GUEST POST from Matthew E May

A few days ago, as I was waiting for an item I purchased in my local Apple store to be brought out to me from the back of the store, I had the opportunity to observe Apple’s frontline strategy be played out in front of me. It revolved around another floor associate assisting a gentleman considering the purchase of an Apple watch.

Now, you might be thinking, what possible strategy would or could an Apple associate on the floor really need? Apple devices sell themselves, right? Wrong. Especially in the case of the Apple watch, which was a strategic product choice seemingly unrelated Apple’s core business. Many pundits questioned Apple’s decision. For many, it was a head scratcher.

That “seemingly unrelated” nature of the choice must have had several conditions for success, one of which obviously concerned the retail salesperson’s capabilities: a watch, unlike all of Apple’s other products, is a wearable one, and a fashion accessory at that. Irrespective of the functional technologic similarities to the rest of Apple’s line, the Apple watch, like any watch for those who wear one, is fundamentally different. It becomes a very visible part of your person, and when the novelty of owning one has worn off, you’re left with the question of whether it reflects your image, and corresponding personal fashion sense. It thus requires a new selling capability, one centered on personal image, lifestyle, and fashion.

I remembered when Apple chose to play in its own bricks-and-mortar retail stores, another move that had been met with the same media skepticism the Apple watch garnered. If you recall, the trend was in the opposite direction, a more Amazonian one: shutter the physical to enable online retail to flourish. (Interestingly, Amazon has reversed itself of late…perhaps you’ve noticed or visited an Amazon Pop-Up store in your local mall.)

The Apple retail store choice was made at the Steve Jobs level, but that choice in turn required thoughtful choices at the retail operations level, one click down from the corporate choice.

As we now know and have experienced, the Apple retail store strategy clearly reflected the Jobsian mindset around simplicity, design, and uniqueness. The retail strategy was, in reality, quite well aligned to Apple’s “think different” brand: the notion of a Genius bar, the utter lack of queues and cash registers, self-organizing floor associates, store design and product display — everything was different from a conventional retail store experience.

But I digress. Back to my story…

It was a busy noontime crowd, and the Apple watch station had at least a half dozen customers hovering around it. One associate was already helping someone. I spied another approaching the general area, which consisted of two parallel display stations: one for the Apple watch, the other for the iPad. The associate glanced at both, then made a beeline for the watch station. That’s what sparked my interest, because the iPad station had just as many customers around it.

It struck me right then that this particular associate had a strategy in mind. I mentally began ticking through the Playing-to-Win framework of integrated choices: winning aspiration, where to play, how to win, critical capabilities, and required systems.

If Apple wanted to win in the “smart wearable” space, it needed to focus retail resources on its success. In other words, this particular retail associate made a strategic choice to head toward the watch station, choosing to devote his personal and professional attention there in an action aligned to the both the retail and corporate strategy.

Among the handful of customers at the watch station, there was an older gentleman desperately trying to look savvy, nervously poking at the display watch, but clearly in need of a confidence boost. And that’s the customer the retail associate chose to help.

Winning aspiration and where to play: check!

I somehow couldn’t picture this particular gentleman wearing an Apple watch, so I inched closer to listen and observe. The first thing out of the associate’s mouth was not a “can I help you?” or even a “qualifying question,” but rather a rhetorical: “kind of confusing isn’t it?” Right away, the customer relaxed. You could see it. A chuckle, a nod, a breath. A little empathy resulted in instant rapport, in five simple words. Immediately, I got this associate’s competitive advantage: empathic connection with customers.

How to win: check!

Once the personal connection was made in that short exchange, the questions began: Considering a purchase, or simply exploring and needing a quick tour? For you or someone else? Do you use other Apple products, an iPhone perhaps?

It turned out that the customer was considering an Apple watch as a birthday gift for his granddaughter, who was graduating from high school. That launched a new series of questions, ones more related to fashion and lifestyle, rather than function. The associate was no longer worried about customer usability, knowing that the gentleman’s granddaughter was a longtime iPhone user, but he was worried about specific model choice. Did she have a favorite color? Did she engage in sports?

The customer didn’t know what his granddaughter’s favorite color was. The associate asked about what she liked to wear, what color her car was if she had one, what color her iPhone was, what music she liked. “She loved the one the guy in the hat on that singing show wore,” said the customer. The associate’s eyes lit up. You could literally see the mental connection being made: “Ah, Apple’s strategic product placement on the wrist of Pherell, a celebrity coach on NBC’s The Voice.” It turned out that what she really liked was the band color: pink. For Grandpa, this sealed the deal.

Critical capabilities: check!

The transaction was consummated within minutes on the associate’s modified iPhone. Email receipt sent to the customer’s Apple ID email address.

Required systems: check!

The whole experience took less than five minutes…in keeping with the Apple philosophy of “ready right out of the box.”
The point of the story is this: if your top-level corporate strategy does not cascade down through the organization to the frontline, if your strategy is a “one and done” kind of thing, you’re missing out on the real power of strategic alignment. Strategy drawn at any level below the very top of the organization must be nested with the one above it. If it doesn’t, it won’t be long before you’ll hear employee feedback ala, “we don’t really have a strategy.”

If your top-level strategy does not cascade down through the organization to the frontline, you’re missing out on the real power of strategic alignment.

The Discipline of Cascades

Many companies are good at cascading measurable outcomes throughout the organization. In Western business, Peter Drucker’s “management by objective,” or MBO, came into vogue in the 1950s, and was later adapted by Intel’s Andy Grove, who coined the practice OKR. OKR stands for Objective and Key Result. John Doerr, a former Intel executive and early Google investor, taught the practice to Larry Page and Sergey Brin, which is why many people believe “it’s a Google thing.” It’s not.

It’s the Western version of the Eastern practice of hoshin kanri, which many believe has it origins in Japan during the mid-1600s as a samurai warrior discipline. Hoshin basically means aim, or setting direction, kanri essentially means management or administration. In Japanese etymology it suggests the shine of the compass’s metal needle, the one leading all the individual units of the group toward the goal. The visual metaphor is that of geese flying in the V formation. Individuals all, but all heading in the same direction, all aligned.

Here’s how it works: Senior management sets objectives and key results, which they hand down vertically to the business units. The senior management key results become the business units’ objectives. They then set key results, and hand them down to functional departments. An upper level key result is a lower level objective.

The same principle can and should be applied to strategic choice-making, ensuring that there’s alignment between various levels of aspiration, playing spaces, competitive advantage, capabilities and systems. The strategic organization is a formidable foe in any space, because it’s generally the winner.

You may have a developed what you believe is a winning strategy. But here’s a good test: does it nest?

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GUEST POST from Matthew E May

When Chris Messina, a former Google designer, conceived of a simple way to filter content and create channels on Twitter in 2007, he blogged about his idea:

“Every time someone uses a channel tag to mark a status, not only do we know something specific about that status, but others can eavesdrop on the context of it and then join in the channel and contribute as well. Rather than trying to ping-pong discussion between one or more individuals with daisy-chained @replies, using a simple #reply means that people not in the @reply queue will be able to follow along, as people do with Flickr or Delicious tags. Furthermore, topics that enter into existing channels will become visible to those who have previously joined in the discussion. And, perhaps best of all, anyone can choose to leave or remove topics that don’t interest them.”

His idea was complete with syntax (rules) for how it would work, such as “No one owns or administers a tag channel,” and “A channel is created the first time someone posts a status with a channel tag.” He included Twitter page prototypes, as well as a test case focused on the popular SXSW conference. In other words, he had proof of concept.

Twitter’s reaction to his proposal? As Messina later told the Wall Street Journal, “[Twitter] told me flat out, ‘These things are for nerds. They’re never going to catch on.’”

Messina was a victim of the Not Invented Here syndrome, aka NIH, which is still alive and well not only in business, but wherever people are put in the position of considering ideas developed elsewhere. NIH is defined as a strong resistance to, or automatic rejection of, concepts—knowledge, ideas, solutions—produced somewhere else, somewhere external to the individual or team, often resulting in an unnecessary reinvention of the wheel. The pairing of these two aspects, external idea origination and immediate internal devaluation, is the defining characteristic of NIH.

The question is, why does NIH persist, and what can we do about it?

As it turns out, science may provide the answer to the first part. Absorbing and processing new ideas and knowledge taxes our brain, specifically the prefrontal cortex, where our deepest thinking occurs. But, we are wired to preserve our resources, mental and otherwise, so we resist new ideas naturally and automatically, not because the ideas are bad, but because we would rather not expend the enormous energy it takes to focus dense attention and make new connections. The feeling is uncomfortable, so we avoid it.

Now, when we solve a problem ourselves, at the moment of insight around which new and complex connections are made, the brain releases an adrenaline-like rush of neurochemicals. So there’s a chemical reward when we produce a new idea, one that doesn’t exist when we try to embrace others’ ideas. So not only is coming up with our own ideas cognitively easier than assimilating ideas of others, there’s a real payoff.

The essential problem with NIH, though, is a lack of learning, the net result often being some combination of being gloriously wrong and wasting valuable resources metaphorically reinventing the wheel.

THE FIX

Fixing NIH is simple, but perhaps not easy.

At the individual level, it amounts to doing what Steve Jobs did by adopting Pablo Picasso’s famous quote: “Bad artists copy, great artists steal.” Jobs didn’t suffer from NIH. If he had, he might have never even considered the pleas of Apple engineers Jef Raskin and Bill Atkinson to visit the Xerox Palo Alto Research Center (PARC) in 1979, much less be persuaded to do so. He might never have seen the future of computing and taken the Xerox interface for Apple’s use, boasting later that “we have always been shameless about stealing great ideas.” And, in the second chapter of his career, after retaking the Apple helm after years of non-Jobsian leadership characterized by an acute case of NIH syndrome, Steve Jobs might never have brought in industrial designer Jonathan Ive to help him revitalize the company. And had Jonathan Ive suffered from NIH, he might never have “stolen” the design stylings and aesthetics of one Dieter Rams, genius designer of Braun fame. But Steve Jobs and Jonathan Ive were immune to NIH, as great artists are, and as a result achieved an unparalleled level of co-created product design that produced world-changing commercial elegance. They wore that immunity like a badge of honor.

At the organization level, it amounts to institutionalizing an outside-in “open innovation” program like Procter & Gamble’s then-CEO A. G. Lafley did in 2000 when he mandated that fully 50% of P&G’s new products had to be originated outside of the company. Yes, you read that right…50%. The coin termed was Proudly-Found-Elsewhere, and the program was called “Connect and Develop.”

What do you do if you don’t happen to have the clout of an A.G. Lafley to issue a company-wide mandate? What do you do if you’re essentially the CEO of You, Inc.? Two tools can help.

1. Open Hackathons. Hackathons have moved well beyond the technology-only focus that “hack” conjures up, to become a valid method of bringing a diverse and passionate group of people—designers, storytellers, marketers, coders, entrepreneurs—together over a short time to solve real world problems and produce a basket of strong ideas. Innovation is a contact sport, and having dozens of talented individuals rub shoulders and put their heads together is bound to produce something profound. Hackathons need not be open to the public; internal hackathons bring the same boundary-breaking enthusiasm and engagement that help to rid the culture of NIH.

2. Knowledge Network. During my tenure at University of Toyota, we encouraged individuals to engage fully with the outside, and to create what we termed a Knowledge Network, in much the same way P&G created a network of innovation partners with whom they could connect. Today, it’s easier than ever to “connect and develop” with a wide variety of knowledge sources—you probably have dozens of ways in the palm of your hand, on your mobile device. The goal of creating a knowledge network is to become more productive and commercially valuable by exploring and exploiting the talents of others and bringing their idea into your own repertoire. One way to visualize a knowledge network is as a radar screen or target, segmented by categories of knowledge sources you find valuable and helpful.

To turn this visual into a useful tool, think about three possible levels of connections: the outer circle representing your loosest connections, and those in your inner most circle being your highest quality connections. A high quality connection is one that you reference and connect with constantly. The information, knowledge, and guidance you receive is excellent, and enables you to be faster, better, and smarter. The connection is also characterized by easy access. Your relationship to individuals is characterized by high levels of dialogue, responsiveness, and collaboration. Your high quality connections enable you to get ahead. To continuously improve the value of your knowledge network, focusing on deepening ties to those with the potential to become part of your inner circle.

When I taught an experimental course on creativity and innovation for second-year MBA students at Pepperdine University in Malibu, California, I encouraged them to “connect and develop” through a knowledge network. Years later, I still receive notes from students telling me how their knowledge network has helped them to be more successful business professionals.

One of the best places to launch a knowledge network is at a hackathon. And if you’re participating in a hackathon, don’t give NIH a second thought. You’ve already beat it.

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GUEST POST from Matthew E May

Does this sound familiar?

Your company has spent months coming up with a detailed action plan for the coming years, complete with financial projections illustrating exactly how you will grow share of market and thus revenue, along with a budget. All of that serious documentation gives you great comfort. In fact, everyone feels really good about it, it’s so solid. The senior leaders are all nodding yes. You can feel the weight of the plan when you hold it. So it must be good. All you need to do now is follow the plan–execute, execute, execute–and wait for the revenue to rain down from the heavens. Life will be grand!

If that sounds familiar, you should be worried. Really worried. Because all that best-laid plan has done is produce a false perception of certainty, that you have control over something inherently uncontrollable and uncertain: the future.

Therein lies the difference between strategy and planning. And they are indeed different animals. What a good strategy actually does is produce discomfort, apprehension, and perhaps a bit of fear. These are the very signals that you are placing bets and making tough choices that may lead you straight into unknown territory.

Here’s the thing: you CANNOT produce a perfect strategy, you CANNOT guarantee success, and you CANNOT eliminate risk, no matter how lock-tight, detailed and logical your action plan is. Mike Tyson said it perfectly: “Everyone has a plan until they get punched in the mouth.”

You CANNOT take the same planning approach to revenue growth the way you do for controlling costs, for the simple reason that the company is not in control of revenue the way it is for costs…the customer is! How many times has your plan failed to produce the expected revenue, forcing you to cut costs, freeze investments, and “hunker down”? (Yes, yes, I know, subscriptions help short-term forecasting. But long-term? It’s the customer who is in control.)

Finally, you CANNOT use the VUCA excuse. You know the one: “If the future is so volatile, uncertain, complex, and ambiguous, why even attempt strategy? Let’s wait for things to settle down and clear up. Meantime, we will just adopt a rapid response capability.” Seriously, I have heard that very line of “reasoning.” The illogic is dazzling. Why, and even more importantly, precisely when, will the future be any less VUCA, and how exactly would you know, in measurable terms?

What you CAN do is make intelligent choices and bets about the future — acquiring and retaining customers — that you can test out in order to validate the assumptions and preconditions under which you are likely to improve your odds of winning.

If that takes you outside your comfort zone, then you’re exactly where you need to be. Lean into that discomfort. Embrace it. Use it as the source of mental energy needed to make difficult strategic choices, choices that will likely lead you to the doorstep of the very innovation you need to claim the right to win.

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GUEST POST from Matthew E May

“If I had the key members of your executive suite all in the same room, would they all be able to articulate the essence of your current strategy clearly and consistently?” I asked the executive vice president of strategy.

“Probably not,” she replied. “But I do know we need a new one, because the current one isn’t working.”

I hear this quite a lot. The reason I ask the question is simple: the starting point for strategy is defining the problem with the current strategy, and you can’t do that without being completely clear on the current strategy.

In my previous post, I made a case for not starting strategy development with S.W.O.T. (Strengths, Weaknesses, Opportunities, Threats), and promised a better starting point. This is it. There are actually a few steps to take before you ever craft a new strategy.

Step 1. Get clear on the current strategy.

You know you’re clear on strategy when you can answer the five key questions in the Playing-to-Win cascade with an as-is perspective:

What is our current winning aspiration?

You have clarity and consensus on what it means to win with customers, and against competitors.

Where do we currently play?

You have clarity and consensus on: who your key customers are; the channels through which you serve those customers; our most winning products or services; all the geographic regions in which you offer those products/services; the stages of production or phases of the overall value stream in which you compete; and where along the value stream do you participate, relative to competitors.

How do we win?

You have clarity and consensus on: your unique competitive advantage; why exactly customers choose you over the competition; whether your basic competitive advantage low cost or differentiation (it cannot be both); and how your competitive advantage is linked to where you play.

What critical capabilities do we need?

You understand clearly which key activities and skills must be performed at the highest level to produce your competitive advantage, as well as which capabilities are most relevant to customers.

What management systems must we have?

You understand clearly the systems, processes, standards and metrics that give rise to and support your critical capabilities.

Once you’re clear on your current strategy, then (and only then) you can talk about the most troubling areas of that strategy, and begin to contemplate a new one.

2. Identify the strategic issue.

The second step is settling on the most pressing and troublesome strategic problem you’re facing. Has your leadership position slipped? Is market share shrinking? Have competitors surpassed you with better products or services? Is growth not happening as fast as you’d like? Are your capabilities becoming irrelevant with end users?

If you’re like most of us, our current strategy is rather target-rich…meaning you have more than one pressing issue. Pick the one that’s keeping most everyone up at night. That’s your bogey.

3. Reframe the issue.

Here’s where Playing-to-Win strategic choicemaking departs from traditional problem solving. You’ll be tempted to begin analyzing the problem. You’ll be tempted to slide back into the familiar S.W.O.T.

Don’t.

Instead, reframe the problem as at least two opposing (and thus mutually exclusive) models or high-level approaches to the problem. Imagine a future in which the strategic issue doesn’t exist. In a couple of words, what did you do?

For example, if your problem is inferior capabilities versus your competitors, the choices could be between building new capability and outsourcing. (At the most generic level, the choice is always going to be between more of something and less of something.) Here are some examples:

• Go broad vs. go narrow
• Move up market vs. move down market
• Build vs. buy
• Generalize vs. specialize
• Centralize vs. decentralize
• Grow revenue vs. boost profit
• Agility vs. Stability
• Customize vs. Standardize

What you’re trying to do with this “framestorming” step is to lay the groundwork for some nonlinear, creative thinking. One of the key precepts in the Playing-to-Win framework is that strategy is a blend of creative and critical thinking modes. The constraint imposed by considering two opposing pathways produces a creative tension that demands resolution, and forces you to expand your thinking.

3. Brainstorm possibilities; cluster and cull

You’re still not ready to dive into the new strategy work just yet, basically because you have nothing to dive in to. What you want to dive into is possible where to play/how to win combinations that you riff off of each pathway of your reframing work. In other words, you’re looking for a good double fistful of “how-to’s” for the two opposing choices…possible ways to solve the problem within the framework of one of the opposing options.

This is where a solid 30 minutes or so of brainstorming will work wonders. When I work with groups, I like to split that 30 into 15 minutes of individual brainstorming and 15 minutes of group brainstorming. The first 15 makes the second 15 very productive.

The approach to brainstorming possibilities I like best is to think of a happy story about a potential future that lays out where your company plays and how it will win there. Start by thinking up different ways to either broaden or narrow where you play. Think through the various spaces in the categories of customer segments, channels, product/service offerings, geography, stage of production, etc.

Then you can think about various ways of winning. One creative device might be to play the “what would X do?” with respect to what Michael Porter in his seminal book Competitive Strategy identified as the only two broad categories of competitive advantage: low cost or differentiation. So, “what would Amazon do?” (low cost) or “What would Apple do?” (differentiation) in these spaces.

Note: you’re still not into drafting a strategic choice cascade yet! You’re just brainstorming. And as with any brainstorm, you’ve got to synthesize your ideas into something both meaningful and relevant to the problem. The best way to do that is to simply cluster the where to play/how to win possibilities by general theme. You might have three basic themes: broaden, maintain, narrow. (Note: Obviously, you haven’t scrapped your current strategy, and it remains the only viable strategy at the moment.)

The last thing you want to do is to cull those thematic possibilities into the few that you will then draft a full strategic cascade for. I recommend three to five possibilities, including the current strategy.

Let’s see how this 4-step start plays out with a hypothetical example.

EXAMPLE: STAR FITNESS TRAINING

Joe and Mary Buff, former Crossfit winners, offer in-home personal training services to an upscale clientele in the Hollywood, California area. Their clientele, which includes some celebrities, pay a premium over even the highest-priced health clubs for their personal attention. They are very successful with this strategy, but have reached the limits of scale in their business and cannot take on new clients. They view it as a good problem to have, but a problem nonetheless.

They define the problem in three words: ceiling on growth. They reframe their problem as two opposing pathways:

expand into new client segments vs. offer new products to existing clientele

These are two completely different and opposing choices. The Buffs would not, should not, could not pursue both simultaneoulsy, so they are mutually exclusive. Each has a number of possibilities:

• expand to cover all of Southern California by franchising Star Fitness Training
• extend into high-end health clubs
• expand through boutique storefront studios
• expand to downscale clientele with trainer certification model
• offer a mobile fitness app
• offer cloud-based fitness and training platform
• offer private-label nutritional products
• offer private-label exercise equipment

Clustering these possibilities might look something like: “grow geographic area,” “diversify clientele,” and “fitness products”:

A. Grow geographic area:

• expand to cover all of Southern California by franchising Star Fitness Training
• extend into high-end health clubs
• expand through boutique storefront studios

B. Diversify clientele:

• expand to downscale clientele with trainer certification model

C. Fitness products:

• offer online training programs
• offer a mobile fitness app
• offer cloud-based fitness and training platform
• offer private-label nutritional products
• offer private-label exercise equipment

They select three possibilities they believe are worth exploring, and scrap the rest: (1) expand to all of Southern California through franchising, (2) expand into less affluent client segment by hiring, training, and certifying new training associates, and (3) offering a cloud-based fitness and training platform.

They pull out three wall size versions of the Playing-to-Win Strategy Canvas, and develop each possibility into a full cascade of choices. They then reverse engineer each set of choices — which are in reality simply a set of hypotheses about the future — to determine the critical risks, by asking “what must be true for this strategy to succeed?”

Finally, they pick the strategy that the group believes is most compelling and construct a strategic test to learn whether what they believe must be true is actually true.

And that is how the best strategists start strategy.

Conclusion

Note the difference between this approach and S.W.O.T. Also note that the starting point for strategy is definitely not, and should never be, tied to the calendar, unless for some uncanny reason your strategic issues magically appear at the beginning of the year. In over 20 years of doing this, I’ve never seen that happen once. Nor do I know of anyone who has.

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GUEST POST from Matthew E May

It’s Time to Retire This Old-School Tool

Over the past few years of helping organizations develop new strategies, I’ve become aware and rather alarmed at a prevalent pattern, one which I find counterproductive, even detrimental, especially in these times of VUCA (volatility, uncertainty, complexity, ambiguity). It concerns the starting point for strategy work: nearly every time I begin working with a new client, I discover that their existing method for crafting new strategies starts with convergent thinking. Convergent thinking is the polar opposite of divergent thinking, which I believe is the kind of thinking true strategic choice-making — i.e. using the playing-to-win framework — demands, at least when you’re contemplating a new strategic direction.

Allow me to illustrate. Take a moment to mentally fill in the blanks with a top-of-mind answer:

Strategic ___________________________________

S.W.O.T. ____________________________________

Invariably, the answers I get when I do this short exercise in strategy sessions are “planning” and “analysis,” respectively.

Here’s the rub: planning and analysis are convergent modes of thinking. But if defining a new strategy is about considering many possibilities and making critical choices, then this kind of thinking doesn’t work. Perhaps that’s why so many people struggle with strategy.

In fact, it’s probably the very reason the starting point for most is the S.W.O.T. (Strengths, Weakness, Opportunity, Threat) Analysis. S.W.O.T. is probably the most dominant way to begin strategy efforts. Sounds cool, right? “We’ve done a S.W.O.T.” Woo hoo! It’s a great acronym…sounds like SWAT (special weapons and tactics). So it’s a brilliant marketing gimmick. No one actually knows who came up with S.W.O.T., which is a bit curious…maybe whoever did wanted to remain anonymous for a reason.

Be that as it may, let’s think about S.W.O.T. for a moment. Generally what happens is that some poor young MBA gets sent out to do a S.W.O.T. analysis, which will then be turned into a “strategic plan,” complete with who, what, when, how, and how much ($).

But let’s back up and parse the S.W.O.T., starting with the “S,” for strength. What is a strength? When we say “strength,” we are loading the concept with a silent context. Context is what gives the word meaning in the first place. There is no such thing as a universal strength in business life. I cannot think of a single strength that is a strength in all contexts. A strength in one context can be a weakness in another context.

(Note: In fact, this is the very point Malcolm Gladwell made in his 2013 book, David and Goliath. This one line was my main takeaway from the book: “The powerful and the strong are not always what they seem.” Gladwell was talking about the power of context, which ironically he introduced us to in his first and best book, The Tipping Point. David beat Goliath because he changed the context within which the battle was fought, and what appeared as a weakness in one context turned out to be a strength in another.)

A strength is only a strength in the context of the two key strategic choices at the heart of strategy: a specific where to play, and how to win within that space. For that matter, a weakness is only a weakness in the context of a where-to-play/how-to-win choice. The same holds for opportunities and threats.

My point: if you start your strategy efforts with a S.W.O.T., without having an explicit, and explicitly different, set of strategic choices, the poor schmo who’s actually doing that S.W.O.T. has to decide what to pay attention to and what to ignore. The reason being, it’s impossible to do a S.W.O.T. analysis of everything! That’s a century-long assignment of a million or so pages in length, and our young MBA only has six weeks and a few pages to do his S.W.O.T.

And what do you think the easiest and most natural, and indeed most unconscious thing for the S.W.O.T.er to do?

Answer: Assume the implied choices in the existing strategic plan. “Given our current plan, our S.W.O.T. looks like this.”

This explains why most “new” strategies end up looking a lot like the “old” strategy, with some updated facts, figures, and language.

I used to be agnostic on S.W.O.T. No longer. I’m violently against it as the starting point for strategy. And I realize now why I hated strategy the way business school taught it, but now love it the way I learned it from Roger Martin.

I now think it’s far better to think through various strategic choices, ask what would have to be true for those choices to be good ones, and explore those hypotheses through valid experiments, before ever locking and loading on a strategy to implement. It’s creative and divergent thinking, which is the polar opposite of the convergent thinking that fuels planning and analysis.

The difference between divergent and convergent thinking is the difference between chess and checkers. Both games are played on the same board, both games have the same number of players. With checkers, though, you really don’t have much to think about, the players are all the same, and the moves are essentially single, linear steps, or simple multiples of the same step. Chess has far more kinds of playing pieces, far more possibilities and options to consider, including the competitive response to a single move. Chess requires far more thinking, checkers not so much. That’s why when you watch the chess masters play (not sure why you’d want to do that), the “action” is mostly invisible…they’re thinking about their choices and and the possible reactions to those choices. And the best chess players won’t take their finger off the piece they’re moving until they’re certain that what must be true for the move to succeed is in fact true.

Strategy is a creative thinker’s game. So, if you want and need a new strategy, don’t start with S.W.O.T.

I’ll show you a better way in my next few articles.

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GUEST POST from Matthew E May

According to some studies, 80% of New Year’s resolutions fail by February. That raises some important questions: Why do we set them in the first place? Why do we abandon them, and, of course, how can we avoid doing just that?

THE PSYCHOLOGY OF FRESH STARTS

The “Fresh Start Effect” is the term University of Pennsylvania professor Katherine Milkman uses in her 2014 study of the same name to describe the feeling we get when the New Year hits and we fire up to set aggressive goals for the coming twelve months. According to the study, people are more likely to set a new goal corresponding with or immediately following an event such as a birthday or the start of a week, month, season, or year, suggesting that temporal landmarks or timestamps might make it easier to engage in aspirational behavior.

For example, the researchers asked hundreds of participants to describe a goal they wished to achieve. After describing the goal, participants were offered a courtesy reminder several months hence as an encouragement to pursue their goal. Half the group was offered a reminder date of “March 20, the third Thursday in March,” while the other half was offered “March 20, the first day of Spring.” More people chose the latter date, which signaled the start of a new cycle.

Milkman proposes two mental processes to explain the effect. First, that these landmarks create new “mental accounting periods” that psychologically distance our present self from its past imperfections, propelling us to behave in line with their renewed self. Second, temporal landmarks interrupt attention to day-to-day details, causing us to take a big-picture view of our situation and focus more on the broader challenge we’re chasing.

The Fresh Start Effect helps explain why we set New Year’s resolutions. But as it turns out, how we set them has everything to do with whether we achieve or abandon them.

THE NEUROSCIENCE OF GOALS

Discoveries in neuroscience reveal that for a significant goal to be achieved, we need both motive and means.

“Goal-direct actions are constituted by both movement and mind,” write the authors of a study at UCLA that examined goal hierarchy. “Actions possess both a how — the executed movements of the body and its mechanical interactions with the physical world around it — and a why — the relatively disembodied motives, beliefs, and intentions of the actor.”

The researchers used functional magnetic resonance imaging (fMRI) to scan and record the brain activity of subjects as they wore video goggles to view videos of people performing routine activities, such as browsing the Web, lifting weights, and brushing their teeth. Participants were asked both how and why people typically perform each action. For the how questions, the participants were told to think of one necessary part of performing the action; for the why questions, they were told to think of one plausible motive for performing the action.

Here’s the thing: the how and the why lit up completely different parts of the brain: how thinking engaged the left brain circuitry, while why thinking engaged right brain circuitry. The findings also suggest an inverse relation between the two circuits, meaning when one is on the other is off.

The implications are significant: goal achievement requires a how as well as a why for whole-brain engagement, and it is important to maintain a connection between both. However, trying to focus on both simultaneously may work against us.

Understanding that the why+how requirement is binary certainly helps explain why so many people fail to achieve their New Year’s goals, but it remains a conundrum that demands resolution (pardon the pun).

WHY-HOW LADDERING

Whether we lose our sense of purpose in setting a New Year’s resolution in the first place, or simply struggle with how to achieve an arduous and ambitious goal, and assuming that science is correct that simultaneously focusing on both the why and how isn’t possible, we still need a practical method to call one or the other up when we begin to stall and contemplate abandoning our big goals.

That’s where “Why-How Laddering” comes in. If the how isn’t yielding the desired progress, we can “ladder up” to asking ourselves the why. If the why isn’t as clear as it could be, we can “ladder down” to a lower level how until we find something we can accomplish to get a quick win and restart our progress toward the why.

One of my favorite examples entailing this kind of laddering concerns the turnaround of the ailing British prison system. When Sir David Ramsbotham retired from the esteemed position of Adjutant General of the British Army in 1993 and was appointed Her Majesty’s Chief Inspector of Prisons for England and Wales, he inherited a system in a tailspin. Since Sir David’s latitude to effect change was limited to inspection, he couldn’t very well go in and tell the heads of prisons to change their ways. Instead, he had to make things happen by changing things within his domain of control…inspection. He chose to focus on the goal of the British prison system, and the measure of success against which prisons were inspected.

As you would expect, the why of the prison system at the time was to prevent escape, and the logical measure of success was the number of escapees. But as he began to think about the problem, he concluded that the main why of a prison system should not be keeping prisoners off the streets, but rather to make sure they didn’t come back once released. In other words, the new why was eliminating recidivism.

The new why meant a new metric: number of repeat offenders. The winning aspiration? 0% recidivism rate. The new why and corresponding constraint effectively turned the prison system upside down. Sir David challenged the management teams of each prison to significantly shift their focus and to devote their energies toward figuring out new hows: processes and programs specifically designed to rehabilitate the prisoners while they were incarcerated, and better ways to ease them back into society once they were released.

So when February (or April) looms ahead of you and your Fresh Start enthusiasm begins to wane, first figure out whether the cause is related to your why or your how. It may be both, and if it is, you might want to take a page from Sir David and tackle the why first, if for no other reason than the old cliche: where there’s a will, there’s a way.

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GUEST POST from Matthew E May

What Did You Learn From 2017?

Around the end of the year, most of us, and our businesses, tend to slow down just a bit from the normal dawn-to-dusk mad dash. We smile a bit more. We wave people in before us in traffic, and let others with less in their shopping carts go first in the grocery store. And we often look back over the year. In other words, we reflect.

But here’s the thing: most of us don’t engage in reflection often enough, or consider it a tool worthy enough to use regularly. Generally we do a light post-mortem when we fail at something, but too often the goal is simple fault-finding, not deeper learning. And if it’s a case of an unexpected win, mostly we fist bump, high five, slap backs, pop champagne, or some other celebratory dance. There’s nothing wrong with that, as long as we acknowledge there is no real learning in that, because whether we miss a mark under or over, there’s a gap there that demands better understanding.

IF we want to get better, that is.

At this point you might be scratching your head. Allow me to explain.

Introducing Hansei

When I was working with Toyota, I learned the art of hansei (pronounced hahn-say). Hansei is the Japanese word for reflection, but its meaning is closer to introspection. Hansei finds its roots in Eastern philosophy and religion, but it is a profound skill to be mastered. Japanese school children are taught from kindergarten how to perform hansei, and it is a vital part of learning and improving.

The key insight is this: Hansei is performed regularly, as a discipline, irrespective of performance or outcome.

In other words, whether you got an A or a C on your report card, you conduct hansei to better understand the process that lead to the specific result. It’s universal that if you expected an A and got a C, you want to understand why so you bring your grade up. Here’s the hansei difference though: If you got an A but expected a B, that’s a gap worth understanding better. Contrast that to our Western culture, where we would usually just celebrate the unexpected A.

Likewise, hansei in business is a rigorous review conducted after execution of any action, and an important part of personal leadership. It is not about confirmation. It’s a sobering reality check, regardless of a project’s outcome. Were you to attend a hansei meeting following a resounding success at Toyota, you might be shocked a the tone of the meeting: it’s more stern and serious than joyful and celebratory. Yes, the team greatly exceeded expectations. But guess what, that means they didn’t understand their process. Their objectives should have been met. And even if they matched perfectly to the target, the team must still examine the course of action and the interim measures, not just the final outcome.

It took me a while to get used to that, but I came to understand that the high levels of achievement are often centered on mining the little gaps — good and bad — and that done right, the fruit of hansei is new insights which can be used to improve performance, course-correct, set new goals, craft new strategies, and plot new directions. (Still, I admit that I often wished there was a touch more rejoice, not only of great wins but also of spectacular fails.)

The late Peter Drucker suggested a practical reflection method which amounts to a daily routine of recording in a personal journal your key decisions and actions, along with a projection of the expected outcome. You then review your performance and satisfaction, feeding back from outcomes to expectations. He suggested getting additional input from a superior, peer or subordinate.

Over time, trends and patterns appear, revealing often surprising insights about our strengths and weaknesses. Drucker wrote, “I have been doing this for some fifteen to twenty years now. And every time I do it I am surprised. And so is everyone who has ever done this.”

A Simple Routine

I have a simple hansei regimen that I look forward to (most days), one which has definitely yielded some surprises, in the form of both good and not-so-good (okay, truly lousy) ideas.

Here’s what to do:

1. Make time. Try to set aside at least 15 minutes per day to begin with. But don’t be limited either way…if you only have 5 minutes, use it. This first step, as in any journey, is of course the hardest part. Blaise Pascal once wrote, “All of humanity’s problems stem from man being unable to sit quietly in a room alone.” A fairly recent study lends support to his assertion: it appears many people would rather do anything other than spend 15 minutes in a room alone diving into their thoughts…including receiving mild electric shocks!
2. Review experience. I like to use the U.S. Army After Action Review technique of answering three simple questions as they relate to your day: a. What was supposed to happen; or, what did you think would happen? b. What actually happened? c. What accounts for any differences or gaps between what you thought or expected to happen and what actually happened?
3. Spot trends. As time progresses (and after you’ve done this for a while), note any recurring themes, and write down or draw any potential connections among seemingly unconnected things.
4. Riff and project. Think of a few “what if” ideas that come to mind based on the first three steps. Jot down opportunities to test out those new ideas. Take your “what ifs” and turn them into “if-then” hypotheses: what do you think will happen if you do (X)? Make some quick notes — to do’s, not-to-do’s, etc. — that will initiate your thoughts and provide some preliminary direction.

Although hansei is a solitary exercise meant to help you improve your performance and creativity by getting your thoughts and actions better aligned by making them more visible to yourself, the results can certainly be shared with others as you wish, and as appropriate.

I find that it helps if you don’t view reflection as a chore or strictly linear writing exercise, but rather a more freeform, self-exploratory, creative mindfulness activity.

As the first quarter of 2018 winds down, use the art of hansei to surprise yourself!

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GUEST POST from Matthew E May

In my previous article (Why Innovation Remains Elusive), I identified a half dozen obstacles to companywide innovation. I also hinted at a grand unified solution in the form of a strategic innovation system. Allow me ease into it by way of story and analogy.

Most people are familiar with the name Toyota. Most business people are familiar with (or at least not completely ignorant of) the vaunted Toyota Production System (TPS), a much-studied manufacturing approach. Having served as a fully retained advisor to Toyota for over 8 years, I have particular point of view on that system, and, more importantly, why it matters when it comes to a discussion of innovation.

As former Raychem CEO Paul Cook once wrote, “To be an innovative organization, you have to ask for innovation. You assemble a group of talented people who are eager to do new things and put them in an environment where innovation is expected. It’s that simple. And that hard.”

This was my very challenge at Toyota. At the time, the production environment was implementing over 700,000 ideas a year. The non-manufacturing side of the business wasn’t anywhere close to that. Many had tried porting over TPS principles to knowledge work, but had failed because knowledge work is far closer to art than science, even though we like to pretend it isn’t.

I was looking for a toehold, a handrail, anything that would give me some traction. Trying to break things down into component parts…tools, techniques, processes, DID NOT WORK. In the midst of it all I had one of those slap to the forehead moments…not quite a Eureka moment or epiphany but more of a if-it-was-a-snake-it-would-have-bit-me” sort of things. In other words, it was staring me in the face: “It’s the system, stupid.”

If you were to ask a manufacturing executive in the 1950s what kept him up at night, you’d hear a whole host of woes related to quality, cost, and speed: overload, inconsistency, and waste in the form defects, bottlenecks, inventory issues, retooling, line delays, supplier issues, you name it.

It’s easy enough to develop processes and tools and techniques to address one or two of these issue, but collectively? it requires a set of integrated processes, tools and techniques to achieve what I call an elegant solution, which is one that achieves the maximum effect with minimum means.

The elegant solution was the Toyota Production System, defined as “a repeatable system of work designed to produce the highest quality, lowest cost, and shortest lead time.”

Put a pin in that for moment.

I recently asked over 100 CEOs what their greatest challenges, issues, and pain points were when it came to innovation in their organization, irrespective of how they defined innovation. The responses produced the same sort of gauntlet as the one faced by 1950s manufacturing executives. It just had different issues: lack of capability, resourcing, risk, getting started, incrementalism, creativity, fear of failure, executive buy-in, focus, return on investment, alignment, confidence, bureaucracy.

Like production issues, you could easily pick off a single challenge and meet it, but collectively? A elegant solution — a system — is required.

Introducing the Strategic Innovation System (SIS), defined as “a repeatable system of work designed to consistently guide creative concepts from inception to tangible commercial product in alignment with company strategic goals.”

And just as the Toyota Production System under the guidance of a master can be effectively installed in a manufacturing setting, so can the Strategic Innovation System under the guidance of a master be installed in a more corporate setting (as well as a manufacturing one).

Conceptually — in full awareness that all models are wrong but some are useful — the SIS can be thought of as three major gears, constantly moving and feeding both forward and back. Visually it looks like this (to see it in motion click here):

The first gear, Governance, is about clarity, commitment and alignment. The second gear, Generation, all about directed creativity and conceptualizing. The third gear, Go-to-Market all about value delivery and commercializing. One without the others will obviously give lift, but will be insufficient to neutralize the laundry list of issues above…innovation will thus remain elusive.

The real value of the SIS is embedding an ethos of experimentation, the benefit of which is the ability to rapidly learn: because if we know anything, it’s that learning and innovation go hand in hand, but learning comes first.

I’ve pressure-tested this system in the wild with a few select client companies. What makes it work is to think about it just as you would enterprise software: a robust set of field-tested, integrated tools and methods — each of the tri-part gears plays host to a powerful but user friendly toolkit — with complete installation and training to help manage the change, supported by an innovation center of excellence.

Now, some may say that the secret to organizational innovation is “culture.” I wouldn’t argue that at all. It’s just that it is “the system” that lies at the root and gives rise to “culture.” You cannot change a culture without changing the underlying system. The system bats last. It’s what Paul Cook was hinting at.

I aspire to make this system available to anyone interested in transforming their company into a constantly innovating one. One thought is to provide the “system in a box,” with extended guidance and support –live and virtual — and a continuously improving toolkit, on a subscription basis.

If this is of interest to you, please let me know so that I might keep you informed of progress toward public availability.

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GUEST POST from Matthew E May

Recently a reporter contacted me by email, asking several questions about innovation. I didn’t have the time to answer all of them, so I asked him what he really wanted to know. He replied that what he really wanted was a bottom line answer to the question of what makes the most difference in a company’s ability to innovate. As is my inclination, I reframe such questions to be about what isn’t there, versus what is.

Here’s what I wrote back:

If I think about why innovation is so elusive — the things that prevent a company from building deep innovation capability, it would come down to a half-dozen critical things that are interrelated:

1. Innovation identity crisis

Many companies struggle to identify what their innovative strength and style is. Are you a needs-based innovator, meaning you take a human-centered approach like good designers and design thinkers do? Or, are you more market-driven, meaning you’re an optimizing fast follower that takes a more capitalistic approach, exploiting the philosophy behind Christensen’s “innovator’s dilemma” by quickly copying and even improving on game-changing innovations as they hit the market? Or is your strength that of a technologist, like an Apple or Google, constantly on the edge of what’s achievable given technological advancement, be it yours or that of others?

If your organization simply doesn’t know or can’t easily conceptualize which of these categories it falls into, or should fall into, given its bench strength, you run the very expensive risk of “kitchen-sinking” innovation, scattering and squandering your attention and efforts.

2. Unclear innovation strategy

As the previous sentence implies, trying to be all things to all people just doesn’t work, and big outfits have a tough time articulating the answers to the essential questions of strategy: where will you play and how will you win? Like any strategy, innovation strategy is a question of focusing resources, which is something different (albeit a nuanced difference) than prioritization. It’s the ability to identify what you’re going to say NO to. Steve Jobs was great at this. He said he was always proudest of the thousands of things Apple said no to.

3. Inaccessible definition of innovation

When I speak to groups I ask them to show their hands if they consider themselves good problem solvers. All hands raise. I ask for a show of hands for the learners. All hands up. Then I ask the true innovators to raise their hands. Less than 5% raise their hands. It’s because people hear innovation and think: gizmo. Or app. Or code. Or product. Or service. Or feature. They think of innovation as a noun rather than a verb.

The best definition of innovation I’ve ever heard is by JetBlue’s founder David Neeleman: “Innovation is figuring how to do something better than it’s ever been done before.” Dirt simple, and it doesn’t matter if you’re a CEO or administrative assistant…you can innovate at some level (and there are a few).

Without the clear definition of what’s considered innovation, you can’t ask people to innovate and expect an intelligent response.

4. No common methodology

We’re not taught in school to innovate. Just the opposite. The natural curiosity we’re born with and utilize during our first 5 years of existence–which is all about observation, experimentation, and play–gets schooled out of us. We’re taught to get the right answer for the teacher. Then the right answer for the boss. We lose our natural born capacity to learn and create new knowledge.

So you have to unlearn the ways of business execution and reteach what came naturally: define a problem by observing or experiencing it, guessing how to solve it, creating a solution based on that guess, and quickly seeing if what you assumed might work actually does.

Without a common methodology, everything is ad hoc, hit or miss.

5. Methodology doesn’t feature experimentation

Beyond not having a common method, you’ll often find the de facto “innovation method” in reality being mostly an idea execution process, rather than a more scientific one. The mindset can’t be “I know what will work and I’m going to ensure it does.” It has to be “I think this may work so let me try it out.”

Scientists work on hypotheses, which is a fancy term for guesswork. If people aren’t getting their hands dirty out in the field with users and customers, testing early low-fidelity prototypes and adjusting a solution, they won’t be able to truly innovate.

For some reason, the hardest thing for those charged with innovation is to get out of the office, out of their data reports, and do what all good designers do, and what the Japanese call genchi genbutsu (go look, go see): mingle with customers and users and get real behavioral feedback when learning needs and testing concepts. (I’ve even heard senior executives go so far as advising employees to “ignore negative feedback from customers.”)

I learned how important it is to get out more and go face to face with customers while working with Toyota (which to this day stills runs over 1 million experiments a year companywide).

Look, innovation is an outside-in contact sport. If you want to grow something alone in a dark room, go farm mushrooms.

6. Mismatching talent to task

Companies love to move “high potential managers” into roles related to innovation. Bad move. Those folks are great at plans and budgets, aka convergent thinking. They’re great at execution. They’re great at growing lines of business. But what do you think they’re going to do when you move them into the messy and uncertain world of pursuing mysteries and creating something new which, in all likelihood, will fail? They’re going to try to plan, budget, execute, and obsess over revenue realization.

Innovation is about divergence, rapid prototyping, testing and failure. Larger, more mature companies have to figure out how to structure ways for innovative thinkers to break away from the main operation and get back to the metaphorical garage, with the charge being to solve a real problem and design a working prototype under a few intelligent constraints. (There are many such structures.. check out my recent article on Gremlin Groups). If you don’t, can’t or won’t, you’ll end up hiring an outside firm that’s set up to innovate for you. All you’ve done is outsource innovation and allow high potential managers to stay in their power zone of planning, budgeting, and executing.

That’s not necessarily a bad thing, it just doesn’t help your efforts to build innovation capability.

Reversing all of these elements is necessary to develop and sustain innovative capability. That’s why innovation sounds so simple but is yet so hard!

________

How about your organization…any of these symptoms getting in the way?

In my next article, I’ll introduce you to a powerful strategic innovation system that, when done right renders all of the above non-issues. It’s an embeddable approach that blends strategy, design thinking, and lean experimentation, as well as a go-to-market approach.

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GUEST POST from Matthew E May

If I were to ask you what your company/unit/team strategy is, could you answer in a single sentence?

Is that even possible? And even if it is, why would you want to (other than to respond to some smart-aleck strategy facilitator)?

I know it’s possible, and there are several worth reasons for stating strategy in a sentence. First, because every time I ask someone what their strategy is, I rarely get a crisp, clear answer. I usually get a medley of purpose, vision, and mission-like responses. Many times I just get blank stares, shoulder shrugs, and head scratches. Sometimes I’ll get a response akin to either “we have a detailed strategic plan” or “we don’t really have a strategy.”

Second, because a single sentence has real power.

Journalist and pioneering congresswoman Clare Booth Luce once told the story of a conversation she had in 1962 with her old friend John F. Kennedy. According to her story, she told him, that “a great man is one sentence.”

In other words, a great leader can be so well summed up in a single sentence that you don’t have to hear his name to know who’s being talked about. For example, “He preserved the union and freed the slaves.” If you’re an American, you don’t need to be told “Abraham Lincoln.”

Luce challenged JFK to think about his sentence, urging him to know the great themes and demands of his time and focus on them, to have absolute clarity on them.

Luce’s concept is a legacy sentence, a future-back statement, but I believe the same logic can apply to crafting go-forward strategy. That is, to steal Clare Booth Luce’s words, a great strategy is a sentence.

Let’s give it a go.

If you follow my strategy posts you know that my approach to strategy is the one I learned personally from Roger Martin, as contained in his book, Playing To Win. His strategic framework is an integrated cascade of five key questions:

1. What is our winning aspiration?
2. Where will we play?
3. How will we win?
4. What capabilities do we need?
5. What management systems must we have?

To state your strategy in a sentence, though, you really just need the first three parts: winning aspiration, where to play, and how to win. This simple madlib-type plug-n-play is basically a tailored, more specific version of this construct:

“We want to [what to win] in [where to play] by [how to win].”

Your winning aspiration needs to spell out a clear win. It needs to be future-oriented, ambitious, and specific (thus measurable), contain a competitive element, and avoid a play-to-play goal. Your where-to-play needs some element of segmentation. Your how-to-win needs to capture your unique and defensible value proposition, which briefly outlines why you’re a better choice over rivals.

Here are some quick examples:

• We want to lead the U.S. luxury performance sedan segment by offering higher quality and competitive design for one-third less.
• We want to have a top-ranked 5-star property in every market that will support a luxury hotel by providing a home-away-from-home, office-away-from-office experience.
• We want to capture the short-haul air travel market with high-frequency flights and efficient service to secondary airports at a price that rivals driving.

You probably don’t need to be told “Lexus,” “Four Seasons,” or “Southwest Airlines.”

(Note: By substituting “I” for “We” you can craft your own personal/professional strategic sentence.)

Try it. State your strategy in a sentence. Done right, it prompts the questions of capabilities and systems you’ll need to produce the win you aspire to in the space you’ve chosen. It begs strategy’s magic question: what must be true for this strategy to a good one?

Share your sentence with those in your charge. Watch the fog lift. Watch people sign up for the win.

Then when some smart-aleck strategy facilitator asks you what your strategy is, you can look him squarely in the eyes and lay him flat in a single breath.

Now that is a win.

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