August 18, 2017


















Article 2.26

STALE STRATEGY? TRY A STRATEGIC CONVERSATION

Many companies do annual planning, budgeting and strategy re-thinking activities in the last calendar quarter. If your companyís planning process has not been delivering the hoped for results, consider having some strategic conversations with your management team aimed at articulating and blending the best of both new and old mental models for running your company. This article reviews two case studies of how high performing distributors invested in some mind-expanding discussions.

BAG THE SPEECH, HOW ABOUT SOME STRATEGIC CONVERSATION.

I recently worked with two, different, management teams of companies led by CEOís who had soured on doing the normal SWOT (strengths, weaknesses, opportunity, threats) type of strategic planning process. As one CEO put it: "We donít know what we donít know, so we always wind up with the keep-doing-what-we-are-doing, but harder and better conclusions. These have served us well in the past, because we execute very well, but we need some next-level thinking. Bruce, youíre an out of box guy, can you speak to our team about some breakthrough ideas?"

I hesitated on the speech idea, because in both cases the core management teams were supposedly large, confidently vocal, interactive groups. For every novel idea I might offer, there should be a lot of push back, vocal or silent, with the general tag line: "Interesting idea, but it wouldnít work here; you donít really understand the details of our business and what we are up against." And, they would be right. We are from two different worlds: they canít know what I have seen working and not working across a hundred plus distribution channels, and I canít know what goes on at the granular level within their business. How could we have a productive meeting of all kinds of minds?

Because it is hard to get people to adopt a new idea through coercion, legislation or promotional exhortation (speech), we decided to experiment with "a strategic conversation." I would start by trying to invite everyone to share their best skills, memories and accomplishments through a process called "appreciative inquiry"(AI). This involves talking first about what a company has done extremely well and then exploring how the team might do that best activity even better. (Note #1: For more on AI go to exhibit # 8 at our web. ./exhibits/Appreciative_Inquiry_Exhibit.pdf.)

My hope for the first discussion was to generate enough positive energy, collaborative creativity and feasible new things to do that we could then use the same open-minded energy for pivoting into a discussion of where we could find the resources Ė time, talent and treasure Ė to purse our new ambitions. Most companies know how to do a lot better than they are doing, but donít for lack of resources to focus intensely and sustainably on new activities.

HOW DID THE DIALOGUE EXPERIMENTS PROGRESS?

Although you can plan the agenda for strategic dialogues, you canít forecast where or how deep they may go on any particular topic. Every group will have different positive and negative energies for exploring new mental models and dissecting old hidden ones that are surfaced in response to the new ideas.

With both clients, we started by discussing the top 10+ most profitable customers that the company had. The rankings for all customers had been done in advance by using a simple activity-based cost ranking report. (Note #2: for more on customer profitability ranking go to ./articles/Identify_Customer_Niches.pdf.) To complement these ranking reports, I also handed out a long list of questions that were like little flags that surrounded the "most profitable customers opportunity area". We called the list the "new frontier question map."

After scanning both the lists of customers and questions, team members started telling stories. The wisdom behind the order and type of questions help to lead them to their own deeper insights. Lots of ideas surfaced about how each company could sell more, old and new miscellaneous items to best customers on a larger average order sized basis due to better demand replenishment systems that could be co-created with the customers. Then, assuming no resource constraints, we addressed resource/skill gaps that needed to be filled to make the ideas happen. Talking about deficiencies and ex-budget spending did not flow as easily or as enthusiastically.

For both companies, there were instances of emotional heat in the exchanges, which was good! Some got excited about the new possibilities quickly while others arose to defend the past, and many were in flux. These differences gave us a chance to think about our thinking. Old thinking is sometimes so hidden that it takes new models to serve as triggers to surface the old. Once identified and honored (yesterdayís accident is todayís religion), we could then carefully start to unpack the old beliefs that had been quietly running the company. We could then test both old and new models for their total effectiveness in todayís world. Best new operative models are usually a blend of the old and the new.

REFLECTIONS ON THE CONVERSATIONAL PROCESS.

As a group we were trying to practice the art of collaborative conversation that involved extending an invitation to everyone to try and meet at some indefinable frontier that the conversation had to first define. This frontier would ideally be a place that gives everyone a sense of enlarging both themselves and the company, and talking about the extremely profitable accounts was an expansive starting point.

Regardless of whether the topics are high or low points, finding the intersecting edge of mutual understanding takes courage. Most of us, in a competitive spirit, don't want to admit that we don't know everything. Many sales reps, for example, donít really want to admit that they may have overlooked selling more, old, stocked items to old customers in a win-win, systematic way.

The participants must have a mutual sense of respect and trust with an up front agreement to not rush to critical judgement of one another. We, instead, have to develop the habit of asking: "Why did I, or you, say that? What are our underlying facts, assumptions, beliefs and mental models?" Otherwise, we may wind up arguing past each other like the 5 blind man talking about their total vision/definition of the elephant based on their one-dimensional touch of the creature. A general technique for this type of conversation is called "dialogue." (Note # 3: for more on "dialogue" go to: ./exhibits/Dialogue_Exhibit.pdf.)

If a business team is going to significantly expand the frontier of their collective thinking and beliefs, then they will also need some new perspectives, vocabulary and concepts for examining their same old business. Old thinking and old vocabulary prevents us from seeing the new emerging opportunities in the marketplace because we keep trying to fit all new data into old models. An outside resource could help with this critical need.

CONCLUSIONS:

Most businesses in mature industries have a strategic sameness that is causing them to compete on price and erode profitability. Every business needs to reinvent their total, value-offering to a unique level for the right, best customers within the right, best niche for each profit center Ė one niche at a time. Donít sell a little bit of something to everyone. Sell everything that is necessary for a best, total, value-bundle to only the customers that are, or can be profitable, and who preferably have an above average growth future.

To reinvent a business's value-offering, a company will have to expand its collective and conscious understanding of what it has been doing historically and what it might do differently in the future. Big gains in value, growth and profitability in a mature industry must start with big collective change in the mental models that are currently gripping the management team.

Instead of trying harder to beat last yearís numbers, we have to ask ourselves discussion questions like:

  • If we are doing the best that we know how, what donít we know?
  • Where is our frontier of understanding?
  • What are successful, new models from other industries that we can use as lenses for re-examining our business and creating "new frontier question maps"?
  • How should we gently identify, unpack and overhaul our old religious mental models to then blend their best, still viable parts with new thinking?

If we donít address the questions above, then wonít our existing culture continue to rule? Wonít we then become increasingly outdated and see our profits and eventually existence fade away?

 

 

Ó Merrifield Consulting Group, Inc., Article 2.26

D. Bruce Merrifield, Jr.