The Painful Process of Pivoting to New Markets

shutterstock_150777920Many senior leaders I encounter are grappling with the modern business problem of our time: what to do for an encore. And no, the encore isn’t a personal one, but rather it is all about the business. Long successful businesses are waking up to the reality that not only did someone steal their cheese, but, the thief ate the cheese. That cheese is not coming back.

Reinventing an old business  in the process of being rendered obsolete due to changing tastes, new technologies, disruption via business model or some or all of the above is the most difficult act in all of business. It happens, but it is rare. When it does, we study it in business schools, attempting to grok the deep insights of the firm’s managers so that we can apply these enlightened and obviously brilliant rules for reinvention to our own situations. Unfortunately, the rules always seem to be for a game we are not playing.

For every successful re-inventor there are many, many others that flail and fail in the process. The roots of these failures are found in human nature and exacerbated by our stubborn application of our traditional, short-sighted management approaches. Oh, and leaders with true courage are often nowhere to be found.

Why the Deck is Horribly Stacked Against Reinvention:

The firm’s collective knowledge and experience—the secret sauce is all about one recipe. The knowledge, skills and abilities are focused on the legacy markets, customers and offerings. The dominant logic of the firm is rooted in making decisions around a set of well understood variables in the industry and with customers. What made you great yesterday, may be one of your biggest disadvantages tomorrow.

We are mostly in denial about the creeping irrelevance of our legacy businesses. Even in the face of obviously declining markets, revenue and profit targets are ratcheted upward by senior leaders who naively believe that they can fight gravity. “Our sales team is stronger than our competitor’s…we will take market share,”offered one executive facing a factually undeniable collapse in demand for their offerings. Even if it works once or twice, it is a dangerous mindset that delays the urgent need to replace old revenue streams.

We talk a good game about innovation, but lack the discipline to pull it off. With our traditional strategy rendered obsolete, we have no filters to help us assess the quality of ideas and to select experiments to invest our shrinking company treasure. All the ideas seem good in isolation.

Desperation makes us stupid. As the numbers from the legacy business enter free fall, we start to flail, looking for quick fixes and we swing away, hoping to connect on a last minute home run hit. The distance from flail to fail is very short.

Even when we find a viable option, we tend to starve it for resources, focus and time. Our tendency is to evaluate new ideas against traditional metrics, and when the results fall short, we reduce our investment support and increase our agitation over the slow-to-emerge results.

Why Leadership Courage is the Missing Ingredient:

Some would argue that a declining business should be allowed to die—sooner if possible to minimize squandering any remaining shareholder treasure. I struggle with blind acceptance of the need for creative destruction. Having lived through and led during one of these that worked (and one that did not), I know that there is no easy answer. For any chance of success however, the one ingredient that must be present is leadership courage. Every single step of the process of reinvention demands a level of courage that many senior managers struggle to manifest.

Why Leadership Courage is Core to the Reinvention Process:

Navigating successfully into new arenas is frightening to your stakeholders. Shareholders, board members and external influencers will caution you against taking unnecessary risks and urge you to move carefully into these uncharted markets. They will second-guess every move you make, and if you are not careful, their creeping doubt will infect you. Of course, they will hammer you mercilessly for near-term results.

Employees—the ultimate stakeholders, will struggle to understand what this change means for them. Some will fight it, others will resent it quietly and some may even leave. You are left on one side with the need to engage and motivate your employees and on the other side with the need to blow up elements of the culture.

Real-time demands will challenge you every day to put more attention and more resources into the legacy business. The distractions will siphon your energy, gray matter and focus so essential for the new endeavor.

Scanning for new opportunities is often limited to the firm’s myopic view of the world. It is challenging to push beyond the gravitational pull of the legacy world. You are fighting the internal system and the dominant logic. You need help…and often, you will have to ask for help.

Saying “no” to the many good ideas that you will hear—avoiding what Jim Collins describes as the “undisciplined pursuit of more” is essential for survival. It is hard to say “no.”

The Bottom-Line for Now:

If only this issue were simple enough to distill down to one of those ubiquitous “Ten Steps…” type lists so common to blog posts. Life and business are mostly never that easy. And no, my indication of the need for “leadership courage” is not the default answer of a leadership blogger. It is the observation of a veteran of these wars. Without leadership courage present and accounted for in every decision, every day, there is no chance of success.

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Get the latest e-book (free) from Art: “A Bold Cup of Leadership Caffeine: Ideas to Stimulate High Performance.” 

See posts in the Leadership Caffeine™ series.

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Art Petty serves senior executives and management teams as a performance coach and strategy facilitator. Art is a popular speaker and workshop presenter focusing on helping professionals and organizations learn to survive and thrive in an era of change. Additionally, Art’s books are widely used in leadership development programs. To learn more or discuss a challenge, contact Art.

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Art’s Writing and Week in Review for January 30, 2016

put it in contextFarewell January! We Won’t Miss You

For the first month of 2016, the weather and the stock market are setting the tone, with wildly varying conditions and tremendous swings in prices, temperatures and precipitation. At least some of that precipitation must have been tears of despair earlier in the month, momentarily giving way to outpourings of joy given Friday’s impressive upturn in the major market indexes. I’m sure I reflect the broader sentiment with, “I can’t wait to see what February brings for the weather and the markets.” 

When we’re not busy digging out from the latest storm or planning how much longer we’ll need to work before we retire, the political scene is keeping many of us enthralled, engaged, amused or horrified depending upon your view. It’s reality TV for the reality TV era.

In the world of business, Xerox has decided to split itself into two in search of renewed relevance, and Microsoft has become interesting again on the heels of a solid quarter based on the firm’s successes in cloud computing. Talking about both of those firms seems so 1990-ish.

For the writing work last week, I covered a wide variety of material, proving once again that I have little ability to govern my enthusiasm for all things management and leadership.

Leadership & Management Writing this Week:

In this week’s Leadership Caffeine post, the focus is on “Leading Your Peers.” This is a topic that is under-covered in the leadership community, and profoundly important if you’re interested in advancing your career and getting things done.  As a complement, consider:  “Why You Cannot Afford to Ignore Office Politics,” from my blog at About.com. 

For those of you interested in the difference between excellence and mediocrity and management and leadership, here’s a reminder on: The 5 Decisions that Make or Break You as a Leader. 

I added the second article in an on-going series focusing on the fundamentals of strategy, entitled: “The Ten Great Habits of Great Strategists.” The post was inspired by a recent and recommended read that I share in the article.

Last and not least, for anyone who has lived through a counter-productive quarterly business review with the team from corporate, I over a bit of catharsis in: Dear Corporate….Why We  Hate Your Business Reviews.” I’m a fan of the productive incarnation of those meetings, but sadly, they are all too rare.

Other News from the World of Leadership Caffeine:

  • Thanks to some great marketing help, I have new and improved Leadership Caffeine Facebook page where I share the articles and a daily helpful (I hope) post or quote. Shameless pitch: please visit and “likes” are always appreciated.
  • The Jump-Start Coaching program is just about filled. I’ve got a few spots open for anyone interested in getting a running start on accelerating their career this year. It’s executive coaching for non-executives at a one-time price! I would love to fill the program this week and get started on the good work of collaborating to help you move forward.
  • WEBINAR on February 4: Level-Up-Accelerate Your Career. It’s complimentary and comes complete with idea prompting content, a nice webinar supplement take-away and 45 minutes of inspiration!
  • Look for the Leadership Caffeine e-news to become a weekly, offering subscriber-only content to help you survive and thrive as a professional and leader!

That’s all for now! Have a great weekend.

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Art’s Leadership & Management Writing for the Week Ending 1/16/16

boxing glove striking man in the face

Keep fighting!

Some weeks are best left behind in the rear-view mirror. From a stock market swoon that was impressive if not unsettling, to the loss of some cultural icons: glam rocker David Bowie and actor Alan Rickman, you had to look hard to find good news. Of course, depending upon your own political views, President Obama’s final State of the Union address and/or the most recent Republican Debate may have offered some relief. (Or not.)

With no claims on predicting the future, last week’s “Don’t Fall Victim to Gloom and Doom,” might have been my internal alarm foreshadowing events to come.

For this week, I served up the following articles and ideas to support our mutual drive to grow as professionals and strengthen  in our careers.

  • The January Leadership Caffeine e-news, offering a variety of features on succeeding as a leader this year; an overview of some great reads and the usual fare of sound-bites and interesting links intended to prompt thinking and promote positive action.
  • I added the second of my posts in the Difficult Conversations series, offering guidance to help reduce stress and improve your chances of success with the actual conversation. Here are some well-practices tips for Conducting Difficult Workplace Conversations”

Enjoy the articles and use the ideas in great health. The year is young and while none of us individually can control the big events, we can all make a difference in our firms and with our teams by focusing on succeeding one encounter at a time.

Yours in great leading and managing!

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See more posts in the Leadership Caffeine™ series.

Read More of Art’s Motivational Writing on Leadership and Management at About.com!

Art Petty serves senior executives and management teams as a performance coach and strategy facilitator. Art is a popular keynote speaker focusing on helping professionals and organizations learn to survive and thrive in an era of change. Additionally, Art’s books are widely used in leadership development programs. To learn more or discuss a challenge, contact Art.

Yahoo Misfires—Don’t Let this Happen to Your Firm

Cartoon image of a business meetingYahoo—a name left over from the boom and bust period of the dot.com world—has somehow managed to limp along in a world where many struggle to understand its value proposition. The financial markets vote with their valuations, and have recently concluded that the firm is worth no more than its holdings in the high-flying stock, Alibaba. Stated another way, the financial markets view the core Yahoo business as effectively worthless. (Note: as of this writing, there’s a good deal of swirl but little clarity surrounding the potential disposition of the Alibaba holding.)

The December 2015 issue of Forbes includes an interesting article, entitled: “The Last Days of Marissa Mayer?” Mayer is the firm’s CEO, and a former high-flying and early-stage Google Executive who has served as the face of Yahoo and the firm’s turn-around efforts for the past three years. If the article and sources are accurate, Mayer is failing as a manager and as a leader, and a big part of that failure is around the hard work of strategy.

In my recent post on strategy, I focused on the importance of the heavy lifting necessary to develop a clear, accurate diagnosis as a critical first step in building a coherent plan. The subsequent step, what strategy expert Richard Rumelt describes as, defining the “guiding philosophy,” builds on the diagnosis to frame the general approach to the situation. It’s the combination of the diagnosis and guiding philosophy that give coherence to the subsequent actions designed to seize opportunities and blunt threats. Anything short of clarity around both of these, and the prediction is in the immortal words of Mr. T, “Pain.”

The article in Forbes highlights in a very visual form the departure of key leadership and technical experts, and it reports (albeit from mostly anonymous sources) the growing frustration, tension and emotional responses to the lack of strategic clarity for the firm. The firm is in pain, and perhaps it is in its death throes. While creative destruction is inevitable in our world of change, one wonders whether a firm with the name and eyeballs of a Yahoo is aggressively striving to snatch defeat from what could be a victory.

In my work as a strategy adviser and facilitator, I see the impact of firms avoiding the hard work, introspection and experimentation that should surround an on-gong strategy process, all too often. Almost without exception, the issue is that top management has failed to take the time and put forth the effort to properly diagnose its situation. I listen to top executives and hear disparate views on the challenges and opportunities. I listen to them for clarity and unity on how they propose to move forward, and what I hear ranges from silence to cacophony.

The Bottom-Line for Now:

The failure of any business is a sad affair. There are people and families and careers and dreams attached to our businesses, and when those are squandered due to ego and pride and unhealthy politics or worse yet, due to managerial laziness, it’s reprehensible. You owe it to your team and your firm to be a positive voice and catalyst in pursuit of strategic clarity, coherent actions and healthy, constant communication.

Read more in the Art of Managing Series.

Art Petty serves senior executives and management teams as a performance coach and strategy facilitator/adviser. Art is a popular keynote speaker focusing on helping professionals and organizations learn to survive and thrive in an era of change. Additionally, Art’s books are widely used in leadership development programs. To learn more or discuss a challenge, contact Art.

 

Art of Managing—Avoid Strategy Malpractice with a Proper Diagnosis

Graphic with the words of Art of Managing and other management termsIf you’ve ever dealt with a complex medical issue, you understand how difficult it sometimes is to identify the real problem. Yet, pinpointing this problem is essential to developing the best possible treatment regimen. It can be a matter of life or death.

My oldest (adult) son suffers from an aggressive form of Crohn’s disease. He was first diagnosed as a young teen and placed on a minimal maintenance routine. We learned a few years later that his situation (location, severity, treatment) had been imprecisely diagnosed when the emergency room doctor informed us that he had summoned a helicopter to fly him to a hospital that was prepared to deal with his very life threatening complication. He navigated that—barely—and we invested a great deal of time working in the right places with experts who helped us pinpoint the type and location of the Crohn’s and develop the best possible treatment regimen and monitoring plan. The results have been great thus far.

As I dug into learning more about Crohn’s and IBS diseases, I learned a great deal about the complexity of diagnosing the problems. I spoke with too many individuals who had lived through a variation of my son’s situation—the wrong generalized treatment for a specific problem that was never properly identified.

The analogous situation takes place in business all of the time. Instead of taking the time to properly understand and diagnose the situation, managers deploy a shotgun approach with all manner of tactics, hoping to get lucky and find a winner. They’re playing fast and loose with the business and the livelihood of the firm’s employees, and this is indeed management malpractice. Sadly, it’s epidemic in our firms and government.

Much of the debate and in some quarters, outrage, over President Obama’s plan to deal with ISIS boils down to a fundamental disagreement over the definition of the problem. Critics suggest that his “diagnosis” is off and therefore his proposed tactics for dealing with the problem are fatally flawed. President Obama of course suggests that same about the thinking of his detractors. A good number of level-headed citizens I’ve spoke with admit to being uncomfortable about whether we (collectively) truly understand this situation enough to develop an approach and appropriate supporting actions.

In organizational settings, I’ve lost count of the number of times senior management team pronouncements of strategies have fallen on deaf or cynical ears from the broader employee population. While poor communication is a critical part of the problem in these situations, the root cause is that most people don’t understand the diagnosis because management failed to find and describe it. They don’t understand the analysis of the situation, the assumptions and therefore, they don’t understand the problem/opportunity with pinpoint precision. Management spouts the approach and the tactics and provides very little context for how they arrived at these ideas. People don’t understand the “Why?” and without this understanding, the “What” and “How” are out of context.

chaosThere’s a reason why we often fail to clarify situations. It’s hard work. Darned hard work, and it takes time, analysis, intense debate and the occasional and very uncomfortable leap of faith.

Rumelt’s concept of the “kernel” of a strategy (diagnosis, guiding philosophy, coherent actions) is the most powerful framework I’ve yet encountered in strategy work to help simplify complexity. The diagnosis portion is step one, and it’s the equivalent of answering: “What the heck is going on here?”

It should come as no surprise that at the beginning of a strategy refresh initiative, the participants have widely varying views of their firm’s situation. Most of those views are anchored in their silo or functional perspective and there’s no unifying diagnosis. People and teams quickly want to jump to action-plan development and bypass the heavy lifting of diagnosis. If you’ve ever been a part of a miserably facilitated strategy process, you know what I’m talking about. Let’s suspend reality and define a vision. Time for a S.W.O.T. Now, let’s describe why we can win, and then define some lofty goals and responsibilities.

This template work makes people feel like they’re making progress. However, it’s just busy work without the context of a carefully developed diagnosis. It’s malpractice if the tactics are put into play and the diagnosis remains vague or non-existent.

A more effective approach is to accept that success is defined at the front-end of the process and it starts with a proper diagnosis. Use these ideas to jump-start the work of finding the diagnosis:

  • Start with the general, “What’s going on here?” and then painstakingly explore, from the macro-trends and disruptive threats to the very specific insights gleaned from speaking with AND observing customers.
  • Understanding a competitor’s strategy is useful, mostly in deciding what not to do. Don’t assume they’ve done the due diligence on diagnosis—like you, most have not.
  • Look across sectors and technologies for external trigger events and macro trends that may present opportunities and threats.
  • Document assumptions about everything and work with experts (inside and outside) to challenge the assumptions.
  • Gain help in looking objectively at your warts and blemishes.
  • Gain help in identifying and articulating your true superpower as a firm. Sorry, you have one superpower only, not six. It’s not something general—it’s very specific.
  • Agonize over a distillation of all of this work to assess the situation. Debate the perspectives fiercely and don’t look for consensus as much as emerging clarity. Let someone with a practiced ear and kevlar skin distill and drive debate around the diagnosis.

Rumelt serves up a great number of excellent historical examples in Good Strategy/Bad Strategy. One in particular, the development of a strategy for dealing with the Soviet Union after World War II is quite powerful. The essence of it, “The Russians look forward to a duel of infinite duration,” eliminated from the equation the possibility of a negotiated “peace” and set the stage for a policy of containment that can be reasonably connected to the eventual demise of that incarnation of their government. Alternatively, a diagnosis that suggested the Soviet leaders would eventually negotiate peace would have led to a different set of actions with a potentially very different outcome. Once the diagnosis is set, the general approach and supporting cascading set of actions are able to be intelligently developed.

The Bottom-Line for Now:

Don’t settle for poorly thought-out, cliché-riddled statements of strategy baked in boardrooms without the benefit of fierce diligence and debate around the diagnosis. As a family, we learned the hard way that a wrong diagnosis was potentially fatal. For a business, it most certainly is.

Read more in the Art of Managing Series.

Art Petty serves senior executives and management teams as a performance coach and strategy facilitator/adviser. Art is a popular keynote speaker focusing on helping professionals and organizations learn to survive and thrive in an era of change. Additionally, Art’s books are widely used in leadership development programs. To learn more or discuss a challenge, contact Art.