Cheese, Change, and Cheyenne

Your signature characteristic as an executive will be how you respond to change.


Here’s a bit of verse for you, courtesy of country music legend George Strait:

She said, “Don’t bother comin’ home
By the time you get here I’ll be long gone
There’s somebody new and he sure ain’t no Rodeo man”
He said, “I’m sorry it’s come down to this
There’s so much about you that I’m gonna miss
But it’s alright baby, if I hurry I can still make Cheyenne
Gotta go now baby, if I hurry I can still make Cheyenne”

This post is about Cheyenne, and getting tangled up, and moving on, and dealing with unexpected change, and keeping on.

“Well, that didn’t go so well, did it?”

Have you ever had a meeting, project, job, or career move that resulted in such a polite evaluation?  Probably so. Things happen.  It’s how you react to things that will define your leadership profile and quite likely your career. It’s how you react to unexpected outcomes that will define you in front of your family, your friends, and your fellow professionals.

Life is full of surprises. Some of them are good, some of them not so good. We all have choices to make in how we respond to surprises.  Unfortunately, it’s human nature to do two things with surprises:  First, we like to take credit for favorable ones.  Second, we like to lay blame on others for negative ones.  These tendencies–taking credit and placing blame–are probably all around you, even if only in nuanced fashion.

How do we ignore credit and blame and just work to move on?

First, let me say that it’s hard.  A defining aspect of my role in the business community is that I have the opportunity to listen to many people who are in transition.  Executives are moving around all the time, and it’s easy to hear from them when your network is deep and your ears are open.  They really fall into two categories:

Category 1 transitioners are people who are focused on “why this happened.”  They fall into a cycle of diagnosis of what got them where they are.  They are focused on what they did right or wrong.  They get bogged down in blame and misunderstanding and pain. They find reasons that they were right and that others were wrong.  I’ve been there.

Category 2 transitioners are people who are focused on “what is happening next.”  They are the ones who recognize change for the opportunity that it is.  They work to define the next thing as quickly as possible. They get off the dime.  They move on.  They look forward. They hurry.

You want to know a little secret:  You don’t have to be an executive in transition to fall into these two categories.  You are in sales?  Fight to maintain a Category 2 mindset.  You are leading a company through a strategic change?  Yep… Category 2 is your ticket.  You are choosing a CEO to lead your company?  Look for Category 2 characteristics.

Category 1 people are caught in the credit/blame cycle–a perfectly natural but fully unproductive place to get caught. I won’t try to insult your intelligence beyond saying that Category 2 folks are the ones who are more successful in normal businesses and organizations.  They are also a lot more fun to be around.

They have a concept of what is possible next.

They have their Cheyenne in mind.

They are in a hurry.

Oh, boss, you don’t think it’s going to work out between you and me?  Ok.  I really liked it here, but I understand.  Gotta go now.

Oh, prospective client, you didn’t like my last and final sales pitch?  Ok. I have an appointment to make for later today if I can hurry.

This is not a post about surrendering and leaving at first difficulty. It’s about knowing how to move on when it is, in fact, time to move on.  I’m not saying have no memory or accountability for the past. I’m absolutely not saying what in the past does not matter.  I am saying that if you let it define you it will sandbag your next steps more than you’ll ever realize.

Author Spencer Johnson has sold 26 million copies of his famous book Who Moved My Cheese?.  The book is a parable about a couple of rodents who get too used to eating cheese that is in the same spot every day.  One day, the cheese is no longer there.  One rat sits still and frets.  The other?  It ties on the running shoes and gets going.

Change readiness (perhaps change openness) is a simple concept.  It’s also a concept that will define you for better or for worse.

Gotta go now, baby, if I hurry I can still make Cheyenne.

What do you think?

Yeah But, Yeah But, Do!

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.

Mark Cuban: This Bubble is Worse

Mark Cuban, famed Internet bubble beneficiary, Dallas Mavericks owner, and willing pundit, posted on his blog a couple of days ago about the new bubble in early stage assets.

Here’s your LINK

Cuban makes a compelling case that the current frenzy of investment in early stage companies (especially apps and small tech companies) is actually worse than the year 2000-era tech bubble.


Because there are far fewer options for liquidity for the types of early stage investments that are dominating today; and there is a far more diverse investor base putting money at risk.

He sets up the situation with this quote:

“In a bubble there is always someone with a “great” idea pitching an investor the dream of a billion dollar payout with a comparison to an existing success story.  In the tech bubble it was, AOL, Netscape, etc.  Today its, Uber, Twitter, Facebook, etc.”

Interestingly, Cuban lists… That caught my eye.

When a billionaire puts the source of his vast wealth on a list of companies that perhaps just maybe were sold based on a pitch and a dream, it catches my attention.   He actually overcomes the cognitive dissonance induced justification of how his own company was different; and just throws it in the street right alongside Netscape.

He then goes on to lament how the average Joe and Jane are now part of the angel investment crowd.  He explains how they have access to illiquid investments through angel investments and crowdfunding that they would not have had 15 years ago.

And he thinks it’s a bad thing.  His quote:

“All those Angel investments in all those apps and startups.  All that crowdfunded equity. All in search of their unicorn because the only real salvation right now is an exit or cash pay out from operations.  The SEC made sure that there is no market for any of these companies to go public and create liquidity for their Angels.  The market for sub 25mm dollar raises is effectively dead. DOA . Gone. Thanks SEC. And with the new Equity CrowdFunding rules yet to be finalized, there is no reason to believe that the SEC will be smart enough to create some form of liquidity for all those widows and orphans who will put their $5k into the dream only to realize they can’t get any cash back when they need money to fix their car”

It’s an interesting read.

Informed consent is a big deal.  When people have access to illiquid and extremely high risk investments, they have to know what they are getting into.  The implication here may not be so much that public valuations are totally out of whack, but rather that there is a shadow bubble of money being thrown at “big things” that come in illiquid packages.

I think Mark Cuban has hit on one of the dark sides of the democratization of capital allocation.

God Help Your Risk Takers…

Recent studies show that references to God in prompts to survey subjects lead them to take on more risky behaviors. This can have interesting implications for your strategy.

If you’ve been following this blog, you’ve seen multiple references to the need for leaders to underwrite risks and back their people.  I’ve cast this as the need for leaders to say “I’ve got your back.”

Here’s a post that goes into that concept in some depth.

Now, researchers at Stanford University have published studies that show people seeking more risk when they are reminded of God before making a choice between lower risk behaviors and higher risk behaviors.

Here’s a link to an article that outlines the findings.

The researchers posed various choices between higher risk and lower risk behaviors, and varied whether there were subtle references to God in the prompt.  For instance, an ad for skydiving might say, “Find skydiving near you!” or it might read, “God knows what you are missing. Find skydiving near you!”

The studies also differentiated between high risk behaviors in a moral sense and high risk behaviors in a non-moral sense.  Prior studies have shown that religious people tend to take fewer “moral” risks than non-religious people.

The summary of the study is this:

“…people are willing to take [more] risks because they view God as providing security against potential negative outcomes.”

Some implications for the strategist and leader:

The gist of this study is that when people believe they have some backing, even by supernatural forces, they are willing to do “more” than they otherwise would.

They view the security as valuable.

A few implication come to mind:

1.  People will take more risks if they know somebody is underwriting it, even (and especially?) God – You and I need to be good at letting people know when we have their backs.  Simple phrases like, “I know this is a risk, but it’s one that I’m taking, not you” can go a long way to putting people’s minds on business strategy instead of survival strategy.

2.  The source of risk backing has to be credible to the person taking the risk – It’s not enough for you and me as strategists and leaders to know that we have the backs of the people taking risks for us…we have to show, credibly, that we have sponsored others through tough risks and failure.  Religions form around stories;  so does your risk taking (or risk-averse) culture.

3. People have to be reminded – It’s important for people to know constantly that risk taking is backed by someone or something. In the study referenced above, people made marginally different choices by merely being prompted with the word “God.”  In your organization, simple prompts make that much difference.  When people are contemplating risks in your organization, do the prompts come with “I’ve got your back,” or do they come with “You’d better not mess it up…”?

All of this matters for you and me as leaders and as strategists.

Strategies involve taking risk.  Otherwise, they aren’t really a strategy.

They also involve people taking risks on behalf of the company and themselves.

Unless, and until, we get good at being clear on the risks we expect other people to take, and have credibility on the point, our people will take fewer risks.

Compound that with the converse situation that tends to get more play at the water cooler in risk averse cultures–namely, constant references to the negative things that happen to risk takers–and the leverage of a few simple words and actions becomes clear.

God help your risk takers…

What Entrepreneurs Know that Corporate Execs Forget…

By looking at what entrepreneurs do well, the rest of us can learn something about strategic decision making and action.

It was 1997.

I was lucky enough, though I didn’t know it at the time, to score an internship as employee number 5 or 6 at E-Loan, Inc.  Such was one of the benefits of being a college student in the heart of Silicon Valley:  There were a lot of start-ups, and there was a lot of work to be done; so a guy like me with no experience beyond manual labor, retail, and a stint as a bouncer could find himself uploading the entire database of lending products to the start-up’s website every morning–performing the critical action of the company’s existence.

In the months I spent at the company, which spanned the launch of the website and the tripling of the employee base, I gained a lot of respect for what high-pace entrepreneurship actually is.

The rest of the E-Loan story is a lot like many others of the dot com era:  Growth, then a hot IPO, then challenges, then acquisition, repositioning, and ultimately in the years that have passed, a company that resembles the original only in name.

The rest of my story is a bit different. I took that experience, along with some other quality early-stage investment experience, and ended up as a larger company consultant and diversified manufacturing executive.  Those experiences have been exemplar of the sort of yin and yang learnings that my own life trajectory has offered; and that frankly inform the bulk of this blog.

Insight from all of that brings me to this:

Larger company leaders can learn from entrepreneurs how to occupy the “pinnacle” of strategy.  That pinnacle is the moment of decision.  It’s the decision seat.

Entrepreneurs do this well because, in essence, it may be all they have.

Large company executives do this poorly because they have the luxury of resources and time.

But they (perhaps, you?) can get better at it.

The Pinnacle of Strategy

What’s the pinnacle of strategy, and why the mountainous metaphor?  In short, it’s the decision seat that stands atop the mountain or molehill of data, insights, analysis, and synthesis of a point of view.

As a McKinsey alumnus, I have been well steeped in (and am a proponent of) Barbara Minto’s “Pyramid Principle” method of thinking and communicating.  The top of the “Pyramid” in action-oriented logic is a synthesis of a point of view. Only far too often, a point of view at the top of a pyramid lacks a pinnacle. That pinnacle is occupied by a decision maker, steeped in the rest of the pyramid, but willing to drive a decision.

Often–particularly in large company bureaucracies–the seat is vacant.  That reality is what gives so many consulting reports their negative dust-collecting reputation.

The difference between entrepreneurs and executives

When it comes to occupying the pinnacle, entrepreneurs have no choice.

During my time at E-Loan and around numerous other start-up businesses, one thing became clear:  Somebody was going to make a decision.  E-Loan was in the business of underwriting mortgage loans in California when it started up.  It, like many dot com businesses of that era, had no real automation when it came to processing the actual deluge of loan applications that came through its website.  We were processing loans on paper.  The popularity of the web being what it was, and the peculiarity of discount mortgages offered online being what it was, the company was quickly overwhelmed.

So, what happened?  Did the founders ponder the data?  Think about talent strategy?  Run endless spreadsheets?  Set meetings in order to plan?  Call a board meeting?


They made decisions.

Hire 5 people. Set pricing at x. Weed out bad applications by doing y.  It was all heady, seat of your pants decision making that was grounded in a strong appreciation for what had to be done and for the business model they thought would win.  There was no “stop and study it.”  It was “study it as we go.”

The greatest entrepreneurs, therefore, occupy the pinnacle of the pyramid even as the pyramid is being constructed.  They sit on the scaffold, not on the bricks.  They are hypothesis driven.  They are (and I apologize in advance for going here) fundamentally inductive in their reasoning.

In short, they are action-oriented.

Contrast that with today’s executive management culture.  Executives across industries lock into linear thought processes.  They go from data, to facts, to insights, to risks, to options, to strategies, and ultimately to a hypothesis.  And, then, they may or may not occupy the pinnacle.   They are fundamentally deductive.  

They have that luxury.

In short, they are, on average, ponderous and cautious.

What do big companies get wrong in their leadership cultures that entrepreneurs get right? 

This is a story of incentives and how we respond to them.

Most of this difference comes down to the old adage about “messing up a good thing.”

For the entrepreneur, the “good thing” is still out there in the primordial soup of opportunity.  She has to act in order to realize opportunity.

For the executive, the “good thing” is the here and now.  It’s far too often the salary and bonus that accrue from just nudging the controls this way or that.  The upside of taking a risk is minute in comparison to the downside of losing power, position, or prestige.

And, that is what large companies ultimately get wrong.  They provide incentives for executives to protect their position, to manage risk vs. capturing opportunity, and ultimately to guard the status quo.  Big, strategic decisions come with millions of dollars of study and sign off not because it’s necessary for large companies, but rather because no one really wants to sit on the pinnacle.

Entrepreneurs know that they get paid when they act.

Executives often get paid not to act. Often, they get paid very well, in fact.

This simple fact is evidenced by the bloated cash positions on some companies’ balance sheets (coupled with latent debt capacity) these days. Corporate executives, faced with decisions whether to invest or wait, have the luxury of waiting.

In the worst of cases, corporate executives earn rents based on time.  “The longer I’m in the seat, the more money I’ll make.”

In almost every case, entrepreneurs create value based on action. “I’d better hire/build/sell or I’m out of cash.”

Would that a little bit of the latter mindset could seep into the former.

So What?  

We are all strategists.  Given that, we should all beware the “study further” cul de sac and focus on a healthy approach to action orientation.

Taking some tips from entrepreneurs, a few things come to mind that might bridge the gap between endless study and deductive processing of strategic problems and efficient, inductive decision making.  These are applicable for you as an individual professional and for the highest level executive leading the most complex multi-national.

  • Know what you (or your business lines) are about – I never met an entrepreneur who didn’t have a strong view of what his business is.  I have met, dare I say, thousands of corporate employees who couldn’t tell you the financials of their company and, worse, how their job connected to them. I’ve also, sadly, met numerous executives whose point of view on what they or their company is about amounts to meeting a budget connected to a bonus structure even when they know it is destroying value (again, rents vs. value).


  • Size up your pyramid – Study is a good thing.  Finely considered decisions can be fantastically successful.  The dirty little secret is that a healthy proportion of momentarily considered action is also successful in creating value.  Know when enough study and analysis is enough.  If you are building a pyramid, know whether you really need one made of bricks that will last 10,000 years or one made of Legos.  This matters.


  • Match pace of decision making with pace of business – If you and your competitors are slow moving, perhaps you have more time.  Or, perhaps, you have an opportunity to outrun them.  During the dot com era, the frenetic pace of decisions was matched to the land grab that was the growth of the Internet.


  • Occupy the pinnacle – Every strategic act worthy of study is worthy of a decision.  This is true whether you are thinking about your personal career or thinking about how to steer your business.  Be willing to occupy the pinnacle of the pyramid; and remember, in the immortal lyrics of Rush‘s “Freewill,” if you choose not to decide…You still have made a choice.


  • Know what incentives you are giving people– My final shot is at incentive structures.  Do your company’s or your personal incentives (and by that, I don’t mean bonuses, I mean the holistic set of incentives a given person has) drive you toward action or inaction.  Do people get rewarded for taking action, or for avoiding it? Do you?  Whether you are an HR executive or a Board member, build a healthy appreciation for opportunity costs into your incentive system.  Some incentive structures, if shareholders knew the behaviors they engender, would embarrass the board members and executives who enact them.


By bridging the gap between the “corporate risk manager’s” strategic approach and the entrepreneur’s approach, we can learn a lot about how to inject a little more action into our approach.

Occupy the pinnacle of strategy.

How to Punch Through Adversity

A renewed focus on individual and organizational entrepreneurship provides a “puncher’s chance” when dealing with ambiguity and adversity.

On November 5, 1994, an object lesson in responding to adversity occurred.

On that date, 45-year old boxer George Foreman–known as much at that time for being the spokesmodel for his eponymous grill as for his boxing–knocked out Michael Moorer, who was up to that point the undefeated reigning World Heavyweight Boxing Champion…and 19 years Foreman’s junior.

Moorer outboxed Foreman for nine rounds, turning Foreman’s face into a fleshy swollen mess. During those nine rounds, Foreman struggled to throw punches and certainly didn’t evade many thrown at him.

And then, in the tenth round… Boom.

Foreman, well known for his punching power, slipped in a short right hand that crushed Moorer’s chin, knocked him to the canvas, and won Foreman the championship for the second time after a 20 year hiatus.

Here’s that classic 10th round on video:

Note the comment from Foreman’s corner man at the beginning of the video:

We gotta put this guy down…we’re behind, baby!

They knew they were losing. Foreman had eaten a steady meal of Michael Moorer’s right jab.  He was way behind and beaten badly.

Foreman was old, heavy, slow, and beaten up going into that 10th round. Moorer was young, fast, strong, fit, and ahead in the bout.

But, Foreman had a chance. His chance was embodied in his wrecking ball of a right hand.

That “chance” put Moorer’s lights out at 2:12 of the video.

The Lesson…

There’s this thing in boxing. It’s called the “puncher’s chance.” It means that a boxer with a strong punch–a go-to skill that can turn a bout on a dime–always has a chance to win. The puncher’s chance applies to those who have it even when they are the lowliest underdogs facing the most superior of opponents.

It doesn’t guarantee a win, but it offers the light of hope to those who have it, even in the midst of a beating. It is literally a means of punching through adversity.

So What?

We all should aspire–individually and in the teams and organizations we lead–to have a foundational capability that helps us punch our way out of adversity. In the most dire of circumstances, having a core capability to call on can mean the difference between having a chance and having none.

We should aspire, in other words, to cultivate a puncher’s chance.

In simple terms, the puncher’s chance in a business environment is a valued capability that, regardless of environment, allows an individual or an enterprise to endure, grow, and prosper.

Be careful, though: For every true cultivated go-to capability, there’s an mountain of pablum about “competitive advantage” and “core competencies” to wade through.

There’s also that catch about “valued” capability–be careful not to claim the ability to spin and confabulate as constituting a valued capability. It isn’t. It’s a delaying tactic just waiting to be exposed.

So, what gives you a puncher’s chance?

What foundational capability gives you your best chance to overcome adversity, individually or as the leader of an entire enterprise?

Is it superior operations? Sales? Marketing? Product development and innovation? Design? Supply chain expertise? Executive talent? Cost control? Effort and work ethic?

In reality, that’s for you to answer. It might be different for you.

In my estimation, the best analogy to the puncher’s chance in business is a deep seated appreciation for and cultivation of


It’s the crushing right hand just looking for a chin to demolish. It’s the single latent capability that can save an organization time and time again, regardless of market context.

Unfortunately, it’s also the capability that gets quashed most quickly by risk-averse and resilience-starved corporate hierarchies.

Still, in the most staid corporate contexts you’ll encounter, where cost control and small thinking rules the day, it is on the shoulders of a few enterprising individuals and teams that success tends to ride. Those individuals drive activities like:

  • Development of profitable new products and markets that nobody in the corporate hierarchy wanted.
  • Development of new customer accounts that others viewed as too hard, too distant, or too far off strategy.
  • Growth of key leaders who renew the organization in tough times
  • Response to muted customer inquiries that turn into significant opportunities
  • Establishment of entire new businesses that feed off the capabilities of the organization in entirely new ways.
  • Constant focus on competitive activity and required responses, acting as the few sentinels for the health of the organization.

In the process, the individuals and teams who do these things create possibilities where none existed…

…and that, my friends, is what the puncher’s chance is all about–a very real something from an apparent nothing.

But, how do you cultivate it?

On some level, it’s fair to debate whether entrepreneurship as a capability is a nature or nurture proposition. I’d argue that entrepreneurial capability can not only be taught, but that it is also contagious.

The flip side is that it is also easily extinguished.

In any event, if you are looking to cultivate this particular punch, here are 5 ways to start:

  • Establish clarity on boundariesEnsure that you achieve clarity on what values apply (i.e., what you won’t do) and what boundaries exist (i.e., where you won’t do it). This applies to you and to your organization.
  • Relentlessly encourage resourcefulness The most ossified of organizations fall into the trap of top down management. People in the organization become so used to being second guessed that they never even bother with the first guess and therefore lose whatever entrepreneurial spirit they had. Encouraging resourcefulness means asking for, listening to, and developing novel perspectives on markets and solutions to pressing issues vs. telling the answer. It also means holding yourself to a standard of generating options vs. finding problems.
  • Generate risk awareness Ensure that leaders in the organization have a sense of ownership and understanding of the price of risk. This can be done through incentives, but also through mere transparency around how capital of all sorts is allocated within the enterprise. Such transparency shows smart people the types of risks a company is willing to underwrite and reward. For you individually, establish thresholds for risks you are willing to take with your career, your income, and your wealth.
  • Role model resilienceIn an odd and ironic point of fact, senior executives in large organizations tend not to be all that tolerant of ambiguity or error. That reality is a driver of the great divide between the mindset of an entrepreneur and the mindset of a solid corporate manager or executive. Corporate managers look at a project and see all the risks, the reasons not to do it, and how to effectively hedge the budget. Entrepreneurs tend to look at a project and wonder why it can’t be done faster and better; all the while disregarding any need for hedging because “you win some and lose some.” Execs need to role model a resilient mindset more often.
  • Reward entrepreneurship asymmetrically – Though such an assertion flies in the face of the world of compensation hierarchies, benchmarks, job classes and bands, and workplace equity; find ways to recognize and compensate intelligent risk takers asymmetrically. Too often, the perceived cost of entrepreneurship exceeds the potential recognition or upside. It tends to look more like executives and shareholders providing a “heads I win, tails you lose” proposition when viewed from the lower end of the hierarchy. Share the wealth…Loudly.

No matter how beaten up your organization is in its markets, how many product launch failures you’ve endured, how much market share you’ve seen erode; the ability to constantly redefine and attack markets and problems with an entrepreneurial edge gives you and your organization a puncher’s chance.

These tips work for enterprises large and small, and certainly work for individual professionals. History is rife with examples. Apple Computer emerged from being a PC maker to being a dominant player in mobile and media markets. Texas Instruments was once an oil and gas exploration services company. GE was Thomas Edison’s hobby shop. IBM made mainframes.

But, watch out!

Perspective matters. Many of you reading this think you know your core ability…”I have it, it’s my competitive advantage and it’s X” (fill in the X with your known strength). Keep in mind that while you might be the fit, strong champ in control of the bout, the other guy just might have a stone cold right fist to throw your way.

The other guy might have a puncher’s chance. Watch out for it.

Today, executives believe that 46% of global strategies fail to deliver. So many companies are trying to develop agility top-down in order to respond to a rapidly changing environment.

We simply can’t rely on top-down thinking driven by corporate savants to save the day.

So, cultivate a tight focus on entrepreneurial mindsets alongside loose control over skilled people.

Do it to drive wins, even while choking on the modern world’s heavy dose of volatility, uncertainty, complexity, and ambiguity.

Cultivate your own puncher’s chance.

Find a way to win.

Energy Shocks Put a Premium on Foresight

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?