Instead, you need to have broad vision, or what I call a trajectory, that compels you towards a better future. It should be flexible enough to absorb changes in market conditions and completely new technologies and products. The key is to only map out how you are going to get there in the broadest of strokes.
Imagine telling this to some of the Japanese companies. To think that some of them still speak of fifty-year plans! There is a good chance that many of us will be dead in fifty years. How on earth are we supposed to know what the marketplace will want in fifty years, or what technology will be available, let alone what it will mean for our industry or our companies? Don't get too excited right now, as you laugh off the fifty-year plans, knowing you have a rock-solid five-year strategy. Perhaps even your five-year strategy is a little absurd. First, it is not rock-solid. Second, in the current business climate a five-year plan could be just as dysfunctional as a fifty-year plan.
Meg Whitman of eBay could not have said it better when she observed, 'Forget about five-year plans, we're working on five-day plans here.' It's not that Whitman doesn't look five years into the future. She didn't pay $2.6 billion for Skype not to be thinking long term. But she and her colleagues are not following a detailed master plan; they're working out the plan as they go.
In an increasingly compressed and complex world with constantly shifting expectations, an obsession with planning and detail can be more of a hindrance than a help. It can wed your teams and business units to plans of action that are not working in the marketplace and that are not reflective of how your business has changed. It is no different in your career. Be flexible in your approach, prepared to unlearn and let go of what no longer supports your ability to move towards your vision, and learn new skills and behaviours quickly that will take you to your goal.
Rupert Murdoch is doing the same. He paid a huge sum for MySpace without a clear and proven business model for how he would generate revenue from the site. MySpace gives us insight into a multinational company and its CEO taking action without a fully developed strategy. Rupert Murdoch is a flipstar! Here is what he said about MySpace and similar News Corporation ventures:
The precise business model for sustained profitability from our digital investments is still uncertain at this point. Consequently, in some ways, we are embarking on a period of trial and error. News Corporation Annual Report, December 2006
I have met Mr Murdoch, having worked with News Corp in the US and having had the pleasure of dining with him in Los Angeles. The man is a genius. He was a few days shy of his seventy-sixth birthday when we met and he was as sharp as any 26-year-old. He knew the MySpace purchase could be profitable, and the signs so far indicate that he is well on the way to being proven right, even if, as the quotation above shows, there are still some uncertainties.
News Corp's Fox Interactive Media division bought MySpace in July of 2005 for US$580 million. Barely more than a year later, in August 2006, Google and News Corp inked a deal under which Google will pay News Corp at least US$900 million, assuming web traffic targets are met, to be the search and advertising provider for MySpace and some other Fox Interactive Media websites. At the time the deal was announced, MySpace was adding 250,000 users a day, suggesting that the web traffic targets would have to be very high indeed to be out of reach. (In April 2007 they register thirty-one billion unique page views.)
Flash forward another seven months, to March of 2007, when News Corp and NBC Universal, the news and entertainment media division of General Electric, announced the creation of the largest internet video distribution network yet assembled. With initial distribution partners AOL, MSN, MySpace and Yahoo!, the as yet unnamed network will reach an unprecedented 96 per cent of the US internet audience. And I am sure internet portals in other countries will soon be added to the mix.At the time of the announcement, Cadbury Schweppes, Cisco Systems, Esurance, Intel and General Motors had signed on as charter advertisers.
There's a flipstar timeline for you. Spend roughly half a billion dollars with no definite idea of how to make it back, and eighteen months later monetise returns at roughly a billion dollars and counting.
The MySpace deals beautifully illustrate the overarching flip principle, 'Think AND, Not OR'. In the first place, the new video distribution network signals that exploiting intellectual property rights and giving the public free access to copyrighted materials on the internet are not mutually exclusive concepts. It displays the flexibility that distinguishes flipstar organisations from their competitors. Instead of relying on business as usual in the television and movie business, News Corp and NBC Universal are seizing the opportunity to make the internet a fully fledged, advertisersupported entertainment medium.
Second, note that in the August 2006 deal, Google and News Corp are partners, whereas the News Corp/NBC Universal video distribution network takes dead aim at Google's YouTube as a competitor. Likewise, outside the new internet video network, NBC Universal and News Corp's Fox television, movie and internet divisions are themselves competitors rather than partners. Change partners and dance with your rival. It's obviously complicated and will no doubt sow confusion along the way, but Google, NBC Universal and News Corp – three of the most successful companies on the planet – recognise that the way forward is to 'Think AND, Not OR', that 'Action Precedes Clarity', and that 'Confusion Management' is now an inevitable cost of doing business. You can resent these facts if you like, or you can learn to love them and join the flipstars.
Take Burger King for another example. Burger King led the corporate charge into MySpace – a messy, ambiguous and ultimately foreign situation – with action. They created a funny and personable profile, and the page took off. Burger King now has 134,000 'friends' (and probably a lot more by the time you read this), many of whom regularly post funny notes or even suggestions for burgers or promotions.
Fox themselves are plunging in to promote their own products. Their brilliantly conceived MySpace profile for X-Men 3: The Last Stand has attracted almost three million friends. It is impossible to quantify how much the MySpace profile for XMen 3: The Last Stand contributed to the movie's record-setting US$120 million opening four-day holiday weekend release (the Memorial Day weekend) in the United States, but it surely didn't hurt. The previous Memorial Day weekend record gross was The Lost World: Jurassic Park's US$90.2 million in 1997. And X-Men 3's Friday gross of US$45.5 million trailed only 2005's Star Wars: Episode III's record first day take of US$50 million.
MySpace is messy, but you need to learn to love the mess, to take some action without the clarity you desire. Others are choosing to sit on the sidelines and wait to see what, if anything, works.
Wired asked Rupert Murdoch how News Corp was going to weather the cold dawn of a world in which traditional media is besieged by bottom-up, user-driven content: ' "We'll figure it out," he says, with a cheeky grin, scratching his head. "You want to learn from MySpace," he muses. "Can you democratize newspapers, for instance? What does it mean for how we do sports or politics? I don't know – no one does. I just know we'll figure it out".'1
This is what I am talking about. I love his new strategy, which strangely looks a little bit like: I am not sure whether this will work or how I am going to go about it, but let's have a crack anyway.We have some bright people, we will pay to retain the bright people who started MySpace, and we will find out.
Even with the US$900 million Google deal and the new internet video distribution network, it is still unclear whether News Corp's internet properties will pay off as they should. But Rupert Murdoch and his colleagues act anyway. They learn to manage the confusion and accept the risk.
There's no detailed master plan. What News Corp does have is a broad trajectory. They know the media business. They know that people, particularly the younger generations, are consuming media in new and different ways, and they know they want News Corp to be a major player in the new media channels. MySpace is a leader of the so-called 'new media' and Murdoch wants a piece of the action
. Rather than try to reinvent the wheel and outspend some of the sites that have grown organically, he buys one of the most visited sites on earth. Then instead of doing what I reckon plenty of other media conglomerates would have done – namely, re-brand and integrate the website into its other media properties – he leaves it as is.
There's not a pixel of News Corp presence on MySpace. 'Obviously MySpace is a world unto itself,' Wired quotes News Corp COO Peter Chernin. 'There's never been a second when we said, "How do we put our stamp on it?"We'd be crazy to interfere.'
It is possible that I may end up eating my words on this, and News Corporation shareholders eating their losses, but it is exactly the willingness to take risks based on a broad vision for the future, in spite of some ambiguity in the present, that the most successful leaders nurture in their executive teams. And you will need to embrace the same openness to risk in your career as well.
For another Aussie gone global example consider the Lonely Planet travel guidebooks. In 1973, after meeting on a park bench in Regent's Park, London, and later getting married, Maureen and Tony Wheeler spent their honeymoon travelling overland across Europe and Asia to settle in Australia. They weren't planning on writing a travel book, but when they told friends about their experiences, and these friends told their friends, they began to be besieged for advice. So they wrote up their experiences and self-published Across Asia on the Cheap, which they stapled together on their kitchen table in Sydney and sold for $1.80 a copy.
They sold 1500 copies the first week, and a new business was born. For their follow-up guidebook, the Wheelers travelled throughout Southeast Asia in 1975. At this time the fires from the Vietnam War were still smouldering and tourist travel in the region was almost unheard of. Yet South East Asia on a Shoestring proved another immediate success. Go forward thirty-plus years and the Lonely Planet guides have inspired imitators like the Rough Guides travel books and have carved out a large slice of the travel book market. Lonely Planet now employ over 400 staff and have annual revenues of more than A$100 million.
It is not like Tony Wheeler is a reckless man. Nor, with an MBA from the London School of Economics, is he the potsmoking hippie some may expect. At the same time, says Tony (I've had the pleasure of meeting him too, and he is an inspiring person), 'We knew nothing about publishing.' The Wheelers simply took action based on their own experiences, the eagerness of friends and acquaintances to learn from them and their gut instincts.
Not that financial success came overnight. For a time they were so broke they would steam unfranked stamps off incoming mail and reuse them. That's creative recycling for you. This is the kind of hunger we need in our bigger organisations. A get down and dirty and make it happen kind of attitude. Imagine what you could do with that desire and the money that so many of our bigger businesses have access to. Some months things were so bad that the Wheelers would go to dinner with their friends, pay on credit card and collect their buddies' share of the bill in cash to get them through the month.
Go and find someone who is boot-strapping a new project or prototype in your business and help get it off the ground. Tell their story to everyone in your company. Celebrate this kind of internal entrepreneurialism.
So many businesses have started just this way. Anita Roddick's Body Shop chain is another great example. This is how strategy gets done. Through action we get clarity.
If you have never watched the TV show House, then you should. It is a crash course in twenty-first century strategy. Without boring you with all the details, Dr House has a worldwide reputation as a brilliant diagnostician. In the medical profession, prescription in advance of diagnosis is generally considered a form of malpractice. Yet when he is confronted with patients whose ailments fit no obvious pattern, House boldly acts on the belief that prescription is diagnosis. He acts on his best hunch and, assuming the patients survive, adjusts their treatment according to their reaction to the first treatment.
Now I know it seems a little crazy to use a TV show as an example, but I can assure you the metaphor is powerful. Dr House only takes the most complicated cases, patients for whom he is the last resort. The more ambiguous and confusing the patient's symptoms, the more interested he is. He takes the seemingly unsolvable cases and solves them. He does it by acting on the best information he can get at the time of diagnosis, without knowing for sure if he is right, and he treats the patient as though he is right. His reasoning is that if he is right then great, the patient will get better. And if he is wrong, not only will he now rule that educated guess off his list of possible illnesses, but the patient's response to the treatment will give him a better insight into what is wrong. Or said another way, action enhances clarity.
I was having a conversation recently with one of Australia's leading equity traders, who was mortified when I suggested that action should precede clarity. Of course he was: as an equities trader, he always wants to make as informed a decision as possible before investing millions of his client?' money. (Equally, despite using the House example above, there is no way I am suggesting that doctors should go and prescribe drugs to patients on a whim.) However, there is still an element of doubt when he makes that investment. There is always a risk. He can use many inventive financial plays to mitigate that risk, but can never do it completely. In a way, he is taking action without complete clarity every day, even if he would never say this out loud.
The point is, you can't let the presence of risk or the absence of clarity prevent you from taking action. Whether that action be an investment, an attempt to ask someone out on a date or a more serious attempt to cure a patient suffering from what at first seems like an incurable disease.
WE HAVE A REMARKABLE CAPACITY FOR STRATEGY ON THE GO
It may seem like a bit of a stretch, but if you really think about it human beings have been doing strategy on the go throughout the course of time. From as far back as studies have looked into, the early hunter-gatherer lifestyle conditioned human beings to be opportunistic foragers in a constantly changing environment. That required decisionmaking on the move.Where is the best place to look for food today? How are we going to work together to find food as the weather changes day by day and season by season?
This lifestyle naturally stimulated our creativity and problem-solving skills and as societies evolved and became more complex these skills were honed in ever more challenging environments.
When you think about it, it is very strange that we as people have become geared against, rather than towards, change. We arrange our organisations around command and control instead of around what has worked for most of time: change and adapt (flipping). Weekly I work with organisations with structures, reporting lines and cultures that are against the very notion of flipping and are for consistency and predictability. Even though at some level the organi-sations know this is dysfunctional – otherwise they wouldn't have asked me to consult with them – they resist hearing the fact and acting on it.
Human success at adapting to changing conditions periodically lulls us into thinking that we've got it all figured out. Then we start developing and trusting long-term plans, which sooner or later – usually sooner – are exploded by a changing world. It is as though the phenomenal success of business in the last century, and especially the last few decades, has created a sort of arrogance that we can predict the future. I think it is fair to say we are increasingly feeling that confidence shaken as the four forces of change come to bear on our daily reality.
In what area of your business have you become overconfident? What do you assume to be immutable today that may become irrelevant tomorrow? The truth is human beings are always much better off and much more productive when they abandon the desire to command and control things and accept the need to change and adapt to them. While the industrial age lent itself towards systemising and efficiency, that is not the case with the knowledge age, creative age or – as I like to think of it – the relationship age. We think better on our feet, as Mihaly Csikszentmihalyi doc
umented in his classic book Flow: The Psychology of Optimal Experience, and as Malcolm Gladwell also shows in his more recent examination of our capacity to make quick decisions in Blink: The Power of Thinking Without Thinking.
Of particular importance to this point is when Gladwell reports studies that demonstrate that we actually learn and adapt much faster than we think we do. We have a reliable ability to make decisions on the spot which are every bit as accurate as those over which we deliberate for months. We make excellent decisions quickly.
One study into the 'adaptive unconscious', as it is known, used two decks of cards – one was stacked with cards that made it hard to win, one with cards that made it much more likely that you would win. Over time, test subjects gradually altered their behaviour to draw more cards from the winning deck. But more interestingly, players actually altered their behaviour before they reported that they had consciously detected a pattern. They were physically learning faster than they thought they were.
Gladwell argues, based on this and a whole host of other evidence, that 'decisions made very quickly can be every bit as good as decisions made cautiously and deliberately'. One of many possible examples of human beings' ability to make accurate judgements quickly is a 2006 study that showed people could predict the result of political elections after seeing just ten seconds of footage of the candidates.
It is true: every action is a gamble, and that's scary. But like I said, we're evolved to thrive on taking lots of hunter-gatherer gambles every day. So stop complaining, because the time has come to . . .
BUILD A BRIDGE AND GET OVER IT!
We're all scared. Seriously.We do our best to pretend we are not, but even the most senior executives I meet are freaking out. What if this new idea does not pay off? What if I do not meet budget? How will the share market respond to our less than double digit growth this year? Will I lose my job? Is my partner really going to leave me? And so on. This fear compounds, and is fuelled by, the confusion that comes with the complexity of the world, especially as we try to plan further and further out into the future, resulting in a paralysis of inaction.
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