Cooking up a Strategy.

I love quotations; they can sum up thoughts simply and elegantly. Some people even quote me from time to time!

Anyway, here’s one more for you: In his book “Execution: The Discipline of Getting Things Done’ Larry Bossidy stated that,

“If you can’t describe your strategy in twenty minutes, simply and in plain language, you haven’t got a plan. ‘But,’ people may say, ‘I’ve got a complex strategy. It can’t be reduced to a page.’ That’s nonsense. That’s not a complex strategy. It’s a complex thought about the strategy.”

And he was right, strategies should not be evaluated by weight, they should be evaluated by quality and simplicity combined. A good strategy has to be compelling, directional and as easy to follow for a board member as it is for someone on the factory floor.

Let me give you a cooking analogy (those of you who know me at all will already be aware that I am often seduced by good food and wine!)

Anyway, when you “reduce” a liquid in cooking you boil away the unwanted water and are left with a sauce with a concentrated flavour. If you reduce your sauce too much, then you begin to lose some of the volatile flavours and your sauce becomes bland, In other words to get the perfect reduction you need to boil away the water for just so long so that you leave yourself with all flavour that you are trying to concentrate, but not to the extent of losing any of the flavour itself. A tricky balance.

Well a good strategy is like that. You may start with something that is far ranging, but you need to reduce it to the point where only the core essentials remain, but none of those essentials are lost. Sometimes it can be very hard for the team that writes the strategy to reduce it to its core essentials (for much the same reason that many writers need good editors). But in my experience it is worth the effort; it is worth the time and it is worth the cost to go through the thought process of determining the core elements of your strategy (I call them Critical Success Factors), and then communicating them to all your stakeholders.

As dear old Einstein said (or is reputed to have said)  “Everything should be made as simple as possible, but no simpler.”,  He was right about that, and probably with that other stuff about relativity too!

How the CIA can help your business.

A man you have probably never heard of called Richards J. Heuer, Jr wrote a book for an organisation you have almost certainly heard of – the C.I.A.

Now I need to make it clear for those who don’t know me well; I’m not a spook, a spy or any sort of undercover agent. There are a few reasons for that, not least that my shoes squeak in the wet!! So having cleared that up what’s my interest in the C.I.A.?

Well the book that Richards Heuer wrote was called the Psychology of Intelligence Analysis and deep in the book is a really great thought:

“The spirit of decision analysis is to divide and conquer: Decompose a complex problem into simpler problems, get one’s thinking straight in these simpler problems, paste these analyses together with a logical glue”

That’s a really great thought, especially if you apply it to your business issues. Think about it, if you’re faced with an issue that you cannot come to grips with, split it into component parts that you can get your mind round. Let me give you an example.

I once asked a senior executive if there was a real plan to grow his business by the 20% he had promised his backers (my clients). “Sure” he told me, “It’s all here”. He showed me a copy of a spreadsheet, with lots of complicated calculations, which did indeed show that his earnings would grow by 20%. It was a mixture, as I recall, of volume increases, price changes, market growth assumptions, share gains – you name it and it was there. So I told the executive, “Well it all adds up, but what are you concentrating on out of all these elements?” He looked at me strangely, and told me that all the assumptions needed to be managed to get to the end result.

Well my loyal reader, I have to tell you, I found all that too complicated, so I went away and deconstructed his plan; I looked at each element and by keeping the others constant worked out which of the elements were responsible for the most $ increases. It turned out that in his case the most important element was his volume market growth assumption. That single factor represented about 70% of his growth.

So I went back to the senior executive the next day, and asked him how he was going to grow the market at the rate needed to meet his projections and what plans he had to stimulate category growth and educate the consumer. To cut a long story short, this executive had never looked at his plan this way, had never focused on the elements that would really generate growth. His plan in reality was a mathematical exercise, with little substance.

Within three months though, this self-same executive had completely turned his strategy around, so that it focused on category growth (It had previously been concentrating on steeling share from competitors). Within the year he was close to his 20% growth figure, not quite there but close enough to retain the confidence of his backers.

Maybe this is not the best example, but you get the idea? Split issues / problems / projects into manageable tangible parts that can be grasped by you (or a subordinate) rather than try to tackle the whole amorphous mess in one go.

Simple advice? Probably. Logical? Probably. Always implemented? Not as often as you would think. So remember the words of Richards J. Heuer, Jr, and how the C.I.A. can help your business.