The Right Strategy, Part 3

In The Right Strategy, Part 1, we looked at the situation of the newly hired coach whose charge is to build a team that is a perpetual winner. Assuming that the two most important things a coach can manipulate are the team's talent and the system under which they play, we described four possible strategies: Talent Driven, System Driven, Competitive Talent Driven and Competitive System Driven. In Part 2, I asserted that there is no absolute right strategy. There is, rather, a right ownership-coach fit, analogous to a board and CEO fit.

There are, however, strategies that are more or less likely to succeed. But we cannot discuss how to succeed without first discussing how to measure success. As Yogi Berra said, "You've got to be very careful if you don't know where you're going, because you might not get there."

Specific, measurable criteria for success are a key element of any strategy. Consider the opening sentence from President John F. Kennedy’s speech entitled “Special Message To Congress On Urgent National Needs” delivered in 1961: "I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth." He then went on to outline the space strategy for the next decade. From the start, he left no room for confusion about how to measure the success of this strategy. The result of this audacious clarity propelled the nation on a course to success.

Recall our coach whose goal is to build a team that is a perpetual winner. What exactly would a perpetual winner look like? Have a winning record every year? Get to the finals every year? Win the championship every year? Our coach needs to know what the owner means by "perpetual winner." Only then can he can present cost-time tradeoffs and get buy-in on "the best strategy" to achieve the goal.

This can be an iterative process. The vision stays fixed, e.g. "a perpetual winner." The mission -- how to move towards the vision over the next few years -- depends upon the ownership's appetite for cost-time tradeoffs and other considerations. Crafting a mission that ownership and management agree to is therefore the essential step to selecting the "best strategy."

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning

The Right Strategy, Part 2

In The Right Strategy, Part 1, we looked at the situation of the newly hired coach (let's make him a basketball coach) whose charge is to build a team that is a perpetual winner. Assuming that the two most important things a coach can manipulate are the team's talent and the system under which they play, we described four possible strategies: Talent Driven, System Driven, Competitive Talent Driven and Competitive System Driven.

I contend that each of these strategies can be successful. Each has its own pluses and minuses. They differ in how they trade off short-term improvements against how quickly they reach the ultimate goal. They differ in short-term cost versus cost over time, short-term fan satisfaction versus long-term fan satisfaction. These and other considerations can be analyzed. But I believe the main factors that determine which of these is the "best" strategy are which one the coach believes in and which one the ownership is willing to support over the long term. Focus, tenacity, commitment and endurance are the essential success factors.

This means that getting ownership and management on the same page is critical (I have intentionally oversimplified and left out the general manager who sits between ownership and coach to make the example less complicated). Ownership's task is then to find a capable coach whose strategy they will support over the long term. The coach's task is to work for a team whose management will support his strategy.

Some coaches are flexible and can implement different strategies given different ownership priorities. Some cannot. Some owners can back different strategies and handle the trade offs they imply. Some cannot.

There is no absolute right strategy. There is a right ownership-coach fit. The analogy to a board and CEO is if course the point of the example.

There are, however, strategies that are more or less likely to succeed. Stay tuned for more on this.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning

The Right Strategy, Part 1

Strategic planning is not the quest for the "right strategy." There is no such thing. Let me illustrate this by a sports example that should be familiar to most sports fans.

A new coach is hired to take over a floundering team. The vision is to build a team that is a perpetual winner. Let's assume that the two most important things a coach can manipulate are the team's talent and the system under which they play. There are many strategies this coach can use that can succeed. Here are some of them:

Talent Driven
Using a talent-driven strategy, the coach assesses the talent the team has and designs a system that takes maximum advantage of that talent, utilizing their strengths and minimizing their weaknesses. As the team's roster changes over time, the coach adapts the system to the changing pool of talent.

System Driven
In a system-driven strategy, the coach implements a system that he believes is superior. Players who do not or will not fit into the system are replaced with those who can and will. The roster is continually adjusted to better implement the system.

Competitive Talent Driven
The competitive-talent-driven coach assesses how the team matches up with the talent of the best teams in the league, then works on roster changes that improve those matchups. The coach then designs a system that takes maximum advantage of that talent, utilizing their strengths and minimizing their weaknesses. As the nature of the competition changes over time, the coach changes personnel and, as a consequence, the system.

Competitive System Driven
The competitive-system-driven coach assesses the strengths and weaknesses of the other teams in the league, then devises a system that exploits the weaknesses and defends against the strengths of the best teams. Players that do not or will not fit into the system are replaced with those who can and will. The roster is continually adjusted to better implement the system. As the nature of the competition changes over time, the coach changes the system and, as a consequence, the personnel.

Each of these four strategic approaches can work. Each can fail. No one of them is the "right strategy." Which to chose? We'll look at that in a future post. Stay tuned.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning

Complementing Your Strategic Leadership Style

Your Strategic Leadership Style describes how you behave as a leader with regard to strategy. An honest assessment is important because, face it, you are who you are and this is but one measure of your leadership traits. The first reaction of CEOs who do not fall in the Strategist quadrant is often to vow to improve ("Every day in every way I will be more farsighted and proactive") or deny the importance of the whole issue.

These are unhelpful responses. As the article "In Praise of the Incomplete Leader" in February's issue of Harvard Business Review well states:

It's time to end the myth of the complete leader. Those at the top must come to understand their weaknesses as well as their strengths. Only by embracing the ways in which they are incomplete can leaders fill in the gaps in their knowledge with others' skills.

Missionary
If you fall into the Missionary quadrant, you are in the company of most successful business leaders. Complement your skills by adding a Mystic or Strategist to your senior management team. Partner with them to marry your proactive inclinations with their ability to craft a farsighted vision of where your planning efforts are taking the business. The hard work for you will be to get this person on the same page with you and commit to the vision they can visualize and express better than you can. Let them articulate the vision, much as you let your CFO articulate the financial state of the company.

Mystic
Similarly, CEOs who are Mystics should partner with a Strategist or Missionary. You have the vision and need them to craft the plans needed to make it happen. This often turns out to be the classical CEO-COO relationship. Getting and staying on the same page is your chore here.

Caretaker
If you are a Caretaker you are also in the company of many successful CEOs. You need help with vision and planning, and your success is due to other areas in which you excel that are not related to strategic leadership style. Your ideal executive partner is a Strategist. Your challenge is to let them lead in both areas and focus on your other strengths.

Keys To Success
The keys to success in complementing your strategic leadership style are getting and staying on the same page and letting each of you do what you do best. This implies a high level of mutual trust and respect, excellent communication between the two of you, and clarity on roles and responsibilities. These relationships require ongoing attention and management, and rock-solid commitment.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning

Is It PC To Call It Tribble Traffic?

"More and more Web 2.0 start-ups are running into a surprising problem: too many customers." So starts an article in last Friday's San Jose Mercury News. The article goes on to focus on the problem of sites that are popular with people in countries advertisers are not interested in. Their traffic clogs the site and thus adds costs. It is also discounted when valuing the company because advertisers want to pay only for desirable segments.

These companies do not like to talk about this problem. As the article asks, "who wants to suggest some users are less valuable than others--even though it may be true?" It seems it is not politically correct to call undesirable web traffic Tribble Traffic. Tribble Traffic is web traffic that grows like crazy and consumes huge amounts of infrastructure resources, but is maddeningly hard to monetize.

When the entrepreneurs who build these companies finally figure out how to monetize their ideas, they discover that they can build a viable business model around only a subset of their users. The problem is that they cannot segment the valued traffic without alienating most all of their users. They similarly cannot capture enough demographic information to segment their traffic for advertisers without user rebellion. The Tribble Traffic is increasingly costly to serve due to diseconomies of scale.

The web places no physical barriers to who comes into your store. You are open to the world. Worse, one man's tribble is another man's target customer. In dealing with this and being shy about discussing it, the online industry shows its immaturity.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning

Attacking The Crown Jewels Is Released

I am very pleased to let you know that my new book on competitive strategy, Attacking The Crown Jewels, is now available on Amazon.com. This book introduces the Strategic Competitive Defense Planning process and the Crown Jewels Attack strategy. Highlights of the book include:

• The dangers of competitive self-delusion, and the three-step cure
• The three key factors that determine which competitive threats are truly strategic
• How to use the Crown Jewels Attack to divert your competitor’s resources away from the threat you fear
• How to use the step-by-step Strategic Competitive Defense Planning process
• The eleven steps to assuring attack success

I also want to let you know that my company, the Crown Jewels Group (http://www.crownjewelsgroup.com/), provides consulting services for the Strategic Competitive Defense Planning process and the Crown Jewels Attack strategy. Please visit our web site and subscribe to our free newsletter.

Readers of Bookman's Business will find some of the material in this book familiar. Some of the ideas and examples were originally developed in this blog. I greatly appreciate all of you who have provided feedback. It has sharpened and expanded my thinking. I trust that will continue.

Click here for more information about Attacking The Crown Jewels.

Click here to order Attacking The Crown Jewels.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning, Attacking The Crown Jewels

Strategic Leadership Style

What traits make some leaders strategists while others who talk of strategy fall short of the mark? I've wondered about this ever since I read Mike Robert's book The Strategist CEO about 20 years ago. I got to thinking about this more seriously while I was writing my book on competitive strategy, Attacking The Crown Jewels. While it did not fit in the book, I do think I have an answer.

There are many traits that are common to effective leaders and models that can be used to understand various leadership styles. Two traits stand out as predictors of strategic leadership: vision and planning.

Vision is about creating an inspiring sense of purpose. Visionary leaders answer the "why" question clearly and simply. They articulate a long-term, overarching goal and stick to it. Those low in this trait answer the "why" question in various ways that net down to this: "we do it to survive."

Planning is about proactively answering the "what, who, when, where and how" questions. Planning leaders spell out a clear roadmap of how to move forward over the next few years. Those low in this trait are reactive and take a tactical approach. They wait to see what happens before committing the troops to a course of action and repeat this again and again.

A leader who is high in vision and planning is a strategic leader. This leader inspires the organization with a worthy goal and shows them how they collectively are going to advance towards it.

A leader high in vision but low in planning is a mystic. This leader can inspire followers with a worthy goal, but cannot reveal how to get there. The path is defined by following the leader, who is making it up as they go along.

A leader high in planning but low in vision is a missionary. They lay out a clear roadmap that the organization can follow but do not inspire passion except in those who love to follow a roadmap regardless of the destination.

A leader low in vision and planning is a caretaker. They deal tactically with each issue as it unfolds with no sense of purpose other than to keep going, wandering aimlessly where momentum takes them.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning

Odds and Ends

Some updates on topics we've been following:

Google's JetBlue Stumble
Many Google service users yesterday experienced hours of outages or slow service, many for up to ten hours. This seems to especially have impacted Gmail and Blogger users. Google's statements about this were vague and lame. They neglect to mention that some Gmail users lost messages.

Google does not seem to understand how to handle this sort of thing. There is no single place a user can go to get clear, accurate, understandable network or service status information for Google services. When information is made available, it is vague. This comes as Google rolls out "Google Apps Premier Edition" in an attempt to get businesses to switch from Microsoft Office. This will go nowhere as long as Google leaves its users stranded on the runway for hours or cancels their flights--oops, sorry, wrong company, right analogy

Oracle Buys Hyperion
Larry Ellison continues to bulk-up Oracle with the $3.3 billion purchase of performance management leader Hyperion Solutions. This move further expands the depth and breadth of Oracle enterprise business applications. Oracle continues its role as the consolidator in this market. After absorbing rivals Seibel Systems and PeopleSoft, Ellison has methodically added targeted capability in niche after niche. His buying spree has resulted in thirty deals and cost over $20 billion. Meanwhile, rival SAP seems stuck looking inward at its management succession and development issues.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning, Google, Oracle