Taking the B.S. Out of BuSiness!

The vocabulary of business management has been corrupted by meaningless buzz-words, and by trivial aphorisms.  We seem to have moved from an age of builders, inventors, entrepreneurs, and innovators to a passive generation content to listen to the musical words of new-age business gurus.  Most of what passes for modern business teaching seems to have the same value and staying power as Transcendental Meditation.  These notes are not for those who worship at the shrine of Paradigm Shift or kneel before the concept of re-engineering.

What do you really need to know, in order to help organize and manage a great company?  With degrees in management or science, with ten to fifteen years of excellent experience, one should be well positioned …at least to learn!

You should start with sound opinions on management of people, proper respect for the advantages of technology, some appreciation for financial business insights, a knowledge of history as a guide to the future, and an appreciation for good planning and operational analysis.

If you have been fortunate enough to work with wise managers who shared their knowledge and were eager to coach, you may already have discovered much of what we’ll cover in my “Taking the B.S. Out of BuSiness” article series.

We will try to avoid the use of silly management phrases and will often revert to the first-person voice in communicating personal insights and personal failures.  Having just passed my 80th birthday, my 55th year in the oil and gas business, and my 35th year as a senior manager, I feel privileged to behave as the resident curmudgeon.

Creating a REAL Strategic Plan

Let’s start by looking at the proper way to create a really useful strategy statement for your company.  Is strategy important to a company?  Yes.  Is it necessary?  Perhaps.  Strategy is not the be-all and end-all of management.  Strategy allows a specific description of what you want to do, to those people directly concerned… because they may be able to help you attain your strategic goals; if they know what the strategies are!

Strategy statements are not for the cajoling of financial analysts, or devised for the sales prospectus to new investors.  They must be the road map to future success; with enough details to demonstrate that the company is driving down the right road at the promised pace.

One often sees strategy statements whose building blocks are meaningless platitudes.  When I see able people attempting to rally behind a strategy constructed of platitudes and feel-good words… Well, it would bring a tear to a potato’s eye.

The Wall Street Journal published a brief list of such platitudes, selected by Mr. Mattera, that serves to effortlessly create impressive new nonsense statements, by merely selecting one word from each of three columns.

I rather liked “strategic planning alternatives,” and, “value-based budget initiatives” has a nice ring to it.  If you didn’t know that these were random assemblages of words, they’d pass for wisdom.

At times, it seems as if strategy statements represent a raid on the dictionary for all the amorphous “good” words… as if the airing of a platitude gives wisdom to the author.  Who would argue against “improve,” who doesn’t want to “prioritize,” who dares to be opposed to “efficiencies”?

When I see otherwise intelligent people creating strategy statements out of platitudes, I like to remind them,

Folks, everyone here can say the word tango; damn few can dance.

There are some simple tests to determine whether a strategic plan is an assemblage of can’t, or represents a thoughtful, analytical plan for the future.

To use the vernacular verb:

• If it ain’t got numbers–it ain’t a strategy.
• If it contains buzz-words that substitute for wisdom, it ain’t a strategy.
• If it doesn’t recognize the problems that need to be overcome, it ain’t a strategic plan.

The strategies for each unit of the company should support and complement the overall company strategy.  Different measurements of progress and success are appropriate for different parts of the company.  These separate strategies of different units should “nest,” should fit with the overall corporate strategy, but should be specific and quantitative enough so that the local unit can measure the achievement of its local strategy.

We’ve used the phrases strategy and strategic plan almost exclusively in this discussion.  A whole hierarchy of words has been fashioned to describe what it is you are planning to do… words like targets, goals, stretch targets, objectives, business plans, mission statements, etc.  All of these words are attempts to organize a description of what you hope to do.  None of these descriptors is better than another.  I prefer to use the word “strategy” so that emphasis remains on the content, rather than on the subtleties erected by differentiating strategy, tactics, goals, targets, objectives, etc.

Let’s take a look at what is needed for creation of appropriate and “nesting” strategics for, say, a large exploration and production company.  Let’s suppose that the executive committee of the Board has decided that the company strategy needs to be the increase of its net income from operations by about 5% per year, for the foreseeable future.  What would be consonant, (nesting) strategies for, say, the corporate HR department?  For the production and operations arm of the company?  For the Waxahatchie office (17 employees)?

Two things can be done to improve corporate net income from operations; increase revenue or decrease costs.  It’s important to recognize that some departments have little or no ability to increase operating revenues; their contribution to this corporate strategy can only be to decrease costs.

The Plan, boss! The Plan!

Implementing strategies might look something like this…

“The HR department plans to review overall staff levels in the corporation, and will offer an option for a 2% per year decrease in staff costs, and HR will eliminate at least 1 of its 20-member staff by mid-year.”

“The production and operations group has analyzed its best response to the corporate strategy and plans to increase its infill drilling by 10%, commit to development of new fields that will yield an increase of 6% in productive capacity, while holding costs level, and maintaining all safety and environmental standards.”

“The Waxahatchie office plans to increase through-put by 5%, as a result of their study on De-bottlenecking plant facilities, will not replace a retiring employee, and will attempt to improve the margin on our sales contract to the Waxahatchie Candle Factory by 2 cents per pound.”

Few corporate strategic plans contain any specifics, any numbers, any historical review, or critical assessment of problems.  No wonder most strategic plans fail!

Let’s remember that if describing strategy statements had any relationship to accomplishing those strategies, success would come easily to a manager.

To assure success for a major engineering construction project, a detailed procedural plan is constructed.  This plan looks at critical path timing; it looks at the resources needed to accomplish each step, the number and abilities of the people to accomplish the key steps, the costs of material, and always includes a review of the history of similar projects to determine likely problem areas.

Many try. Most fail.

If such an approach is absolutely necessary for accomplishment of an individual project — shouldn’t detailed planning be necessary for the accomplishment of the strategic plan for a multi-billion dollar company, containing scores of individual investment projects? And, yet, few corporate strategic plans contain any specifics, any numbers, any historical review, or critical assessment of problems.  No wonder most strategic plans fail!

Is strategic planning important for a company… clearly the answer is YES.  Is strategic planning commonly done usefully and well; sadly the answer seems to be… NO.

But Wait, There’s More.

There’s much more in our “BS Out of BuSiness” series on Roxanna’s new website (Thanks JDM Digital!).