We’ve all experienced it–the annual strategy development session, with the same old goals, tactics and initiatives, trotted out like tired beasts of burden from the strategy barn where they were housed and more or less forgotten during the winter. We affix a new harness or polish an old saddle, and pretend we are somehow mounting a restless thoroughbred, chomping at the bit to dart off over unexplored knolls for new pastures. Yet we are more like a heard of African wildebeests, instinctually following a familiar well-trodden path through the bush during our annual migration, without thought or consideration. We just simply move.
Somehow after so many days of effort, we end up with a strategy that bears little difference from the previous year’s. If an outsider compared the two side-by-side, could he really tell the difference? We go about implementing it, knowing that next year we will be here again debating the same issues, pretending that getting the same results is somehow unexpected. How can we break this cycle?
What Keeps Old Strategy Alive?
Before dealing with the question of how to break away from old strategy, let’s look at three phenomena that keep old strategy alive.
The Kid Stuck on the Monkey Bars
The Kid Stuck on the Monkey Bars is about fear of letting go of what has made a company successful in the past. Sometimes called the success trap, this is when a company becomes so successful at doing one thing, that its leaders grow overly fearful of growing in new directions, or more precisely, the associated risk. It is like a child on the monkey bars. He needs to muster the courage to let go of the bar behind him to grab the bar ahead and move forward. Without that courage, he is stuck hanging midair, and he knows he cannot cling there forever.
A company with which I have worked that sells public training courses and consulting services based on a well-known management methodology is a clinging kid. The methodology had its heyday twenty years ago, and while still popular, has become old hat. The company was the first to offer these services in the market and became successful that way. Today however, they face a myriad of me-too competitors and their services are increasingly viewed as commodities. Yet they cling to the management methodology as the product they must sell. So, they are stuck. Continuously fretting about the decline of what they sell, but to afraid to let go of it.
The Zombie Assumption
The Zombie Assumption is something that the leaders of an organization assume as fact despite evidence to the contrary, but nonetheless continue to base strategic decisions on that assumption anyway. The assumption lives on, without anyone questioning it. For example, a registered nurse once related to me how in the 1950s, doctors had told her that it was not necessary to sterilize tubes carrying fluid into a patient as long as the fluid was moving against gravity. Incredibly, this assumption lived on for years despite high rates of infection.
In strategy development sessions, I frequently hear zombie assumptions. For example, “Chinese people will only buy cheap products! They are not interested in paying more for quality!”
Maybe at one time that was true. However, that’s not what I see today on the streets of Shanghai, the shops in Ginza, and the boutiques of Paris.
The Maginot Line
The Maginot Line is about building a strategy based on world from the past that no longer exists. The French had built the Maginot Line of defenses to protect France against German attack from the east based on the realities of the First World War and the strategies that were successful during it. In 1940 however Germany invaded France through Belgium, leaving the Maginot Line untouched.
A Western company I know runs an industry association trade promotion office in Tokyo for twenty years. They have made great effort promoting an imported agricultural product in Japan. They have been extraordinarily successful, taking massive market share and created a strong brand for the product.
Years ago, the thrusts of the strategy were focused on food safety and adequacy of the product for Japanese tastes. Even though the company won that battle over a decade ago, today it continues to develop strategy today based on the same objectives, as if it were still the 1990s. While once successful, the strategy is neither effective nor necessary in the current market, and is doing little to stave off loss of market share to new lower-cost competitors.
Some Techniques to Help Break Away
So what can be done about this? Below are three techniques to use in strategy development to help break away.
Change Perspective: Be your competitor.
A client company of mine was facing a significant threat in Japan from foreign competition. There had been a change in import regulations that gave the competitors access to the market. The leaders of the organization were concerned the current strategy bore little dissimilarity from previous ones, despite the dramatic change in environment. It was as if the executive team were a one trick pony, recycling old safe initiatives with which they were familiar, effectively trotting out the same old beasts of burden from the strategy barn.
So, we changed the exercise from developing our own strategy to developing the strategy of our competition. If we were entering this market after having been excluded, what would we do to grab market share? How might we dislodge incumbent players?
Coming from the fresh perspective of a competitor organization had two effects. First it helped the team understand the market better, as they worked on strategy from a green field perspective. They had liberated themselves from previous strategies. Second, it help people develop a hypothesis of how the competition will move. They were able to plan actions and contingencies. As a result, the new strategy looked substantially different from the old, and took into account the changed market realities.
Challenge Yourself: Run a business simulation game.
Sometimes called war games, in business simulations teams representing the company, the competition, and sometimes customers play out a business simulation. This allows testing of the strategy in simulation, and results in insights that are not typically gained during strategy develop sessions using other techniques. Some research, setup, and facilitation is required, and simulations might last 2-3 days.
A key to a good simulation is choosing the right team members. Particularly in choosing teams to play the competition or customers. You need a good number of what I call “cheeky monkeys” on the teams. These are people in the organization who are unafraid to criticize or take a contrarian view. An advantage to simulations is that it legitimizes challenges to conventional thinking in the company without the potential stigma of having a bad attitude, being a naysayer, or not being a “team play.” To the contrary, it is the role of the team player to challenge and confront. This technique is particularly useful for unmasking faulty assumptions, and identifying strategic gaps.
Force Confrontation with Reality: Ask for evidence.
A client company of mine that makes ingredients for cosmetic products had established an independent company to test cosmetic products for safety and effectiveness. When the company was established, the leaders had conjectured that clear separation and independence would be critical to avoid an appearance of conflict of interest with business of the ingredients manufacturer. This assumption had continued for years without question, and it guided strategic decisions, such as not offering joint development projects as a service or collaborating with the sales staff of the ingredients company.
When I asked if there was any evidence that conflict of interest was a concern to customers, there was none that anyone could site. To the contrary, after investigating this, we found that 50% of the testing company’s sales came from referrals from the ingredient company’s own sales staff, despite competitors offering similar testing services for lower fees! Apparently, customers viewed the relationship with the ingredients company as a sign of credibility. The testing company is now exploring ways to collaborate better with the ingredients company’s sales staff.
Breaking away from old strategy can be challenge. Some of the reasons for this include the Kid Stuck on the Monkey Bars, the Zombie Assumption, and the Maginot Line.
Three techniques to help break away from old strategy include the following:
Playing the role of the competition in developing strategy,
Running business simulation games, and
Asking for evidence that support deeply assumptions
If you think there may be a break away problem in your organization, think about what might be the cause. Write it down. Now think of which technique or techniques might be used the next strategy development session. Write those down too. Maybe then, you will be able mount a restless thoroughbred and break away bound for new pastures.