General Motors and Ford, my favorite subjects. They have provided lots of material over the last decade of what not to do. These two guys diddled for the last decade against the tide. While perhaps $4-5/gallon of fuel wasn't predicted, you didn't need a crystal ball to know that fuel economy would be on its way in and big hog trucks and cars were going to be on the decline. But a problem. Big cars and trucks create 1000's of $'s of profits each, little cars 100's. So rather than deciding on a course of action that recognized these trends and started sacrificing gross margin but keeping a strong dealer network and market share--taking decisive action--they waited around to see with perfection through hindsight exactly what the market would be. So now they've lost both lead time and market share, and will are starting to lose dealers from this inaction. Every time they'd start to go small, there would be some setback and they'd pull in their horns. So we had a combination of waiting for the perfect answer, and in the process constantly changing course.
Constructing a NorthWest strategy is exactly the opposite. Construct a reasonable and rational plan and get on with it. Be decisive. Stick to it! Don’t let your various constituencies or market perturbations make you wobble.
There’s not an executive in the free world who doesn’t at least say he has a strategy. Most of them actually have one, of sorts. It may even be a good one. After all, what is a strategy but a description of a company’s problems and opportunities along with what it takes to solve them?
So after considering all the necessary factors, determine a sound strategy and get it to the “good enough” stage. Don’t get bogged down by the worries of this or that issue; work them out as you go. This is your Northwest Strategy. Everyone (management, directors, owners and security analysts) knows it’s not perfect. Hopefully everyone also knows it’s virtually impossible to have a perfect strategy. But if the course is sound, it makes sense, it contains no non-starters, it fits with the communal knowledge of the various stakeholders, it is describable and communicable, and it creates purpose and eliminates distractions, you and your business will be a winner.
Creating a reasonable but not necessarily perfect strategy can be simple or unbelievably complicated. Typically the simple ones are the best, at least for a while. They are frequently developed by a combination of analysis, common sense, instinct and perhaps a little luck.
The highly instinctive approach is typical of a new or start-up company. Larger organizations frequently get so caught up in analysis the process becomes numbing. A mid-market sized company has a nice advantage: it’s neither so small that someone’s pet idea can supplant an intelligent strategy nor so large that paperwork galore needs to be generated to satisfy all the people who need (want) to be involved.
Out of all the mid-market companies, clearly some have great strategies, many have okay strategies, and others have crappy strategies. We tend to view companies with great strategies as being led by a brilliant strategist. My observations suggest that a good number are led by someone who happened to do something that made sense. Good luck and good execution make the strategy seem brilliant.
Management then uses various techniques to implement that strategy, to explain it to the key operatives, to enlist insiders and outsiders to that strategy, and to keep it an open book. He enlists the thinking of the remainder of his organization; he encourages feedback and is relentless in pursuing it. He gets everyone pulling Northwest and makes substantial progress.
Over time, because the strategy is a living, breathing entity, it improves. The CEO carefully adjusts to a more northern course. Because it’s an open book, modest steering changes are understood and supported.
Don’t make the common mistake. The manager or CEO, when assessing a strategic direction, starts out okay. Assuming he’s not a highly decisive individual or is easily influenced by new or even old inputs, he continues to change, constantly reacting to input, and taking too much account of all recent readings, hallway inputs, and current trends. He is reluctant to communicate specifics broadly because he knows they might change or he might be criticized.
The CEO may appear exciting to his management, directors, owners and security analysts because of his savvy, brilliant, with-it mentality and elocution; he’s always on top of the latest headline. He may actually get to true north in his own mind and in his presentations. Frequently this type of CEO enjoys accolades and a higher share price, at least temporarily.
However, what are the long-term results? If he is constantly updating and changing directions, utilizing the latest lingo, it will be difficult for his team to make substantive progress. In the end, progress is all that matters.
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