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Strategy is all about guiding the outcome of individual effort and events to produce sustained success. In strategic terms, success is producing a sustainable outcome that is valuable and satisfying over time. Strategy, then, is not winning battles; rather it is winning wars and more particularly the peace that follows them. Focusing on battles at the expense of wars and the subsequent peace is dangerous in the extreme and almost never leads to long-term success.
Many people think that strategic thought and execution are very difficult. To the contrary, almost everyone can learn to do both. The operative word, however, is “learn.” We all grow up in a tactical world where looking both ways before we cross the street is a necessity for survival. Likewise, in our education we spend the overwhelming majority of our time learning details while we spend little time trying to integrate what we have learned—especially the things we have learned in various disciplines. So, unfortunately, strategy is foreign to most of us—we have had little exposure to it and we are normally rewarded for tactical, not strategic, prowess. If, however, we really want our efforts to produce sustained success, then we must learn strategy at both an organization and a personal level. Fortunately, despite the mysteries surrounding strategy, learning to think and act strategically is not too difficult, but it does require you to view the world in a different way.
I: Design the Future
The first (and importantly first) step in strategic thinking is to identify the future that you want to create. In the Prometheus Process, the desired future is called the Future Picture. It is a very hard, very objective, very measurable picture of the future you want to create. In the Prometheus Process, you break the Future Picture into 12 separate elements that ensure a balanced future embraced by all.
Accompanying the Future Picture are strategic Measures of Merit--those measures that tell you when you have achieved your Future Picture or when you are on the right course for it. They are normally not the same measures you use at a tactical level. In fact, tactical measures can be quite dangerous when applied at a strategic level, as can the wrong measures of merit.
The third key part of designing the Future is deciding on the Guiding Precepts which will apply to the organization. Guiding Precepts describe the essence of the organization (Nordstrom’s extreme customer focus) and the boundaries you intend to accept regardless of the circumstances (the opposite of the Enron Executive Committee waiving its conflict of interest rules for off-book deals).
Process assumes that the people in an organization generally know
more about their business than anyone else in the world. It also
assumes that people in an organization will make and execute smart
plans if they have a disciplined process which takes place in an
Open Planning environment. The more people who are involved in the
planning process, the faster it goes, and the more likely that the
plan will be well executed. In general, it is good to have at least
three echelons involved in the open planning process. Having three
echelons ensures that there will be good knowledge and experience in
the room. It also means that as the planning merges.
II: Target for Success
There are a very large number of things against which an organization can put its resources. You know intuitively that some of those things will have much higher impact than others. The organization which targets the right things, the centers of gravity, will be far more effective at a much lower cost than the organization that has no disciplined way to choose and affect its targets.
Process recognizes that everything takes place in the context of a
system and that systems have such annoying characteristics as
inertia and resistance to change. But they also have centers of
gravity—the handful of things in a system that produce
disproportionate impact when affected.
The Five Rings model—exclusive to the Prometheus Process--provides a real-world way to understand organizations and markets as a system and to find their centers of gravity. The best way to change a system (your organization, your market) is by affecting its centers of gravity.
If you want to put your organization or market on a new track, it is necessary to create rapid and hard-to-reverse system change.
To create hard-to-reverse change, you must affect system centers of gravity in a compressed period of time. Doing so significantly reduces the ability of the system to resist what you want it to do and the change tends to stick.
III: Campaign to Win
With the Future Picture standing before everyone as a clear beacon to guide actions, you begin to attack the centers of gravity previously identified. You do this with campaign teams drawn from across the organization and consisting to the maximum extent possible of those who participated in the creation of the Future Picture and the identification of the centers of gravity.
It is the objective of the campaign teams, continuing to work in an open planning environment, to affect the centers of gravity in parallel, which means to affect them in a very compressed time frame. Compressed, parallel operations have far higher probabilities of success than do stretched-out serial operations and paradoxically cost much less.
It is almost always the case that the current organization structure will not be optimum for a new strategy, especially if it involves an aggressive Future Picture. That being the case, part of Campaigning to Win is to modify the structure as required to allow the organization to move fast and accurately against the centers of gravity. The campaign teams themselves, of course, are designed for rapid action and will normally provide the bridge to a new formal structure. In the interim, however, the organization is acting and winning in the real world and is not waiting for the development of a new structure.
IV: Finish with Finesse
In the real world, every business cycle and product has a beginning and an end. Even though we know this to be the case, very few organizations plan for the back side of the inevitable cycle. The failure to plan in advance means that too much energy is devoted to the wrong things. In the Prometheus Process, you plan so as to exit cycles and products with maximum gains.
The Cardinal Rules are a set of guidelines that are invaluable to follow while planning and executing whether at a strategic or tactical level. If you follow these rules, you are more likely to be successful than if you ignore them. What follows is a very brief review of each rule with an associated additional illustration of the idea.
· Think Like an Architect—Not Like a Bricklayer: Start with the overall big-picture concept, and then work to the details. If you start with the bricks, you will build a brick structure whether or not that is the right choice. Non-architectural thinking almost always ends up with a serial operation (see Parallel Operations)which means a very contorted path forward in time. Motorola’s introduction of the Iridium satellite phone network failed to follow this rule.
· Focus on the Future: Value is in the future, not in the past. If you don’t focus on the future, you will end up repeating what you did yesterday, albeit with some modification—which tends to be marginal. The Pennsylvania Railroad violated this rule and went bankrupt in the process.
· Execute Good-Enough Plans: The world is changing while you are planning. If you take too long to plan in an attempt to create a perfect plan, the world will have changed sufficiently to invalidate your initial assumptions, or more likely, someone with an action bias will have stolen a march. Michael Dell followed this rule as he introduced new computer buying methods quickly and then improved them over time.
· Go to Rome: All of us have a tendency to concentrate on the immediate problem without keeping in mind what you really want to accomplish. Rome may be a place, but more often it is a state of being. Bill Gates did an excellent job in this area where almost from the beginning, his Rome state of being was a company that had the dominant graphical user interface software and associated applications that were of interest to the majority of computer users.
· Concentrate for Success: Although this seems obvious, we frequently deploy our resources to avoid tactical failure rather than to maximize strategic success. Properly thought through, however, we can deploy our resources in such a way as to improve our chances of success while giving us a mechanism to deal with genuinely strategic threats—which probably means ignoring some of the tactical problems. Early Japanese automobile makers did a great job here as they focused themselves on markets in which they could succeed—first at home and then in the US.
· Defend All—Lose All: This Cardinal Rule is the evil twin of Concentrate for Success. It says that nobody is powerful or rich enough to defend all their markets and products and that some are worth more than others. If you try to defend them all, you end up losing them all. The famous department stores of yesterday violated this rule by trying to be all things to all customers—something they simply were not able to do in the face of specialty stores and the big box discounters.
· Stay Out of the Balkans: Don’t sink scarce resources into projects that will not have much, if any, impact on strategic success even if they are successful. Balkans are projects that may look great on the surface and may be quite well run but which consume resources and management time that should be spent on strategic issues. British Petroleum in 2006 seemed to become so mesmerized with its environmental crusades that it forgot to pay attention to strategic interests such as its Alaskan pipelines.
· Maximize Friends, Minimize Enemies, Choose Wars: You can never have too many friends whereas even a single enemy creates a potential problem. Even if you are very strong, many enemies will eventually destroy you just as the tiny Lilliputians were able to enslave Gulliver. Wars (think competitors) are very expensive and chancy. The ideal world is one where you have no competitors and your major chore is to find new customers and sell to them. This is sometimes thought of as finding blue water opportunities (see Blue Ocean Strategy). Cirque de Soleil created a market between the circus and the Broadway show where it basically had no competitors.
· Don’t Underestimate What It Takes To Win: Few endeavors turn out to be as inexpensive in money and energy as original prognostications predict. Unfortunately, great enterprises in war and business start out grossly underestimated. The frequent result is failure with concomitant loss of the entire investment. Careful, conservative estimates of cost may keep you out of some good projects, but you are far more likely to succeed with the ones you do undertake. In addition, conservative funding of a project probably means that you will automatically have something in reserve—which will mean that you are following another Cardinal Rule—Maintain and Use Reserves.
When developing a business plan for a new company, product, or project, planners typically make cost estimates in order to assess whether revenues/benefits will cover costs (see cost-benefit analysis). This is done in both business and government. Costs are often underestimated resulting in cost overrun during implementation. Main causes of cost underestimation and overrun are optimism bias and strategic misrepresentation (Flyvbjerg et al. 2002).
In the home improvement area, the author
has adopted the “rule of 9” for
estimating time. Decide how long a project will take, multiply by three, then
multiply by three again. This is generally accurate and helps avoid taking on
projects where the time to dothem is simply not available.
· Don’t Deceive Yourself: The terms “articulated” and “axiomatic” describe the common phenomenon where the leader of an organization announces a bold new plan (articulated), then promptly continues doing everything the old way (axiomatic). People and organizations frequently (mostly?) confound themselves by failing to force change in axiomatic behavior to match the new articulated policy. The default is for people to revert rapidly to their old way of doing something (axiomatic) and that is exactly what will happen absent strenuous and open efforts to prevent it. This rule applies not only to new policies but also to maintaining old ones. For example, Nordstrom’s has long had an axiomatic policy of customer service, but knows that it needs to articulate it constantly, to back it up with the right hiring, training, and incentive programs lest even its legendary service collapse. If you say you are going to do something, mean what you say, then demonstrate it by your own actions to include building the support programs necessary to align organizational behavior.
· Maintain Momentum—Bypass Barriers: Time is the most precious strategic asset. When an organization gets hung up on a barrier, it loses time which can never be replaced. To avoid losing time, make it part of the organization psyche always to look for ways to maintain forward velocity.
· Be Offensive—When In Doubt Attack: The “When in Doubt” part of this rule flows from a 19th century Prussian military observation that if a commander was in doubt whether to attack or defend, the situation was probably close to equilibrium which meant that whoever moved first could probably tip it in his direction. The reason behind this is clear: if the other side is retreating or attacking, then you have no doubt about what you must do. If nothing is happening, it almost certainly means that both commanders are in doubt. When a situation is roughly balanced, a little effort can go a long way just as it doesn’t take much to move one end of a centered seesaw. In other words, the injunction to attack when in doubt is not gun slinging. In the commercial world, you have a good chance of success in going into a new market if you are in doubt about whether to do it or not. The fact that you are in doubt probably means that the situation looks reasonably attractive and either that someone else doesn’t already own the market or someone who is in the market is not doing much with it.
· Maintain and Use Reserves: It is not possible to forecast the details of the future with much precision. You do know with near certainty, however, that something either good or bad will arise with which you need to deal. Reserves are the things that give you the ability to deal with threats and opportunities without destroying everything else that you are doing. Reserves can be people, money, equipment, facilities, or even a little time left open on your daily schedule. If you try to operate everything at 100% of capacity, something will break with frequently catastrophic results. Unfortunately, human nature drives us away from reserves because we think that something not fully committed is being wasted or we believe that it is better to bet everything up front rather than to hold something back. Both ideas are demonstrably false which becomes clear when we think about probabilities—which are always less than “1.” Financial planners typically advise people to have an emergency fund that covers six months of expenses in the event that they lose their job. This is a good example of maintaining reserves where having the reserve means that you don’t lose your house when you lose your job.
· Impose Your Plan: As Captain Jean-Luc Picard says in Star Trek: The Next Generation, “make it so!” If you are going to the trouble of planning, you really ought to do everything to ensure that your plan works as written. If you have done a good planning job, there is no reason why you should not get quite close. If, on the other hand, you fall back on the really stupid bromide “no plan survives first contact with the enemy,” you give yourself every possible excuse to do lousy planning—which will not survive first contact with the enemy! If you don’t make every effort to impose your plan on the competition whether it be a market or a state, the competition will thank you profusely and do what it thinks is best, which is highly unlikely to be good for you. In the ideal world, your plan is so good and so well executed that no one has the ability to react. Get as close to that ideal as possible and recognize danger whenever the competition has the opportunity to react to your actions. At a detail level, even if you can’t dominate the entire spectrum, try to do things that are difficult to counter. When Braniff tried to counter upstart Southwest Airline’s low fare flights between Houston and Dallas with its own fare reductions, Southwest began offering its passengers a free bottle of Scotch. It worked because Braniff, as a big established airline, was unlikely to be able or want to deal on this level. Southwest imposed its plan.
· Make Time Your Servant: The Time Value of Action (see Parallel Operations) is a strategic observation of the highest importance. If you take a long time to do something and you do it one step at a time, your costs will be high and your probability of success much lower than if you do it fast. You must understand and control time. If you don’t, time and your opposition will control you. Airbus, as of early 2008, is paying a huge price for being so slow and serial in the introduction of its new aircraft. Costs have skyrocketed while customers have cancelled orders in favor of Boeing. Failure to make time its servant has cost Airbus far more than it would have cost to have bought the capability to the job correctly in a minimum amount of time.
 Cost. (2007, March 10). In Wikipedia, The Free Encyclopedia. Retrieved 13:24, March 21, 2007, from http://en.wikipedia.org/w/index.php?title=Cost&oldid=114171474