According to a study by the Harvard Business School Press, “up to 90% of strategies fail in the execution.”
Daunting? Only if you follow the herd and apply outdated strategic planning practices to today’s lightning-speed business environment. Good plans shape good decisions, drive alignment of resources and define “what not to be doing.”
Be the leader you were designed to be and follow T.H.Enterprise’s 7-ingredient recipe for success in strategic planning:
- Involve multiple minds in the planning process. Expand beyond the top few managers to include thought leaders, collaborators, problem solvers, influencers and at least one person representing each of the following job areas: finance, sales and marketing, operations and people (HR). Leverage an external facilitator who is experienced in planning and facilitating for small businesses – someone who can ask tough questions, share best practices and keep people engaged.
- Plan to your level of need. Five-year strategies are passé. Most small to mid-size businesses struggle to build replicable processes and infrastructure; moving from the horsepower of the few to the defined procedures necessary to grow. Set a plan that will position you well for 1-3 years and leverage your strengths while closing infrastructure gaps. Don’t forget to add in elements of fun or frivolity into the planning process, and I don’t mean bowling, golf or bungee jumping. Find a fun, lighthearted facilitator who can cater the planning process to your needs. A good laugh helps people relax and open up to creative and collaborative thinking.
- Confront the brutal realities without ever losing faith. Jim Collins uses this phrase as one of the 6 elements in companies who go from Good to Great. Spend time talking about the power of the vision, market opportunities, value proposition and other internal strengths but an equal amount of time exploring disappointments from the past year and what must be done not to repeat the mistakes of the past. Use passionate inquiry, i.e. Why did we fail to execute? Why did we lose that sale? Why did we miss those deadlines? Don’t be afraid to ask the tough questions.
- Set balanced strategic objectives that include forming the ideal corporate culture. If you are not intentional about what culture you want to create, you will fall into the trap of trying to change a culture that doesn’t fit your needs. Set measurable objectives in four vital areas – Financial, Customer Focus, Production Capacity (internal efficiencies to meet growth and profitability goals), and People Focus.
- Ensure your plan includes monthly measures and quarterly shift sessions, not just a multi-day event once a year. Each quarter, review the strategic initiatives or vital few objectives generated in your strategic plan. Shift resources as needed. The data you use to run your business should be balanced across the four areas listed above. Review the measures of success for each objective on a monthly basis. Create a six month cash flow forecast, then compare the forecast to actual performance in all strategic areas. Let go of projects that don’t hit the priority list. Michael Porter, the king of modern strategic planning, asserts that “The essence of strategy is deciding what NOT to do.”
- Tie the strategic plan to job duties. Too often job duties and performance objectives lose their relevance as a business grows. Implement a performance management process to include bi-annual reviews and updates of job duties and short term objectives. Keep your people focused on executing to your strategy.
- Communicate, communicate, communicate. Share the top line goals with your staff. Make sure every new “great idea” links back to a discussion of the strategic plan. Communication takes concerted effort. Don’t assume people “get it,” because they don’t. Continually discuss vision, mission, values and top level goals. Help your staff to understand the connection between your strategic initiatives and their daily work. This is most readily done with a sound performance management process that is tied to your strategy. Find a strategic HR Consultant, like Teri Hill, to help you in this vital step.
Remember that strategic planning is an exercise in strategic thinking – the more you exercise, the healthier you become. The highest value you can bring to yourself and your company is in shaping, directing and executing strategy. Whether you are a solopreneuer, a business owner, manager or staff person looking to get to the next level, give yourself the gift of strategy.
Being decisive is looked upon as strength in leadership. What is less assumed are the subtle but inherent biases that can creep into the decision-making process. Why should you care? With the accelerated rate of change in today’s business environment, the difference between success and failure is increasingly affected by the rate at which we make creative, cohesive and strategic decisions. A wrong decision costs precious time, allowing a competitor to swoop in and take over or causing your organization to stumble while trying to alter the course.
A recent McKinsey study of more than 1,000 major business investments showed that when organizations worked at reducing the effect of bias in the decision-making processes, they achieved returns up to seven percentage points higher. (“The Case of Behavioral Strategy,” McKinsey Quarterly, March 2010)
Yet the most dangerous thing about these cognitive biases is that we have no real way of knowing that they are happening to us. As a leader you MUST put into place practices to break through the insidious biases. Who in your organization gives you real, honest feedback on your decisions? Who pushes back on you and challenges your thinking? What practices do you have to ferret out cognitive biases and push through to stronger decisions?
The first step to breaking through biases is knowing the common decision-making biases to watch out for. Many of us are familiar with a common bias called group think. This is the tendency of groups to jump in and go along with an idea or decision which seems to be popular. Group members rush to minimize conflict by converging on the first decision that appears to be gathering support. Sadly, though, group think squelches the dialog necessary to come up with creative, collaborative problem-solving or brilliant ideas. Speed becomes the mantra instead of thorough, careful, comprehensive or ingenious thinking.
What are some other common biases? The list is too exhaustive to explain in one post. Behavioral psychologists have studied this phenomenon since the 1970s, when I first started my research into cognitive science. My next post will discuss a few biases I have seen at work and how great organizations are breaking through the biases. Too eager to wait? Check out some of these books below:
Think Twice: Harnessing the Power of Counterintuition by Michael J. Mauboussin
Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You by Sydney Finkelstein, Jo Whitehead and Andrew Campbell
Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely
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As he walked across the sales floor with stern look on his face, it was as if a tsunami of panic rushed in, washing over every other face with fear.
This reaction is illustrative of the dramatic impact a top executive’s presence can have on people without even saying a word. Bob was the CEO, CTO and owner of the company so it is natural that people would pay attention to his moods. His company, like so many others, was regularly balanced on the edge of profitability and pain.
However, Bob’s facial expression that day had nothing to do with the fiscal stability of the company. Bob was working out a tough engineering issue that had the potential of bringing in an extremely profitable new line of business. While I knew the real reason behind Bob’s contorted facial expression, what about the other employees that were there that day? How much unnecessary doubt, fear and worry were brought up in the minds and during the break time conversations of the people who didn’t know the reason behind Bob’s stern look?
There are many things that business owners and leaders must tune into each day. Sadly, few pay enough attention to the massive impact their facial expressions have on people. Studies indicate that people are six times more influenced by visual cues than by words that are used. The non-verbal signals we send have a much higher impact on the performance of our people than we recognize.
Tune into this critical component of leadership. Realize that whenever you, as a leader, are exposed to others you must pay attention to the expression on your face. Make it easy on yourself and find a public persona or poker face to put on whenever you are around others. Better yet, try a bright-eyed small smile and gentle nod of acknowledgment. Sure, it takes focus and lots of practice to become a habit, but the potency of positivity you will foster in your corporate environment will far outweigh the inconvenience of taking time out to alter your mental and physical demeanor.
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Imagine an art exhibit with one room containing breathtaking paintings, sweeping you away with the color, lighting, brilliance of design and detail followed by another room littered with mere sketches with perhaps a splash of color added? What made the artist stop short of completing a potential masterpiece? Did he lose his passion? Did he feel defeated, bored, or distracted?
Recently I read an article out of Harvard Business Review about how most managers reach a certain level of proficiency and stop—far short of what they could attain. Why? Is the place in which they find themselves good enough? How many of you have worked from the proverbial abandoned canvas?
Working with federal agencies and small to mid-size businesses I, too, see this phenomenon of managers who stall in their development. Why does this occur and what can be done to complete the masterpiece of leadership potential?
- Most don’t know what is required of them to be effective as a leader. There may be books to read or classes to attend but without having an accurate assessment of gaps you don’t know where to start. Look for feedback. Seek input on your performance.
- Many don’t know HOW to make the change. What can you do to lead more effective team meetings or to communicate in ways that meet the needs of employees? Try new things then ask for input on how it worked.
- Some start the process of development but underestimate the time and effort it takes to apply new skills and practice new approaches to situations. There is no substitute for consistent, persistent effort.
- In our world of immediacy and urgency, the focus is on short term results vs. long term development. Like the artist’s painting, brilliance takes time.
- Fear of failure is one of toughest barriers to overcome. Developing any behavior change takes trial and effort. Stumbling and picking yourself up again is nature. Failure is a powerful step in ultimate success. We learn from failure much more than we learn from success.
Similar to the artist who is struck by the beauty of a field of brilliant flowers, we all need a mental model to lay over the chaos of daily life, lift above it and align our continued development into a framework of ultimate success. True leadership is breathtakingly beautiful. What is the next brushstroke on the canvas of your leadership journey?
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We’ve all heard the phrases like “change or be changed” and “the only thing certain in life is change” (except from a vending machine that is). But what must change? How do we need to change? Is some changing enough? How much change is too much change?
Jim Collins’ of “Built to Last” and “Good to Great” fame recently addressed how some formerly “great” companies hit severe declines to flat out bankruptcy. Hardy, profitable, popular institutions slid, sometimes sped into the abyss of irrelevance. Sadly, most didn’t even see it coming. Collin’s likens institutional decline to staged disease: harder to detect but easier to cure in the earlier stages, easier to detect but harder to cure in the later stages.
Think about this in terms of a marriage that unravels after years of neglect. Symptoms were present but easy to overlook until it is too late. Or consider the tragedy of a golden customer who out of the blue starts buying from your competitor. Wow! Where did that come from? What are the symptoms to decline? How do you employ early detection of potential demise?
As a coach in Central Texas, I often hear the phrase “If it ain’t broke don’t fix it.” Well how does one define “broke” and when is “the fix” too late? The real issue is not about “broke” or “fix,” or even about change or don’t change. It is more about staying AWARE and adapting. It is more about evolution than revolution.
My advice on change is to continually and systematically look out and adjust. Open your eyes to what is really going on behind the P &L, beyond the cash flow statements, behind the veiled walls of the C-suite. Be ever-vigilant. Be hyper-aware. Have you examined your relevance lately? Are you measuring your relevance regularly? What does the data tell you? What are your competitors paying attention to? Is it your company that needs a tune-up, facelift, or overhaul? Or is it just a few key products or offerings that may be lacking the necessary sizzle of relevance? What about your infrastructure – the systems/processes, people or functional alignment, or business model? Are you still operating at peak or slowly eroding into mediocre? Or, perhaps the best place to look is in the mirror. Are you keeping your eyes, ears, mind, and heart open to change?
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