Everyone has a plan, until they get punched in the face – Mike Tyson
One of the tweets I received in January declared 2013 is “The Year of Doing”. I am just coming around to fully appreciating what that means. We are in the midst of a trend of epic proportions toward execution over deliberation. This shift is very evident in strategic planning, project development, and capital investment. As someone who has presided over many strategic planning processes, I am not sure I completely buy into this, but the trend is unmistakeable.
Traditionally, you could think of management as the planners, the doers, and the counters. The lines have blurred over time, but the planners’ specialty was targeting the hogs, while we all know the doers brought in the bacon. Until the recent past, in order for a venture capitalist or corporate leader to invest in an initiative, you had to build a pretty bulletproof, strategic business case. It was expected that you would have done significant expansive research, pushed all of that data through a number of trusted strategic frameworks, come up with a shortlist of alternatives, and used logic and communication skills to prove the optimal business case to achieve corporate goals. That understates a managed strategic planning effort that took months to create, enlisted diverse opinions, and required more months to diligence and gain approvals prior to any implementation.
Little to none of that strategic planning process appears to matter anymore. As the eminent thought leaders at the failed WebVan would attest*, regardless of your strategic planning proficiency, only hindsight is 20-20. Sure, there are still industries and businesses that depend on strategic planning, their boards certainly must. Initiatives where resourcing needs are high and the results delayed, such as major infrastructure projects and biotech, still rely on plans. Companies seeking tactical management might include the term strategy in any given title. However, at least in tech-related fields, I believe that the diminution of the corporate strategic planning practice in corporate America is a reflection of a decline in its perceived importance. This trend would be mindboggling only a few years ago, and deserves a glance at the driving forces prompting it.
In terms of capital, it takes a lot less cash to get online offerings into the marketplace, and digital is where a lot of the innovation, disruption and subsequent ROI lies. The early bets are now smaller, so you can make more of them. Venture capitalists were known to delay, move goalposts and endlessly diligence to reduce their risk in the name of fiduciary responsibility. Now their business model has been to some degree subsumed at the early stage by super-angel investing of rapid, smaller bets. Today, those super-angels are themselves beginning to feel the hot breath of crowd funding and micro investments, in some cases including the same VC limited partners who are in search of returns on smaller bets they can decide upon independently. This should be welcome news to anyone who has previously raised startup funding. Beyond more, smaller investments there is more news.
Half the name-brand trend setters in entrepreneurship now claim they do not even want to see a traditional business plan. Building a thorough plan, they’ll claim, is a waste of time better spent getting to product / market fit. They want to see your prototype and hear about your success in the market. They request a demo, not a Powerpoint presentation. The hog is a given, they want to see some bacon. Rather than a definitive strategy, they ask a better question: Given what you have learned in the market, how will you adapt? In fact, there is some credence to the notion that business plans were never funded, only results were.
What about other types of equity investment? Main Street has long since lost confidence in researching and holding of long-term equities in favor of the bond market. That leaves your average day trader who relies more on minute-by-minute analytics software then his/her own research on strategies. Programmed trading carries global equity markets based on brute number crunching speed more than any strategic financial expertise. Again, the programmers win by shrinking cycle times. Any investor will tell you, it’s not how long you are in an investment, it is the difference in price when you got in and get out that matters. Hey, even John Maynard Keynes said: “In the long run, we’re all dead.” So, it would be hard to deny that changes within the sources of capital play a part as a driving force in the trend toward short-term reaction and away from strategic planning.
Strategists place high standards upon themselves for minimizing risks in order to be right well into the future. Classically, there is financial risk, technology/operations risk and market risk. Market risk was traditionally the most worrisome. However, given today’s small bet, short-term zeitgeist, spaghetti marketing, where you throw initiatives against the wall to see what sticks, is increasingly replacing “traditional” strategic marketing. A 2/20/13 search for the term “strategic planning” on Craigslist’s Boston job board lists 59 links, and many of those are repeated various times. Meanwhile, the same Boston job search that resulted in 59 (duplicated) links for strategic planning, produced 222 for analytics and 147 for SEO. This is a 2 to 4x favorability toward search engine analysts over strategic planners. Is it probable that I searched the job board on a day when almost all strategic planning roles in Boston were filled? Another rationale would be that strategy has become less of a major specialized role, and a small part of other line management processes. The job market portends the direction of management sciences. Certifications that allow employers to fit you into their specialized tactical needs are becoming more predominant hiring criteria than college degrees or leadership development. Dropouts and 15 year old coders who get product into the market are prized. The tactical if/then adaptors are in demand, not strategic forecasters. Analytics has made the marketplace itself into the preeminent laboratory, thus eroding strategic planning’s value as a predictive tool.
The web is integrated ever closer into both our lives and our decision-making across functions, vertical markets and geographies. For example, it’s more important to be fluent in Objective C or Ruby on Rails than in English. Technology is subsuming strategy because, just as a zoom lens brings you closer to the action, the hindsight that visited WebVan far too late is brought to marketers ever faster through landing pages, SEO, SEM, and online analytics. Actual results can be reviewed in a matter of hours rather than months. Campaigns can be launched in a globally accessible way for smaller dollars. Modifications in approach are made frequently and on the basis of reality, not conjecture, however logical or rooted in proven managerial or marketing theory it may be. Why imagine the future when you can create it?
How can one extrapolate an entire business trend on the basis of a few web searches on a job board? Today, it seems that conducting more research and strategic evaluation is perceived as wasteful. So, I won’t even perform searches on different job sites, and different cities, or look for other indicators. I’ll go by these three data points, gut feel, maybe call a friend or two in the business for support, and call this a trend. What gives me the license to do so? It’s fast. Let’s move on to development.
A search for the term “Agile” on that same job board, as in “Agile Development”, reveals 259 links. What about its precursor, the well planned and meticulously managed development process known as “Waterfall”? Well, “Waterfall” results in only 12 links, and at least one of those job requisitions requires agile as well. That is a significant 20x difference in favor of companies seeking the adaptive “Agile” approach. This unscientific comparison favors a development process based on little up front project planning and many releases of software that will produce frequent failures and rework evaded in Waterfall. A well-designed and managed planning process should be more efficient. If strategic planning identifies a target, Waterfall’s project manager is the sniper that project plans in advance, and manages to bypass all obstacles in order to reach that far away target on time and budget.
Agile, on the other hand, is like a double barreled shotgun approach that places value on overcoming the nearest targets and moving forward rapidly in order to eventually get to the far away target. Agile expects to accept collateral damage on the way to the objective, and also expects the objectives themselves to change. If a release is made that does not add customer value, Agile’s basic justifications are that you only lost 2 weeks before customer activity forced a pivot. Waterfall errors may cost you months. Failing fast is the new religion. This sucks for those of us who hate to fail at any rate, but should be second nature for Gen Y-ers who always got the gold star.
At its core, adopting Agile is a value statement on Strategists properly identifying targets, and project managers long-term planning to reach those targets. Conforming to long-term plans will not accommodate goals that change as conditions change. So Agile adherents know that, in practice, by the time you get there with Waterfall, it is probably not where you want to be anyway. Therefore, a true Agile believer will minimize strategic planning, put a wet finger in the air, put their head down and start coding.
Before you comment on hybrid approaches, as is usual with any diametrically opposed pair of methodologies, they do exist. I’m sure that in some cases, Agile within the Waterfall will make sense even if it does water down the perceived value to both camps. (No pun intended) I believe that the hybrid approach is not in the median, however. According to the job market, the mean is skewed greatly toward the lightweight Agile approach.
Beyond investment, marketing and development drivers, another driver is of course technology itself. Cloud computing, open standards, app stores, bandwidth and massively open online education all contribute to make small teams easier to manage, more focused, and a cheaper way to get to market fast. This makes a small team more powerful than large, process-ridden departments. Why else, after only 18 months, would the video sharing app company SocialCam have sold to Autodesk for $60 Million, with only three employees. (I would normally verify the headcount read on a blog, but in the Agile spirit, that would be wasteful in terms of getting this blog post out fast.)
A rising tide moves all boats. Seeing results like SocialCam’s and Instagram’s exit, does the practice of sticking to a strategically planned, profit producing, built to last venture mentality have no place in today’s hyper-active business environment? If these are flash in the pan successes based on being first to market, why translate their model across opportunities? Long-term strategic planning will not ensure a greater success rate if you cannot scenario plan everything as accurately and often as customers respond to rapid releases. With the high rate of marketplace change continuously accelerating, people are now declaring that it’s ok to be wrong. It’s just not ok to be slow. We now live in a Ready, Fire, Aim, repeat world. Of course, the management folks with the ultimate accountability for the success of failed initiatives are the ones in the line of that fire. The Agile developer can just toss a backward scowl and go on to the next lightweight project.
Pendulums swing, and this move toward spaghetti marketing, agile development, and “ready, fire, aim” strategic investing has a way to go. In the end, this movement will release a tremendous amount of entrepreneurial energy in 2013, and it will be interesting to see how placing many more smaller bets at all stages will turn out. It is no doubt an exciting time. I for one would appreciate seeing more investment in startups located in smaller cities that were historically starved for funding. Is the shift away from truly deliberative, strategic planning toward rapid opportunity scans and short-term commitments in investments and workplaces the new normal? Will short-term thinking and reflective action permeate through other facets of our societies, or do you think it really started from society, and permeated into the workplace and investing realms?
You are welcome to share your thoughts on this post, but don’t feel like you need to spend a lot of time on the research – I didn’t.
* example attributed to Steve Blank’s book, The Four Steps to the Epiphany