Willie’s Blog Posts

The Strategy Q&A

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The good news is that many companies are striving to improve the quality of their strategy processes. The bad news is that they often resort to a ritual of filling in templates as a way to do this. But without a proper understanding of the underlying concepts, the people who fill in these forms can lose sight of the object of the exercise, and soon the templates themselves become a substitute for strategic thinking.
First we must think strategically, only then can we function strategically. To facilitate this mindset I offer the following Q&A as a way for executive teams to develop a common understanding of strategy fundamentals.

Q: What is strategy, and why do we need it?

A: Strategy is the necessary response to the inescapable reality of limited resources. The entire flow of logic stems from this premise. If we had unlimited resources, we would not need a strategy. We could just keep hurling resources at our problems and our ongoing survival would be guaranteed. We would eliminate all risk of failure and competition would be irrelevant. Such a world does not exist.

In essence, therefore, strategy is about harnessing insight to make choices about how best to deploy scarce resources to achieve competitive advantage.

The worst choices are those that divert our resources from what matters most. Hitler’s decision in World War 2 to open a second front and invade Russia drained Germany’s resources and contributed to its defeat.

Q: What are the key deliverables of a strategy?

A: Strategy creation is not just a haphazard process choice making. The key deliverables of a strategy are the answers to a set of crucial questions that fall into two categories:

1) Where will we deploy our scarce resources?

– In which arenas will we compete?
– Which customers will we serve?
– What will we offer them?

2) How will we deploy these resources?

– What will be our winning proposition in our chosen arenas?
– What will be our key priorities for success?
– How will we align the organization and execute our strategy?

Without clear answers to these questions, we simply don’t have a strategy. Everything an organization does must cascade from these answers in a process of translation through all the layers of the system.

Q: Whose job is it to do a strategy for an organization?

 A: If a strategy exists only at the top of an organization, it will have little effect. Achieving competitive advantage requires a focused collective effort. Therefore, strategy is everyone’s job. The golden rule is to start with a clear line of sight to the strategic goals of the total enterprise, then to translate these into an aligned winning proposition and key priorities within your own domain of responsibility. This cascading process enables the organization to achieve its central task – unity of action.

An apt metaphor is the teamwork that propels a rowing eight. The coxswain is responsible for steering the boat and calling out the power and rhythm of the rowers. We talk of “pulling your weight.” Any rower who falls out of rhythm or reduces the team’s pulling power will impede the progress of the boat. There is simply no room for passengers.

Q: How do we define a winning proposition?

A: As noted above, the core deliverable of a strategy is an organization’s winning proposition. However, many companies use the term “value proposition.” But this is a deficient concept. It is an absolute statement in a world where everything is comparative and leaves out the biggest question of all: How much value?

To capture competitive advantage, an organization must define its winning proposition. This formulation forces a business to define the margin of difference in the value it will offer its customers. A winning proposition answers two key questions:

– What unique benefits will we deliver to our customers that provide a compelling reason for them to choose us?

– How will we translate this exceptional customer value into superior financial returns for our enterprise and its investors?

To be competitive, organizations need to respond to the reality that both customers and investors have choices. Why should they choose you?  Amazon’s winning proposition for its retail business is stunningly simple:

“We make it easy for people to buy things by offering a wide range of products at great prices with fast delivery.”

Q: How many priorities should we have?

A:  Let’s clarify the role of the key priorities. Your winning proposition faces outward and defines the superior benefits your customers will receive. Your key priorities face inward and define the critical resources that need to be mobilized within the organization in order to achieve your winning proposition.

An organization should have no more than five priorities. The reason is not arbitrary. It is a universal law that every additional thing we do subtracts energy from everything else we do. So the longer the list of your priorities, the less chance you have of achieving any of them.

Priorities must also define what an organization will not do. Otherwise you are simply piling it on and diluting your focus. Our mantra must be: subtract first, then multiply.

Steve Jobs as CEO of Apple was outstanding at this. He would have teams study fifteen opportunities. He would then pick only three, and have the whole organization concentrate only on those three.

Q: What is the best process for creating winning strategies?

A: The process I recommend is called Strategic Learning. The logic is as follows:

The competitive environment is Volatile, Uncertain, Complex and Ambiguous (VUCA). In this dynamic environment, the old static methods no longer work. Our only competitive advantage is the ability to build an adaptive enterprise capable of ongoing learning and renewal.

The Strategic Learning process introduces a shift of gear: from strategy as planning to strategy as learning.

The process involves 4 steps that move in a cycle:

LEARN through a Situation Analysis to create insights into the external environment and your own realities

FOCUS by using these insights to make choices on where you will compete and how you will win

– ALIGN by mobilizing your business system and motivating your people in support of your chosen strategy

– EXECUTE better and faster than your competitors

-This loops you back to the LEARN step, thus creating a cycle of ongoing learning and adaptation

Q: Is the sequence of steps important?

A: Yes, the sequence is a crucial aspect of thinking and functioning strategically.

The essential starting point is the Situation Analysis (Learn). This is the brains of the operation. Starting here forces an organization to think outside-in. As the military emphasizes, intelligence precedes operations.

The Situation Analysis produces the insights that inform Step 2 (Focus). This is the heart of your strategy and everything else follows from there. The role of Step 3 (Alignment) is to support the strategy – structure follows strategy, not the other way around. The elements do not work in isolation; they are mutually reinforcing. Each step builds on the prior step and confers power on the next step.

Q: How do we align an organization’s business system?

A: There are four key levers in a typical business system:

– Measurement and Rewards
– Organization structure and Processes
– Culture
– People

For any strategy to succeed, all these elements must be aligned synergistically in support of that strategy and in mutual support of each other. This requires holistic thinking – seeing your business as a system of interdependent parts, just like an ecosystem in nature. Quoting from ancient wisdom: “The parts of a chariot are useless unless they act in concert.”

A good example is Southwest Airlines, the consistently profitable low cost airline. It’s magic lies in its beautifully orchestrated alignment system: point-to-point only, just one type of aircraft, no assigned seating, no meals, no interline baggage, use of secondary airports, training focused on teamwork, shared incentive systems. Competitors may be able to copy one or two of these elements, but no one has been able to copy Southwest’s entire business system.

Q: What is the difference between strategy and planning?

A: Strategy and planning are related but very different in their aims, and confusing them is a bad idea. Strategy is mainly about ideas, choices and trade-offs. Planning is largely about numbers and logistics.

Think about running a railroad company. Strategy determines where to lay the railroad tracks; planning ensures that the trains run on time. You can’t run a successful railroad company unless you do both those things well. But one is not a substitute for the other.

Attempting to combine strategy and planning in one process creates a toxic mixture. Doing so typically produces 10% strategy and 90% planning. Companies then lose the understanding of what strategy is. Both play an important role, but the golden rule is strategy first and planning afterwards.

Q: What is the relationship between strategy and leadership?

A: Strategy and leadership are essential parts of each other. No leader can lead without a clear and compelling strategy. But even a brilliant strategy, without effective leadership, will take an organization nowhere. It is strategy and leadership working hand in hand that is the key to success.

This idea was well expressed by Henry Kissinger: “No strategy, no matter how ingenious, has any chance of success if it is born in the minds of a few and carried in the hearts of none.” This truth carries an important implication. The final deliverable of a strategy is not simply a document – it is a leadership message. People don’t follow documents, they follow leaders and they follow ideas

The crucial leadership task is to translate the written strategy document into a compelling leadership message that wins the hearts and minds of all employees. In short, leaders need to reinvent the oral tradition of storytelling.

Carl von Clausewitz, the noted military expert, taught us that strategy is above all a way of thinking. Attaining excellence requires the rigorous application of shared mental disciplines. Among the most important of these:

– Thinking from the outside-in
– Embracing the aim to win at value creation
– Harnessing the ability to prioritize
– Asking the right questions
– Practicing customer empathy
– And probably most important, simplifying complexity

These ways of thinking don’t occur naturally. Leaders must guide their organizations on how to apply them. Only then can tools such as templates serve their strategic purpose.

Consider the parable of a passer-by encountering three workmen toiling away at a construction site.  He asks them what they are doing. The first workman says, “I am laying bricks.” The second one says, “I am digging a hole.” The third one straightens his back and declares, “I’m building a cathedral.” The role of leaders is to paint a vivid picture of the cathedral – the strategic intent of the enterprise – that gives meaning to the work that needs to done.

 

Posted by Willie Pietersen at 2:12 PM | 0 Comments

What I Learned About Leadership From My Dog

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Margaret Wheatley, the complexity theorist, explains how personal growth takes place: “You cannot change a living thing from the outside. You can only disturb it so it changes itself.” Leadership development then, is largely about how we learn and grow in response to the disturbances or stimuli that life offers us.

These “disturbances” can come from many sources; teachers, role models, or the study of nature for example. We can all think of the big influences in our lives, and how they changed the way we think, feel or behave. A profound set of lessons for me came from an unexpected source – my 14-year journey with a four-legged creature, my Black Labrador, Maisie.

Life With Maisie

Maisie came to us from the Guiding Eyes For The Blind. At 18 months she had “failed” her final test, thus becoming what they euphemistically call a “release dog” and available for adoption. In due course we were approved, and excitedly welcomed her into our family. It soon became apparent why Maisie had failed at the final hurdle – she was just too eager to please. She would likely have led a blind person into all kinds of playful but inadvisable adventures.

Certain memories become imprinted in our minds. So it was the day Maisie joined our family. I saw her for the first time when I got home from a day of teaching. We looked intently at each other, in a kind of mutual sizing up. She was a sleek, shiny, beautifully athletic canine youngster, exuding curiosity and eagerness. After this brief inspection her tail began to wag and she trotted towards me for our first greeting. She had decided I was okay. What struck me more than anything else that day were Maisie’s deep brown eyes; shining and youthful, but somehow also discerning and wise.

From then on, Maisie and I walked the path of life together. We developed a growing bond built on time spent together in my home office, daily walks in the park, playing chase, often traveling together. We were seldom apart and learned to understand each other’s moods, needs and expectations.

It is a truism that we are closest to those who have been our lifelong friends. Maisie knew me for 14 years, but I knew her through all her life stages – from her exuberant squirrel-chasing youth, through her more sedate middle age, to her faltering old age and eventual demise. Despite this mismatch in our life cycles, I would venture that Maisie knew me at least as well as I knew her, and in a number of respects even better.

Many of my memories of my years with Maisie are purely sentimental. I have a scrapbook that I page through regularly, quietly savoring the special bond we shared. But beyond this nostalgia, this relationship revealed to me some important lessons about life and leadership.

The real meaning of transparency

In the business world, we emphasize how important it is for companies and their leaders to be “transparent.” To clarify this buzzword we come up with sophisticated definitions of what this actually means, from the rules for “full disclosure” in financial statements to simple calls for honesty in our dealings with others.

When this topic comes up in my seminars, I reflect on what I learned from Maisie and often ask how many attendees own a dog. Usually this is around 50%. Then I offer this advice, “If you want to understand what true transparency looks like, observe your dog.” I then ask the dog owners to describe to the rest of the group what they see in their dog’s behavior. What follows is a great discussion about the real meaning of transparency.

Day in and day out Maisie revealed her mood or feelings without reservation —  whether joy, fear, pain, hunger, playfulness or just the need for a walk. No pretenses, no vanity, no ulterior motives, no defensiveness, no fear of being judged; just plain honesty and most important of all, humility. I can’t think of a better transparency check list for business leaders.

Living in the moment

Seneca, the Roman philosopher and statesman, counseled that “The greatest obstacle to living is expectancy, which hangs upon tomorrow and loses today. You are arranging what lies in Fortune’s control and abandoning what lies in yours.”

Logic tells us this is true. Yet how hard it is for us lofty humans to live in the here  and now. We pride ourselves in our ability to interpret the past and contemplate the future, and in the process we too often forsake the present. It is always instructive to hear the stories of people who have been through a near death event. It jolts them into experiencing the rest of their lives in the present tense, and they tell us how transformative this has been.

Animals are often wiser than we are. Maisie was a daily reminder of what it means to live in the moment, to experience life as it unfolds. If I could have asked her,  “Maisie, what time is it?” she would have answered, “The time is now.” Ah, yes, of course it is …

The power of encouragement

Maisie loved to learn new things, and I sometimes worked with a dog trainer to add to her repertoire.  At a certain point the trainer said, “You are Maisie’s mentor, so should take over the training now. It’s part of your relationship with her.”

Feeling unprepared, I sought the trainer’s advice. “What is the key to training a dog well? Repetition, discipline, lots of rewards?” She replied, “Yes, all those. But you have left out the biggest one – encouragement. Give her a sense of achievement by setting manageable tasks; praise her when she succeeds; restore her confidence when she fails and help her try again; never let her lose her dignity.”

That lesson in dog training was a real epiphany. My attitude up to that point had been rather condescending, thinking that as a dog Maisie could only learn by rote; that belief in herself didn’t matter. I had forgotten the most important task of a leader – to help others overcome self-doubt and realize their best selves. The revelation was to see what a big difference encouraging the spirit makes, as much in the canine species as in the human one.

The importance of enthusiasm

I don’t think there is a more consequential attribute than enthusiasm. It literally changes our chemistry, drives us forward, helps us overcome hurdles, and inspires cooperation in others.

My daily “dose” of enthusiasm came from Maisie. She responded to both small and big things with the same zest and joy – whether it was a car ride, a new toy or a visit from a friend. During our early morning walks in Central Park, she sniffed the air with expectation, played eagerly with other dogs, chased the ball with a joyful vigor and licked the hands of her favorite people. Seeing her in full flight was a wondrous, uplifting sight. Whatever she was doing, she was all in, fully committed.

When I would get back to my office to start the work day, with Maisie resting at my feet, I was infused with positive energy. Everything felt brighter and more hopeful. Life was good.

There is a message here for leaders everywhere: Pause to find joy in small things as well as large – the whole parade of life. No half measures. The magic of enthusiasm is that it’s infectious.

Communicating without words

Maisie mastered an impressive array of commands, and she enjoyed learning new ones. However, most of our communication was non-verbal. Any dog owner will recognize the behavior of a dog upon seeing a suitcase – tail between the legs, head bowed, shadowing one around the house.  The disappointment is clearly expressed. The message: “Please don’t leave me.”

As I was a regular traveler, this was a common occurrence. So to spare Maisie from prolonged disappointment I decided on a plot to conceal my travel. No packing, no suitcase, no visible signs of travel until the last minute. But something really interesting happened. Without any concrete evidence Maisie sensed my impending departures, and showed her disappointment. What was it? Did she pick up key words like “passport” or “tickets” or was it a subtle change in my nervous energy or scent? I never figured out what triggered this, but one way or another, Maisie got the message at an intuitive level. She was simply much better at interpreting me than I was her.

The best leaders recognize the importance of effective communication, and that the key to this is the ability to listen well. But words are inefficient, and humans often use them to shield their real feelings. Maisie reminded me that the high art of listening is the ability to hear what is not being said, but nevertheless being felt.

The ultimate test of trust

The gurus tell us that effective leadership is based on trust. This is undeniably true. But how do we gauge trust?

My time with Maisie made me think of trust in new ways. In important respects we depended on each other; enriched each other’s lives. But clearly she was the more vulnerable partner – to mistreatment or neglect, for example. I realized that the ultimate test of trust is how we treat those who rely on us, but have no means of retaliation when we fail them. The abuse of power is the biggest breach of all.

All this came into sharp and wrenching focus when Maisie reached the final stages of her life. Old age began to ravage her, and she struggled more and more. Under the watchful eye of our vet, we made sure she wasn’t suffering pain, and kept putting off the awful moment. We wanted to hold on to her. But her discomfort and distress increased, and her joy of life faded away. We knew the end was coming soon but needed a signal. On a sunny April day, I took Maisie out for a gentle walk. At a certain point she stumbled and glanced up at me. Those wise brown eyes conveyed a message, “I think it’s time.” Maisie trusted me to understand when her time was up, and to be with her when the end came.

The vet was kind and understanding. Tears were okay as my wife, Laura, and I said farewell to our treasured friend.

As I think about these lessons I am struck by the fact that they raise the basic question: are leaders born or are they made? I don’t mean to be glib, but I am convinced that the answer is both. Yes, we are all born with a unique set of leadership gifts, our genetic baseline if you like.  But it is also true that we can improve on what we have inherited if we are open to it. This is far from a trivial conclusion. Apart from anything else, it stops us from giving ourselves the lazy  answer that our leadership effectiveness is just a function of the genetic lottery.  More important, it means that there are pathways to personal growth we can pursue.

As each of us considers our own avenues of growth, we come back to Margaret Wheatley’s insight. We tend to think of leadership as being conferred by a formal appointment to a position of authority. But leadership development, she reminds us, must be self-generated. Our task is to search for the stimuli that will light the way. We enrich our insights when we turn our lens on a wider field. What can we learn  from laborers, artists, scientists and adventurers? From our fellow creatures? To my surprise and delight, I found a number of rich, and sometimes humbling, insights about life and leadership from my cross-species relationship with Maisie.

Posted by Willie Pietersen at 1:54 PM | 0 Comments