Guest blog from my colleague, Adam Brock, Director of Social Enterprise at Joining Vision and Action (formerly JVA Consulting):
How can a well-meaning startup avoid “Silicon Valley Syndrome” and actually use a social startup to create real value for society?
Every era has an industry that epitomizes its values. At the turn of the 20th century, nascent car companies like Ford and Packard were the symbols of a growing middle class. A couple of generations later, the best and brightest were lured to IBM and Xerox to develop the infrastructure of the information age. And in the 1980s, a booming Wall Street captured that decade’s spirit of self-interest.
As for today, there’s little doubt that the startup has become 2016’s quintessential business model. Inspired by the garage-to-riches mythology of Bill Gates and Steve Jobs, millions of young people are spending their prime years honing business plans, practicing sales pitches and tweaking their personal brands. Whereas the previous “it” industries profoundly reshaped society through corporate R&D, the rise of the startup has enabled scrappy entrepreneurs working out of college dorm rooms and coffee shops to transform how we listen to music, how we get around, even how we communicate our very identity.
But is all this disruption actually making the world a better place? It depends, as it turns out, on what kind of startup we’re talking about. Technically, the word can describe any kind of business in its launch phase. But the ones that dominate our news feeds and app screens are all startups of a certain flavor: those that are based in Silicon Valley, funded by millions of dollars in venture capital, and hoping to be bought out by one of the industry’s titans.
Business Models That Increase Middle-Class Convenience Through Automated Algorithms
For all their rhetoric of a better world through tech, most business models of these startups amount to increasing convenience for middle-class consumers through automated algorithms. Very few of them even manage to create a positive cash flow, electing instead to subsist off of venture capital funding until they get bought out or go public. Yet because these specific kinds of startups are the most visible, we’ve accepted their approach – brash, informal and dead set on glory – as the norm for all new businesses.
So how can a well-meaning social startup avoid “Silicon Valley Syndrome” and actually create real value for society? Here are a few pointers:
What is your goal?
For many centuries, a successful business was one that improved a community by meeting its real needs. But at some point, “success” came to mean relaying an investment into short-term profit. Regardless of their original intent, many Silicon Valley startups get pushed into the second category by their over-reliance on venture capital. Social enterprise startups, meanwhile, build social impact into their core business model, and would never accept investment that causes them to compromise their mission for the sake of profit.
How big is best?
The Silicon Valley ecosystem thinks big, pushing entrepreneurs towards high-stakes, industry-shaking concepts – the vast majority of which fail. For every Instagram, we’re left with 99 other similar ventures that fell flat. The sad thing is, many of these businesses could have thrived on a more modest level, sticking with a specific community or service. It’s great to think big, but sometimes, small is beautiful.
How long are you in it for?
Tech companies tend to go all in on the 21st-century obsession with quick fixes. But it can take years, or even generations, for institutions to reach their full potential. Even if the founders are long gone by then, planning for the long view is important from Day 1.
As more and more entrepreneurs and thought leaders realize the downsides of the much-lauded tech startup, the backlash can’t be far behind. Before long, we’re likely find ourselves in a new era. And with any luck, the values we bring to our startups today will help define whatever comes next.
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Joining Vision and Action, a Denver-based consulting firm, offers a new program called the Social Enterprise Navigator. This one-on-one social enterprise coaching series guides social change organizations through an efficient, well-defined, highly-collaborative process to grow and sustain long-term impact via the marketplace. Adam Brock is the director of that program.
To become a master strategist, you must develop strategic intuition. Consider Warren Buffett’s genius for seeing investment gems lying unnoticed in a huge pool of possibilities…. Or Steve Jobs’ ability to intuit the features and qualities of technology that will bring magic to customers… Or Oprah Winfrey’s ability to discern what her viewers want to experience and learn about… In the end, wisdom on this scale cannot be gained through simple analytic tools or logic… intuition is a matter of knowing without knowing how you know.
Biographers of Napoleon Bonaparte talk about his ability to size up a situation with a single coup d’oeil, (pronounced koo-DOY), meaning “a stroke of the eye” or “glance.” To become a master strategist, you must develop strategic intuition. Napoleon was so knowledgeable about his strategic situation—the enemy, the landscape, available technology, similar situations from the past—that he could understand and respond quickly to ever-changing circumstances.
The best decision-makers in chaotic “fog of war” conditions seem able to call on intuition – knowing what to do without knowing why or how they know. To study the dynamics of decision-making under pressure, Gary Klein lived with firefighters and other emergency or quick-response personnel. His objective was to understand how people make decisions in the most hectic of moments. In his book Sources of Power, he concludes that the keys to good spontaneous decision-making are entirely different than what matters when one ponders decisions with time available for analysis and deliberation.
For example, Klein tells the story of one fire captain who entered a burning house, got an odd feeling that something was amiss, and ordered his firefighters out of the structure just seconds before it collapsed. It turned out the source of the fire was in a basement that they did not know was there. Something about the situation just felt wrong to the captain, and he acted on his intuition, saving the lives of his men. According to Klein, intution is recognizing complex patterns “without knowing how we do the recognizing.”
Pattern recognition, by the way, is a key indicator of whether someone has begun to develop a “Zen” way of knowing about his or her field of expertise. Master chess players, for example, can take a cursory glance at the pieces configured on a chess board, turn around, and accurately recreate the placement of all the pieces on another board. The rest of us, at best, can remember where one or two pieces are placed. The difference is that the chess masters look at the board and see a pattern – a story – that they can hold in memory and recall later. To recreate the board, they simply put the pieces into place in order to tell the same story. This is the basis of intuition. While the word conveys a bit of magic or mysticism, psychologists say that intuitive knowledge is the result of repeated experience. The chess master has seen countless configurations on chess boards and gradually learns to see them as a whole experience, pattern of story. To the master, the pieces are just elements of something larger. In like manner, a quarterback who intuits where to find the open man or just seems to sense that it is time to get rid of the ball as he’s approached from behind, has achieved masters level pattern recognition.
Psychologist sometimes call the things that we know intuitively “tacit knowledge.” And we can only use language to speak about things that are “explicit.” Bill Snyder — author of books on knowledge management and communities of practice — says that “unless we can distinguish between tacit and explicit knowledge, we are likely to pay inordinate attention to explicit knowledge and underestimate the prevalence and value of tacit knowledge.”
Tacit knowledge refers to knowledge that one has but cannot explain. In corporate settings, we distinguish between codifiable knowledge that can be written down or documented in some way, and non-codifiable knowledge that you can only learn from experience. This kind of knowledge includes intuitions, values, and basic assumptions as well as “artistry” or Zen mastery. Explicit knowledge involves knowledge that can be explained and codified. For example, facts, theories, recipes, standards, and procedures are all examples of explicit knowledge. It is important to distinguish tacit and explicit knowledge because research indicates that more than half of the knowledge in organizations is tacit.”
How to Develop Strategic Intuition. As Malcolm Gladwell has shown in his book, Outliers, mastery of a field generally takes 10,000 hours of concentration in that knowledge domain. With time and practice, the individual begins learns to recognize patterns where others don’t and begin to recognize gaps in knowledge and begin to make new connections in order to solve or fill in these gaps. Warren Buffet certainly put the time in to gain his legendary intuition about the world of investments.
Gaining napoleon’s coup d’oeil – intuitive grasp of the competitive landscape – comes from a mix of aptitude and hard, diligent, and persistent work.
If you’d like to hone your own strategic thinking and deciding skills, please consider joining our workshop called “Learn Strategic Decision-Making at Gettysburg” to be held September 26-27, 2016. To learn more about it, check out our video below or visit our website, here: https://mark-rhodes-y43x.squarespace.com
The Consultants Development Institute is offering a complete, online series to teach how to facilitate strategic planning for any type of organization. The series Facilitating Strategic Planning includes a pro bono Audit Track with unlimited enrollment.
In that Audit Track, you get free access to all of the courses, tools, assignments and discussion forums with faculty and other participants — everything to learn how to customize and facilitate strategic planning for any type of organization.
Faculty members in CDI have extensive experience in teaching strategic planning and in online education. We have 30 students nearing the end of the series and feedback has been quite positive. Students include both experienced and inexperienced facilitators.
CDI’s mission is to provide highly affordable and accessible consultant training, especially to people and organizations in need. So we want to offer the series especially to service organizations and professionals that focus on very under-served areas and people.
I invite you to take a look at the series’ website to learn more. If you are interested, you can enroll in the pro bono Audit Track and experience the series for yourself. The enrollment period ends January 31, 2016.
Please tell others who might benefit from this pro bono service to provide highly accessible strategic planning training for organizations around the world.
Paul DePodesta new Chief Strategy Officer for the Cleveland Browns
Paul DePodesta was recently named the Chief Strategy Officer by the Cleveland Browns of the National Football League. This is significant because, as any fan of Moneyball knows, Mr. DePodesta has spent his career in the sport of baseball, not football. This matters to the community of strategic thinkers because it means that increasingly, the realm of Strategy is seen as a unique and crucial discipline independent of the industry in which the strategist works.
You may recognize DePodesta’s name because he was played by Jonah Hill in the movie Moneyball based on the Michael Lewis book of the same name. The real DePodesta is nothing like the Jonah Hill persona. He played both baseball and football at Harvard, and comes across in person as bright, energetic and assertive. But it is DePodesta’s intellect that made the story… both the true story in the book and the quasi-true movie. Evidently the movie producers wanted the character played as passive and dumpy to accentuate the theme of brain over brawn.
“From the standpoint of raw intelligence, Paul is the smartest person I’ve ever been around,” says Josh Byrnes, VP of Baseball Operations for the Los Angeles Dodgers. “From a strategizing viewpoint, he’s brilliant. If the owner gives him enough runway, I have no doubt in a short time Paul will make an impact.”
To put the role in a nutshell, the Chief Strategy Officer owns the decision-making processes of the organization. The strategist does not necessarily make strategic decisions, but designs and manages the process by which they are made. The strategist must then align the compendium of all decisions made throughout the organization such that all members understand strategy, and can make operational and tactical decisions in a manner consistent with the organization’s strategy.
Moreover, the strategist ensures that all decisions are made in an information-rich environment. Appropriate competitive intelligence must be gathered and understood by the right people. That’s why DePodesta’s experience as an Analyst is so important for his upcoming job.
DePodesta as a chief strategy officer
As Chief Strategy Officer, DePodesta will own the strategy-making process from end to end. He will evaluate intelligence and make sure the right information is in the right hands. He will guide the process of formulating strategy. He will assist in articulating strategy to the Browns organization so that others can make good decisions. He will ensure that executives know how and when to execute strategic action (that’s why they are called executives!). And he will make sure that the Browns’ leadership learns from experience, reviewing the results of past decisions and tweaking the process so that future decisions are better made. The graphic below shows the work of the strategist as a continuous learning loop.
In a presentation to a group in the OD world several years ago, DePodesta explained how he got started in the world of strategy and analytics:
“In my first year I was charged with charting every pitch of every single one of our major league games in terms of pitch type, pitch location, and ultimately the outcome of that pitch. It really made me focus on everything that was going on, and ultimately what was successful and what wasn’t.”
DePodesta described how he would sit in the stands at baseball games among the “scouts” who were evaluating the players. As he hung around the periphery and listened to the opinions and evaluations of the scouts, and then waited a few years to see what would happen, he came to realize with time that the scouts’ predictions of future performance were not proven true by the players on the field. He realized that their subjectivity was actually hurting the decision-making of the Cleveland Indians.
“In my mind, I started thinking that maybe this whole subjectivity thing isn’t so good. I started realizing that we had a lot of psychological biases when we were making subjective decisions on things. A lot of them”, he says. “First and foremost was that we made a lot of emotional decisions. The team was playing well, the team was playing poorly, it didn’t matter. Whatever sort of wave of emotion we were riding at that point caused us to make certain decisions that in otherwise rational times we probably wouldn’t have made.”
As mentioned above, the job of the strategist is to “own” the decision -making processes of the organization. DePodesta has spent a lot of time thinking about how decisions should and should not be made. He says “I don’t think it was the scouts. I think it was us. I don’t think we were doing a very good job at all in preparing the scouts for what they needed to do. What we needed to do was come up with a better process – a better process than the subjective 1.0 operating system that we had at the time.”
This is music to the ears of Browns fans, who have seen their team bungle decisions high and low since their return to the NFL in 1999.
DePodesta cites Thomas Payne’s Common Sense as wisdom to be mined in correcting a decision process gone wrong: “A long habit of not thinking a thing wrong gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom.” Depodesta learned that this was the case in baseball, and as we have all observed is still the case for the Browns of the football realm. Talking about baseball, he says “This was an industry that was run by old-timers. It was old school. Everything was really based on opinion, but for all this time we felt this was the way to do it, but we weren’t thinking critically about it.”
As an analyst, he began to ask “What are we going to measure, and how are we going to measure it? The first one was critical, because for so long we just assumed that batting average and on-base and home runs and runs batted in were important. We decided to throw it all out. We started trying to figure out what the real correlation was between a statistic and winning, and ultimately we created our own statistics.
DePodesta concluded his talk about organizational strategy and decision-making with a quote from Thomas Kuhn in his book The Structure of Scientific Revolutions. “The proliferation of competing articulations, the willingness to try anything, the expression of explicit discontent, the recourse to philosophy and to debate over fundamentals, all of these are examples of a transition from normal to extraordinary research.”
Some important things to take note of
What can the rest of us learn from the challenge that faces Paul DePodesta? Keep in mind the job of the Chief Strategy Officer:
Understand the strategic environment. Understand the critical capabilities necessary to win. Monitor the organization’s performance on critical success factors. Monitor the performance of competitors along the same dimensions. Gather options.
Formulate a strategy based on facts, informed assumptions, and the best possible “what-if” thinking. Frame strategy so that members of the organization can internalize the strategy and implement strategic action at the right time.
Know when to pull the triggeron strategic options and how to do so. Recognize critical events in the strategic environment as they unfold that will trigger strategic action. Communicate strategic intent throughout the organization to clarify and align the role of every strategically critical player and process.
Monitor progress and update strategy as the organization learns from experience.
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Click here to see reviews of Michael Lewis’ Moneyball at Amazon.
To engage in strategic thought, you must think and reflect on the big picture—on the diverse players and forces in your competitive environment. Anticipate the future. Use your right brain for intuition and wisdom, your left for planning. As Isaac Newton said “truth is the offspring of silence and meditation.”
Here are 50 tips and tools for effective strategic thinking:
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1. Read Learning to Think Strategically, by Julia Sloan of Columbia University.
This is my favorite kind of book… the kind that has lots of my under-linings and margin notes left over from previous readings! That means I intend to come back to the book now and again for wisdom and guidance about my topics of interest… Strategy and Strategic Thinking.
Professor Sloan’s book traces the history of strategy, differentiates strategic thinking from strategic planning, describes the influence of culture, and introduces five key attributes for learning to thinking strategically. Learning to Think Strategically asserts that learning is the critical link to transforming strategic thinking into a sustainable competitive advantage.
2. Learn the four stage strategic decision-making model.
Read the Schoemaker & Russo classic, Decision Traps and learn the four stage model. The model fits for all sorts of decisions, be they tactical, opera Business Routine bucketstional, or, in our area of interest, strategic. In the rare instances when I have been asked for advice, I have often resorted to the model — shown below — to mask my otherwise dearth of wisdom. Here is what I have learned to ask people about the decisions confronting them: “Are you asking the right questions?” …”Have you gathered enough information to make a good decision?”… “Are you getting good advice from those around you?”… “What have you learned from decisions you’ve made in the past?”… I’ve found that these four simple questions go along way in helping people make good and sound decisions.
3. Set up a process to scan your Competitive Environmentusing Google Alerts.
Every day, I get a morning email from Google with links to all the articles that have been published in the past 24 hours on three topics near and dear to me: Competitive Advantage, Strategic Thinking, and Competitive Intelligence. For your use, you might want to track anything that mentions your company, your competitors, your key suppliers or your favorite artist.
4. Think about setting up barriers to entry to protect your business.
Look into setting up exclusive relationships with customers, distributors and suppliers. Make sure you are protected with trademarks and patents. And simply, be careful about giving away your intellectual capital. See Chris Sloan’s article in The Business Journals called How to create barriers to entry that protect your business.
5. Reach out to your customers for feedback.
Better yet, set up a Customer Insights research project for your company. When we perform a “Customer Value Analysis,” a process pioneered by Bradley Gale in the 1990s, we seek to learn more than the degree of “customer satisfaction.” Rather, we determine the importance weights of various attributes of quality and service as predictors of purchase and repurchase. Measuring performance on these attributes yields insight on where you need to improve your offerings, be they products or services. Find more detail about setting up a CVA for your company here.
6. Install a rigorous ongoing strategy process.
For ideas, look at an article called Managing the Strategy Journey in the McKinsey Quarterly. Authors Bradley, Bryan and Smit suggest that moving from ideas to execution requires seven distinct modes of activity. The authors suggest a looping and re-looping approach to strategy making with the following elements.
Idea Generation
Frame: What are our objectives and constraints?
Baseline: What is the reality of our performance and capabilities?
Forecast: What do we expect of the future environment?
Development and Selection
Search: What options do we have to create value?
Choose: What packages of choices will define our strategy?
Commit: How will we deliver the changes required in the strategy?
Execution and Refinement
Evolve: How will the strategy unfold and evolve over time? How do we manage strategic risks?
7. Give some thought to outsourcing business processes that are not in your wheel house.
Nike makes shoes, right? Well, not exactly. Nike is a wonderful company with superb marketing capability. But Nike outsources the actual manufacturing process to someone else. So in that sense, Nike does not make shoes. Nike’s competitive work is the design and marketing of athletic shoes. Obviously, the company has succeeded for years at doing just that. Knowing when to outsource work and when to keep it in-house is a key to successful strategy.
You’d never outsource your competitive work, of course, but sometimes it is best to have others do the rest, so you can focus on the strategic work. To learn how to categorize your work into Competitive, Competitive Enabling and Business Routine buckets, follow the link.
8. Visit and study your competitor.
How is their business model different from yours? What do they say makes them unique? What do they do better than you do? Why? Paul Gustavson tells the story of seeing a Walmart manager while shopping in the store of Walmart’s key (at the time) competitor–a once mighty retail chain now all but vanquished by Walmart. “Isn’t that the manager from Walmart?” Paul asked an employee. “Oh, yeah,” was the reply, “We see him here more than we do our own manager!” The visiting Walmart manager, of course, was gathering competitive intelligence and simply gathering good ideas as he “shopped.”
9. Convene your strategic team and talk about nothing but what you have learned over the past year.
This “Lessons Learned” process sets the U.S. Army apart as an outstanding “learning organization.” From the Army’s Lesson’s Learned document published after the Gulf War: “One of the great, and least understood, qualities of the United States Army is its culture of introspection and self-examination.
American soldiers, whether it is the squad leader conducting a hasty after-action review of a training event or the senior leader studying great campaigns from the past, are part of a vibrant, learning organization.” Their motto—The Past is Prologue—neatly and poetically summarizes the Army’s approach.
Look at the way the US Army masters the Lessons Leaned process. It’s really extraordinary what they are doing.
10. Keep an eye out for potential disrupters and threats to your business model.
Make sure you are constantly on the hunt for intelligence about not just what is happening, but what may happen in the future. Michael Birshan and Jayanti Kar write in the McKinsey Quarterly that “Picking up weak competitive signals is more often than not a result of careful practice: a systematic updating of competitive insights as an ongoing part of existing strategic processes.
Executives with diverse backgrounds can boost the quality of dialogue by contributing to—and insisting on—issue-based competitive analyses. Who is well-positioned to play in emerging business areas? If new technologies are involved, what are they, and who else might master them? Who seems poorly positioned, and what does that mean for competitive balance in the industry or for acquisition opportunities?”
11. Spend more time in the shower… or wherever you get your best ideas.
Aaron Sorkin, creator of TV show West Wing — not to mention that new Steve Jobs movie — describes his process for doing creative work: “Take a shower, put on clean sweatpants, try to write; have another shower, put on a comfortable outfit, take a crack at writing; shower again.” Sorkin admits to up to six showers a day.
There is science behind the idea. Studies show that when you are doing something “mindless” like showering, running, or driving down the interstate, your brain enters a state sometimes called “theta.” This is similar to the state you are in in the moments between sleep and wakefulness. Free associations lead to new connections, and new connections lead to new ideas you haven’t put together before.
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12. Read a book on history.
When you are faced with the most important and strategic decision of your life, where can you go for wisdom? Can you find insight in a book of history? Facing a world in crisis, John F. Kennedy did just that.
See my blog entry called To Learn Strategy, Read History, describing how President Kennedy’s strategic decision-making during the Cuban Missile Crisis was greatly affected by his reading of Barbara Tuchman’s book about the antecedents of World War 1 called The Guns of August.
Kennedy said he wanted to “send a copy of that book to every Navy officer.” Indeed, JFK had his aides read The Guns of August and had copies distributed to every US military base in the world.
“It had a huge impact on his thinking, becoming the dominant metaphor for JFK on the crisis,” said Graham Allison, author of Essence of Decision: Explaining the Cuban Missile Crisis.
13. And read MORE history.
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While you are in a World War 1 frame of mind — Read Paris 1919: Six Months that Changed the World.
It was 1919. The “war to end all wars” had come to a close, with the Allied forces finally defeating Germany and Austria-Hungary after a devastating conflict in after which there were no real winners.
A conference was held at Versailles Palace in France at which decisions would be made to shape post-war Europe. Among the participants were three leaders who would become the “Big Three” and would dominate actual decision-making: the American President Woodrow Wilson; David Lloyd George, Prime Minister of the United Kingdom; and the 77 year old statesman Georges Clemenceau of France.
As I read historian Margaret Macmillan’s marvelous book, I was shocked to learn how the history of our globe over the past 96 years was shaped not by a thorough and comprehensive decision-making process, but by, simply, what these three gentlemen thought ought to be done.
Woodrow Wilson, for example, was enamored with the idea of creating a country to be called “Iraq.” As he said “Basra, Baghdad and Mosul should be regarded as a single unit for administrative purposes and under effective British control.”
Umm, yeah… that was effective!
14. Learn Search Engine Optimization (SEO).
No matter how removed you are from your digital marketing group, as a strategic leader you should know what keywords people use to find your company. After all, the keyword is the digital manifestation of your brand in the competitive marketplace. Think about it this way: The search term that people find you with on the internet… that’s your brand.
Author Nick even introduces a new strategic metric he calls RoSEO (Return on SEO). He says the metric is meant to get you thinking about the implications of cost versus revenue in terms of return on SEO. The model includes variables such as click-through ratio and rate of conversion of clicks to sales. Not the stuff of CFO thinking in days gone by. As mentioned, since the search term is so intricately linked to your brand, RoSEO can also be thought of as “Return on Brand Investment”.
15. Learn more about who your customers and followers are by peeking to see who is linking to your website.
Here is a great set of tools for researching “back-links” to your site and improving your visibility on the web. While you are there, read Brian Dean’s case study titled: “How Emil Turned a “Blah Blog” Into an Online Sales Machine.” I was captivated by the story. The case study describes the strategic actions that a young client — Emil Shour — used, based on Brian’s guidance, to draw thousands of readers to his website.
Emil runs content marketing and SEO at SnackNation, a “healthy snack” delivery service. He wanted to draw more attention to his company’s website and build a stronger brand. Emil learned to use internet tools to identify the followers of his competitors’ websites (potential customers for Emil’s company!) and how to identify the keywords people use who are searching for services that SnackNation can provide.
He used this information to reach out to and win new customers. Even if you don’t have the slightest interest in on-line marketing, read the case study to reinforce ideas about the strategy process. [BTW, check out SnackNation’s blog to see some great case studies about Employee Wellness programs.]
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16. Learn about Whole Brain methodology and the required brain dominance for strategic thinking.
I understand the context around me in a different way than you do. Some of us are most moved by thoughts of the big picture. Others look first at the details. For some of us, the we make decisions with our emotions out front. Others are focused on the facts. The “whole brain” approach shows us how to make change happen by leveraging individual differences.
Visit HerrmannSolutions.com and respond to the instrument to see
your preferred style of thinking. Or read Ann Herrmann’s Whole Brain Business Book to learn an approach to business effectiveness drawing on understanding of the ways we differ from each other.
Learn More about the Whole Brain Business Book. here.
17. Watch Ann Herrmann’s TED TALK.
Ann is the CEO of Herrmann International. Listen and watch as Ann tells us about how her father hooked her up to an EEG to see which parts of her brain were most active as a teenager.
18. Plan for the unknown future… Develop Scenario Plans and Crisis Management Response
In the Art of War, Sun Tzu introduced a concept he called shih.Shih is the state of calm readiness at which an army stands, with a variety of options at hand. Sun Tzu’s army did not have a specific program or plan, but understood the competitive landscape and all of its options. As battle began, decision-makers high and low knew what to do as each contingency played out.
Sun Tzu said that the skilled leader knows shih so well that he/she can use it to achieve effortless victories. He advises:
One who uses shih sets people to battle as if rolling trees and rocks.
As for the nature of trees and rocks —
When still, they are at rest.
When agitated, they move.
When square, they stop.
When round, they go.
That is to say, the skilled leader anticipates and recognizes the dynamics in the ever-changing environment that tell him it is time to execute a previously choreographed response. Today, we call this scenario planning. Scenarios are “alternative futures” that cannot be predicted due to uncertainty. The term is borrowed from the world of drama, since each alternative future is described in the terms of a “story” or scenario. Scenario planners identify clusters of events that could happen, and imagine how things would be impacted should these events actually occur.
Some scenarios are positive, such as a world event that causes you revenue opportunities. Some are true disasters … weather events, computer hacks, bankruptcies of key suppliers, and so on. Great leaders, Sun Tzu tells us, anticipate each possible scenario and prepare a response for each contingency.
Jonathan Bernstein defines a crisis as “any situation that is threatening or could threaten to harm people or property,
seriously interrupt operations, damage reputation and/or negatively impact the bottom line.” Jonathan and his team at Bernstein Crisis Management help clients attain a state of readiness — Sun Tzu’s shih. Armed with scenario and contingency plans, Bernstein’s clients are prepared for all aspects of crisis management – crisis response, vulnerability assessment, planning, training and simulations.
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19. Going on a trip?Grab a book
Grab a book you can read in its entirety as you travel to and fro. Perhaps try William Duggan’s delightful (and short) book called Creative Strategy: A Guide for Innovation.
Duggan explains the critical steps to innovate in business and any other field as an individual, a team, or a whole company. The critical step — the search for past examples — takes readers beyond their own brain to a “what-works scan” of what others have done within and outside of the company, industry, and country. It is a global search for good ideas to combine as a new innovation. Duggan illustrates creative strategy through real-world cases of innovation that use the same method… from Netflix to Edison, from Google to Henry Ford.
I also learned a great deal from Duggan’s previous book, Napoleon’s Glance: The Secret of Strategy. Hmm… Maybe that one’s better… Yeah, read Napoleon’s Glance first. If you like it, Creative Strategy will help you apply what you learned from Napoleon.
20. Read the Blue Ocean Shift, by W. Chan Kim and Renee Mauborgne.
21. Make sure your company has a high level strategic scorecard.
Define the long-term goals that are aligned with and will drive desired behaviors. As everyone knows by now, these goals should be “specific, measurable, and attainable”. Useful goals should:
Be linked directly to environmental demands, particularly to customer needs
Be congruent, both horizontally and vertically, throughout the organization
Drive breakthrough improvements in addition to incremental improvements
Define the organization’s priorities
Be attainable
Key questions a good system of goals and metrics should address include:
What are the ultimate targets, what are the interim targets?
What is our current performance? What is it relative to others?
How do we know we have won?
What will have clearly happened that we can point to as achieving our vision?
Do these goals stretch the organization?
What are the ways we will measure progress towards the goals?
22. Make sure your strategic decision-making team is a diverse and flexible group.
The Strategic Thinking and Strategic Action blog is a great resource for insight about the do’s and don’ts of strategic decision-making. Recent articles there include an explanation of “Decision Traps, Flaws and Fallacies” and how to “Open Up Your Thinking. Make better decisions in a group process.”
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23. You probably already own it… Now read it!
Doris Kearns Goodwin’s excellent book Team of Rivals explains how instead of bringing in a cadre of leaders whose thinking closely matched his own, Abraham Lincoln made a point of surrounding himself with his political rivals, naming William H. Seward, Salmon P. Chase, Edwin M. Stanton, and Edward Bates – all of whom had opposed Lincoln in a bitterly fought presidential race – as members of his cabinet.
Despite initial misgivings, this unlikely team learned that Lincoln valued their opinions, would consider and reflect on their disagreements and challenges, and would not stick unnecessarily to preconceived notions.
Though the mix of personalities and opinions inevitably led to debate and verbal conflict, Lincoln was able to facilitate and mediate, tapping into a rich variety of ideas in order to find the optimal solution to political and military issues.
24. Look at your business as a series of experiments.
That’s what eBay does. (See How to Design Smart Business Experiments, by Thomas Davenport, in HBR.) At eBay, there is an overarching process for making website changes, and randomized testing is a key component. eBay benefits greatly from the fact that it is relatively easy to perform randomized tests of website variations.
Its managers conduct thousands of experiments with different aspects of its website, and are able to conduct multiple experiments concurrently and not run out of treatment and control groups. Simple A/B experiments (comparing two versions of a website) can be structured within a few days, and they typically last at least a week so that they cover full auction periods for selected items.
Davenport explains that on-line testing at eBay follows a well-defined process that consists of the following steps:
Hypothesis development
Design of the experiment: determining test samples, experimental treatments, and other factors
Setup of the experiment: assessing costs, determining how to prototype, ensuring fit with the site’s performance (for example, making sure the testing doesn’t slow down user response time)
Launch of the experiment: figuring out how long to run it, serving the treatment to users
Tracking and monitoring
Analysis and results
25. Find a way to work the following into a conversation: “Strategic Planning is an oxymoron, don’t you think?
26. Lose yourself in an on-line brainstorming tool…
Try Soovle, and enter “strategic thinking” in the center box. Let the internet take you on a ride of free association. Or use it to understand the keywords people use to find you or your company.
Then check out the same for your competitors. Where do you stand on the digital battlescape? Need to improve?
28. Understand your generic strategy.
Look at the four generic strategies in the 2 by 2 model below. Can you place your company in one, and only one box that fits its strategy? If you can’t you may not have a strategy. Learn more here…
Here’s 50 tips on how to do so, provided by Chris Brogan. As an example, Chris’s tip #24 is “Use services like Twitter Search to make sure you see if someone’s talking about you. Try to participate where it makes sense.”
31. Think about the Worst Decisions Ever Made and make sure you don’t follow suit!
I enjoyed a book called Idiotica: History’s Worst Decisions and the People Who Made Them. Examples include pre-WW2 France’s decision to stake the defense of their country on the Maginot Line, the approval of the drug thalidomide and Custer’s decision to go “all in” at the Little Big Horn.
Maginot Line in 1939 – These are Scottish highlander troops, Nazis not there yetClick on book cover for detail from Amazon
32. Revisit and test your assumptions.
In Thinking In Time: The Use of History for Decision Makers, Richard Neustadt and Ernest May suggest that decision-making groups should begin by listing key elements of the immediate situation in three separate columns under the headings of Known, Unclear, and Presumed. Assertions made by the decision-making group should be subject to constant challenge as facts are distinguished from assumptions.
In corporate settings, we try to leave key assumptions in clear view on a white board or flip chart to remind us that our deliberations are built on a foundation of beliefs that may or may not ultimately stand as facts. As the intelligence-gathering process continues, the list of assumptions can be changed with the swipe of a white-board eraser, signaling to all that decisions should be tested against the latest set of assumptions.
When decision-makers refer to other decisions made in the past, they sometimes reveal assumptions that are so deeply embedded in their thinking that they are unaware of the extent to which the present decision-making process is flowing through a channel laid out by the flow of previous decisions and events.
33. Build a competitive intelligence-gathering process for your company.
As Napoleon said, “the right information at the right time is 9/10 of any battle”. Intelligence-gathering involves seeking both the knowable facts and the reasonable estimates of unknowables that you will need to make decisions. To set up an effective intelligence gathering system, we ask clients to agree to the following principles:
Information is factual — Intelligence, on the other hand, is a collection of information pieces that have been filtered, distilled, and analyzed.
Intelligence, not information, is what managers need to make decisions — Another word for intelligence is knowledge.
Information has become a commodity — Intelligence is the most important source of competitive advantage today.
34. Examine your mental models, theories and strategic frames.
For the strategist, a useful theory provides a way of understanding the dynamics of the complex strategic environment, recognizable indicators or warning signals of change, and agreed-upon means of dealing with change. Simply put, a theory is one’s notion of cause and effect.
In his influential book The Fifth Discipline, Peter Senge refers to hypotheses about cause and effect as mental models. To Senge, mental models are “deeply ingrained assumptions, generalizations, or even pictures and images that influence how we understand the world and how we take action” (Senge 1990: page 8). Mental models are useful and, indeed, unavoidable.
By nature, we form beliefs about cause and effect. One person may form a mental model that says people are best moved toward excellent work by the promise of monetary rewards. Someone else may hold to the mental model that the best determinant of good and diligent work is the intrinsic satisfaction of the effort itself.
Both of these mental models can be stated in cause and effect terms. A good mental model is “disconfirmable.” That is, we can put models and hypotheses to the test through experimentation or simply through continued observation of events and results.
A MOOC is a “Massive Open Online Course”. Stanford offers several free MOOC’s of interest to the strategic thinker. Stanford Online offers a variety of professional education opportunities in conjunction with many of the University’s schools and departments, and free online courses taught by Stanford faculty to lifelong learners worldwide.
Stanford On-Line Courses are Free!
37. Conduct a Customer Value Analysis (CVA).
If customers can obtain greater value elsewhere, they will. Studies have indicated that the value of a company’s product or service, as perceived by its customers, is the single best predictor of future changes in that company’s market share.
Customer Value Analysis produces more than a simple measure of customer satisfaction. It results in a more meaningful and more important measure, one that compares a company to its competitors in terms of the value provided by each. The CVA analysis answers a critical question for many companies “How satisfied are our customers with our products and services compared to our competitors’ products and services?”
Stay involved in high-level discussion about the future of your industry by joining a LinkedIn group. Not sure how? Try this: How To Join a LinkedIn Group for Dummies.
Unlike so many this group is actively managed and full of lively discussion. For example, Warren Miller recently posted a link to “New Case Study: Complex Strategic Integration at Nike.”
Photograph by Nick Nicks of Gulfport, FL
43. Understand the Monetizable Pain suffered by people in your target markets.
What is the pain they are feeling? What is the medicine that you provide? Remember, pain pills are easily sold. Vitamins take some persuasion.
Mark Richards, the founder of Sand Hill Partners, helps clients looking for seed capital, mentoring, and experienced, hands-on help for early stage technology startups in Silicon Valley. Mark and his partners show entrepreneurs how to quickly nail the product that will actually sell and build a repeatable, scalable business model.
Mark’s advice to companies in start-up mode: Find the Pain Point. “If your offering provides relief for Monetizable Pain, you have a real shot at building a business. If it doesn’t, well, it’s going to be a long tough slog as a startup.” Learn how to identify the pain the drives customer purchases, see Mark’s blog post called The Essential Fuel for Startup Success – “Monetizable Pain”.
Like the Sharks, Mark Richards provides advice on organizational start-ups. He advises looking for the pain customers experience that your offering can cure.
44. Pay attention to the metaphors people are using.
A metaphor, according to I. A. Richards in The Philosophy of Rhetoric (1936), consists of two elements: the tenor and vehicle. The tenor is the subject to which attributes are ascribed. The vehicle is the subject from which the attributes are borrowed…. See my article Metaphors be With You!: The Strategist as Poet.
45. Conduct an employee engagement survey.
Assess your company’s culture or climate.
Collect baseline data as part of an organizational development, redesign or re-engineering effort.
Diagnose a company’s current design and business practices to identify specific improvement opportunities.
Develop and refining the components of a company’s Balanced Scorecard.
Measure and manage work group and team performance.
46. Answer Clayton Christensen’s question.
What are you customers hiring you for? If you are in the service business, this may be obvious. But Christensen’s influential HBR article he discusses what people are “hiring their milkshake for,” and how insights gleaned from the exercise can help you to orient your marketing efforts to show how your products and services meet the true needs and desires of customers.
47. Watch the movie ENRON: The Smartest Guys in the Room.
You remember Enron, don’t you? Check out this great documentary to see how a hyper-profitable mob was built by people with shining reputations. See how the company was praised by Fortune and Business Week as “Visionary” even as it created and manipulated markets that drained the lives and fortunes of innocent customers and business partners. In retrospect, here is the business model that these guys came up with:
Sell an unproven concept and get the business world to take notice.
Make billion dollar deals.
Find ways to monetize the deals by borrowing on future income.
Pay out unconscionable bonuses to the folks who did the selling and monetizing.
Don’t actually do the work since you’ve already been paid!
48. Watch the Godfather (I and II) using Michael Porter’s five forces model as a filter.
Who are the customers of the crooked organization? Suppliers? Threats and Rivals? Who are the industry complementors? It’s all there!
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49. Now in a movie mood, watch Glengarry Glenn Ross.
Want to think about how compensation systems drive behavior? Watch Alec Baldwin explain the incentive system for motivating sales of land by the sad crew of salesmen. Or just watch the unforgettable scene here on YouTube. Note that the first prize is a Cadillac Eldorado, and second prize is a set of steak knives. It’s third prize that is a little scary!
50. Rethink your strategic planning process.
For some step by step tools and processes, check out the Free Management Library, here. Carter McNamara and his team provide the best and most complete set of strategic planning tools I’ve seen.
51. Write to me and start a conversation about strategic thinking.
I am markrho “at” mindspring.com. Mindspring is an internet provider that died a long long time ago. But its memory lives on as part of my email address. I am stuck with it just as we are all stuck with typing keyboards that were designed to keep the typewriter keys from sticking together.
When you are faced with the most important and strategic decision of your life, where can you go for wisdom? Can you find insight in a book of history? Facing a world in crisis, John F. Kennedy did just that.
Generally, we learn skills by trying something, failing, and trying again until we get it right. That’s a conundrum for strategic decision-makers, because the opportunity to make strategic decisions comes around rarely, and failure at the strategic level can be devastating. The realm of Strategy, more than any other discipline, must be learned by watching and learning from the decisions of others.
In 1962, President Kennedy was confronted with the greatest decision of his era. Intelligence-gathering aircraft over Cuba confirmed the presence of missiles there that meant Cuba would soon have capability for launching a nuclear attack on the U.S. homeland.
The situation was unprecedented. Moreover, just a year before, Kennedy’s team of advisers had failed to provide him with sound advice, leaving him to blunder into the “Bay of Pigs” disaster, widely seen as one of the most significant strategic failures in American history.
Kennedy turned to his interest in history for wisdom. As it happened, JFK had recently read Barbara Tuchman’s Pulitzer Prize winning book on the antecedents and beginning of World War I called The Guns of August.
A particularly compelling passage in Tuchman’s book describes how the critical moment arrived for Kaiser Wilhelm as he was to give the go-ahead for Germany’s well-planned attack on France through the neutral country of Belgium. In the middle of a sleepless night, the Kaiser had a change of heart… second thoughts.. cold feet. After all, pulling the trigger on what was called the “Schlieffen Plan” would mean an attack on a neutral country protected by long-respected treaties and alliances. The world would abhor this action. It would also set into motion, in domino fashion, a series of promises that most of the European countries had made to one or more of its allies that each would go to war to protect the other. An inflexible, almost automatic set of responses would follow, plunging Europe into war.
“I have changed my mind!” the Kaiser told his generals, suggesting that they stick to a one-front war with Russia. But it was too late. The Kaiser’s illusion of control burst as he realized he was at this point just a character in a carefully scripted play.
Moved by the story of a world plunged into unwanted conflict, Kennedy told his brother Robert “I am not going to follow a course which will allow anyone to write a comparable book about this time [called] ‘The Missiles of October’. If anyone is around to write after this, they are going to understand that we made every effort to find peace and every effort to give our adversary room to move.” [Ironically, just such a book was eventually published, called The Missiles of October.]
Kennedy said he wanted to “send a copy of that book to every Navy officer.”. JFK made his aides read The Guns of August and had copies distributed to every US military base in the world.
In the end, Kennedy’s brother Robert, then the American Attorney General, found a way around the dilemma. In private conversations with Soviet ambassador Anatoly Dobrynin, he promised that the U.S. missiles would be out of Turkey in four or five months. He also said that he would deny ever making such a promise — when the deal happened, all that was announced to the world was that the soviet missiles would be withdrawn from Cuba in return for assurances that the US would not invade Cuba. Five months later the missiles were withdrawn.
The solution is noted by historians as a creative solution to an apparently intractable problem. Where the European leaders of 1914 followed a rigid plan of action leading to horrific consequence, the Kennedy team found a back door solution that met the needs of both sides and avoided an unwanted conflict.
And so it is that knowledge of history can imbue us with wisdom useful for making present-day strategic decisions.
The ancient Greek historian Thucydides saw time as a circle. He believed that his history of the Peloponnesian Wars would arm future decision-makers to do better when comparable choices came around again on time’s enduring track.
In their wonderful and seminal book Thinking In Time, the eminent historians Richard E. Neustadt and Ernest May assure us that “Vicarious experience acquired from the past, even the remote past, gives such guidance to the present that history becomes more than its own reward. Knowledge conveys wisdom; ignorance courts trouble.”
For wisdom relating to your strategic decisions at hand, look to the wisdom of the ages for help.
Governments have become more and more focused on the risks posed by opaque and confidential corporate structures. In particular the ability of a certain type of person to use such structures to hide the true ownership and origin of funds, thereby facilitating tax evasion and money laundering.
Most bodies set up to tackle these issues are of the view that for law enforcement agencies, being able to quickly and easily identify who really owns a company or a corporate structure, would be a huge boon to the fight against money laundering and tax evasion.
Recommendation 10 of the Financial Action Task Force (FATF) states that financial institutions should undertake customer due diligence measures to identify and verify the identity of the beneficial owner of the customer and not just the customer themselves. This is because it is the beneficial owner that really matters for money laundering, not the customer themselves.
This recommendation has been implemented in most countries who follow the FATF recommendations and it also extends to many non-financial institutions (including Elemental).These checks are done specifically by the financial institution though and they are not part of a government register of similar.
However, the UK has gone a step further in the Small Business, Enterprise and Employment Act 2015 (“SBEE“). Through the SBEE, the UKhas passed legislation to create a Register of Persons with Significant Control. This will require every company in the UK to maintain a register of every individual who holds or controls more than 25% of the beneficial interest in the company (Note: Please see here for the full test). Importantly, this register will be publicly available on the Companies House website for anyone to review.
In theory therefore, this achieves the desired aim of shining a light on any opaque or confidential structures involving UK companies. David Cameron (the UK Prime Minister) announced this policy to the G8 summit back in 2013 to great fanfare and he encouraged other countries to follow suit suggesting that it would be a great weapon in the fight against money laundering.
In many ways, this was a brave gesture. One of the factors that has discouraged countries from adopting policies to make it harder to use companies for illegal purposes, is the fear that increased regulation will harm other more legitimate businesses and maybe encourage businesses to utilise other jurisdictions. By taking a lead in this area, the UK has taken a risk and hopefully lead by example for others to follow.
On the other hand, the SBEE has not gone as far as David Cameron would like people to believe. There is no independent verification of the information on the beneficial owner register and it has no force of law relating to who the actual owner is.
Therefore, it would be naïve to think that those persons who are participating in illicit activity will disclose the true information on this register. In fact, Lord Blencathra, the former Tory home office minister David Maclean has gone further and claimed that this policy was a ‘purely political gesture’ designed to head off European attempts to curb the City of London.
So, will this idea go further and be adopted in other jurisdictions and potentially with some form of verification process? It can only be hoped, but I suspect that it will be a long and slow road.
Nick Lindsay is a director of Elemental, a corporate service provider who provides Escrow Agent services.
The results are in – Execution trumps strategy. Your business plan may have great strategies, but it will be a great failure if executed poorly. So just hire the right people, right? Turns out the answer is not what you think. At least according to a recent Harvard Business Review Article.
Five Myths About Effective Execution
Myth 1: Execution Equals Alignment
The typical approach to execution is to translate strategies into specific objectives, assign them to employees, use tools such as management by objectives and balanced scorecards to measure results, then hand out rewards based on performance. To fix implementation problems, adjust the processes that link strategy to action throughout the organization, leading to greater alignment and thus better results.
Unfortunately, in most companies, the problem isn’t alignment. It isn’t even having the right people on the bus. The problem is silo thinking. Their research found that 84% of managers say they can rely on their boss and their direct reports all or most of the time, while only 9% can rely on colleagues in other functions. Two out of three times, those colleagues screw things up.
And even for companies that have systems in place to manage commitments across silos, only 20% of managers believe they do enough good. Most want more structure to coordinate activities across units; more bridges across those silos.
Myth 2: Execution Means Sticking to the Plan
Many companies treat plans as sacred objects. That’s great if obedience is your strongest priority, but it doesn’t encourage agility. Effective implementation requires managers that adapt to changing opportunities and threats quickly, but that’s not going to happen if adherence to the plan trumps all other considerations.
And it’s also not going to happen if capital resources and staffing are tied up in less productive uses, rather than reallocated to support strategic priorities. Most companies, for profit and nonprofit, tend to be very slow to discontinue declining activities, denying resources to growing areas.
Myth 3: Communication Equals Understanding
Communication is good, so more communication is better, right? Not necessarily. Many organizations push out so much internal communication that the important stuff gets lost in the shuffle. Keep it simple and reinforce the central points.
Myth 4: A Performance Culture Drives Execution
What matters is what you do, not what you say. While many organizations offer a compelling official culture, reflected often in core values listed on the web site, but in practice what tends to get rewarded is individual or team performance (certainly a good thing), while collaboration across units, ability to adapt, agility and risk-taking, those attributes are rarely rewarded.
Too much focus on a performance culture leads to an unwillingness to experiment, to be open about challenges, to take risks that might lead to set backs. In other words, keep it safe, hit your numbers, that’s the real internal culture at most companies. And that doesn’t encourage the kind of openness and risk taking that’s essential for long term success.
Myth 5: Execution Should Be Driven from the Top
While leadership from the top is essential, an execution-driven organization needs to encourage middle managers to have the authority to make execution decisions on their own, taking initiative and ownership of the results rather than expecting all of that to come from the top. Get clarity on the objectives, then managers figure out the best ways to get there.
Now here’s a frank perspective: Balance doesn’t work. So don’t even try. Accept the fact that the only way to really make something happen is to go “full out” at it, with everything you have. Continue reading “Is Balance Possible?”
Last week, I attended a celebration for B corps in Colorado. These are for-profit companies certified by a nonprofit called B Lab for achieving social and environmental goals along with business ones. What I noticed differently from other discussions among B Corps in the past, was a stronger focus not only on this vibrant community of like-minded business people — there are now more than 1000 B corps in the US, including Patagonia, Etsy, and Seventh Generation, and dozens in Colorado, including New Belgium Brewing, GoLite, and Teatulia.
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Guest blog from my colleague, Adam Brock, Director of Social Enterprise at Joining Vision and Action (formerly JVA Consulting):
14. Learn Search Engine Optimization (SEO).
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Kennedy said he wanted to “send a copy of that book to every Navy officer.”. JFK made his aides read The Guns of August and had copies distributed to every US military base in the world.
