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Why Your Company’s Business Model Needs to Keep Changing

There’s a certain false comfort which comes from believing that your organization’s profitability will always occur in the same way, year after year. That is, until the magic stops. When a disruption takes place, you must face the facts: your products are stale, your people disengaged and your loyal customers are doing business with someone else altogether.

Now, it’s time to transform your business, except that you are too late. The perfect moment was several years ago while you were enjoying the fruits of your success. Back then, you suspected that you would eventually have to make a shift, but never expected it to come so quickly… so suddenly. You thought you had more time. In retrospect, you should have paid more attention to the disruptions already taking place in other geographies.

If your business is able to survive today’s onslaught, how can you ensure it never happens again?

One way is to plan the kind of strategy that assumes a future combination of new technology, external competition, poor economic performance and government regulations. Put them all together and you imagine a perfect storm in which you are forced to react to monstrous changes.

But is there a way to be proactive?

Start by using the Jobs to Be Done framework introduced by Clay Christiansen. It asks the question “What are my customers trying to do when they purchase my product or service?”

For most industries, a rough answer might be: “To achieve a decent balance between price and value.”

For example, look at the value-price equation for a highly competitive niche like internet access. Over the years, the consumer has been able to enjoy the best of both worlds, as both sides of the equation have improved dramatically. How can you provide such a benefit to your customers that would endear you to them?

1. Change Your Mindset

If your company views customers as scoundrels to be defeated, or as disloyal partners to be scorned, it might be time to shift your mindset. Instead, think Win-Win, in which each transaction is an opportunity to build goodwill on both sides.

Consider that the average transaction delivers a dose of goodwill which “satisfies” both parties. However, that might simply be ordinary.

What if you were to commit to a mindset of providing extraordinary goodwill? What difference would a systematic approach to increasing value and decreasing cost make to your company?

2. How to Increase Value

Imagine if you were to keep your prices constant. Ask yourself, “How can we deliver even more value to customers, while continuing to achieve a Win-Win relationship?”

As tricky as this may sound, it’s a principle embedded in Jamaican history. “Brawta” – the little extra offered by a supplier to sweeten a transaction – has been a part of our island‘s commerce for as long as most remember. The idea is simple: a supplier can improve the buyer’s experience in ways that are asymmetrical.  

For example, imagine visiting the local butcher. She offers some raw dog meat as Brawta – a gift of scraps that were headed to the garbage bin. To her, the cost is nothing. To you, the benefit is substantial.

As a supplier of value, you probably have lots of ways to make your customer’s life easier. You just need to look for them with the right level of creativity. Once found, can they be packaged up and delivered so they add significant value yet cost you relatively little?

3. Cut Prices

Here’s the more difficult part. How could your company deliver the same value, enjoy the same margins while lower prices at the same time?

This is no theoretical exercise. Instead, you are anticipating a time when you won’t have a choice – a future in which you may be forced to cut prices in order to remain competitive. The difference is that if you do so now, you will have higher margins, and retain some powerful flexibility for later.

In effect, you are building a buffer against disruptions.

Plus, you’ll be able to provide customers the kind of price cuts that make them fall (and stay) in love with your business. As foreign as this may sound, look around at companies who consistently offer you the lowest prices. If they are smart, they are being aggressive to find ways to continually cut the amount you must pay.

What you may not know is that there’s a secret benefit to this effort. If your company commits to reducing prices, it will discover the technologies necessary to keep competitive advantage. In other words, you’ll never be surprised by a disruptive technology because you already use them.

Together, these three strategies can launch you into a different world from your competitors: one they’ll find hard to replicate.

http://jamaica-gleaner.com/article/business/20181202/francis-wade-change-your-business-model

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How Examining Core Assumptions Can Save Your Company

Why do disruptions drive companies out of business? While it’s easy to blame “innovative technology” or “tough competitors”, most firms hurt themselves by not following early warning signs which challenge core assumptions. Jamaican firms are particularly vulnerable.

Why? As mentioned in prior articles, our companies are overly leader-centric. While this is sometimes a benefit, it’s more often a weakness, especially when the big boss is the sole strategic planner. In such firms there are no real, bottom-up planning retreats – just ad-hoc announcements of the leader’s intent.

While the downsides of this approach are easy to imagine, specific blind spots are hard to detect.

For example, when I lived abroad I used to be a customer of Kodak, Blockbuster, and Blackberry. These were all dominant players, but today, it’s hard to find a trace of these firms or their products. When their industries were disrupted, they just disappeared.

While some point fingers at their aggressive competitors, that’s only a part of the story. In retrospect, they could have anticipated the changes that eventually wiped them out. Their blind spots prevented them from noticing what was happening.

This may be taking place in your industry, to your company.

Fortunately, research shows that in each firm there are usually a few mavericks who see such disruptions coming quite clearly. However, their insights often make little difference. They aren’t invited to retreats, sit-downs with the CEO or board meetings. Without their input, companies fail to see their blind-spots, and don’t tackle underlying business assumptions which are slow-moving, but inexorable. If your company is vulnerable to this mistake, here is an approach which will reduce the risk.

  1. Uncover Core Assumptions

Conduct an exercise in your next retreat to make a list of assumptions that are tightly held, but are not being discussed. They should be pre-requisites for your current strategy to succeed.

Unfortunately, there is no static set of assumptions sitting in an MBA textbook waiting to be copied. You will get better results if you allow your team to flounder as it struggles to uncover them.

I often suggest that teams find companies in their industry worldwide which are using the latest disruptive technology or business model. Look for the ones showing some early success.

Then, conduct a quick poll of your middle managers. Ask “Until what year is our company safe from this particular disruption?” Use the responses to see whether or not there is a wide range of opinions.

Now, perform the same survey, but restrict it to attendees at the last strategic planning retreat. If you don’t find consensus, question the validity of all your firm’s current plans. Furthermore, if your company is leader-centric, and has never conducted a real, participatory retreat, you should be even more concerned. You may be facing a battle for the future.

Use the answers to these questions to come up with a timeline, carrying forward either the average or the median year for planning purposes.

  1. Agree Upon the Timing

Conduct an open discussion with the help of a neutral facilitator, asking: “How will the events leading up to this disruption, according to this timeline, play out?” Allow the sparks to fly as different assumptions arise.

It may be a contentious affair, but it’s better to have this conversation now, when the stakes are low. Even if you fail to achieve perfect agreement due to a lack of data, the disparity in viewpoints will point to the need for a further step.

  1. Name Someone to Monitor or Track Assumptions

If your firm faces a complex set of data, don’t rely on “buck up” methods. Appoint someone with the right background to scan the horizon for breaking information. Better yet, give him/her a budget to do proper research. Empower the individual to sound an alarm as soon as a shift is detected in the data they are collecting.

In other words, look for the early indicators that your intended strategy or business model is in danger of failing. And do whatever it takes to bring this data to the planning team so they can do a rethink. After all, they are the ones who developed the original hypotheses and are in the best position to determine the size of the correction that’s needed.

Following these steps should give you the kind of early warning signs that your strategy and/or business model are likely to fail. It’s not necessarily bad news – just an indication that swift action is required.

This is especially true in leader-centric firms which have relied on the instincts of a single, stubborn individual. Help these strong bosses recognize that their original brilliance needs a dramatic, team-based upgrade if the company is to survive a potentially disruptive future.

 

 

 

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How to Scale Up a New Innovation

Sometimes, good ideas for new products and services include the seeds of their own destruction. How can this problem be discovered and prevented, thereby ensuring the success of your latest, greatest idea?

As a company innovator you are excited. Your original concept has taken off with higher-than-expected sales or conversions. Customers are buying because you uncovered an unmet need before anyone else.

While congratulations are in order, it’s also a dangerous moment because you are entering uncharted waters filled with new obstacles.

They are not coincidental. Your success has bred them. Being ready for them takes real ingenuity, and you must use your imagination to deal with this unique situation. Here is a useful framework.

The Five-Part Model

The Balanced Scorecard is built on the notion that a company’s strategy can be viewed through four distinct perspectives: Financial, Customer, Process and People. While your firm is actually an interconnected
whole, there’s value in viewing it in-depth from these separate angles.

In addition, the PESTER Model offers a fifth “External” perspective. It’s shorthand for Political, Economic, Social, Technological, Environmental and Regulatory/Legal forces which affect every company.

Here’s a way for your planners to use all five dimensions to examine your company’s existing state, and future dangers.

Step 1 – Create a current day snapshot

Together the team develops a joint view of the performance of the business via the five perspectives. This involves far more than looking at a few numbers. It means finding the drivers of today’s successes and failures in a group discussion which includes every stakeholder.

While it’s a challenge to bring all members of your team to common agreement, the effort is necessary for subsequent steps and shouldn’t be rushed. In both technical and emotional dimensions, there must be a meeting
of the minds.

Tip: use layman’s language.

Step 2 – Simulate Future Growth Scenarios

Here, you imagine different kinds of success. For example, contrast hyper and moderate sales increases and their impact. What if the market were to grow in response to your product as it did when Digicel first offered mobile phone service?

As you detail these scenarios find one you are most willing to realize. Then, carefully assign it a future year which takes you just beyond the moment when the current burst of sales is projected to end.

Step 3 – Look for Hurdles in the 5 Dimensions

Now for the creative part. As customers respond where is your system likely to fail first within the five perspectives?

– Financial: Will cash-flow problems develop? Many companies who experience rapid growth wind up with high receivables that run them straight into bankruptcy.

– Customer: Can success bring new competitors into the market offering fresh discounts or features?

– Process: Where would you run into a lack of capacity? Will ad hoc processes begin to break down once volumes increase? The fact is, most new products and services are developed by small, informal teams. They work well in the early days, putting in extra hours at little cost to them and their families. It’s a sacrifice that’s not sustainable.

– People: Where will you see a lack of talent? To develop the initial offering, you probably used well qualified, trusted individuals with a depth of experience. Now, to match new sales volumes, you must hire from the second and third tiers. By definition, they aren’t as productive and need to be trained.

– External: In a highly regulated industry, is it likely that the regulatory rules may change in response to your product? Could the authorities react by limiting the market, reducing your profit-making potential?

While taking these five perspectives are a beginning, my experience tells me that the most difficult topic to discuss is that of leadership. Founders, CEO’s and Chairpersons are often reluctant to craft plans for succession, putting off such uncomfortable issues for others to suffer through. They neither train their replacements, nor make provisions for catastrophes which may render them unable to lead.

There’s also an unwillingness for companies which belong to conglomerates to consider changes driven by their ownership. It’s easy to overlook the fact that in these groups, other people can decide to use a company’s profits (or surpluses in the public sector.) The owners, in the absence of compelling counter-arguments, may simply choose to invest elsewhere, pay dividends or reimburse the group office for the original risk.

Companies which don’t properly consider all these factors expose themselves to rude surprises, thereby jeopardising the enterprise. Fortunately, it’s not expensive to make plans to meet these challenges – they
represent a critical investment that’s well worth the value.

 

 

 

 

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When Big, Hairy, Audacious Goals Produce Poor Performance

If you lead an organization you may have asked yourself: what is the effect of setting big goals? Most leaders know that such objectives can be empowering in some circumstances but produce the opposite result in others. If so, some recent research might help the next time you sit down with a subordinate to set performance targets.

The management bestseller “Built to Last” by James Collins and Jerry Porras coined a phrase that is now used widely: BHAG, a “Big, Hairy, Audacious Goal.”

Most Jamaican executives have heard the term in the past and try to use stretch goals to awaken their organization from stale, static patterns. Once enlivened, breakthroughs become possible.

As a result, managers who have accepted the idea, encourage employees to commit to difficult goals.

Some push hard, using the force of their personality to get direct reports to acquiesce. Sales managers, for example, try to inspire their people to leave their comfort zones to accomplish big revenue targets, sometimes refusing to take “No” for an answer. Their occasional success leads them to repeat the tactic as often as they can, especially with fresh recruits.

However, new studies show that there are actually two different kinds of goals which should be set. Gary Latham from the University of Toronto has studied the question for the past three decades, concluding that it’s easy to set goals which end up doing more harm than good. Here are the strategies he recommends to avoid this problem.

Strategy 1 – Create targets which are not too hard, but not too easy
Scientists call it the Goldilocks Effect. The most effective goals need to be challenging enough to get someone’s attention, but not so difficult that they believe it’s impossible and therefore give up. Leaders must calibrate targets carefully.
For example, in the 1930’s, Manley and Bustamante didn’t immediately strive for the objective of complete independence. While they probably saw it as the ultimate objective, they took their time. The Jamaican people were shepherded through a long struggle which started with earning the right to form trade unions. It continued through the formation of political parties and the fight for Universal Adult Suffrage which eventually led to self-rule.
In retrospect, their strategy of taking one step at a time was probably best. It’s a lesson for all managers who want employees to produce extraordinary results, and it happens to be supported by empirical research. Don’t ask for “too much, too soon” or its opposite: “too little, too late”.

Strategy 2 – Distinguish outcomes from learning
In Latham’s work, he further distinguishes between “outcome targets” and “learning goals”. The former relate to end-results, such as a salesperson’s total sales per month. They are easy to understand and define because in the end, measurable accomplishment counts the most in any business.
However, managers are not usually aware of his major finding: outcome targets are only suitable for employees who have mastered their jobs.
By contrast, most employees are still developing critical abilities. His research recommends a different approach for this cohort: the use of “learning goals.” These are defined as targets which are linked to the acquisition of new knowledge or skills. They focus employees on “discovering, mastering, or implementing effective strategies, processes, or procedures necessary to perform a task.”
For example, new salespeople barely understand their product, the market, or required sales tactics. They should concentrate on setting learning goals related to mastering the fundamentals of their specific craft.
Latham’s work shows that managers who fail to make the distinction court failure, producing frustration and anxiety. In the worst case, people end up blaming themselves, then quitting, experiencing a drop in self-esteem. They have no idea that their manager should have explored an alternative.

Strategy 3 – Shifting Expectations
The above finding indicates a level of nuance most organizations don’t realize. Instead, those who employ salespeople often kick off the year with over-the-top “Rah Rah” sessions. They are entertaining but do little more than produce hype.
What’s a better choice if you are a manager? Skip the use of such blunt, short-term instruments, and train yourself to understand the two different kinds of targets. With this skill, you can set learning goals, look for the early warning signs of employee maturity, then shift your approach to targeting outcomes at just the right moment.
If you commit yourself to developing these surgical skills, you won’t get stuck on the one-size-fits-all thinking which permeates companies and demotivates employees. Instead, it may be the key to moving each of your direct reports to higher levels of performance.

Francis Wade is the author of Perfect Time-Based Productivity, a keynote speaker and a management consultant. Missed a column? To receive a free download with articles from 2010-2017, send email to columns@fwconsulting.com

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Connecting Strategy, Performance, and Daily Activity

How do you ensure employees are balancing their time between routine activities and long-term, strategic projects? Managers and their HR Partners have been tackling this problem for decades but continue to fail to separate the two different energies essential to sustain high performance. Here’s why.

Robert Pirsig’s “Zen and the Art of Motorcycle Maintenance” was a cult hit, but his follow-up book, “Lila” offered important, practical ideas for every organization. He outlined two kinds of value in everyday life: Dynamic and Static Quality.

Dynamic Quality is the energy needed to make change happen. He defines it as a disruptive force which upsets the status quo, drives improvements and makes a difference. Its opposing “yang” is Static Quality, the energy needed to keep things the same. This is the source of maintenance chores; the continuous reliability which allows daily life to function.

Most people prefer one or the other, but in Pirsig’s brilliance, he brought the two together. Instead of seeing them as enemies, he imagined they exist in a symbiotic, alternating partnership.

He explains that each kind of quality has its season. There are dynamic moments when change must be driven versus its static counterpart where gains have to be consolidated. The key is to ratchet between the two at the right tempo, without getting stuck in either “harem-scarem” chaos or brain-dead stasis.

How does this idea apply to your organization?

Each year, when your firm conducts its annual strategic planning retreat, it’s allowing dynamic quality to run unbridled and free. Representing a dramatic departure from the routine of daily activity, it deserves its vaulted place in the calendar.

However, static quality probably reigns supreme on every other day. Immediately after the event, the status quo re-asserts itself, adding friction. Innovation degrades into wishful thinking. Customers remain upset, processes are never fixed, and profit margins don’t improve. The retreat is ultimately judged as an expensive waste. Some companies stop having them altogether.

In the 1990’s, to answer this problem, Drs. Kaplan and Norton invented the Balanced Scorecard. Along with the Strategy Map, these tools were intended to connect long-term plans with daily activity. After two decades, we now realize much more is needed.

The duo never imagined the mistake most companies make in implementing their ideas. In direct contravention of Pirsig’s call for clear separation, they implement performance management systems which throw dynamic and static quality into a single lump. As a result, staff is unable to answer: “What do I need to do to keep things the same, versus change, and how do I achieve a balance of time and effort between the two?”

The result? Staleness. Boredom. Failed improvement initiatives. Here are three tactics which will begin to break them out of their predicament.

  1. Bravely Separate Dynamic and Static Quality

In my firm’s planning retreats with executives and board members, we find ourselves working hard to keep the two energies apart. “The effort to envision a shiny future must be informed by the status quo but not limited by it,” is our mantra as participants reach for Dynamic Quality.

The very purpose of a retreat is to consider a brand new vision: a courageous act for most teams.

To wit, I have been in retreats where attendees risked their jobs to birth a breakthrough future. In one case, executives were collectively and ultimately successful; but they paid the price before their vision came to fruition when some were summarily fired. Needless to say, this is an extreme example, but Dynamic Quality always requires courage.

  1. Create Organizational Strategy and Business-as-Usual (BAU) Metrics

To strike a balance between the two energies, companies need to measure two kinds of activities after the retreat. The first set applies to the annual strategy and tracks its implementation. The second, BAU metrics, are ones required to maintain company functions and change little from year to year.

At the highest level, the CEO and employees must keep track of both. However, boards should demand to see the former, while saving any interest in the latter for the exceptional circumstance.

  1. Deploy Blended Performance Management

In most companies, the individual employee has no clue which parts of their job are strategic versus BAU in nature. Therefore, they have no idea where to focus. In its place, provide each person the means to define separate targets in both areas. Also, appreciate the fact that while some employees will only be doing BAU activity, everyone must be able to explain the difference between the two.

These practical steps help staff-members step out of muddy waters where Dynamic/Static quality, Strategy/BAU metrics are confused. Their clarity increases the odds that your futuristic plans succeed, while simultaneously ensuring the continuity of previous, hard-earned gains.

Francis Wade is the author of Perfect Time-Based Productivity, a keynote speaker and a management consultant. Missed a column? To receive a free download with articles from 2010-2017, send email to columns@fwconsulting.com

http://jamaica-gleaner.com/article/business/20180408/francis-wade-connecting-strategy-and-performance

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How to ensure a lack of time doesn’t ‘mash up’ your strategic plan

I just had an article published in Trinidad’s Newsday newspaper that highlighted the reasons why poor time management skills routinely mash up the best made strategic plans.

How to Ensure a Lack of Time Doesn’t “Mash Up” Your Strategic Plan

As we enter the post-festival season, many local companies embark on fresh annual and quarterly strategies that just won’t succeed. Most executives will blame “the culture” but they are mistaken: it has more to do with their ineffective use of time.

If you are an executive you may relate to the problem. During the strategic planning retreat, brainstorming sessions generate a lot of new ideas. As the activities add up you feel a subtle but distinct discomfort, especially if you happen to be more experienced. You sense that everything on the list simply cannot get done. Furthermore, you mute your own objections because of the strong pressure to be a “team player.”

The best companies determine the cost of each strategic project plus the overall budget when they do their strategic planning. The rare few, according to McKinsey & Co.’s Bevvins and De Smet, will go further and complete a time budget. Why is it needed?

Most company executives focus on financial budgets first because they believe that cash is their scarcest resource. The new strategic plan must be made practical by selecting activities with the highest ROI – a widely accepted technique.

However, near the end of a retreat, tired executives rarely go the next step, asking themselves how much time needs to be budgeted for each new activity. In the months to come, they treat time as if it’s an infinite resource. This sets their strategy up for failure from the beginning, causing the discomfort I mentioned earlier. The problem isn’t a lack of time, however. It’s a deficit of skill.

Most will turn to “time management” skills for the answer, without understanding that it’s a misnomer: time cannot really be managed. Instead, they need to learn to manage a “time demand,” defined as an individual, internal commitment to complete an action in the future. This distinction is foreign to many executives in Trinidad and beyond, but it lies at the heart of time budgeting.

As a manager you may possess a secret – your methods for managing time demands are self-taught, starting around the time you took the Common Entrance or SEA. You did so early on, giving you an edge that has played an important role in your academic, career and organizational success.

However, being better than the average Caribbean person is no great accomplishment. The data I have gathered from regional workshops shows why individual productivity is low, even as the macro-economy might be growing. With respect to time budgeting, our skills are lacking at all levels of the enterprise, but here are four things that can be done to instill a new level of rigour in the C-Suite while executing your annual strategy.

1. Gain an appreciation of your current individual and collective skills at managing time demands. Do so by completing an informed self-assessment illuminating your methods and their relationship to world-class standards. You’ll probably find some critical behaviours you merely do each day, but have never thought about before. Your profile reveals the salient gaps.

2. Create improvement goals and a plan. These are easy to build based on the prior step. If you were well-trained in order to do a self-assessment then you should be itching to close the gaps. The temptation will be to try to change too many, too quickly. Resist it and go for small steps with lots of support.

3. Collect time data. Most professionals have only a gut knowledge of how long things take. The chances are high that you have never tracked your personal time as the McKinsey authors and also Peter Drucker, the management guru, recommend. For planning purposes, this discipline can be as important as tracking expenditures. Data should be collected on a programme basis also, so that teams in your firm can determine how to make successful project plans.

4. Manage packed calendars. The gradual removal of administrative assistants from C-Suite staff complements has pushed a number of new time demands into your lap. The problem isn’t about fetching coffee, however. Now, you are forced to manage the all-important activity of planning your time-starved calendar using technology that changes from day to day.

The McKinsey research shows that the effective executive makes full use of administrative assistance to coordinate demanding schedules. This helps them to preserve time devoted to “the flow state” – their most productive times spent alone doing their best work.

In the absence of this knowledge and the supporting mechanisms, it’s no surprise that many strategic plans amount to little more than overblown wish-lists. Unless local companies take their executives’ time demand management skills seriously, it’s safe to expect disappointments at this time next year.

Francis Wade is a management consultant and author of Perfect Time-Based Productivity. To receive a free compilation of past columns, send email to columns@fwconsulting.com

Click here to read the article online.

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Taking the Very Long View in Strategic Planning

How long a horizon does your company use when it develops its strategic plan?

In a recent article in the Jamaica Sunday Gleaner, I make the point the there’s tremendous value in looking at a planning horizon of 20-30 years.

Here’s the article:  Taking the Very Long View in Strategic Planning.

For more details about this approach that the firm uses with strategic planning clients, see the book written by a former employee of Framework Consulting, Amie Devero — Powered by Principle.

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As companies set up their annual strategic-planning retreats, there is a natural temptation to forget about the future, and focus on today. While the recession has driven us to examine daily cash flow, it is a mistake to think that the long-term future doesn’t matter.

 

It certainly does, and here are the reasons why I encourage my clients to consider a 25- to 30-year future.

Vision statements are fine tools for ensuring that an executive team – and an entire company – are focused on the same things; however, they are often used badly.

Before a team sits down to define the future, it is safe to assume that each person comes with two different understandings: the exact year ‘the future’ refers to; and what constitutes his/her vision for that year.

Too many companies jump right into statement building only to discover after consensus is achieved that half the team is in 2021 while the other half is in 2012. Some never discover this fact and suffer when discord breaks out as budgets, targets, and interim measures need to be defined.

Good future statements are based on specific years, like the one that our own Government has defined: Vision 2030 Jamaica.

Coming to agreement on the ‘planning year’, such as 2030, is a critical first task in any retreat.

LOOKING FAR AHEAD

When I work with top teams in their strategic planning retreats I urge them to pick planning years that are 25-30 years in the future. Their first reaction is one of shock, and there is usually resistance. Some argue that they can’t think that far ahead. Others say that business conditions change so much each year that such planning is unrealistic.

I draw an analogy to what Columbus had to endure when he committed his first voyagers to travel to lands that were ‘over the horizon’ – beyond their capacity to see.

This was no easy undertaking at a time when many believed that the Earth was flat and that one could fall off the edge by travelling too far out of sight. He was able to paint a vision of a land that he had never seen that existed ‘over the horizon’.

The fact is, it is impossible to accomplish big goals unless you are able to see that far in your mind’s eye.

Jeff Bezos of Amazon.com fame puts it well: “We are willing to plant seeds that take five to seven years to grow into reasonable things. You can’t do big, clean-sheet invention unless you are willing to invest for long periods of time.”

Another interesting thing happens when executives look far enough into the future. They stop focusing on themselves, and their personal goals. An over-the-horizon future is one that is not about them, but instead must focus on the next generation as most executives won’t be around. As they plan for a future that excludes them, they start to ask themselves what they really want for the company: its shareholders, employees, customers, and other stakeholders.

Bad news

At first they discover some bad news: they want very different things.

This is a sobering discovery as they realise that they have been working at cross-purposes for some time, pulling towards different destinations. However, once they come to a new consensus, they can work together for the first time.

What prevents these 20- and 30-year visions from turning into random fantasies is the next step: laying out the details of what happens in the planning year. Once the team completes the prior two steps, they can describe the destination in measurable details.

Revenues, profits, financial ratios, headcounts, physical locations, geographic locations, bi-lingual abilities, these are all examples of the metrics that are used to convert a far-away future into a coherent, measurable goal.

The last step is the so-called Merlin Process in which the future targets are connected to today’s actuals in a single matrix. Many adjustments take place at this step as the team ensures that there is a feasible pathway from the present to the planning year. Unfortunately, this is usually the point at which some nice-to-haves must be discarded as the true essence of the plan emerges.

For the past 10 years, I have witnessed teams take the long view and the results are usually inspiring.

A new world emerges as they lift themselves above daily pressures to craft a unified vision that is well over the horizon.

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Start a Fight in Your Next Strategic Planning Retreat

The latest research is clear.

When executives are allowed to openly disagree about important issues, they are likely to truly buy-in when consensus is finally reached.

I took that finding and applied it to the strategic planning process in an article in the Trinidad Newsday entitled Start a Fight at Your Next Strategic Planning Retreat.

You can find the entire text of the article here at the Guardian Life website.  Thanks to them for sponsoring the column.

Here is the article in full:

Start a Fight At Your Next Strategic Planning Retreat

Strategic plans are often accused of being little more than a mish-mosh of disparate ideas thrown together in a single document.  When they are disjointed  and incoherent, it makes them difficult to implement, let alone remember.  When critical opportunities pop-up in the year to implement them, they are lost.

 

The best strategic planning retreats, however, avoid this trap by encouraging confrontation and honest dialogue.  Unfortunately, most executive teams don’t have the discipline or ability to have these conversations, and for the sake of speed and “tranquility,” they avoid confrontations.  Instead, they rely on their colleagues who have that rare Anil Roberts combination of intelligence and “talky-ness” to drive the process home, leaving most others in the room as disengaged, bemused, observers.

 

The strategic planning process simply becomes an extension of day-to-day conversations… conducted instead “down the islands.”

 

A simple way to change the discourse from everyday concerns is to take the long view, and to use the planning process to define a future that is usually ignored:  one that is 30 years away.

 

Sometimes, I hear complaints.  Why should we care about a future that is that far away?

 

The fact is, an executive team is always shaping the future, whether it realizes it or not. The best teams do so consciously, while the worst only concern themselves with immediate issues.

 

Take the simple example of a company that wants to enter Latin American markets in a big way, with a goal of having 50% of its business coming from that segment.

 

The executive team realizes that it would require the creation of a bi-lingual workforce, while facing the fact that there are no Spanish-speakers on staff today,  When HR estimates that some 75% of the workforce would need to be bi-lingual to assure success, it becomes obvious that the goal won’t be achieved in a year, or even ten years.  A much longer-term plan must be crafted.

 

Something magical happens when executive teams of (usually middle-aged) professionals start to consider a long-term future.  The discussion stops being about them, and their department’s agendas, and the concern shifts to future generations, and what legacy is being left for them to manage.  They quickly realize that an executive team that crafts, for example, a bi-lingual future could be hailed for their brilliant vision in 2041.

 

By contrast, the company that suffers from a lack of new markets in 2041 will look back at prior executives with disdain, and blame them for mortgaging the future for short-term gain.

 

From our company’s work with executives around the region, we have observed that a certain kind of business altruism comes alive when they grapple with long-term futures as a team.  They come to realize that they often have very different visions of what the company will look like in 30 year’s time, and how their different points of view have led them to make different decisions.  When these decisions are in conflict, they sometimes end up working at cross-purposes, wasting time and money, but without knowing why.  In the retreat, it’s possible to get these views out on the table, and lead them to craft a single defined future.  It’s OK in this controlled setting to fight for one vision or another, with an understanding that consensus only comes when all the personal visions have been aired.

 

In one retreat I facilitated,  an executive was fully convinced that the company should become the largest in the Latin America /Caribbean region.  He fought for this vision with others in a useful way that illuminated a key reality:  they would have to move the corporation to Miami from Port of Spain to realize it.  That, they realized, was something no-one wanted.

 

Once a single picture of the future has been aligned upon, the battle isn’t finished.  After the future is translated into hard numbers like market share and profitability, these metrics must be connected back to today’s historical results in a way that makes sense.  This is normally done in a spreadsheet that shows the key turning points required to achieve the final results,

 

It’s not just a matter of filling in numbers, however.  Underlying each result and turning point are some powerful assumptions about how the company operates, and what can or can’t be done to move key indicators.  Listening to marketing, human resources, finance, IT and operations managers as they share their views, and struggle to come to consensus, is often inspiring, even when it gets heated.  They demonstrate the value of a good, fair fight for the future, and how it can lead managers to define a future that is much, much bigger than themselves.