Role of Strategy: "Adapt or Die"

"You can't discuss changing strategy unless you are ready to discuss what makes people resist change and what part people could potentially play in creating more adaptability in an organization." 

This morning while reading the weekly HBS Digest, I paused on the above quote by Harvard Business School Professor, John Wells, who was interviewed for "Strategic Intelligence: Adapt or Die" about his book, Strategic IQ: Creating Smarter Corporations.  While he cites case studies of larger businesses, much of what he presents is relevant to small businesses, too.

Wells defines "strategic intelligence" primarily by the ability for an organization to adapt to ever changing circumstances.  He gives an excellent example of how Circuit City grew 20+% over a period of years in the 1980's to the detriment of then little known Best Buy.  When Best Buy adapted by changing its strategy to lead in pricing by reducing inventory, storage and labor costs, Circuit City ignored this competitive landscape change for a decade and ultimately filed for bankruptcy.  (I just bought a projector at Best Buy, not Circuit City, and there's a reason for that.)

Change is tough.  And when sales and profits are growing, it is perhaps easier to ignore the need to continually hone a competitive strategy.  This may be the most dangerous point, though, as it leads to the complacency that allows the competition to move in. 

Resistance to change is something we look for at Trellis Wine Consulting starting with the first phone call with a potential client.  In our primary meetings and before there is even an agreement to write a proposal, we probe for change resistance because we know that this will create an impasse.  There is a tremendous difference to being concerned about change -- yet open to it, and being resistant.  When we find the latter, we know it will not be a fit since our process is all about creating an effective and efficient path to enhanced sales and profitability. Which almost always means change.

This doesn't mean we are dictating strategy -- far from it.  Developing it is a process within our engagement.  It is worth noting that Wells recommends that consultants be involved in the strategy development process, but that companies take care not to delegate this function.  We couldn't agree more; in fact, it is critical that our clients are involved because it is their vision that leads the process.  We are in a position of asking probing questions, providing recommendations based on past experience, and challenging status quo.

Strategic intelligence is a skill that must be ever present in a company; it is a mindset.  When we work with clients, we are in a position of helping them think differently about their businesses.   We translate the common complaint, "I don't have time for planning" as "I don't value it (or understand its potential value to my business) so do not make the time" to strategize.  

The how is as important as the what.  A chosen path is not an accident; it can and often does lead to a specific outcome.  One of the most interesting things about strategy you don't have to have one to operate.  There are profitable companies without them.  The right question to ask though, is what might you be leaving on the table without one -- is there an opportunity cost to ignoring strategy?  The problem with not having one or engaging in the process is that you'll never know.

Don't Forget the People Side of Change

For some, the word "change" is invigorating -- filled with opportunity; for others it's something to be avoided at all costs.  Dictionary.com states that it's anything from "to make the form, nature... different"; "substitute"; "give and take" to"transform".*

As a management consultant, a lasting positive and profitable transformation of a client's organization is my main priority with every project.  This typically includes selling more goods and services more profitably, and should include improved experiences for the client's customers and internal team.

Planning is of course an important part of these engagements.  We must anticipate the gaps between the current state and the desired future outcome.  No matter how small or large the project, we must consider two sides of the change equation: technical and people.

It is unfortunately all too common to focus on the technical side, forgetting the human element required for successful change.  Let's use an example of building an e-commerce site for a client which has never before used an online business channel:  Simply creating a project plan, implementing it and running through the testing with a demo is not sufficient.  The technical side may work, but the people side will suffer.  So we must also understand how the team takes and processes orders, who is involved in each state, when each step must occur and and where the important information lives.  Then we compare the former process to the new in order to create a change management plan including coaching, follow up and point persons.

You can imagine how a change management plan intensifies when ours is a project covering the entire business side of the operation given the number of people and functions involved.  The scope is much broader, but our process stays the same.

* When speaking with potential clients, assessing how they view change is critical to the potential success of a project together.  Just as with any fitness regimen or new habit, we have to be ready and committed or the effort will not work.  So we only enter into client agreements when we are confident that the outcome will be a successful one.

How Does Your Brand's Pricing Align with the Competition?

Analyzing the competition is an essential aspect of business planning. Examining the competitive market’s strengths and weaknesses, for example, can lead to opportunities for your business; one company’s weakness is another’s opportunity.

It is also important to regularly check competitor pricing.  This is easily done by surveying accounts to determine what deals are being offered and where your brand fits within the price spectrum.

In late May, we challenged the students enrolled in Dixie’s Introduction to Wine Marketing at Umpqua Community College’s Southern Oregon Wine Institute to examine wine prices at a local off-premise accounts.  We asked each of the 12 students to gather information on five Pinot Noir brands from Oregon and California priced from $10 to $20.[1]  

The data we requested included the brand, vintage, original price and discounted price if one was available.  Then we pulled together a summary of the findings, which are detailed in the table below:

Metrics	OR	CA	Overall
Vintage Range	2005-2010	2005-2010	2005-2010
Price Range	$10.99 - $21.49	$8.88 - $29.99	$8.88 - $29.99
Avg Price	$18.01	$15.77	$16.83
Avg Deal Price	$14.87	$11.74	$13.00
Avg Discount	22%	26%	24%
Number of Producers	27	30	57
Number Discounting Producers	17	25	42

One of the more interesting things we found was how many producers were discounting -- 42 out of 57 surveyed.  On average, these discounts are 24% of suggested retail price or about $13.  We were also interested to find the range of vintages being offered.

 For an individual Pinot Noir producer looking to compete in the off-premise, being aware of the state of pricing and discounting is a must.

---

[1] With an approximate even male-female ratio, we asked female students to examine California brands while males collected information on Oregon producers.

Downtime continued -- a source of creativity

In my last post, I wrote about the power of downtime.  A couple of weeks later, I took my own advice and kept smart phone use to a maximum of 15 minutes per day while on a very enjoyable vacation.  I returned energized, focused and ready to tackle the always busy summer filled with new client engagements and their events.

Fast-forward two weeks after vacation and I've clocked about 70 hours in each with some very late nights and early mornings.  The first week, I could blame the early mornings on jet lag; at the end of the second, I am reminded of the constant struggle for balance in our society and among entrepreneurs -- it's especially hard when you truly love what you do.

Last night, while returning from a full day meeting in wine country, I heard a radio talk show host discussing how to enhance creative flow.  (Unsurprisingly, tackling work projects was not listed as a way to enhance creativity and productivity.)  She is indeed correct about time -- one of our most "precious resources", and how down-time allows us to capture a quiet, focused mind for problem solving.

The times when we feel most overloaded and "stuck" are exactly when we need to take a break.  Switching gears with a walk, music, aromatherapy, massage, napping, spending time with a pet, or even day-dreaming all qualify as relaxation activities.  I am personally guilty of hurrying my beloved Newfies on our walk so I rush back into my office.  And I can't remember the last time I actually drifted into a day-dream -- do adults even do that?

Tomorrow is officially a work- and technology-free day for me at Trellis Wine Consulting.  Perhaps I'll re-read one of my favorite books: Flow, The Psychology of Optimal Experience, which discusses how to improve life quality by ordering the conscious.

Power of Down Time and Disconnecting

We've all seen it and we're (probably) all guilty of it.  I sure am.  Smart Phone addictive tendencies. If it's the last thing you check before falling asleep, the first thing you see in the morning, and a part of your daily life -- even while on vacation, you need to know about some insightful research.

Leslie Perlow, author of Sleeping with Your Smart Phone and Harvard Business School Professor, challenged a team of Boston Consulting Group professionals to take "predictable time off". These "world's leading business advisors" fit the addictive tendencies I mention above, and over 90% work over 50 hours per week with a third clocking in at 65.

The results reported in Harvard Business Review were very telling -- I highlight a few below:

• 51 percent (versus 27 percent) were excited to start work in the morning
• 72 percent (versus 49 percent) were satisfied with their job
• 54 percent (versus 38 percent) were satisfied with their work-life balance

This parallels a recent change at Volkswagen, which turns off the email push to Blackberries beginning 30 minutes after the end of the work day until 30 minutes before the next starts.  Interestingly, this is only for union workers in Germany -- not management, but I wonder if this will become a broader trend given the research findings.

My relationship with my first Blackberry (and the expectation that I would always be "on" as a PR professional) started ten years ago, so it is a tough habit to break.  In the last six months, I've been turning off on Sundays, and I have seen my creativity, productivity and energy levels increase.  Last year I even took a 10 day vacation without my phone.  (Well, I brought it with me, but it was turned off the entire time.)

The areas where I'm still struggling are early morning and evening times, when the urge to connect, produce for clients, or just make sure everything okay, is a strong one.  Perlow's research proves something I've known deep down for a long time -- that constant connectivity is neither the most efficient, effective, or health way to run a business.  It also proves that "mother is always right" because she told me to establish a set schedule and stick to it within the first month of starting my business.

Here's to a more productive, creative and healthier way of working!

I recently explored, How: Why How We Do Anything Means Everything... in Business (and in Life). Author, Dov Seidman, a noted leadership expert, demonstrates that the nature of today's fast-paced, information-driven, social media enhanced environment has changed the nature of reputation and culture building.  As a marketer and management consultant, Seidman's message struck an important chord.

Our personal and professional "brands" are under more scrutiny than ever before.  In the 1960's -- think Mad Men era marketing, simply devising a great visual and copy strategy then funding it well would build a brand.  Now, forty years later, there are a multitude of inputs into creating and fortifying a brand's reputation.  Primary examples include positioning (intended by the company -- a la Mad Men), the actual living internal culture created by team members, traditional media reviews and real-time customer feedback made possible by social media.  All of these measures and more contributes to a brand or company's net reputation quotient.

So how we conduct ourselves is much more important than what we proclaim.  It is no longer enough to demonstrate only quantitative success metrics; a brand must strive to create a positive culture and reputation, which necessarily means embracing the qualitative measures of integrity, values, social responsibility and more.  Since we are constantly being evaluated, our messages must be more genuine; more organic and less concocted.

Personal and company reputation are therefore now the sum of "how" we've achieved instead of the collection of "what" we have achieved.  How is your company reflecting this in its marketing communication and management efforts?  Have you changed your approach to brand and leadership management in the last 10, 20 or 40 years?

Our spring newsletter went out today highlighting a risky, but important topic for our industry -- the Top Five Excuses for neglecting marketing investment.

The first two -- "we don't have time" and "we don't have a budget" are perhaps the most common, but the other three are just as important to understanding the misconceptions surrounding the demand creation function.

We are excited to announce that we're in the process of developing an industry-wide sales and marketing survey.  The results report including benchmark metrics will be made available to all who participate.  The survey will go out this summer with results to be released just before harvest.