How to detect and avoid 'scaling' problems
Francis Wade, Sunday Business COLUMNIST
During hectic times, some executives argue against strategic planning activities, saying that they don't have time to do anything more than firefight.
Mistakenly, they think that planning is only about dreaming up shiny new stuff that will happen only in the distant, imaginary future. They are wrong. Strategic planning is also about making sure that present-day success isn't marred by future failure caused by scaling problems.
In the not-so-distant past, Blackberry and Nokia dominated the smartphone and mobile industries. Last week, Blackberry announced the layoff of 40 per cent of its workforce due to a loss of US$1 billion, causing its stock price to plummet by 17 per cent. Nokia was recently acquired by Microsoft after years of poor results.
In the last few years, both have lost huge market share and profits, but it's not because they did anything wrong. Their failure comes because they didn't do the right things: they simply didn't see that their early success controlling their own, proprietary operating system would not scale.
WHAT IS 'SCALE'?
Companies typically fix problems and implement strategies serially. The problem is that they cling to actions that work in the short term without thinking about the endgame: the conditions under which those successful tactics may eventually fail.
The 'Mythical Man-Month' is a typical example: putting more people on a project often reduces the time taken to complete it. However, there is a point after which the addition of more people - and the 'man-months' they add - actually makes things worse. Much worse.
The short-term solution - to add more people - doesn't scale.
Blackberry and Nokia had tremendous early success that wouldn't scale. Both should have switched over to non-proprietary operating systems, sharing in a much larger pool of apps and developers.
As important as it is, it's hard to see destructive scaling problems happening in real time. Strategic planning teams struggle to see them for two reasons:
1. LACK OF COURAGE
Most executive teams include a few big egos, often in the roles of chairman, president or founder. They are proud of the company's accomplishments, and look for opportunities to dwell on their successes. All this chest beating, however, makes it hard for their teams to discover that the very success being lauded is the seed of tomorrow's failure.
'Doubting Thomases' are derided for not being team players or for being pessimists. Their inconvenient opinions are ignored because they require a level of confrontation that Jamaican executives find uncomfortable.
Those who think differently don't bring up their doubts, preferring to sit silently. They go with the flow, especially when they have only a few hunches to rely on instead of the hard data they would need to present a convincing argument.
In this case, silence doesn't mean consent; it only hides dissent.
It takes courage to speak up in these situations, but in most companies, people don't get promoted for being renegades. They get to the executive suite by being agreeable, cooperative and 'nice'.
When everyone wants to feel good, it's hard to buck the trend by warning about bad things that are coming, like scaling problems. Who wants to be the one to make others feel scared about the very thing that's making them feel good?
Most are unwilling to wander into this emotionally difficult territory, which is one reason skilful facilitation can make such a big difference.
2. AVOIDANCE OF HARD THINKING
When there's no lack of courage, strategic planning teams can run smack into another problem - a dearth of smart thinking.
It takes some heavy lifting to imagine something that's not currently happening, such as the rise of a new competitor that completely changes the game. For example, software giant Microsoft is wondering why it couldn't foresee its rapid fall into irrelevance when it ignored mobile computing.
Cable & Wireless' former Caribbean executives might also be wondering how its monopoly status, based on a century of experience, slipped through their fingers so quickly.
Martin Luther King Jr suggested why: rarely do we find men who willingly engage in hard, solid thinking. There is an almost universal quest for easy answers and half-baked solutions. Nothing pains some people more than having to think."
Try this test in your company: Who is looking at the endgame of your current winning formula? In what ways are today's strategies unable to scale? Who has discovered the equivalent of the 'Mythical Man-Month' in your business or industry? Are you sticking to strategies that future executives will laugh at because they work well only in today's simple scenarios?
Don't resist your annual strategic planning activity. It's a must if your firm is going to prevent itself from sowing the seeds of tomorrow's failure.
Francis Wade is president of Framework Consulting and author of 'Bill's Im-Perfect Time Management Adventure'. Email feedback to him at email@example.com.