Planning & Adaptability
Mutually exclusive?
Friends,
I hope that all is well with you and yours, and that this e-mail finds you on a boat with shoddy connection, in the tropics, three months after I sent it.
A couple of updates before we go-go
At last, I can now officially confirm that James and I will indeed be returning to the Cannes Lions Festival of Creativity for a talk called Under Pressure: Marketing in a New Financial Era. As is our wont, it will feature current market trends and their strategic implications, and be delivered with the usual bullshit free style. Our slot should be on the official WARC/Cannes Lions stage, on June 21, at 1pm. If you are in the area, do come by and say hi.
Speaking of speaking, my keynote at Techsylvania, which takes place June 7-9, will be titled Delusions of Determinism: Why Planning for Success So Often Leads to Failure.
In the news
Despite popular claims that it has gone all-in on digital commerce, Nike is looking to connect DTC and wholesale. The move is the right one, but then I would say so given that it follows what James and I have argued for years: the best view of retail is a holistic one.
New Under Armour CEO Stephanie Linnartz has said that “growth is, without question, [their] highest priority”, which makes sense from a competitive standpoint (the company has struggled to keep up with rivals of late), but raises a few strategic concerns. This paper illustrates why.
Investors are pouring billions into companies that claim to work with AI, sometimes even without the companies in question having a business plan. Certainly, some success stories will come out of it, but so will a lot of failures – and a lot of perverse behavior.
Item of the week
Another week, another Roger Martin piece that I highly recommend that you read, and not only because it fits the overall theme of the current series of newsletters. In this post, he highlights the perils of analysis and assuming that the future will bear a striking resemblance to the past. While it may occasionally be true in the short-term, it becomes increasingly untrue over time (hence Q3 will be more reminiscent of Q2 than Q4 will be).
The big implicit assumption is that the future is identical to the past. If it is, then a sample drawn from the past is entirely representative of the future, and it is safe to make a decision based on rigorous analysis of such a sample.
But it behooves us to ask: just how safe is that assumption? How many times is the future identical to the past? Occasionally, I guess. Though probably the more accurate answer is that occasionally it is identical but only for short durations of the future.
The overwhelming majority of time in business, the future is different, and often frustratingly so, from the past. Therefore, any inference that you draw from data analysis — which is inevitably about the past — to utilize in making a decision about the future is fundamentally flawed.
Moving on.
Plans increase the feeling of control
But decrease adaptability
Over the last couple of weeks, we have discussed dissimilarities between strategy and planning. Although the terms are used interchangeably in everyday business speech, there lies a danger in doing so; the two are not variants on a similar theme, but fundamentally different:
Now, of course, one should be careful with dichotomies (it may be better to think of them as polar opposites on a scale), and the two are not necessarily mutually exclusive. On the contrary, the two concepts can be, and often are, complementary – plans work within the confines of an overall strategy, particularly when the task is such that it requires scheduling (e.g., an advertising campaign), is predictable (the market is entrenched; we have been there and done that before), or there is key stakeholder demand (such as shareholder expectations).
But is important to recognize that one is not the other. We cannot plan our way into a future we know nothing of, if for no other reason than that things will always happen that we did not plan for. In other words, we have to be able to adapt.
Inherently, however, plans constrain adaptability. The entire point of the planning exercise is to establish what to do beforehand, so as to create a sense of control and predictability. It is for this reason that planning is so popular with management, and why CEOs are attracted by the offerings of what Steve calls “merchants of certainty”, i.e., consultants who guarantee a particular outcome. It is also, one might surmise, why so many planning enthusiasts look down upon the agile community.
Granted, agile is also not something which one should conflate with strategy. If planning can turn into over-constrained movement, agile can easily become under-constrained movement, much like how bureaucratic organizations can be slow like glaciers, but startups can spend a lot of time running at full speed without getting anywhere at all. As I have written before, strategy is not about moving fast all the time, but enabling the capacity to move fast when you have to. That may even require you to first slow down.
Anyway.
The controversial yet undeniable fact is that employees, as a rule, should not be told precisely what to do unless their task is ordered and repeatable, for such instruction will inherently be limited to one particular context and cause all sorts of problems in others. Rather, employees should be enabled to adapt to changing circumstances. In order to prevent the startup problem, this requires that they know the boundaries outside of which they are not allowed to venture, and the direction in which their projects, experiments and actions should move the company.
In other words, it requires an actual strategy.
Next week, we will continue this conversation by breaking down a number of different approaches to strategy and seeing where they might be helpful, and where they might be harmful.
Until then, have the loveliest of weekends.
Onwards and upwards,
JP
This newsletter continues below with additional market analyses exclusive to premium subscribers. To unlock them, an e-book, and a number of lovely perks, merely click the button. If you would rather try the free version first, click here instead.