How to Prevent Scaling Problems in Your Strategy Building

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In this recent article for the Sunday Gleaner, I tackled a difficult problem to describe – scaling.

Or, in other words, why today’s solutions become tomorrow’s problems.

How to Detect and Avoid ‘Scaling’ Problems.

During hectic times, some executives argue against strategic planning activities, saying that they don’t have time to do anything more than firefight.

Mistakenly, they think that planning is only about dreaming up shiny new stuff that will happen only in the distant, imaginary future. They are wrong. Strategic planning is also about making sure that present-day success isn’t marred by future failure caused by scaling problems.

In the not-so-distant past, Blackberry and Nokia dominated the smartphone and mobile industries. Last week, Blackberry announced the layoff of 40 per cent of its workforce due to a loss of US$1 billion, causing its stock price to plummet by 17 per cent. Nokia was recently acquired by Microsoft after years of poor results.

In the last few years, both have lost huge market share and profits, but it’s not because they did anything wrong. Their failure comes because they didn’t do the right things: they simply didn’t see that their early success controlling their own, proprietary operating system would not scale.

WHAT IS ‘SCALE’?

Companies typically fix problems and implement strategies serially. The problem is that they cling to actions that work in the short term without thinking about the endgame: the conditions under which those successful tactics may eventually fail.

The ‘Mythical Man-Month’ is a typical example: putting more people on a project often reduces the time taken to complete it. However, there is a point after which the addition of more people – and the ‘man-months’ they add – actually makes things worse. Much worse.

The short-term solution – to add more people – doesn’t scale.

Blackberry and Nokia had tremendous early success that wouldn’t scale. Both should have switched over to non-proprietary operating systems, sharing in a much larger pool of apps and developers.

As important as it is, it’s hard to see destructive scaling problems happening in real time. Strategic planning teams struggle to see them for two reasons:

1. LACK OF COURAGE

Most executive teams include a few big egos, often in the roles of chairman, president or founder. They are proud of the company’s accomplishments, and look for opportunities to dwell on their successes. All this chest beating, however, makes it hard for their teams to discover that the very success being lauded is the seed of tomorrow’s failure.

‘Doubting Thomases’ are derided for not being team players or for being pessimists. Their inconvenient opinions are ignored because they require a level of confrontation that Jamaican executives find uncomfortable.

Those who think differently don’t bring up their doubts, preferring to sit silently. They go with the flow, especially when they have only a few hunches to rely on instead of the hard data they would need to present a convincing argument.

In this case, silence doesn’t mean consent; it only hides dissent.

It takes courage to speak up in these situations, but in most companies, people don’t get promoted for being renegades. They get to the executive suite by being agreeable, cooperative and ‘nice’.

When everyone wants to feel good, it’s hard to buck the trend by warning about bad things that are coming, like scaling problems. Who wants to be the one to make others feel scared about the very thing that’s making them feel good?

Most are unwilling to wander into this emotionally difficult territory, which is one reason skilful facilitation can make such a big difference.

2. AVOIDANCE OF HARD THINKING

When there’s no lack of courage, strategic planning teams can run smack into another problem – a dearth of smart thinking.

It takes some heavy lifting to imagine something that’s not currently happening, such as the rise of a new competitor that completely changes the game. For example, software giant Microsoft is wondering why it couldn’t foresee its rapid fall into irrelevance when it ignored mobile computing.

Cable & Wireless’ former Caribbean executives might also be wondering how its monopoly status, based on a century of experience, slipped through their fingers so quickly.

Martin Luther King Jr suggested why: rarely do we find men who willingly engage in hard, solid thinking. There is an almost universal quest for easy answers and half-baked solutions. Nothing pains some people more than having to think.”

Try this test in your company: Who is looking at the endgame of your current winning formula? In what ways are today’s strategies unable to scale? Who has discovered the equivalent of the ‘Mythical Man-Month’ in your business or industry? Are you sticking to strategies that future executives will laugh at because they work well only in today’s simple scenarios?

Don’t resist your annual strategic planning activity. It’s a must if your firm is going to prevent itself from sowing the seeds of tomorrow’s failure.

Francis Wade is president of Framework Consulting and author of ‘Bill’s Im-Perfect Time Management Adventure’. Email feedback to him at columns@fwconsulting.com.

 

How to Detect and Avoid ‘Scaling’ Problems.

How to Implement Far-Future, Reality-Based Strategic Planning

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Why should a local company bother to carve out a 30-year strategic plan? Here’s one reason: to clearly separate today’s ambitions from tomorrow’s legacy.

Contrary to conventional wisdom, a sound long-term plan is built on small actions taken immediately, not on grand gestures. Here’s an example.

Jamaicans who travel to Trinidad notice a small but telling difference right away. At night, Port of Spain and its environs are “brighter.” Trinidadians who land in Jamaica at night say the same: Kingston is “darker.” This noticeable difference is not emotional but empirical: one country is an oil and gas producer, while the other is struggling to find the foreign currency needed to pay its energy bills. As a result, recession-hit Jamaicans look for reasons to turn off electricity, seeing every light left on as a huge cost.

The habit that’s developed seems like an insignificant one today in the present energy boom. An effort to be energy conscious would seem superfluous. However, a company that develops the small practices leading to energy conservation would be preparing itself for a time when Trinidad’s subsidies are removed. It would be able to accomplish goals that the average firm would not even fathom.

This is just an example of the benefit of simultaneously planning for the long term while focusing on small, frequent actions. With the right planning process, any company can project itself into the future and consider the kind of “what-ifs” that change the way business is done today. By taking big trends seriously, firms can use them to define a destination that inspires bold actions right away.

By contrast, RIM, the manufacturer of Blackberry smartphones, didn’t do this kind of projection. As a result, its U.S. market share plummeted from over 50% in 2009 to less than 3% today. How should your company look beyond the conventional wisdom to see future reality with greater clarity?

1. Welcome contrary views.

As the CLICO/HCU inquiry reveals, squelching contrary views is a fast track to failure. A company that suppresses alternate and uncomfortable points of view is setting itself up to fail, and it’s especially easy to do this in a growing, healthy economy. It’s much harder to introduce and encourage conflict when there is no urgent or even apparent need to do so.

One method is to introduce outsiders with sharply defined opinions to act as professional devil’s advocates. Another is to conduct interviews with participants that help them sharpen intuitions into well-articulated points of view. During the retreat, allowing difficult conversations with uncertain outcomes is an absolute requirement.

2. Look at long horizons.

It’s often almost impossible for leaders to plan and consider big short-term changes. The psychological need to feel comfortable is just too strong. However, it’s easier to look to big changes in the future. For example, the adjustments needed to thrive in an economy without subsidies are easier to see from a distance, without the sense of an immediate threat. Then, creativity becomes the driver rather than fear, allowing the executive team the freedom needed to go beyond everyday boundaries.

3. Craft adjustment strategies.

Using contrary views to look far over the horizon is not just for intellectual stimulation. The purpose is to create a specific, measurable vision that can be back-cast from the future back to today. That’s how short-term adjustments and course-corrections can become apparent. Saving energy, which might seem silly today, becomes critical when a longer horizon is seriously considered. These adjustments, if applied consistently, add up to corporate transformations.

4. Look for a legacy.

Another benefit of a long-term planning exercise is that it takes the participants away from their current crop of concerns: bonuses, pension plans and corporate ambitions. It allows them to squarely confront the legacy they are leaving behind.

Consider this fact: decades in the future, a strategic planning activity will be undertaken in which the future leaders of your company will be talking about the performance of today’s leaders. Will your team be judged as a group of wise men and women who saw what was coming and made hard sacrifices and investments in order to preserve the company’s future? Or will your team be judged as fools who fiddled while Rome was burning?

Steve Jobs insisted that the inside of an Apple machine (which only technicians would ever see) should be just as aesthetically pleasing as the outside. He taught his employees that excellence lay in the details that others overlooked, and it’s no accident that he was able to take a failing company and turn it into the world’s most valuable in just over a decade.

Companies that take the easy path are fiddling, when they should be looking for small actions driven by a vision – far beyond the sum of personal ambitions.

Published in the Trinidad Newsday.