Center for Simplified Strategic Planning

Category: Strategic Thinking

  • Where are you on the Technology Curve?

    Where are you on the Technology Curve?

    technology life cycle curve
    technology cycle curve (source: Wikipefia)

    New technologies follow a fairly well-understood “curve”.  We can think of these curves in terms of profitability, but this is oversimplifying things.  Much of the thinking about technology curves in the business world comes from the work of Nikolai Kondratiev in the 1920s.

    The Kondratiev Curve

    In his work, Kondratiev suggested that there are long-term cycles of economic development and growth, characterized by periods of prosperity and innovation followed by periods of stagnation and decline.  These periods are driven by technological innovation.

    During the periods of prosperity, known as Kondratiev upswings, there are rapid advances in technology and infrastructure, as well as increased productivity and economic growth. These upswings are typically accompanied by new inventions and innovations that have a significant impact on society and the economy. For example, the Industrial Revolution, which began in the late 18th century, is considered a Kondratiev upswing.

    In contrast, the periods of stagnation and decline, known as Kondratiev downswings, are characterized by slower economic growth, decreased innovation, and declining productivity. These downswings are typically marked by economic crises, such as recessions and depressions, and may be accompanied by social and political instability.

    Technology Curves in Strategy

    While the application of this theory to economic thinking may have drawbacks, it is quite useful in understanding the path of a specific technology in an industry.  Technological adoption and improvement in the early years of a technology tends to lead to rapid growth and profitability for the key players in an industry, while the downswings can indeed lead to crises an instability.

    In the business world, most of the darling companies of the past 50 years have been companies in the upswing part of the cycle.  This make sense, since the way most analysts value stocks relies heavily on the Black-Sholes model and puts a premium on growth.

    Strategically, if you are in the upswing phase of your technology, congratulations.  Your business is likely to be viewed favorably by investors and your main focus should be market share over anything else, including profit.

    When your technology reached the top of the curve and begins the downswing, your strategic priorities should shift.  At this point, market share is still a priority, but profit becomes much more important as your industry shifts from building the technology to exploiting the technology.  Efficiency, execution and branding become much more important in this phase, and growth may be best achieved through identifying and exploiting niches or consolidation of the industry.  If your business has geographic elements, you may also want to seek growth through geographic expansion.

    Understanding where you are on the technology curve can be a critical element of setting good strategy.  Simplified Strategic Planning offers a tremendous advantage for setting and executing such strategies.  If you’d like to book a workshop on the process and its application in your organization, contact us at www.cssp.com/inhouse-workshop/

  • Push Strategic Growth with the 20% Rule

    If you’re familiar with Google, you may have heard of the 20% rule they’ve followed since their early days as a startup.  The simple rule says that every key employee needs to spend 20% of their time on projects that have no immediately visible payback for the company.  While 20% may seem like a lot, this rule led to the development of Gmail, Adsense and other products that made Google the profitable giant it is today.  Google executives credit this approach with much of their strategic growth over the years, and they consider it an important part of their culture.

    Activities that meet the 20% Rule criteria are not just about product development.  Outside reading, professional development and developing networks are often seen in this category.  Basically, anything you see as beneficial, but not immediately so, could be pursued under this rule.

    Why would this rule help a company?  To begin with, it corresponds with attention to truly strategic initiatives.  As I’ve said many times, really strategic things are very rarely urgent, and they often don’t lead to an immediate payoff in profit.  The 20% rule gives employees permission to take a break from the “must do” pressures of the day to give time and thought to things that will add to your strategic growth and competitive advantages in the future.

    A second benefit of the 20% rule is that it opens a space where employees can think about the future.  If you aren’t focused on urgent things, the important things often come into much sharper focus. This can be an important way to encourage strategic alignment with employees.  This mental orientation can be very useful in encouraging strategic growth.

    It would be a mistake to miss pointing out that this rule also leads to a more capable workforce with better morale.  If you function in a heavily information-oriented industry, the value of these things are quite high.  Your strategic competencies reside in your people, and happy, growing employees are definitely more valuable.

    Finally,  rotating your attention away from your normal routine has been shown to be a great way to enhance both productivity and creativity.  This means that – even if their 20% efforts never pay off – employees will end up doing their routine responsibilities more effectively.

    How can you implement the 20% Rule in your company?  To begin with, it can be baked into job descriptions for many positions.  In addition, a good CEO can include this in his or her evaluation of managers, so they know they are expected to encourage this approach.

    Strategic Growth

    To do this well, however, you will also need to appreciate the capacity of your human resources, and take care not to overload people with routine “must-do” tasks.

    In the Simplified Strategic Planning process, we examine and budget time as a critical resource in implementation.  This activity – in meeting three of the three-meeting schedule – is a great place to examine how the rule is being observed.  It’s also a great activity to use to encourage appropriate use of the 20% Rule.

    You may also want to take a moment to ensure your strategic objectives include some longer-term targets.  One of the great benefits of strategic planning is that it can lead to much better execution on ideas that don’t create immediate benefits.  You can use your strategic planning process to push your team farther into the future.

    Have you used an approach like the 20% Rule at your company?  How has it contributed to your strategic growth? I’d love to hear your stories and discuss how you might get even more benefit from such practices.

  • How to use multiple scenarios in planning

    Scenario planning can be a very important part of your strategic plan. One question that sometimes comes up is should I use a single scenario or multiple scenarios? Another question is with more than one, how do you choose what the scenarios are?

    use multiple scenarios in your planningShould you use more than one?

    A single scenario is the basic approach that we use in Simplified Strategic Planning. This is because, in many instances a single scenario gives us a good snapshot of the future we expect to happen. There is no need to use more scenarios if there is little chance of great variations in the future of your industry.  There are however often situations where different possibilities will lead to very different outcomes.

    To determine if you need more than one example, take a look at the basic expected outcome. Are there any highly likely changes that may or may not occur that would dramatically change that outcome? If there are, you should consider having two or more scenarios.  We use the Industry Scenario to create the Winner’s Profile (page 4.8 in the Simplified Strategic Planning Manual), an outline of the traits of a company that is most likely to success in that situation. Multiple scenarios are most useful when the resulting Winners’ Profile would be dramatically different between the resulting scenarios.

    Useful categories for scenarios

    Here are some examples of future categories that I have found useful when working with companies:

    1. Event based scenarios.  This is useful when there is an either or event that could happen, eg. the passage of a new healthcare law, an election, or the approval of a new drug.
    2. Best case worst-case most likely scenarios. This is useful when there’s a great deal of uncertainty and a wide range of possibilities. For example in my April article on Covid, I speculated on three outcomes for the Covid pandemic, and some clients have used this approach basing scenarios on variables like the price of oil.
    3. Alternate trends . This can be useful when you see major trends in an industry that may lead to wildly different outcomes. In several cases, I have worked with teams that could not choose whether their markets were going to become more specialty oriented or commodity oriented. Another divergence would be whether your industry is going to consolidate or become more fragmented.

    Keep it simple

    While this list is not exhaustive, the three approaches above are both the most common and the most useful.  Generally, you should keep the list as simple as you can.  It’s good to encompass markedly different outcomes that could happen in the future.  It’s not useful to create multiple scenarios covering small variations in outcome.  This is especially true if the resulting Winners’ Profiles are virtually identical.

    If you would like to explore which approach to planning would work best for your company the team at Center for Simplified Strategic Planning offers the best team based strategy facilitation you can get.

     

  • Make strategic thinking easier

    You’ve seen it happen, perhaps dozens of times:  A company makes some choice that looks good on paper, but leads to major strategic problems.  No one is immune to this problem, because good strategic thinking is hard.  Why is this?  And how can we make strategic thinking easier?

    strategic thinking is hardThere are three basic reasons why good strategic thinking is hard.  They all revolve around the way our brains frame decision making.  Thousands of years ago, our ancestors had very real problems that were more important than strategic thinking.  All the strategy in the world won’t help you if you’ve been eaten by a lion.  Much of our nervous system is finely tuned to this critical survival situation – even though we rarely will encounter such situations.

    1. Your brain is looking for a lion, and there is no lion

    In addition to being eaten, ancient humans had to do some things regularly to survive.  Getting enough food was a constant, serious issue.  This led much human behavior to be structured around scarcity, and making sure there was enough to survive.

    2. It’s easy to forget that you aren’t starving

    Finally, even in modern life, it is easiest to think about things in simple, immediate ways.  “You can never be too rich or too thin” suggests that very important things can always be thought of as quantities, and that you always want more.  If a few deer are good for hunting, a massive deer population should be even better – except it isn’t.  Populations have limits, and very large populations bring problems – like disease – that small populations never have.  Likewise, cutting costs leads to higher profit, until it destroys the trust customers have in your brand.

    3.  It’s easier to always seek more than it is to understand the right amount.

    These are not problems that come from too little knowledge, or lack of rigorous thinking.  They are problems that come from thinking the way we normally do.  Most of the time, our thinking seems sensible because it is either reacting to the world around us, or it is tactical thinking.  This kind of thinking often yields great results, in the short term.  In strategy, this kind of thinking can lead to disaster.

    So, how can we stop thinking this way and think more strategically?  Is there a way to ignore a million years of evolution and force our brains to focus on a different approach?  The simple answer is yes, but it can be difficult.  Here are three simple changes that make strategic thinking easier.

    1. Zoom out

    To get away from looking for lions in your strategic thinking, back away from the immediate problem.  A lion will dominate your thinking when it’s close, but when you are a hundred miles from any lions, you can start to think about how to avoid lions completely.  One great way to do thing in business decisions is to ask yourself to play out the effects of your decisions over a very long period of time.  Will your choice still have benefits in 10 years?  How could it create problems?

    2. Look for abundance

    Instead of thinking in terms of starvation, strategic thinking should emphasize creating plenty.  Let’s say your choice requires more money, for example.  Where could that money come from?  Why would money flow in to your company to pay for things?  In many cases, examining the systems that surround your business decisions can lead to strategic changes that change the game from scarcity to abundance.

    3. Find the dichotomy

    When examining strategic decisions, you can easily see a bigger picture by finding the limits of your choices.  What would happen if the labor cost were zero?  How would customers respond to more expensive raw materials at a higher price?  Much of our world reflects a balance between two forces – the desire of customers to get the best products and services they can, and the desire of customers to spend as little money as possible.  Seeing your decisions as a way to anchor your brand to a point on that continuum will help you avoid some of the disasters that come from a “more is better” approach.  The key to this approach is finding where the tension lies in your own markets, and expressing it as a choice between two extremes, like “cheaper or faster” or “convenient or enjoyable”

    These are just a few ideas about how to think more strategically in your daily life.  If you’d like to learn more about strategic thinking and make strategic thinking easier for your team, attend our 4 hour webinar on Strategic Thinking on September 18, 2020.  You’ll be glad you did.

     

     

  • Strategic Performance

    One of the great challenges in executing a strategic plan is getting the team to perform and be motivated by the strategy. Indeed, strategic performance in implementation is the achilles heel of strategic planning.  It’s common to hear people say “We did strategic planning, but it didn’t change anything.”  Obviously, the way you approach strategic planning should be oriented to getting better strategic performance from your whole organization. It turns out that by looking at things that enhance individual performance, we can find corollaries in team performance that are very useful for executing your strategic plan.

     

    We often pay so much attention to the strategy that we disregard the challenges of execution.  By thinking about how you can enhance the performance of your executive team in strategy implementation, we can achieve much better results.

     

    There are three main elements that will increase your teams performance in a strategic plan. These elements are

    1. Midpoint goals.
    2. Visualizing immediate success.
    3. Framing a strategy uniquely.

    Strategic Performance from Mid-point goals

    Focusing on midpoint goals is common sense in many situations. If you are looking for a spouse, you don’t run into a crowd of people and start introducing yourself as a prospective future spouse. A commonsense approach to this is to take the process in steps. That means you start with an introduction.  Once you are introduced, you don’t propose marriage – you propose a date, and then maybe some more dates. There are two reasons why this works. First, we make much better progress if we work towards the small steps that lead to the big change. Second, people can feel overwhelmed by a seemingly impossible large goal. While some people who thrive on an audacious goal, most people will feel overwhelmed.  They may not take action on an audacious goal unless you give them concrete steps that they can take today that way I have a payoff in the near future.

    In Simplified Strategic Planning, we achieve this result in two ways.  First, we set annual objectives that are possibly intermediary steps to achieving the longer-term vision.  Second, we create action plans by splitting those objectives into smaller, more easily attained steps.

    Strategic Performance from Visualization

    The next approach, visualizing success, has some excellent examples available in real world business. For example, consider the pink Cadillac used at Mary Kay cosmetics. Leading salespeople are shown pink Cadillacs owned by higher level salespeople in the organization. These pink Cadillacs are awarded by the organization to salespeople who surpass $1 million in sales. At sales events, salespeople are encouraged to experience the reward.  They don’t just look at the pink Cadillac but get behind the wheel and imagine themselves getting one of these for exceeding $1 million in sales. This visualization creates an immediacy of the reward and starts the brain down the pathways that lead to the ultimate achievement.

    A skilled facilitator will use this visualization technique in several points in the strategic planning process.  For example, when thinking of opportunities, it’s useful to ask the team to imagine a successful future.  By thinking about how they reach that point, the team will have an easier way to identify strategically useful opportunities.

    Strategic Performance from Re-framing

    The third technique, reframing is as useful as a strategic tool as it is as a motivation and performance tool. The idea here is to reframe what your company is doing.  It’s best to do this uniquely so that people think of themselves as doing something interesting and unusual. The reason this is often a good strategy tool, is that reframing often helps reorient the organization.  For strategic purposes, we want to move towards an entirely different approach to competing in the marketplace with this new orientation. A good example of this is Southwest Airlines in the 1980s.  Southwest famously began thinking of themselves not as competing with other airlines, but as competing with the bus and the train. This reframing was built around and understanding of competing and serving the fundamental need of the customer, rather than focusing on the way that need is met.

    Strategic Performance Improvement

    The application of each of these three approaches has been demonstrated to improve individual performance. In Clearer, Closer, Better: How Successful People See the World, by Emily Balcetis, we see examples of controlled studies of individual performance varying tasks, whether athletic or mental in nature.  These studies showed that these three techniques can measurably improve how well people perform.  By using these techniques with your team, you should also be able not just to motivate the individuals in the team but you enhance the performance and the alignment of your entire management team.

    If you would like to apply these approaches to your own strategic plan in a way that will yield better implementation and more effective growth and profitability, click on the link below to attend our next virtual program on strategic thinking, or contact us to discuss how we can actually turn this into reality in your organization through the strategic planning process

     

     

  • How to Predict Trends by Finding Limits

    In the first two articles about predicting the future, we looked at types of curves and leading indicators.  These tools are useful ways to predict trends, but tends have limits, too.  Today, we will look at the types of things that disrupt predictions made with the first two tools – or any other tool.predict the end of a trend by finding the limit

    In general, if we understand how to find the type of system or curve shape we are dealing with, we can make much better predictions than most people.  One of the biggest gotchas that can occur using this approach is that systems always have limits.  Limits can be a powerful tool for understanding when trend and systems based predictions are most likely to fail.

    Predicting Trends in the Dotcom Boom

    Think back to the mid to late 1990s, as an example.  The US economy was growing by leaps and bounds, and the early dotcom players were the darlings of the stock market.  Stories of startups reaching huge market valuations in three or four years dominated business news.  Many of these companies were bought and sold – privately or publicly – for multiples of earnings that astonished people with experience in finance.

    In terms of curve shapes, this was clearly a period where we saw the effects of the geometric curve.  The growth in adoption of internet-based behaviors was a clear driver of growth in dotcom businesses, and the numbers were staggering.  The internet access service AOL grew from users in the tens of thousands in the beginning of the 1990s to 1 million users in 1995.  By 1996, AOL had 5 million users, and the numbers seemed to be increasing more every year.  Three years later, they had over 18 million users, and AOL was one of the biggest growth stocks of that period.  Companies like Yahoo, Amazon and Priceline were seeing similar growth.

    Along with this dizzying growth came astronomical market values.  Stocks in internet businesses commonly traded at multiples exceeding 50 times earnings.  This happened because many pricing models used the anticipated growth rate in earnings to value a company’s shares.  Clearly, businesses that were seeing 500% growth in a single year must be worth much more than “normal” businesses that saw only 10 or 15% growth.  In the early years of the dotcom boom, these investments payed out handsomely.  Many investors who liked to predict trends clearly saw big growth in these markets, and invested accordingly.

    Growth Plateaus

    Unfortunately for many investors, between 2000 and 2005, most of these companies saw their growth plateau.  As the growth rates slipped, market valuations began to tumble, and dotcom companies that had seemed poised to take off were often sold at a fraction of their earlier valuations.  This was clearly a visible, understood and heavily analyzed market, by this point.  So what happened to the predictions that led to such heavy investing?

    To understand this, we need to think about what drove growth in these markets.  In this case, the growth was massive adoption of a new technology – internet access.  In 1989, only the most bleeding-edge tech-savvy households had modems, but by 1999, nearly 1 in ten households in the US were paying AOL for internet access.  This suggests a very important factor for growth by technology adoption – the portion of the possible market that is currently using the technology.  Unfortunately for AOL, there was a limit to this adoption.  Simply put, the limit was the number of households in their market.  As the technology got closer to this limit, the cost of converting non-users to users started to rise, and new forms of resistance to adoption emerged.

    Predict Trends with Limits to Growth

    This point – where growth tapers off and new growth is limited by the population, is where the technology of internet access nearly reaches its limit.  Growth in the technology may still exist, but the markets are mostly saturated, and new growth will be driven by new products, services, and technologies.  By 2010, AOL was no longer a growth stock, and its place was taken by players like Netflix, who was riding a new was of adoption fueled by broadband internet access.  With the new technology, a new geometric growth curve revved up, and the tech market was once again dominated by the growth of user bases.

    When we set out to predict trends, how do we see these limits before they happen?  Simply put, we need to ask the question “What would stop this curve from going up this quickly forever?”  In most cases, the population involved is a reasonably hard limit.  The number of people in the world who have mobile phones cannot reach 20 billion because there aren’t that many people.  Sales of high-end private jets are unlikely to exceed a few hundred because the number of billionaires is similarly limited.  And right now, it’s safe to assume that the number of people infected with the COVID virus cannot exceed 100% of the population.

    When looking for limits, ask what else might reduce the absolute maximum.  For example, internet adoption can be limited by more than population.  Luddites and other people who abstain from the use of technology, for example, are always there, as are people who can’t afford private jets, or are afraid to fly.  Quick estimates of these proportions will help you estimate the level of any limit, especially in business forecasting.

    When you predict trends in your future growth plans, it may help to work with experienced professionals who have a strong track record of planning for the future.  If you’d like to learn a systematic approach to strategic planning that will help you incorporate some of these ideas, attend our day long online workshop on Simplified Strategic Planning, on August 10.

  • Predicting with leading indicators

    We can improve our predictions in strategic planning by predicting with leading indicators.  You may have hear of the Composite Leading Indicators, a statistic used by the Federal Reserve to predict recessions.  This tool is a good way to anticipate changes in a dynamic system.  Choosing important leading indicators for your business may be simpler than it would appear.

    The first step in understanding leading indicators is to recognize the shape of the curves predominant in your system.  As mentioned earlier, there are three basic types – stable, oscillating and geometric.  Most important assumptions we will have to make will involve stable and oscillating curves, as geometric curves tend to reach some limit fairly quickly.

    If you are looking for leading indicators for a stable change, you’ll want to look for any event or change that tends to happen before change in your industry.  For example, food consumption in most countries will grow with the population.  While babies don’t usually consumer lobster, for example, it’s fairly easy to predict that a part of the population will want to eat lobster some of the time when they are older.  This means that an increase in births will be followed by an increase in lobster demand – a few years later.

    This approach can be applied to many markets with fairly stable demand.  Appliance sales, for example, have two components – appliances bought for new dwellings, and appliances purchased to replace old appliances.  Both can be predicted relatively well with information about new housing construction and appliance longevity.  This type of correlation can be complicated by the fact that one of the components – new housing construction – may be affected by how easily people can purchase new dwellings.  Even so, good predictions can be made about appliance sales based on these two factors.

    predicting with leading indicators - auto sales 1951-2019With oscillating curves, you have a slightly more difficult task predicting with leading indicators.  This is because the wavelike form of the oscillating curve can vary a lot in both frequency (the number of waves per time period) and amplitude (the distance between the top and the bottom of the curve).  Usually, we can understand both by examining historical data.  For example, if you look at the graph here, you see data on car sales in the USA from 1951-2019.  You can see that there is clear oscillation, largely driven by purchasing ability.  While the frequency varies from decade to decade, there is a clear 3-5 year space between the peaks in the curve and the valleys that follow in most cycles.  This would be a decent frequency to assume for future cycles in auto sales.

    The amplitude of this curve is a little more difficult to estimate.  In this time period, we see swings by as much as 3 million vehicles, but we also see some cycles with swings of only about 1 million vehicles.  In addition, some upward swings are small while the downward portion is much larger.  Still, it’s reasonable to assume that future swings will be in the 1-3 million vehicle range.

    For accurate leading indicators, you would need to examine any data you can find relating to things that would explain the shift from increase to decrease in the curve.  For auto sales, it’s practical to assume a large part of this oscillation is driven by the economy.  Indeed, the decision making process in purchasing a car usually starts with an assessment of whether a new vehicle is affordable.  This means that personal income and interest rate numbers would make good leading indicators.  It also means that the things that cause upward and downward shifts in those numbers are likely to set the frequency of the auto sales numbers.

    A simple way to help predict such oscillating numbers, then, is to ask what leading indicator shows us the inflection point – where the curve shifts from up to down, or down to up.  This will make predicting with leading indicators much more useful with an oscillating curve.

    Looking at our predictions for things like sales and costs can be a critical part of strategic planning.  If you’d like to improve your own understanding of making assumptions and using them in your strategy, you’ll want to attend our live online seminar on Simplified Strategic Planning.

  • How to make better predictions 1 – the shape of the curve

    How to make better predictions 1 – the shape of the curve

    One of the things we cannot avoid in strategic thinking is making predictions.  While predictions, being assumptions, inevitably carry the risk of error, there are things we can do to make better predictions.  When you can match an understanding of future trends with a clear vision, your plans are much more likely to be successful.

    Making better predictions with curvesIn any complex system built around process flows and limits, we can graph changes over time.  It’s common to refer to a simple XY graph over time as a curve, and the behavior of curves is a very important part of understanding how these systems will change.  If we want to predict automobile sales, new technology adoption, population trends or even the stock market, some simple ideas about the shape of these curves can lead to much better predictions about the future.

    Common curve shapes

    There are three common curve shapes we encounter.  While I won’t go into the math, it’s important to remember these shapes can be combined to yield other, different shapes.  The three basic types are stable, oscillating and geometric.  The stable curve is just what it sounds like – basically a straight line.  It can have a flat slope – growing arithmetically over time – but it doesn’t do the kinds of ups and downs we often see in graphs of the economy or the stock market.  It’s fairly easy to make better predictions with a stable curve because the slope clearly indicates the rate of change.

    Oscillating curves

    The second curve shape, oscillating, is very common in complex systems.  This is because complex systems change behavior as limits are approached.  As an example, consider a population of squirrels on an island.  When food is plentiful, the population soars, but when the population reaches a certain point, there is not enough food, and starvation results.  This leads to a crash in population, and the cycle can start all over again.  When you see a graph with consistent undulations, like a sine wave, you are likely seeing a depiction of an oscillating curve.  If you are forecasting around an oscillating curve shape, you can make better predictions by knowing the causes of the cycles you see in the curve.

    Geometric curves

    The third curve shape is geometric, and it’s common when looking at short term changes, but uncommon over the long term.  This is because the geometric curve represents something that is growing at a geometric rate, where each succeeding time period has a higher rate of growth (or decline).  The reason these are rare over long periods of time is that limits often arise that cause the curve to peak out.  Interestingly, the curve after the peak may either become stable and flat, or decline precipitously.  When there is a repeated cycle of geometric growth followed by geometric decline, we get an oscillating curve.  This means that if you following a geometric curve long enough, you’re likely to see it become and oscillating curve or it will plateau, looking a lot like a simple step up or down.

    Example of curve shapes in analysing change in an industry

    The reason we want to understand these shapes is that curves can be fairly predictable.  Here’s an example:  in 2000, air travel was becoming less expensive and more pervasive.  The price competition in the industry combined with the ease of online booking was driving a steady increase in passenger miles.  This was not a geometric growth, but it was a positive time for volume in the industry.  Some heavily travelled routes, like New York to Boston, were seeing hourly flight departures that suggested the whole industry was beginning to resemble commuter bussing.  On 9/11 in 2001, terrorist attacks cause a dramatic downward step in that curve which lasted months.  As the industry recovered, restrictions, higher costs and economic pressure shifted the entire curve downward, but it did resume its upward trend – at a slower pace.  If you were a supplier to that industry, or simply invested in airline stocks, understanding this behavior could lead you to some astute observations about the future of the industry.

    This kind of prediction is exactly the kind of thing we need to do in our strategic thinking.  While no one can predict the kind of disaster that leads to a step down, it was useful to note that the effect of the attacks was a sharp step down followed by lower stable growth.  An important question for your business is what the curves you see will do in the next few years.  Do you anticipate a dramatic step up, a flat upward trend, or an oscillating curve that may slope upward?  One of the most important ways to make these predictions well is to understand the real world factors that lead to these different shapes.  If you can accurately assess the dynamics of your environment, it’s possible to do an excellent job of thinking strategically about where your organization should go.

    If you are considering new directions for your organization, now is an excellent time to bring new strategic thinking into your strategic planning process.  Our online seminar is a great way to learn more about strategic thinking and how to beat or avoid your competition.

  • The Eleventh Critical Skill in Strategic Thinking is Patience

    Patience in Strategic Thinking
    Patience in Strategic Thinking

    The eleventh critical skill in strategic thinking is patience – the ability to wait.

    This is not just waiting to act – it is about waiting to judge and decide an issue. This critical skill is important for three key reasons.

    1. Great strategic thinking requires adequate thought and information.

    Both information and thought require time to develop well.  When we skip building the foundation of data and analysis, we may very well arrive at a faulty decision.  We also may fail to understand why the decision would work – or why it wouldn’t work.  This thorough understanding builds both support and confidence in the decision.

    2. The strategy that is quickly visible is often the exact same strategy your opponent thinks of.

    “Knee jerk” strategy is far too common.  The process of gathering information and analyzing possibilities is work, and it takes time.  Both of these may be avoided by people who just want to “get to the answer”.  There is a very good chance that competitors are showing the same impatience.  Therefore, a little extra time will help you anticipate their strategies and devise an approach they haven’t prepared for.

    3. It is often possible to devise a superior strategy with just a little more thought and information.

    Quite simply, information and analysis are the building blocks of good strategy.  An overwhelming amount of data won’t help you strategize better.  The right information and analysis, however, will help you devise a better strategy than one you create in a vacuum.

    In practice, patience can show up in several ways in your strategic planning.

    First, it’s important to conduct a preliminary strategic planning meeting (as outlined in Simplified Strategic Planning).  In this meeting, you will organize and assign research before you have your central meeting to formulate strategy.  Second, spend considerable time reviewing the data with the strategic planning team.  Finally, do the analysis and set the direction for your organization.  Mistakenly, companies often make strategic decisions in that first, preliminary meeting, before laying the foundation of data and analysis.  Without question, you’ll be happier with the resulting plan if you suspend this type of decision making.  Wait to make strategic decisions until you reach the section 5 exercises, especially Strategic Issues and Strategies.

    Beyond patience in the strategic planning process itself, you may also find great advantage in strategic patience.

    This is partly because great strategic advantages are the result of investing large amounts of time and/or money.  When we are patient about our strategies, we gain the ability to substitute time for money in building these advantages.  Failure to show patience can result in a rushed job on creating strategic advantage.  Any such advantage can be matched and possibly overcome with a similarly rushed effort.  Instead of creating a sustainable advantage that is difficult to copy, the rushed approach can turn your markets into a donnybrook of competitors hurriedly introducing flimsily constructed strategies.

    Are you showing enough patience in your strategic planning and strategies?

    If you’d like to learn more about strategic thinking and more specifically the importance of patience, Simplified Strategic Planning is a great place to start.  For great ideas on how to improve the quality of your planning, contact me at rbradford@cssp.com.  Consider holding a one-day workshop on Simplified Strategic Planning.

    In-house Workshop

    Robert Bradford is President & CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.

    Dana Baldwin is Senior Strategist with the Center for Simplified Strategic Planning, Inc.  He can be reached by email at baldwin@cssp.com.

    Co-Author Robert Bradford
    Co-Author Robert Bradford
    Co-Author Dana Baldwin
    Co-Author Dana Baldwin

  • Openness – The Tenth Critical Skill for Strategic Thinking

    Openness in Strategic Thinking
    Openness in Strategic Thinking

    The tenth critical skill in strategic thinking is the ability to suspend judgment.

    Better strategic thinkers should consider ideas and explore possibilities before they impose any evaluation. This does not mean that a strategist never applies judgement.  It means that they should apply analysis without judgment before they critique ideas.

    Openness is a critical skill in strategic thinking because we tend to evaluate too quickly.

    There are situations where this tendency was a life saver for early humans.   Seeing a lion without instantly classifying it is dangerous and could be a fatal failure. Decisiveness, which is often viewed as highly desirable in a leader, should not be equated with quick evaluation.

    In strategy, we are not going to be in immediate danger.

    There are no split-second threats to anyone’s life when considering a strategic course of action.  There may be longer term threats – things that could be dangerous next year, or in five years, but the nature of strategy is that it is not urgent.

    This means that the very useful critical skill of instant evaluation is unnecessary in strategic thinking.

    Further, instant evaluation can distract our thinking from a deeper understanding of the situation.  With some distance from the need for evaluation, we can look at the implications of a situation and identify opportunity.  This is especially useful when we encounter things like threats.  For example, seeing the lion from a distance might be a clue that there are things a lion wants to hunt nearby.  Being close to good hunting was also critical for early humans – it meant food.  So, a more strategic view of the presence of a lion would suggest one would not starve in a place where lions live.

    In business strategy, this approach to information can yield profitable insights.

    Restaurants cluster around freeway exits because there are lots of customers nearby, looking for food.  The quick judgment might be that such a place is a fine location for a restaurant.  A more strategic analysis would bring up some interesting ideas. First, there is more competition here. Second, customers tend to seek convenient locations for certain types of restaurants.  Third, being close to the customer is a competitive advantage, and so on.  These ideas contain countless opportunities for deeper understanding.  For example, restaurant competition is acceptable if you are targeting a different market niche (think Cracker Barrel vs. McDonalds).  You might also notice that convenient locations are only beneficial for certain types of restaurants.

    The quick judgment in this situation might be that you are looking at a fine place for a restaurant.

    Suspending judgment allows us to ask important questions, like why is this a good place for a restaurant?  Would my restaurant thrive in this competitive, convenience-oriented location?  What are the disadvantages of convenience?  By postponing judgement, we gain the ability to look at a strategic situation in a light by which we can create strength out of weakness and opportunity out of threats.

    Suspending critique is not easy.

    The instinctive desire to seek safety and run from danger, for example, are very strong emotional responses.  Unfortunately, these once-useful instincts are often the enemy of great strategic choices.  In nature, ecological niches can be seen where a strategically good choice can be found.  For example, birds that roost or nest near predators like crocodiles are less likely to be threatened by other predators.  In business, we can spot niches like this by looking for situations that repel competition.  One might, for example, enjoy less competition by seeking customers that others deem unattractive.  Only by suspending judgment can we, for example, build a highly profitable business around customers who take a long time to pay, or customers who are difficult to work with.  Or think about insurance underwriters who focus on high risk customers.

    This critical skill is vital in the creative process of finding opportunities for a business.

    The simple, instinct-based opportunities tend to draw competitors.  Great strategy often comes from seeing opportunities that repel competitors, which creates a more sustainable advantage for those that can hold back their judgment. This is one reason we want to suspend judgment in the opportunity generation process in strategic planning.  The other – equally important – reason is that criticism instantly interrupts the flow of creative ideas.  So don’t jump the gun with premature judgment.  Remember, the creativity of your strategic ideas may be the competitive advantage that is key to your successful future.

    How have you taken advantage of this?  Do you closely examine things that may give rise to feelings of fear or greed in your competitors?

    If you’d like to learn more about strategic thinking and more specifically the importance of openness, Simplified Strategic Planning is a great place to start.  For great ideas on how to improve the quality of your planning, contact me at rbradford@cssp.com.  Consider holding a one-day workshop on Simplified Strategic Planning.

    In-house Workshop

    Robert Bradford is President & CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.

    Dana Baldwin is Senior Strategist with the Center for Simplified Strategic Planning, Inc.  He can be reached by email at baldwin@cssp.com.

    Co-Author Robert Bradford
    Co-Author Robert Bradford
    Co-Author Dana Baldwin
    Co-Author Dana Baldwin

  • The Ninth Critical Skill in Strategic Thinking is Honesty

    Honesty in Strategic Thinking
    Honesty in Strategic Thinking

    The ninth critical skill in strategic thinking is honesty.  Great strategic thinkers can balance their tremendous creativity with a sense of realism and honesty about what is achievable in the longer term. This ability to balance is not an obstacle to their accomplishments.  Many strategic thinkers refer to themselves as realistic optimists.

    How does this honesty in strategic thinking show up?

    One of the hallmarks of shortcomings in this area is self-deception.  While many point out – correctly – that many entrepreneurial activities require a certain kind of optimism, great strategic thinkers temper that optimism with understanding.  This means that good strategic thinking may start with an optimistic idea, such as “We can do this”, but works realistically with the issues that exist.

    In strategic planning, the capabilities assessment reveals a lack of honesty.

    A clear understanding of both the strengths and the weaknesses of the organization is a great clue that some good strategic thinking is going on.  Strategic planning teams sometimes resist this.  It can feel vulnerable to accurately acknowledge weaknesses in a group.  A well-managed team, however, treasures that vulnerability as a sign that the group is both trustworthy and honest.

    There are three main areas where honesty can be a huge issue in strategic planning.

    1. Acknowledging weaknesses

    The first is exactly the problem we see when team members aren’t brave enough to talk about weaknesses in the capabilities assessment.  We do this because, anthropologically, there is a group sentiment that weakness should be avoided and, where noticed, it should be exploited by the alpha in the group.  This is the opposite of good teamwork, but it’s a strong part of primate behavior.

    2. Perceiving threats

    The second is often referred to as the “ostrich syndrome”.  You have the desire to stick your head in the sand to feel safe from the threats you cannot see.  This is obviously not going to work, but our stress responses often cause us to behave like a small child.  We cover our eyes when the scary part of the movie comes up!

    3. Accepting the possibility of bad outcomes

    The third area comes from assuming we have a good plan which can’t go wrong.  Of course a good plan can go wrong.  One problem we see in many models of strategic planning is the failure to assess how that plan might cause new problems that didn’t already exist.

    All three of these issues arise from the problems many cultures have with pretending things are OK.

    This is not unique to western culture, but it is particularly strong there.  Why do we pretend things are OK?  Here are the biggest reasons:

    1. The group tendency to gang up on the weak (which was already mentioned).
    2. The classic management approach of trying to make every peg fit our square holes, which became enshrined in manufacturing management in the early 20th Century.
    3. The normal human tendency to treat different thinking as bad.
    4. The cult of “fake it till you make it” we learn from motivational speakers and sales training.

    All of these reasons are artifacts of our history, our evolution and our culture.  All of them are also either created by or sustained by the people involved.  Great strategic thinking requires that we challenge this reasoning.

    The underlying thought process here is that we often look at the way things could be and ask “Why not?”.

    This is a great approach for strategic thinking.  Unfortunately, our minds – and the minds in our groups – can often come up with easy answers that don’t connect with reality.  The real answers are often the most useful for strategic thinking, but acknowledging them can feel vulnerable and threatening.

    How can we encourage brave, honest thinking?

    The most important factor here is our sense of safety.  We have to remember that we are actually less safe when we fail to acknowledge the truth, even if it feels like we are safer.  In groups, we also need to take the effort to make everyone feel safe speaking the truth, even when it isn’t what we want to hear – and even if it scares us.

    Have you wrestled with self-honesty in your strategic thinking?  What steps do you take to avoid this?

    If you’d like to learn more about strategic thinking and more specifically the importance of honesty, Simplified Strategic Planning is a great place to start.  For great ideas on how to improve the quality of your planning, contact me at rbradford@cssp.com.  Consider holding a one-day workshop on Simplified Strategic Planning.

    In-house Workshop

    Robert Bradford is President & CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.

    Dana Baldwin is Senior Strategist with the Center for Simplified Strategic Planning, Inc.  He can be reached by email at baldwin@cssp.com.

    Co-Author Robert Bradford
    Co-Author Robert Bradford
    Co-Author Dana Baldwin
    Co-Author Dana Baldwin

  • A Critical Strategic Thinking Skill – Seeking Advice

    A Critical Skill for Strategic Thinking
    A Critical Skill for Strategic Thinking

    The eighth critical skill for great strategic thinking is seeking advice.

    Great strategists rarely make strategic decisions by themselves.  They usually prefer to get input from people who are closer to the issues. They also highly value the input of people who may simply have much different perspectives from their own.  This is listening, but it’s much more than that.

    Seek advice is a critical skill for leadership.

    Getting input from others means you are assembling your best decisions from information that you know other people have.  Furthermore, you are considering other perspectives on the issues in order to have a better grasp of your strategic thinking.

    Its hard to recognize that other people have information you need, but do not have.

    This is because we have lived for far too long with the myth of wise loners making better decisions.  We partly have this myth because dysfunctional groups often do make worse decisions than individuals.  Group think is a term that has long been used for this problem.  We need to remember, however, that less useful traits – dominance, talking loudly and quickly, or abusing authority – can skew group decision making. Ultimately, the most forceful person in a group, rather than the best thinker in the group can skew the decision.

    Great leaders are great listeners and are often much more effective and successful.

    This effect actually goes much deeper than that.  Research tells us that the highest performing individuals do things that help them remember that they don’t know everything.  In Zen Buddhism, the phrase that people use to describe this is “the beginner’s mind”.  Almost every great innovator has had enough expertise to do what they do very well.  But they also have some way of remembering that they don’t know everything there is to know.

    One way we can all keep that mindset is to seek advice from someone we respect.

    This can be a mentor, a coach, a peer advisory group, or anyone we would expect to understand some of the issues we face.  Advisors do not have to be expert at the same things we are expert in.  Though they do have to be willing and able to share different perspectives that may enrich our understanding of the issues we wrestle with.

    In some circles, when you seek advice, others may see this as weakness, but it surely is not.

    Quite the contrary – strong leaders and great strategic thinkers make their weakest decisions when they act completely alone and fail to get input from others.  This is not because we need the strength others may offer to back us up – though getting advice does bring that.  It’s rather because it is impossible to consider every perspective on an issue alone.

    If you seek advice from someone who thinks exactly as you do, your strategic decisions will be weaker.

    Great leaders test their strategic thinking in the crucible of disagreement.  Without some form of push back, you’ll find your best ideas and your weakest ideas will look the same to you.  Thus the quality of your thinking will suffer.

    To get good stress testing of your ideas, bounce them off of someone who often disagrees with you.

    Without question, this is something we encourage when assigning homework to the strategic planning team.  While some think I do this to save time in the meetings, the biggest benefit is in the output.  When two or more people with widely different viewpoints make decisions, they are inevitably sturdier and more robust than ideas from a single individual.

    Where do you get your input, and who do you seek advice from when making strategic decisions?  I’d love to hear any stories of things that have led to great successes for you.  And – of course – if you’d like assistance developing these skills, please reach out to me for workshops, coaching and consulting assistance.  If you’d like to learn more about getting advice and more specifically about strategic thinking, Simplified Strategic Planning is a great place to start.  For great ideas on how to improve the quality of your planning, contact me at rbradford@cssp.com. Be sure to take advantage of the Early Bird discount below.

    Early Bird Discount

    Robert Bradford is President & CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.

    Dana Baldwin is Senior Strategist with the Center for Simplified Strategic Planning, Inc.  He can be reached by email at baldwin@cssp.com.

    Co-Author Robert Bradford
    Co-Author Robert Bradford
    Co-Author Dana Baldwin
    Co-Author Dana Baldwin