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Revenge of the microeconomist in the real world

We are in a world of opportunity and hurt.  Demand is high, spirits (and prices) are up, and supply is constrained.  What’s a leader to do?

Geoff Wilson

When I was a young man I learned microeconomics on the back of a simple diagram with two lines…one for demand (always downward sloping) and one for supply (this one goes up).

Turns out, the microeconomists were right.  Mostly.

We are living in a fever dream at the moment.  It comes with the pleasure fog of rising demand for…well…everything as people regain the confidence that they can interact and transact with one another without threatening lives. It also comes with the tormenting nightmare of not being able to hire, source, or build the products and services that they need.

There’s plenty of blame to go around. The most plausible explanation is that we are simply mired in the midst of a massive supply chain bullwhip that is synchronized around the world for once. As positive and negative information trickles out across industry chains, individuals firms attempt to adjust…and they do so badly.

Add the labor-market distortions brought by extended unemployment benefits, extended school and family support organization closures, fear of the unknowns around coronavirus reoccurrence, and general inflation; and you have a multi-faceted political and commercial game that would make George R. R. Martin blush.

But all of this is couched, at least for the moment, within a massive environment of opportunity.  Demand is popping for most of the economy, and poised to pop for much of the rest.

So (as I’m often wont to ask), what’s a leader to do?

Here are a few ideas.

  • Embrace, but prioritize, the opportunity: George Patton’s theory of war was “violent attacks with everything, everywhere” and, while Patton was certainly an effective field general, that theory won’t get you far when you have more opportunity than fuel (yeah, Patton ran out of fuel, too).  Reinvigorate your opportunity analysis approach.  Sometimes, in the cold light of day, an opportunity to serve an existing customer more deeply is actually a massive drain of resources that should be deployed to new customer demand. Sometimes, the opposite is true.  How will you know until you’ve actually thought about it?

 

  • Take the opportunity to actually, really, innovate: Your cupboard is almost bare and your stove is almost out of gas, but the customer is ready to eat. Sure, you’ve always cooked the meals in-house, but perhaps now it’s time to try something new.  Innovation is a funny thing.  We all “talk” about being innovative, but–as the old saying goes–necessity is the mother of invention. Use the constraints to identify new ways of serving customers and allocating resources.  Maybe it’s time to look more closely at your portion size controls, or your fueling strategy, or your staffing policies, to see if a habit of “just a little bit extra” for customers who are “in”  is creating a reality of “just a little too little” for new customers.  Maybe it’s time to look at your inventory (or talent) pools in Pacoima, Paris, Prague, and Pune and think about them more globally.  Innovation might just be the act of ensuring your organization has the tools necessary to allocate and reallocate resources. It might also be investigating whether your current models of working are overbuilt for accomplishing the task at hand.

 

  • Explore new supply chain structures and mechanisms: Your suppliers haven’t performed, so what do you do?  Hammer them. Am I right? Penalties, complaints, responsive declarations of force majeure, and just plain angry talk abound right now.  Maybe it’s time to think about how to partner differently.  I have no doubt that new, enduring partnerships will be forged from the fever fire of the current environment.  I also have no doubt that a lot of relationships will be broken in ways that won’t be forgettable in the near future.  Take the time to look your suppliers in the eye and solve problems with them.  Look for new ways of partnering.  Look for new economic models (maybe incentives vs. penalties). Look–most importantly–for the priorities you need to set.  Oh, and if you are the one getting hammered, it’s ok to partner more closely with those customers now…and then fire their keisters later.  An elephant never forgets.

 

  • Get rid of taboos: There’s that group across town whom you’ve never worked with because, well, you don’t like them. Maybe they stole your cookies once in the lunchroom in 3rd grade. Maybe they fired you once. Maybe they based their operations in China (or California) and you just won’t go there. Taboos can relate to suppliers you work with, customers you would never put on allocation, places you’d never recruit from, or any number of other things.  Your proverbial elephant maybe hasn’t forgotten a bad experience.  Maybe you need a new elephant. Challenge those old taboos.  We are in a time of supply creation.  Think that way.

These are ideas.  They might not apply to you, but then again some might.  I encourage you to look at your own situation for what it is, and choose accordingly.

The economists have us in their thrall at the moment. We are waiting for the invisible hand to rise up and do its work. In the meantime, we see opportunity, and we see constraint…and in between the two is the imperative to act.

Now it’s your turn:  How are you thinking about tackling the current supply / demand imbalance?  Punching an economist is not a valid answer. 

Your lack of takt is showing!

The faithful delivery of services and product on time is a challenge, maybe it’s time to apply more production-floor common sense to services.

Geoff Wilson

Stop me if you’ve heard this story before:  An executive hires a consultant to solve a problem.  The consulting agreement is for a lot of work–maybe redesigning the way an organization is structured–in a little time (and for a lot of money).  The consultant comes in, does the work “on time and in full,” and drops off the report at the end of the engagement.  The executive’s team hardly notices the consultant was there because, well, the consultant moved really fast and the organization didn’t.

The executive is left with a book, a recommendation, and a confused organization.

Sound familiar?  I suspect it does for those who have worked with any high-powered, high-fee consulting firm.

What’s the issue?

Well, let me unpack a notion from the world of lean manufacturing, and then come back to this example.

In lean manufacturing, one of the critical sources of waste is overproduction.  That is to say that making too much of a product and sloshing it into inventory is wasteful.  It wastes valuable production resources, not to mention valuable capital.

The solution to this type of waste is to align production resources to “Takt Time.”  Takt is a derivation of a German word that means “pulse.”  Takt Time, then, is the pulse of an operation or a business.  And, what is the actual pulse of a business?  It’s the demand for products and services within a given time period.  If demand for my product is thirty units per month and my organization is open every day, then my effective Takt Time–the time I should take to make and deliver a product–is roughly one day. Making more than one per day is wasteful.

There are many nuances to this line of thought, and it’s certainly possible to get too “lean” in your thinking.  Many companies have.  But the notion of Takt Time is super useful for an executive trying to balance strategic initiatives and daily business activities.

Let’s revisit our executive at the beginning of this post. Our executive has agreed with the consultant on the pace and delivery of a work product, but the organization is focused on daily management activities.  The strategic organization work falls into the category of important but not urgent.  In the end, the pace of the delivered work product is too fast for the organization to engage around at its current pace, leading to a far less than optimal delivery of the consultant’s product.

The product could be a total waste.

So what? Well, I bring this up because while Takt time is a concept that is well known in production environments, it is not well applied to services environments. And this is a tragedy.  Why?  Because products can be inventoried and eventually liquidated.  Overproduced services (like our consultant’s report above) are typically wasted.

To probably feel the result of a lack of service “Takt” in a lot of parts of your life. How often are you overserved “all you can drink” beverages by an overly enthusiastic server?  Maybe even more poignant in today’s economy:  How often do you find that your “subscription” service (for meal kits or pet food deliveries) ends up piling up wasted products, time or energy?

Often, I’ll bet.  And it’s because nobody actually aligned your real demand for the beverages or pile of meal kits in your kitchen with the actual pace of delivery.  When buying or selling services, consider the actual pace of consumption or the actual ability of the service to be consumed, and plan accordingly.

It’s all about Takt.

Now it’s your turn: How does matching service pace and demand fit with situations you are dealing with? 

Legacy lessons from NASCAR’s worst wreck ever

We all leave a legacy of some sort. Ryan Newman’s survival of NASCAR’s worst wreck ever highlights the contrasts of passive and active legacies.

Geoff Wilson

Do you know the legacy you are leaving with your business, team, or organization?

It’s surprising how little this topic actually gets highlighted when managers and executive teams focus on their strategic aims.  Sure there are legacies that are left via who you are–for example the ethical legacies like that of Marvin Bower at McKinsey or innovation legacies like that of Gordon Moore of Intel and Moore’s Law fame.  Those were probably not forged in a boardroom strategy session but rather through strength of personality.

But, there are also legacies left in a couple of other ways.  There are passive legacies that result accidentally, and there are active legacies that result from thoughtful focus and intervention.  This weekend offered a stark contrast of the two.

Monday’s Daytona 500 ended with a vicious wreck where driver Ryan Newman–leading the race at the time–was bumped from behind and spun violently into the wall of the final turn in the race.  His car, pictured above, went airborne, was struck broadside by another car at 190 miles per hour, landed on its roof, and then slid for a quarter mile or more in a conflagration of sparks and flames.  Here’s a post with that wreck:

Most are saying the wreck is the worst in NASCAR history.  Rescue crews took a long time to extract Newman from the car, shielded by black screens that usually signify tragic carnage on race scenes.  Speculation was rife that Newman was killed in the wreck, and prayers and concerns swept social media.

But, Tuesday morning brought news that Newman had survived.  As of this writing, details remain sketchy, but reports are that Newman is not only alive, but also is awake and conversing with doctors and family.  Doctors have said his injuries are “non-life threatening.” And, while such announcements can no doubt hide life-changing and awful injuries, they offer hope.  Furthermore, Newman’s survival illustrates an amazing pair of legacies.

The first, is the unfortunate legacy of the last race driver fatality in NASCAR’s elite division.  That would be the 2001 death of Dale Earnhardt, Sr.  Earnhardt Sr.’s death–on the same track at almost the same spot as the Newman wreck–happened one day shy of 19 years before Newman’s wreck.  For those who are not NASCAR-literate, that wreck killed the biggest legend in a sport that is rife with legends.  It was, put simply, the equivalent of Michael Jordan, Lebron James, Tom Brady, or Lionel Messi dying on the court or field.

And, it changed the sport.  NASCAR changed mandates for safety equipment and changed car and track characteristics significantly.   Many fans are acknowledging this:

At the same time, Ryan Newman is being acknowledged as having a safety legacy of his own. Newman has been an outspoken safety advocate who is responsible for the addition of the “Newman Bar” to the roll cage of the current NASCAR car design.  That addition may have saved his own life on Monday.

Which brings me to the punchline of this post.

The sad reality is that a lot of passive legacies are written in blood.  The Earnhardt legacy can certainly be characterized as such.  Without going too far in trouncing a legend, I’ll put it this way:  Earnhardt came from a tradition of selective usage and even modification of readily available safety equipment that was allowed within NASCAR at the time. But, that selective usage arguably cost him his life in a wreck that “looked” far less violent than the Newman wreck.  I quote “looked” because I know firsthand that television cannot convey the real physics of collision like this.

Active legacies, like Newman’s with the “Newman Bar,” are quite different.  They are active modifications in hopes of protecting the future. They are also often implemented without fanfare or–thankfully–tragedy.

Not seeing the connection to your legacy yet?  Consider such passive legacies as innovation funding or safety investment cuts to meet current quarter profit targets.  What do they leave for the future?  Consider such active legacies as protection of training and development programs for your team. What do they leave?

The list could be long on both sides of the ledger.  I only pose the question:  What kind of legacy are you leaving, and are you trying to leave it?

What do you think?

Are your people uninspired? Maybe it’s time to hang the DJ.

Your strategy is supposed to inspire.  Have you forgotten?

Geoff Wilson

What’s the purpose of your strategic plan?

The possibilities are endless.  Some might say that the sole purpose is to “enhance shareholder value.”  I’d argue that this old trope is no longer the gold standard.  Some adhere to the stakeholder model…which might be closer.  Regardless of the “concept,” a given business strategy has to appeal to a lot of people.

Strategy, inasmuch as it deals with things that are less certain and immediate, is an argument.  It’s an argument formed from assumptions that are (or should be) formed from knowable facts and less knowable (but educated) estimates.

But, something tends to happen on the way to building business strategies that derails one of the most important imperatives.  We lose the power of inspiration. Usually, we lose it when the hardcore management nerds get ahold of the strategic planning and implementation “ecosystem” and start overswhelming the organization with jargon, tools, and really smart pablum.

A strategy is an argument, for sure.  But it’s an argument that is–in the main–supposed to inspire action against specific aims.  And, when you lose inspiration, you lose action.

How do you know if you are building an uninspiring strategy?  Well, if it’s uninspiring to investors and the board they usually let you know.  Where it gets tricky is when it’s uninspiring for employees, customers, partners, or other stakeholders.  A lot of times, they will vote with their feet; and you don’t want that. The best way to test is usually to ask.  I know, I know…too easy. But, it’s true.

So what’s a well-rounded leader like yourself to do if you find less than stellar inspiration in the ranks?  Well, it depends on who the uninspiring one is. I’m reminded of the lyrics from The Smiths’ still fantastic song “Panic.”

It goes something like this:

Hang the blessed DJ

Because the music that they constantly play 

It says nothing to me about my life

Hang the blessed DJ

Do you see it?  Are you the DJ?  Do you know who is? Did you hire the DJ?  Did you allow the DJ (in the form of very smart but totally uninspiring consultants, perhaps) to hijack the strategy and make it a “value creation strategy” vs a truly inspiring enterprise strategy?

If you are authoring uninspired strategy, or hiring those who are, then consider starting over.  If your strategy isn’t touching people where they live…through things that are relevant to their lives and livelihoods, then you are probably going to get hung at some point anyway, so why not just do it yourself?

Build strategy to inspire. And if you haven’t done that?  Hang the DJ.

What do you think?

It’s what you give that matters

How much do you focus on what you give vs. what you think you do?

Geoff Wilson

“It’s not what you got, it’s what you give / it ain’t the life you choose, it’s the life you live.”

– What You Give, Tesla (the rock band)

Have you ever met an executive that focuses a LOT on the skills and capabilities she has amassed, but who forgets to measure the actual impact of them?

I have.

In the strategy world, we talk about capabilities, value propositions, and sources of competitive advantage.  Those are all super, super important.

The problem is, they don’t always translate to outcomes for those who matter most:  The customers who derive pleasant value from products, services, and experiences; and the employees and other stakeholders who play a part in delivering them.

In other words, only looking at your balance sheet and what it contains–both tangibly and intangibly–is a recipe for disappointment in the longer run.  And, it’s all about the longer run, so make no mistake.

Tesla (the rock band, not the inventor or the auto manufacturer) had a less appreciated song that I’ve quoted from above.  It essentially says, that life is about outcomes, not ownership or expectations.  Your customers know this.  Your employees know this.

Don’t you doubt it.

So as you think about your strategy–as you decide to position yourself for the future–be sure to focus on what you give and the life you live…not the things you have or the choices you think you are making.  Focusing on outcomes vs. assets can lead you to very different conclusions about how to position your business and yourself.

In other words, be sure to focus on outcomes and not intent. Intent is far less memorable to your customers and other stakeholders than outcomes.

You can take that to the bank.

What do you think?  Is it possible to focus on outcomes vs. assets?  

 

 

New year, new you?

Renewal is the word to embrace at the start of the year.

Geoff Wilson

2020.

Two thousand twenty.

For those of us born and reared prior to the turn of the century, just the concept of 2020 is striking…it’s as if we are living in the future.

The turn of the decade brings to mind an important habit for executives of all kinds:  the habit of reflection and renewal.  More than just “re-setting your plan,” a habit of reflection and renewal is about a full breakdown of your career and personal aspirations and–this is the important part–how your current actions align against them.

The most effective executives I know are experts at reinvention. Without being haphazard, they are thoughtful about what to cast off and what to bring into the fold when it comes to their professional lives and their overall endeavors. The kicker is that this habit isn’t done as “change for change’s sake,” it’s done as a means of renewal

Renewal.

Not change.

Renewal implies the continuation of the good, a re-upping of time and effort against things that matter most.  And, it implies that some things are left to expire.

As we start this new decade, it’s good to consider what your own points of renewal are.  This habit can be focused on your personal life, your career, or your overall business.

Maybe, in your personal life, you might seek to renew a writing hobby but to allow a portion of your screen habits to expire.

Maybe, in your professional life, you might have a renewed focus on developing new expertise in your particular function or profession.

Maybe, in your overall business, you might have a renewed focus on a particular strategic thrust at the expense of boondoggles of the past.

Think renewal.

What do you think?

5 ways strategy deployment fails

Deploying your strategy isn’t easy, here are 5 reasons deployments fail.

Geoff Wilson

The reality of strategic management is that it requires having a strategy and actually managing with the strategy as the touchstone. The first part isn’t easy…plenty of management “stories” masquerade as strategy without actually being founded on real choices about what to do and not to do.

The second part–managing with the strategy as touchstone–is downright hard. It’s hard because organizations have inertia…they keep moving in the direction they are already going. Overcoming this inertia is a real challenge when it comes to deploying strategy that involves a change in direction. Here are 5 root issues that we frequently witness for companies that “have” a strategy but are struggling to deploy it.

  1. Nobody knows: The executive team has focused on building a strong, coherent strategic plan.  The organization never gets the word. Need I say more?
  2. Strategy management is left to staff functions: Every strategy at organizations of any significant size and complexity comes with a need for coordination, control, reporting, and management.  So, many organizations set up a staff organization (in some companies, it’s a single person) to help coordinate the strategy.  The problem starts when line leaders start leaving strategy program execution to the staff organization.
  3. Initiative definitions are lofty and cute but ultimately meaningless: The company has a great, tailored set of marketing messages, but initiatives based on marketing messages are hard to manage. They need to be based on actual process change. “Customer success” may sound great to you and your friends, but how do you drill that down to the bedrock actions that deliver on such success? If your strategy can’t connect to economic and process reality, then you are probably here.
  4. Workstreams masquerade as initiatives: An initiative is a self-contained effort to change “something” within the company.  Great strategies are made u up of initiatives. The change may be around a process or product.  A workstream is a subset of activities within an initiative.  It may be somewhat self-contained, but it ultimately lacks standalone sense apart from the Initiative.  In other words, a workstream rarely delivers an overall result…it requires the result of other workstreams and coordination among them.  Many, many strategic deployment structures fail because they create “accountability” for workstreams and call them initiatives.  This results in every “initiative” requiring constant and tedious C-Level intervention to actually get things done because, well, none of the “initiatives” is actually self-contained.  While this may look like an odd and technical distinction, it actually matters a lot because it represents a failure of delegation.  An initiative ought to be self-contained as to design and to general decision rights, or else it’s just another cross-functional conflagration.
  5. The future is undefined: The deployment lacks a vision for the future. This is the opposite of point 1.  Strategic deployment looks like business as usual, but with PowerPoint and neat messages about component outcomes.  If your strategy lacks a view what the future state of the business is, it may be lacking something.  People are much better at executing when they have a view of a future than they are when they are given only concepts and objectives.  If you find that you are spending more time communicating with powerpoint and slogans than asking about the latest progress toward margin or sales improvement, you might be in this bucket.

There you have it:  Five reasons that strategy deployment fails.  There are many others, but these are my “five.”  The antidote is actually pretty simple to articulate, but harder to execute:  vision, communication, integration, and followup.

What do you think? Have you found the secret to great strategy deployment? 

 

 

What Andrew Luck just taught us about protecting top talent

Andrew Luck’s retirement shows that if you don’t protect the talent in your organization, you won’t have it for long.

Geoff Wilson

Andrew Luck announced his retirement Saturday night.  Luck, the intriguingly smart and fantastically gifted quarterback of the Indianapolis Colts, basically explained that the constant cycle of injury and recovery he has gone through for the past few years had ground him down emotionally and physically.

This is a particularly personal story for me.  I am not one who is a big fan of individual football players.  It’s a team sport, and I enjoy the team aspect.  So, let me just put it this way:  Andrew Luck is probably my favorite football player of all time.

Now, there are those who disagree with Luck’s decision.  Some claim it’s a silly financial decision–Luck is leaving nine figures of future earnings on the table.  Some claim it’s a cowardly thing to do–football players always have to pay the butcher’s bill, and Luck’s “quitting” young speaks to his softness of character.

For those people, I’ll only say this:  Let the person who has taken snaps in the NFL with a lacerated kidney and peed blood afterward be the one who judges Luck.   I could stand on my soapbox and talk about “playing hurt” with the best of them, but I’ve witnessed Luck’s NFL career, and the guy has earned the right to make whatever decision he wants.

Andrew Luck is a generational talent. Unfortunately, the Indianapolis Colts teams that Andrew Luck led were built to exploit his talents, not to protect them.  So, the Colts had this big, strong, fast, smart quarterback who could pull off the most uncanny plays and shake off the most vicious of hits; and they placed him behind an offensive line that for years could at best be referred to as a “patchwork” of journeyman players.  The running backs and receivers that Luck has played with were fair at best, and absolute fill-ins at worst.

The Colts took Luck’s greatest strengths–his ability to take hits and still raise the level of everyone around him–for granted.   Luck’s toughness and tendency to compliment players for making good hits against him have been well documented in his “mic’d up” segments.  And, as it often goes in the NFL, the tougher you are, the more likely you are to be injured.  Luck has suffered through a litany of injuries.

Zak Keefer has the most noteworthy tweet on Luck’s injury history today.  The physical toll on Luck through 6 seasons reads like someone who has been in a major car accident…not somebody who has actually played the most difficult position in all of sports at the highest level despite and concurrently with these injuries.  

The Colts organization is smarting from the retirement of its young superstar quarterback. Colts fans booed Luck as he left the field for the last time after his retirement was leaked during their preseason game.  Still, I’m going to just put it this way:

The Colts organization and leadership is getting EXACTLY what they deserve.  

The waste of a generational talent is a sad thing to see, but it was entirely foreseeable.  Luck was sacked 41 times in his 2012 rookie year.  That kind of pounding is psychologically withering to a quarterback more than almost any other position player because the quarterback has to have the confidence that he can focus on other things without having a sledgehammer swung at his chest on every play.   So, what should be the priority for the organization?  limit those sacks, right.

Luck was sacked an identical 41 times in 2016.  That’s four years later for the mathematically challenged.  The result is that Luck has had to come back from an awful set of injuries, with each comeback extracting a little bit of soul.

In Luck’s words, “it’s been unceasing and unrelenting…It’s taken my joy of this game away.”

Which leads me to the point of this post:  If you are an organizational leader who is leaning on a few star talents surrounded by a supporting cast of also-rans to “gut it out” on a daily basis, you are playing a very dangerous game.

Because when your top talent has had enough–when you have extracted enough of their soul by asking them to jump on yet another grenade dropped by a poor performing organization–it will be fully justified to go elsewhere.

You will get EXACTLY what you deserve.

And, if you aren’t doing this explicitly, it might be good to take a moment and reflect on whether you are doing this implicitly.  Take a look at the team you lead and ask whether you are leaning a bit too heavily on a talented few.  Take a look at the organization you lead and ask whether you are counting too much on a few talented teams to carry the rest of the organization.

Do this not because you have the time to do it.  Nobody does.  Do it because you can’t afford to grind your top talent down to a joyless nub.

Andrew Luck’s retirement is a cautionary tale to those executives who believe a little too much in the power of star talent.

What do you think?  How do you protect your star talent? 

(Photo credit to Clutchpoints.com)

The waiting is the hardest part

There is such a thing as strategic patience…

Geoff Wilson

I have a confession to make:

I’m impatient.  It’s a fundamental trait that I have wrestled with for years.  I’d love to think that I’m not alone and that it’s okay because other people are impatient, too, but the reality is that impatience is not okay.

Urgency is okay in most circumstances, but impatience?  Not really.

This reality has smacked me in the face HARD lately due to an adventure I’ve been on for the past 7 weeks.  A minor fall down some stairs left me with a torn quadriceps tendon.  It turns out that this type of injury is one that, while painful at its onset, is really a test of patience.  Following surgery a number of weeks ago I have been set aside, wings clipped and wheels idled, because I have not been able to bend my right leg.

Why?

Because this particular injury–a grafting of a very large tendon and muscle group back to the bony real estate of my kneecap–has to heal before I get to start rehabilitation. Waiting is actually the right thing to do. It’s excruciating.

And that, like many parts of life, brings to me a question:  While most of us want results and we want them now, is it often healthier to be patient? Is patience a strategic weapon?

Yes! Of course it is!  But we forget this so often.

I’ve witnessed executives wreck M&A negotiations by being impatient.  I’ve witnessed sales efforts scrapped by impatience.  I’ve witnessed promising innovations cast aside by–yep, you guessed it–impatient executives.  I’ve seen extremely valuable assets given away for a pittance by executives with a tyrannical urgency to do…something.

But, how do you know when waiting is actually the strategically correct position?

Usually, it’s the correct position when you know that things will sort.  In other words, if you have the luxury of time to wait to gain additional insight or maturity, then waiting is a strategic option that should be considered.  In most of the generic examples in my prior paragraph you see examples where the fear of missing out interjects to drive really bad decision making.

When in doubt, assess whether you have the ability to exercise a real option to wait.  It’s not always the right option, but it is one that should be on the table.

Sometimes, the time to be aggressive is after you’ve let things settle.

What do you think?

How do you respond to adversity?

Things are going to go sideways…so how do you respond?

Geoff Wilson

No strategy survives contact with the enemy.

That’s a timeless truth that, while written for a military crowd, is valid in all parts of life.

If you don’t like that one, how about this one:  “Man plans…God laughs.”

In other words, no matter how much you think you are in control, there are risk factors to any plan that will prove you are not.  These risk factors create adverse outcomes for your business, or maybe your career.  So, how do you respond to them?  How do you handle adversity?

I could riff here about always having contingency plans and ensuring that you have mitigated key risks across the board.  Those things are important and I certainly preach them to my clients.  Still, what do you do when a true black swan risk shows up in your back yard.  They do happen, and the way people respond to them are absolutely defining.

A famous case is the so-called “Tylenol murders” in the 1980s.  Bottles of Tylenol were laced with cyanide by some nut job (yeah, I know, but I can only call them like I see them).  People were dying.  And, what did Johnson & Johnson–the maker of Tylenol–do?  They pulled all distribution, stopped advertising, and recalled all the product from the shelf.  They absolutely gutted what was no doubt a cash cow for the corporation, and in doing so made a widely praised statement to the world that their focus was on product safety above profit.

I suspect that product tampering may have been on J&J’s radar before the incident, and J&J may have had contingency plans. But in any instance, the response to adversity was a defining moment.  Compare that to today’s situation with opioid pills–distributed to the letter and not the spirit of the law–leading to deaths of tens of thousands of people.  It’s not clear that current makers even have internal contingencies. They are being forced into contingencies by legal and social pressures.  Such inaction has defined perceptions of many drug makers lately as well.

What these cases illustrate is that how one responds to adversity usually tracks very closely to what one values.  When things go sideways (or south), you often are left with only your most basic principles to operate from.

As an individual, your most basic principles may be to ensure your family is provided for and your health isn’t impaired.

As an executive, your most basic principles may be to ensure the survival of the company in trying times.

As a board member, your most basic principles may be to ensure that the company operates both legally and ethically in times of strife.

As a strategist who works to maintain a focus on the real world, I can only say this:  Your plans are likely to succeed only partially, and in some instances, they will fail completely.  It’s in the basic values you espouse that you will find your likely responses to adversity.  Instead of the usual approach to management that involves working the business problem from the top down (e.g., forming a commander’s intent and disseminating it), you suddenly have to work the problem from the bottom up (e.g., falling back on the basic values that you have articulated and built into your organization).

If you don’t have a foundation of values that will allow you to clearly lead through adversity, you are likely to fail.

What do you think?