Three proven ways to win hearts at work with the 3Ps of Balanced Accountability in the workplace: Personal, Positive, and Performance.
Today’s post is by Jeff Bennett.
When my sons were about 6 and 8 years old, in an effort to create an alternative to video games, I taught them to play poker. Okay, so that admission probably disqualifies me from any ‘father of the year’ awards. But in the process of watching them learn to play, I gained some fascinating insights both about how novices approach poker and, by analogy, how many companies appear to approach strategy.
It didn’t take too long for my children to get a grasp of the basic rules and hand rankings (three of a kind beats two pair, etc.), but even with this working knowledge, they weren’t very good at the game. What I realized is that without an intuitive knowledge of probabilities, they were focused only on what was possible, and not what was likely. This caused them to rack up big losses because they would keep betting on a bad hand long after an experienced player would have folded. In short, they hadn’t taken Kenny Rogers’ advice in The Gambler: “you’ve got to know when to hold ‘em and when to fold ‘em…”
When I asked them to describe their thinking, it was something like: “I will stay in, because if the last card is an eight I will have a straight and will likely win.” Whereas an experienced player would have looked at the same cards and said: “I am going to fold because if the last card is anything other than an eight, I will have nothing and will certainly lose.” My children were focused on the possibility that the outcome they desired would occur, whereas the experienced player is thinking through the probability that it will occur relative to other possible outcomes.
It occurred to me that on a grander scale, this is a problem many companies face with their strategies and goals – they tend to hold onto a comfortable direction that might work, rather than thinking more objectively about the risks of the current course and what options might be more likely to work in a competitive and dynamic market. This should be the essence of leadership – decision-making in the presence of risk. Yet, why is it that so many companies get this wrong? We believe there are several reasons:
Too often companies define their strategies in terms of what they want (e.g., “we want to shift our mix from products to higher margin services”) without an adequate understanding of the customer value proposition (why will customers pay us a premium for these services given their other alternatives?). As a result, too often, the bulk of a company’s precious time with customers is spent trying to convince them to buy what the company wants to sell, rather than listening to what customers really need.
At too many companies, “we’ve always done it that way” is an acceptable (and often unspoken) logic for business plans, and questioning this can be seen as a lack of support. It may feel more comfortable to keep betting on the hand we have and hope that this is the year the market turns around or customers fall in love with our service, rather than save some of our chips for another bet where the odds may be more in our favor.
Many business leaders are naturally confident and optimistic. This is likely an essential skill if they grew up in sales, where you have to treat every call like it is going to be the next big deal; but it is counter-productive when thinking about strategies. There are too many variables we can’t control, and false confidence about staying the course may cause us to overlook more attractive opportunities elsewhere.
Lack of awareness of tools/frameworks for strategic thinking
Everyone knows how to make a financial projection look good in a spreadsheet, but is there a strategy behind it? In our experience, too few companies work to broadly teach strategic thinking, leaving big parts of the organization executing largely on auto-pilot until a new strategy is delivered by “someone else”. In other words, its not sufficient to learn the rules of poker, someone needs to teach you how to play the game.
So how do companies get around this in their strategic planning? We have a few suggestions:
Focus first on what customers want, not our internal goals and objectives – if we can find a customer problem that we can solve better than anyone else, we can get paid to do so, even if we can’t project exactly how much or how fast. If your team has not practiced listening to the real voice of the customer, this is a great place to invest in outside resources to teach them the basics of market insight.
Separate the strategy discussion from annual business planning – a focus on financial projections will naturally lead to a focus on only those known opportunities that feel comfortable and that we can commit to with some degree of certainty. Often strategic planning runs right into annual planning, leading naturally to a target negotiation process. We suggest running strategy on a completely separate timeframe – if you haven’t done it for a while, why not start now?
Create a safe space and/or workshop where we can talk objectively about how we got here and what may be changing with customers and competition – it is also necessary to acknowledge the risks of sticking with the status quo. You might think about devoting part of your next off-site meeting to an honest discussion of the momentum of the business – what forces got us to where we are, and given market trends and challenges, what is likely to happen if we do nothing fundamentally different? This can be a great way to surface and socialize the unspoken risks of a ‘try harder’ strategy.
Take the time to train your organization how to think strategically. This will help them understand that confidence in a strategy comes largely from a process of elimination – yes, this direction might not work, but it is more likely to work than anything else we have yet thought of; in other words, it is our best bet. This also requires acknowledging the risk of complacency – at some point, failing to change may be the riskiest course of all.
Finding a way to have this dialogue and embedding this type of strategic thinking in your organization is not easy, but it is possible. It is precisely what we have been doing with our ‘Grassroots Strategy’ sessions over the last 16-plus years.
To finish the poker story: as my sons began to learn how to think about probabilities, their skills improved dramatically; though sadly, not enough to overcome the allure of video games. But we still play from time to time, and they more than hold their own. Like even the best players, they will never win every hand, but they are a lot better at knowing when to fold and how to bet when they have a potential winning hand (bluffing will have to be a topic for another day).
In the end, that is about what we should expect from a strategy: not guaranteeing that we never lose, but rather objectively assessing the situation in order to help us to recognize the limitations of our current hand, know when to stop certain initiatives and how to place bets that improve our odds of winning. In addition, this upfront acknowledgement of risk should help us think about natural ‘off-ramps.’ Strategy should not always be a ‘bet the farm’ moment; rather we can define smalls steps and interim measures of success where we can evaluate and ‘pivot or persevere’ based on early feedback.
If your planning is mainly a financial exercise based on hopeful sales projections to meet a top-down revenue growth target, then you haven’t incorporated these critical strategic concepts and you may be drawing to an inside straight. This might work for a while, but as a reckless poker player inevitably finds out, it will eventually catch up with you. Before you double down on your current hand, it may be a good time to objectively assess the odds. As Kenny Rogers also said, “If you’re gonna play the game, boy, you gotta learn to play it right”!
Note: Kenny Rogers died at his home in Sandy Springs, GA on March 20 of 2020, at the age of 81. The great man may be gone, but his music and his wisdom live on.
Today’s post is by Jeff Bennett, founding and Managing Partner of Amphora Consulting.
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