to become leaner, to innovate quicker, Hamel and Prahalad wrote that, "A company surrenders today’s businesses when it gets smaller faster than it gets better.  A company surrenders tomorrow’s businesses when it gets better without getting different (p. 16)."

Know any organizations that are mainly trying to get better at what they do?  Could it be that they need to be working to become different?

Need some ammunition?  You can pick up your copy of Competing for the Future RIGHT HERE.

One of the great challenges in life is learning to say "no."  I don’t mean when you’re 16 months old.  That part of learning to say "no" comes easy to all of us.  The "no" I mean comes much later.  The "no" I’m talking about is the one where you’re choosing not to deviate from the path you’ve chosen.

One of the great challenges in the life of an organization is simply staying on course.  So often that is about saying no to little deviations.  Big deviations are easy to see.  Most of us see them coming and can easily say no.  It’s the little ones that are so tricky.  Oddly, it’s the little ones that get us from the elegant simplicity of  In-n-Out’s menu to the crazy complexity of McDonald’s.  After all, what harm could offering an Asian salad made of orange-glazed chicken, snow peas, red peppers, mandarin oranges have on the effectiveness of the company?

I loved this response to the challenge of saying no by 37signal’s Jason Fried.  "We say no to a lot of ideas — including most of our own ideas. But it’s
important to remember that no can be temporary. No now may be yes
later. Or it may be no forever. The trick is to figure out which camp a
certain no falls into and then respond appropriately."

How would you evaluate your own ability to say no?