SmallBizU
™
eLearning University
Strategic Planning and Execution
Presented By
SmallBizU Online eLearning Classroom
http://www.smallbizu.org
© copyright 2002 SmallBizU
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Objectives of this course…
 To present the strategic devices of mission, vision,
goals, and strategy and demonstrate exactly how they
are created.
 To show that the way a strategy is presented is different
from the way it is crafted.
 To reveal the secrets of how great entrepreneurs execute
strategy through the formation and organization of a
great group.
 To provide a case that details the four tipping points of
successfully implementing your strategy within an
organization.
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Course Outline
1.
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What is strategic planning?
Knowing your purpose and mission
Defining a vision
Forming goals and objectives
The two kinds of strategy
Crafting internal strategy
Crafting external strategy
8. Presenting strategy as story
9. The secrets of organizing genius
10. Tipping point execution
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What Is Strategic Planning?
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Writing the future…
 The future is a mere story—albeit a powerful one.
 You are either writing the story of the future or you are
living inside the story of another. There can be no other
possibilities.
 The entrepreneur has no choice but to anticipate the future,
to attempt to mold it, and to balance short-range and longrange goals.
 To accomplish this, the entrepreneur needs to think
strategically—and this is the domain of strategic planning.
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Strategic planning is…
 The continuous process of making present
entrepreneurial decisions systematically with the
greatest knowledge of their futurity,
 Organizing systematically the efforts needed to
carry out these decisions, and
 Measuring the results of these decisions against
the expectations through organized systematic
feedback.
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It’s not a bundle of techniques…
 Strategic planning is not a box of tricks or a bundle of
techniques.
 Quantification is not planning. Some of the most important
questions in strategic planning can be phrased only in
terms such as “larger’ or “smaller,” “sooner” or “later.”
 Strategic planning is not the application of scientific
methods to a business decision.
 It is the application of thought, analysis, imagination, and
judgment.
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It’s not about forecasting…
 It is not masterminding the future. Any attempt to do
so is foolish—the future is unpredictable.
 Strategic planning is necessary precisely because we
cannot forecast.
 Since the entrepreneur upsets the probabilities on
which predictions are based, forecasting does not
serve the purposes of planners who seek to direct their
organizations to the future.
 Forecasting is of little use to planners who would
innovate and change the way in which people live and
work.
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It doesn’t deal with future decisions…
 Instead, it deals with future-aspects of present
decisions.
 Decisions exist only in the present.
 The question that faces the strategic decisionmaker is not what his/her organization should do
tomorrow.
 It is, “What do we have to do today to be ready for
tomorrow?”
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It doesn’t attempt to eliminate risk…
 It is not even an attempt to minimize risk.
 Economic activity, by definition, commits present
resources to the future. To take risks is therefore the
essence of economic activity.
 While it is futile to try to eliminate risk, it is essential that
the risks taken be the right risks.
 The end result of successful strategic planning must be the
capacity to take greater risks, for this is the only way to
improve entrepreneurial performance.
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The devices of strategic planning…
 Each device in strategic planning is meant to answer one
fundamental question about your plan:
– Vision: Answers the question of “what.” What will our future
look like? What will we accomplish? What is our dream with a
deadline?
– Mission: Answers the question of “why.” Why do we exist? Why
is our vision important?
– Goals: Answer the questions of “who and when.” Who will do
what? When will they do it?
– Strategy: Answers the question of “how.” How will we achieve
our goals? How will our vision bring our mission to life?
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Knowing Your Purpose And Mission
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Mission and Vision…
 Though the terms are often used interchangeably,
there is a vast difference between a mission and a
vision.
 While the two concepts play-off of one another,
they work in very different ways.
 The purpose of the next two sections is to examine
exactly what makes mission and vision different
and to demonstrate why you need to have both.
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Clarity about mission and vision…
 Clarity about mission and vision is both an operational and
spiritual necessity.
 Mission provides a guiding star, a long-term purpose that
allows you to balance the inevitable pressures between the
short-term and the long-term.
 Vision translates mission into truly meaningful intended
results—and guides the allocation of time, energy, and
resources.
 It is only through a compelling vision that a deep sense of
purpose comes alive.
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The dynamic interplay…
 Mission is about preserving the core…
–
–
–
–
Provides continuity and stability
Fixed stake in the ground or the horizon
Limits possibilities
Conservative act
 Vision is about stimulating progress…
–
–
–
–
Urges continual change
Impels constant movement
Expands possibilities
Revolutionary change
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The eyesight metaphor…
 Mission and Vision are like your eyes.
 Each is independent of one another, yet each works
together to provide both depth and breath ultimately
coming together to make one in sight.
 The absence of one or the other (or both) is akin to looking
at your organization with one only eye…or less.
 It can truly be said that nothing happens until there is
vision. But it is equally true that a vision with no
underlying sense of purpose is just a good idea—all sound
and fury, signifying nothing.
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What is mission?
 Mission is the purpose or reason for existence of
your business.
 It is a general heading or direction—it is abstract.
 A mission is what you stand for.
 A mission should be timeless. It should rarely, if
ever, change. It should stand the test of time.
 Example: “To increase man’s capability to
explore the heavens.”
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The ground-rules of mission…
 Paradoxically, if an organization’s mission is truly
motivating it is never really achieved.
 Mission provides an orientation, not a checklist of
accomplishments.
 It defines a direction, not a destination.
 It tells the members of an organization why they are
working together and how they intend to contribute to the
world.
 Without a sense of mission, there is no foundation for
establishing why some intended results are more important
than others.
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The missions of enduring companies…
Company
Core Purpose
3M
To solve unsolved problems innovatively
Fannie Mae
To strengthen the social fabric by continually
democratizing home ownership
Hewlett-Packard
To make technical contributions for the advancement
and welfare of humanity
Mary Kay
To give unlimited opportunity to women
McKinsey
To help leading corporations and governments be more
successful
Merck
To preserve and improve human life
Nike
To experience the emotion of competition, winning,
and crushing competitors.
Wal-Mart
To give ordinary people the chance to buy the same
things as rich people.
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Being mission-based…
 There is a big difference between having a mission
statement and being truly mission-based.
 To be truly mission-based means that key decisions can be
referred back to the mission—the reason for being.
 This also gives some clue as to why being mission-based is
so difficult. It gets to the core of power and authority. It is
profoundly radical. It says, in essence those in the
positions of authority are not the source of authority.
 It says rather, that the source of legitimate power in the
organization is its guiding ideas.
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Power from ideas not people…
 Mission is therefore the belief that power
ultimately flows from ideas, not people.
 Moreover, mission is inherently fuzzy and
abstract.
 It is so much easier to make decisions based on the
numbers, habit, and unexamined emotions.
 To be mission-based requires everyone to think
continuously.
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Mission is a balancing act…
 It should not be so generic that it reads something
like:
– Our mission is to deliver the best quality product at the
lowest price through the most knowledgeable
employees for the benefit of all stakeholders.
 This is simply stating best practice or the rules of
the game of business itself—the basic ticket for
admission if you will.
 Instead, it should speak to some universal or
cultural human need or condition.
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On the flipside…
 A mission cannot be too narrow in scope either.
 Saying:
– The mission of ACME is to serve medium-sized
original equipment manufacturers by providing
small power generators.
 This mission is a current marketing strategy, not a
timeless reason for existence.
 The statement is far from timeless since both the
customer and the products could change as the
business grows.
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Now it’s time to write your mission…
 Right now on a piece of paper, write down your
mission statement.
 Remember, a mission is the reason or purpose for
the business.
 Write it as simply and honestly as you can.
 Example: The mission of CEDC is to increase the
entrepreneurial capacity of our clients.
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The mission in review…
 Remember a mission statement should be somewhat
timeless—it should apply to not only today but possibly
fifty years from now.
 It should put forth a general direction or heading stating
what it is that you stand for.
 In essence, a mission can never really be achieved—it
should be ongoing. If it can be achieved and completed
then it is a vision or goal, not your mission.
 You should think of your mission as your true north
heading on your compass.
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Finally, check your mission…
 Your mission should…
–
–
–
–
Provide continuity and stability
Act as a fixed stake in the ground or the horizon
Limit possibilities
Be a conservative act
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Defining A Vision
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What is vision?
 A vision is a specific future destination—it is
concrete.
 A vision is a dream with a deadline.
 It should change over time.
 It must say “yes” to some ideas and “no” to others.
 It’s about what the future might be, could be, and
shouldn’t be.
 Example: “To put a man on the moon before the
end of the 1960’s.”
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Defining a vision…
 In some ways, defining vision is easier than
knowing your purpose or mission.
 Business people by nature are pragmatic;
ultimately they are concerned about results and
must concentrate on what and how, not just why.
 This is why vision matters. Vision—an image of
the future we seek to create—is synonymous with
intended results.
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The ground-rules of vision…
 Vision is a practical tool, not an abstract concept.
 Visions can be long-term or intermediate term.
 While an organization should exist for one, single
purpose, multiple visions can coexist, capturing
complimentary facets of what people seek to
create and encompassing different time frames.
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Vision-based leadership…
 Leaders who lack vision fail to define what they hope to
accomplish in terms that can ultimately be assessed.
 While mission is foundational, it is also insufficient
because, by its nature, it is extraordinarily difficult to
assess how we are doing by looking only at the mission.
 For this we need to stick our necks out and articulate “an
image of the future we seek to create.”
 Results-oriented leaders, therefore, must have both a
mission and a vision. Results mean little without purpose.
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Vision is intrinsic…
 Ultimately, vision is intrinsic not relative.
 It’s something you and your organization desire for its
intrinsic value, not because of where it stands you relative
to another. Relative visions may be appropriate in the
interim, but they will rarely lead to greatness.
 Nor is there anything wrong with competition.
Competition is one of the best structures yet invented by
humankind to allow each of us to bring out the best in each
other.
 But after the competition is over, after the vision has (or
has not) been achieved, it is the sense of purpose that
draws you further, that compels you to set a new vision.
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Now lets define your vision…
 Remember, a vision is a specific, future
destination.
 It’s your dream with a deadline.
 Therefore, the first thing we need to do is establish
a time frame that we want to look ahead.
 You will obviously choose the timeframe(s) that
best fits your specific vision, but for the sake of
this exercise, we are going to look out 5 years into
the future.
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Ask yourself such questions as…
 What big, audacious goal(s) do you want to try to achieve
in five years from now?
 What does success look like in five years?
 In five years time, how should your business be different
than it is now?
 Using your own metrics of success, what must you
accomplish in five years for you to consider yourself
successful?
 Right now, on a sheet of paper, write down your vision.
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Now review what you have written…
 Remember a vision should be a description of a specific
future destination.
 It should speak to what your future should be and to
what it shouldn’t be.
 It should excite the human imagination over a long
period of time.
 It should be bold, but there must be a belief that it can be
achieved.
 Remember: It’s not what the vision is, it’s what the
vision does.
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Finally, check your vision…
 Your vision should…
–
–
–
–
Urge continual change
Impel constant movement
Expand possibilities
Result in revolutionary change
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Having a vision is but one facet…
 Having a well-defined vision is not enough by itself to
transform an organization to greatness—an organization
must also have a good handle on its current reality.
 And so, defining the current reality of the situation in all of
its gory detail is equally important.
 It sets the stage for the future story that is about to unfold.
 Truly creative organizations use the gap between vision
and reality to generate energy for change.
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The formation of creative tension…
 If you have an intriguing and well-constructed vision that
excites the human imagination, there will be a gap between
your defined vision and your current reality.
 This gap is the source of creative energy that makes
achievement of the vision possible. This gap is called
creative tension.
 Having an accurate, insightful view of current reality is
therefore as important as having a clear vision.
 Unfortunately, most of us are in the habit of imposing
biases on our perceptions of current reality which destroys
much of the energy generated by creative tension.
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Leveraging the brutal facts of reality…
 All successful companies began the process of finding a path to
greatness by confronting the brutal facts of their current reality.
 When you start with an honest and diligent effort to determine
the truth of your situation, the right decisions often become selfevident.
 Once the vision is defined and compared with an accurate,
truthful map of current reality, the imagination cannot help but
to begin filling in the holes created by the gap—exploring
scenarios, generating possibilities, and testing new ideas.
 But as stated earlier, many more organizations are usually the
victim of an unrealistic view of current reality than the victim of
a poorly defined vision.
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Your current reality and situation…
 Right now, on a sheet of paper, write down a description of
your current reality.
 Make the description of your situation as truthful and vivid
as you can render it.
 Don’t hide any constraints that you believe might keep you
from achieving your vision.
 The truly creative organization knows that all creating is
achieved through working with constraints. Without
constraints there can be no creation.
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Forming Goals And Objectives
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What are goals and objectives?
 Goals are your definition of what success looks
like.
 Goals are your vision in miniature.
 They specify what work of your vision will get
done, by who, and by when.
 In effect, goals pose the question, “What will I
have to accomplish by the end of this year to
consider myself a success?”
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The purpose of goals and objectives…
 Objectives clarify what it is you are trying to accomplish in
specific, measurable goals.
 For an objective to be effective, it needs to be a welldefined target with quantifiable elements that are
measurable.
 Whereas your vision statement is expansive and idealistic,
and the mission short, powerful, and memorable, your
objectives are designed to focus your resources on
achieving specific results.
 The purpose of well-defined objectives is to cause
meaningful action.
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Types of objectives…
 There are many types of objectives and your plan
should include a wide-variety.
 For many businesses the two most important
categories will be the financial and marketing
objectives.
 It is important, however, to tailor your objectives
to cover the entire scope of your business,
focusing on the goals that are most critical to your
success.
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What targets will you aim for?
 Most objectives can be broken down into the
following general headings:
–
–
–
–
–
–
–
Financial
Marketing and Sales
Operations
Human Resources
Research & Development
Manufacturing
Personal
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What do you need to accomplish?

To create a solid objective you must:
1. Describe the activity required.
Example: Introduce new products…
2. Describe what will happen and when.
Example: a book by 6/30 and a CD-ROM by 8/15

You can then wordsmith these pieces into a
complete objective:
– Marketing Objective—Introduce a book by June 30th
and a CD-ROM by August 15th.
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What works and what doesn’t…
 Right: Obtain Oracle Named Account Status by
July 2003 and SunMicro key account status by
year end. (Measurable and easily understood)
 Wrong: Develop strategic marketing alliances
with key partners. (With who? and by when?)
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What works and what doesn’t…
 Right: Reduce overtime to maximum of 3%;
introduce 401k plan by June 30th; implement
recognition program by September 30th.
 Wrong: Increase employee morale.
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Expansive and intrinsic goals…
 Many world-class companies will not only set business and
operational goals for themselves, but also expansive goals as
well.
 Expansive goals are intrinsic and seek to set the standard
extremely high—based upon some subjective standard of
greatness.
 The premise of these goals is not about outrunning competitors
bent on reaching the same prize. Rather, it’s about having one’s
own view of what the prize is. There can be as many prizes as
runners—imagination is the only limiting factor.
 What distinguishes leaders from laggards, and greatness from
mediocrity, is the ability to uniquely imagine what could be.
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An expansive goal example…
 Bill Russell, the legendary center for the Boston Celtics
basketball team, used to keep his own personal scorecard.
 He graded himself after every game on a scale of one to one
hundred. In his career he never achieved more than sixty-five.
 Now, given the way most of us are taught to think about goals,
we would regard Russell as an abject failure. The poor soul
played in over 1,200 games and never achieved his standard.
 Yet, it was striving for that standard that made him arguably the
best basketball player ever. It’s not what the vision is, it’s what
the vision does.
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Developing your goals…
 Think back to your vision statement once again.
 If you recall, your vision statement looked five years into
the future toward a specific destination that you want to
arrive at.
 Next, read your current reality description that wrote.
 Now think about the activities you need to accomplish this
year in order to move from your current situation toward
that destination.
 Create 5 to 6 objectives that are critical to arriving at your
envisioned future.
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Example of well-defined goals…
 Vision: By 2005, 50% of all revenue will occur
through our own branded product line.
 One year objectives:
– Secure trademark and other intellectual property by
February 28th.
– Establish website with e-Commerce capabilities by
March 15th.
– Complete 8 products by the end December 31st.
– Secure 10 content licenses by October 1st.
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The Two Kinds Of Strategy
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What is strategy?
 People use the term “strategy” to describe one
thing, but it is actually a bundle of insights and
activities.
 There are fundamentally two kinds of strategy:
internal and external.
 The concept is so simple and obvious that most
managers and entrepreneurs simply overlook it.
 And yet, few managers or entrepreneurs are taught
to craft strategy with these insights in mind.
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Why internal and external strategy?
 The reason why internal and external strategy exist is
based on the rules of the game of business itself.
 By definition, in order to fulfill a need or want, there must
be an organization and a customer so that an exchange of
value can take place.
 But each of these players in the game is seeking something
different and operating under different rule-sets.
 Therefore, creating only an internal or external strategy
(but not both) ignores the very definition of a business
transaction and allows you to only look on one side of the
equation.
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Thinking of the two independently…
 If internal and external strategy are not thought of
independently, you can not appreciate the fact that
they are…
–
–
–
–
–
Created differently,
Using a fundamentally different approach,
Leveraging different resources,
Focusing on different aspects, and
Resulting in completely different outcomes.
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The two kinds of strategy…
Internal
External
Created…
Inside-out
Outside-in
Fundamental
Approach…
Creative
Strategic
Leverages…
Assets
Communications
Focus…
Organization
Customer
Desired Result…
Innovation
Positioning
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Resolving the apparent conflict…
 The existence of both internal and external strategy begins
to explain why so many business books and consultants
seem to contradict one another when talking about strategy.
 One school of thought says that you need to begin with
your organizational vision and work outwards, while
others state that you need to instead begin with the
customer and work backwards.
 This paradox is resolved when you recognize that each
school is simply describing either internal or external
strategy. And since both kinds of strategy are created
differently, it makes for what appears to be a contradiction.
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The kind of problem you are solving…
 The most common strategic planning mistake is made when you
don’t understand the kind of problem you are working on.
 In most planning sessions, little regard is given to the whether
the organization is currently crafting internal or external
strategy—it all gets blended together.
 But internal and external strategy are different kinds of
problems requiring different solutions solved through different
means.
 Once you understand this basic assumption you will begin to see
more clearly what to focus on, what approaches are available to
you, and what outcomes to expect.
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An integrated system…
 The fact is your organization must think about and craft
both types of strategy.
 You must understand how each kind of strategy is created,
what makes it different, and what the desired results should
be.
 External strategy follows internal strategy the way the left
foot follows the right foot in walking.
 In effect, both kinds of strategy support the organization as
well as each other. Each precedes the other, and follows it,
except when the two move together, as the organization
jumps to a new position.
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The feet metaphor…
 If mission and vision are like your eyes that come
together in making one in sight, then…
 Internal and external strategy are like your feet
moving you forward, backward, or sideways.
 Each is again independent of the other, however,
they work together in a complex system constantly
reinforcing each other and playing-off one another
in creating movement.
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Crafting Internal Strategy
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What is internal strategy?





Internal strategy is created from the inside-out.
Its fundamental approach is internal and creative.
It leverages assets as part of the creative process.
Its primary focus is upon your organization.
The desired result of successful internal strategy is
innovation and the creation of new wealth.
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Strategy inside-out…
 Internal strategy is best summed up by Jim Collins, author of the book
Built To Last, when he stated:
– “If you did a word search across my research materials on the
greatest company builders of the past 100 years, you would find
almost no mention of “competitive strategy.” Not that those
builders had no strategy; they clearly did. But they did not craft
their strategies principally in reaction to the competitive landscape
or in response to external conditions. Without question, they kept
a wary eye on the brutal facts of reality. The fundamental drive to
transform and build their companies was internal and creative.”
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Crafting your organization…
 The philosophy of internal strategy is to think of your
organization as the ultimate creation—as if being crafted like a
lump of clay on a potter’s wheel.
 You are the craftsman and your organization is your clay and,
like the potter, you sit between a past of (organizational)
capabilities and a future of (market) opportunities.
 It involves the constant and systematic application of the
principles of creation, preservation, and destruction.
 As with any craft, formulation and implementation merge into a
fluid process of learning through which creative strategies
evolve.
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The three acts of internal strategy…
 Creation is about the deliberate conception of new
ideas, thinking, and assets.
 Preservation is about remembering, infrastructure,
and consistency.
 Destruction is about getting rid of the old and the
obsolete—whether it be hard assets or the soft
concepts of ideas—and freeing up these resources
for the creation of new wealth.
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Internal strategy is an understanding…
 Your internal strategy is not a goal to be the best,
an intention to be the best, or a plan to be the best.
 It is a fundamental understanding of what you can
be the best at. This distinction is absolutely
critical.
 It comes from a particular state of mind rather
than some routine process.
 And that mindset concerns clock-building rather
than just time-telling.
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Good versus great…
 The essential strategic difference between “great”
companies and the good, lay in two fundamental
distinctions.
 First, great companies build their strategies on deep
understanding of:
– What they are passionate about,
– What they can be best in the world at, and
– What drives their economic engine.
 Second, great companies translate that understanding into a
simple, crystalline concept that guides all their efforts.
 Jim Collins calls this concept the “hedgehog concept.”
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The power of knowing one big thing…
 In his famous essay, “The Hedgehog and the Fox,” Isaiah
Berlin divided the world into hedgehogs and foxes, based
upon an ancient Greek parable: “The fox knows many
things, but the hedgehog knows one big thing.”
 These words may mean nothing more than the fox, for all
his cunning, is defeated by the hedgehog’s one defense.
 From this parable it can be extrapolated that all companies
can be separated as either foxes or hedgehogs.
 The question is which is your company.
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Is your company a hedgehog?
 Hedgehogs simplify a complex world into a single
organizing principle.
 They leverage a single, universal, organizing principle in
which all that they are and say has significance.
 They use this principle as their frame of reference when
making any and all decisions.
 They understand that the essence of profound insight is
simplicity.
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Some sample hedgehog concepts…
 Sam Walton, Wal-Mart: Serving small, out-ofthe-way, rural towns.
 Michael Dell, Dell Computer: Sell computer,
then build computer.
 Howard Schultz, Starbucks: The concept of the
third place—it’s not work, it’s not home.
 Steve Jobs, Apple Computer: The computer for
the rest of us.
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Or is your company a fox?
 Foxes, on the other hand, pursue many ends, often
unrelated and even contradictory.
 They see the world in all of its complexity.
 Their thought is scattered and confused, moving
on many levels—never integrating their thinking
into one overall concept or unifying vision.
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The hedgehog’s internal strategy…
 Hedgehogs use their single organizing principle as the lens
in which they make all decisions regarding the assets they
create, preserve, and abandon.
 This is not something that will come during the course of
an afternoon planning session—deep understanding never
does.
 But you must constantly be aware of the concept of your
“one big thing” as you discover the necessary insights
along the way.
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Hedgehog questions to ask yourself…
 Your hedgehog concept needs to be run through the
following test:
– Are we passionate about it?
– Can we be best in the world at it?
– Is there a sufficient economic engine to drive it?
 Now ask yourself the following questions:
– What are the things that we are currently engaged in right now that
fail the above test?
– What are things that we are already doing that meet the test that we
should continue to do?
– What are things that we are not doing that meet the test that we
should seriously consider doing?
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The generic internal strategies…
 In a very general sense, there are only a few
generic internal strategies you can employ.
 You can:
–
–
–
–
Create new assets
Leverage the assets of another
Buy new assets
Abandon old assets
 Of course, the imagination can dream up an
infinite combination of these strategies.
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Broadening and coordinating assets…
 The transition of a fledgling business into a growing
enterprise requires a fundamental transformation rather
than a simple scaling up.
 Building a large and enduring company requires a
considerable broadening of the company’s assets and the
establishment of effective mechanisms to coordinate those
assets.
 As for their asset mix, quickly growing businesses have a
broad and well-coordinated portfolio of products,
relationships, know-how, and other such assets that allow
them to profitably compete in large markets.
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Not just hard assets, but soft ones…
 Most companies know how to leverage traditional hard
assets such as equipment, real estate, and so forth.
 But these represent only a fraction of the capabilities and
advantages that companies have at their disposal.
 Every organization has numerous “hidden” assets that may
include unique customer access or relationships, technical
know-how, an installed base of equipment, a window on
the market, a network of relationships, information, or a
loyal user-community.
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Asset-based questions…
 Think a moment about your vision and from an
internal and creative perspective ask yourself:
–
–
–
–
What old assets will we abandon?
What new assets will will create?
What assets can we leverage within our network?
What assets should we buy?
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Internal strategy review…
 When crafting your internal strategy remember:
–
–
–
–
How:
Who:
What:
Result:
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Inside-out, Creative
Organization
Assets
Innovation
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Crafting External Strategy
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What is external strategy?
 External strategy is about your approach to
communications.
 It is built from the outside-in—from the customer
backwards.
 Positioning theory provides the body of
knowledge for crafting this type of strategy.
 Its focus is purely strategic as opposed to the
creative orientation of internal strategy.
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The origins of positioning…
 In their 1981 book, Positioning: The Battle for your Mind,
Al Ries and Jack Trout describe how positioning is used as
a communication tool to reach target customers in a
crowded marketplace.
 Not long thereafter, Madison Avenue advertising
executives began to develop positioning slogans for their
clients and positioning became a key aspect of marketing
communications.
 While positioning begins with a product, it’s not what you
do to a product.
 Positioning is what you do to the mind of the customer.
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Why positioning?
 Ries and Trout explain that the concept is really about
positioning a product in the mind of the customer. Strategy
is therefore planned in the mind, not the marketplace.
 Marketing then becomes a battle of perception not
products.
 This approach is needed because consumers are
bombarded with a continuous stream of high-volume
advertising.
 The consumer's mind reacts to this high volume of
advertising by accepting only what is consistent with prior
knowledge or experience.
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The positioning strategies…
 In a very general sense, there are only a few
generic external positioning strategies you can
employ:
– Getting into the mind first—finding the niche,
– Positioning yourself to the leader, or
– Repositioning the competition.
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The importance of being first…
 The easiest way of getting into the mind is to be first.
 As proof of this concept, answer these questions:
– Who was the first person to fly solo across the North Atlantic?
Charles Lindbergh, right? Who was second?
– Who was the first person to walk on the moon? Neil Armstrong,
of course. Who was second?
– What’s the highest mountain in the world? Mount Everest in the
Himalayas, right? What’s the second highest?
– What’s the largest-selling book ever published? The Bible, of
course. And the second largest selling book? Who knows?
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The easy way into the mind…
 It is very easy to remember who is first, and much more
difficult to remember who is second.
 Even if the second entrant offers a better product, the first
mover has a large advantage that can make up for other
shortcomings.
 However, all is not lost for products that are not the first—
it’s not about being first physically to the marketplace.
 By being the first to claim a unique position in the mind of
the consumer, a firm effectively can cut through the noise
level of other products.
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Finding your unoccupied position…
 If a product is not going to be first, it then must
find an unoccupied position in which it can be
first.
 At a time when larger cars were popular,
Volkswagen introduced the Beetle with the slogan
"Think small.”
 Volkswagen was not the first small car, but they
were the first to claim that position in the mind of
the consumer.
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Positioning to a leader…
 Consumers rank brands in their minds. If a brand is not number
one, then to be successful it somehow must relate itself to the
number one brand.
 A campaign that pretends that the market leader does not exist is
likely to fail. Avis tried unsuccessfully for years to win
customers, pretending that the number one Hertz did not exist.
Finally, it began using the line, "Avis is only No. 2 in rent-acars, so why go with us? We try harder."
 For 13 years in a row Avis lost money. After the campaign, Avis
quickly became profitable. Whether Avis actually tried harder
was not relevant to their success. Rather, consumers finally were
able to relate Avis to Hertz, which was number one in their
minds.
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You must own your space…
 Remember, you must own your niche and own it
outright. No one else can occupy your space.
 If you can’t own it, especially from a marketing
expenditure outlay, then decrease the size of niche
until you can.
 If somebody else occupies your chosen space you
must try to reposition them.
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Repositioning the competition…
 Sometimes there are no unique positions to carve out. In
such cases, Ries and Trout suggest repositioning a
competitor by convincing consumers to view the
competitor in a different way.
 Repositioning a competitor is different from comparative
advertising. Comparative advertising seeks to convince the
consumer that one brand is simply better than another.
Consumers are not likely to be receptive to such a tactic.
 Tylenol successfully repositioned aspirin by running
advertisements explaining the negative side effects of
aspirin.
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Tylenol burst the aspirin bubble…
 “For the millions who should not take aspirin. If your
stomach is easily upset…or you have an ulcer…or you
suffer from asthma, allergies, or iron-deficiency anemia, it
would make sense to check with your doctor before you
take aspirin. Aspirin can irritate the stomach lining, trigger
asthmatic or allergic reactions, cause small amounts of
hidden gastrointestinal bleeding. Fortunately, there is
Tylenol…”
 Sixty words of ad copy before any mention of the
advertiser’s product.
 Sales of Tylenol took off. Today, Tylenol is the No. 1
brand of analgesic.
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Repositioning Stoli’s Competition…
 Consumers tend to perceive the origin of a product by its
name rather than reading the label to find out where it
really is made.
 Such was the case with vodka when most vodka brands
sold in the U.S. were made in the U.S. but had Russian
names.
 Stolichnaya Russian vodka successfully repositioned its
Russian-sounding competitors by exposing the fact that
they all actually were made in the U.S. (by listing the cities
they were produced in) and that Stolichnaya was made in
Leningrad, Russia.
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Repositioning Pringles…
 When Pringle's new-fangled potato chips were introduced,
they quickly gained market share.
 However, Wise potato chips successfully repositioned
Pringle's in the mind of consumers by listing some of
Pringle's non-natural ingredients that sounded like harsh
chemicals, even though they were not.
 Wise potato chips of course, contained only "Potatoes.
Vegetable oil. Salt.”
 As a result of this advertising, Pringle's quickly lost market
share, with consumers complaining that Pringle's tasted
like cardboard, most likely as a consequence of their
thinking about all those unnatural ingredients.
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The United States of Columbus?
 As every school child knows, the man who discovered America
was poorly rewarded for his efforts. Christopher Columbus
made the mistake of looking for gold and keeping his mouth
shut.
 Amerigo Vespucci didn’t. Amerigo was 5 years behind
Columbus. But he did two things right.
 First, he positioned the “New World” as a separate continent,
totally distinct from Asia. Second, he wrote extensively of his
discoveries. Both brilliant external strategies.
 As a result, Europeans credited Amerigo Vespucci with the
discovery of Amercia and named the place after him.
 Columbus died in jail.
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Other positioning examples…
 Other positions that firms successfully have
claimed include:
–
–
–
–
–
–
age (Geritol)
high price (Mobil 1 synthetic engine lubricant)
gender (Virginia Slims)
time of day (Nyquil night-time cold remedy)
place of distribution (L'eggs in supermarkets)
quantity (Schaefer - "the one beer to have when you're
having more than one.")
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You must begin with the customer…
 All successful external strategies must start with the mind
of the consumer and then work backward.
 This is true because the answer is not contained within the
product or service itself.
 No amount of creative thinking or analysis will result in
the insights needed to successfully position your company,
product, or service.
 The answer rests instead in the mind of your customer.
You must begin with what’s already there and then work
backwards—outside-in—to create your external strategy.
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To create your external strategy…
 Ask yourself, “What position do I own now?”
 External strategy is thinking in reverse. Instead of starting
with yourself, you start with the mind of the prospect.
 Instead of asking what you are, you ask what position you
already own in the mind of the prospect.
 Changing minds in our over-communicated society is an
extremely difficult task. It’s much easier to work with
what’s already there.
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What position do you want to own?
 Next, ask yourself, “What position do I want to
own?”
 Ask yourself, “How can I be the first to claim a
unique position in the mind of my customer.”
 Here is where you try to figure out the best
position to own from a long-term perspective.
 “Own” is the key word. Too many programs set
out to communicate a position that is impossible to
preempt because someone else already owns it.
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External strategy review…
 When crafting your external strategy remember:
–
–
–
–
How:
Who:
What:
Result:
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Outside-in, Strategic
Customer
Communications
Positioning
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Presenting Strategy As Story
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Presenting a strategy…
 The methods, craft, and techniques by which you present a
strategy are different from those used to create it.
 Contrary to conventional wisdom, PowerPoint
presentations, statistics, and rational argument-style
methods are not the most effective ways to communicate
your strategic plan.
 Entrepreneurial leaders know the best way to engage
listeners on a whole new level is to toss the rational,
statistical presentations and learn to tell good stories
instead.
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The importance of persuasion…
 Persuasion is the centerpiece of business activity.
 Customers must be convinced to buy your company’s
products or services, employees and colleagues to go along
with a new strategic plan or reorganization, investors to
buy (or not to sell) your stock, and partners to sign the next
deal.
 But despite the critical importance of persuasion, most
entrepreneurs struggle to communicate, let alone inspire.
 Even the most carefully researched and considered efforts
are routinely greeted with cynicism, lassitude, or outright
dismissal.
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Persuasion using rhetoric…
 A big part of an entrepreneur’s job is to motivate people to reach
certain goals.
 To do that, he or she must engage their emotions, and the key to
their hearts is story.
 There are two ways to persuade people. The first is by using
conventional rhetoric, which is what most business people are
trained in.
 It’s an intellectual process, and in the business world it usually
consists of a PowerPoint slide presentation in which you say,
“Here is our company’s biggest challenge, and here is what we
need to do to prosper.” And you build your case by giving
statistics and facts and quotes from authorities.
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The problem with rhetoric…
 But there are two problems with rhetoric.
 First, the people you’re talking to have their own
set of authorities, statistics, and experiences.
While you’re trying to persuade them, they are
arguing with you in their heads.
 Second, if you do succeed in persuading them,
you’ve done so only on an intellectual basis.
That’s not good enough, because people are not
inspired to act by reason alone.
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The other way to persuade…
 The other way to persuade people—and ultimately
a much more powerful way—is by uniting an idea
with an emotion.
 The best way to do that is by telling a compelling
story.
 In a story, you not only weave a lot of information
into the telling but you also arouse your listener’s
emotions and energy.
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Harnessing the imagination…
 Persuading with a story is hard.
 Any intelligent person can sit down and make lists. It takes
rationality but little creativity to design an argument using
conventional rhetoric.
 But it demands vivid insight and storytelling skill to
present an idea that packs enough emotional power to be
memorable.
 If you can harness imagination and the principles of a welltold story, then you get people rising to their feet amid
thunderous applause instead of yawning and ignoring you.
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What is a story?
 Essentially, a story expresses how and why life changes.
 It begins with a situation in which life is relatively in balance:
You come to work day after day, week after week, and
everything’s fine. You expect it will go on that way.
 But then there’s an event—in screenwriting, this event is called
the “inciting incident”—that throws life out of balance.
 You get a new job, or the boss dies of a heart attack, or a big
customer threatens to leave. The story goes on to describe how,
in an effort to restore balance, the protagonist’s subjective
expectations crash into an uncooperative objective reality.
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Dealing with opposing forces…
 A good storyteller describes what it’s like to deal
with these opposing forces, calling on the
protagonist to dig deeper, work with scarce
resources, make difficult decisions, take action
despite risks, and ultimately discover the truth.
 All great storytellers since the dawn of time—
from the ancient Greeks through Shakespeare and
up to the present day—have dealt with this
fundamental conflict between subjective
expectation and cruel reality.
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Humans want stories…
 Stories have been implanted in you thousands of times since your
mother took you on her knee. You’ve read good books, seen
movies, attended plays.
 What’s more, human beings naturally want to work through stories.
 Cognitive psychologists describe how the human mind, in its
attempt to understand and remember, assembles the bits and pieces
of experience into a story, beginning with a personal desire, a life
objective, and then portraying the struggle against the forces that
block that desire.
 Stories are how we remember; we tend to forget lists and bullet
points.
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Telling strategic stories…
 Businesspeople not only have to understand their
companies’ past, but then they must project the future.
 And how do you imagine the future? As a story.
 You create scenarios in your head of possible future events
to try to anticipate the life of your company or your own
personal life.
 So, if a businessperson understands that his or her own
mind naturally wants to frame experience in a story, the
key to moving an audience is not to resist this impulse but
to embrace it by telling a good story.
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What makes a good story?
 You emphatically do not want to tell a beginning-to-end
tale describing how results meet expectations.
 This is boring and banal. Instead, you want to display the
struggle between expectation and reality in all its nastiness.
 For example:
– Let’s imagine the story of a biotech start-up we’ll call Chemcorp,
whose CEO has to persuade some Wall Street bankers to invest in
the company. He could tell them that Chemcorp has discovered a
chemical compound that prevents heart attacks and offer up a lot of
slides showing them the size of the market, the business plan, the
organizational chart, and so on. The bankers would nod politely
and stifle yawns while thinking of all the other companies better
positioned in Chemcorp’s market.
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The alternative pitch…
 Alternatively, the CEO could turn his pitch into a story,
beginning with someone close to him—say, his father—
who died of a heart attack.
 So nature itself is the first antagonist that the CEO-asprotagonist must overcome.
 The story might unfold like this:
– In his grief, he realizes that if there had been some chemical
indication of heart disease, his father’s death could have been
prevented. His company discovers a protein that’s present in the
blood just before heart attacks and develops an easy-to-administer,
low-cost test.
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The story continues…
 But now Chemcorp faces a new antagonist: the FDA. The
approval process is fraught with risks and dangers.
 The FDA turns down the first application, but new research
reveals that the test performs even better than anyone had
expected, so the agency approves a second application.
 Meanwhile, Chemcorp is running out of money, and a key
partner drops out and goes off to start his own company.
Now Chemcorp is in a fight-to-the-finish patent race.
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The resolution…
 This accumulation of antagonists creates great suspense. The
protagonist has raised the idea in the bankers’ heads that the
story might not have a happy ending.
 By now, he has them on the edges of their seats, and he says,
“We won the race, we got the patent, we’re poised to go public
and save a quarter-million lives a year.”
 And the bankers just throw money at him.
 Screenwriting coach Robert McKee can attest to these results:
“I know that the storytelling method works, because after I
consulted with a dozen corporations whose principals told
exciting stories to Wall Street, they all got their money.”
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Character versus characterization…
 Characterization is the sum of all observable qualities of a
person or organization…but it’s not character.
 Beneath the surface of characterization, regardless of
appearances, character answers the question: Who is the
organization?
 The only way to know the truth is to witness it making
choices under pressure to take one action or another in the
pursuit of its desire.
 Pressure is essential. Choices made when nothing is at risk
mean little.
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Business presentations and character…
 Most business presentations and business plans only present the
characterization of an organization. For Example:
– Chemcorp is a multinational manufacturer of pharmaceutical-based
chemical products with revenues of $1.8 billion. This is strictly
characterization or boring, rational description.
– Character, on the the other hand, would explain what Chemcorp
would do when it discovers that a drug it has developed for “river
blindness” was not going to be paid for by the government or other
third party. It must make a choice under pressure.
 This was exactly the dilemma faced by pharmaceutical-maker
Merck after it had developed Mectizan. Merck chose to give the
drug away free to all who needed it—at its own expense—this is
character.
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Positioning your problems upfront…
 If entrepreneurs would take the time to psychoanalyze their
companies, amazing dramas pour out.
 But most companies and entrepreneurs sweep the dirty
laundry, the difficulties, the antagonists, and the struggle
under the carpet.
 They prefer to present a rosy—and boring—picture to the
world. But as a storyteller, you want to position the problems
in the foreground and then show how you’ve overcome them.
 When you tell the story of your struggles against real
antagonists, your audience sees you as an exciting, dynamic
person.
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The problems of a positive picture…
 The problem with a positive picture is it doesn’t ring true.
 You can send out a press release talking about increased
sales and a bright future, but your audience knows it’s
never that easy.
 They know you’re not spotless; they know your competitor
doesn’t wear a black hat. They know you’ve slanted your
statement to make your company look good.
 Positive, hypothetical pictures and boilerplate press
releases can actually work against you because they
foment distrust among the people you’re trying to
convince.
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How to discover your strategic story…
 The storyteller discovers a story by asking certain
key questions.
 First, what does my protagonist want in order to
restore balance in his or her life?
 Desire is the blood of a story.
 Desire is not a shopping list but a core need that, if
satisfied, would stop the story in its tracks.
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Think about the antagonists…
 Next, ask what is keeping my protagonist from
achieving his or her desire?
 Forces within? Doubt? Fear? Confusion? Social
conflicts arising in the various institutions in
society? Physical conflicts? Not enough time to
get things done?
 Antagonists come from people, society, time,
space, and every object in it, or any combination
of these forces at once.
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The choices made under pressure…
 Next, ask how would my protagonist decide to act in order
to achieve his or her desire in the face of these antagonistic
forces?
 It’s in the answer to that question that storytellers discover
the truth of their characters, because the heart of a human
being is revealed in the choices he or she makes under
pressure.
 Finally, the storyteller leans back from the design of events
he or she has created and asks, “Do I believe this? Is it
neither an exaggeration nor a soft-soaping of the struggle?
Is this an honest telling, though heaven may fall?”
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The craft of story…
 Designing story tests the maturity and insight of the writer,
his knowledge of society, nature, and the human heart. Story
demands both vivid imagination and powerful analytic
thought.
 All stories must have a form, but form does not mean
formula. Story is too rich in mystery, complexity, and
flexibility to be reduced to a formula.
 There is no magic formula for you to use in crafting a story to
present your strategic plan—there is only craft.
 A wonderful book about this craft is Robert McKee’s Story:
Substance, Style, and the Principles of Screenwriting.
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The Secrets Of Organizing Genius
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The importance of execution…
 Having a strategic plan is one thing, but the other
half of the equation is of course the
implementation of the plan.
 For the entrepreneur, implementation is at least as
important as the development of a sound strategy.
 Indeed for many entrepreneurial firms, superior
execution can be the strategy.
 The next two sections examine what the best
entrepreneurs know about strategic execution.
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The myth of the lone hero…
 There is a strong individualist bent in American culture.
 The myth of the triumphant individual is deeply ingrained
in the American psyche.
 Whether it is midnight rider Paul Revere or basketball’s
Michael Jordan, we are a nation enamored of heroes.
 But the more you look at the history of business,
government, the arts, and the sciences, the clearer it is that
few great accomplishments are ever the work of a single
individual.
 Our mythology refuses to catch up with our reality.
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Consider your own perceptions…
 Who painted the ceiling of the Sistine Chapel?
The famous Renaissance artist Michelangelo
right?
 Actually, this misconception is a result of our
individualist cultural mythology.
 We know now from historical accounts that
Michelangelo actually worked with a group of 13
artists in painting the ceiling of the Sistine Chapel.
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The dark side to American ideology…
 Our mythology continues to promote the triumphs of the
great individual at the expense of the great group or team.
 But the group is the vehicle how the world actually gets
changed today.
 In a society as complex and technologically sophisticated
as ours, the most urgent projects require the coordinated
contributions of many talented people.
 There are simply too many problems to be identified and
solved—too many connections to be made for any one
person to deal with.
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The need for organizing genius…
 Even as we make the case for collaboration, we resist the idea of
collective creativity. But many great entrepreneurs throughout
history have understood the limitations and dark-side of the hero
mythology.
 Instead, they have systematically organized genius and the
power of great groups in getting their visions brought to life.
 And this is the precise skill and discipline you must practice if
you expect to bring your strategic plan to life.
 Your only chance is to bring people together from a variety of
backgrounds and disciplines who can refract a problem through
the prism of complementary minds allied in common purpose.
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The secrets of great groups…
 In order to study how great groups work, Warren Bennis in
his book, Organizing Genius: The Secrets of Creative
Collaboration, studied some of the most noteworthy of our
time, including:
– the Manhattan Project, the paradigmatic Great Group that invented
the atomic bomb;
– the computer revolutionaries at Xerox's Palo Alto Research Center
(PARC) and at Apple Computer, whose work led to the Macintosh
and other technical breakthroughs;
– the Lockheed Skunk Works, which pioneered the fast, efficient
development of top-secret aircraft; and
– the Walt Disney Studio animators.
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The 10 principles of great groups…
 Every great group is extraordinary in its own way, but a
study put forth by Bennis suggests 10 principles common
to all—and that apply as well to their larger organizations.
 These principles not only define the nature of Great
Groups, they also redefine the roles and responsibilities of
leaders.
 To be sure, Great Groups rely on many long-established
practices of good management—effective communication,
exceptional recruitment, genuine empowerment, and
personal commitment.
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A shared dream…
 At the heart of every Great Group is a shared
dream.
 All Great Groups believe that they are on a
mission from God, that they could change the
world, make a dent in the universe.
 They are obsessed with their work. It becomes not
a job but a fervent quest.
 That belief is what brings the necessary cohesion
and energy to their work.
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They manage conflict…
 They manage conflict by abandoning individual egos to the
pursuit of the dream.
 At a critical point in the Manhattan Project, George
Kistiakowsky, a great chemist who later served as Dwight
Eisenhower's chief scientific advisor, threatened to quit
because he couldn't get along with a colleague.
 Project leader Robert Oppenheimer simply said, “George,
how can you leave this project? The free world hangs in
the balance.”
 So conflict, even with these diverse people, is resolved by
reminding people of the mission.
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They are protected from the "suits…”
 All Great Groups seem to have disdain for their corporate overseers
and all are protected from them by a leader—not necessarily the
leader who defines the dream. This “dual administration” can be
found in all great groups.
 In the Manhattan Project, for instance, General Leslie Grove kept the
Pentagon brass happy and away, while Oppenheimer kept the group
focused on its mission.
 At Xerox PARC, Bob Taylor kept the honchos in Connecticut
(referred to by the group as "toner heads") at bay and kept the group
focused.
 Kelly Johnson got himself appointed to the board of Lockheed to help
protect his Skunk Works. In all cases, physical distance from
headquarters helped.
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They have a real or invented enemy…
 Even the most noble mission can be helped by an onerous
opponent.
 That was literally true with the Manhattan Project, which had
real enemies—the Japanese and the Nazis.
 Yet most organizations have an implicit mission to destroy an
adversary, and that is often more motivating than their explicit
mission.
 During their greatest years, for instance, Apple Computer's
implicit mission was, Bury IBM. (The famous 1984 Macintosh
TV commercial included the line, "Don't buy a computer you
can't lift.") The decline of Apple follows the subsequent
softening of their mission.
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They see themselves as the winning
underdogs….
 All successful entrepreneurs inevitably view
themselves as the feisty David, hurling fresh ideas
at the big, backward-looking Goliath.
 World-changing groups are usually populated by
mavericks, people at the periphery of their
disciplines.
 The sense of operating on the fringes gives them a
don't-count-me-out scrappiness that feeds their
obsession.
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Members pay a personal price…
 Membership in a Great Group isn't a day job; it is a night
and day job.
 Divorces, affairs, and other severe emotional fallout are
typical, especially when a project ends.
 At the Skunk Works, for example, people couldn't even tell
their families what they were working on. They were
located in a cheerless, rundown building in Burbank, of all
places, far from Lockheed's corporate headquarters and
main plants.
 So groups strike a Faustian bargain for the intensity and
energy that they generate.
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Great Groups make strong leaders…
 On one hand, they're all nonhierarchical, open, and very
egalitarian.
 Yet they all have strong leaders. That's the paradox of
group leadership.
 You cannot have a great leader without a Great Group—
and vice versa. In an important way, these groups made the
leaders great.
 The leaders studied were seldom the brightest or best in the
group, but neither were they passive players. They were
connoisseurs of talent, more like curators than creators.
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The product of meticulous recruiting…
 It took Oppenheimer to get a Kistiakowsky and a Niels
Bohr to come to his godforsaken outpost in the desert.
 Cherry-picking the right talent for a group means knowing
what you need and being able to spot it in others. It also
means understanding the chemistry of a group.
 Candidates are often grilled, almost hazed, by other
members of the group and its leader. You see the same
thing in great coaches. They can place the right people in
the right role. And get the right constellations and
configurations within the group.
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Great Groups are usually young…
 The average age of the physicists at Los Alamos was about
25. Oppenheimer—"the old man“—was in his 30s.
 Youth provides the physical stamina demanded by these
groups. But Great Groups are also young in their spirit,
ethos, and culture.
 Most important, because they're young and naive, group
members don't know what's supposed to be impossible,
which gives them the ability to do the impossible.
 As Berlioz said about Saint-Saens, "He knows everything;
all he lacks is inexperience." Great Groups don't lack the
experience of possibilities.
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Getting the right people on the bus…
 In a similar way, research into what transforms good
companies into great companies conducted by
management author Jim Collins in his book, Good To
Great, found many similar group characteristics as
compared to what Warren Bennis found.
 Collins used the metaphor of getting the right people on
the bus and in the right seats (and the wrong people off the
bus).
 And only then did the good-to-great companies figure out
where they wanted to drive it.
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Start with who, then ask what…
 In working with your vision, if you begin with “who,” rather
than “what,” you can more easily adapt to a changing world. If
people join the bus primarily because of where it is going, what
happens if you get ten miles down the road and you need to
change direction? You’ve got a problem.
 But if people are on the bus because of who else is on the bus,
then it’s much easier to change direction: “Hey, I got on this bus
because of who else is on it; if we need to change direction to be
more successful, fine with me.”
 If you have the wrong people, it doesn’t matter whether you
discover the right direction; you still won’t have a great
company. Great vision without great people is irrelevant.
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The entrepreneurial leader…
 In the end, the single job of the entrepreneurial
leader is to instill effort with meaning.
 There are essentially three realms available to the
leader in creating such meaning and purpose:
– The realm of facts,
– The realm of emotion, and
– The realm of symbols.
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The realm of facts…
 The questions an entrepreneur needs to address
concerning the realm of facts include:
– What are the brutal facts of reality?
– What is your ideology? What school of thought do you
subscribe? What school are you attending?
– How will you excite the human intellect?
– What is your vision?
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The realm of emotion…
 The questions an entrepreneur needs to address
concerning the realm of emotion include:
– What is your purpose or mission?
– How will you create emotional resonance through the
unification of an idea with an emotion?
– What enemy are you combating and, as the underdog,
how will you win?
– How will you excite the human imagination?
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The realm of symbols…
 The questions an entrepreneur needs to address
concerning the realm of symbols include:
– What iconography have you chosen?
– How have you symbolically chosen to represent your
meaning?
– What metaphors describe your meaning and purpose?
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Tipping Point Execution
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The principles of strategic execution…
 How can you catapult your organization to high
performance when time and money are scarce?
 Police chief Bill Bratton has pulled that off again and again
through a method called “Tipping Point Leadership.”
 What makes Bratton’s turnarounds especially exciting to
us is that his approach to overcoming the hurdles standing
in the way of high performance has been remarkably
consistent.
 His successes, therefore, are not just a matter of
personality but also of method, which suggests that they
can be replicated. Tipping point leadership is learnable.
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Bratton’s background…
 In February 1994, William Bratton was appointed police
commissioner of New York City.
 The odds were against him. The New York Police
Department, with a $2 billion budget and a workforce of
35,000 police officers, was notoriously difficult to manage.
 Crime had gotten so far out of control that the press
referred to the Big Apple as the Rotten Apple.
 Indeed, many social scientists had concluded, after three
decades of increases, that New York City crime was
impervious to police intervention. The best the police
could do was react to crimes once they were committed.
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An incredible turn-around…
 In less than two years, and without an increase in his budget,
Bill Bratton turned New York into the safest large city in the
nation.
 Between 1994 and 1996, felony crime fell 39%; murders, 50%;
and theft, 35%. Gallup polls reported that public confidence in
the NYPD jumped from 37% to 73%.
 Perhaps most impressive, the changes have outlasted their
instigator, implying a fundamental shift in the department’s
organizational culture and strategy.
 Statistics released in December 2002 revealed that New York’s
overall crime rate is the lowest among the 25 largest cities in the
United States.
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The tipping point…
 The NYPD turnaround would be impressive enough for
any police chief. For Bratton, though, it is only at the
latest of no fewer than five successful turnarounds in a 20year career in policing.
 All of Bratton’s turnarounds are textbook examples of
tipping point leadership.
 The theory of tipping points is well known; it hinges on the
insight that in any organization, once the beliefs and
energies of a critical mass of people are engaged,
conversion to a new idea will spread like an epidemic,
bring about fundamental change very quickly.
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A four-step approach…
 Tipping point leadership involves a four-step
approach:
–
–
–
–
Break through the cognitive hurdle
Sidestep the resource hurdle
Jump the motivational hurdle
Knock over the political hurdle
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Break through the cognitive hurdle…
 In many turnarounds, the hardest battle is simply
getting people to agree on the causes of current
problems and the need for change.
 Most entrepreneurs try to make the case for
change simply by pointing to the numbers and
insisting that the company achieve better ones.
 But messages communicated through numbers
seldom stick.
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Not by numbers, but face-to-face…
 Tipping point leaders like Bratton do not rely on numbers
to break through the organization’s cognitive hurdles.
 Instead, they put their key managers face-to-face with the
operational problems so that the managers cannot evade
reality.
 Poor performance becomes something they witness rather
than hear about.
 Communicating in this way means that the message—
performance is poor and needs to be fixed—sticks with
people, which is essential if they are to be convinced that it
is something they can achieve.
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The Transit Police case…
 When Bratton first went to New York to head the transit
police in April 1990, he discovered that none of the senior
staff officers rode the subway.
 They commuted to work and traveled around in cars
provided by the city.
 Comfortably removed from the facts of underground life—
and reassured by statistics showing that only 3% of the
city’s major crimes were committed in the subway—the
senior managers had little sensitivity to riders’ widespread
concern about safety.
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The Transit Police case…
 In order to shatter the staff’s complacency, Bratton began
requiring that all transit police officials—beginning with
himself—ride the subway to work, to meetings, and at night.
 It was many staff officers’ first occasion in years to share the
ordinary citizen’s subway experience and see the situation their
subordinates were up against: jammed turnstiles, aggressive
beggars, and gangs of youths jumping turnstiles.
 It was clear that even if few major crimes took place in the
subway, the whole place reeked of fear and disorder. With that
ugly reality staring them in the face, the transit force’s senior
manager could no longer deny the need for a change in their
policing methods.
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The MBTA case…
 Bratton used a similar approach to help sensitize his
superiors to his problems.
 For instance, when he was running the police division of
the Massachusetts Bay Transit Authority (MBTA), the
transit authority’s board decided to purchase small squad
cars that would be cheaper to buy and run.
 Instead of fighting the decision, Bratton invited the
MBTA’s general manager for a tour of the district.
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The MBTA case…
 Bratton picked up the general manager in a small car just like
the ones that were to be ordered.
 He jammed the seats forward to let the general manager feel
how little legroom a six-foot cop would have, then drove him
over every pothole he could find. Bratton also put on his belt,
cuffs, and gun for the trip so the general manager could see how
little space there was for the tools of the officer’s trade.
 After just two hours, the general manager wanted out. He said
he didn’t know how Bratton could stand being in such a
cramped car for so long on his own—let alone if there were a
criminal in the backseat.
 Bratton got the larger cars he wanted.
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The internal communications case…
 Bratton’s internal communications strategy also plays an
important role in breaking through the cognitive hurdles.
 Traditionally, internal police communication is largely
based on memos, staff bulletins, and other documents.
Bratton knew that few police officers had the time or
inclination to do more than throw these documents into the
wastebasket.
 Officers rely instead on rumors and media stories for
insights into what headquarters is up to. So Bratton
typically calls on the help of expert communication
outsiders.
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The internal communications case…
 In New York, Bratton recruited John Miller, an
investigative television reporter known for his gutsy and
innovative style, as his communication czar.
 Miller arranged for Bratton to communicate through video
messages that were played at roll calls, which had the
effect of bringing Bratton—and his opinions—closer to the
people he had to win over.
 At the same time, Miller’s journalistic savvy made it easier
for the NYPD to ensure that press interviews and stories
echoed the strong internal messages Bratton was sending.
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Sidestep the resource hurdle…
 Once people in an organization accept the need for change
and more or less agree on what needs to be done, leaders
are often faced with the stark reality of limited resources.
Do they have the money for the necessary changes?
 Most reformist CEOs do one of two things at this point.
They trim their ambitions, dooming the company to
mediocrity at best and demoralizing the workforce all over
again, or they fight for more resources from their bankers
and shareholders, a process that can take time and divert
attention from the underlying problems.
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The resource trap is avoidable…
 The resource trap is completely avoidable.
 Leaders like Bratton know how to reach the organization’s
tipping point without extra resources. They can achieve a
great deal with the resources they have.
 What they do is concentrate their resources on the places
that are most in need of change and that have the biggest
possible payoffs.
 This idea, in fact, is at the heart of Bratton’s famous (and
once hotly debated) philosophy of zero-tolerance policing.
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Turning to the numbers…
 Having won people over to the idea of change, Bratton
must persuade them to take a cold look at what precisely is
wrong with their operating practices.
 It is at this point that he turns to the numbers, which he is
adept at using to force through major changes.
 Take the case of the New York narcotics unit. Bratton’s
predecessors had treated it as secondary in importance,
partly because they assumed that responding to 911 calls
was the top priority.
 As a result, less than 5% of the NYPD’s manpower was
dedicated to fighting narcotics crimes.
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The narcotics unit case…
 At an initial meeting with the NYPD’s chiefs, Bratton’s
deputy commissioner of crime strategy, Jack Maple asked
people around the table for their estimates of the
percentage of crimes attributable to narcotics use.
 Most said 50%, others said, 70%. The lowest estimate was
30%.
 On that basis, a narcotics unit consisting of less than 5% of
the police force was grossly understaffed, Maple pointed
out.
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The narcotics unit case…
 What’s more, it turned out that the narcotics squad largely
worked Monday through Friday, even though drugs were
sold in large quantities—and drug-related crimes
persistently occurred—on the weekends.
 Why the Weekday schedule? Because it had always been
done that way; it was an unquestioned modus operandi.
 Once these facts were presented, Bratton’s call for a major
reallocation of staff and resources within the NYPD was
quickly accepted.
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Better targeting resources…
 A careful examination of the facts can also reveal where
changes in key policies can reduce the need for resources, as
Bratton demonstrated during his tenure as chief of New
York’s transit police.
 His predecessors had lobbied hard for the money to increase
the number of subway cops, arguing that the only way to stop
muggers was to have officers ride every subway line and
patrol each of the system’s 700 exits and entrances.
 Bratton, by contrast, believed that subway crime could be
resolved not by throwing more resources at the problem but
by better targeting those resources.
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The Subway case…
 To prove that better targeting resources was the answer,
Bratton had members of his staff analyze where subway
crimes were being committed.
 They found that the vast majority occurred at only a few
stations and on a couple of lines, which suggested that a
targeted strategy would work well.
 At the same time, he shifted more of the force out of
uniform and into plain clothes at the hot spots. Criminals
soon realized that an absence of uniforms did not
necessarily mean an absence of cops.
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The Subway case…
 Distribution of officers was not the only problem.
Bratton’s analysis revealed that an inordinate amount of
police time was wasted in processing arrests.
 It took an officer up to 16 hours per arrest to book the
suspect and file papers on the incident.
 What’s more, the officers so hated the bureaucratic process
that they avoided making arrests in minor cases.
 Bratton realized that he could dramatically increase his
available policing resources—not to mention the officers
motivation—if he could somehow improvise around this
problem.
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The Subway case…
 His solution was to park “bust buses”—old buses
converted into arrest-processing centers—around
the corner from targeted subway stations.
 Processing time was cut from 16 hours to just one.
 Innovations like that enabled Bratton to
dramatically reduce subway crimes—even without
an increase in the number of officers on duty at
any given time.
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Trading resources…
 In addition to refocusing the resources he already controls,
Bratton has proved adept at trading resources he doesn’t need
for those he does.
 When Bratton took over as chief of the transit police, for
example, he discovered that the transit unit had more unmarked
cars than it needed but was starved of office space. The New
York Division of Parole, on the other hand, was short of cars but
had excess office space.
 Bratton offered the obvious trade. It was gratefully accepted by
the parole division, and transit officials were delighted to get the
first floor of a prime downtown building. The deal stoked
Bratton’s credibility and it marked him, to his political bosses,
as a man who could solve problems.
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Jump the motivational hurdle…
 Alerting employees to the need for change and identifying how
it can be achieved with limited resources are necessary for
reaching an organization’s tipping point.
 But if a new strategy is to become a movement, employees must
not only recognize what needs to be done, they must also want
to do it.
 Many CEOs recognize the importance of getting people
motivated to make changes, but they make the mistake of trying
to reform incentives throughout the whole organization.
 That process takes a long time to implement and can prove very
expensive, given the wide variety of motivational needs in any
company.
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Single out the key influencers…
 One way Bratton solves the motivation problem is by singling
out the key influencers—people inside or outside the
organization with disproportionate power due to their
connections with the organization, their ability to persuade, or
their ability to block access to resources.
 Bratton recognizes that these influencers act like kingpins in
bowling: When you hit them just right, all the pins topple over.
 Getting the key influencers motivated frees an organization from
having to motivate everyone, yet everyone in the end is touched
and changed. And because most organizations have relatively
small numbers of key influencers, and those people tend to share
common problems and concerns, it is relatively easy for
entrepreneurs to identify and motivate them.
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Putting spotlights on performance…
 Bratton’s approach to motivating his key influencers is to
put them under a spotlight.
 Perhaps his most significant reform of the NYPD’s
operating practices was instituting a semiweekly strategy
review meeting that brought the top brass together with the
city’s 76 precinct commanders.
 Bratton had identified the commanders as key influential
people in the NYPD, because each one directly managed
200 to 400 officers.
 Attendance was mandatory for all senior staff, including
three-star chiefs, deputy commissioners, and borough
chiefs.
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Spotlight strategy sessions…
 At Bratton’s spotlight strategy meetings, which took place in an
auditorium at the police command center, a selected precinct
commander was called before a panel of the senior staff (the
selected officer was given only two days’ notice, in order to
keep all the commanders on their toes).
 The commander in the spotlight was questioned by both the
panel and other commanders about the precinct’s performance.
 Indeed, a photo of the commander who was about to be grilled
appeared on the front page of the handout that each meeting
participant received, emphasizing that the commander was
accountable for the precinct’s results.
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Tipping the culture…
 The meetings changed the NYPD’s culture in several
ways. By making results and responsibilities clear to
everyone, the meetings helped to introduce a culture of
performance.
 An incompetent commander could no longer cover up his
failings by blaming his precinct’s results on the
shortcomings of neighboring precincts, because his
neighbors were in the room and could respond.
 By the same token, the meetings gave high achievers a
chance to be recognized both for making improvements in
their own precincts and for helping other commanders.
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Framing the challenge…
 Bratton also used another motivational lever: framing the
reform challenge itself.
 Framing the challenge is one of the most subtle and
sensitive tasks of the tipping point leader; unless people
believe that results are attainable, a turnaround is unlikely
to succeed.
 On the face of it, Bratton’s goal in New York was so
ambitious as to be scarcely believable. Who would believe
that the city could be made one of the safest in the
country? And who would want to invest time and energy
in chasing such an impossible dream?
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Framing goals for different levels…
 To make the challenge seem manageable, Bratton framed the
enormous task as a series of specific goals that officers at
different levels could relate to.
 As he put it, the challenge that NYPD faced was to make the
streets of New York safe “block by block, precinct by
precinct, and borough by borough.” Thus framed, the task
was both all encompassing and doable.
 For the cops on the street, the challenge was making their
beats or blocks safe—no more. For the commanders, the
challenge was making their precincts safe—no more.
Borough heads also had a concrete goal within their
capabilities: making their boroughs safe—no more.
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Knock over the political hurdle…
 Organizational politics is an inescapable reality in
organizational life, a lesson Bratton learned the hard way.
 Even if an organization has reached the tipping point,
powerful vested interests will resist the impending reforms.
 The more likely change becomes, the more fiercely and
vocally these negative influencers—both internal and
external—will fight to protect their positions, and their
resistance can cause serious damage, even derail, the
strategy execution process.
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Identify the negative influencers…
 At the NYPD, Bratton appointed John Timoney, Miami’s
commissioner, as his number two.
 Timoney was a cop’s cop, respected and feared for his
dedication to the NYPD and for the more than 60 decorations he
had received. Twenty years in the ranks had taught him who all
the key players were and how they played the political game.
 One of the first tasks Timoney carried out was to report to
Bratton on the likely attitudes of the top staff toward Bratton’s
concept of zero-tolerance policing, identifying those who would
fight or silently sabotage the new initiatives. This led to a
dramatic changing of the guard.
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Anticipating opposition…
 In many cases, Bratton silences opposition by example and
indisputable fact.
 For instance, when first asked to compile detailed crime maps
and information packages for the strategy review meetings, most
precinct commanders complained that the task would take too
long and waste valuable police time that could be better spent
fighting crime.
 Anticipating this argument, deputy commissioner Jack Maple
set up a reporting system that covered the city’s most crimeridden areas. Operating the system required no more than 18
minutes a day, which worked out, as he told the precinct
commanders, to less than 1% of the average precinct’s
workload. Try to argue with that.
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Building broad coalitions…
 Often the most serious opposition to reform comes from
outside. In the public sector, as in business, an
organization’s change of strategy has an impact on other
organizations—partners and competitors alike.
 The change is likely to be resisted by those players if they
are happy with the status quo and powerful enough to
protest the changes.
 Bratton’s strategy for dealing with such opponents is to
isolate them by building a broad coalition with the other
independent powers in his realm.
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Handling opposition…
 In New York, one of the most serious threats to Bratton’s
reforms came from the city’s courts, which were concerned that
zero-tolerance policing would result in an enormous number of
small-crimes cases clogging the court schedule.
 To get past the opposition of the courts, Bratton solicited the
support of no less a personage than the mayor, Rudolph
Giuliani, who had considerable influence over the district
attorneys, the courts, and the city jail on Rikers Island.
 Bratton’s team demonstrated to the mayor that the court system
had the capacity to handle minor “quality of life” crimes, even
though doing so would presumably not be palatable for them.
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Isolating and silencing the opponent…
 Bratton’s alliance with the mayor’s office and the city’s leading media
institution successfully isolated the courts.
 The courts could hardly be seen as publicly opposing an initiative that
would not only make New York a more attractive place to live but
would ultimately reduce the number of cases brought before them.
 With the mayor speaking aggressively in the press about the need to
pursue quality-of-life crimes and the city’s most respected—and
liberal—newspaper giving credence to the policy, the costs of fighting
Bratton’s strategy were daunting.
 Thanks to this savvy politicking, one of Bratton’s biggest battles was
won. The courts would handle quality-of-life crimes. In due course,
the crime rates did indeed come tumbling down.
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Tipping point execution at a glance…
 To summarize, tipping all four of the strategic hurdles
leads to rapid strategy execution:
– Cognitive Hurdle: Put managers and employees face-to-face
with problems and customers—find new ways to
communicate.
– Resource Hurdle: Focus on the hot spots and bargain with
partners.
– Motivational Hurdle: Put the stage lights on and frame the
challenge to match the organizations various levels.
– Political Hurdle: Identify and silence internal opponents
and isolate external ones.
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