Electronic coupling is the transfer of energy from one circuit or medium to another. Sometimes it is intentional and sometimes not (crosstalk). I hope that this column, by mixing technology and general observations, is thought provoking and “couples” with your thinking. Most of the time I will stick to technology but occasional crosstalk diversions may deliver a message closer to home.
“We are on fire!” – Good News, Bad News, or Both?
When a business is said to be on fire does strategy go out the window? It is curious that fire or fire-related terms are used to characterize two extreme states of business. A business on fire may think they are like a professional athlete who, when is said to be “on fire”, is unstoppable and at the top of their game. The business may have too much of a good thing, i.e.: more orders than they can handle which is a problem in itself. At the other extreme, a business faced with a disaster (actual fire, product safety issues, etc.) quickly goes into “firefighting” mode. In “firefighting mode” the entire organization is consumed with containment, stabilization, and recovery. And a successful recovery will keep the business from heading to a “fire sale”.
How to avoid being burned regardless of good news or bad news? Use a solid strategic planning process and follow that plan. Good strategy does not change on a daily basis. Only the tactics to achieve the strategy should be “tuned” in response to the current situation. Significant issues involving insufficient resources and prioritization typically challenge a company on fire. The company exclusively focuses on delivering against commitments to avoid dissatisfied customers and without thought of the future. Production “war room” anyone? As a result, it is too easy to ignore strategy while focusing on execution.
Businesses are tempted to respond similarly when there is a disaster. One might argue that when an organization is facing a potentially fatal crisis it is appropriate to suspend organizational strategies to focus on improvised short-term tactics to navigate the crisis. If the business doesn’t survive what does next year’s plans matter? Better are corporate strategies that contemplate contingencies for crises that may arise. Simply put: you need strategic planning now to have a workable strategy for both growth and to avoid tragedies.
Mature and successful companies understand the need for strategic planning and staying focused on their objectives to survive long term. There are “successful” companies that do not plan strategically and it is not simply a confusion between strategy and tactics (the actions that you take to achieve the strategy or other objectives). These companies tend to either have immature management or operate in a transactional manner where success comes from basically doing more of the same (think credit card processing). In the world of high technology, many companies start as or function in a transactional manner like a “job shop.” Yes, the technology is complex and the products are sophisticated. With rapid advances of technology and lacking a proper long-term strategy to expand into other markets, many of these businesses enjoy short-term success but don’t survive long-term. How many purveyors of floppy diskettes and drives are still in business?
All it takes is a commitment to create and follow the plan. Even though a company lacks strategic planning as a core discipline, they can implement strategic planning as their management processes mature. Strategic planning can help grow the smallest organization (think sole proprietorship or “mom & pop”) operation to a much larger concern. And it will keep a large organization relevant and competitive. The team at Feldman Engineering has worked with organizations of all sizes and business models (“job shops” to multi-national) and quality of management processes (the good, the bad, and the ugly) to deploy strategic planning. After overcoming the initial skepticism and inertia, these organizations realize they can be even more successful with a systematic on-going strategic planning program.
What about companies that are always in crisis mode cycling from the extremes in industries that have frequent cycles and/or very deep boom & bust cycles (feast to famine)? The semiconductor supply chain was historically characterized by both and the business cycle was described as “the roller coaster”. Companies enjoyed a great year or two during the booms while fearing the inevitable bust that not all companies survived. Hope is definitely not a strategy, so the long-term survivors developed strategies that either reduced the cycle or found non-cyclic / counter-cyclic business to smooth out the peaks and valleys. The strategic companies also completed the consolidation necessary to stabilize their businesses.
Why does strategy get brushed aside and ignored? Is it simply a case of being too busy? Lack of resources? Or is it the result of confusing the urgent with the important? Has management given up their responsibility to manage so they can jump in and be a hero by putting out today’s fire? The answer may be a mix of these reasons exacerbated by human nature. What is clear is that management and individuals who allow this to happen do not comprehend the implications of ignoring strategy. Most importantly these are missed opportunities to make progress on strategy. When an organization is too busy with orders – i.e. business is “great” and revenue is at the top end of the scale – they can most afford to implement strategic change. Yes there may be a shortage of resources (manpower and/or equipment) since “everyone” is busy fulfilling demand. But perhaps the current financial situation permits hiring, renting, or subcontracting to provide the required resources? And when an organization is in crisis mode, making strategic changes – especially to prevent future recurrence of pain – is when the organization may be most motivated to change. In either case the strategy should be established beforehand to allow the proper research and planning to take advantage of the situation and avoid over compensation.
What about strategic planning for startups? Companies started with a strategic vision are more likely to succeed as demonstrated by disruptive innovators like Qualcomm, Nvidia, and others. A company lacking a solid strategic plan will find it extremely difficult to obtain venture capital or other funding. Once the strategy is set, a startup should become laser focused on tactics. Their only role becomes one to discover or develop a new business for their technology by executing a properly-scoped business plan that was designed to support the strategy. If a startup is not successful with their initial target market(s), they can “pivot” to a new market or adjust their business model but their core strategy should remain constant. Long term strategic activities are beyond the scope and funding of a startup. Once the startup has proven itself by demonstrating a functioning product or service with a market of willing customers, the startup team either generates an “exit” (selling via a corporate acquisition or initial public offering) or raises additional funds. At this point the startup needs to transition from focusing only on tactics to regular strategic planning to drive their tactics.
Operating without a strategic plan is like sailing without a destination in mind. You may spend a lot of time and energy tacking as a reaction to how the wind is blowing. But without a plan you don’t know how to adjust each tack to efficiently arrive at the desired destination. The good news is that any organization can be taught how to implement and execute a strategic planning process. We have done this successfully for both high technology and non-technical companies and organizations. With the discipline to execute strategic planning regularly and to not abandon the principles during a crisis, an organization will become better and more efficient at achieving its desired goals.
As always, I look forward to hearing your comments directly. Please contact me to discuss your thoughts or if I can be of any assistance.