The Seconde
THE UNCERTAIN STRATEGIST’S TALE
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T
wo billion pound turnover and one of the fastest growing businesses in Europe and I’d blown it. How could any one fail with built-in advantages like that? I had. I feel such an idiot.
I’m sitting in the departure lounge at Heathrow opposite a balding man. And for some reason, pouring out my heart to him. I don’t usually tell almost complete strangers all about the things I’ve done wrong but Franck seems so genuinely interested and supportive that he has fooled me into dropping my guard. My attention strays and I turn slightly to my left looking out of a wall-sized window at a white and red 737 taxiing gracefully past us.
“And so what happened next?” he asks.
I have just told him the background to my sorry state. I’ve explained how, in spite of our explosive growth in volume, our margins started to shrink and I was given the job of ‘thinking about what to do about it all’. “Well,” I say immediately, “it seemed that the market was less and less interested in paying for the services we’d been supplying. When we started, the main competition was one large organisation. In the past we had studied their weaknesses and focused on how to satisfy the customer in those specific areas. As a result, Bingo! We now had a £2bn organisation. The competition, who had been a sleeping, lumbering giant, seemed to have got their act together, so that service levels which two years previously were legendary, were now commonplace. If we were to make any money now and in the future we would have to concentrate on doing even better what we already did well today. This would mean that we would have to concentrate all our best people and key resources on improving the service offering we currently provide See New Rules Applied section on Paradox busting.”
On the face of it, this was an obvious option. We already had in place all the performance and appraisal infrastructure which had kept us growing so effectively. What we really needed to do was to get the message out that we needed to be ahead again and to encourage people to look again for chinks in the armor of our traditional competition.
There was one wrinkle though. Perhaps more like a big crease. Some of our business was not only being lost to our traditional competitors but also to new emergent competitors. The difference with the new competitors was that they weren’t playing fair. They weren’t competing head to head. For example, whilst we were offering customers purely service, their service was backed up with comprehensive guarantees. But the worst part was that because they were using the new technologies to provide the new services they had a completely different cost base to us and whereas we made money directly from the customer they also made money by distributing hardware on behalf of OEMs. This was what frightened us. It meant that they could continue competing the margins down way below the level at which we would cease to be profitable and by creating a commodity business could drive us out of business. This meant that in order to make money both now and in the future we would have to find ways of doing things significantly differently. In order to achieve this we would have to focus the efforts of all our best people and resources on creating solutions for the future.” See New Rules Applied section on Paradox busting
I finally pause, waiting for a reaction. Franck says, “What a dilemma. Stay with your core traditional business and risk the chance of losing to an emergent industry or concentrate on creating a new industry and risk losing out to your traditional competitors. What a bummer!”
He has summarized the problem very well. “You’ve summarized that very well,” I say in a congratulatory tone. Suddenly the airport tannoy cuts in announcing a flight. I pause to wait for the announcement to end. It’s not my flight and judging from the look of disinterest on Franck’s face it’s not his either.
“Carry on,” he urges.
“It was mid financial year so we didn’t have any formal way of getting people’s attention, so we held a large management briefing to inform managers about the need to challenge themselves in order to regain the margins we’d lost. I think we talked about the importance of innovation in delivering business results.”
“How was it received?”
“Surprisingly well. But here’s the sting in the tail. When we looked at the figures a month later, rather than improve they’d actually gotten worse.”
“Why was that?”
“I did some grapevining and discovered that almost every manager had interpreted the message only partly correctly. They knew that something had to be done and what they had done was try to sell more or produce more. They had looked at their annualized targets and simply pulled them forward. They had sold more volume but the customer pressures on margins meant that the overall profitability was worse. Almost no one had tried to sell anything different to the customers.”
Franck has a quizzical expression on his face.
“I guess what was happening was that they were trying to meet our demands whilst satisfying the annual targets we’d set them.”
No change to the expression.
I explain, “Their targets determined their appraisal results, bonuses, promotions and so on. They would have been mad to abandon them simply to satisfy our immediate demands.”
The expression has changed to one of comprehension. I continue. “I was responsible for delivering strategy and so I suggested that we had time out. We held an Exec. Retreat to discuss what we were going to do about getting people to do things differently. It was a typical two day event and we hired a facilitator to help us. I guess I was lucky. I chose someone I’d never worked with but she had a good reputation so I’d taken the risk. The first day covered most of the standard stuff SWOTs, PESTs and so on and then on the second day the facilitator started urging us to be creative with our solutions. She talked us through some truly remarkable case studies. Companies who had re-invented their industries. Others who had grown from minnows to dominate the globe. I think she also flattered us by constantly referring to our own phenomenal growth and placing us firmly in the league of these super-companies.”
I pause, checking that Franck is still following what I’m saying. I also glance at my watch to see how much time I have left before my flight. It was a good idea of Franck’s to meet here at the airport whilst we were both waiting for flights. It was good use of the time. Usually I browse the shops or camp out in the lounge pretending to make important phone calls.
“What happened next?” he asks.
“We got pretty fired up. We talked big. We talked about reinventing the industry. For some reason I still don’t understand to this day, the idea of reinventing the industry captured all our imaginations. From the MD all the way down. Instead of our usual politically correct responses, my colleagues and, I must admit I, started to get excited about it. I can’t remember us showing emotion towards any action or initiative for years. It must have been the effect of the facilitator, I guess,” I add thoughtfully. “Anyway, it all made sense. We would go against the new competitors with energy. We would focus on customer product needs and deliver the need at the point of highest value. This would grow our margins and at the same time it would protect our future income, putting severe pressure on both traditional and new competitors. We even coined a term for it. We talked about moving from CATS (Carrying-out Also-ran Technical Services) to DOGS (Devilishly Opportunistic Good Stuff).” I pause waiting for a response.
“Cats and dogs?”
“Well we started by calling them pots and pans (pretty amazing new stuff) but we couldn’t find an acronym for pots.”
Franck nods, baffled.
I decide to continue my story quickly. “Anyway, the upshot of it was that we decided to concentrate on doing new things in a new way to reinvent the industry. We felt that there was so much history and performance measurement encouraging people to do more of the same, to do slightly better what we already do today. We felt that we should get our people aligned onto the future.”
“Given the background, that seems to make sense,” he comments. “So what’s the problem?”
“Well it didn’t work too smoothly,” I say. “We needed to get everyone working toward the new goals so that we could meet and overcome the strategic I define Strategy as the conscious manipulation of the future. A strategic problem is a problem, which if left to fester has significant implications for the foreseeable future. problems we needed to move from reactive tactics to develop a longer lasting philosophy. To achieve this we needed to create and actively communicate a clear vision.”
I can tell from his expression that he can’t see the problem.
“Don’t you see? The problem was that the strategic problems were immediate. So we needed to frequently re-focus on strategic pressures. That suggested almost the antithesis of what we felt we needed to do. It meant that rather than look too far to the future we should instead be creating and monitoring short term challenges. This was the point at which all the camaraderie and team spirit we had built up during our retreat evaporated. Two thirds of the exec wanted us to press forward with the ideas and vision we had developed and concentrate our efforts on making sure that all our people were focused on creating our new offers. And then there was the other third. They were moaning and dragging their feet complaining about their existing work load. Just like dinosaurs complaining that they were far too busy becoming extinct to evolve. Fortunately the majority included our MD. So forward to the new industry it was.”
“So your MD stifled the debate and insisted on one of the ways forward?” he asks in a flat tone which I interpret as disapproval.
“Not so much stifled,” I reply, “more like showed decisive action for once. It was just as well because the next stages also went just like a dream. We knew we had to get the vision across and we had to enthuse people to actually do something different in their day jobs in order to bring the whole thing to life. We did all the right things. We canvassed the key opinion leaders. We developed a one day event to communicate the messages. We got the directors to run the event, rather than using an external speaker, that way we demonstrated commitment. We made it interactive and finally we made absolutely sure that every one literally went through the process. The way we achieved that was to hire a large warehouse and kit it out with a stage PA system and rows of tables each fitted with a microphone. That meant that the sessions of up to 250 people could be interactive and people could ask questions about anything they were unsure of. Can you imagine?” I say, my eyes shining with the excitement of remembering, “two way dialogue See New Rules Applied section on Information and Communication. not just talking at them. It was fabulous!”
Franck is nodding attentively as I reel off the list of things we did to get the initiative going, obviously drawn in by the enthusiasm in my voice. “You felt you needed to involve everyone fully?” he asks.
I’m barely thinking about his question as I reply, “Sure. We wanted to roll out the new strategy and do it fast.”
“And?” he asks.
“That was it. We’d done it. There was enthusiasm for the initiative. Our people felt that they had permission to explore and create the new organisation. We were absolutely delighted.” I pause for effect again. “Can you imagine the feeling of power and success?” We had turned on 2000 people. We had run the workshops over a three week period. The workshops were followed by the directors ‘walking the talk’. We spent a fortnight walking the corridors department to department, shaking hands, answering questions. It was rolling. We had reached critical mass. They were going for it. They were committed. And then...”
“And then?”
“And then we realised that almost four months had passed. We realised this and noticed the figures. Customer satisfaction was the worst ever. Our satisfaction index had collapsed. It seemed that we had become completely inwardly focused through our initiative. Our customers felt ignored. Sales were down too. But the real shock was the costs. Costs had gone astronomical.”
I’m watching the expression on Franck’s face as I tell him all this bad news. His brow is furrowed, his jaw muscles are rhythmically tensing and releasing.
“The costs had skyrocketed because we had started so many projects simultaneously. However, none of the projects were showing much progress because we were spending all our time in meetings and since there were too many projects the meetings led one to another without any time to do any actual work in between. My colleagues had been dragged into sponsoring so many projects that they were also out of the loop. It took a further week before we could get past unbreakable commitments and organize a meeting, to decide what to do about the impending crisis.”
“Is that what you really want from me, to find out what to do?”
“Yes and no,” I say shaking my head from side to side as I reply. “I guess what I really want to know is how it all went so right and then all went so wrong. I mean, we’d achieved what hundreds of companies only dream about when they launch initiatives and yet we were failing as a business and failing fast.”
“I see. First, before I comment, tell me what happened at the meeting.”
“Well the outcome was simply to give it another couple of months to see what it yields. And that’s it. It’s probably the right thing, not to panic. But it feels scary. It started off a bit tense. About half an hour into the discussions one of my colleagues described it as selling off the present to pay for the future. It was a good description. We all laughed. It broke the tension. Usually companies are accused of being short-sighted and doing the opposite, compromising the future to survive today.”
Franck smiles warmly.
“What I want to know is how could we have avoided being in this situation. We seem to have done everything right so how come...?” My voice trails off as I pass the baton to Franck.
Franck takes a deep, long breath. “In the Old World See either the Prologue section on Old World/ New World or for a full explanation see Making Re-engineering Happen Obeng Financial Times 1995 environment efficiency was a clear route to success.”
I nod.
“You improved your chances of success by doing few things but doing them all the same way. In a world where if you were smart enough you could learn faster than the world changed, it made sense to do things one way or another.” For some reason he stresses the word ‘or’. “You will find,” he states, “that the word ‘or’ is firmly etched into the Old-world part of your brain.” He pauses, focuses on my face and asks, “Why did you feel that you had to put everyone in the organisation through your process?”
It’s the same question he’d asked earlier. I reply quickly, “To get buy-in. You need buy-in for this sort of thing.”
“So what you are saying, is that it was absolutely crucial that you had to get buy-in from everyone, at the same time?”
I pause briefly. I think silently to myself, ‘No, not everyone.’ I reply “but eventually we would have to get everyone on board.”
Franck raises his left eyebrow a centimeter. “Perhaps eventually. But why did you feel you had to work with everyone, all at once? Were there areas of the business where you might have made gains earlier? Maybe even given them slightly different messages? Maybe you were thinking that it was either the old way of operating or the new way.” Again, for the second time in three minutes he over stresses the word ‘or’.
‘It’s true,’ I think, ‘we were assuming that the most efficient route would be to give the message to everyone. We justified it by thinking that we were concerned about the propagation of mixed messages.’
“You’re right,” I say, “We were fooled by our need to appear efficient, we thought it made sense to be fair to everyone. Being fair meant treating everyone equally. Now I see that we would actually have been fair to treat every one differently. It was unfair to treat people equally. Unfair on the organisation and unfair on the people. It didn’t give them the best opportunity to succeed. It’s almost as if...”
The airport announcement system cuts in again drowning my words. This time it announces my flight, delayed for half an hour and a second flight Franck’s as a ‘last call’. It’s not fair. He rises up grinning down at me in mock triumph. for that brief moment in time I don’t care anything about what we’ve said before or any conclusions I might have reached, I exclaim, “It’s just not fair!”

<< Wavy lines wavy lines... back to the present.>>
As the account ends the listeners appear thoughtful. One listener looks particularly perplexed. “What about efficiency?” s/he demands.
There is no reply. Franck is busy adding to his notes on the white board.
One of the other listeners says, “I guess it makes more sense to achieve the results effectively than to just be effective?” The statement is phrased as a question inviting other comments.
“I guess it depends on which industry you’re in says another, responding to the invitation.”
At the whiteboard, Franck clears his throat. “Sorry to be an ogre but ground rules. Let’s save the discussion until we’ve heard all the accounts.
On the white board behind him have been added two new bullet points.
· fair = equal fair = different; unfair = equal
· or and