ALIGNING EXECUTION TO STRATEGY
Most people don’t understand strategy. I was a speaker at the annual meeting of the International Council of Air Shows (ICAS). Before me sat hundreds of incredibly talented pilots consisting of aerobatics teams, outstanding individual civilian performers, plus the very best of the various military flight demonstration teams, including no less than the Navy’s Blue Angels and the Air Force Thunderbirds. These were people who were like me—people who live and breathe Flawless Execution. Every one flew an aircraft and executed a performance that, if done wrong, could kill them. So, here I am before my brothers and sisters ready to deliver my standard keynote, but today my job is to get them thinking about the air show business. How does their act contribute to the overall Future Picture of an industry that puts on more than 200 air shows a year? How does what they do help build a product with the brand appeal and uniformity and the shared revenues of the NFL or Major League Baseball or NASCAR?
I started with strategy. My hunch was that almost no one in the audience was thinking strategically about the business side of the air show world. “You guys can fly a perfect show and flawlessly execute your mission,” I said as I began. They nodded. “You’re flawlessly executing, but are you helping achieve the overall strategy of the ICAS show you’re performing in? Are you aligned with their Future Picture? Probably not.”
I put up a slide. It showed dozens of arrows pointed in different directions. I continued.
“Imagine,” I said, “that each one of these arrows is one of you. Look at it. You’re working hard and doing a great job. You’re flying your solo act or your four-ship formation aerobatic team perfectly and no one can fault you on a thing. You people are a bunch of hot sticks executing your acts with absolute precision. My hat’s off to you.
“But, what about the big picture? Imagine that each of these arrows had a rope tied to the overall ICAS organization. See what’s happening? All of those arrows pull in different directions. Yes, you’re executing flawlessly up there; you’re flying your act absolutely perfectly. But is your act aligned with the Future Picture of the ICAS organization? Do you even know what their Future Picture is? NASCAR controls everything from the racetrack to the cars to the uniforms the drivers wear. Each race has a standard level of quality, predictability, rules. The drivers—sure, they have personality and would probably like to come out with cool names like Gravedigger or maybe have a PR team of attractive girls doing wet T-shirt contests behind the pits. But they don’t. So, have you noticed what sport has absolutely exploded? NASCAR. Why? Because NASCAR delivers a consistent product. The fans are in the stands because they know the race will be a loud, rocking-and-rolling, consistent, family experience. No matter where they are or what race they attend, they know the venue will have vendors selling this and that and the drivers will line up for autographs at a certain hour and that nothing offensive is going to happen when they least expect it. Things will be clean. The uniforms worn by the drivers will be professional-looking. The cars will be freshly painted. Everything is controlled by NASCAR with one thought in mind—consistency.”
I looked over a room full of great pilots, but I wasn’t talking about flying. I was talking about aligning. I continued: “Have you assigned ICAS the rights to license merchandising and products; have you given them control over your brand name? Some of you wear flight suits and look sharp and some of you are wearing T-shirts and jeans. Some of you are selling high-quality merchandise dise next to your planes, and some of it, well, it’s awful. Sure, you are all executing perfectly but you’re doing so against your own Future Picture, your own parameters. Isn’t that about right?”
I paused to look around. The faces I saw were slowly nodding acceptance. I continued. “Isn’t that what’s going on at the average air show? Everyone’s flying a flawless performance but there’s no cohesion, no alignment behind a common strategy. Do you see any cohesive, collective strategy? Of course not,” I said. “Arrows are going in every direction, all flawlessly executing, but not aligned.” Then I asked them to participate in a demonstration. “I want each of you to gently put a hand on the shoulder of the person next to you,” I said, “and give them a slight push.” One by one they tentatively raised a hand and did what I asked.
“Now, while you’re pushing, look around.” They looked around.
“See what’s happening?” I said.
See, indeed: Everyone was leaning in a different direction.
“Now I want all of you to lean in this direction,” I said, leaning my body to the left, “and now put a hand on someone’s shoulder and push again.”
Guess what? They were all pushing in the same direction. Did I tell them which hand to use? No. Did I tell them what direction to push? No. But the entire room was leaning in one direction.
Satisfied that I was getting their attention, I put up another slide. The arrows were more or less pointing in the same direction. “You see,” I said, “with just a high-level statement, what we call a Future Picture, the whole room became aligned. You knew what my intent was—my Future Picture—and all I did was add a unifying strategy: Lean in “this” direction. After that, it was up to you to tactically execute any way you saw fit. I offered no techniques, no tactical guidance. You chose to put out your left hand and you chose to push to the left and suddenly, this whole room was executing strategically.”
Strategy. Not tactics.
STRATEGY VERSUS TACTICS
As I said at the beginning of this chapter, few people define strategy the same way, so let’s get the Flawless Execution definition of strategy on the table. Strategy, quite simply, is asking four very important things:
Where are we going to be in the future?
What are we going to apply our resources into or against in order to get there?
How are we going to do this?
And when or how are we going to exit, adapt, or change course—how do we finish with finesse?
Let’s look at Vietnam. For the sake of this illustration, let’s say that we had more than 1,000 engagements with the Viet Cong in our quest to win the war. Maybe it was more, maybe less; the number’s unimportant. The fact is this—we won about 90 percent of the battles. Ninety percent! Our tactics were superior, our equipment was superior; our aircraft, our weapons, our soldiers, and our training were superior. So, battle by battle, we won more than we lost. Tactically, we won by a decisive margin, but, strategically, we were humbled and humiliated. In the end, our mighty military, with all of its superior technology and all of its training, was forced to use that technology and training to do little more than evacuate Saigon from the rooftop of the United States Embassy Building as Saigon became Ho Chi Minh City.
Tactically, we won. Strategically, we lost.
Tactics are rarely decisive. When competition is based on tactics alone, the tactics rapidly lose their effectiveness. Examples? Forward air controllers directed the air strike missions in Vietnam. These were guys in small airplanes with propeller-driven engines. They scanned the brush for targets. When they had a target, they called in the jets. Over time, guess what? The enemy adjusted and when they heard the sound of that small propeller engine, they simple moved. When our fire-breathing, heavy metal, F-4 Phantoms came in to take out a target, they did an extraordinarily good job of blowing up dirt.
Tactics lose their effectiveness in a short amount of time. Said differently, tactics are almost always short-term fixes. A company watches the sales of its products slip. It institutes a price promotion, let’s say a 30-percent-off weekend special. Sales jump up, don’t they? But, in a week or so, sales turn downward again. Tactics.
Let’s look at something that appears to be strategic but on further examination is yet another tactic. In the fast food industry, restaurants that embraced drive-thru windows showed a sharp increase in business but, in short order, the drive-thru concept was commonplace. At first blush, it seemed strategic, but in fact it was tactical. The early adopters had a temporary advantage
, but in time, competitors copied the concept, sales fell back to their historical levels, customers returned to their patterns, and the drive-thru window is now… just there.
Tactics are basic actions of an organization. Tactics are promotions, discounts, temporary price reductions, gifts-with-purchase. Tactics don’t guarantee success. Equally, success doesn’t require superior tactics. America’s superior firepower and technology didn’t guarantee success on the Vietnam battlefield.
Now let’s look at a strategy. Apple had a superior computer, but they refused to license the operating system. The PC came along and Microsoft initiated an open-licensing strategy. In a few years, Microsoft OS-powered PCs dominated the market. Despite everything marketing theory teaches you, Apple, one of the best, most user-friendly computers on the market ended up with just a miniscule share of a marketplace they helped define. Apple had a poor strategy; Microsoft had a winning strategy.
What accounts for this counterintuitive result? History teaches us that in both business and war it is strategy that makes the difference. In Vietnam, the United States had a poor strategy. No matter how hard our guys fought, it made little difference to the outcome. North Vietnam had a “good enough” strategy. “Foreigners will not occupy our country,” they said. “We will wear the Americans down and be happy so long as we’re moving toward Saigon.”
The lesson is this: Good strategy can allow you to succeed even with inferior products or tactics.
Alternatively, trying to win by pouring more money and more energy into tactics rarely results in a decisive or permanent victory. Price cuts are matched by competitors; the consumer gets numb to promotions.
CREATING STRATEGY
As we stated earlier in the chapter, there are four essential elements to creating winning strategies. The first is familiar to you. Where? Where do you want to be in the future? Strategies start with the Future Picture.
The second question is What? What are you going to apply your resources into or against in order to achieve your Future Picture?
The third is How? How are you going to apply your resources?
The fourth is deciding ahead of time when you will finish or finish with finesse.
So, where does one start? We call it mapping the system and identifying the centers of gravity—the system’s centers of gravity, which, as you will learn, are key to building strategy.
MAPPING SYSTEMS
As we mentioned earlier in the book, everything exists inside a system. At a very basic level, your body is a system. Your lungs take in oxygen, your heart distributes it, your liver cleans your blood, and so on.
A car requires an engine, tires, steering mechanism, and brakes to work, or the “system,” called a car, breaks down. The U.S. government operates as a system; Wal-Mart is a system.
The point is, everything operates as a system.
A key concept to developing strategy is to understand that systems resist change. Look at what is called the Hysteresis Effect. When you jump on a diving board it bends but then springs back to its original position. Bend a pencil and when you release the pressure it returns to what it was before. If a virus enters our body, white blood cells go into action and fight it back. Systems resist change. Ask any IT executive what it is like to roll out a new computer software system to her company and she will definitely tell you that systems resist change!
Now, if all systems resist change, how do you put a system in a new state of energy? If I bend that pencil a little more it will break, and when it does it has permanently entered a new energy (and physical) state. We change a system by applying energy at the right points to cause the system to “break.” We change it according to our Future Picture. To achieve your Future Picture you inevitably must break the elastic barriers of the “old” system and put the system in a new energy state. You create a new system—one that benefits you.
If everything operates as a system, and systems resist change, the only way we can change a system is by mapping it out and finding those points where, when sufficient energy is applied, the system changes in accordance with our Future Picture.
Mapping the system is that process. The key to changing a system is to understand how things relate, how things move, communicate, and interact. The key to understanding that is to map the system out. Let’s look at a business. Businesses operate as systems. They have elements that are external and internal. What are in those elements? Externally, there are competitors, consumers, retailers, distributors, and consumer perception. External elements of a business’ system include the competition’s leadership, the capital markets, media, regulators, and other industries that may influence yours. To write strategy you map out the external system, eliminating nothing that touches or affects you or your company, however odd or seemingly irrelevant it may seem.
In order to effect change on an external system you must also change your internal system. Walt Disney had a Future Picture of the amusement park industry. In his picture, he saw a place where Americans would stay for as long as a week. They would check into a wonderful, fun hotel; eat delicious meals; and be entertained by some of the most imaginative rides in the world.
It was heresy. In the 1950s, amusement parks were seedy, the rides were predictable, the food little more than cotton candy, hot dogs, and popcorn. Stay at the park? For a week? People went to amusement parks for the day. Disney not only had to map out the external system he would need to effect in order to realize his Future Picture, but more importantly, he needed an entirely new internal system to pull it off. He needed an internal system that handled customer interactions, transportation, lodging, and food service and maintained the now world-famous Disney experience.
Internal systems include your CEO, board members, executives, employee groups, communications infrastructure, buildings, marketing collateral—all of your internal resources. In order to see how everything relates with one another, you must map out that system. Eliminate nothing. Include everything.
Now, looking at your internal and external systems, you’re ready to learn a huge amount of information on the interrelated elements that make up these systems. Herein lies a problem. Once you’ve mapped out your system, you will quickly see that there are far too many elements or “nodes” than you have resources to effect. But are there? In truth, some nodes will give you more bang for the buck than others. By going through this mapping process you will be able to identify centers of gravity.
Flawless Execution
CENTERS OF GRAVITY
Centers of gravity are those critical leverage points where, if pressure is applied, your resources gain the most impact on that system. Wal-Mart wanted to become the dominant retailer but didn’t see any percentage in opening up thousands of small stores and just blending into the retail landscape. They saw huge, big box stores as a way to change the landscape. This was their center of gravity. They could change the system; they would make people come to their stores, but by having huge stores filled with big quantities of everyday products priced below competition. The age of mom-and-pop retailing effectively ended.
If you believe that everything operates in a system and systems have centers of gravity, you can change a system by changing its center of gravity.
TARGETING
Once you’ve identified your centers of gravity, you have a related question: What do I do now? Most companies would rank or order their priorities and then go after each, one by one, until the budget runs out or the tasks are completed. We call this attacking in serial. History shows us that prolonged, serial warfare leads only to a protracted battle. Ultimately, the longer the battle, the worse the odds become to achieve your Future Picture. Why? As time goes on the system begins to counterattack. It begins to defend itself and, with time, it gets better and better at defending itself, defeating your Future Picture. As time goes on, the cost of operations increases. It is far better to attack your centers of gravity in parallel—rapidly, all at once. You shock the system and put it in a new energy state.
Colonel John Warden did this brilliantly during Desert Storm. Let’s look at it.
During the first Gulf War, the Future Picture was to get Saddam out of Kuwait. One of the elements in that picture was to minimize collateral damage. The planners mapped out the external system of Iraq, which included over 300,000 targets! It was too many to deal with, so they identified centers of gravity, things like command posts and radar sites. Among these centers of gravity was the Iraqi electrical system. The electrical system had many components—hundreds if not thousands of them—with the obvious ones being the power-generating plants. If our bombers could take out their power plants, we could deny electricity to the enemy, which in turn would blind his command-and-control facilities and thus reduce his combat effectiveness. But what constitutes “taking out his power plants”? In the past, from World War II through Vietnam, the conventional thinking was to task heavy bombers like B-52s to a prolonged saturation-bombing campaign. After a few hundred strikes over a period of weeks, after dropping more than a few thousand bombs, the lights in Baghdad would go out.
Warden looked at the “system” and came up with a radically different approach.
“Why destroy the power plants?” he asked. “Is that the leverage point? Does that best achieve the Future Picture?” No. Too many resources would be diverted, the attacks would be serial, the process would take too long, and power could be shunted from one grid to another.
One planner had a better idea. “We can achieve the same results,” he argued, “by destroying the step-up transformers—the points where the power aggregates and is then redistributed. Instead of darkening the skies with dozens of bombers for a period of weeks, why not use our smart bombs and our tactical fighter aircraft and, in parallel, take out all of these transformers?” Ever so slowly, the idea gained traction. Soon it became a strategy—use F-15Es and F-111Fs to surgically remove the transformers in a coordinated strike that could be executed in parallel. Do it quickly, from one end of the country to the other. The desired outcome would be achieved—the lights would go out in Baghdad; the enemy would be blinded and collateral damage would be held to a minimum. So, in flew the surgical strike teams; and in the first six minutes of the war, out went the lights! (Later, when the bomb damage assessment photographs made their way to the Pentagon, they saw pictures of perfectly intact power plants. Those not in the loop were aghast. “The power plants are up!” they said. Which, of course, is a tactical way of thinking. “Yes, but the lights are out in Iraq,” said the strategically aligned field commanders.)
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