The Guiding Policy

...it channels action in certain directions without defining exactly what shall be done.

The guiding policy outlines an overall approach for overcoming the obstacles highlighted by the diagnosis. It is "guiding" because it channels action in certain directions without defining exactly what shall be done.

Kennan's containment and Gerstner's drawing on all of IBM's resources to solve customers' problems are examples of guiding policies.  Like the guardrails on a highway, the guiding policy directs and constrains action without fully defining its content.

ACTION POINT: Develop an outline to overcome the obstacles that are present by your diagnosis.

The Diagnosis VI

most deep strategic changes are brought about by a change in diagnosis--a change in the definition of the company's situation. 

In business, most deep strategic changes are brought about by a change in diagnosis--a change in the definition of the company's situation.  For example, when Lou Gerstner took over the helm at IBM in 1993, the company was in serious decline.  Its historically successful strategy had been organized around offering complete, integrated, turnkey end-to-end computing solutions to corporations and government agencies.  However, the advent of the microprocessor changed all that.  The computer industry began to fragment, with separate firms offering chips, memory, hard disks, keyboards, software, monitors, operating systems, and so on.    Then new industry structure was fragmented and, it was argued IBM should be broken up and fragmented to match.

After studying the situation, Gerstner changed the diagnosis.  He believed that in an increasingly fragmented industry, IBM was the one company that had expertise in all areas.  It's problem was not that it was integrated but that it was failing to use the integrated skills it possessed.  IBM, he declared, needed to become more integrated--but this time around customer solutions rather than hardware platforms.  The primary obstacle was the lack of internal coordination and agility.  Give this new diagnosis, the guiding policy became to exploit the fact that IBM was different, in fact, unique.   IBM would offer customers tailored solutions to their information-processing problems, leveraging its brand name and broad expertise, but willing to use outside hardware and software as required.   Put simply, its primary value-added activity would shift from systems engineering to IT consulting, form hardware to software.

Neither the "integration is obsolete" nor the "knowing all aspects of IT is our unique ability" viewpoints are, by themselves, strategies.  But these diagnoses take the leader, and all who follow, in very different directions.

ACTION POINT:  Consider the direction that a diagnosis will take you.

The Diagnosis V

The United States would have to keep the virus from spreading until it finally died out.

A diagnosis is generally denoted by metaphor, analogy, or reference to a diagnosis or framework that has already gained acceptance.  For example, every student of U.S. national strategy knows about the diagnosis associated with the Cold War guiding policy of containment.  This concept originated with George Kennan's famous "long telegram" of 1946.   Having served as an American diplomat in the USSR and having seen Soviet terror and politics at close hand, he carefully analyzed the nature of Soviet ideology and power.  

Kennan started with the observation that the Soviet Union was not an ordinary nation-state.  Its leaders defined their mission as opposition to capitalism and as spreading the gospel of revolutionary communism by whatever means necessary.  He stressed that antagonism between communism and capitalist societies was a central foundation of Stalin's political regime, preventing any sincere accommodation or honest international agreements.  However, he pointed out that the Soviet leaders were realists about power, Therefore, he recommended a guiding policy of vigilant counter force.

Kennan's diagnosis for the situation--a long-term struggle without the possibility of a negotiated settlement--was widely adopted within policy-making circles in the United States.   His guiding policy of containment was especially attractive as it specified a broad domain of action--the USSR was metaphorically speaking, infected by a virus.  The United States would have to keep the virus from spreading until it finally died out.

ACTION POINT:  When diagnosing a situation, consider a metaphor that may apply.

The Diagnosis IV

good strategy tends to be based on the diagnosis promising leverage over outcomes.

A good strategic diagnosis does more than explain a situation--it also defines a domain of action.  Whereas a social scientist seeks a diagnosis that best predicts outcomes, good strategy tends to be based on the diagnosis promising leverage over outcomes.  For instance, we know from research that K-12 student performance is better explained by social class and culture than by expenditures per student or class size, but that knowledge does not lead to many useful policy prescriptions.  A very different strategic diagnosis has been provided in the book Making Schools Work.  It diagnoses the challenge of school performance as one of organization rather than as one of class, culture, funding, or curriculum design.  Decentralized schools, the book argues, perform better.

Now, whether the organization of a school system explains most of the variations in school performance is not actually critical.  What is critical, and what makes this diagnosis useful to policy makers, is that organization explains some part of school performance and that, unlike culture or social class, organization is something that can be addressed with policy.

ACTION POINT: A good diagnosis should be able to be addressed with a policy.

The Diagnosis III

...diagnosis is a judgement about the meaning of facts.

At Starbucks, one executive might diagnose this challenging situation as "a problem in managing expectations."  Another might diagnose it as  "a search for new growth platforms."   A third might diagnose it as "an eroding competitive advantage."  None of these viewpoints is, by itself, an action, but each suggests a range of things that might be done and sets aside other classes of action as less relevant to the challenge.   Importantly, none of these diagnoses can be proven to be correct--each is a judgment about which issue is preeminent.  Hence, diagnosis is a judgement about the meaning of facts.

The challenge facing Starbucks was ill-structured.  By that I mean that no one could be sure how to define the problem, there was no obvious list of good approaches or actions, and the connections between most actions and outcomes were unclear.  Because the challenge was ill-structured, a real-world strategy could not be logically deduced from observed facts, Rather, a diagnosis has to be an educated guess as to what was going on in the situation, especially about what was critically important.

ACTION POINT: The diagnosis for the situation should replace the overwhelming complexity of reality with a simpler story, a story that calls attention to its crucial aspects.  This simplified model of reality allows one to make sense of the situation and engage in further problem solving.

The Diagnosis II

Slowing growth is a problem for Wall Street but is a natural state in the development of any noncancerous entity.

In 2008, Starbucks was experiencing flat or declining same-store traffic growth and lower profit margins, its return on assets having fallen from a generous 14 percent to about 5.5 percent.  An immediate question arose:  How serious was the situation?  Any rapidly growing company must, sooner or later, saturate its market and have to clamp down on its expansion momentum.   Slowing growth is a problem for Wall Street but is a natural state in the development of any noncancerous entity.

Or were there more serious problems? Was overbuilding outlets a sign of poor management?  Were consumers' tastes changing once again?  As competitors improved their coffee offerings, was Starbucks' differentiation vanishing?  In fact, how important for Starbucks was the coffee-shop setting it provided versus the coffee itself?   Was Starbucks a coffee restaurant, or was it actually an urban oasis?  Could it brand be stretched to other types of products and even other types of restaurants?

ACTION POINT: Tune in tomorrow to find out more.

The Diagnosis

An especially insightful diagnosis an transform one's view of the situation, bringing a radically different perspective to bear. 

A great deal of strategy work is trying to figure out what is going on.  Not just deciding what to do, but the more fundamental problem of comprehending the situation.At a minimum, a diagnosis names or classifies the situation, linking facts into patterns and suggesting that more attention be paid to some issues and less to others.

An especially insightful diagnosis an transform one's view of the situation, bringing a radically different perspective to bear. When a diagnosis classifies the situation as a certain type, it opens access to knowledge about how analogous situations were handled in the past.  An explicit diagnosis permits one to evaluate the rest of the strategy.  Additionally, making the diagnosis an explicit element of the strategy allows the rest of the strategy to be revisited and changed as circumstances change. 

ACTION POINT: Develop strategic diagnosis by focusing on what is going on.

Examples of The Kernel of Good Strategy

In business, the challenge is usually dealing with change and competition. 

Here are some examples:

• For a doctor, the challenge appears as a set of signs and symptoms together with a history.  The doctor makes a clinical diagnosis, naming a disease or pathology.  The therapeutic approach chosen is the doctor's guiding policy.  The doctors specific prescriptions for diet, therapy, and medication are the set of coherent actions to be taken.
• In foreign policy, challenging situations are usually diagnosed in terms of analogies with past situations.  The guiding policy adopted is usually an approach deemed successful in some past situation.  Thus, if the diagnosis is the Iran's president, Mahmoud Ahmadinejad, is "another Hitler", war might be the logical implication.  However, if he is "another Moammar Gadhafi," then strong pressure coupled with behind-the-scenes negotiation might be the chosen guiding policy.  In foreign policy, the set of coherent actions are normally a mix of economic, diplomatic, and military maneuvers.
• In business, the challenge is usually dealing with change and competition.  The first step toward effective strategy is diagnosing the specific structure of the challenge rather than simply naming performance goals.  The second step is choosing an overall guiding policy for dealing with the situation that builds on or creates some type of leverage or advantage.  The third step is the design of a configuration of actions and resource allocations that implement the chosen guiding policy.
• In many large organizations the challenge is often diagnosed as internal.  That is, the organization's competitive problems may be much lighter than the obstacles imposed by its own outdated routines, bureaucracy, pools of entrenched interests, lack of cooperation across units,, and plain-old bad management.  Thus, the guiding policy lies in the realm of reorganizations and renewal.  And the set of coherent actions are changes in people, power, and procedures.  In other cases the challenge may be building or deepening competitive advantage by pushing the frontiers of organizational capability.

ACTION POINT: The three elements, diagnosis, guiding policy and coherent actions, emphasize the core of strategy.

The Kernel of Good Strategy

It is very straightforward and contains three elements:

Good strategy is coherent action backed up by an argument, an effective mixture of thought and action with a basic underlying structure called the kernel.  A good strategy may consist of more than the kernel, but if the kernel is absent or misshapen, then there is a serious problem.

Once you apprehend this kernel, it is much easier to create, describe, and evaluate a strategy.  The kernel is not based on any one concept of advantage.  It does not require one to sort through legalistic gibberish about the differences between visions, missions, goals, strategies, objectives, and tactics.  It does not split strategies into corporate, business, and product levels.   It is very straightforward and contains three elements:

• A diagnosis that defines the nature of the challenge.   A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of a situation as critical.
• A guiding policy for dealing with the challenge.  This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.
• A set of coherent actions that are designed to carry out the guiding policy.  These are steps that are coordinated with one another to work together in accomplishing the guiding policy.

ACTION POINT: Base strategy on the three elements of the kernel of good strategy.

Discovering Power

 Looking at things from a different or fresh perspective can reveal new realms of advantage and opportunity as well as weakness and threat.

The second natural advantage of many good strategies comes from insight into new sources of strength and weakness.  Looking at things from a different or fresh perspective can reveal new realms of advantage and opportunity as well as weakness and threat.

The story of David and Goliath pitted a small, young, inexperienced but very brave shepherd against a massive, experienced and very strong warrior.   Moving toward Goliath, David took a stone and launched it with a sling.  Struck in the forehead Goliath fell dead on the spot.  It is said that strategy brings relative strength against relative weakness.  In this story the mismatch between David and Goliath was vast.   It is only after the stone is slung that the listeners viewpoint shifts and one realizes that the boy's experience with a shepherds sling is a strength as his is youthful quickness.

It is the victory of apparent weakness over apparent strength that gives this tale its bite.  More than the deft wielding of power, the listener experiences the actual discovery of power in a situation--the creation or revelation of a decisive asymmetry.     How someone can see what others have not, or what they have ignored, and thereby discover a pivotal objective and create an advantage, lies at the very edge of our understanding, something glimpsed only out of the corner of our minds.  Not every good strategy draws on this kind of insight, but those that do generate the extra kick that separates "ordinary excellence" from the extraordinary.

ACTION POINT: Look for ways to change your perspective.

Good Strategy is Unexpected

most organizations will not create focused strategies

The first natural advantage of good strategy arises because other organizations often don't have one.  And because they don't expect you to have one either.  A good strategy has coherence, coordinating actions, policies, and resources so as to accomplish an important end.  Many organizations, most of the time, don't have this.  Instead, they have multiple goals and initiatives that symbolize progress, but no coherent approach to accomplishing that progress other than "spend more and try harder."

Having conflicting goals, dedicating resources to unconnected targets, and accommodating incompatible interests are the luxuries of the rich and powerful, but they make for bad strategy.  Despite this, most organizations will not create focused strategies.  Instead, they will generate laundry lists of desirable outcomes and, at the same time, ignore the need for competence in coordinating and focusing their resources.  Good strategy requires leaders who are willing and able to say no to a wide variety of actions and interests.  Strategy is at least as much about what an organization does not do as it is about what it does.

ACTION POINT:  What are the actions and interests you should say no to?

Making Magic at Disney

...but what really drives the magic is the extraordinary service

The enchanted realm called Walt Disney World is about the size of San Francisco, or twice the size of Manhattan.  It is the largest tourist destination and one of the biggest convention sites in the world.  With it's 59,000 cast members, it is the largest single-site employer n the world.

It has thrilling attractions and great shows that bring millions of people a year to Disney World.  Those are extremely important, of course, but what really drives the magic is the extraordinary service.  Each of the 59,000 cast members is trained to treat each and every guest with the utmost care and respect.  And they do this consistently because they are treated exactly the same way by the Disney leadership: with the utmost care and respect.

If that sounds like a commercial fluff feel-good Disney movie, it is not.  It's a rational, muscular, no-nonsense business strategy.  And it's results are reflected in Disney's robust bottom line, not to mention its astonishing 70 percent return rate among visitors and the lowest employee turnover rate of any major company in the hospitality industry.  The formula is simple: Committed, responsible, inspiring leaders create a culture of care, which leads to measurable business results and a strong competitive advantage.

ACTION POINT: Commit to creating a culture of utmost care, respect and extraordinary service.

Coherence and Strength

 A good strategy doesn't just draw on existing strength; it creates strength through the coherence of its design.

The most basic idea of strategy is the application of strength against weakness.  Or, if you prefer, strength applied to the most promising opportunity.  The standard modern treatment of strategy has expanded this idea into a rich discussion of potential strengths, today called "advantages."  There are advantages due to being a first mover: scale, scope, network effects, reputation, patents, brands, and hundreds more.  None of these are logically wrong and each can be important.  Yet this whole mid level framework misses two huge, incredibly important natural sources of strength:

• Having a coherent strategy -- one that coordinates polices and actions.  A good strategy doesn't just draw on existing strength; it creates strength through the coherence of its design.  Most organizations of any size don't do this.  Rather, they pursue multiple objectives that are unconnected with one another or, wore, that conflict with one another.
• The creation of new strengths through subtle shifts in viewpoint.  An insightful re framing of a competitive situation can create whole new patters of advantage and weakness.  The most powerful strategies arise from such game-changing insights.

ACTION POINT: Re frame your viewpoint and look for new strengths.

Wheel Spinning

The most common complaint about "srategy' is the lack of execution. 

Many people assume that a strategy is a big-picture overall direction, divorced from any specific action.  But defining strategy as broad concepts, thereby leaving out action, creates a wide chasm between "strategy" and "implementation."  If you accept this chasm, most strategy work becomes wheel spinning.

The most common complaint about "strategy' is the lack of execution.   This complaint is usually the result of having confused strategy with goal setting.   When the "strategy" process is basically a game of setting performance goals --so much market share, so much growth, etc.--then there remains a yawning gap between these ambitions and action.

Strategy is about how to advance the organization's interests.  Of course leaders can set goals and delegate to others the job of figuring out what to do.  But that is not strategy, let's skip the spin and be honest--call it goal setting.

A good strategy includes a set of coherent actions.  They are not "implementation" details; they are the punch in the strategy.  A strategy that fails to define a variety of plausible and feasible immediate actions is missing a critical component.

ACTION POINT: Identify the coherent actions that will advance your organizations interests.

Strategic Lines II

"strategy" should mean a cohesive response to an important challenge

A word that can mean anything has lost its bite.  To give content to a concept one has to draw lines, marking off what it denotes and what it does not.  To begin the journey toward clarity, it is helpful to recognize that the words "strategy" and "strategic" are often sloppily used to mark decisions made by the highest-level officials.  For example, in business, most mergers and acquisitions, investments in expensive new facilities, negotiations with important suppliers and customers, and overall organizational design are normally considered to be "strategic."  

However, why you speak of "strategy," you should not be simply marking the pay grade of the decision maker.  Rather, the term "strategy" should mean a cohesive response to an important challenge.  Unlike a stand-alone decision or a goal,  a strategy is a coherent set of analyses, concepts, policies, arguments, and actions that respond to a high-stakes challenge.

ACTION POINT: Identify the important  challenges you are facing.

Strategic Lines

Strategy cannot be a useful concept if it is a synonym for success. 

"Strategy is never quitting until you win."  This sort of mishmash of pop culture, motivational slogans, and business buzz speak is, unfortunately, increasingly common.  It short circuits real inventiveness and fails to distinguish among different senior-level management tasks and virtues.

Strategy cannot be a useful concept if it is a synonym for success.  Nor can it be a useful tool if it is confused with ambition, determination, inspirational leadership, and innovation.   Ambition is drive and zeal to excel.  Determination is commitment and grit.  Innovation is the discovery and engineering of new ways to do things.  Inspirational leadership motivates people to sacrifice for their own and the common good.    Strategy, responsive to innovation and ambition, selects the path, identifying how, why, and where leadership and determination are to be applied.

ACTION POINT: Identify the path and how, why and where to apply leadership.

The Kernal of Good Strategy

Crafting good strategies is based on an underlying structure:

There are dramatic differences between good and bad strategy. Crafting good strategies is based on an underlying structure:


1. A diagnosis: an explanation of the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as being the critical ones.

2. A guiding policy: an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.

3. Coherent actions: steps that are coordinated with one another to support the accomplishment of the guiding policy.

ACTION POINT: Base strategy on the underlying structure of diagnosing the challenge, guiding through policy and following through with coherent actions.

Why so much Bad Strategy?

Strategy involves focus and, therefore, choice.

Bad strategy has many roots, two significant ones are: the inability to choose and template-style planning—filling in the blanks with “vision, mission, values, strategies.”


The inability to choose.  Strategy involves focus and, therefore, choice. And choice means setting aside some goals in favor of others. When this hard work is not done, weak strategy is the result. In 1992, there was a strategy discussion among senior executives at Digital Equipment Corporation (DEC). A leader of the minicomputer revolution of the 1960s and 1970s, DEC had been losing ground for several years to the newer 32-bit personal computers. There were serious doubts that the company could survive for long without dramatic changes.

Three points of view emerged from the executive team.  “Alec” argued that DEC had always been a computer company and should continue integrating hardware and software into usable systems. “Beverly” felt that the only distinctive resource DEC had to build on was its customer relationships. Hence, she derided Alec’s “Boxes” strategy and argued in favor of a “Solutions” strategy that solved customer problems. “Craig” held that the heart of the computer industry was semiconductor technology and that the company should focus its resources on designing and building better “Chips.”

Choice was necessary: both the Chips and Solutions strategies represented dramatic transformations of the firm, and each would require wholly new skills and work practices. One wouldn’t choose either risky alternative unless the status quo Boxes strategy was likely to fail. And one wouldn’t choose to do both Chips and Solutions at the same time, because there was little common ground between them. It is not feasible to do two separate, deep transformations of a company’s core at once. With equally powerful executives arguing for each of the three conflicting strategies, the meeting was intense. DEC’s chief executive, Ken Olsen, had made the mistake of asking the group to reach a consensus. It was unable to do that, because a majority preferred Solutions to Boxes, a majority preferred Boxes to Chips, and a majority also preferred Chips to Solutions. No matter which of the three paths was chosen, a majority preferred something else. This dilemma wasn’t unique to the standoff at DEC.

The French philosopher Nicolas de Condorcet achieved immortality by first pointing out the possibility of such a paradox arising, and economist Kenneth Arrow won a Nobel Prize for showing that “Condorcet’s paradox” cannot be resolved through cleverer voting schemes.

Not surprisingly, the group compromised on a statement: “DEC is committed to providing high-quality products and services and being a leader in data processing.” This fluffy, amorphous statement was, of course, not a strategy. It was a political outcome reached by individuals who, forced to reach a consensus, could not agree on which interests and concepts to fore go. Ken Olsen was replaced, in June 1992, by Robert Palmer, who had headed the company’s semiconductor engineering. Palmer made it clear that the strategy would be Chips. One point of view had finally won. But by then it was five years too late. Palmer stopped the losses for a while but could not stem the tide of ever more powerful personal computers that were overtaking the firm. In 1998, DEC was acquired by Compaq, which, in turn, was acquired by Hewlett-Packard three years later.

Scan through template-style planning documents and you will find pious statements of the obvious presented as if they were decisive insights. Template-style strategy, the Jack Welch quote about “reaching for what appears to be the impossible” is fairly standard motivational fare, available from literally hundreds of motivational speakers, books, calendars, memo pads, and Web sites. This fascination with positive thinking has helped inspire ideas about charismatic leadership and the power of a shared vision, reducing them to something of a formula. The general outline goes like this: the transformational leader (1) develops or has a vision, (2) inspires people to sacrifice (change) for the good of the organization, and (3) empowers people to accomplish the vision.

By the early 2000s, the juxtaposition of vision-led leadership and strategy work had produced a template-style system of strategic planning. (Type “vision mission strategy” into a search engine and you’ll find thousands of examples of this kind of template for sale and in use.) The template looks like this:

The Vision. Fill in your vision of what the school/business/nation will be like in the future. Currently popular visions are to be the best or the leading or the best known.

The Mission. Fill in a high-sounding, politically correct statement of the purpose of the school/business/nation. Innovation, human progress, and sustainable solutions are popular elements of a mission statement.

The Values. Fill in a statement that describes the company’s values. Make sure they are noncontroversial. Key words include “integrity,” “respect,” and “excellence.”

The Strategies. Fill in some aspirations/goals but call them strategies. For example, “to invest in a portfolio of performance businesses that create value for our shareholders and growth for our customers.” This template-style planning has been enthusiastically adopted by corporations, school boards, university presidents, and government agencies. Scan through such documents and you will find pious statements of the obvious presented as if they were decisive insights. The enormous problem all this creates is that someone who actually wishes to conceive and implement an effective strategy is surrounded by empty rhetoric and bad examples.

ACTION POINT: Recognize that choice involves "choosing" and that strategy requires more than filling in the blanks.

Fluff

Fluff is a restatement of the obvious, combined with a generous sprinkling of buzzwords that masquerade as expertise.

A final hallmark of mediocrity and bad strategy is superficial abstraction—a flurry of fluff—designed to mask the absence of thought. Fluff is a restatement of the obvious, combined with a generous sprinkling of buzzwords that masquerade as expertise.


Here is a quote from a major retail bank’s internal strategy memorandum: “Our fundamental strategy is one of customer-centric inter mediation.” Inter mediation means that the company accepts deposits and then lends out the money. In other words, it is a bank. The buzz phrase “customer centric” could mean that the bank competes by offering better terms and service, but an examination of its policies does not reveal any distinction in this regard. The phrase “customer-centric intermediation” is pure fluff. Remove the fluff and you learn that the bank’s fundamental strategy is being a bank.

ACTION POINT: Good strategy requires deep thought and can be communicated simply and clearly.

Bad Strategic Objectives

...if the consequent strategic objectives are just as difficult to meet as the original challenge, the strategy has added little value.

Another sign of bad strategy is fuzzy strategic objectives.  One form the problem can take is a scrambled mess of things to accomplish—a dog’s dinner of goals. A long list of things to do, often mislabeled as strategies or objectives, is not a strategy. It is just a list of things to do. Such lists usually grow out of planning meetings in which a wide variety of stakeholders suggest things they would like to see accomplished. Rather than focus on a few important items, the group sweeps the whole day’s collection into the strategic plan. Then, in recognition that it is a dog’s dinner, the label “long term” is added, implying that none of these things need be done today. As a vivid example, the mayor of a small city in the Pacific Northwest and his planning committee developed a strategic plan containing 47 strategies and 178 action items. Action item number 122 was “create a strategic plan.”

A second type of weak strategic objective is one that is “blue sky”—typically a simple restatement of the desired state of affairs or of the challenge. It skips over the annoying fact that no one has a clue as to how to get there. A leader may successfully identify the key challenge and propose an overall approach to dealing with the challenge. But if the consequent strategic objectives are just as difficult to meet as the original challenge, the strategy has added little value.

Good strategy, in contrast, works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes. It also builds a bridge between the critical challenge at the heart of the strategy and action—between desire and immediate objectives that lie within grasp. Thus, the objectives that a good strategy sets stand a good chance of being accomplished, given existing resources and competencies.

ACTION POINT:  Focus energy and resources on very few pivotal objectives whose accomplishment will lead to a cascade of favorable results.

Mistaking Goals for Strategy

“If you don’t have a competitive advantage, don’t compete.” - Jack Welch

A few years ago a strategist was talking to the management team of a graphic-arts company that was working on “strategic thinking.”   Chad Logan the leader of the management team said the overall goal was simple—it was called “20/20 plan.” Revenues were to grow at 20 percent a year, and the profit margin was to be 20 percent or higher. “This 20/20 plan is a very aggressive financial goal,” said the strategist. “What has to happen for it to be realized?” Logan tapped the plan with a blunt forefinger. “The thing I learned as a football player is that winning requires strength and skill, but more than anything it requires the will to win—the drive to succeed. . . . Sure, 20/20 is a stretch, but the secret of success is setting your sights high. We are going to keep pushing until we get there.” The strategist tried again: “Chad, when a company makes the kind of jump in performance your plan envisions, there is usually a key strength you are building on or a change in the industry that opens up new opportunities. Can you clarify what the point of leverage might be here, in your company?” Logan frowned and pressed his lips together, expressing frustration that I didn’t understand him. He pulled a sheet of paper out of his briefcase and ran a finger under the highlighted text. “This is what Jack Welch says,” he told me. The text read: “We have found that by reaching for what appears to be the impossible, we often actually do the impossible.” (Logan’s reading of Welch was, of course, highly selective. Yes, Welch believed in stretch goals. But he also said, “If you don’t have a competitive advantage, don’t compete.”)

The reference to “pushing until we get there” reminded the strategist of an association with the great pushes of 1915–17 during World War I, which led to the deaths of a generation of European youths. Maybe that’s why motivational speakers are not the staple on the European management-lecture circuit that they are in the United States. For the slaughtered troops did not suffer from a lack of motivation. They suffered from a lack of competent strategic leadership. A leader may justly ask for “one last push,” but the leader’s job is more than that. The job of the leader—the strategist—is also to create the conditions that will make the push effective, to have a strategy worthy of the effort called upon.

ACTION POINT: Create conditions that will make your teams efforts effective.