A Strategic Punch in the Mouth

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Submitted by Chris Humberstone on Tue, 12/02/2014 - 01:51

“Strategies too often fail because more is expected of them than they can deliver.” (Economist Nov 2nd 2013).

“As Helmuth von Moltke, a 19th -century German field-marshal, put it: “No plan survives contact with the enemy.” or Mike Tyson, still more pithily: “Everyone has a plan 'til they get punched in the mouth.” A strategy that starts with objectives and works backwards is one that is likely to fail.”

A strategy is more like a soap opera than a novel. A strategy should not describe the end point and construct a narrative of how to get there.
A stolen kiss from one competitor to another can disrupt the best laid plan, and we must be ready to adapt to the new reality.

But sometimes it is not the kiss or punch in the mouth that causes the strategy to fail, it could be that too much was expected in too short a time. Perhaps there was a basic misunderstanding about how long things take, or about the market dynamics, or perhaps the resources needed to realize the plan are not available. Sometimes the strategy is just wrong and developed by a consultant or a new CEO implementing the same plan that worked for the last company.

In the hyper speed private equity world where there is often not enough time to properly understand a business, the three to five year flip also means that a great strategy has to be implemented and successful within the three to five year window.

A great acquisition can help, but should a strategy depend on an acquisition? Probably not. The ideal acquisition is rarely available, so usually the strategy changes after an acquisition, as the plot twists and turns.

So how do you avoid implementing a strategy that expects more than can realistically be delivered?

According to “Thinking, Fast and Slow” by Daniel Kahneman (a book I would recommend to any executive involved in decision making), you should try the “premortum”.

“Imagine we are a year into the future. We implemented the plan as it now exists. The outcome was a disaster. Please take 5 to 10 minutes to write a brief history of that disaster.”

“The premortum has two main advantages: it overcomes the groupthink that affects many teams once a decision appears to have been made, and it unleashes the imagination of knowledgeable individuals in a much-needed direction. As a team converges on a decision - and especially when the leader tips her hand - public doubts about the wisdom of the planned move are gradually suppressed and come to be treated as evidence of flawed loyalty to the team and its leaders. The suppression of doubt contributes to overconfidence in a group where only supporters of the decision have a voice.”

Uncritical optimism leads to strategies that fail because too much is expected, and the “premortum” could temper optimism and ensure the leaders understand what is possible, what might go wrong, what resources are really needed to implement successfully and what the real dynamics of the market are, from the people who live with these things from day to day. So the soap opera will have a more realistic script at the beginning, but it will still need to change as unexpected events occur.

A “premortum” may help you avoid a quick TKO but won’t stop the need to adapt your plan when you get punched in the mouth.

 

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