Every business system is subject to change. After all, continual development of the system’s capability and capacity increases complexity and thereby the chance of internal friction and conflict. In addition, businesses operate in dynamic environments, with ever changing consumer preferences, and competing value propositions.
The CEO is uniquely responsible for adjusting and changing the system―to re-align the system’s current state with its desired state. After all, no one has more authority to approve enterprise-wide changes than the CEO.
Note that misalignment can originate from changes in either the current state or the desired state. Be that as it may, the resulting situation Is-What-It-Is; it cannot be changed. What I mean to say is there is no operand―as in mathematics―to reverse the existing situation (e.g. 10÷2=5 and 5×2=10).
Hence, we can choose to accept the situation as it is and respond in time with a decision derived from strategic thought, or attack the situation with an in the moment knee-jerk reaction that we may very well regret later. In other words, what we can change is our own experience of a situation.
The worst experience of unintended and unwanted situations is confusion and disorder―doubt and uncertainty magnified into panic and chaos.
The best experience of unintended and unwanted situations is trust and confidence in one’s ability to comprehend, cope with, shape and adjust the business system in order to accommodate for new and unforeseen circumstances as they unfold.
The difference between these two experiences is one’s ability to create a mental image of the situation with which one is confronted―engage one’s insight to quickly understand what’s going on.
These images help determine if either a mistake was made, or if our beliefs are wrong―if it’s time to break the rules. This is the most fundamental consequence of the law of cause and effect; cause is thought (mental programming or beliefs), and effect is our experience in the outer world. Transformation―changing one’s beliefs―is thus a mental process that precedes any changes to the business as an organic whole. Only a different level of thinking will result in different―more desirable―outcomes.
Col. John R. Boyd USAF, creator of the O-O-D-A loop[i], identified a decision maker’s Orientation as the key aspect of any decision making process. Because Orientation shapes our Observation, Decision, and Action, we must avoid becoming what the Germans call a “Fachidiot”; a one-track specialist who is an expert in his field, but takes a blinkered approach to multi-faceted problems.
Consequently, contemplating every solution to making money, cutting cost, and increasing efficiency is inadequate. Yet, vendors are lined up to sell you their latest and greatest solution to date. This can be a tool, a technology, a best practice or specialized knowledge. Most, if not all promise it will raise your bottom line results. And, therein lies a dirty little secret:
- Is the chosen solution capable of eliminating the root cause of the symptom or effect that is undermining operational effectiveness and/or -efficiency?
- Is the chosen solution properly matched for effective and efficient realization of the business system’s purpose?
- A chosen solution may cut cost―thus increasing the contribution margin of one department―but will it increase cost for other departments?
- A chosen solution may deliver great short-term results, but will that deteriorate over time?
- Some solutions may raise bottom line results and have as unintended consequence a de facto change in the business’ strategic direction.
Many of such solutions erode operational effectiveness; eliminating the very distinguishing properties and qualities that a target audience admires in your value proposition. I call that “The Black Knight Syndrome” after a scene from the Monty Python movie The Holy Grail.
These solutions have a tendency to cause convergence among all competing value propositions. By eliminating distinctive features, advantages, and benefits, you can only compete on price. The ensuing attrition warfare is the result of investment in cost cutting solutions, and having to pass on the savings to buyers in the form of discounts. Failing to recuperate investment costs, while giving away your profit margin is a typical example of a regrettable, in the moment knee-jerk reaction that is only an all too common practice.
Strategic thinking is critical thinking, thinking for oneself as opposed to group-think and following what everyone else does. Executive leaders follow others when they hire people with a similar socio-economic background, with similar academic degrees from their own alma mater, and retaining the same consultants who advised the businesses whose practices they want to mimic. John Boyd called that behavior Incestuous Amplification; Observing behavior in others for the purpose of reinforcing one’s own Orientation.
CEO Adventure―Creating Authentic Solutions for Stubborn Systemic Problems was written specifically to help executive decision makers think strategically, thus avoiding the pitfall of Incestuous Amplification. The many illustration help you think your way through any challenge from root cause to authentic solution. Call me if you feel inspired.
[i] BEWARE: Boyd’s O-O-D-A loop is NOT a sequential process. The objective of the loop is not to identify an action but to collapse time within the decision making process. Because of the loop’s complexity I am not elaborating on its intricacies within the space of this article. I present it in order to illustrate the importance of one’s Orientation when confronted with new and unforeseen circumstances as they unfold.