When is Strategic Thinking a Luxury?

Blog_28.pngBy Anna Caraveli

“We wish we had time to think about big ideas and the future and all this,” one executive told me somewhat patronizingly. “Our hands are full with our annual meeting coming up in 5 months and so many positions to fill at the same time. You can’t start with ‘big-picture thinking’ unless you first solve all the smaller problems. Maybe in a couple of years….”

Is the tactical-practical-issues-first mentality the “mature” and rational way to run a business, especially in certain situations?  Is “big-picture,” strategic thinking a luxury to be indulged in our spare time?  We found that how an organization thinks, learns, makes decisions or determines priorities are not as much indicative of the situation it faces as they are of the organization’s “personality;” the real orientation and focus that drive it.

 

Our research indicates that emphasis on processes and tactics were among the characteristics of more conventional, bureaucratic, supply-driven organizations. Customer- based entrepreneurial organizations were focused on innovation and encouraged strategic thinking. This didn’t mean that they did nothing but sit around musing about the cosmos but that, no matter how small the task or issue, it was understood in its relationship to the whole.

How you view and frame challenges and solutions also influences results.  This was the reason why two associations who took different approaches to comparable challenges–a declining industry and a shrinking profession respectively—experienced different outcomes: one continued on the path of attrition and decline, while the other grew and thrived.

The first association that traditionally depended on the construction industry attributed its decline strictly to the economic downturn. Its strategy was to maintain the status quo at all costs until the economy improved.

The other association was AOPA (Aircraft Owners and Pilots Association). Even though it never experienced attrition, Craig Fuller, its President and CEO since 2009, realized that to sustain their growth, they had to expand and diversify their customer pool and the very basis of their competitive advantage.

In today’s environment, the second CEO’s approach is more likely to succeed.  The ability to lead change, as leadership expert, Michael Maccoby tells us, is a leadership prerequisite for success.  And substantive change requires the capacity for strategic thinking and innovation.

The leadership of the first association had no patience for any suggestion calling for stepping back, re-assessing and re-configuring. “All we have been able to do,” the exhausted CEO said, “is to keep plugging holes to keep from sinking further down. This is not the time to think about big questions.”

While this is not illogical, by focusing on maintenance of the status quo, they were also pouring all their resources into pieces of their business that might have been discontinued or re-configured if they had been re-assessed. Likewise, “busy work” also blocked innovation and discovery of new value in ordinary assets, such leveraging and integrating the 2-3 small associations they managed which currently ran on independent and parallel paths.

AOPA’s Craig Fuller saw his role as uncovering things that were not easily visible and ensuring that tactical tasks did not prevent the association’s capacity for large-scale innovation. Instead of focusing largely on new products and members, Fuller enhanced capabilities by building a new and more flexible basis for building competitive advantage; one that did not depend solely on factors that were subject to change, such as a product line, business model or narrow market definition, for example he:

Established AOPA’s identity as a multi-faceted knowledge enterprise built around the objective of safeguarding the future of general aviation, rather than on the basis of its membership model, products or association status.

  • Expanded AOPA’s definition of members from only pilots of single engine recreation piston aircraft to other types of pilots (e.g. those who flew turbine engines, and flew for business rather than recreation); and aviation related industries. There are currently a dozen major segments in AOPA’s membership pool.
  • Extended its value beyond its core members, such as the Aviation Safety Institute and a leadership role in the growth of the pilot population in response to the shortage of pilots.
  • Embraced the model of collaborating with all segments of aviation, even with competitors, to expand the larger market.

As a result, even though the pilot population had been steadily shrinking–from 820,000 pilots in 1980 to 620,000 today- AOPA’s membership, retention and renewal rates have continued to grow. What’s more, events such as its trade show have been breaking new records in attendance. Today AOPA boasts a membership of more than 400,000–a number that represents more than two thirds of all certificated pilots in the United States; a staff of more than 200 and a total budget of $60 million.

We found that attitudes about and practices in strategic thinking and innovation are among 8 characteristics that define an organization’s true focus and personality.  Below is a summary of characteristics associated with three types of organizations:

  • 1=bureaucratic or supply driven, characterized by silos and top-down leadership
  • 2= hybrid organization, between A & C or in transition from one to another
  • 3=entrepreneurial or demand-driven organization, characterized by flexibility, team work, speed, agility and complete alignment of every part of an organization with customer value

 

Responses to Interview Questions

  • Our first step in planning is to
  1. Convene a task force
  2. Brainstorm with others in my department; other departments; and/or conduct a survey
  3. Talk to members and other stakeholders and try to understand the needs, challenges, priorities and environment.
  • To move from idea to action we
  1. Go through the right channels of approval
  2. Focus on developing the program or product until it is ready to market
  3. Engage potential end-users and –members, and other internal and external  stakeholders –in its development, pilot test and continuous adapt
  •  To plan and come up with new ideas we:
  1. Develop programs and other initiatives to execute the boards strategies and objectives
  2. Have an annual or bi-annual executive retreat for strategic planning
  3. Continuously brainstorm, test and learn from results. Strategic thinking and conversations are part of our culture and are not limited to formal planning events.
  •  We innovate through:
  1. New or improved products and processes within conventional categories
  2. Re-examining, re-inventing or transforming, as needed, both products and the fundamental pieces of business, including & membership models, mission, service delivery etc. Nothing is off the table
  3. Building capacity for strategic innovation and embodying it in incentives, rewards, measures of success and resource allocations.
  •  We are:
  1. Focused on understanding and executing the board’s policies and mandates.
  2. Looking to best practices from other associations as benchmarks.
  3. Open to new ideas and members’ input. We constantly scan the larger environment for new trends and developments on all fronts.
  •  When faced with attrition we:
  1. Assume that the bad economy is the cause or that we have not done our job communicating all our great programs and benefits to members.
  2. Increase the number of programs/products and add new ones that reflect more updated topics
  3. Assume that we are no longer providing adequate value and, hence, talk to members, re-examine our value proposition, assumptions, relationships, program and product categories.

Check out which categories of answers (#1,2 or 3) best represent the thinking and practice of your organization.


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  • commented 2013-11-22 02:19:01 -0500
    Brad: You are so right. This is an important one. Another implication is the idea of linear development: you design something and the design process comes to an end. Then you sell it or build it or carry it out in some way and it’s either a success or failure. stops. Someone in an innovative company told me once: a program or product is never “finished.” You reconfigure it for different markets or applications; use it as a springboard for a different business line or product, integrate it with a larger service package as a piece of a solution, create a community around its use etc. “Implementation” is not static and final but the way you learn and adapt a product or service to the market. So, I suppose, the idea of determining success through one, “best” shot would be absurd for such company. Thanks for bringing this “missing approach” to our attention.
  • commented 2013-11-20 10:08:57 -0500
    There is one danger of the bureaucratic approach that you missed: “we gave it our best shot.” By over focusing on process and bureaucracy, management gains a sense that following the set procedures defines “best practices.” In turn, this leads to a belief that any attempt to implement an idea that was approved through the bureaucratic review process is the “best shot.” So, if the “best” implementation fails, managers assume it was the idea that is a problem. Instead of reviewing and rethinking the implementation, the project is killed, branded “bad,” and never addressed again. While the bureaucratic process is necessary to regulate the enterprise and keep the association from chasing truly far-fetched ideas, it must be understood that the implementation it approves is based on the knowledge of the people in the room and the experiences the organization has with the idea. Months and years later, the organization has more experience and knowledge regarding the new idea and may be able to find a better implementation/solution…… if management does not assume that the one first approved by the bureaucratic process must have been the “best shot.”

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