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Assumption, what’s your strategic function?

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The journey to real insight lies in debating assumptions, not outcomes.

Geoff Wilson

You know what happens when you assume? Well, the classical answer to that question involves something unsavory that happens to you and me. But that’s not what I had in mind.

What I meant is what happens when you make assumptions about the future of your business, your competition, and your market. It’s something all strategists have to do. They can’t tell the future, but they can test assumptions about it. And testing assumptions about the future is far more rewarding and sound than testing guesses about future outcomes.

Imagine you’re trying to set a business strategy for entry into a market. Let’s say it’s the market for insulated coffee mugs. You might start your business on the notion that the outcome you seek is to sell 1,000 mugs the first year, 5,000 the second, and 10,000 the third. You reach nirvana that way.

But what matters is the assumptions you make about the market and your product in order to build to the outcome. If you’re targeting coffee mugs for truckers, you must estimate the number of truckers you need to reach in order to sell those first 1,000 mugs, and then determine the number of places that you need to carry your mugs in order to reach that many truckers (which leads to an assessment of how many mugs you should have on how many racks in how many truck stops, all driving your assumptions about working capital, how many competitive mugs are on the same racks, your price point, etc.).

Before you know it, you’ve had to make assumptions about many variables that actually matter in building up to that outcome of 1,000 mugs in the first year. And assumptions (or estimates, if you will) can be debated far better than any blanket statement about sales forecasts or market share gains.

Assumptions are where the rubber meets the road for strategy. Assumptions are testable propositions.

Too many strategic-planning exercises go sideways in the gap between “We have to grow sales by 7 percent next year” and “We can’t figure a set of assumptions that allows it.” This is especially true when a decidedly top-down view of the world (“grow by 7 percent”) collides with the reality of the bottom-up assumptions (“The market is shrinking and our competition is getting stronger.”).

Something has to give, and it’s usually either the top-down whim (in the case of sound strategic planning processes) or the bottom-up assumption (in the case of personality-driven planning processes). You’ve probably witnessed both cases.

When you make strategic assumptions, you create little test tubes that can be individually experimented with far better than strategic predictions about the overall environment. You can test a proposition about the market, but you can’t really test a statement about the market’s outcome.

When seeking to build a better strategy, you should debate assumptions about what drives reality around you, not mere statements on that reality.

What do you think? 

(In)Attention to Details

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Are we losing the ability to mind the details?  I don’t think so, but maybe!

 

Chalk this one up to amusement, but I ran across an article today that explains how the state of Oklahoma recently adopted “loser pays” for attorney fees in all civil suits.

That’s a big deal.  A really big deal.

But it was “unintentional.”

Yes, no kidding.  A bill was voted on, passed, and signed into law by a state legislative body and executive. And, its effects were unintentionally broad.  Here’s an article on this doozy.  The key quote:

The amendment, written by state Sen. Anthony Sykes, R-Moore, was intended to apply only to civil cases involving child sex-abuse.

But the amendment had a broader impact, according to the Senate author of the bill, state Sen. David Holt, R-Oklahoma City. “Upon a closer reading of the amendment, it seems evident that it makes all civil cases … loser pays,” Holt told the World. “But nobody caught that.”

But nobody caught that…

We are talking about a massive change in liability for legal fees.  And the response is, essentially, “oops.”

Well, luckily the Oklahoma legislature can change it.

But it raises the question: Are we suffering from a societal migration away from what one of my favorite coaches used to call “attention to detail?”

When a legislature can pass a bill through multiple steps and have such a big miss, imagine what details are being missed in your company or in daily life.  You need look no more than your web browser to see the effect of lowering standards for attention to detail.  Today’s news media are a caricature of the phenomenon, where we are constantly barraged with half truths and partial lies, no matter where you stand on the political spectrum.

In most pursuits, details matter.  In critical ones, they matter a lot.  When you are acquiring a company or putting together the biggest sale of your life, it’s rarely ok to say “let’s let the lawyers handle that.”   In Oklahoma’s case, the law can be changed.  That’s not so when you forget to vet the representations and warranties in your purchase agreement!

Nirvana on attention to detail is challenging.  I’ve known many people consumed by the details.  The trick, I find, is to combine the accountant’s eye for detail with the artist’s eye for completeness.  You have to get the details right, but also be able to notice what’s missing.  You have to see the forest and the trees, as it were.

The best strategists that I know are able to master this art.

Can you?

 

 

 

Mars, Resilience, and Resourcefulness

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What do you do with what you have?

 

One of the cool parts about having a 13-year old homeschooled son is that I get to ride along for some of his lessons.  He is currently taking a class that revolves around watching a broad set of historically and ethically relevant films and reflecting on them.

Last night, the assignment for this class was to watch The Martian.  If you have not read this most entertaining book or watched the visually and emotionally stunning motion picture, you might be missing out on a really great science fiction narrative rooted in a very real approximation of real world scientific constraints.  But, that may be beside the point.

As I mentioned to my daughter this morning on the ride to school (she, one of our three non-homeschoolers), the lessons from The Martian are not only good lessons for a person who might one day be trapped on Mars.  They are very much real life lessons applicable in junior high or in the boardroom of the largest organizations.  They are lessons in resilience and resourcefulness…and they resonate.

Here are a few aspects that stand out from The Martian that just might save your life or career right here on earth.

First, things are going to go wrong. It’s how you respond to crisis that matters.  The main character in The Martian is a guy named Mark Watney (played well by Matt Damon in the film).  He is famously stranded on Mars after a confluence of events that make your head spin.  But, once faced with the reality of his situation, he takes stock of his situation–which is exceptionally dire–and gets busy figuring things out.  He, faced with a painfully narrow chance of surviving in a harsh environment, famously says “I’m going to have to science the shit out of this…”

We are all faced with times where we have to “manage the shit out of” bad situations. They can be immediate crises with clients or customers, or they can be the slow train wreck of a deleteriously competitive market.  Mark Watney’s example of reacting to reality is instructive.  Take stock, let the emotions work themselves out, then get to work.

Second, your resources are going to be limited, but often not as limited as you think. For me, the most amazing aspect of The Martian (and one that is far better fleshed out in the book) is its overt display of resourcefulness.  Watney is forced to confront his resource constraints in terms of power, water, air, food, warmth, physical strength, ability to communicate with the rest of the world.  He then goes about tackling, one by one, the constraints he has, and he uncovers new ways of solving his own problems. Without going into detail, I’ll simply say that Watney’s ongoing calculations of his resources form a centerpiece of the book, and his continual pressing against those constraints is instructive.

You and I are going to have to face constraints.  We can only make so many sales calls, close so many deals, and coach so many people in our organizations.  We can only spend so much capital.  It’s a fact of life.  But, many creative managers out there get more productivity out of their sales forces, work forces, and capital because they try. They don’t have to be Watney-esque, they just have to ask the question of whether constraints assumed are constraints for real.

Third, it helps to have moments to reflect…and a sense of humor.  This one seems easy, but it’s actually one of the best lessons for high stress professionals anywhere.  Watney is the king of the one liner in both the book and the movie; and he is the king of the reflective vignette that frames his awful circumstances in positive light.  In one instance, the character reflects on the fact that no matter what he does on Mars, he is the first person ever to do it.  And, that’s kind of cool.

Professionals anywhere tend to know the value of a moment of humor in a terrible circumstance. Gallows humor isn’t that hard.  What is hard is stopping for a moment and positively framing challenging circumstances.  Then, you get back to work.

Fourth–and I’ll stop at four–The entire book is a treatise on the need for resilience in problem solving.  If you aren’t failing, you probably aren’t working on hard enough problems, or you aren’t working them fast enough.  The Martian is a book about failure.  There are failures of systems, people, organizations, tools, and even imagination.  The book and film are so outstanding because of their display of resilient problem solving in the face of failure.  You get blown up by your improvised water generator, and you light that mother right back up.

Resilience is something that we are, unfortunately, breeding out of our culture. That is, perhaps, a topic for another blog sometime.  But, the fact remains that as our levels of professional, political, and social understanding narrow, we feel the buffets of perspective shocks far more than we used to. As professionals, we need to be resilient because the world changes.  We may not face life and death circumstances for our bodies, but our ideas may live and die constantly. Have the courage to keep going.  Have the courage and grace to allow your organization to keep going.

The Martian is about Mars.  And, it’s chock full of life lessons for us right here on Earth.

May we learn them.

Do You Have an Empathetic Strategy?

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A little empathy can help your strategy.

 

I’ve kept this one in the queue for quite a while.  Sometimes things just get stuck there.

In an early 2015 insight by McKinsey, Catherine Courage, SVP of Customer Experience at Citrix Systems, landed this outstanding strategic punch while talking about “design thinking” with an interviewer:

“Design thinking is an ideal framework for us to use because it focuses on developing deep empathy for customers and creating solutions that will match their needs—as opposed to just dreaming up and delivering technology for technology’s sake.”

Design thinking has been, for me, one of those near cringe-worthy topics because of the essential nothingness of the term.  As a matter of fact, a large proportion of the interview in the link above is dedicated to merely defining “design thinking.” And, while I still think “design thinking ” is better suited to a marquee than to a management process, I think Ms. Courage nails it with her comment on empathy.

We would do well to extend her comment on empathy to our company strategies as a whole.  If design thinking is the focusing of product design and development on the experience of the customer, then strategic thinking shouldn’t stray far from a focus of resources on meeting the needs of customers.

Call it strategic empathy.

I’ll be the first to tell you that strategy is all-too-often devised for internal purposes and not for attainment of external goals.  Strategy, in the wrong management team’s hands, becomes just another process.  It becomes a set of steps to complete so that a capital request can be approved or a new project can be started.  It loses customer empathy very early on.

Similar to unenlightened product design efforts that never really touch the customer, unenlightened strategic plans ignore the market and customers as well.  The worst offenders wrap their strategy around a financial model.  As a huge believer in the financial model as a foundation of strategy, I can also say that a financial model is necessary but insufficient for defining a company’s strategic plan.

That requires listening to the market.

That requires empathy.

That requires patience.

Take the time to understand what it is your capabilities can deliver to your customers, then set direction.  You might find that a little bit of design thinking–applied empathy, just as Ms. Courage from Citrix describes–can help your strategy.

What do you think? 

 

Strategic synthesis: The art and corruption of brevity

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Pithy management insights have their place—and their perils.

Geoff Wilson

I dig synthesis. I mean, I really enjoy enlivening concepts by making them simple and direct. You say, “I want to have the best service, best product, best operations, and the best brand.” I say, “You want a delighted customer.”

See what I did there? Same concept, synthesized. But synthesis is a Goldilocks proposition: too much and you get burned; too little and you’re left cold. Take the above example. Is it sufficient feedback? I’m not sure. That mostly depends on the leadership team receiving the synthesis.

I know some leadership teams that would take “delighted customer” and turn it into a map of service, product, operations, brand, etc. And I know other leadership teams that would hear “delighted customer” and knuckle down on their customer service function. It’s obvious, right? Customer service is the function that delights customers … right? Wrong.

That’s where synthesis is dangerous. Excess synthesis make you pithy. Pithiness is useful in some contexts. Look at the typical internet meme and you’ll see pithiness writ large. But go too far down the pithy path and you end up at pithy’s dangerous neighbor: glibness.

If synthesis is a beautiful red wine, pithiness is a wine cooler, and glibness is a nasty bottle of Boone’s Farm. Dilettantes guzzle Boone’s until they suffer the consequences. Boone’s is cheap, shallow, and insincere—just like a glib statement.

boones

To wit, I’m struck by a meme that recently passed through my LinkedIn feed. It depicts Simon Sinek and a quote about hiring attributed to him:

sinek-skills

This statement epitomizes glib, dangerous advice. Would you select your surgeon based on demeanor? Or choose a mechanic based on attitude? Of course not.

The advice is so extremely context-driven as to be useless. It’s not pithy, it’s shallow—glib, even. Such thinking may apply to the most basic entry-level or noncritical jobs, but adopting the same philosophy to hire your CFO would not only be moronic but could also put you in jail.

While I’m not trying to disparage Sinek—I don’t even know if he approves of the use of this particular quotation—I am denigrating truthiness in management advice. Sinek, I suspect, may know better. Synthesis is an art of the highest order. It delivers precisely what you need when you need it.

Pithiness is an art, too, but it’s a corruptible one. Pithy bullshit sells. But that same pithy bullshit can also get you in deep trouble. Leaders, strategists, managers, and people of all sorts must be skilled at hearing a pitch, proverb, or proposal and searching for the bones beneath it.

If I tell you to “delight your customer,” you may be able to find the full skeleton of a well-built customer-value proposition. At that point, I may have done my job. But f I tell you to “delight your customer” and you then zero in on only the customer service function, I haven’t done enough. I’ve delivered you a wine cooler when you actually need more wine.

If Sinek tells you to hire for attitude and then teach skills, and you rightly ask how that works when hiring senior software engineers, you have properly looked for the bones that were never there. You’re calling bullshit on a tidy, pithy, pseudo-synthetic glass of glibness. Think Boone’s Farm.

Such swill is from the bottom shelf of management thinking—just like a $2 bottle of “strawberry-flavored citrus wine” (a description that sounds like the recipe for a bad hangover). You can live with a wine cooler now and then, but if you’re swigging Boone’s Farm, you’re in for a rough awakening.

What do you think?

A Song For Me at 23

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If I could tell my younger self what matters in professional life…I would tell him this.

I walked out of college a free man, but I didn’t know it.  I may have been a free man with a limp and a headache thanks to a few too many days on the football field, but I was free.

I had no money to speak of and drove my girlfriend’s car. Luckily, I now know, I also had no debt. Along with that, I think I had a healthy appreciation for hard work.

Still there are a lot of things I wish I had known at that age as they relate to business and executive life.  There are things you just don’t learn in school, and many of them relate to interpersonal or even personality-based observations. That’s why I’m writing this. I figured that I can put out a few points that I wish I had known at 23, and I figure they might help someone else along the way.

One thing is for sure, they will help you understand my professional worldview.  If you read this blog, you know that it’s about worldview, and these points represent scar tissue; none of them has been fatal (totally), and some of them represent processes that have made me the professional I am.  Read them, and then tell me where I’m wrong (or right).

____________________________

 

Dear 23-year-old self:

You are about to embark on a career.  It’s going to be fun, frustrating, and probably not as fast-moving as you would like, so I’m going to list a few suggestions here that will give you a leg up in your career, and perhaps in your life.  Many of them you won’t be able to understand until you’ve experienced the situations themselves, and that’s just life, but some of them might help you be better prepared for the situation.

  1. Invest the time on your own or in a class to learn principles of accounting and finance cold.  I know it’s an odd “reflection” to start with on a list like this one, but it’s true. Sure, your liberal arts education is valuable because it helps you to think…Sure, whatever.  But what’s really valuable is knowing how to assess organizations’ financial health, understand the time value of money, and peer into how decisions are made vs. how they should be made based on the numbers. No matter where you sit, knowing the numbers gives you a leg up, so you need the tools to learn how to know the numbers.  If you don’t know what a T-account is or can’t explain why a company would invest in a project that will lose money for five years, you need to go back to school.
  2. Acquire a healthy skepticism for title and wealth. These are not always an indication of the quality of person you are dealing with.  Like British accents, titles and wealth can lead you to a false sense of security that the person you’re working with is smart and accomplished, and that is in fact often the case, but not always, and the same goes for degrees and credentials–the guy with the engineering degree from State can often run circles around the Harvard MBA.
  3. Beware anyone who thinks work hours are defined by the calendar.  “My” holidays and “my” vacation are signs of a paycheck player.  If you’re on a professional track, opportunity comes at all times in all shapes.  That guy who calls you at 9 pm on a Friday?  He probably has something important to say.  I once had a manager answer the phone in Europe at 2 am local time when I called from the U.S.  I had no idea where he was, and he made no protest during the call.  I didn’t find out until later that week, after he had returned to the U.S., that he had even been in Europe when I called. I asked him why he answered, and you know his response?  “Might have been important.”  I love that guy.
  4. Working harder than other people does not guarantee you success or wealth.  It might provide you with some dignity, however.  Remember Boxer from Animal Farm?  He was the noble horse who always worked hard for the cause, no matter the direction.  The work didn’t take away from his nobility, but it did kill him–he literally worked himself to death.
  5. Learn and understand the snowdrift problem in game theory.  This one is kind of nerdy, but it’s real everywhere. There will always be people whose first move in a tough situation will be to wait for somebody else to do the hard work.  Be sure that you think about accountability carefully, and if you’re always the one shoveling snow, be bold enough to get out.
  6. Recognize that there are people without consciences, and they are probably better at the political game than you.  I once observed an executive execute the most deceptive game of bait and switch I’ve ever seen, and shortly after that, he offered advice and support to the person who had been baited.  The kicker?  The executive knew he was being deceptive–he offered his advice with the phrase “I don’t know why you would trust us, but here’s the advice.”  The nerve.
  7. Find a way to serve.
  8. Learn to manage for the short term, but get out of any situation that manages to only be short term, because your life will (hopefully) be long. It’s important to learn how to manage for the short term–to cut costs and rein in spending or maybe seek additional sales to cover a shortfall elsewhere. And it’s okay to manage to the short term–that’s where we all eat.  But it’s also important to realize that just as alcoholism is the diseased extreme of enjoying a good drink, short-termism is both a disease and a kind of addiction: The more you do it, the more it becomes insidious.
  9. Hotheads aren’t always bad.  I had a boss early in my career who was the greatest guy to ever throw his keyboard across a room; he was a tantrum machine, but he was also a guy who genuinely cared.  Know the difference between a grade-A jerk or asshole and a good person with a strong sense of duty but also a temper.  There is a difference.
  10. Where there’s no contract, there’s no contract.  Here’s a piece of advice that’s going to sound more cynical than it is.  No, I’m not saying “always have a contract”; I’ve negotiated multi-million dollar consulting engagements that were founded on the client’s trust and the consultant’s commitment to excellence, and I believe in the power of a person’s word and handshake. But, and this is an important but, many people like to use the ambiguity of no contract to gain advantage.  So my advice to you is to always know when there is no contract–know your counterparty/client/customer, and your boss (see what I did with that last one?), as well as you know yourself.  Don’t rely on contracts, but know when you don’t have one; no amount of flattery and gushy feelings at the start of a relationship will overcome the poor values of a counterparty who won’t define or fulfill commitments.
  11. Beware anyone who goes out of their way to say they are giving you friendly advice.  They probably are neither giving you advice nor being your friend.  True friends don’t have to reiterate the point; you know them by their deeds.
  12. Liquid net worth provides flexibility. Whether you’re a shop floor worker or a CEO, money is important, but it’s really liquid net worth that matters; I know plenty of senior executives who are miserable but completely locked down to a bad team, bad company, or bad leader due to their own financial choices.  Always keep enough liquidity on hand to be able to walk away without regret; that means you should accumulate a few thousand bucks when you’re just out of college, and it might mean hundreds of thousands of dollars once you’ve “made it.”  Financial handcuffs are tough, which brings me to my next point…
  13. People make really bad decisions when they’re under financial stress.  This can include executives cooking the books (or even “just” shading them surreptitiously) to make their bonuses, but it can also include things as innocuous as salespeople treating customers poorly or manufacturing workers doing their jobs poorly.  You really don’t want to have a workforce that’s worried about whether they can make their next grocery bill, and more than that, you don’t want a CFO who will make rotten financial and personnel decisions just to make a bonus.  The love of money is the root of all sorts of bad things–I read that somewhere.
  14. Care.  Yes, I mean that: Care.  You will be tempted (in fact, encouraged in some environments) to acquire social and emotional distance from the people some think you will have to hurt to be successful; it will come with the challenge to “do what it takes” to keep your job.  But don’t be fooled–care.  I was once offered a role that implicitly came with the need to fire a couple of people I had coached and mentored and whose capabilities were strong. It wasn’t the right thing to do, so I didn’t; I chose to leave.  On the way out, I was goosed with a comment and critique about not doing what it takes, but that’s just a consequence of caring.  You know what else is a consequence of caring?  Loyalty, love, the ability to sleep well at night.  In short, your life will be better because you took the time to care.
  15. Trust is cumulative…in both directions.  You will live life with a sense of trust in people you know you can rely on, but you have to learn to know when you have enough evidence to know you can trust someone, and also to know when you can’t. 
  16. Respect the dignity of other people.  There are a lot of instances in life when it’s easier to double cross, lie, shade the truth, and walk away–resist that temptation. Stripped bare, we all rely on others. So respect that, and you’ll go a long way.
  17. Life and business are not zero-sum games. You’ve made it through college, and maybe played some sports.  If so, you’ve gotten used to winners and losers, but life isn’t like that.  In life, there are winners of all sorts and losers of all sorts, and sometimes there are situations when everyone is a winner (or at least not losers).  Really effective executives I know think about when they are playing a zero-sum game and when they have the opportunity to grow the pie, so learn to realize the beauty of growing the pie.   Zero-sum games are in actuality very rare–we only make them common. On a related note,
  18. A spreadsheet can’t show you how to grow the pie.  Unfortunately, math without vision only leads to reductive incrementalism.  Very, very few spreadsheets would have predicted the rise of Standard Oil, the emergence of digital music, or the turnaround of Apple Computer. Numbers don’t lie, but they don’t think either. Vision has to be injected into that spreadsheet; don’t mistake tools and math for strategic vision.
  19. When it comes to people, where they (and you) stand depends on where they sit.  Upton Sinclair famously noted that it is difficult to get a man to understand something when his livelihood depends on his not understanding it. Perspective matters, and if you get good at taking different perspectives, you’ll start to understand how other people think, although it does take time and practice.  By altering where you sit and then thinking about where you stand, you start to think interesting thoughts when it comes to business strategy.  Funny thing is, you also start to think differently about the world.  Perhaps John D. Rockefeller (of Standard Oil) really did save the whales; perhaps Steve Jobs is actually the cause of a generation of hearing loss and an epidemic of traffic fatalities; and perhaps, just perhaps, what you’re being paid to do isn’t good for the organization or the world.  Get beyond your salary when it comes to what right and wrong look like. Stretch your thinking, and be bigger than your smallness.
  20. No matter how much garbage they eat, seagulls are not really good creatures to have around. Seagulls fly in, beg for food, take a dump, and then cackle a lot; some people are enamored with them, but in reality, they’re just rats with wings (as we used to say back home on the Gulf Coast).  Seagulls live at the beach and the dump, and in human form, they often live in corporate environments.  My advice for you is to learn to be a problem solver, not a problem finder; cultivate a constructive approach to life, not just an observational one. Justify your existence, and don’t be a seagull.
  21. Know how to incrementally assess situations.  The incidence of “good from far, but far from good” in people and companies is increasing because the channels of communication are increasing; it’s far easier for companies to cultivate high-profile brands that cover up lowlife cultures.  On the flip side, it’s far easier for motivated individuals to learn a lot about any situation in a short time frame. Learn to assess situations at first glance, after a few minutes, after a few days, and after months.  Learn to take the time to sleep on decisions, and do your due diligence, but also trust your gut.  This is especially true about people: If people look and smell unethical even though they’re wearing ethics as a badge, disregard the badge and go with look and feel.
  22. Don’t be a “yes” man, but realize that being a “no” man is just as bad.  Yes men are common in any culture; they go along to get along.  It’s a fact of life, but not a very edifying existence, so find a way to have your own point of view or else you’ll be redundant.  But the opposite position is equally bad; the “no” man rarely encourages growth or expansion.  Try to think about growth as coming from a combination of yesses and nos, and live in the mess between the absolutes.
  23. Be exceptionally careful about “following orders.”  Just following orders can give you a mental freedom that allows you to ignore basic ethical principles, and ultimately it can corrupt your values.  Have the self-respect to reflect on orders, and recognize that they shouldn’t supersede your humanity.
  24. Your network is everything, but you have to know what a network is.  A real network is not the number of people you’re connected to–it’s the number of people who will do something for you if you’re in need, and there is a huge difference between the two. In my early days, people thought networking was collecting business cards; nowadays it’s probably LinkedIn connections–but both are wrong. Networking is finding reciprocal relationships that help you by your helping others.
  25. If you’ve made it this far, you probably already know this, but reading is a highly underrated skill.  I’d argue it’s second only to listening.
  26. Finally, and perhaps as a wrapper…Preserve your self-respect.  There will be plenty of times in your career when you’ll be faced with choices that can erode your self-respect; sometimes it’s just as simple as taking a call in the middle of a family event, and sometimes it’s worse. You’ll find months of your career that are bad for your health–it is going to happen. But even if one day you find that you have to make a choice you know is wrong but you have to do it to preserve a broader agenda or position, just be sure you know the stakes.

I’m sure you’re off to a fantastic career.  Enjoy it, and maybe one of these points will save you from a scar or two.

Sincerely,

Your much older self

The Most Important (and Annoying) Business Skill

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You have to know the numbers. 

 

It’s always the people who say “now, wait just a minute.”

You probably know them… they are the numbers people.  They take the arm waving, visionary ideas…hit the pause button…and ask the quantitative question.

It might be financial:  How can we justify those kinds of margins?

It might be operational:  How can you assume we can produce that many widgets with only our bare hands?

It might be organizational:  What number of sales people are required to meet those projections?

But the question is placed.  And, if it’s not, you want it to be.  The numbers are important for a reason…they form the most testable type of hypothesis.

A season of advice…

This is the time of year where I inevitably get the chance to talk to younger people starting out their careers.  They might be finishing up college and looking for a job, or just referred my way for ideas and guidance.  If that gives you a shiver, then let me put you at ease:  My advice is simple.

It’s this:

Use your early career to learn the numbers.  Learn how the basic financial statements work, and how things like margins and asset turns determine the performance of a firm.  Learn to model them.  Get smart on the quantitative drivers of markets. Understand how to represent a product’s quality and positioning in terms of market share and margin.  Know the numbers.

I give this advice for one reason:  The strongest executives I know, whether they are sales oriented, ops oriented, or otherwise, understand finance and quantitative drivers of business.  They understand that the numbers show progress.  And, unfortunately, it can be tough to get training on the numbers later in one’s career.  A lot of executive fake it, of course, but people who know can see it.

Learn the numbers early so that you can go through the rest of your career without the fear of being found out.

But, if you take my advice…

Knowing the numbers will saddle you with one annoying habit.  It’s the “wait just a minute” habit that I started this post with.

You will, in some circumstances, become the “annoying” presence who always attempts to ground the conversation in quantitative reasoning.

The New York Times recently published an article about how much more creative the accounting in public companies has become.  As companies insist on more and more non-GAAP representations of their operations, the need for people to know the difference heightens.

But, when you know the difference, it can make for some uncomfortable discussions with your less quantitatively grounded brethren.  One of my favorite examples, albeit a sad one in historical context, is when Enron CEO Jeff Skilling famously called an analyst an “asshole” for questioning accounting standards.  The annoying “asshole” was, in retrospect, exactly right.

More than sales, more than marketing, more than anything else, know the numbers.

Okay, then know sales. Sales is important next.

As always, I’d love your thoughts on this one.

 

Finding the Pony in the Pile

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Faced with adverse situations? Dig. 

 

I’ve written before on the benefits for strategists of finding strength and beauty, and you can look here for that.

But this post is a little different. This one is about finding strength from adversity. This is about the pony in the pile. If you don’t know the apocryphal story, here it is:

Once there were five-year-old twin boys,
one a pessimist and the other an optimist.
Wondering how two boys who seemed so alike could
be so different, their parents took them to a psychiatrist.

The psychiatrist took the pessimist to a room piled high
with new toys, expecting the boy to be thrilled, but instead he burst into tears.

Puzzled, the psychiatrist asked, “Don’t you want to play with these toys?”
“Yes,” the little boy bawled,
“but if I did I’d only break them.”

Next the psychiatrist took the optimist to a room piled high with horse manure.

The boy yelped with delight, clambered to the top of the pile,

and joyfully dug out scoop after scoop,
tossing the manure into the air with glee.
“What on earth are you doing?” the psychiatrist asked.
“Well,” said the boy, beaming,

 “There’s got to be a pony in here somewhere!”

 

So that’s the pony in the pile in the traditional sense, but what about in your own professional life? How do you look for the pony in the piles of manure you’ve walked into?  Maybe the better question is, “Do you even look for the pony?” I can offer a few anecdotes that address my own stubborn growth on this topic.  I’ve reflected on these often.

About 12 years ago, I was an ambitious, strapping young lad who had just joined what many consider to be the most prestigious professional services firm in the world.  My second assignment as a member of this bastion of intellect and influence was to recommend elements of a massive downsizing for a struggling company.  It was not only a project that you had to swallow hard to take in the first place, it was also right in the middle of the holiday season. I have never hoped to have to say “Merry Christmas, you’re fired” to anyone as they are being laid off, but this was it. The pile of manure was tall, dark, and handsome, and to put it bluntly, I didn’t see a pony in sight.

It was, to most people involved, a distasteful project.

Then, about 9 years ago, I had the opportunity to lead a team in a gut-wrenching engagement to support the buy side of a highly complex, time-sensitive M&A transaction that involved multiple large corporations, multiple cultures, and a massive government component to boot. For all involved, it was an absolute mess of a project, and I got to sit right at the nexus. The pile of manure was standing tall once again.

These couple of instances of the “pile” and their separate trajectories through my life may be informative to you.

The first instance was dire, but it was clearly an opportunity to learn something I hadn’t learned before. Nobody was breaking ethical rules; the company was just sick and needed help. I was everything short of malcontent, and at some point, I even got there. But the work got done, I learned a ton, and to this day I believe that any young, self-righteously smart person ought to have to go through the effort of trying to turn around a dying company, even if only as an adviser. In short, here, the pony was staring me right in the face, and I only needed to look.

The second instance was exceptionally challenging. Through the hours, pressure, and politics, several people involved with the project struggled to recoup their professional lives after it was over. In that instance, I could sense that the learning experience would be a good one.  I could also sense–as the banker across the table from me fell asleep during the meeting–that the pain was shared across all parties; in other words, I didn’t have to dig too far to find the pony.  That was one of the most heartbreaking and energy-sucking projects I’ve had the opportunity to be a part of–one that I never want to relive–but the experience I gained from that roughly 10-week period of no sleep, constant travel, and absolute burnout strongly buttressed my professional outlook–although it left behind scar tissue that to this day has not gone away.

So why the serenade on heaps of manure and ponies? Really it’s because maybe somebody else can benefit from the little bit of perspective I’ve been able to accumulate.  Namely:

  • The worst experiences are often the best growth opportunities for your life, professional or otherwise.
  • Until you recognize adversity for the learning experience it is, it’s hard to look for the growth opportunity.
  • Many of us hide behind facades in order to avoid confronting the dung heap.
  • It’s better to start digging than to continue complaining.

I’ve never been accused of being an eternal optimist, but I have learned that when you’re presented with a pile of manure, dig for the pony.

How about you? You dig?

When Reality Doesn’t Matter

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The sad hilarity of the “say anything” executive and consultant…

 

I can’t write much on this one other than to say it represents the types of behaviors that give high concept consultants and high level executives bad reputations.

It’s worth your time to watch for a bit (and hopefully to get a chuckle).

 

 

You ever have to work with someone who took a “just do it, it’s easy” attitude toward things that are literally impossible?

Me too.  And, I hope I never do it again.

 

Never Go Full Framework

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Frameworks exist to support decisions…not to make them. 

 

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

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

Plug and chug.

Rack and stack.

Rank and yank.

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

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

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

A story

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

And you know what?  It’s all wrong.

What’s that you say?

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

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

Which brings me back to my advice…

Going “Full Framework”

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

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

The worst of cases

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

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

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

So what?

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

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

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

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

simple Jack

Remember…He went full framework.

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