Tag Archive for: Strategy

What Tesla’s First Autopilot Fatality Teaches Us

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What to do when your product kills someone.

 

Tesla is in a pickle today.

It has a product feature that has killed its user. Now Tesla has to walk the fine boundaries between legal defense, public relations sensitivity, technological defense, and moral culpability.

The National Highway Transportation Safety Administration (NHTSA) has opened an investigation into the circumstances surrounding the death of a Tesla motorist employing Tesla’s much hyped Autopilot feature.

The motorist was cruising on a divided highway when an oncoming tractor-trailer made a left turn in front of it, clearing enough space that the cruising Tesla drove right under the trailer, removing windshield (and one would assume killing the inattentive drive instantly at that moment) before continuing to cruise into several more collisions.  A diagram of the accident is here.

 

It’s a straight up oncoming left turn–not some freakish move by another motorist that could not have been judged. And, the Tesla drove right through the truck without seeing it.

That’s scary.

Now, there are a few issues related to the use of new technology that come to mind here, namely that there are risks to using new technology in general, and in particular when it involves moving your body at high speed.  The first people to fly in airplanes faced a much higher risk of death than those of us who partake of air travel do today. It’s part of the process.

But… When the technology is uniformly hyped, results in a fatality, and then its purveyor only defends the technology, then the purveyor is on the hook.

Okay, well, no, probably not legally.  As Tesla not so subtly posted in its blog about this crash, the company immerses the user–every user–in disclaimers about the technology while allowing the user to use it. From the blog post:

It is important to note that Tesla disables Autopilot by default and requires explicit acknowledgement that the system is new technology and still in a public beta phase before it can be enabled. When drivers activate Autopilot, the acknowledgment box explains, among other things, that Autopilot “is an assist feature that requires you to keep your hands on the steering wheel at all times,” and that “you need to maintain control and responsibility for your vehicle” while using it. Additionally, every time that Autopilot is engaged, the car reminds the driver to “Always keep your hands on the wheel. Be prepared to take over at any time.” The system also makes frequent checks to ensure that the driver’s hands remain on the wheel and provides visual and audible alerts if hands-on is not detected. It then gradually slows down the car until hands-on is detected again.

That is a mouthful that basically says “use at your own risk.”  And, that’s fine, but to place “public beta” software in charge of multi-ton hunks of metal and plastic moving at 90 feet per second seems a bit…aggressive. And so I’m betting Tesla will face a bit of backlash about the technology.

Which brings us to Tesla’s other defense… the one using numbers. In its blog post, Tesla says:

This is the first known fatality in just over 130 million miles where Autopilot was activated. Among all vehicles in the US, there is a fatality every 94 million miles. Worldwide, there is a fatality approximately every 60 million miles.

And, this is fine, but it’s also indicative of a marketer or PR person using statistics–not a person who understands the stats themselves.

You want to make a fair comparison of the safety of your technology, Tesla?  Great, then let’s do a couple of things…

First off, let’s remove from the 130 million miles cited the mileage merely using active cruise control, because as I understand it those miles are aggregated in there.  That is sure to be a LOT.  That will leave the mileage that Tesla’s are being used with “autosteer” engaged.  That is the technology in question. That means that this fatality came with far fewer miles driven than the company claims.

Second, the company is appealing to the base rates of fatalities as evidence that Teslas on “autosteer” are safer than other cars; but the base rates used are highly misleading.  Okay, so there is a fatality in the U.S. every 94 million miles driven.  That’s fine; but it includes, for instance, people who die from overloading their 1978 Ford Pinto and then losing control after a blowout.  It includes drunk drivers.  It includes people driving old cars, and cars with mechanical deficiencies, and cars with bald tires.  It also includes fatalities where the driver was killed by the negligence of other drivers–not simply their own.

In short, it’s not a base rate that’s comparable for Teslas driven by sober drivers on divided highways. That rate is different, and likely less flattering for Tesla.

The correct base rate starts with the rate of fatalities of people driving brand new luxury automobiles.  And, that matters. In the chart below, you see the car models with the lowest driver death rates, and the models with the highest rates.  Tesla isn’t in league with the Kia Rio or the Hyundai Accent (two cars that happen to have drivers who die at high rates). To suggest it is so is to pad the PR.

The correct base rate also includes cars on divided highways, and where the dead driver was the inattentive one who drove into an avoidable accident.

So what?

First, the facts are actually not likely to be in Tesla’s favor even though Tesla has attempted to lead with facts.  The legal case probably is in Tesla’s favor, but it’s not clear the moral case will be…because:

Second, I’m betting that Tesla drivers, like the one in the unfortunate crash incident, are using this nascent technology and expecting that it will not run them broadside into a tractor trailer.  The hyperbole surrounding the tech, and the feel good ego boost of owning a six figure investment in new technology, likely clouds judgment.

Third, when it comes to new products, it’s probably too aggressive to put highly dangerous equipment in people’s hands and call it a “public beta.”

As someone who is a fan of the prospect of self driving cars but who had no idea the aggressiveness of Tesla’s placement of this technology onto actual roads, I’d say it’s time for them to go back to the drawing board.

One fatality does not make a new product category go away, but Tesla faces a very fine line between legal defense and technology evangelism.  When your product kills someone, especially when it kills someone during a routine circumstance where the technology should have obviously worked, resorting to bad statistics and legal disclaimers is a bad idea.

The right thing to do is to fix the technology, not to spin its goodness.

As always, caveat emptor. And be careful out there.

Benchmarking – how do you measure up?

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How benchmarking can leave you on the bench

 

A few weeks ago, my family and I took a trip to the beach. We arrived in the middle of a monsoon, so I parked quickly in an empty row and dashed into the hotel. The next morning, I looked out of the window and saw, with a mixture of amusement and embarrassment, that I had parked at a significant angle. Not only that, but five cars to the left and two to the right had done the same. My parking faux pas had changed the rules of the game.

Measuring ourselves against others is an inherent human trait, at both a personal and business level. It’s basic risk avoidance. But our choice of comparison could lead to sub-optimal decisions.

When we compare ourselves, we make assumptions. Firstly, as in the case of my parking, we assume that others know what they’re doing. They may not. For example, just because a company is the market leader, it doesn’t mean they excel at everything. They may also have made a conscious decision not to invest in an area on the basis of its perceived strategic importance. Website development for large industrial companies is a case in point.  To them,  the website is often viewed as a company intro as opposed to a key touch point and sales channel. It doesn’t mean it’s not an opportunity for others, though.

We might also be comparing ourselves with the tallest midget, meaning that the entire industry falls short.

Looking at others in the industry is not a bad thing.  It’s the basic tenet of market intelligence.  But challenging the status quo or looking outside our industry could also lead to significant opportunities.  Take Xerox Corporation, for example. Several years ago they were dissatisfied with their their order-fill rate, so they looked at online apparel retailer, L.L. Bean. Turns out they were 3 times more proficient at moving items from inventory to the customer than Xerox.  A visit to  L.L.Bean’s facility helped them understand why and take away ideas that they could replicate.  I hate to reference Apple, since it’s what everyone does, but I was intrigued to learn that their Genius Bar is apparently modeled after the Ritz Carlton’s guest service. Having recently waited 30 minutes just to pick up a new phone, I’m not entirely convinced they’ve nailed it, but they did check me in and remember my name.  No fluffy slippers or mints, though.

So next time you are scanning the horizon for comparisons, think twice about where you look and consider a different direction.

How about you…how do you think about benchmarking as a strategic tool?

 

 

About That Horse You Rode In On…

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What’s your second act?

 

In 2001, at the time of the 9/11 attacks, it’s arguable that Delta Airlines was sitting in the best position of any other airline in the industry.  With a strong balance sheet and strong industry positioning, Delta was arguably best positioned to weather the impending shocks to air travel that 9/11 would bring.  Only the world changed even more than a strong balance sheet would cover…and Delta’s longstanding brand and culture were forced into bankruptcy.

You could call it a lack of agility.  I might call it a lack of awareness.  The company had seen many changes to airport security and customer mindsets before and was in a strong position.  Its leaders probably didn’t think they needed to change all that much…and that inertia was fatal. Delta’s leaders knew where they were, but failed to understand that how they worked would not work in the new world.

So, as for you: You may know where you are.  You might have a view of your “strategic context.” That’s usually the starting point of a solid strategic plan…assessment of where you are today. The tools are legion: SWOT, MACS, SCP, etc. etc. etc.  Call me, I’ll probably be able to name a few more.

But, strategy isn’t about the tools, it’s about knowing what you want to BE and finding out what you are going DO in order to BE that thing in the future. In other words, it’s about figuring out what the future requires and getting to it.  Having a vision for where you want (or need) to be is all the more important if the world is changing quickly.

So, if you are like the average executive, you’ve probably figured out a play that you run for success. You probably have a routine, an approach to leading people, and a default set of questions you ask…no matter the context.  And, just like the average executive, you probably really can’t figure out how to change your routine.

I’ve got bad news for you…The horse you rode in on is probably tired.

You need a new horse.

So, how do you do find it?

As an individual executive you have to find a source of renewal.  You have to be able to look at the world and try new things.  It’s not a bad thing, and it might even keep you young. That guy who won’t shut up about something new he wants to try?  He might be your key to flexing your muscles a bit.  That advisor who just might have a new idea or two, perhaps you should listen to her.

Organizations are different, and in some ways harder to cause to switch horses. Why?  Well, put simply, they are a collection of individuals.  If it’s hard to get an individual to change, then that level of difficulty is compounded in organizations.  Some executives might be energized to change at one point, while others are not…the whole organization, then, starts to look like a slow speed traffic jam…where some executives are speeding up while others are coming to a stop.

What to do? Half the battle is admitting it. The other half is being thoughtful about how much horse you really have left, and what your next horse really needs to look like.  In our practice, we take the time to listen to the context of an organization before working with our clients on the next step.  If the next step means a new horse, it’s certainly important to know the rider’s style of riding.  Otherwise, the attempt to switch horses will fail.

I encourage you to think about where you are, and (if indicated) be proud of what got you here. But, I encourage you to realize that the horse you rode in on is probably tired.  The chances of that are much higher if you are in a rapidly changing (or shocked) sector.

One thing is certain: the world is change.  That horse you really liked is probably going to mature and decline.  That is true whether the horse is a business, a technology, or even a set of management practices.

You need fresh horses.

Be willing to get help looking for them.

What do you think?  Have you ever seen an organization run out of horse? 

Yeah But, Yeah But, Do!

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With an overabundance of data and information, we have to find a way to get past “yeah, but” and get to “do!” 

 

Did you know that some poor soul on the battlefield at Gettysburg left behind a rifle loaded with 23 projectiles? It’s true. When you understand the vast effort required to load a muzzle-loaded rifle, you start to understand the peculiarity of this anecdote.

Now, do you know any poor souls who toil under a leader who is great at loading but never pulls the trigger? You know him… He’s the guy who, no matter what, needs more analysis. He needs more information in order to make a decision. You get the sense that if he were in the middle of the road with a semi-truck bearing down on him, he would ask for an estimate of its speed before deciding to get out of the way.

I’m betting you know this guy.  He is the Fred Flintstone of business… Only he’s always “yeah, but” and never “do.”  Don’t be this guy…

Our current overabundance of data and information allows us the benefit of knowing so much in so little time that we can forget the need to actually act.  Decision makers make decisions.  That means they take information, perceive it, process it, and decide on it.  When you spend too much time perceiving and processing, the battle passes you by.

You end up with a rifle loaded 23 times and never fired.

Not to mention you end up with an organization that is exhausted by all the loading…the constant analysis and responding and delaying and dithering.

As a provider of strategic insight and analysis, I personally wage war against analysis paralysis in keeping to a philosophy of practical strategic impact. Sometimes, this means helping clients acknowledge when they know enough to fish or cut bait.

When is enough enough?  Well, that depends.  In one of my first blog posts, linked here, I went into a bit of detail on Bayesian Inference as a powerful tool for strategic (and interpersonal) analysis. Knowing when you have enough information to make a decision is a critical skill in all leadership positions. In leadership positions that come with the luxury of delay, determining whether to do more analysis really comes down to the return on investment:  Will the new analysis prove or disprove what you substantially already know?

A lot of times, the answer is “no.”

Make a decision.

Yabba Dabba Doo!

I’m curious what you do to ensure you are acting vs. analyzing… Please share.

About That Winning Streak…

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Winning streaks are both essential and dangerous…know the difference. 

 

How important are winning streaks?

A winning streak is a great thing.  It shows consistency.  It shows advantage. It shows careful attention to detail and general focus on the win.  It may even show talent.

But winning streaks are also dangerous. Just as anyone who has ever played a sport will tell you, a winning streak creates immense pressure within some individuals and immense complacency in others, and sometimes it’s hard to tell who is who.

In the business world, a winning streak might looks like a streak of closed sales against a main competitor. It might look like a streak of earnings increases over prior quarters.  It might even look like a streak of successful product launches or talent acquisitions. Streaks come in all shapes and sizes.

As a strategist, I argue that streaks are important in a few ways.

Namely,

They build credibility where none may have previously existed.  Human minds are really complex but sometimes awfully simple; show your board or your organization a stream of small wins, and they will get it, but show them a string of wins broken by a string of losses, and they will wonder what you are getting at.  In most change efforts, a focus on early and visible wins is a core element.  There’s a reason for that…the wins build credibility.

Streaks also create attraction.  People like to bet on a winner, so it’s great to point to wins when attracting talent or wooing that next acquisition.

But streaks have a downside, and that has to be managed.  I’ll put it in the same two categories that I mentioned at the start of this post:

First, streaks create pressure, both individually and organizationally.  Why?  Because who wants to break a streak?  The downside of this pressure is that it can lead to ethical lapses because the streak must be maintained.  “We never lose” is a very dangerous mantra because it comes with the implication that we either never really challenge ourselves or we play the game in such a way that it is rigged to our advantage.

Second, streaks engender complacency.  I happened to be a part of a global firm during the last economic downturn. Many, many individuals in that firm had grown up as the recipients of a built-in winning streak.  The phone rang, and there was work to be done. However, as the economy changed, many had to suddenly learn how to sell, and a few weren’t very good at it.  Their complacency was complete.

The implications for all of us on this topic really do vary. I’ll try to put a few out there:

If you are leading change, be sure to find ways to create a streak or two. Credibility can depend on it.  Have the discipline, for instance, to leave some low-hanging fruit for others to capture vs. doing it all yourself.

Also, be sure to capture your winning streaks, celebrate them, and use them as strategic tools for talent attraction and relationship building.  Taking a moment to reflect on a streak can be powerful in almost any circumstance.

If you are in the midst of a streak, be sure to test for corner cutting or ethical lapses when the streak is uncannily extended. So, do you have a business unit that has never had a loss?  Check for whether they are burying their talents or their skeletons in the name of earning their bonuses.

Finally, if you are part of an organization that has never had a significant run of bad luck, then take the time to force the “what if” conversation and to build the contingent skills now.  It’s a bad thing to be the guy who has been sitting pretty for years based on a high tide, but who is now grounded and without the skills necessary to get unstuck.

Your career may depend on it.

Come On, Feel the Noise!

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You need a little noise with your signal to spice up your life.

 

Do you use services that depend on your prior “likes” and “dislikes” to serve up suggestions to you? You know, like Amazon, Pandora, or other eerily perceptive services that depend on your input to provide you with tailored experiences?

Do you think that those services depend on serving up only what you want, and not a few things that you might want?

Of course they don’t.  They may know you like Bruce Springsteen, but occasionally throw in a little bit of Bob Dylan.  Why?

Just to see.

Just to see what *might* be the boundaries of your likes and dislikes.  And, besides, if they only served up a steady helping of exactly what you like, then your life would get more and more limited, and more and more boring, to boot.

And, there is a lesson in that.

In order to find the edges of our capabilities, we have to step outside of our comfort zones.  We have to create tests of our boundaries.

We have to, in short, introduce noise into the system.

Now, all my highly structured, management guru, six sigma worshiping friends are saying NYET!  Variability is a bad thing.  I want what I want, when I want it.

Well, sure you do, but how do you know you are getting what you really want?

There is a “thing” in the physical world known as “Stochastic Resonance” or SR, for short.  SR is a phenomenon whereby the introduction of noise to a system actually amplifies the ability to see the signal.  The signal stands out more because of the noise, not without it.  Just like when we use Amazon’s suggestions, we can find what we really like by virtue of introducing a steady stream of things that we might not clearly like.

The signal gets clearer.

And, while I’m leaning on examples that have to do with consumer marketing, this type of thinking has applicability to strategists everywhere.  We in business have been brought up in systems that point to noise as a bad thing.  People who don’t do exactly what they are told are bad employees.  Financial performance that is noisy is bad financial performance.  Manufacturing processes that have variability are bad processes.

These are concepts that are near and dear to the hearts of management scientists everywhere.

Minimize uncertainty.

Create systems that minimize thought and choice.

Plan the economy.

Only, a strange thing happens on the way to technocratic nirvana…we scare out the entrepreneurship.  We scare out the little variances that create or illuminate opportunity.  We–in full thrall of the arrogance that we can create systems that know all–remove the ability for a little bit of idiosyncrasy to add to our lives.

So, what does this really mean?  Well, let me offer a few ideas.

  • For teams you lead…introduce new perspectives.  You have a team of engineers?  Bring an artist to a meeting.  You have a team of bankers?  Bring an operations guy to the room every now and then.
  • For you as an individual…Try something new.  You like playing golf? Try poker.  You like finance?  Spend a few weeks working on a marketing project.
  • For your organizations…find it within yourself to encourage a few more experiments.  Give your organization some leash and see what it can create.  Sponsor people.
  • For your organizations’ external relationships…find a way to create more of them.  Test partnerships.  Date more.

With a little bit of noise, you might be able to more clearly discern opportunity.

When The Spin Stops

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Reality bites.  It bites a lot harder when you avoid it through spin and hyperbole. 

 

The Wall Street Journal reported this week that Theranos CEO and majority owner Elizabeth Holmes is under threat of major government sanction including a personal multi-year ban from the lab testing industry.

Holmes, a darling of the “unicorn” hype machine and a manufactured pop culture executive with outstanding political connections, has given every indication over the past 6 months that she is dedicated to a culture of spin to keep her venture going.

One need only look at the preceding and succeeding headlines of the piling on media tempest to see the realities of a spin machine undergoing a slow-motion train wreck.

First, the hype focuses on Holmes herself–she has an interesting story, and she makes for good press: College dropout, new technology, black turtleneck, mysterious company.

“This Woman Invented a Way to Run 30 Lab Tests on Only One Drop of Blood” – February 18, 2014

“This CEO Is Out For Blood” – June 12, 2014

Then, there is an expose’ about how the company’s technology might not actually work.

“Hot Startup Theranos Has Struggled With Its Blood-Test Technology” – October 16, 2015

That is followed by the righteous indignation of the company and its founder.

“Elizabeth Holmes Slams Theranos Critics” – October 21, 2015

But then people start to get wise.

“The Cautionary Tale of Theranos: Beware Runaway Stories” – November 15, 2015

And individuals start to question the overall honesty of the enterprise and its founders.

“How Theranos Misled Me” – December 17, 2015

“Could Theranos Go From Unicorn to Unicorpse?” January 28, 2016

“Theranos Sounded Too Good To Be True And It is” – February 2, 2016

“Study of Theranos Medical Tests Finds Irregular Results” – March 28, 2016

“Theranos wasn’t forthcoming” – April 14, 2016

Finally, as was published this week, regulatory authorities come into the picture, and in the case of Theranos, it wasn’t pretty.  In a tersely worded letter, Centers for Medicare and Medicaid Services (CMS) officials basically told Theranos and Holmes that they are about to get the death penalty.

You can’t spin your way out of that one.  That’s when the spin stops.

So who cares about this?

Well, you should.  You probably work with people who aren’t exactly forthcoming about things that really matter.  You know them–they’re the ones who lead organizations by expounding on ethics but whose honesty and integrity are known to have more holes than Swiss cheese by those who have worked with them.

Those types have the cardinal virtue of likability, which ropes people in with narrative and story and can actually hold quite a portion of the world in thrall.  But narrative can’t overcome a lack of substance forever, and that is what the Theranos story shows.

The Theranos case also illustrates something more general.  Theranos is a high-profile, high-growth, “disruption”-oriented company.  Such companies come with a healthy dose of optimism because they are founded on the principle of swimming upstream.

But…there is a boundary in strategic thought that defines the difference between optimism and spin.  It’s the boundary between honesty and dishonesty and is usually defined by a few markers.

First is personality vs. performance – if you find that the focus of a business strategy is on the charisma and glibness of the organization’s leaders vs. actually confronting performance issues, you probably have a spin problem. A charismatic leader is a great thing, but it can’t be the only thing.

Second is story vs. strategy – if you find that the focus is constantly on getting your story straight vs. actually addressing the merits of the strategy, you probably have a spin problem. This includes an overweening focus on what not to show others (management, boards, investors, the press).  The more you have to artfully conceal–especially from fellow insiders–the more you are probably in the spin zone.

Finally is attacking vs. listening – If you find that your leaders, or the leaders you’ve hired, resort to the classic ad hominem approach when criticized, then you probably have a spin problem.  Somebody questions the numbers and suddenly becomes a “jerk.”  Somebody else brings up an issue with the logic of a strategy and is discredited as “academic.” Yet another person calls into question the sustainability of a company and simply isn’t around at the next meeting. They are attacked, whereas a sound culture listens and responds.  Elizabeth Holmes, in the case above, decided that it would be a good strategy to attack a two-time Pulitzer Prize winning journalist at the Wall Street Journal as publishing baseless trip.  There’s a certain arrogance in that.

These markers all form the boundary between basic optimism (a good thing) and basic spin (a bad thing). They all demarcate boundaries between healthy and sick cultures.

If you look at the Theranos case, you can see failure on all three markers.

What happens when you look at your own culture?  What about your own leadership style?  What side of the boundary are you on?

What happens to you when the spin stops?

It’s All Moneyball…

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The search for value is the key to strategy.

 

Michael Lewis’s Moneyball never did provide the answer to the question of where value is in our own lives, but it certainly inspired us to look.

Remember Moneyball?

It was a book by Michael Lewis… a guy who has made a career out of taking mundane subjects (like bond trading, high frequency stock trading, left tackles, and baseball scouting) and making them imminently interesting by melding fantastic stories around the topics.  You may have recently seen one of his works come to the big screen in The Big Short.

Moneyball was Lewis’ take on the search for value and the need to avoid “conventional” wisdom…especially when one faces constraints that conventional thinkers do not.  the story was simple: The Oakland A’s were an anomaly.  They won more games than they were supposed to when their payroll was factored in.  That’s right… dollars in, wins out was considered to be the metric.  Why?  Because all scouts were assumed to be looking at the same components of talent: a traditional view of the “tools” that ballplayers had been evaluated on for years.

Only something happened…someone, somewhere realized that the value of a ballplayers in terms of the game itself wasn’t necessarily correlated with the old school way of looking at things.  Turns out that players who were unorthodox when measured by traditional metrics but really effective at doing things that got them on base more often were actually undervalued by those who scouted and paid ballplayers.

In other words, a key trait was undervalued in the market, and a team like the Oakland A’s that would focus on that trait could find valuable ballplayers with a lower pricetag.  That translated to wins for fewer dollars.

This insight is brilliant for anyone in business: When everybody else is paying for traits, it’s good to try to pay for results.

This is true for my friends who pay up for educational pedigrees that don’t translate to results.

It’s also true for my friends who go after market trends because they are “hot.”  Anytime there is a clear stampede to something, ask yourself why. Is there value left in the equation?

In a world of hype and conventional wisdom, have the patience to seek value.

What do you think?

The Worst Strategy Metaphor in Use Today

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Choose your business metaphors wisely, because they say a lot about how you view the world.

 

 

One of the minor annoyances present in the business world is the use of metaphors that are resoundingly misfit.

How often do we talk about “blocking and tackling,” or “moving the ball down the field,” or “hitting singles and doubles,” or going for the “Hail Mary” in our everyday professional lives?

How many times have you heard even these simple ones mixed up, as in “I think it’ll be a home run, but the boss keeps moving the goal posts…”

Often. Right?

But every now and then, a metaphor is used so often it becomes a paradigm that is dangerous.

The metaphor of business as a “chess match” is one of them; and I’ll tell you why.

Chess and chess matches, when viewed in the light of the complexity and ambiguity of the business environment, are purely tactical. Chess is tactics. I write this despite the existence of a body of literature suggesting that the preparation, staging, execution, and ultimately winning of chess matches amounts to exacting preparation for business leaders…Strategic nirvana.

I’d argue it’s analytic nirvana–necessary but insufficient for a strategic metaphor.

Alas, chess as strategy is a bad metaphor for business mortals. While chess allows us to illustrate the depth of analytic thought on an issue (the best masters of chess can see deeply into a match to judge moves and patterns); it lacks the breadth of conceptual thought necessary to be an active analog for business strategy.

Mastery of tactical depth counts for something, to be sure. But mastery of strategic breadth, on the other hand, counts for everything.

The issue is that we conflate the two…Badly.

The most magnificent Chess minds spend thousands and thousands of hours mastering tactics. They learn every potential combination of openings and defenses. They spend their lives immersed within the very box of patterns and potential moves that, for some reason, has become synonymous with “strategy.”

They do this, and yet they have been mastered by machines. Think about that for a moment, and you can start to see why the game is based on patterns and repetition vs. intuitive, virtuosic strategic brilliance. The mechanistic logic of chess is its own prison, and thus is the reason chess is a bad metaphor for business.

Allow me to create the mental image of business as a chess match, then you be the judge of whether it rises to the level of a sufficient strategic paradigm:

Imagine that you and I both agree to play in a business arena where we:

  • Start with the same resources
  • Agree to the same set of moves
  • Operate on the exact same game board
  • Disregard comparative advantage
  • Agree not to move pieces in any innovative manner
  • Operate in a purely zero sum environment
  • Keep all moves open and transparent
  • Avoid arbitrarily upgrading or switching out pieces for pieces with more power
  • Prevent the lowly from ruling the mighty (as in the illustration above)
  • Avoid outside sources of power, resupply, or leverage (i.e., capital, partnerships, brand equity)
  • Will on average play to a draw if we both play the game as well as it can be played (“…chess is a draw” according to famous grandmaster Gary Kasparov)

…and so on.

Are we now engaged in a strategic struggle for the ages?

No.

We’ve chopped all the degrees of strategic freedom save two: Our experience and our intellect. All the real world strategic levers I’ve outlined above lie in the negative space of a chess match.

In short, once you’ve taken nearly every strategic variable off the table, you are left with a chess match. It’s two people matching wits. That, folks, isn’t strategy, it’s a contest. It’s a highly regulated, constrained caricature of real world strategy.

Chess is a closed system. Real world strategy is an open system.

Strategy is about exploiting means to achieve ends. The first means anyone exploits in a strategic contest is whether to play on the terms available. While chess matches do offer the option of a “surrender,” to do so is to incur a loss and to provide a massive advantage to one’s adversary.

A second, and very important means, is the means of overinvestment. Overloading a single point of weakness (or strength) at a single point in time is a key real world capability. Put a team together to go after a single customer? Go ahead, it’s the real world. Overload on a chess board is a sequential thing, not an instantaneous one.

Other strategy games offer exit and overload options (like folding or going “all in” in the game of poker)–limiting losses or allowing asymmetric bets based on early indications that the game is or isn’t worth playing.

These moves are analogous to real world actions. But, they aren’t really an option in Chess.

If business were such that one could simply study all the moves in history and play the next match, it wouldn’t be all that tough, would it? That is essentially what has happened in chess. If it were so in business, IBM would have developed the Deep Blue machine for business back in the 1990’s and we would all be working for IBM at this point.

That, my friends, may be the best evidence for the misfit metaphor: If a computer can outwit a grandmaster (and they pretty much all can at this point), the game is one of logic and pure horsepower; not one of strategy.

If it were a game of strategy, the grandmaster would unplug the computer first, and then ask it to make its first move–while smiling of course.

Add to all this the cardinal observation that properly played chess will typically result in a draw (as noted above) and you have a very dangerous metaphor for your organization (implicitly, if you play well and lose, you did something wrong…Not always the case in business and life).

So, what?

I write this not to split hairs, but to illustrate the importance of the metaphors we put in front of our organizations–especially during times of change. So many of the metaphors we use are quirky; but some of them are downright dangerous.

If we are to pursue an enlightened approach to strategy, then using metaphors that speak to openness, flexibility, and canniness are much more on point than those that involve pure intellect applied to closed systems that imply no loss as long as strict discipline is maintained.

The metaphors you choose say a lot about how you view the world: Do you view your organization’s business environment as a closed, zero sum game, or something different?

File this one under strategy, change leadership, and perhaps curmudgeonly explication (as if LinkedIn needs more of that).

Note: The current Carlsen – Anand world chess championship match inspired thoughts for this article. Though the game of chess may not be a good business metaphor, the drama of championship chess matches can be quite a thing to behold and study.

Geoff Wilson is a strategy executive focused on the articulation of practical strategic principles for leadership. He also harbors the specific indignity of blundering into a fool’s mate one time in the 7th grade. He has just started a Twitter presence and still isn’t sure what to make of it, so consider following: @GeoffTWilson

It Ain’t What You Put Into It That Counts

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A foolish focus on the inputs can endanger your strategy, company, and career.

 

Have you ever heard someone say something like,  “I’ve worked 75 hours this week.” (Of course you have.)

Have you ever heard a manager or business leader expound on the dollars spent on something?  “We’ve spent ten million dollars on implementing this effort.”

Have you ever seen an approach to business strategy that focused solely on the available inputs?  “We have two factories, the strategy has to focus on those.”

Worse, have you ever witnessed an approach to strategy that only focused on organization, infrastructure, or edifices?  “Let’s build it and then figure it out.”

I’m betting you’ve seen at least one of these.

And really, what’s wrong with focusing on how much work you’ve done, or the money you’ve spent, or the assets you have in place today, or the capital you could deploy tomorrow? Here’s what:  They are all inputs.

A strategy, whether for wars, countries, companies, or individual careers, is about ends, outcomes, objectives.  A strategy without an objective is a dance.  It can be beautiful, but it is ultimately just a play…kabuki at its finest.

When “being strategic” means focusing on the hours you’ve worked or the dollars you’ve spent, you’ve probably already lost the battle.  Why?

For the professional individual, a focus on how many hours you’ve spent doing your job is frankly just silly.  I have a healthy respect for people who work hard; I really appreciate it.  However, if a person works an 80-hour work week when a smarter person would work only 50 and get the same result, why is the input of 80 hours relevant?  When people start to focus on time, particularly in knowledge work roles (we aren’t talking the factory floor here, folks), the organization will suffer.  It usually signals a transition in the conversation from the “responsibilities” of a role–generate an output that has value–to the “rights” of the individuals–work a reasonable work day.  The conversation for an individual ought to be about the product of the work, not the time spent doing it.

A wise senior leader of a global consultancy I know well once told me, “If you can’t consistently do this job in 60 hours a week, you may not be smart enough for the job in the first place.”  That’s a pretty interesting perspective.  A true pro focuses on the outputs of their work and negotiates the resources to ensure the right output at a reasonable input of their own resources.

For companies and senior leaders, the problem is a little different.  Business strategy is about deploying resources to achieve an objective.  Some senior leaders are exceptionally good at these sorts of things without even thinking about it, but some, frankly, are not.  The ones who are not good at it tend to use strategic planning as a reductionist exercise to meet “non-strategic” objectives–budget numbers, financial incentives, etc.–that in all reality don’t tie to the health of the company as a whole. A focus on inputs at a company level usually comes in the form of binding constraints that aren’t really constraints at all.

Instead of asking the question, “What would it take to win that account from that competitor?”, they say, “How can Ralph from accounting take on this new sales role and try to get some wins?”  When hunting elephants, bring enough gun.

To wit, managers use only the talent and capabilities they have today in thinking about their business strategies.  They focus only on the financial resources they have at this moment to achieve their objectives.  They allow themselves to focus on optimizing their existing pie charts of businesses, assets, resources, talent, etc. vs. thinking about what the future pie can look like.  In other words, they focus on the inputs.

So what?  

For yourself, watch out for a creeping sense of martyrdom about how much you put into your job; instead, focus on what’s coming out of it.  Shift the focus to results attained and only then zoom in on what it would take to sustain them.

For your company?  This is tougher.  First, management teams have to articulate practical business objectives for a strategy to be real.  “Take hill 1221 from the enemy” is a strategic objective; “cover 2500 meters and burn only 5,000 gallons of fuel” is not.  Yet we allow companies to run on goals and metrics (or budgets) that look like the latter, and in some cases, they operate with management not even knowing what hill to take.

All this is to say that it’s healthy to ask yourself whether you are too focused on the inputs of your strategy and not enough on the outputs.  It is not, however, to say that constraints don’t matter; constraints are important, and they should be reflected in any strategy.  To use my analogy above, a strategy that says “Take hill 1221 from the enemy using only a cigarette lighter, five rubber bands, and a Daisy bb gun” is what I would call a good start toward revising your objectives.

On hill 1221, that might get you killed.  In your company, such ignorance of constraints might just get you fired.  It’s the strategist’s job (and we are all strategists at some level) to balance strategic objectives with degree of difficulty and possible resources (not resources on hand…important distinction, that).

A foolish focus on the inputs can endanger your strategy, company, and career.

Now, if you’ve come this far, take a moment to leave a comment.  Hundreds of people read this blog, and your insights matter.