Tag Archive for: Foresight

Never Go Full Framework

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Frameworks exist to support decisions…not to make them. 

 

“Everybody knows you never go full [framework].” – Kirk Lazarus, Tropic Thunder

Ever work with a leader who was too wedded to a framework? Not in terms of using the framework to organize their thinking, but in terms of letting the framework do the thinking?

Plug and chug.

Rack and stack.

Rank and yank.

You know the kind.  They’re the ones who will not only enforce the rigor that a BCG growth / share matrix implies in evaluating a portfolio but also blindly follow its conclusions to divest, invest, or starve businesses in the company’s portfolio, real-world results be damned.

If you know corporate strategy, you know these people.  Sometimes they come in the form of consultants who are selling an approach or framework itself, and sometimes, it’s the executive who just really wants a complex world to be as simple as a spreadsheet.

So, let me just say it this way:  Never, ever go full framework.

A story

I spent years as a competitive athlete on the football field.  I had the opportunity to know and work with many truly great coaches (the greatest of whom are probably more nameless than they should be). In the highly structured and choreographed game that is American football, technical details, frameworks, concepts, and plays abound. Though it is a sudden and violent game, it is also a technical game: no play exists that doesn’t come with prescriptions for precise footwork, speed, and multi-person meshing of motion.

And you know what?  It’s all wrong.

What’s that you say?

Yep, it’s all wrong.  No great coach in football relies on his players to merely run plays as they are diagrammed, and no great team in existence runs plays that way.  The world doesn’t even work that way.  The moment the ball is snapped and the play starts, all bets are off.  The defensive tackle moves at the last moment, and suddenly you’re off balance.  Then the linebacker fills the wrong hole in the line, and now your path is blocked.

Precise footwork can become precisely wrong footwork, so for that reason, you do what it takes, not what the framework demands. Bad players will botch a play, go back to the coach, and say “I did all the right technique and it didn’t work.” They are “full framework.” Good players—really great players—read, react, and deliver.  They, to use a term I’m very fond of, overcome coaching.  They know when it’s time to go off script.

Which brings me back to my advice…

Going “Full Framework”

I have worked with management teams who decide to use extremely prescriptive financial or people metrics to run organizations; they use hard-and-fast logical frameworks, such as financial hurdle rates or scores on standardized tests.  They use the frameworks as tools to make decisions and, to put it bluntly, as alibis.

Frameworks give cover; they give comfort. And you know what? They too often also cause management to go home empty handed. The HR person who relies too much on standardized test scores is bound to miss out on natural players; the M&A strategist who relies too much on a framework of numbers and rules will miss out on attractive deals; and the sales manager who insists on having full attendance at 8:30 am every day of the week will miss out on productive salespeople whose style doesn’t mesh with such a rule.

The worst of cases

I’ve mentioned that going full framework gives cover and comfort, but what it can also give is moral distance. The framework says fire that guy, so you do.  Who cares if his wife has major medical issues and COBRA won’t cover them? The framework says promote that gal, so you do.  Who cares if she is completely loathed by the people she will manage—that’s their problem.  Your framework says you have to get to x dollars on price or you walk from negotiation. Who cares what other value is on the table? The framework says divest that underperforming division.  Never mind that it’s the division with the most promising talent your company contains…it’s underperforming.

You’ve gone full framework; it’s not your decision anymore, right? That’s where the worst cases come up—when you go full framework and you lose ownership of the problem, you lose values and a value-centric view of things.

I give these examples as the worst of cases, but in reality the worst of cases is when these alibis are used by senior executives; when they absolve themselves of the responsibility to interpret and decide in favor of letting frameworks or spreadsheets do the heavy lifting, companies suffer.

So what?

This is about you (and me).  You have to be able to overcome coaching, and you have to be able to overcome frameworks.  A good practice is to use frameworks for what they are:  ways of organizing thoughts and concepts for deeper consumption.  You use them rigorously to position yourself for decision making, but you don’t actually make decisions via framework; you make them via reasoned consideration of all available information, and no framework can capture that.

Sure, you diagram plays.  Sure, you use a profitability pareto to tell you which accounts you might need to change or fire.  Sure, you use a growth-share matrix to guide you to your most promising portfolio. Sure, you apply 5 forces, SCP, 7S, Blue Ocean, name your framework here to define reality.

But you still have to decide. Remember, you may diagram the play, but the defense will move. The framework can’t possibly represent the real world completely.  That’s for you to do.

Next time you are faced with an executive who has decided to go full framework, think about this picture of Simple Jack from Tropic Thunder, a fair if crude satire of many things Hollywood, business and otherwise:

simple Jack

Remember…He went full framework.

Now it’s your turn:  How do you ensure that you overcome coaching?  Ever gone full framework?  Leave a reply.  Start the discussion.

The Alchemy of Apple’s Strategy

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Apple created a culture of freedom and playfulness out of a product philosophy of absolute control. It was all about trust.

If I told you about a regime that was run by a notoriously secretive autocrat who locked out all democratic suggestions or changes and brutally suppressed the press, would you link it to the Dalai Lama?

Mohandas Gandhi?

Nelson Mandela?

Jackie Robinson?

No?

I’d have to agree. When your mind turns to suppression, control, and dictatorship, you certainly don’t think of people who represent broken barriers, peace, and freedom.

So how did Apple under Steve Jobs take an approach that was straight out of the totalitarian playbooks and turn it into the most celebrated consumer strategy of all time? How did Apple back up—earn, if you will—its association with the trailblazing freedom fighters above, writ large in its “Think Different” campaign?

Trust.

Trust is what allowed Apple to turn the grayest iron curtain of strategies into the most golden consumer product reputation possible, and trust is what enabled the alchemy of Apple’s strategy. That’s the genius of Apple over the past 20 years.

But Apple is only part of the story here.

The larger story is about why and when control can be exercised over customers (and other followers like employees, vendors, and partners). Control is an expression of power, and power, in the commercial world, is something that is derived from consent. It’s derived through trust.

Consider some of the ways Apple exercises its power:

  • Apple exercises a fanatical commitment to controlling the customer experience – a bit of corporate DNA born directly from the personality of Steve Jobs. Apple tightly controls the product, its customer interface, what peripherals work with its products, and what software runs on its products. It maintains a closed ecosystem.
  • Apple tightly controls messaging, going so far as to sue young bloggers who speculate too correctly about the next product release.
  • Apple is renowned for its aggressive supply chain management, at times driving suppliers out of business through punitive control.
  • Apple uses its massive media appeal to aggressively and maniacally extol the “next great thing” from its own pipeline and subtly denigrate the features its competitors roll out. Who (above a certain age) can forget the “been there, done that” meme from Apple acolytes when Windows 95 launched…?

But this authoritarian behavior comes with a promise: an exceptionally clean (and generally delightful) customer experience. That’s the promise—a distinctive and exceptional experience. And so far, it has been a credible one.

Consumers cede control to Apple and, in return, Apple has delivered on its promises. Like many movements that start small, Apple’s resurgence started with roughly 5% of the PC market – a core group of fanatical followers who had ceded control years ago. Today, an astounding proportion of mobile, music, and computer consumers have bought into the strategy of ceding control and relying on trust.

Apple’s strategy has been one of offering consumers overwhelming simplicity, the message being: Simplicity sets you free. But as we’ve seen, simplicity comes with a tradeoff: a loss of choice.

The Concept

The reality is that Apple has illustrated a very valuable, stable approach to customer engagement and strategy. The degree of control a company seeks to apply to its customers’ experiences successfully relates directly to how much trust the customers have in the company.

I highlight successfully because plenty of companies have tried to control all aspects of customer experience without trust and failed. You can only pursue this strategy for a short while. Companies (and as you know, I relate these concepts to leaders as well in most of my writing) that attempt a high control strategy with low trust must either build trust quickly or stop. Such a strategy is an example of an unstable equilibrium. Customers (and followers) leave you when you are in their kitchen too aggressively and without welcome.

Throwing all this into a matrix (because who doesn’t love a good matrix?) we get something like this:

apple-matrix

These lessons apply to management and leadership as well. As we gain more trust, we can take more control, but when we lose trust, we lose our ability to exert control. The uniqueness of the experience we provide is both a route to building trust with those who matter and a route to highly profitable relationships.

What’s the message for executives thinking about their business, talent, or organizational strategy? Well, it’s pretty simple:  You can be an autocrat, but you’d better have the trust of those around you that that outcome will lift all boats, or else you won’t build anything enduring.

The takeaway: Don’t forget trust.

How Shared Vision Prevents Small Thinking

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When we’re not able to see that we are part of something bigger…We become part of something smaller.

Recently, I read the book Being Mortal: Medicine and What Matters in the End by Dr. Atul Gawande. Gawande is a surgeon and author.  The book is an excellent read about how individuals, cultures, and the medical profession deal with the concept of mortality.

In a decidedly challenging but altogether interesting narrative, Gawande surfaces an interesting concept that is directly useful to those of us thinking about strategy, talent, culture, and inspiration.

Namely, in one part of the book, Gawande outlines research by Laura Carstensen at Stanford University on how mindsets related to aging cause us to close off our horizons.

It seems that as young people with boundless time ahead of us, we (that’s you, me, and every other person in the world) think expansively, we seek new things, and we value unfamiliar experiences.  We “plug into bigger streams of knowledge.”

The world is our oyster.

Interestingly, as we age, and as we come to terms with the waning amount of time we have in the world, we become much more interested in spending time with people we know and love, focusing on what is tangible and immediate, and enjoying the things we are familiar with.

As you age, “your focus shifts to the here and now.”

Carstensen did multiple studies to test this hypothesis.  The survey based research on this topic shows that young people generally value adventure…expansive vision and activities. Older people generally value a smaller view of the world…their circle and its inhabitants.

But there is one shocking revelation about this that the book provides…

The closing off of horizons isn’t about age.

It’s about perspective.

For instance, among the ill, the age differences in mindset disappear. Young people who are terminally ill think “like old people”–small horizons, immediacy, and intimacy are important.

On the other side, when posed with hypothetical questions of how they would spend their life if a medical breakthrough extended it for another 20 years, old people think like young people–expansively and in terms of adventure.

Similarly, young people faced with major crises or uncertainty start to think “like old people.”  A great example is given from the research, which happened to bracket some very uncertain times for its subjects. To wit (and this is from Gawande’s book with my emphasis added):

“…A year after the [survey team] had completed its Hong Kong study, the news came out that political control of the country would be handed over to China.  People developed tremendous anxiety about what would happen to them and their families under Chinese rule.  The researchers recognized an opportunity and repeated the survey…Sure enough, they found that people had narrowed their social networks to the point that the differences in the goals of young and old vanished.  A year after the handover, when the uncertainty had subsided, the team did the survey again.  The age differences reappeared.

“They did the study yet again after the 9/11 attacks in the United States, and during the SARS epidemic that spread through Hong Kong in the Spring of 2003 killing 300 people in a matter of weeks. In each case, the results were consistent.  When, as the researchers put it, life’s fragility is primed, people’s goals and motives shift completely.

It’s perspective, not age that matters.”

People with a view of being part of bigger things–a longer future, for instance–think bigger, more creatively, and more adventurously.

People with no view of bigger things think smaller.

How this applies to you…

This insight is not about aging… It’s about how our minds deal with vision, purpose, and inspiration.

For instance, there are people in your organization right now who have no view of a bigger, longer term purpose for themselves in the organization.

It might be just a few…

…It might be every. single. one. of. them.

The research cited above says something very simple:  When people believe they are part of something bigger…that they have a future–No, strike that, even that they believe they could have a future that is long and interesting–they think more expansively and creatively.

When they don’t?

They worry about themselves.

Their world becomes smaller, intimate, and guarded.

So what?

You want to cultivate an organization that is creative, expansive, and vibrant?

Try helping people understand their future within it.  Be explicit about the long term, about how people are cared about; and about the prospects for the future for them and for the organization.

You want to cultivate an organizational culture that is insular, turf driven, selfish, dull, and dogmatic?

Try focusing people on the short term.  Ensure that word gets around that nobody is safe. Manufacture crisis and ambiguity. Conduct layoffs right along with your annual budgeting cycle. Fire people for taking risks. Create uncertainty and fear. Propagate a vision of the future that is inscrutable for the rank and file or simply insensitive to their goals.

The research cited above says that you and I think “old” when we undergo times of strife, uncertainty, and major change.

In short, we think “old” when we have no positive or stable vision for what the future holds.

Insularity, selfishness, and small mindedness are the insidious outcomes of a lack of vision.

So, when we’re not able to see that we are part of something bigger, we become part of something smaller…Namely ourselves and our own immediate circle.

A healthy vision of the future and what’s in it for the people in the organization just might be the key to keeping your organization forever young.

I’d be interested in your comments.

Belling the Cat Part 2: Greece’s “Innovation”

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Interesting commentary from Yanis Varoufakis, Finance Minister of Greece, published in the NYT a few days ago.

YOUR LINK

In the midst of a highly academic treatise on why his motives are really not to engage in any games, but rather to do “the right thing,” Varoufakis meets the strain a writer always does when he is forced to come up with the “SO WHAT?” to his argument.

What is his “so what” to the question of what Greece must do?

Well… Let’s let him tell you:

“Against such cynicism [about Greek motives] the new Greek government will innovate.”

Innovate.

In the midst of a house afire, the Greek finance minister proposes to pull a rabbit out of his hat.

In corporate environments, innovation has become a sort of conjured savior within strategic plans.

All that is left is to define what innovations, where, and when.

The Greeks are suffering from the same delusion, it seems.

This is another great example of high-minded rhetoric being used to avoid discussion of tough choices.

It’s belling the cat, all over again.

All that is left is to find the mouse who will bell the cat.

 

Are You Well if Oil is Not Well?

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Where to from here?

 

The jolly crew of optimists at ZeroHedge, quoting some of their stable of doomsayers, are predicting that the oil crisis is just beginning… And I find it worth reading.

http://www.zerohedge.com/news/2015-02-16/why-price-oil-more-likely-fall-20-rather-rise-80

To follow on to some of the earlier questions posed by this blog:

What does your business look like in the age of an extremely strong dollar, a Euro depreciating against all other global currencies due to EQE, and oil at $20 a barrel?

Tough question, eh?  Well, I’m not one to call the price of oil…If I were I’d be in a different line of business; but I am one to encourage clients and executives to look at the world through multiple lenses.

The lens that is most interesting right now is the one that includes a dramatic re-set of oil production both domestically and abroad, along with a healthy heaping helping of the knock-on effects that will impact consumer and B2B markets geared to this phenomenon.

Remember, you don’t have to sell into oil exploration and production to feel this wrath…you only need to be near people and companies who do.

Their risk is your risk.   Stay ahead of it.

Stay tuned.  Your comments are welcome.

Where strategy gets real

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A company’s budget shows what its strategy really is.

Geoff Wilson

Imagine a world where you have full view of all budgets and resource allocations in every organization you could possibly want. You could read any company’s press releases, strategic statements, and marketing collateral—and then immediately assess whether that company is doing anything special with its resource allocations to reflect its “special-ness.” What do you think you’d find?

Let’s take a topic like share buybacks. What if a company told you its strategy was to accelerate share buybacks when prices are high, and to slow them when prices are low? Would you call that company crazy? Of course. Nobody says that. Yet FactSet publishes this:

Here’s the CliffsNotes version of this chart: S&P 500 executives and boards execute vastly more share buybacks (blue bars) when share prices are high (purple line) than when they’re low. Though there are many explanations for this seemingly nonsensical reality (most importantly the timing of capital availability in the cycle), the fact remains that corporate leaders exhibit the exact same pro-cyclical bias that any investor on the street does. It turns out that manias for tulips, dot-com stocks, real estate, and share buybacks have this in common.

Now, suppose an honest CFO were to slip up and say “We’re going to budget to buy back shares when everybody is really excited about our stock because that’s when we are excited about it, too!” Would you be impressed with the company’s strategic acumen? No. You’d just have the truth.

The practical insight

Because executives, managers, and employees would be crazy to admit their biases and lack of certainty publicly, a deft analyst or owner has to find other ways to unveil strategic intent. Here’s one to live by:

An organization’s budget is the honest expression of its strategy.

It’s Occam’s razor for discerning strategic intent. More than words. More than magnificent manifestations of PowerPoint prowess. More than organization charts and stated goals. The budget is the message. It’s the narrative applied. Follow the money.

Corporate finance practitioners are reading to this point, nodding vigorously, and probably wondering why such a concept merits a full article. Here’s why: The vast majority of stakeholders in and around an organization place a lot of weight on the words and fancy marketing messages that come with strategy. All the statements of intent to “be the best at” this and “compete the hardest on” that accompanying a typical organization’s vision get delivered liberally.

Those minor messages are extremely important to align and encourage the organization. They are the audio of the strategy. However, the video of a strategy is an organization’s resource allocation. And any stakeholder—employees, board members, executives, owners, and sometimes investors—needs to discern strategy from it as a sort of check on the words. Just like the old Russian proverb: Trust, but verify.

A side note on results

Note that I don’t confuse an organization’s budget or resource allocation with its “results.” A company’s prospective budget or resource allocation is the expression of strategy. Results, on the other hand, come from the confluence of position, potential, competitive actions, regulatory changes, customer idiosyncrasies, fluctuations in weather and commodity prices, luck, happenstance, and any number of noisy and ambiguous factors.

Results are measures of performance, but not of a healthy (or even discernible) strategy. They can be spun into a hindsight strategy, but aren’t necessarily the results of a prospective strategy. In other words, organizations with bad or nonexistent strategies can deliver good results, but not for long. The key is to find executives who recognize when they’re lucky.

Results are real and provide for the present. They are a must have. Strategy, however, aligns resources for the future. It’s a must have, too.

Unpacking the insight

On one level, a budget is simply numbers. It’s not strategy. Saying that you’re going to grow earnings or tamp down costs or grow the revenue line through a budget does exactly that. It shows those things mathematically. It doesn’t establish how you intend to use the resources.

More importantly, a budget shows what you expect to achieve, but it doesn’t show the opportunity cost of that achievement. Strategy is about choices. A budget isn’t a choice. It’s math. It’s the scoreboard, not the game, and certainly not the playbook. Math isn’t strategy. But on the other hand, the math is the simplest view of an organization’s aims. In this basic view, budget is, in fact, strategy.

Let me rephrase that: A budget, and the actions it enables, is the most honest expression of strategy. Show me a company’s three-year plan and budget, and I’ll be able to articulate the company’s strategy to an 80/20 approximation—though it may not match what’s printed on the marquee.

The really interesting part is when you put the strategy and the budget together. Your strategy says you want to grow. OK, what’s your investment in growth? The budget shows that. Your strategy says you expect to be a superior marketer. OK, what’s your allocation to marketing spend? The budget shows that.

A leader who truly expects growth but cuts productive growth spend is suffering from cognitive dissonance. He’s living two lives, but only one can survive. One side of the argument will win.

And these days, with incentive structures being what they are, what wins? It’s often the spreadsheet. It’s the budget—the accounting—that wins.

How to apply this knowledge

All of this is easy if you see the resource allocation and statements of strategic intent and can make the comparisons. If you’re on the outside looking in, it can be tougher. Here are a few practical points.

To test strategy and budget alignment, consider the following hot spots:

  • Capital allocation: How is the company allocating its capital investment? Is the company in a mature market yet overspending on growth capital? Is the company pursuing a cost-driven strategy but starving assets of even minimal maintenance capital in order to drive earnings? These things can be discerned in most cases through even the highest-level financial reviews.
  • Overhead allocation: Does the company allocate overhead to the right places within its strategy? Is overhead allocated to administrative and risk management activities more than growth and renewal of the franchise? Is that what is supposed to happen?
  • Capability building/initiative spending: Can you find strong evidence of investment in capability building or renewal toward the stated strategic intent of an organization? If the organization is pursuing cost leadership, do you see evidence of investment in cost-leadership capabilities? Ditto for growth and innovation. Do you see it? Do they walk the talk?

Often, strategic discussions focus on the words of a strategy. Financial discussions frequently center on the math—forecast amounts of spend and investment vs. types.

In order to understand strategy applied, seek out the allocation of resources in the companies you own, serve, or work for.

Executives should use this sort of check on the strategies and budgets of their organizations. Avoid fooling others with and being fooled by clever narratives overlaying misaligned operations. Shoot for integrity.

Employees can use this as a test of whether the direction their organization is taking is actually the direction stated. That’s an important inkling when deciding where to ply one’s trade. They can vote with their feet. (Side note: Candidates can use this notion effectively as well. Does the company you’re interviewing with understand its resource allocations toward its aims vis-à-vis the competition? Does the audio match the video?)

Owners, board members, and investors simply need to ask the question and look for a satisfactory answer: What are the ways and means being applied to meet the ends being stated. They can also vote with their feet or, of course, with the stage hook.

The budget is an honest interpretation of strategy. It’s not the strategy, but it’s close. It’s Occam’s razor—the most direct path to strategic intent.

Follow the money.

What do you think?

Strategic Implications of Clark Griswold’s Turkey

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Clark Griswold’s turkey was an object of art on the outside, and a hollow mess on the inside. So are some strategic plans. Have the courage to call them what they are.

‘Tis the season. So, I figure…why not take advantage of it?

Remember that finely-crafted 1989 cinematic masterpiece, National Lampoon’s Christmas Vacation?

It provided us with such insightful and penetrating quotations as Clark Griswold’s “Hallelujah! Holy S#*@! Where’s the Tylenol?” It also gave us that indelible image of Randy Quaid as cousin Eddie poolside with his t-shirt tucked into a leopard print Speedo.

And, who can forget Eddie, the RV, and the storm sewer?

On a more serious note, the movie has a couple of meaningful lessons for leaders.

Yes, there’s the “Jelly of the Month Club” fiasco and the classic (and useful) quote by Clark’s boss about how things sometimes “look good on paper, but lose their luster when you see how it affects real folks.”

That’s a good one for all of us to ponder as we tweak our spreadsheets this Christmas season. But…

…I’m taking on the turkey.

Remember the turkey? It was beautiful…stunning even. Ask anyone who has labored near an oven, basting a roast turkey for hours on end, and they can tell you how difficult it is to achieve the golden brown visual perfection that is the Griswold’s turkey. See for yourself:

But then, the test.

Clark puts the knife and fork to it. And, well, click here if you don’t know the story.

It’s the letdown of letdowns–a finely tuned visual feast followed by the disgust of a dry, empty, cracked, steaming hole of a broken promise.

What are the leadership implications?

For those of us who are the cooks–the ones charged with compiling and crafting strategies, plans, visions, and ideas–the siren song of great visuals with no substance constantly beckons. We have the tools to create a symphony of perfectly prepared sights, sounds, and steam. We also have the pressure to perform and incentives to placate those we answer to, whether they are managers, executives, boards, or shareholders.

For those of us who are the carvers–those charged with reviewing such plans and possibly eating the cooking–such placating visuals can be blinding, especially if they confirm our desires.

In working with more than 30 large organizations and countless small ones as employee, consultant, investor, and executive, I have had the opportunity to witness and test countless executives’ abilities to cook up a plan, if you will.

A majority of the time, the cooking survives the knife and fork. It is grounded in facts, shaped to the reality of markets and constituencies, and staged thoughtfully. It is represented by people who know what they believe and can articulate it carefully.

But, every now and then, I’ve run across Griswold’s turkey. And, it’s not always obvious. Careful use of numbers, mindful (or at least artful) omission of realities, and tight stage management of the presentation all combine to create a golden brown shell of a vision or plan that anyone would want, supported by a scaffold of…nothing.

In those cases, two things became apparent (but, again, not always obvious..keep that in mind):

First, for the executives who knew that the plan was a, well, turkey; the immense focus of their time was on parrying the knife and fork. They delay, obfuscate, rotate the turkey five different ways, or just keep saying “it’s still in the oven.” They waste time. They aren’t all bad people, but they do tend to lack the courage to call it what it is. In some cases which one could consider unethical, they avoid examination of the underlying realities because they are playing a timing game due to misaligned incentives.

Second, for those who had to eat the cooking (that is, live with the choices of the first group)–the shareholders, boards, and true fiduciaries–the surprise of the broken promise leads to needs for hard decisions. They finally put their knife into the plan to carve it and eat it; and it turns into a dry, cracked shell. When the carvers finally do take action, people are fired and in the worst of cases investigated. Boards are turned over. Divisions or entire companies are sold or shut down. Shareholders, employees, communities, vendors and customers all lose.

I’m not necessarily talking about fraud, mind you, I’m talking about window dressing on a brick wall. For example: Griswold’s turkey could be the metaphor for the vast majority of companies founded and funded during the dot com era. They had beautiful plans with no reasonable path to profit. These were not (typically) fraudulent. They were, however, absolutely built on the back of willful blindness to reality peppered with really difficult incentive issues related to agency and timing.

What are we to do?

Step 1: Admit when you are looking at Griswold’s turkey. If the plan looks nice on the outside, but is a steaming mess of emptiness on the inside, be willing to call it out no matter where you sit. Have courage.

Step 2: Go to the knife and fork every now and then. For those of us who review strategic plans and are charged with poking around, be willing to poke with more than a finger. Ask the penetrating questions about the numbers, the dynamics, and the actions underlying the shiny shell of the plan. Learn to spot the obfuscation or honest ignorance that comes with Griswold’s turkey. Really think about the responses you get to your questions.

Step 3: Be careful as an executive or board member not to inadvertently provide incentive for others to bring you Griswold’s turkey by being soft, lazy, or simply too busy to inquire. Management claims to pursue a local market strategy but can’t name the markets, segments, or tailored approaches? Hmmmm… Maybe you’ve been too easy to fool or too comfortable with current performance.

Step 4: Be willing to slow down, start over or exit. So many instances of the Griswold’s turkey come from the need to show progress or a plan in the face of intense time pressure and expectations. It’s easier to polish up a PowerPoint and parry every question with “I’ll come back to you on that” than it is to know what you believe. If you are on the team, be willing to say when a plan isn’t ready. If you are reviewing the team, be willing to order them to go back to the clean sheet. If you are making strategic decisions, be willing to know when it’s time to stop cooking–to change leadership or exit.

These steps represent a critical aspect of leadership and a key learned skill: Calling a golden brown shell surrounding a hollow hot mess exactly what it is.

These particular turkeys are, as mentioned earlier, the letdown of letdowns. They are a visual tease. They lead to the disgust of a broken promise.

Learn to spot them, have the courage to avoid them, and role model the discipline to prevent them.

Hallelujah! Holy S#*@! Where’s the Tylenol?

Merry Christmas!

Energy Shocks Put a Premium on Foresight

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The current sea change in energy markets brings the need for foresight to the front stage.

 

Foresight feeds the foundation of strategy.  The ability to read and react to the likely future defines organizations and executives.

On November 25th, energy expert Daniel Yergin (writer of The Prize among many other interesting books and articles) appeared on CNBC to outline the impact of revolutionary changes in U.S. oil and gas production.  Here’s the Link. Video here.

The upshot?  The U.S. is becoming a bellwether energy producer…so much so that Russia and OPEC are losing sleep over how to handle the ocean of oil and gas that is slated to come from the U.S. in the next few years.

Subsequent to Yergen’s commentary–on Thanksgiving day–OPEC chose not to alter its production schedule.  This was a move to maintain share at the expense of price. The decision sent oil prices plummeting more than 10 percent on Friday.  Here is CNBC’s report on that.

So, what?  

These issues impact you, your organization, your city, state, and country.  Pick an affinity that you have–any affinity–and this news matters.

Imagine first a future where energy stays cheap. Imagine that the economics of the petrochemical supply chain are severely impacted by low prices.  Maybe the dynamics crush upstream commodity producers.  Maybe they enhance smart specialty producers who benefit from consumer spend and lower commodity costs.  However, lower energy prices directly impact players who depend on energy production, particularly in specific geographies. Laborers in geographies that lie on the high end of the cost curve might not enjoy this news; neither will suppliers to those work-forces–the ones that provide uniforms, tools, meals, and services like laundry and transportation. The more localized the impact, the worse it could be.

But every shock means opportunity.  So, meanwhile…

Imagine second a future where consumer and corporate disposable income is unlocked from the dungeon of costly energy.  Where an average family receives a dividend that amounts to real cash to spend, just because the world has become more efficient at extracting (and, yes, using) energy.   Imagine that the average manufacturer can also contemplate reinvestment of such gains.

Those two imaginary impacts of lower energy prices are strikingly significant to all companies, whether they play in the petrochemical space or not.   Now is the time to contemplate change (yes, 2011 was the time, but still, get on board now).

What does this mean for your end products?  How about for your capital projects? What about for your procurement targets and programs? Perhaps more importantly, what does this mean for your job?

The market-wide impact of energy costs is practically instantaneous.  In 2008, we saw a tremendous reallocation of production in the automotive industry due to sustained spikes in oil prices.  SUV and truck plants were closed, not just idled, as reality set in.  Demand for efficient vehicles spiked as well, spurred by some (perhaps spurious) legislation in that era.  Such corporate moves dwarf in relation to moves that consumers make as energy costs crowd out other spend categories.

What will this sort of change mean for your company or your career?  How do you sense and predict what different end states of the world look like, and how each one impacts your capital and expense allocation?

Think about the the future, and develop options for it.  Options are the foundation of strategy, and foresight feeds them.

What do you think?