Category Archives: Strategy

Two Innovation Killers

Organizations over-focus on managing the present—increasing efficiencies—and they think they are doing strategy. ~Vijay Govindarajan

Over the years, I have had individuals argue during discussions about strategic planning that “getting better” is strategic. Getting better, making improvements is absolutely something that needs to happen in organizations and it certainly should be encouraged. However, I still believe “getting better” isn’t strategy.

Several years ago I heard Vijay Govindarijan speak about The Innovation Challenge. This week his presentation came to mind as I was working on a project in health care. I reviewed his presentation once again and still believe his premise that strategy is innovation.

VG (as he’s called) says that organizations spend time and resources in three boxes. If there is an over-focus on Box 1, innovation may never occur.

Box 1: Managing the present = efficiency

Box 2: Selectively forgetting the past = what you will abandon

Box 3: Creating the future = innovation

Therefore, strategy is answering the question: How do we create the future while managing the present?

I think this is why so many strategic plans fail. The plans weren’t strategic in the first place. In other words, they focused on managing the present, got more efficient, but nothing new emerged. Or, they got frustrated by the enormous challenge of creating the future while managing the present, and essentially gave up.

VG maintains that you can’t create strategy in your dominant logic. Your dominant logic (performance engine) is the kind of people you hire, the kind of processes you have, the performance measures you monitor, etc. All of this is needed for continued operational execution (i.e., efficiency), but it is also a barrier to innovation, or strategy.

How do you simultaneously do innovation and efficiency? That’s strategic planning. And, that’s hard.

According to VG, there are two common innovation killers.

  • To assume that innovation can happen inside the dominant logic (your current performance engine).
  • The innovation team and plan is not constituted correctly. It has to be a separate team and plan with different responsibilities. In other words, not the operational team. You may need to recruit people from outside of your organization because you are building new capabilities and selectively forgetting some of what’s worked in the past.

There’s far more to unpack around this topic. But if your strategic planning isn’t going anywhere, maybe part of the reason is because the very same team is trying to both manage the present (operational efficiency) and create innovation (strategy).  Step 1: Start your strategic planning by building a dedicated team to create the future and function without the restrictions of your current dominant logic.

3 Critical Steps to Get the Most Out of Your SWOT Analysis

Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different. ~Michael Porter

A SWOT (strengths, weaknesses, opportunities, threats) analysis is only the beginning of identifying a strategy. I see too many organizations conduct a SWOT and stop there; not knowing how to turn that analysis into a strategy. This is what I believe should be the outcome of a SWOT.

First, here’s my working definition of creating strategy. Creating strategy = identifying a few strengths and/or unique attributes that can be intentionally leveraged to your advantage toward solving an external problem or felt need, while recognizing and mitigating risk.

Second, my definitions of SWOT.

(a) STRENGTHS: includes not only what you do really well, but also what is unique about your organization and/or what you do. (b) WEAKNESSES: what you do not do well. (I’d stay away from using language like “what’s not working” because that implies it needs to be fixed. Not all weaknesses need to be fixed.)  (c) OPPORTUNITIES: this list should include all things external to your organization that could provide direction for what you choose to do and how you do it—technological changes, changing competitive landscape, regulations, innovations, cultural shifts, demographic swings, etc. (d) THREATS: this list is similar to opportunities but focuses on anything external that could have a significant negative impact on what you choose to do.

If you’ve kept each one of those four lists in its appropriate lane, you can now identify a strategy.

Step 1: Look at your lists of STRENGTHS and OPPORTUNITIES side by side. Using my definition of strategy, what specific strengths and/or unique attributes can you intentionally leverage to your advantage toward anything you’ve put on the opportunities list? This could mean that your strategy doesn’t focus on what you consider your #1 strength. If there’s not a viable opportunity (external problem or felt need) for you to intentionally leverage that strength, then that doesn’t align with the definition of strategy. You might discover that the strength you would have put third or fourth on your list if you were to rank order them, could be intentionally leveraged toward solving one of the opportunities you identified.

The best strategy comes from first pairing your strengths with the opportunities where you can have the greatest likelihood for success.

Step 2: Next, look at your list of THREATS. Are there any threats that would create too great of a risk to pursue what you identified in Step 1? Any threats that would essentially veto that strategy? Are there initiatives you could implement to help mitigate some of that risk?

Step 3: Lastly, look at your list of WEAKNESSES. What weaknesses, if any, do you need to address in order to ensure that you can accomplish the strategy you’ve identified? Notice that spending time fixing weaknesses is the last thing you would do to create a strategy, and is the last priority in determining what strategy to pursue. That’s why it may not be a prudent use of resources to fix weaknesses that have little or no impact on your strategy.

It’s your turn. What’s your strategy?



What distinguishes leaders from laggards?

What distinguishes leaders from laggards and greatness from mediocrity is the ability to uniquely imagine what could be. ~Robert Fritz

“The Spirit of Progress”

When I first moved to my condo in Chicago I had a bird’s eye view of The Montgomery. This is a condo building that was once home to the retail giant Montgomery Ward. I remember watching the transition; at one point it was stripped to the concrete pillars and I could see all the way through the building. This image resurfaces whenever I hear someone say their organization could have X number of clients, customers, or sales without even trying (i.e. laggards). It could be that Montgomery Ward believed that to be true as well.

What still remains atop the former Montgomery Ward Administration Building across the street is the statue, somewhat ironically entitled, “The Spirit of Progress.”

Another building, just north of the Administration Building is the former two million square foot Mail Order House (a single floor covers six acres). The interior contained miles of chutes, conveyors, and storage lofts. At one time the building had its own post office branch and a ground-floor shipping platform that could accommodate 24 railroad freight cars. Today, this is where you’ll find Groupon HQ, and yes, many more condos.

In my last post, I quoted Sue Barrett’s definition of strategic: Being strategic means ensuring the organization’s core competence is consistently focusing on those directional choices that will best move the organization toward its new future. Something that Montgomery Ward did not do.

In 1962 Everett Rogers, a professor of communication studies, published a theory in his book Diffusion of Innovations. His theory outlines a process by which an innovation is adopted over time. It’s the shape of a bell curve beginning with the innovators (2.5%), then on to the early adopters (13.5%), early majority (34%), late majority (34%), and finally closing out the bell curve with the laggards (16%). [Rogers’ book is in its fifth edition and continues to be frequently referenced.]

I think it’s easy for organizations to become comfortable with making directional choices based upon their laggards—the people (customers, clients, etc.) who will always be there. It feels “safe” in the short term, but could be very risky in the long term. There’s a reason they are laggards; they don’t like change. Consequently, it’s likely that the laggards are the most vocal when you make directional choices that don’t mirror the past.

Directional choices (i.e., strategy) should be moving the organization toward its new future. That means leaders’ strategic choices need to focus on the initial part of the bell curve – the innovators, early adopters, early majority.

When I read about the history of Montgomery Ward and compare and contrast that with what Amazon is looking for in its HQ2, it’s unfortunate that Montgomery Ward made choices to serve their laggards. In many ways their basic mission and even infrastructure isn’t that different from Amazon. The difference is that Amazon is constantly making directional choices to move the organization toward its new future – they have a dynamic strategy.

Strategic leaders don’t build their strategy based on their laggards. They make directional choices to always be moving the organization toward its new future.

5 Steps to Build a Strategy

The corporate role is not to see over the horizon but rather to imagine what one might find there, and begin preparations accordingly. This frees the crew to focus its full attention on the shoals and treasures that are already in view. ~Michael E. Raynor

Strategy is an organizational hot potato. I see the ownership of organizational “strategy” being tossed from the CEO to senior leaders, to managers, to board members, and so the cycle continues. It doesn’t matter if the organization is for-profit or not-for-profit; the challenge of “strategy” seems to perplex all sectors.

I believe part of this challenge is coming to a shared understanding as to what is strategy. There are many definitions (one source indicated a Google search for strategy resulted in 85 million definitions). Sue Barrett, a sales consultant from Australia, researched many definitions and concluded that this definition encapsulates the similarities she found.

Being strategic means ensuring the organization’s core competence is consistently focusing on those directional choices that will best move the organization toward its new future, with the least risk and in the most orderly fashion. [Note, she didn’t say no risk.]

The strategy comes from the leader(s) as Michael E. Raynor described: “not to see over the horizon but rather to imagine what one might find there, and begin preparations accordingly.” Or as Sue Barrett said, “focusing on directional choices…” That may be easier said than done. Barrett provides 5 steps to help map out what a strategy might look like.

  1. Decide what challenge(s) you’re solving: Once there is a clear sense of the challenges being addressed, they can start being addressed.
  2. Answer the value proposition question: “How can we provide a uniquely valuable customer (client, member, etc.) experience that drives our success?” Look at your core competence and decide what the value proposition is. Make sure it answers the question. [Andy Stanley provides some thoughtful insights about being uniquely better. He says that “every industry (again, both for-profit and not-for-profit) has shared assumptions. Every industry is ‘stuck.’ However, somebody, somewhere is messing with the rules to the prevailing model. Someone is creating a uniquely better”]
  3. Know where you’re starting from: Once you’re clear on your challenge, it’s important to have an accurate picture of the current reality.
  4. Be clear about your new future: In difficult times it’s always easy to retreat into survival mode. However, having a clear, bold sense of the future gives employees a positive frame and offers an antidote to fear.
  5. Face the obstacles and determine the brutal facts: Now look at the possible obstacles to the vision in a dispassionate/objective way. What are the brutal facts you can control and which ones can’t you control? Facing the obstacles in a clear-minded manner allows the organization to assess the situation well and take appropriate action to overcome them.

 Create your strategy by imagining what might be over the horizon, and begin preparations for a uniquely valuable customer experience.

Don’t protect, correct your strategic planning!

The trick in [strategic planning] is not to worry about making a wrong decision; it’s learning when to correct! ~Susan Jeffers

In Feel the Fear and Do It Anyway Susan Jeffers discusses the crippling effects of fear in her personal life and explains how she formulated a course of action for conquering it. In the chapter “How to Make a No-Lose Decision,” I came across an analogy that I believe gets at the core of effective strategic planning.

I am referencing Susan Jeffers who referenced Stewart Emery in his book Actualizations. This is what Emery learned while on the flight deck of an airplane. Planes have an inertial guidance system. The purpose is to get the plane within a short distance of the runway within a short time of the estimated arrival time. Each time the plane strays off course, the system corrects it. As the pilot described this process he said, “we’ll arrive on time in spite of having been in error 90 percent of the time.” Emery observed, “So the only time we are truly on course is that moment in the zigzag when we actually cross the true path.”

Jeffers used this analogy to describe how we could view decision making in life, and I quickly translated this into strategic planning. It represents what I see happen all the time!

Strategic plans, painstakingly written in detail with long lists of “to-do” action items and precise milestones; this could easily characterize a very straight line from the current state to the goal. What strategic plan is so accurate, and environment so stable, that an organization can truly practice linear planning!? The straight line might be your strategic plan, but strategic planning looks much more like the dotted line in the illustration.

I’ve seen numerous organizations launch a new strategic plan, arrive at their first “oops,” and (A) immediately abandon the plan all together because it must be wrong, (B) change the goal because their first effort must have been right, or (C) continue full-force in the misdirection and get even farther from heading toward the goal in an effort to “protect the plan.”

Why don’t more organizations correct course? Continuing with the aeronautical analogy, the people in organizations are the inertial guidance system. Does your “strategic planning” only focus on divvying out lengthy to-do lists? Or, have you invested in empowering your people with the capability and liberty to make course corrections?

Writing a strategic plan is the easy part. Actually practicing strategic planning, that’s the hard part. As Dwight D. Eisenhower said, “Plans are nothing. Planning is everything.” Planning means people are engaged, they are empowered with the capabilities necessary to do the planning, and they have been given the liberty to make miscalculations and, consequently, corrections. I intentionally said miscalculations and not mistakes. Going back to Emery’s reference to being in error 90% of the time, that means miscalculations are a necessary component of planning and should not be characterized as mistakes.

Jeffers’ statement: “Don’t protect, correct.” How much time and effort is your organization spending protecting your strategic plan; and how much time and effort are you putting toward correcting your strategic planning?