Flawless Execution Page 6

  The step-up transformers were centers of gravity within the electrical system that, when broken, altered the system. By hitting these centers of gravity in parallel, the Future Picture was advanced and resources were economized.

  The surgical strikes made the system change. It achieved the desired outcome and was consistent with the Future Picture.

  When translating the Future Picture into strategies, the answer to What? is to identify the place or places within the system that, if attacked, efficiently and effectively change the system in a fashion that helps us achieve our Future Picture. We attack centers of gravity in parallel.

  But how does this work in business? Apple’s iPod is a marvelous example of mapping out a complex internal and external system then attacking the centers of gravity. Apple quite correctly saw the need for a device that digitally stored songs and allowed users to take those songs with them; they created the digital jukebox. The jukebox was a nifty device, but the sales were poor. Apple pulled back the lens and looked at the system. They mapped out their internal system and then the external system and started to sift through them to identify the centers of gravity. First, they noticed design. Was this product an “Apple product”? Did it look and feel like things Apple designed? They thought not.

  Then they looked at the music industry. The music industry, they agreed, was part of the jukebox system—but what a mess it was. Millions of kids were downloading music through illegal websites like Napster, causing the record companies to respond with hundreds of lawsuits. The Internet, in the eyes of the record industry, was a dark force destroying their business. Only a fool would think that the music industry would be a part of this product’s success—a product that downloaded music from the Internet.

  But Apple saw it as a center of gravity. Without songs, who needed a digital jukebox? Desired effect? What if they could convince the industry to license their songs to a secure, Apple-controlled, fee-based website that could turn pirated digital music into a new revenue stream for the record industry? What if they could “break” an external system that resisted downloadable digital music and make it work for Apple?

  So, Apple worked with the record industry, wrangled download rights to tens of thousands of songs and created an Internet store called iTunes. They found an attractive price-per-download and agreed to a shared revenue model.

  In parallel, they attacked their second center of gravity—design. They redesigned the jukebox and renamed the sleek new device the iPod. And they did this all in less than nine months, a classic outcome of a systems approach and attacking in parallel.

  Taken together, attacking these centers of gravity in parallel, they changed the system to their Future Picture—a nation of men, women, and children carrying a small device that stored thousands of songs, with revenue coming not just from the sale of the product but from the sale of the music, too. Neither pioneer nor market share leader at the time, Apple’s strategies paid off; today, they have 70 percent of a thriving market.

  Yes, Apple could have rolled out price cuts and given their retailers special incentives to stock more jukeboxes, but those were short-term tactics, and in the end the elements of the system would resist change.

  The folks at Apple mapped out the system, identified centers of gravity, and then attacked in parallel. And they were smart enough and their product was hip enough to pull it off. The iPod is now nothing less than a cultural phenomenon. iTunes has more than one million songs available for download. Hewlett-Packard has even launched an official, licensed version of the iPod. The institutional memory at Apple recalled the disaster of the decision way back when not to license their operating system, and did not allow the company to make the same mistake twice.

  CHAPTER 6

  Leader’s Intent

  It is not enough to just know the strategy…

  but the decisions behind the strategy.

  The astute reader may at this point realize that two things are missing. By what process do you map out systems? And how do we measure our progress against that Future Picture, or our desired effects?

  OPEN PLANNING

  Against the entire body of prevailing thought in corporate America, we know that planning should be conducted as an open process involving everyone necessary to achieve the Future Picture. Manufacturing, packaging, sales, promotions, advertising, distribution, warehousing, finance, human resources, and any other department charged with executing the Future Picture—these people must be involved in the planning process. They must physically be in attendance and they need to contribute from the beginning. They need to understand the nuances of the Future Picture, contribute to the key descriptors, help map out the system, help identify the centers of gravity (and their desired effects then with vigor and wholehearted buy-in), take this Future Picture back to their teams, and clearly communicate their intent—what we call the leader’s intent—and allow their team to begin the Plan-Brief-Execute-Debrief-Win cycle that is the hallmark of Flawless Execution.

  To some companies this is heresy. Plans come down from the ivory tower, don’t they? You have an executive vice president of planning who has a floor filled with MBAs who specialize in planning, who specialize in developing brilliant strategies (notwithstanding the fact that they may never have walked a factory floor or sat down with a buyer for a grocery chain).

  In other companies, it’s a closed-door affair. The brand manager works on the marketing plan. The manufacturing people work on the production plans. The sales force works on its plans. And nobody tells each other what they’re doing.

  In truth, both systems fall short. Instead, bring everyone together. Plan in the open. And then watch the results. Open planning is conducive to the vital attributes that are the stock-in-trade of winning companies. Speed to market. Creativity. Collaboration. Opening planning lets everyone see the cause and effects of ideas in real time across all of the departments. Moreover, open planning triggers intense, passionate, and unspeakably valuable buy-in by the people who will have to put the plan into effect; for, in the end, nothing defeats a plan faster than apathetic, grumbling, reluctant executors. By being there and knowing everyone’s intent, everyone can make decisions at the field level, confident that they are making the right decisions since they were present when the decisions behind the development of the strategy were made.

  Who uses open planning? In forty-eight hours, the Department of Defense wrote the war plan for Operation Desert Storm. To accomplish this incredible feat, Colonel John Warden demanded the attendance of a representative from every support asset in the military—over 200 people in all—and assembled them in the basement of the Pentagon in a room called Checkmate. They walked out with the strategies that would achieve the president’s overall Future Picture and win a war in 100 days. Centers of gravity were identified and targeted, and measures of this future success were established.

  Some rules of thumb:

  Open planning. The environment must be conducive to ideas. People in the process should check their egos at the door. Open planning takes open minds.

  No tactics. Because the goal is to determine the future as your team wants it to be, tactics are not on the agenda. Deal with them later, not here. To give but one example of the difference, in the example of the new product a company is about to introduce, mass media may be the best advertising strategy, but whether to advertise on NBC or CBS is tactical. Tactical discussions are not welcome.

  Be quick about it. The planning process should be dynamic and time-compressed. The best thinking is done when your backs are against the wall. Deadlines should be measured in hours and the process in just days. Remember—Desert Storm was planned in forty-eight hours.

  Everyone contributes. Everybody speaks and everyone contributes. This forges a valuable interaction. Vital contributions may come from the least expected corners. Leaders who rarely collaborate find themselves mixing concepts with people they hardly know, thus creating entirely new points of view. Everyone contributes to the Fut
ure Picture. Everyone contributes to the key descriptors. And everyone writes the measures of merit.

  CAMPAIGN ROOMS

  The planners of Desert Storm configured Checkmate in a very effective way. The room was large enough to support 200 people. In the middle of the room was the commander’s table, where the leaders could see the action unfolding around them. Each campaign team or mission team owned a section of the wall on which was pasted block paper notes, planning docs, maps, and intelligence pictures. As new people entered the room, they could walk around the perimeter and quickly get up to speed on the current state of the overall plan as well as the many centers of gravity and their variables.

  Can this work in business? The BAMA Company sells pastries to fast food restaurants such as McDonalds. To achieve their productivity and quality goals they use this process. BAMA rented a semi-trailer and put it smack in the middle of their factory parking lot. This became the BAMA campaign room. Displayed on the walls are the twelve key descriptors and measures of merit. Every time a new employee comes online, he or she is required to take a lap around the campaign trailer, read the Future Picture, and understand the company’s strategy. The leader’s intent at BAMA is at work in the campaign room getting the newest arrow aligned. The effectiveness has flowed over to the employees’ families; the trailer has become a way they show off their pride in BAMA and the great work everyone has done. The results have been spectacular. Since adopting open planning, BAMA has won the prestigious Malcolm Baldrige Award and continues to grow its business. Open planning is the key to the leader’s intent being executed throughout the ranks of the organization.

  FINISHING WITH FINESSE

  The last aspect of developing strategy is answering the very important question of when or how are we going to exit? The two most vulnerable times in a company’s life are at the beginning and at the end. Generally speaking, entrepreneurs put enormous amounts of time into planning the start-up but very little into planning the exit strategy. A typical business plan may have twenty pages explaining the business and how it will compete, but just one page on the exit strategy. Why don’t companies and individuals put the same amount of energy into the end—after all, everything ends, right? Few wars end in good peace and few companies or products end on a high note.

  Look at the following figure of the typical life cycle of a product or service. In the beginning, buckets of resources and energy are expended to get this product above the black line into profitability. The marketing and sales departments ramp up and embrace this hot new item. Profits soar and the company invests even more resources to scale the product. Things look great; life is good.

  But eventually the product reaches a point where sales flatten, maybe level off, and profits dip. What happens? A call goes out from the CEO to make the changes necessary to keep the momentum going: Hire a new marketing head, reenergize the sales force, institute six sigma into the manufacturing department. Promotions. Specials. Deals. Profits rise again, but soon the gradual plunge returns.

  The company is now riddled with angst. Management is trying to put its arms around air. The company spends and spends but nothing happens except that it slides further down until it’s out of cash and maybe out of business. What’s wrong? It has no measures of merit to guide it through the inevitable point where a product wears out. The company hasn’t planned its exit strategy. It hasn’t written into its business plan the milestones that, when reached, trigger an appropriate exit strategy.

  Look at companies that do plan their exit strategies. Hollywood, for one, is superb at this. Movies have distinct sales patterns, and the studios track indicators like a hawk. The first indicator is the weekend gross when the movie opens at the movie theaters. This is a critical benchmark. Let’s say the movie opens nationwide with $40 million in grosses. Right away the studio has a rough idea if the movie will become profitable. Now they wait for the second week’s grosses. Grosses almost always decline. The first week will be the best week; the question is, how good are its legs? Week number two starts to tell the story. If the grosses decline less than twenty per cent, the movie’s hot and has good legs. If the grosses plunge, the measures of merit tell the studio to pull the plug. Cut back on the advertising. The movie has done what it can. Get ready to put money behind the next release. Push up the home video release date.

  That’s how studios think. From the moment they release a movie, they’re in the finish-with-finesse portion of their business plan. From the moment the movie hits the theaters, the studio is in the exit strategy phase of the product’s life cycle.

  Coca-Cola is another company that understands life cycles. Coca-Cola expects its product life cycle to be in multiples of generations, not merely years or weeks, so it has its own measures of merit. How do we keep Coke relevant, corporate honchos ask? People change, tastes mature. How does Coke maintain market share and profitability as the consumer shifts? At some point the company will introduce a line extension. Line extensions adapt a product to trends in the marketplace, which in turn keeps the brand relevant. What are brand extensions? Diet Coke. Lime Coke. Vanilla Coke. Cherry Coke. And now C2—the low-carb Coke.

  The point is this: Know where you are in your product’s life cycle and plan on exiting with finesse. Generally, that leaves you with two choices. You can wind up and dissolve the company like a movie studio treats a movie, or you can embark on a new strategy like Coke does. When you embark on a new strategy you are exiting the old plan with finesse. An easy example of this comes from the hotel industry. Believe it or not, in the mid-1960s, it was rare for a resort hotel to have a golf course. But consumers were changing; they wanted more recreational amenities. New hotels started to be built with great golf courses around their properties so the old hotels had to make a strategic adjustment. They added golf courses and upped the room rate. That’s exiting the old business—hospitality—with finesse. The resort hotels become golf resorts.

  Passenger shipping lines have been adept at this. The old idea of a five-day cruise across the ocean has been replaced by countless new ideas. Weekend cruises to nowhere. Cruises packed with energetic, active land excursions. The shipping lines finished with finesse. Nowadays, they are hardly in the business of a quiet Atlantic crossing.

  You are going to come to the end of your mission. In that there is no doubt. Why not determine how you will finish ahead of time so you and your employees finish with finesse? Sound strategies are built on finishing with finesse.

  All of this goes into the open planning process and comes out in the end as a package—the Future Picture, the key descriptors, the measures of merit, centers of gravity, their desired effects, and the exit points. Since the leaders were part of this process through open planning, they are carrying a package they understand and “own,” which can then be effectively delivered to the team. The leader can lay out the picture in detail, and, in turn, create a clear statement of his own Future Picture for his department, or the center(s) of gravity his team must effect. This in turn directs the actions of the tactical team, guided by the intent of their leader. From this point forward, the team goes into the Plan-Brief-Execute - Debrief-Win cycle.

  Here in the execution engine, the Flawless Execution cycles begin to spin.

  CHAPTER 7

  The Flawless Execution Engine

  To win in a dynamic environment you must accelerate

  the experience of your team.

  Up to now, we’ve been dealing with broad, generalized statements. Future Picture: A picture of the future as you want it to be. Strategies: High-value centers of gravity executed in parallel that focus resources on the key leverage points to achieve the Future Picture.

  Now we’re in the execution engine, the place where we bring the strategy down to the squadrons and actually fly our mission. Here is where we are dealing with tactics—the daily execution, the job of putting the bombs on the targets, missiles on Migs, products on shelves, closing sales, and inching ourselves one step forward toward the Future P
icture. Here is where we break down the general picture and translate it into specifics.

  Here the rules change.

  Let’s review where we are. The first three sections in the Flawless Execution Model were designed to be general and far ranging, open to creativity without getting bogged down with tactics. No longer. Now we’re getting to specifics. Did we take out the SAM site? Did we take out the bridge north of Baghdad? Did we finish installing the new software? Outcomes are now vitally important and detail is everything. Down in the tactical teams, our objectives are specific, clear, measurable, and achievable and developed down to the smallest detail. Everything we ask our people to do is contributing to the overall Future Picture.