Let me begin this book with a story. In 1951, the Nobel prize-winning physicist Albert Einstein was teaching at Princeton University. He had just administered an examination to an advanced class of physics students and was on his way back to his office. His teaching assistant was walking with him, carrying the completed exam papers.
The assistant, a little shy in the presence of the greatest physicist of the twentieth century, asked him, “Dr. Einstein, wasn’t that exam that you gave this class of physics students the same exam that you gave to this same class last year?”
Einstein thought for a moment and then said, “Yes, it was the same exam.”
The teaching assistant then asked hesitantly, “But Dr. Einstein, how could you give the same exam to the same class two years in a row?”
Einstein’s answer was classic. He said, “Well, the answers have changed.”
The point of this story is that the questions might have been the same, but as the result of rapid developments and discoveries in world of physics at that time, the correct answers were different from what they might have been a year before.
This story applies to you and your business as well. Your answers have changed in the last year, and they continue to change, sometimes every day. Over the course of twelve, twenty-four, or thirty-six months, your products, services, prices, processes, marketing, selling, and levels of profitability may all change. Sometimes they will all change together. This is why you need to engage in a continuous, ongoing process of strategic thinking and strategic planning.
Much of what you are doing in your business today is simply a continuation of what you have done in the past, whether or not it is the most effective and profitable way to run your business. Much of what you are doing is no longer relevant to the current business situation in today’s market. The answers have changed.
Many executives are operating on old assumptions, attempting to sell their no longer ideal products and services to changed markets containing customers with different wants, needs, and expectations who are operating under new conditions with new pricing demands and constraints.
Many executives are like the driver whose companion looks at the map and says, “We’re on the wrong road!”
The driver, hunched over the wheel, replies, “So what. We’re making great time!”
Many executives are “making great time,” working harder and harder to get results, but they’re on the wrong road, going in the wrong direction in terms of the current realities. The answers have changed.
Flexibility Is Essential
The most important quality for success in business, according to the Menninger Institute, is the quality of flexibility. To survive and thrive in turbulent times, you must develop an attitude of open-mindedness. You must be willing to face the facts and realities of today rather than those of yesterday. You must be open to the possibility that you are on the wrong road and be prepared to change course.
According to the American Management Association, 70 percent of your decisions in business will turn out to be wrong in the fullness of time. When you made those decisions, they made sense. Based on the existing situation, they were probably good decisions. But now the answers have changed. The information upon which you based your decisions is no longer the same. The business situation may have changed dramatically.
Like calling a “time-out” in a football game, you need to stop occasionally and reevaluate the situation. You need to pull back and examine your assumptions, to determine whether or not they are still valid. With new information, you need to establish a strategic plan that is relevant and applicable to your situation today.
The One True Measure
Once upon a time, a man died of a heart attack and left his construction company to his wife. He had spent twenty-five years building the business, but he had neglected his health. He ate too much, drank too much, smoked too much, and never exercised. Finally, it all caught up with him and he was gone.
His wife had spent most of her adult life raising the children and running the home, and she knew very little about business. Nonetheless, she was now the owner of a ten-million-dollar construction company that was her sole source of support and her largest family asset.
After the funeral, she went into the company on a Monday morning, sat all the managers down and asked them to explain to her how the company worked. They realized she was serious about wanting to understand the business, so they took her around and described to her the various products and services that they offered. When they explained a particular product line that the company was selling, she asked simply, “How is it going?”
If it was selling well, she encouraged them to do more of it. If it was doing poorly, she encouraged them either to stop doing it or to change what they were doing so it was more profitable.
She had two basic questions: “What’s working?” and “What’s not working?”
This became her management style. Each time she came to the offices, she met with her managers or walked around and asked, “What’s working?” and “What’s not working?” If it wasn’t working, she would instruct them to improve it or to discontinue it. If it was working, they were encouraged to do more of it.
She then began asking, “Who’s working?” and “Who’s not working?” In short order, she changed the staff around so that everyone was doing what they had been hired to do and making a valuable contribution. Those who would not or could not were encouraged to go elsewhere.
Practice This Method Daily
You should use the same method with your business. If, for any reason, something is no longer working, if you are not making progress, moving ahead, growing in sales and profitability, and hitting your numbers on schedule, you must ask, “Is it working?”
If it’s working, do more of it. If it’s not working, be prepared to stop the clock, call a “time out” and reexamine the product, service, process, or area of activity with new eyes.
Be willing to put all of your past experiences and assumptions aside for the moment and simply ask, “What’s working? and “What’s not working?”
The difference between success and failure in business largely depends upon your ability to look at your company through the lens of strategic planning and make sure that everything you are doing is contributing to the achievement of your most important business goals.
Let’s look now at twenty-one great ideas you can use to hold your business up to the light, perform a strategic analysis, and begin to move ahead toward your business goals of sales, growth, and profitability faster than you ever thought possible.