Get ideas to craft a winning strategy
Especially in this fast changing world, your strategy will be based on unquantifiable assumptions; rather than giving up, ask your team to estimate your unquantifiable assumptions to build understanding and dialogue.
Accounting discipline teaches great accuracy in numbers, even when they are not important.
“Not everything that counts can be counted, and not everything that can be counted counts.”
William Bruce Cameron
Strategic thinking requires inaccurate estimates to be made of numbers that are of critical importance.
A Big Hairy Audacious Goal (BHAG) could be just what you are looking for to mobilise your company, providing a Mount Everest for you to climb
This is a great example of a Big Hairy Audacious Goal (BHAG):
- It will inspire their people. Financial goals fail completely at this. “Doubling shareholder value” will not motivate anyone except the CEO sitting on million of share options. Even “become the biggest X” fails as a meaningful goal to inspire your employees – why is big better? Much of our experience in this world is that big leads to mediocrity, not excellence. Saving lives is a goal that everyone from the Executive Suite to the assembly line can relate to. And even more important, their work can contribute to achieving it
- It is a bulleye for their strategy. Why do their customers buy Volvos rather than Audis or BMWs? (their Value Proposition) Their brand has always stood for the safest cars – not necessarily the most exciting to drive, but nothing shows how much you care for your loved ones more than buying a Volvo. This goal will also guide them towards Electric Vehicles, autonomous cars and beyond
- It will require the best of Volvo to achieve. It is unlikely that Volvo can achieve this goal by 2020 – there is always the chance of a freak accident or driver error. It will require the best innovation across the company in both engineering and manufacturing to make this real.
With this BHAG, Volvo aligns their whole company behind their strategy, provides a guiding North Star for decisions and provides forward momentum for all their employees.
What goal could achieve all these things for your business?
After every engagement, the US Army holds an After Action Review (AAR). Their purpose is to identify exactly what happened and why so that the unit can apply lessons learnt to their next engagement.
Several principles make AARs work better than less-structured post-mortems. Accountability for the operation is reinforced through a clear comparison of intended vs. actual results achieved. The AAR is conducted by the front-line unit, for the benefit of the unit, as soon as possible after the action – it is not a remote back office staff activity. No tells the participants what they should have done – they draw their own lessons and apply them to make themselves more effective next time. There is no allocation of blame or search for faults. The US military know that if participants sense a blame hunt, they will become defensive and no learning will happen.
An AAR can be formal, with a facilitator guiding the team. This may be appropriate for a major action – a new market entry, a new product launch, a strategic initiative. Short, informal AARs could be held by team leaders at every milestone.
In today’s rapidly changing business environment, the companies that learn the fastest will thrive, whether they are exploring new services, customer needs or technologies or business models.
The biggest business challenge to holding useful After Action Reviews is not time, but company culture – the culture is too defensive and aggressive to hold them successfully. But how about turning this statement around – how much could an effective AAR mechanism contribute to creating a more constructive culture and, over time, a learning organisation?
Warren Buffetts CEOs are extraordinarily successful. Their primary concern is their organisation’s long term performance, not their egos. Are the two linked?
In a recent annual report letter, Warren Buffett describes why the managers of his business are so special. How have they averaged an annual gain in earnings of 17.8% over the last 42 years? (Earnings growth of 1,000 times!) He explains that their extraordinary performance is due to their extraordinary motivations.
They have no financial need to work; they have nothing more to prove; they are running their businesses because they love to; they have exactly the job they want for the rest of their working years.
For most of us in the hustle of the corporate world, this description seems unreal. More common motivations are maximising the bonus, getting the next promotion, building our egos, positioning ourselves for when the head-hunter calls with the dream job.
Step back, and imagine yourself in one of Warren Buffetts CEOs shoes for a moment. You have no self-generated or external pressure to pump the short term at the expense of future years – you will be the one to eat your own cooking for many years to come!
You don’t play corporate games or have your mind half out the door. You are totally focused on your legacy, building an organisation that thrives and survives you.
Your team and customers also know that you are with them for the long term.
Berkshire Hathaway has shown it is possible, and the results it creates. Are we up to choosing to live by the same principles?
Strategic resilience is what will enable you to survive tough times. The Roman Empire survived defeats that would have destroyed other nations. What lessons can modern businesses learn from the legendary resilience of the Romans?
The Roman Empire had the best military machine of its day, but this was not sufficient on its own to guarantee its survival. The Romans suffered decisive defeats in their homeland from both Pyrrhus and Hannibal in the 3rd Century BC that would have destroyed any contemporary nation. After winning, the victors expected the Roman ambassadors to arrive and sue for peace. Instead, what turned up was another Roman army.
How did they sustain this? As well as indomitable will, they needed the extraordinary loyalty of their Italian allies. Even with the Romans reeling, the allies contributed their manpower to call up another army and rarely defected.
What inspired this loyalty? As would be expected of ancient times, self-interest trumped more noble rationales. With the Italian allies, the Romans were generous in victory, creating an incentive system with 4 tiers of citizenship for allies to climb, with rich rewards at the top. The Italian allies simply saw their best future as partners of Rome.
The business equivalent is how a dominant player treats their business partners, their employees, suppliers and customers. In the good times, do you use your strong negotiating position to maximize your profits at their expense? Or do you create incentives that allow them to thrive too?
In tough times, do you expect them to stick with you, or embrace your attacker who can offer them a more attractive future?