Monday, September 27, 2010

Strategy – Is it a Marathon, Sprint or Both?

Courtesy: Google Images

While we have used quite a few metaphors in the past to explain the purpose-profit balanced strategies – the one, that has caught my attention the most, in recent days is – “Is Strategy, a marathon, sprint or both?” Granted, the street often pushes the firms to run the race with a sprint like mentality producing quick wins– yet, history is also, filled with examples of firms fading away in to the doldrums (after producing those early quick wins)- partly because of their lack of marathon like mindset. Hence, the question before us today is -do we execute our strategies with a sprint mindset, marathon mindset, or both?

Solomon – the wisest man ever lived – once, said -“There is a time for everything, and a season for every activity”. In other words, the appropriate speed in which we react to business situations depend upon the seasons of the business cycle - and so it is important that we get in tune with the business seasons first - before deciding whether to execute our strategies with a sprint or marathon mindset. What do I mean by that?

As it turns out - the concept of seasons is what gives us the confidence that every down cycle in life or business has a beginning and an end. In other words – if situations like misfortunes, misunderstandings, quarrels, failures, disappointments, profit or loss -have no end, our life will be totally meaningless (and perhaps even boring). As a matter of fact, if there is no down time – we will not be able to even appreciate the goodness of up time – much less experiencing them.

Likewise, if we look at the characteristics of sprint and marathon races – we can clearly understand that - both have start and finish lines, and yet – what happens between their start and finish lines are a different story. In a sprint, the effort is focused on reaching the finish line in seconds or perhaps in minutes, and so the runners push hard, giving the whole energy they’ve got till they reach the finish line. Also,the timely start is critical, as it makes up the huge percentage of the race, and even a tiny stumble can cost them a heavy damage much less winning the trophy. On the other hand, in a marathon, runners know that they’re going to be running for a long time, and so pacing is critical for them to reach the finish line much less winning the trophy. While the start is important, it is secondary in comparison to sustained progress and so, one can even recover from a large stumble as long as it doesn’t result in any physical injury.

Similarly, those who approach strategy execution as a sprint quickly burn out. They run the first few days, maybe even the first month or two, like a category 5 hurricane that seems unstoppable by their competitors. And yet, as time wears on, they lose their strength (stamina), well before the finish line. On the other hand, those who approach it as a marathon, though, they get off to a good start, and yet oftentimes fall far behind the sprinters. So, the question of the day is - how do we get to that optimum speed that helps us to win the race at all times? I guess the answer lies in Solomon’s words of wisdom within the context of the sprint-marathon metaphor –“run the business race like a marathon, yet sprint up, once in a while as needed-as per the seasons – and, then scale back after the sprinting season is over”.

This does not mean that we have to be wiggling like worms for every environmental change -on the contrary, we need to be steady and manage the execution speed (or momentum) by proactively choosing the optimum speed, as per the seasons of business realities. The optimum speed is what going to help us to transcend over the minor changes of the environment – thus, giving us the control over the future ( i.e. leading to superior results) vs. letting the environment controlling our future without our proactive intervention. That being said, we cannot, however, blindly ignore the seasonal challenges as well- as adjustments (like speeding up once in a while like a sprint) are absolutely needed to react appropriately to the seasons (e.g. missing a quarter numbers). Without such minor adjustments, our strategies can quickly become irrelevant to the moment and actually end up hurting our long term success.

In the final analysis - it is a balancing act -and so depending upon the seasons- we need to pick and choose the optimum speed (as a sprint or marathon) as needed by the business realities of the seasons to sustain the momentum for the long haul. Without such speed, we might even miss the mark on some business situations – and likewise, with too much speed, we might even lose the stamina (needed for the long haul) - and so “doing both” is the way to go when it comes to strategic planning in the words of Inder Sidhu and Roger Martin. To get to that “doing both” mindset within the strategic planning process – like most things in this world – we need to adhere to certain principles to help arrive at that optimum speed.

Marathon principles

  • Principle of "high energy" – Addressing “who we are” question in terms of forming the “spirit-soul-body” balanced high energy team – or hire the right people who can execute with high energy for the long haul.
  • Principle of "sustainment" – Addressing the "why do we exist" question in terms of sustainment based purpose dimension.
  • Principle of "endurance" – Addressing “where to play” question in terms of overcoming the early painful situations (i.e. anything is worth chasing after it creates some pain) or chasing the right market track/geography.
  • Principle of “never giving up” – Addressing “what to play” question by overcoming the early brick walls with “never giving up” type differentiation and exploitation strategies.
  • Principle of "dream" – Addressing “how do we win” question by “keeping the dream of finish line in mind” or with top line focused big bet ideas.

Sprint Principles

  • Principle of "unstoppable force" – Addressing “who we are” question in terms of forming the team with a good mix of "skill, talent and giftings" who can execute with a great force for a higher first mover advantage or business impact.
  • Principle of "early start" – Addressing the "why do we exist" question in terms of hitting the quarterly profit numbers quickly.
  • Principle of "focus" – Addressing “where to play” question in terms of being laser focused with the right set of product and services categories.
  • Principle of "finish" – Addressing “What to play” question in terms of “getting to the finish line” quickly mentality.
  • Principle of "trophy" - Addressing “How do we win” question in terms of “keeping the trophy in mind” type bottom line focused operational excellence ideas.

Bottom line: As we can recognize from this set of marathon-sprint balanced principles, it is clearly evident that “there is no silver bullet” -especially when it comes to arriving at the optimum speed using these marathon-sprint balanced principles - and so, it is all the more important for organizations to properly balance these principles with a “doing both” mindset. In addition, augmenting these principles with the right set of accountability/governance processes will not only make our organizations a best in class in our industry vertical in terms of exceeding the profit numbers, but also, make them the purpose leaders for the long haul.

Tuesday, September 21, 2010

What in the world is the "Strategy Pitch Equation"?

One of my friends who had paid a closer attention to the cartoons within one of our earlier blogs – jokingly said –“don’t stretch him any longer ... he is going to break apart”. With all the pun aside - as I thought more about it –the character within the cartoon is being stretched for a reason i.e. to reach the optimal length with the appropriate tension- so that he/she can pitch the purpose-profit balanced strategy for a maximum business outcome - very much like how a guitarist tunes his/her strings (by balancing the length and tension) artfully for bringing the maximum harmonious pitch to our ears.

C.K. Prahalad and Gary Hamel would argue that "creating stretch, a misfit between resources and aspirations, is the single most important task senior management faces" – which makes me to propose a hypothesis - that the stretch/causal analysis is the single most strategic activity within an organization, given the fact, that the number of resources (length) and their aspirations (tension) have a direct co-relation to the effective implementation of the strategy causal chain. Hence, aligning the length and tension of the strategy causal chain/string is the single most prerequisite task of the pitch masters to pitch or execute their strategies effectively.

A quick musical instrument primer would be appropriate here to move forward with our hypothesis – i.e. arriving at the optimum length along with the appropriate tension of the string are the two most important challenges for the stringed musical instrument designers to achieve the desired pitch level as outlined in the musical pitch equation below.

P=1/2L (T/m) 1/2

P= pitch frequency
L= length of the string
T= tension of the string
m= mass per unit string length

Now that we have understood the “what part” of the musical pitch equation, one can easily extend this equation to the business strategy pitch context as well- i.e. equating resources to the length of the string and aspiration to tension within the context of maximizing the strategy pitch outcome or the so called, competitive advantage . While the “what part” of the stretch/causal analysis will help us to “get even” with our competition, the “why/how part” of the analysis is what help us to create, the so called, competitive advantage to march ahead of our competition. To arrive at this “why/how part” of our analysis- we may have to revisit our strategy causal chain/string analogy, one more time, for some more inspiration.

As we dissect the variables within this musical pitch equation, we can clearly see a pattern evolving - when we keep the string's length constant, we need a higher mass “per unit string” to generate the appropriate amount of tension, which then, producing the desired pitch. On the other hand, if we keep the string's mass “per unit length” as constant, we need a longer length of string to generate the same tension, which then, producing the desired pitch.

Similarly, when we keep the number of resources constant (due to capital constraints), the talent “per unit resource” needs to be elevated higher to generate the right amount of aspiration needed to produce the desired strategic pitch outcome. For some reason, If we have to keep the talent “per unit resource” as constant (due to the lack of talented resources), we will, then need, more number of resources to generate the same amount of aspiration level, thereby achieving the same desired pitch effect - as outlined in the strategy pitch equation below.

P=1/2R (A/t) 1/2

P= strategy pitch execution frequency
R= resources of the strategy causal chain
A= aspirations of the strategy causal chain
t= talent per unit resource

As we can clearly see in this equation – it is not only strategist dilemma to balance the resource and aspiration dimensions of the strategy pitch equation for a maximum outcome, it is also the leadership dilemma to arrive at the right number of resources (with appropriate talent) with appropriate aspirations for the strategy to be pitched/executed effectively for a maximum business outcome. The next obvious question is -how can organizations with limited resources can achieve superior strategy pitch/execution performance within the context of this strategy pitch equation?
  • “Stretch” the aspirations of the resources to generate the optimum tension within the strategy causal chain/string.
  • “Leverage/Maximize” the talents of resources (or hire talented resources) to achieve the optimum length within the strategy causal chain/string.
  • Execute” the strategy with laser focus vigor to achieve this optimum pitch by balancing the variables of the strategy pitch equation.

Friday, September 17, 2010

What in the world is a "Purpose-Profit" balanced equation?

Courtesy: Google Images

I guess, my blogs in the last few weeks –definitely has created some buzz and made folks to pay a closer attention! On the other day, someone within our professional network barraged me with a list of questions (friendly questions though!) – What do I mean by the purpose-profit equation? What are the variables within this equation -other than purpose and profit? How and where do we draw the line between purpose and profit while balancing this equation? Are these virtues or variables mutually exclusive? Can they walk in harmony with each other - i.e. enhancing and leaning on one another thus creating a multiplier effect as suggested by Inder Sidhu?

While I was thinking about the best way to answer these questions within the larger context of the business world – I could not think of any better analogy than Buddha’s “five horse faculty” analogy. Extending this analogy to the business world- Corporation can be visualized as a team of five horses - with the lead horse (CEO) propelling the other two pairs of horses – and together they pulling the wagon called corporation to meet its intended purpose. The lead horse can go fast or slow (as guided by the board/stakeholders) - and the remaining two pairs of horses, not only must fall in step with the lead horse, but also, must balance with each other for the wagon to go forward without being toppled .

So far so good…right…well, I hear someone asking - what does that got to do with the purpose-profit balanced equation? Well, the first pair of horses within this analogy can be equated to “purpose and profit” dimension followed by the next pair of horses to “destiny and decision” dimension. In other words, “the CEO, purpose, profit, destiny and decision” are the five horses (or variables) that ride the wagon called corporation (as outlined in the picture on the top of the page) - within the context of balancing this purpose-profit equation for a maximum business outcome.

Rightfully so, the first pair of horses that need to be balanced within this equation is “purpose and profit” - I mean literally, they need to be balanced on a continual basis very much like a “tough love” type conversation occurring between two individuals. Again, leveraging Buddha’s analogy – it is like a “blind giant” called profit, conversing with a “small sharp-eyed cripple”, called purpose. Within their conversation - the blind giant apparently was saying to the sharp-eyed cripple: "Although I'm strong and can go very fast, I can't see clearly where I'm going and so, if you can ride on my shoulders, together we could go very far with the help of your sharp-eyes." Granted – it is a funny analogy – but the truth is that purpose and profit dimensions are profoundly intertwined - while the purpose dimension provides the solid root for the profitable growth, profit, on the other hand nourishes the soil in which purpose can grow. They are inseparable and necessary for each other – very much like the mind driving the profit and the heart serving the purpose in our personal lives. When heart and mind are brought to a point of this harmonious co-existence, the power of one driven multiplier effect indeed will start happening!

The next pair within the equation that needs be balanced is “destiny and decision” – i.e. exhibiting unwavering destiny focused determination while balancing the day to day decisions. Leveraging Buddha’s analogy again- it can be compared to a man wearing a turban (destiny) while standing near a burning bush (decision). Obviously, if a man is wearing a turban standing close to a burning bush, he is anxious to get rid of it (due to the heat), but yet, instead of throwing it away completely- he just keeps it aside for a period of time - till he puts the fire off. Similarly, there may be situations within our business world -where we may have to be decision minded to achieve some near term “fire fighting” situations – but, soon afterwards, we must wear the turban(destiny) back, after quenching those fire fighting situations. In other words- if destiny is not coupled with decision, it will lead to a status-quo and eventually will come back and haunt us in the long run.

The next obvious question is how does the lead horse ensure that the remaining pairs of horses are complementing each other by enhancing and leaning on one another thus creating a magical multiplier effect? With the question is about being magical, I guess -the only way we can answer it is, with a picturesque story, and not just words. Although, history is filled with many such examples (both modern and ancient days) - as I think about it more - the story of Joseph stands out more than the others. As the story goes - Joseph, the then governor of Egyptian Pharaoh in the ancient scriptural days is being sent to Egypt against his will. However, on reaching there, in a short time, with his purpose minded focus along with his shrewd profit minded administration kills – get the recognition as the best manager within Pharaoh’s court. Not only that- he also exercises integrity in every decision by fleeing away from the man made distractions (or the so called tests) of his days, but, yet was destiny minded when it comes to saving Egypt from the famine. Even on situations when he was misunderstood, imprisoned, and forgotten by his fellow friends - Joseph exercised his purpose in life – which eventually helped him to create the multiplier effect in the midst of one of the difficult circumstances of his era. In other words, the five horse balancing approach helped him to come up with the first disruptive innovative business model in the world- thus protecting Egypt from one of the worst famines. If you think about it – Joseph along with his team was the first one to come up with the “Harvest-Tax-Store-Consume” business model much ahead of the famine (i.e. recession in today’s terminology) as opposed to the prevailing business model of that era (Harvest and Consume). The impact of his team's genius work was that all the countries in and around Egypt was spared of starvation (i.e. recovery in today’s terminology) during the famine.

Bottom Line: Buddha’s five horse analogy within the context of Joseph’s life is a great case study for today’s business leaders – as balancing these five horses on a daily basis will not only make our corporations a best in class incubator for purpose-profit balanced leaders, but also producing highly sought after destiny-focused decision makers like Joseph. Healthy, yet impactful destiny balanced decisions on a daily basis increases productivity of the employees, enhances the morale, increases the perceived value to consumers; produces healthy financial results, better stock prices and dividends for the investors and other stakeholders.

Monday, September 13, 2010

Transforming “WHAT ABOUT/SO WHAT” questions in to tug-of-war like “SO THAT” Strategies based Causal Chain.

Courtesy: Google Images

Over the weekend, I heard a message - that the number one reason most prayers go unanswered is because we fail to get the “SO THAT” (or motive /purpose) part correct within our hearts – instead, we end up spending too much time asking the “WHAT ABOUT/SO WHAT” type of questions - which kind of reminds me of the reason why most business strategies go unimplemented as well. As it turns out, most strategies end up being put on the shelves is because we fail to get the “SO THAT” (or purpose) part correct -and end up spending too much time answering the “WHAT ABOUT/SO WHAT” type of questions within the larger context of purpose-profit balanced equation. What do I mean by that? The purpose-profit balanced equation, in its essence is coming up with the right set of balanced strategy questions - with an end goal of formulating a purpose-profit balanced strategy causal chain ( The strategy causal chain - in my opinion – is the missing link- that is needed to transform the so called “WHAT ABOUT/SO WHAT” questions in to an outcome (or execution) based “SO THAT” strategies. In other words, strategy causal chain is the sequence of cause and effect based strategy actions leading up to the final effect (or outcome), where each element of the sequence causes its succeeding element with an execution focused action/answer.

A very important challenge of forming the strategy causal chain is arriving at the “good enough” length with a proper tension, similar to that of a tug-of-war chain – or arriving at the appropriate amount of time we must be spending on answering the follow-on “what about/so what” questions. If the chain is too short, strategic planning itself will become trivial and so does its sub-actions. On the other hand, as the chain lengthens- strategic planning slowly loses its momentum (& focus) and eventually do not get implemented. So, failure on both fronts can result in inaction -and so managing the length of the strategy causal chain (with a proper tension like a tug of war), perhaps is the most important part of the strategic planning process as it has a direct correlation to the business impact or outcome. The challenging part, though, is arriving at that optimum length (with a proper tension) – which by the way is decided by the way we go about answering the key strategy questions without falling in to the so called WHAT ABOUT and SO WHAT question traps.

Those of us who have gone through the large scale cross-functional strategic planning efforts would hopefully relate to this - while the early-stage hypothesis or ideas usually come with a great potential (and enthusiasm) from various quarters, they also come with their own share of uncertainties – partly, because of the lack of data to substantiate them. This is where – if one is not careful -the so called “what about and/or so what” questions can do more harm than benefit – and end up killing those early momentum/enthusiasms, especially within disruptive innovation initiatives.

· What about the market size? Are we sure that these ball park numbers are right?
· What about the competitive landscape? Is it possible to model the landscape to assess the impact of us entering that space?
· What about margin numbers? Are they realistic?
· What about the Profits? Has anyone done the profit pool analysis?
· What about the risk factors? Has anyone done proper risk model analysis?

While these are all valid follow-on questions, if we are not careful – sometimes these questions will never stop -and go in to an infinite loop of analysis/paralysis mode -and eventually bringing the whole strategic planning effort to its knees. Granted, the intentions of the questions are valid — but the problem, though, is what follows those "what about/so what" questions. The result from most of these questions- invariably- is to conduct further research and analysis which means delayed action or execution.

Don’t get me wrong - asking the follow-on “questions" by themselves are not bad as long as they are asked within the right context (& for the right type of problem we are trying to solve). It is a balancing act as asking the right questions within the right context is a skill only few folks are good at. To find that right balance, we need to first understand the human decision making process so that we can comprehend why some folks ask those diverging set of “what about/so what questions”.

By and large, depending upon the data or facts available to us (& risk tolerance level), we pick and choose one of the following decision making/problem solving methods. We tend to go from one side of the spectrum to the other side depending upon the amount of data available to us to make decisions.

1. “Shoot at the dot” method
2. “Connect the dots” method
3. “Hypothesis based” method
4. “Framework based” method
5. “Mathematical model” method
6. “Repeatable process” method

We usually settle down with the “shoot at the dot” or “connect the dots” methods when we try to solve a problem with less or no data at all. Interestingly enough, these two methods are more of ART type methods and folks with right brain thinking skills are usually good at arriving at the right decisions using these methods. “Hypothesis based” method is most commonly used within the Strategy problem solving space and in general we can arrive at a reasonably sound decision with this method. “Framework based” method is also common in strategy arena, but more widely used in the pure sciences. “Mathematical model” method is more common in applied sciences/engineering fields whereas repeatable process is used in life sensitive/R&D decision making situations. As we navigate across this spectrum, most of the disruptive innovation problems fall within the realm of methods #1 or #2 whereas traditional strategy problems fall within realm of #3 and #4 and scientific/R&D problems fall within the realm of #5 and #6. Rightfully so, the methods within this spectrum starts first with the “ART” characteristics and finally ends with the “SCIENCE” characteristics.

With this prelude- let us come back to the “what about questions” - which in general are diverging in nature (i.e. they create more options) and are typically asked by left brain thinkers whereas “so what” type questions are converging in nature (synthesis/insight focused and so eliminate options) and typically asked by right brain thinkers. The point is that both types of questions are asked with right intentions, but the problem is asking wrong set of diverging questions (e.g. “what about/so what” questions) for the wrong problem space and context (e.g. disruptive innovation) – which invariably will delay the execution – resulting in killing innovations in early stages.

This is where we need to step back – and work towards establishing the missing link – or the so called “good enough” strategy causal chain - which inherently will help us to ask the right set of balanced questions with an optimum amount of details - that is good enough to solve the current problem at hand instead of boiling the whole ocean. In other words, while answering the questions – one has to agree on the larger purpose or the so called “so that” root cause of the chain first before answering the “what about/so what” based effect part. The cause-effect relationship is key – i.e. identifying the root cause or the purpose part will eventually make the effect part to fall in place within the context of the purpose profit balanced strategy equation. Formulating the causal chain with the purpose (cause) part on one end -that is chained together to the profit (effect) part on the other end (like a tug of war as outlined in the top of the page)-is what that transforms “WHAT ABOUT /SO WHAT” questions in to “SO THAT” Strategy based Causal Chain.

Finally, let us face it- it is not worth to put those well thought out strategies on the shelf -and so it is time to step back and take a balanced approach when it comes to strategic planning – i.e. forming the strategy causal chain, which not only helps us to transform the “what about/so what” questions in to “so that” strategies, but also helps us to be purpose focused.