Imagine if Hogwarts, the mythical school of magic and sorcery in the Harry Potter books, taught strategic planning.

You could use enchanted mirrors to gaze into the future with unerring accuracy. You could conjure up potions for warding off evil competitors, recite charms for turning lousy products into perennial moneymakers, and chant incantations for rendering customers intensely loyal under your spell. Most important, you could learn how to wield the magic wand that makes all your business goals and aspirations come true.

Sound crazy?

We all know that magic wands only work in fairy tales and Hollywood movies. But you would be amazed at how many organizations subscribe to what I call the “And then a miracle happens…” approach to strategic planning.

With this approach, management invests a great deal of time and energy in identifying the destination (where the company needs to go), but puts almost no effort into determining how the company will get there. Instead, they believe that someone will wave their magic wand and the organization will suddenly get to where it wants to go.

In all my years of helping companies craft strategic plans, I have seen a lot of misguided thinking about the strategic planning process. But perhaps the most common fallacy is believing that just because you state a goal it will magically happen. Maybe at Hogwarts, but not in the real world!

Without question, creating a strategic plan takes hard work. But it represents only half the battle. To achieve the results laid out by the plan, you must also figure out how you will get there, which requires breaking down the process of reaching your destination into manageable steps. To facilitate this process, I recommend dividing the journey into three distinct phases: incremental, substantial, and transformational.

Start by comparing your destination to your current reality, noting any gaps between the two. Then identify what you will do incrementally different to achieve your goals. Over the next six months, what needs to happen in order to make progress toward your destination? What operating goals and strategies can you achieve in that time frame? What capabilities must be in place to support getting there?

During this phase, take into account how much change your organization can absorb without getting off track. Pay close attention to what it will take to increase the skills, knowledge, and competency levels to reach your destination. And if new systems and processes need to be created, how long will it take to implement them?

Next, identify what you will do substantially different to move closer to your goal. In other words, what needs to happen after the first six months and prior to your first 18 months of progress? Again, look at the operating goals and strategies you can achieve during this time frame, and what new skills, resources, capabilities, systems or processes will be required to achieve them.

Finally, identify what you will do that begins to achieve the type of transformational goals you set during the initial strategic planning process. What will happen after the first 18 months of progress? What operating goals and strategies can you achieve in that time frame? What capabilities must be in place to support getting there? Keep in mind that a lot may have happened since you first embarked on your journey. So make sure to build as much flexibility into this phase of the plan as possible.

In today’s chaotic markets, nothing is more critical than figuring out where you need to go as an organization. Once you do, put away your magic wand and invest the time in creating your incremental, substantial, and transformational action plans. These will ensure that all your hard work during the initial planning phase doesn’t go to waste.

Magic may rule supreme at Hogwarts. But in the real world, hard work, discipline, focus, and manageable action steps win every time.

Wait your turn. No pushing in line. Yield to pedestrians. Treat others the way you would like to be treated.

Certain timeless rules are better obeyed than broken. But in today’s topsy-turvy business world, many of the rules that informed and guided previous generations of business leaders no longer apply. If you’re not breaking rules on a regular basis, your customers and markets have probably already left you behind.

Most business leaders intuitively know that they need to do things differently. But they struggle when it comes to determining which rules to hold onto and which rules to cast aside for newer ways of thinking.

In working with clients around the world, I have found two areas in particular where throwing out the old rulebook is essential for keeping up with today’s frenetic rate of change. One involves the skills, attitudes and mindsets required to manage people and work processes. The other has to do with how you go about analyzing and assessing your competitors and your markets. In these two areas, I highly recommend forgetting most (or all) of what you think you know.

For example, from a people/process perspective:

Old rule: Strive to maintain the status quo, but react quickly when change happens.
New rule: Don’t wait for change to hit you. Anticipate it, plan for it, and make it happen on your terms.

Old rule: Management’s job is to make decisions.
New rule: Management’s job is to facilitate decisions made by those closest to the customer.

Old rule: Avoid conflict.
New rule: Rock the boat! Purposefully create conflict and manage it in a constructive manner.

Old rule: Tell employees what to do, when to do it and how to do it.
New rule: Give employees the resources and support they need. Then stand back and let them do their jobs.

From a competitive analysis perspective:

Old rule: Focus your research on competitors inside your industry.
New rule: Stretch your horizons. The next competitor that causes your world to implode may well come from outside your industry.

Old rule: Markets have predictable life spans and earnings curves.
New rule: Today’s markets can (and do) disappear overnight.

Old rule: Strategic planning involves creating a 5-year plan.
New rule: Look 12 to 24 months (at most) into the future. It’s almost impossible to accurately predict what will happen after that.

Perhaps the most important new rule for today’s chaotic market realities is to constantly challenge what you think you know about your business and the world in general. Don’t allow yourself to get comfortable with the status quo. Don’t allow yourself to get stuck thinking that what has made you successful so far will continue to make you successful in the future. And if you haven’t re-evaluated your customers’ wants and needs within the past six months to a year, do so now!

Letting go of rules that have served you well in the past can be difficult, but holding on to them can be fatal. What rules are you holding onto that you should be letting go?

They say that denial is a river in Egypt. Maybe so, but I contend that denial is also running rampant in the conference rooms and corridors of most of today’s companies.

I’m not talking about the stuff you need to see a psychiatrist for. I’m referring to something far more subtle and insidious, a kind of denial that strikes at the very heart of how business leaders and managers go about managing their people and their organizations.

Everyone talks about change these days. But if you look around, it’s easy to see that many companies (and the executives who lead them) have yet to acknowledge just how profoundly our business world is changing. Consequently, they have yet to come to terms with how relentless change is affecting the way they need to lead and manage their organizations. And this is where so many companies get into trouble.

When market conditions change dramatically, as they have in the past year or two, business leaders need to adapt quickly. They also need to help their people adapt.
Otherwise their companies get stuck in “same-old, same-old” mode, and soon lose touch with their customers and their markets. Granted, many of the recent business failures can be attributed to the economy imploding at such a rapid clip. But the fact remains that too many business leaders never even saw it coming even though the signs were everywhere.

What does denial in conference rooms look like? Symptoms include:

• Blaming all your woes on the economy.
• Not looking beyond the narrow boundaries of your industry to keep abreast of new trends and developments.
• Believing that “everyone else may be in a global economy, but we’re still a regional business.”
• Expecting that your next big competitive threat will come from within your industry.
• Automatically discounting new technologies, such as social media, because you don’t think they apply to your business.
• Taking for granted that you still know what customers want and need when you haven’t checked with them in a year or more.
• Assuming your employees are glad to just have a job so they are working hard on the right things.

Most of all, denial involves thinking that most of what you know about your business is still true and believing that what made you successful so far will continue to make you successful in the near future.

I hate to kick someone when they’re down, but General Motors represents the classic example of corporate denial. In the face of overwhelming evidence that their customers, markets and environment were permanently changing, they continued to crank out the same old tired products, using a business model nearly 100 years old. Any changes and innovations they did make were done slowly and grudgingly, and always with an eye toward recapturing past glories rather than blazing a new trail for the future. The wonder is not that they went into bankruptcy but that it took them so long to get there.

Here’s the real problem with corporate denial — it is both an attitude and a behavior. Which means that solving the problem requires more than just pulling your head out of the sand and taking an occasional look at what is going on in the world around you. In order to make lasting changes in behavior, one must first change the attitudes and beliefs that drive behavior. And from what I have seen, many business leaders are either unwilling or unable to commit the time and effort into adjusting their attitudes and beliefs. Or maybe they just don’t know how.

The cure for corporate denial is actually fairly simple (notice I said simple, not easy). Cutting through denial requires challenging your attitudes, beliefs, and assumptions on a regular basis. Getting together once a year with your management team for a cursory competitive analysis will no longer cut it. Challenging everything you think you know about your business must become a way of life.

Overcoming denial also requires a focus not just on strategic planning, but on strategic agility. Today’s companies need to become quick, agile, and able to respond immediately to changing market conditions and customer expectations. This may require a profound shift in how you think and how you go about managing your organization, which is not easy. But — and trust me on this one — the alternative is much worse.

So I have two questions for you. Are you in denial? And if so, what do you intend to do about it?

It takes many different qualities to make a great leader. Vision. Honesty. Integrity. Passion. Commitment. Communication skills. The ability to build relationships. And in today’s world of rapid-fire change, I also put flexibility at the top of the leadership attribute list.

The dictionary defines flexibility as “a ready capability to adapt to new, different, or changing requirements.” And nothing characterizes today’s business environment more than the need to constantly adapt to change. If you can’t readily adapt to new and often dramatically different circumstances, your organization will quickly get left behind.

Today’s leaders are confronted with three broad categories of change:

• Globalization. As our world grows smaller and smaller, the ability to think globally becomes paramount. Managers and leaders must become more innovative and proactive, anticipating problems and opportunities as well as entirely new markets and products that can spring up from anywhere in the world.
• Leadership styles. Today’s employees want to be led. They want to be motivated, guided and inspired, not directed and micro-managed. Most of all, they want to participate and engage in every aspect of their job. This requires discarding the old managerial approach of administrating and directing and adopting the new idea of guiding and inspiring.
• Increasingly diverse workforce. For the first time ever, the U.S. has four generations in the workplace, each with different attitudes, values, wants, needs, desires and expectations of work. The workplace is also growing more diverse in terms of race, ethnicity, gender and political and religious beliefs. Long gone are the days of “one size fits all” workplace policies. More than ever, managers and leaders need a variety of options with which to manage their workforce.

The bad news is that change is only going to get faster. Work will grow increasingly complex. And as more and more generation Y (currently ages 20 to 27) enter the workplace; it will become even more diverse. In the face of such relentless change, leadership agility becomes more critical than ever.

At the organizational level, leadership agility manifests itself in things like workplace flexibility programs. When you provide employees with options such as flexible hours, telecommuting and compressed workweeks, it gives them some control over their work environment while creating the sense of engagement they crave.

At the personal level, leadership flexibility is reflected in the attitudes and actions of individual executives. It involves keeping an open mind to new and different ways of managing people and work, and a willingness to unlearn old ways while embracing new ones. It also involves constantly testing your own assumptions and beliefs to see if they remain valid (if they’re even six months old, probably not).

The trees that survive a hurricane are those that bend with the wind rather than resisting it. Make flexibility part of your leadership skill set and your organization will find that it can ride out the winds of change no matter how strong they may be.

To learn more about workplace flexibility check out Holly Green’s keynote presentation at the Rady School of Management at UC San Diego, November 3rd, 2009.  Click here for more details!

Identify Key Lessons from Troubled Times

Signs of an economic recovery are starting to come into view. Are you prepared to seize the momentum? Or is your organization still in a holding pattern as you ride out the storm?  Those companies that act carefully, but swiftly, will have an unfair advantage in re-building as the economy upswings. But the first step is to pause and reflect on what just happened. You won’t have a better opportunity to identify key lessons that have led not only to your survival, but might be key characteristics that build sustainability into your future business strategy.

This is exactly what Joseph Petrucelli has done as CEO of East Bridgewater Savings Bank, a small community bank near Boston that has been criticized by the FDIC for not loaning enough money. The irony is the private bank, with assets of $135 million, has weathered the financial industry meltdown because of its long-held practice of being stingy in the loans it makes. East Bridgewater has had no foreclosures or even delinquent loans.

When competitors were freely approving loans at a rate of $9 for every $10 in deposits, East Bridgewater loaned less than $3 out of $10 in deposits. Petrucelli is a self-described “paranoid” when it comes to the credit worthiness of borrowers. The strategy has paid off and East Bridgewater has never stopped loaning money while others struggle.

Petrucelli’s determination comes from a key lesson he learned during the 1980s downturn when he was asked to rescue Boston’s Eliot Savings. Eliot Bank had been transformed from a 100-year-old sleepy community bank into a high-growth commercial lending institution with piles of bad loans. Unfortunately, there was not much left to do but close the bank by the time Petrucelli arrived on the scene.

Understanding the changing business fundamentals separates the survivors from victims. Those fundamentals are found when digging deep into your operations rather than relying solely on general market trends:

• Understand what drives customer retention, and focus on customer expansion. Most businesses are trying to keep customers happy today. Few, however, are discussing how to help customers and sales people build new business.
• Get close to your sales force. Learn what customers “want” as much as what they “need.” Talk to the sales force directly to understand the stresses and strains that could provide opportunities for solutions that will help you and your customers to prosper. Just be cautious to make sure you don’t collude with negativity. Focus your team on the opportunities without ignoring the challenges.
• Better yet, get close to your customers. And not just your peers at these companies. Visit the people who actually use your products or services. They are the ultimate influencers who can help define a competitive differentiator for you. Assign an executive sponsor for all your key clients and establish a management routine to talk to them not only about your products and services, but about their own business, their competitors, the trends they are seeing, their challenges, etc.
• Honestly assess your markets. Listen for ideas that may work for green industries, healthcare, legal services, education, utilities, security services or other growth categories. Or evaluate growing geographical regions like Canada, Brazil and Australia. Consider how you can apply what is going on in these growing sectors to your own business. Who is succeeding and what are they doing that you can learn from even if their products and services are dramatically different than your own.
• Understand what drives productivity at every level of your operations. While the claims processor might handle administrative tasks effectively, what could make his task simpler so he can take on more volume? Or maybe Jane could handle more web inquiries if her antiquated computer didn’t crash every hour.
  • Talking to the troops should not be positioned as a critique of the immediate supervisor. Rather, position your review as a desire to understand the pulse of the organization so new initiatives can be quickly adopted in the future.
  • Be curious. Ask questions across your organization that demonstrates you are genuinely interested. Try “What is the one thing you want changed? What can I do to help you be more successful in your role?” If you demonstrate caring, employees are more likely to truly engage in their work making better decisions and increasing productivity.
• Understand your prime costs and sales drivers. East Bridgewater Savings Bank knew its threshold for lending to keep it out of trouble. What are the key two or three measures that, if achieved consistently, will virtually guarantee success? A rolling 12-month sales average? Operating profit percentage? Accounts receivable aging? Average margin per sales rep? Focusing on these prime figures eliminates the “can’t see the forest for the trees” dilemma when you start scenario planning. And don’t limit your thinking to these drivers to just financial ones. Consider customer relationships, brand perception, company culture, etc.

In the final article of this series, I’ll discuss the next two steps to take after you complete your ‘lessons learned’ analysis: How to define a plan of action, and creating a culture that thrives on adjusting to unanticipated scenarios that will impact your plan. Stay tuned!

There’s a new normal for today’s businesses

Part 1 of a 3-Part Series

All great leaders are constant learners and unlearners. They study, analyze and question everything regardless of the economic situation. They shift when the need arises, not depending on those things they have always done the same way. Effective leaders don’t take anything for granted, especially outside forces that can drastically change the long-term impact on business.

So, what do we think we know based on the past year?

• Growing government regulations will impact how you sell, operate or deliver products and services more than ever.
• A recent study by Vistage International finds many business leaders are bracing for higher taxes to pay for the new regulations and loans used to re-ignite the economy.
• Economist Brian Beaulieu and others predict unemployment will continue to rise until early 2010 while loyalty will diminish as the remaining employees are asked to tackle extra tasks.
• Online social networks and other technological changes will continue to empower customers and employees. Company reputations will rise and fall virtually overnight through these communities.
• Finally, globalization will march forward on all levels… from smaller American companies selling security technology to foreign governments to Chrysler being owned by Italian automaker Fiat.

Planning Versus Reacting
Companies are adjusting to these trends, but often with knee-jerk reactions:

• Many businesses remain in survival mode with a focus on scrutinizing every expense, stretching out accounts payable schedules and, of course, layoffs. Preparing for sustainable growth is not on the radar screen.
• Customer service is improving as businesses hold on to preserve every precious relationship, but many companies will do almost anything to keep customers happy even if it makes no financial sense.
• Companies are chasing anything that might turn a fast buck. But with fewer employees, the chase diverts limited human resources from the core business and less progress is made on the right things.
• Decisions have been delayed in almost every sector regarding almost every choice. Some are looking for an instant, magic wand type event to indicate it is time to shift back to growth mode so not much is getting done even with the resources these organizations have.

What can you learn from these trends? And what can companies do to get positioned for an era of sustainable growth?

As Albert Einstein summed up about change… “Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.”

But with so much in flux, where do you begin with your list of questions? Break up your process into three main steps to avoid confusion among employees and customers, and to validate your assumptions for success as the economy recovers:

• Identify key lessons about your business from the past year or two. What major considerations should be central to your strategic planning? Consider actions, activities, products and services that are not the focus of your competitors. Are they not hiring? Are they not seizing an emerging market? What gaps can you fill? And what can you stop doing? What did you try, but it did not work? What old habits and processes should you abandon even if you have invested in them for a long time?
• Distill your learning into focused action plans. Some actions might be short-term opportunities to meet cash flow needs. Other actions may build long-term sustainability. You may seize an opportunity that your competition is missing. Regardless, the actions should always support your core business mission and you should be very clear on when you will take the action and what resources are required to do it well.
• Anticipate the unanticipated as you start to implement. Make scenario planning part of the daily routine rather than an afterthought when plans don’t pan out. Prepare to pause, think and plan. It will feel like it is slowing you down, but will actually help you get to where you want to go much faster. Make asking “what if?” part of ‘the way we do things here.’ Force yourself to slow down and consider multiple perspectives, challenge your own assumptions and engage others who have diverse views.

I’ll break these three steps into more detail over the next two blogs. Stay tuned for a step-by-step approach on how to leverage the lessons learned to position your organization for greater success in the future.

To most Americans, Labor Day represents just another three-day weekend that signals the end of summer and a return to school for the kids. But as with all holidays, there’s more to it than the barbeques, beach bashes and family get-togethers.

Created by the Central Labor Union of New York, a forerunner of various trade groups that later became part of the AFL-CIO, Labor Day was first celebrated on Tuesday, September 5, 1882. Its purpose was to honor the American worker and create a day off for working citizens.

Two years later, Congress declared Labor Day a federal holiday, dedicating it to the social and economic achievements of American workers. Congress also moved the holiday to the first Monday in September, and since then Labor Day has served as our yearly tribute to the American workers who have contributed so much to the strength, prosperity and well being of our country.

The rank-and-file worker often gets a bum rap these days. But the fact remains that American workers are still the most productive in the world, and we owe much of our extremely high standard of living to their muscle, sweat and toil. So this Labor Day, I propose that as leaders and managers we take a moment to reflect on what we can do to show our appreciation to the people who make us successful.

Ask yourself, “How often do I…

Communicate the goals to employees so that they know where we are going?
Tell employees what is expected of them and how they will be held accountable?
Spontaneously recognize employees for doing something right?
Actively solicit and encourage feedback and input from employees?
Tell employees how much I appreciate their efforts?”

If you aren’t doing these things on a consistent basis, identify what is stopping you and remove those roadblocks. It’s your job as a leader or manager to communicate consistently, clarify expectations, hold people accountable and recognize performance. It’s also a great way to show employees how much you appreciate their efforts.

Happy Labor Day!

At last, some evidence that suggests the economy is about to escape the doldrums.

In its June 2009 Investment Outlook, Morgan Stanley Smith Barney pointed to a number of important economic signposts that have charted upward since the beginning of the year. And while many economists and financial experts have been predicting the demise of the current recession, it’s always good to get some solid facts before making any major strategic or financial decisions.

Now that the economy might be picking up steam, I’m going to throw out two questions for consideration. What have we learned from this recent and fairly painful recession? And, what should we do differently going forward?

I recommend a return to prudence.

Over the last decade, business leaders came to expect explosive growth as the norm. As a result, many companies continued to take on more risks because they had been conditioned to expect only success, ignoring the clear evidence of declining markets. With few exceptions, they paid a painful price. So I’m suggesting that we reevaluate our assumptions and beliefs about what constitutes sustainable growth, and start acting a bit more prudently.

What does ‘prudent’ look like in today’s economy? On the financial side:

• Be realistic about your leverage. Just as many homeowners got into trouble by buying more home than they could afford, many companies sealed their doom by over-leveraging themselves based on unrealistic growth projections and valuations. Don’t count on never-ending growth in the value of your business, your products, or your markets.
• Stop spending like there’s no tomorrow. A large part of the recent economic debacle was due to individuals and organizations living beyond their means. Create a budget you can live with, one that does not count on double-digit growth in revenue year over year.
• Know where your money is going. Everyone watches their pennies like a hawk during down cycles. But once sales turn around and the cash starts rolling in again, many companies ease off on the financial oversight and return to sloppy spending habits. Don’t let this happen to you.
• Save for the next rainy day. Every business experiences fluctuations in cash flow. To prepare for your next cash crunch, avoid unnecessary capital purchases, don’t use credit to fund daily operational expenses, and put some money aside for the next economic hiccup.

On the strategic side:

• Challenge all your beliefs and assumptions. Don’t assume that what you knew as absolute fact a year or two ago is still true. Ask yourself, “Is it time to change any of my beliefs and assumptions? If so, which ones and what do I need to change them to?”
• Check in with your workforce. What assumptions and beliefs are your employees holding onto that need to be changed? Remember – behaviors do not change until beliefs and assumptions change.
• Adjust your expectations. The new ‘normal’ may be slow and sustained growth rather than a hockey-stick recovery curve. Instead of waiting for some economic miracle to rescue your company, strive to make the best of what you’ve got.
• Get comfortable with uncertainty. Don’t wait until you have all the answers before investing in the future. Certainty is a thing of the past, especially for the short-term. Instead of making rash, uninformed decisions, gather as much real data as you can, test your assumptions, and then make the best possible decision based on what you know.

Finally, get focused and stay focused, not an easy task as new opportunities open up around you. Determine what you really do best as a business (based on what your customers tell you and not what you think you know) and invest your resources in those two or three areas. Stay lean, gather all the data you can, and make every decision after pausing to check on the facts rather than outdated assumptions.

Finally, some evidence that the economy is starting to show signs of life!

In its June 2009 Investment Outlook, Morgan Stanley Smith Barney reported that eight of their nine economic signposts for 2009, which represent a varied mix of indicators from consumer sentiment to U.S. leading economic indicators, have posted an upward trend since the beginning of the year.

Many economists and financial experts have been predicting the demise of the current economic recession. But this is the first solid evidence I have come across that suggests it’s time for business leaders to start poking their heads out of the trenches and look at what they need to do differently over the next 12 to 18 months. Of course, just today, different economists questioned any positive news and the markets dropped. Keep in mind that most economists have been wrong quite a bit of the time these last few years, so don’t completely jump out of that trench just yet!

What should leaders do to prepare for the turnaround?

• Show me the data! Start by paying very close attention to the data in your industry. Look beyond the media hype and ‘feel good’ projections from pseudo-experts and get as much real data as you can about what is happening in your market. Don’t ignore your gut, but don’t make any important decisions without the hard facts to support them.
• Look beyond your immediate world. Collect information and monitor trends outside your own industry. We live in a highly connected world. The more data you have about the business world in general, the more informed decisions you can make about how to behave in your own market segment.
• Question authority. Whose authority? Yours! Pause and think hard about the assumptions and beliefs you formed over the last year or two. Then ask, “Is it time to change any of these beliefs? If so, which ones and what do I need to change them to?”
• Adjust your expectations. Over the last decade, we came to expect rapid growth as the norm. But the ‘new normal’ may be slow and sustained growth rather than a hockey-stick recovery curve. Instead of waiting for some economic miracle to rescue your company, ask, “How can we make the best of what we’ve got? How can we re-focus some energy and resources on growth versus cost cutting?”
• Get comfortable with uncertainty. If you’re hesitant to invest because you aren’t certain what the future holds, get over it! You may never be sure again, especially in the short-term. Don’t make rash, uninformed decisions. But if you wait for absolute certainty, you will never get out of first gear.

CLIMB THE LADDER

Of these suggestions, perhaps the most important going forward is to challenge your own thoughts, beliefs and assumptions (your thought bubbles). Check your thought process as you quickly climb what is known as the Ladder of Inference (originally developed by Chris Argyris). The world is changing faster than ever, and what you knew to be absolute fact a year or two ago may no longer be true.

Since our beliefs and assumptions are deeply held, challenging them is often easier said than done. I recommend a process called ‘climbing the ladder of inference.’

Developed by Chris Argyris, a Harvard professor and pioneer in the field of learning organizations, the ladder of inference is a mental construct that helps human beings interpret data, make decisions and take actions as we interact with the world. It consists of six rungs that form a mental pathway of increasing abstraction:

• Rung 1 (bottom): We gather and mentally record observable data and experiences.
• Rung 2: We select data from all that we have observed.
• Rung 3: We add meanings to the data we select.
• Rung 4: We make assumptions based on those added meanings.
• Rung 5: We draw conclusions based on our assumptions.
• Rung 6 (top): We adopt beliefs about the world and take actions based on those beliefs.

Here’s the problem. This process is so quick and largely unconscious that our self-generated thought bubbles almost never get tested. We instinctively feel that our bubbles represent the truth and that the truth is obvious. We also feel that our bubbles are based only on real data, which is not always the case. As a result, our untested thoughts, beliefs and assumptions often get in the way of achieving the results we want.

We can’t live without adding meaning to the data we gather or without drawing conclusions and having bubbles. But we can avoid falling victim to faulty conclusions by using the ladder of inference in three distinct ways.

REFLECT, ADVOCATE, INQUIRE

In the Fifth Discipline Fieldbook (Senge, et al), they advocate first, become more aware of our own thinking and reasoning (reflection). Second, make our thinking and reasoning more visible to others (advocacy). Third, delve into the thinking and reasoning of others (inquiry).

What does this process look like?

Imagine you have proposed a marketing initiative that represents a new direction for your team. It sounds great in your own head, but you want to use the ladder of inference to check your reasoning.

Start by presenting your own thinking. State your assumptions and describe the data that led to them. Explain your assumptions, including who will be affected, how they will be affected and why, and give concrete examples of what you propose. For example:

• Here’s what I think and here’s how I got to this point…
• Based on the data I have, I assumed that…
• I came to this conclusion because…

Next, publicly test your thinking by encouraging others to explore your model, assumptions and data. Reveal where you are least clear in your thought process and refrain from defensiveness when others provide feedback. Listen, stay open, and actively solicit different points of view. Public testing statements sound like:

• What do you think about this data?
• Do you have different data, assumptions or beliefs about what I am proposing?
• Here’s one aspect where you might help me think it through.

Finally, ask others to make their own bubbles and thinking processes visible by walking them down the ladder of inference. Explain your reasons for inquiring and check your understanding of what others have said. Inquiry statements sound like:

• Can you go through the data that led you to that conclusion?
• Help me understand your thinking here.
• I’m asking about your assumptions because….

In simpler times, leaders could get by with thinking they had all the answers. In today’s complex, interconnected world, the winners will be those who excel in two key areas — constantly challenging what they think they know about the world, and making informed decisions based on gathering as much real data as possible rather than solely relaying on their (probably outdated) bubbles.

For more thoughts, tools and techniques on how you can thrive in this new and uncertain economy, contact The Human Factor, Inc. today!

Strategic planning methodologies are like shoes – one size does not fit all.

Some companies use a top-down, autocratic approach, where the plan gets created by a small group of senior managers and handed down to the rest of the organization. Some prefer a more democratic approach, with employees at all levels contributing their ideas and input to the plan. Most companies employ a hybrid of these two models.

The best approach for your company depends on several factors, such as size, industry, culture, type of workforce and management style. Regardless of which approach you choose, however, every strategic plan needs five key elements in order to achieve the intended results.

1. Mission. This defines why you exist as an organization. Specifically, it tells others (not just those in the organization) why you exist. Ideally, it describes some noble purpose that is both inspirational and aspirational, so that it instills pride in all those connected with the organization.
2. Guiding principles. Also called organizational attributes, these describe how you expect people to behave with each other and with other stakeholder groups. Guiding principles broadly define which types of behaviors are acceptable and which behaviors will not be tolerated. In particular, they describe how you will behave when faced with difficult situations or challenges.
3. Value propositions. These explain the value you provide to your organization’s different stakeholder groups, both internal and external. For example, why do customers buy from you? Why do employees come to work for your organization? What kind of return can shareholders expect? How does your community benefit from the work you do?
4. Destination points. These identify where your organization wants to go within a specified time frame. This is perhaps the most critical element in the whole process because the more clearly you define your desired end state, the greater your chances of getting there.
5. Areas of focus/strategies. These define, in a broad sense, how the organization will get to where it wants to go. They are the three to five areas everyone should be focused on to get to the destination points. What cuts across several destination points; where should the majority of energy be focused; what must everyone keep in mind as they make investments in people and other resources; and, what guides you on what to do and not to do are the core questions answered.

These five elements form an essential foundation for the strategic planning process. If even one of these bedrock elements is missing, your chances for success become marginal at best.

Once these elements are in place, the next step involves action planning and breakthrough modeling to determine what it will take to get to where you want to go. Here is where you get down to the nitty-gritty to figure out what organizational capabilities (systems, tools, processes, people and technologies) are needed to reach your destination points. Effective strategic planning also requires that you set goals and define team and individual accountabilities, as these link the big picture to individual goals and competencies.

Ultimately, strategic planning is like a jigsaw puzzle – all the pieces must be in place in order to complete the picture. The mission and guiding principles inspire and energize employees, while creating pride and connection throughout the organization. The value propositions provide a touchstone for staying focused on what matters to stakeholders. The destination points provide clear goals and milestones that provide the big picture employees want and need. And the strategies/areas of focus create alignment and ensure that everyone in the organization is working toward the same goal.

Have you got your five must have’s in place? And is everyone clear on what they are?