First things first.

I've been helping a large outdoor goods company with its strategy development. The CEO has been struggling to move the process forward for a few months now, and he turned to me for outside perspective. It became quickly apparent that his difficulty was not with the process per se. The difficulty was rooted in the lack of a clear direction: what does his company represent, and where does it want to go in the next 5-10 years? You can't develop a strategy until you can answer those questions.

I'm personally fond of the approach Jim Collins described in Built to Last. He suggests that you first clarify your core values and purpose, and a "big, hairy, audacious goal" that will take you 10-30 years to reach. (Read more about it in this HBR article, and download this helpful worksheet from his website.) Now, not many companies are ready to commit to a 10-30 year goal, but there's no reason you can't modify it by setting a 5-10 year goal.

I haven't consulted to them, but my guess is that both Nike and Patagonia have absolute clarity in these areas, and as a result they're able to set -- and change -- their strategies as needed to attain their goals. Their strategies are documents designed to help them create their envisioned future. As for what particular tool or process they use to develop the strategies? Who cares. There are a host of approaches out there, any one of which will do an adequate job. And since strategy is flexible -- It has to be, since external conditions change so frequently -- it doesn't really matter which you use. The critical part is defining who you are and where you want to go.

Following a strategy without first having a core ideology and a clearly defined goal is like following a compass without a magnetic needle pointing north. You'll certainly move, but you have no idea where you'll go.

"The signature of mediocrity is chronic inconsistency."

This is what really hit me when I listened to Dan Pink's "Office Hours" interview with Jim Collins:

The signature of mediocrity is not an unwillingness to change. The signature of mediocrity is chronic inconsistency.

This was a finding from Collins's research for his latest book, Great By Choice -- mediocre companies have no consistency in leadership, in mission, in management style, or in philosophy. They drift with the prevailing tides, unwilling (or unable) to chart a determined course.

Collins believes that great companies adhere to "SMaC" -- Specific, Methodical, and Consistent -- guidelines for their business. A SMaC recipe is a

set of durable operating practices that create a replicable and consistent success formula; it is clear and concrete, enabling the entire enterprise to unify and organize its efforts, giving clear guidance regarding what to do and what not to do.

Southwest Airlines has 10 such principles -- fly only 737s, no flight segment over two hours, stay out of food service, and stay passenger focused – no freight or mail, etc. Whereas tactics may change with the situation, SMaC practices can last for decades.

Chronic inconsistency in improvement efforts dooms companies to mediocrity as well. I've seen companies go from quality circles to TPM to business process reengineering to Six Sigma in an effort to improve quality, lower costs, and increase employee engagement. Eventually, employees become cynical, deriding each new effort as the management "flavor of the month." And they're not wrong, given that each new approach usually discredits the previous approach.

There is no magic formula for organizational greatness. But it's clear to me that consistency in improvement methods is just as important as consistency in organizational guidelines. That, I think, is one of the beauties of lean. The focus on continuous improvement and creating a community of scientists devoted to the pursuit of perfection (even while recognizing that perfection is unattainable) creates a consistency that other methods don't. Lean is a "SMaC" approach towards improvement. It's not flashy, but it provides a clear route towards organizational excellence.

May 2011 Newsletter: Jim Collins Lives Lean

Take a page from Jim Collins: learn to apply lean techniques and improve the quality of your own work. Download PDF

Those BHAGs Will Kill You.

Jim Collins and Jerry Porras coined the term BHAG (“big, hairy, audacious goal”) in their article, Building Your Company's Vision, back in 1996. Since that time it’s become so much a part of the lingua franca of business that you practically can’t call yourself a leader if you haven’t set some BHAGs for your company, your team, or yourself. It’s fascinating, though, to see just how many BHAGs are entombed in 2” D-ring binders collecting dust on people’s bookshelves, with pretty much zero chance of actually being implemented. There are all kinds of reasons—you don’t have the time or money or people, for example, or first you have to take care of your boss’s stupid pet project, or you’re trapped in too many meetings—but regardless of the excuse, those BHAGs are joining flying pigs in the list of things you won’t see in this life.

Now Shawn Achor, author of The Happiness Advantage: The Seven Principles of Positive Psychology that Fuel Success and Performance at Work, explains why in an article in CIO:

Goals that are too big paralyze you. They literally shut off your brain, says Achor.

Here's what happens to your brain when faced with a daunting goal or project: The amygdala, the part of the brain that responds to fear and threats, hijacks the "thinker" part of the brain, the prefrontal cortex, says Achor. The amygdala steals resources from the prefrontal cortex, the creative part of the brain that makes decisions and sees possibilities.

"We watch this on a brain scan," he says. "The more the amygdala lights up, the less the prefrontal cortex does."

Breaking a big goal into smaller, more achievable goals prevents the fear part of your brain from hijacking your thinking cap and gives you victories.

Don’t get me wrong: I don’t think your lizard brain (in Seth Godin’s term) is the only reason that so many organizations fail to achieve their BHAGs. Corporate inertia has a thousand fathers—reading any Dilbert is proof of that. But the daunting prospect of a BHAG, combined with a lack of clarity of how, precisely, to get from here to there, often plays a role in paralysis at the individual level.

In companies that struggle to realize their BHAGs, it’s frequently because no one has taken the time to map out precisely what small steps are needed to reach them. When I worked at Asics years ago, we set ourselves a goal to dethrone Nike as the number one brand among running enthusiasts. (To put this goal in perspective: Nike was a $4 billion company at the time. Asics was $180 million.) Pretty ambitious stuff for us.

We laid out a careful roadmap to reach this goal: recasting our running product line by eliminating lower-end shoes and building our first legitimate high-end shoe; providing special sales and customer service support to specialty running stores; creating special sales programs; focusing our advertising on the core running enthusiast; and having the product marketing and development teams spend more time visiting specialty running retailers during the product development stage. No step by itself would have done the job, but the steady accretion of these moves eventually toppled Nike among these customers.

We didn’t talk about BHAGs then. (That was before Collins’ article, for one thing.) But we did achieve one, by rigorously implementing a series of small steps. And because we were dealing with small steps, we didn’t have to worry about illuminated amygdalae, or struggle to clarify the vacuous ambiguities that too often paralyze good people.

Closed Lists, Kanbans, and the Key to Prioritization.

I was recently revisiting Mark Forster's concept of the "closed list." (Mark is the author of Do It Tomorrow, and a leading productivity consultant and thinker based in the UK who's well-worth reading.) The closed list is essentially a to-do list that's limited by the amount of work time you have available during the day. Mark's argument is that making a daily to-do list containing 14 hours of work is pointless, not to mention frustrating and self-defeating. If you're only working 10 hours a day, you'll never finish all the items on your list no matter how efficient and motivated you are. So why bother putting all those items on your list for the day? You'll have to move it to another day.

Instead he advocates a to-do list that can be completed within your workday -- and that includes accounting for the unexpected problems that inevitably derail your schedule. It's a reality-based to-do list.

The closed list reminds me of the brilliant simplicity of the kanban in a lean production line. For those who don't know, a kanban is a signaling device (usually a simple card) that controls the amount of work-in-process inventory. When a person on a production line finishes his operation (grinding a piece of metal, say, or checking the credit scores on a mortgage application), he sends a kanban to the previous station. This signals that he's ready for the next piece of metal or the next mortgage application, and the upstream person then sends the next item down the line. For the purpose of this blog post, what's important is that the kanban controls the amount of work-in-process inventory: there can never be more inventory than there are kanban cards, so you never run into Lucy's famous problem of too many chocolates coming too fast down the assembly line.

Mark's closed list -- which is really the father of my principle of "living in the calendar" -- has the same benefit of the kanban in controlling the amount of work-in-process inventory. It prevents you from taking on more than you can handle in any one day, and thereby forces you to prioritize. You can't do more than 8, or 10, or 14 hours worth of work -- you have to decide what's most important, and ruthlessly weed out the rest (a la Jim Collins' stop doing list). It also creates a basis for a conversation with your boss when yet another "critical project" with an impossible deadline is added to your load.

The closed list doesn't reduce the amount of work you have to do. The truth is, that work is pretty much infinite. But it does force you to assess your work more closely, and helps you prioritize and keep you focused on what's really important to you.