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The Seven Steps from Big Idea to in-market Success
Successimenting
We each know of the “big idea” which turns into the big embarrassment. It can come from small companies and large, great ones as well as weak ones. It may be a new product, a “can’t miss acquisition,” or expansion into a new country. When Wal-Mart introduces downloadable movies, only to abandon the idea a year later, Procter & Gamble launches ColdSnap dessert, Tesco introduces Fresh and Easy stores in the US, or Perdue Farms buys DeLucca Foods, it does not necessarily mean that it is a bad idea. Frequently, it is simply flawed execution. Developing a strategy or having an idea is simply the first step on a long path. There is value to expertise and experience in execution. So, when executives in corporations are faced with expansion into a new country, a new product category, an acquisition to integrate, a new product to launch, or a business to save, it is frequently best carried out by people who are not current employees or without the systems and procedures which are so effective at running an existing business. We have identified seven key steps from concept to execution as follows:
1. A fresh set of eyes - Independent appraisal of the idea or strategy. Do not engage in a conspiracy of the involved. Look for objections.
2. Define and measure - Establish a definition of success, with milestones and quantifiable results. Ensure that measurement systems are in place.
3. Eliminate complexity and bureaucracy - Simplify to speed it up – do not mire yourself in indecision or internal meetings, act! Simplify all decisions and move fast. For example in an acquisition, determine before it closes who will be terminated and do it in the first week in one step so that all can move on.
4. Put the right people in charge – now! Use a blend of functional and industry experts. Industry experts will have huge blind spots and will be inhibited from thinking outside the box. The proportion will depend on how much change is required. Recognize that you will never know what you do not know which you need to until after the fact.
5. Benefit from learning as you go. Strategy is a living component. Change it based on measurement of results. Importantly, experience, sensitivity to the situation and adaptability are key. Many think they have all of these, but few do. Look at required changes as victories since they symbolize learning and openness.
6. Empower all involved, with very few layers of decision making. Understand the downside as well as upside of each decision. Seek to identify and understand potential unintended consequences.
7. Watch for the law of unintended consequences. Reward systems have to reward desired behavior or they will be “gamed.”
While these are addressed in much more detail in our upcoming book, we expand on each key step below as we describe how we would carry it out:
1. A fresh set of eyes is critical. All the evidence suggests that executives who are too close to a situation are less likely to view it objectively. They are also less likely to come up with solutions which really address the needs. Lou Gerstner had no industry experience when he turned IBM around. Executives who have spent all their lives in a situation have difficulty in developing a new perspective, whereas someone who has great expertise in multiple businesses and a process with which to view a new one, can be apparently highly innovative. Furthermore, few companies have cultures of rewarding those who consistently question the status quo. Outsiders do this better. Frequently, a new initiative is clearly flawed, whether strategically or tactically, but the momentum has built so strongly that no one in the company can question it. Whether to improve it or to simply change it, such attempts can be punished severely, even if unintentionally.
2. Starting a new initiative without defining what you have to measure and putting the systems in place to do so is irresponsible. Careful definition of goals and objectives is needed for successful outcomes anyway, and establishing milestones for measurement allows us to carry out constant fine-tuning. In addition, measurement allows for learning and for companies to learn the keys to successimenting. While the ultimate measures are financial ones, it is critical to define the individual components which go into these, whether production, customer, product quality, or others.
3. In successimenting, it is essential to eliminate all unproductive steps. Speed is essential. Decision-making has to be speedy. One of the keys is to establish the criteria for decisions ahead of when they will occur so that the decision can be made in seconds rather than months. This demands the ability to understand what decisions lie ahead. All too often companies are surprised by most and therefore slow the execution down by mulling over the decision. Preplanning and accurate anticipation are key to so much. We also keep documents as brief as possible. While key events and decisions have to be documented, they have to be brief and not slow down action.
4. Functional experts and industry experts each bring value to successimenting. Industry experts know much of intense value. They know people, suppliers, and customers. However, functional experts with high-quality multi-industry experience bring expertise in process and tools. A combination of such people who respect each other will usually be more effective than a more insular team.
5. Strategy is critical, but it is often based on incomplete or wrong knowledge. As the execution process continues, more is learned. In many companies, working the traditional way, there is not only no opportunity to modify strategy, but any attempt to do so is severely punished. Successimenting requires that strategy benefits from continuous learning and that experience is fed back into strategy. This requires strategy developers to share responsibility for execution instead of simply being observers of the process.
6. If a company wants to be successful, those responsible have to be able to make decisions. While the limits may be set to those which are anticipated and reasonably could occur, they must feel free to make them without risk of second guessing. In fact, they must feel obligated to make them as fast as possible. Project control systems must be used for timing, resources, investment, and logistics. While first developed over fifty years ago, they are still inadequately used.
7. Frequently, companies are not aware of the true consequences of their actions. Managers are often motivated to do things which are not intended. Sales people are penalized for cross-selling when that is a stated objective. Manufacturing people benefit from compromises with quality, and customer service is rewarded for annoying customers. Decisions on plant location can be unfortunate because not all factors have been considered. Some steps open the door to behavior which ends up being illegal. Many poor results become inevitable given the structure of incentives.
These kinds of incidents can happen in companies big and small, but are far more likely to happen in larger organizations where there is more complexity and more likelihood of mixed messages and conflicting incentive systems. It does no good to have a financial incentive system which encourages speed, if the advancement system penalizes those who act fast. Managers who have prospered in large companies in conservator roles will not step outside their comfort zone readily. Many are reluctant to admit to themselves that they do not know something. Most people believe that entry into a new market or geography is far easier than it is. This is why most such actions fail. Most new products fail. Yet, successimenting would reduce the likelihood of this dramatically, since it combines improved due diligence with faster decision-making and continuous improvement. With an average of over 35 years experience and several dozen successes under our belt, we have developed a key to this which we bring to our clients.
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