The Real-Life MBA: The no-nonsense guide to winning the game, building a team and growing your career. Suzy Welch
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around the strategy-making process being as intellectually complex as humanly possible.
Over the past several years, however, we’ve observed a significant movement toward more flexible, swifter strategy processes that promote agility. Because being agile really matters. At a tech conference we attended not long ago, for instance, Qualcomm’s then CEO Paul Jacobs (he is now executive chairman) noted that his team conducted an informal strategy review monthly, and if the markets were demanding it, more often. No one in the audience seemed shocked by this statement, and many nodded approvingly, as if they knew exactly what he was talking about.
Which brings us back to HDS. Before it got whacked, it too wasn’t exactly stuck in old strategy habits, it just hadn’t fully embraced the new. But its crisis changed that, to put it mildly. Instead of quarterly strategy sessions, it moved to market reviews every Thursday.
Yes, every Thursday.
Just as significant—and this is really key—the company made sure its Thursday strategy (and tactics) review process was an exercise in exploring the external world.
Look, too often, strategy can become a bunch of people in a windowless room (literally and figuratively) talking about history. About trends they’ve seen. About who did what back when. About things they know to be true because that’s the way they’ve been. About the way things just seem to go in the business. About what’s happening in the company right now—as in, what it can do and can’t do because of this person and that person.
No, no, no.
Effective strategy-making is about the future—and the markets. Customers and competitors today, tomorrow, and a year from now, technology coming down the pike sooner and later, products not yet invented, looming social and political events. You name it—as long as it is out there.
At HDS, “I just kept returning every strategy conversation to the markets,” Joe says. “We were never going to succeed talking about us and what we could or couldn’t do. We had to talk about the customers, the competitors, new products, new services, new technologies. What else is there?”
That’s a great question.
Let’s now turn to our final two pieces of advice about surviving a whacking, and, indeed, getting better because of it.
Reality-Check Your Social Architecture
Social architecture describes how a business has its people arranged—its reporting relationships—and inasmuch conveys who and what are important to the organization. Put simply, we’re talking about the “org chart.”
Generally, people in business avoid talking about org charts because they’re boring, especially when dotted-line-heavy matrix organizations come into the conversation. Org charts can also make some people a bit frantic, especially people who care a lot about how high their little box is compared to other people’s little boxes. But that’s not our point here.
Our point is the following: in our experience, too many companies still get whacked because their social architecture has not changed with the times. And to be even more specific, because their social architecture is too often a relic of the past, with today’s critical functions of IT and risk management reporting either to the wrong level (misunderstanding their importance) or on the wrong function (misunderstanding their value-add).
Hanging on to outdated social architecture usually isn’t malevolent, of course. But it still happens, a historic habit, left over from the days when the nice semiretired lawyer or out-to-pasture accountant in risk management chatted with the company’s auditing firm a couple of times a year and checked in with the line people every now and again. As for IT, well, it was the number you called when you wanted help running a WebEx with your team in the field.
Today, of course, IT has a major strategic function in just about every business. And with the rise of cybercrime and proliferation of government regulation, risk management should be as well.
Yet, in too many companies, we still observe that the social architecture doesn’t reflect reality. Risk managers are trotted out to report to the board twice a year and get patted on the head and sent back to their caves. Similarly, the leaders of too many companies can’t bring themselves to let the CIO into the room for strategy conversations. We certainly know where that fear comes from. Even with the advent of low-cost cloud-based solutions, it can still feel like IT comes around too often asking for huge sums of money to upgrade this or that system, or for some other “urgent” technology infrastructure project no one really understands. “Puh-leez,” everyone is thinking to themselves, “make your expensive gobbledygook go away.”
There’s a terrible cost for marginalizing risk management and the CIO, however, and the time you see it is when a company has just taken a huge whack. Take the case of Target. Right before Christmas in 2013, during the peak-peak of the year’s biggest selling season, the store had the very unpleasant task of announcing that cyber-thieves had broken into its system, accessing the account information of 70 million customers.
Seventy million!
Target is hardly alone. Think of Sony’s hacking debacle, surrounding its release of The Interview. It was nothing short of an international incident. Think of GM recalling millions of cars for lethally faulty ignition switches after 13 deaths. Think of JPMorgan Chase losing billions of dollars due to the so-called London Whale incident.
How agonizing. Disaster shouldn’t have to strike for companies to examine who’s reporting to whom, and how often. There is, of course, no “ideal” social architecture. There is only the “ideal” social architecture for each individual company and its market. That said, it’s hard to think of a business today that shouldn’t have risk and information tech positions filled with the top talent, talent that understands not just their immediate function but the business strategy as a whole, connected closely to top leadership in high-profile reporting relationships, and sitting in the room during every conversation that matters.
And Finally, Worry More Productively
Last year, we got a midnight email from an old friend. This friend, whom we’ll call Julie here, runs a $2 million ad agency with a part-time staff of 12. And she’s thinking of adding more, in fact; business is booming. Yet her late-night missive read, “I’m worrying constantly these days. It’s stupid to worry, right?”
Wrong.
It is only stupid to worry about worrying. It’s smart to worry as long as you nail down what you’re worried about—and face into it.
Look, we don’t need to belabor this point except to say one thing: in business, worrying can often be a signal you’re about to get whacked. It’s your early warning system, based on just . . . stuff . . . vague inputs. A big client taking a few hours longer than usual to return emails. Unexpectedly positive tweets about a competitor’s product that you’d written off. Your landlord making noncommittal noises about his plans to sell the building “eventually.”
These kinds of mushy, nebulous data points are part of every manager’s day, and too often, managers wave them off. As we said in the last chapter, “the work” gets in the way. Our message there was that alignment is part of the work. And our message here is that worrying—constructive worrying—is too. Doing the painful pinpointing of what trend, occurrence, offhanded comment, or whatever-it-was that is causing the uh-oh feeling in your stomach, and then doing the equally painful investigation into whether your worrying is justified or paranoid. You win either way. If you discover your worry is justified, you can fix things before it’s too late. If you discover you were just being paranoid, you can rest easy with the knowledge that, at least this time, you’re not going to need to groan, “Damn, I knew that was coming.”
Our friend Julie, unfortunately, didn’t want to go there. When we pushed her to identify the source of her worry, the best she could do was, “I just get the feeling Harry is mad at me.” Harry was the VP of marketing, and Julie’s main point of contact, at her marquee client.
Then we advised her to visit Harry to test her concerns. She demurred. You guessed it—she was too