Focus on the Red Zone

We're into the heart of the NFL playoffs and, of course, my Brownies are nowhere to be seen. This weekend's AFC Championship features my worst nightmare: the hated Steelers against the even more hated Ravens (i.e. the former Browns). In the other conference, the perennial underachieving Falcons made the playoffs; the Arizona Cardinals are still playing, this weekend in the championship against the Eagles. (Has anyone else noticed that 3/4 of the teams playing are birds?)

What is it about these teams? Let's look at their performance in the Red Zone.

Twelve teams make the playoffs out of 32. There are two primary aspects to performance in the red zone. One is offense, the second is defense, and, yes, the metrics are the inverse of each other. On offense, you want to score touchdowns when you get into the red zone. On defense, you want to prevent the other team from scoring. So, frequency of scoring or allowing touchdowns when you or your opponent get into the red zone are important measures. In addition, the frequency of getting into the red zone at all is relevant.

So, I've developed a RedZone Index (RZI). This index combines both offensive and defensive performance. It takes into account all the relevant statistics and combines them into a single ratio. And the result is clear: Red Zone performance - on both sides of the ball - matters.

Nine of the top 10 RZI ranked teams (and ten of the top 12) went to the playoffs: New York Giants, Philadelphia Eagles, Baltimore Ravens, San Diego Chargers, Pittsburgh Steelers, Tennessee Titans, Indianapolis Colts, Carolina Panthers, and Atlanta Falcons. The Arizona Cardinals are number 12 on the RZI index. The Minnesota Vikings were #17, the Miami Dolphins #21. Both Minnesota and Miami lost badly in the first round of the playoffs.

Clearly, Red Zone performance makes a difference. The teams that perform best in the red zone - 1) they get to the red zone, 2) score when they get there, 3) keep their opponents out of the red zone, and 4) keep them from scoring when they get there - are the winners. They finish the job. They reach their true goals.

Oh, and my beloved Browns? #23 on the Red Zone Index. A pretty good indication of how poorly the team played. The bottom four teams? Oakland, Cincinnati, Detroit, and St. Louis.

Yes, Red Zone performance is a good indicator of whether you're a winner - or not.

It's Time to Finish the Job.

Welcome to 2009. Sitting at my desk a few days before the end of 2008, I find myself fully and unapologetically looking forward to the start of 2009.

I won't spend much time dwelling on 2008. The press and the holiday parties have that responsibility well in hand. My conclusions fall in line with others:

• The economy is bad and will get worse before it gets better;
• Consumers don't have money to spend. We will continue to see the impact in housing, automotive, and retail which, in turn, will impact nearly every other industry;
• We're in a downward spiral that will require significant government intervention and spending to break.

Yet, for all the negative news, I go into the new year remarkably optimistic. I'm not being a polyanna, nor ignoring facts. I continue to believe, however, in the ambition, drive, dedication, and determination of us.

RedZone Consulting is all about helping organizations "reach (their) true goals." To do so, we use a structured process, a methodology. And a critically important part of that process is at the very end. We call the activities: "Finishing the Job." It's a set of activities that you don't see in most (if any) other methodologies. And the concept behind "Finishing the Job" is what makes me optimistic about 2009.

You know the story. The first 80% is the easiest. The last 20% is the tough part. That's the "red zone" - the 20 yards before the end zone. But getting into the red zone isn't the goal. It's getting into the end zone. It's scoring. It's winning the game. It's finishing the job.

We use "Finishing the Job" in our methodology as a reminder, as an opportunity to revisit and confirm our original goals. And, if those goals are still valid, to re-focus our efforts on achieving those goals.

"Finishing the Job" is something we (collectively) do. Sometimes we need prodding or reminding. Thus, the activities in the RedZone framework. But, when reminded, we rarely say, "naw, I don't want to do that..." We get up and we finish the job. We get it done.

Consider 2008 our reminder. 2008 was the wake up call. 2008 was the kick in the pants.

So we head into 2009. Heads high. Determined. Focused. It's time to finish the job. It's time to get through the red zone to the end zone. It's time to score. It's time to win.

Happy New Year. Now, let's get it done.

What if you gave a party....

....and nobody came?

That's what it feels like right now. We're sitting smack dab in the middle of "tough stuff." (I refuse to say "bad economy" or "worst economy in 40 years" or "Dang, what the heck is going to happen next?!?") And during tough stuff like this, every company should be very actively doing things - i.e. making changes! So where is everyone????

I can't believe it's just the holidays. "That's okay, I know it's a crisis and my business is on the cusp of failing - but we've got a Christmas lunch to attend. I'll deal with the business stuff after the first of the year."

C'mon people! Almost every assumption people made about business growth and the economy at the beginning of 2008 have been proven WRONG. And what are you supposed to do when your core assumptions turn out to be wrong? (Remember your lessons from Strategy Execution 101!).

That's right - you need to update your assumptions, assess the new assumptions impact on your goals, reset your goals, and then develop a new plan of attack based on the new goals. And what happens after the new plan is established? That's right - you EXECUTE! You start doing things differently - immediately! "Don't do ANYTHING that is not fully aligned with reaching your goals." Period. (That's also from Strategy Execution 101).

So, with all of our assumptions turned inside out, I would expect this huge buzz of activity, of companies changing direction, taking on new activities, eliminating others. Instead, what do I hear? Layoffs.

Layoffs! People losing jobs. In some cases layoffs are an appropriate and necessary activity, required to align a company to its new goals. But layoffs are NOT the full answer. That's a short-sighted, knee jerk approach.

Instead, companies should be using this market weakness as an opportunity. Since expectations are so low right now, companies should be using this time to invest, change, reposition for the future. And the future will come. The question is simply who will be ready to take advantage of the future the minute it shows its face - and who will just be starting... I'll bet you know who the ultimate winners will be...

Happy Holidays, everyone. May 2009 be a year of health, happiness, and success - in all senses of that word - for you and yours.

Tomorrow! Tomorrow!

With apologies to Annie, what the heck is the big deal with "Tomorrow?"

Teacher, teacher! I know!  Call on me!  "Tomorrow is the day of promise.  It's the future.  It's when all those things we are wishing for will come true!"

Uh, time out.  There's the problem.  "Wishing."

Far too often, strategic plans or major projects are built on the equivalent of 'wishes.'  Leaders say they want something to happen.  They say it loud, they say it strong, they say it often.  And somehow, they think that is enough to make the wishes come true. It isn't.

Let me tell you one of my favorite "I can't believe he did that" stories.  You'll soon understand why I can't tell you the name of the executive involved or his company.  But I will tell you that it went through Chapter 11....

It was a year of challenge.  The stores weren't meeting their numbers.  But the CEO had the answer.  He scheduled, on short notice, a managers' meeting.  He brought all the store managers together for a three day session.  We're talking a few hundred people, so this was not an inexpensive operation.

On the first day of the three-day session, the CEO opened the meeting with a video.  It was a very well-done video, full of nice imagery and music, to pump up the audience.  And it did.  The managers stood and applauded.  The stage was set.  The CEO strode to the front of the room and in his loud, ex-Marine voice, announced:  "I need you to sell more."  And then he repeated the same phrase several more times, sometimes the exact words, sometimes varying them slightly. Because, of course, if you repeat something often enough, it will happen.  Uh, or not.

Over the next three days, the meeting followed this pattern.  Some "pump you up" activity would occur and then the CEO (or one of his designates) would get up in front of the crowd and say (yep): "I need you to sell more" (or something just like it).

After three days, everyone went back home and the CEO sat back, just waiting for the new, bigger numbers to start rolling in.  Ha.

I love this story because it is so clear, and such an extreme example (almost to the point of farce) of the problem evidenced at many companies.  

You can't just tell people what to do.  You have to teach them.  Show them.  Make sure they understand clearly what is expected of them, in ways they can monitor and measure.  Give them the right tools.  Make sure they have the right incentives.  Help them to understand the clues along the way that let them know they're going in the right direction, or not.

And that's the big deal about "Tomorrow."  It's not the ability to wish or hope for something to happen that makes tomorrow so important. It's what you do.  You know your goals.  You know what you want to accomplish.  That's the easy part.  What do you do?  What are you going to do to reach your goals?  What are you going to do to succeed?  What are you going to do differently to make the right things happen?

When you think about tomorrow, make sure you're thinking about it the right way:  "What am I going to do, tomorrow, different from today, to reach my true goals."  A wish may be "a dream your heart makes."  It's hard work, however, to make that dream come true.

Survival of the Fittest

Those of you following the markets - stop!  Those of you concentrating on your business - continue.  One of the core precepts of Strategy Execution is to focus on those things you can impact directly.  I won't say ignore those items you cannot affect, but you certainly shouldn't do anything more than monitor them from a distance.  

I tried to take my own advice this week - No shoemaker's child here!  (Ask me if you don't know that reference....).  I have always talked about two kinds of strategic changes - those a company chooses to undertake, and those forced upon it.  Over the last ten years, most companies have had the luxury of focusing on the former.  Today, almost everyone is dealing with the latter.

If you take a look at the RedZone Consulting web site (www.RedZoneConsulting.com), you'll see some pretty significant changes.   RedZone has always focused on helping companies successfully execute major change.  And we still do.  Historically, most companies we worked with were those that chose to undertake a new direction.  Not now.  Today, I'm seeing that most companies are being forced to change their strategy and operations to reflect an entire new economic reality, one that had not even been considered. 

There are few, if any, companies that today's economy isn't impacting. As a result, every company has one primary focus:  Cash.  With credit tight, customer behavior's unpredictable, business assumptions and projections thrown out the window, the first place every business must focus is survival.  

It's a pretty simple question:  Do we have enough cash?  It's one of the "let's pretend" scenarios that we walk clients through:  Let's pretend you have absolutely zero sales over the next six or twelve months.  How much cash will you burn?  What are the levers that allow you to save (or gain) cash if needed?  This exercise has very little to do with what the business is trying to accomplish, and more with a foundational issue:  If the company has no cash, it cannot survive.  If it doesn't survive, successfully executing its strategy is both impossible and meaningless.

Survival of the fittest today is all about cash.  Do you have the cash to deal with the unexpected twists and turns driven by this new, unpredictable economy?   If you can use discipline, clarity, focus to monitor and maintain your cash position, you'll give your company the opportunity to succeed in the future.  

The Game Plan - and Adjustments for Success

I'm surprised by how much I learn about Strategy Execution by watching football.  (No, that's not just something I tell my wife....).  

Let's start with the key concept that, to successfully execute a strategy, you need both clarity of vision (a clear understanding of what you want to accomplish - more on this topic at a later date) and a plan of how to get there.  Right now, let's focus on the plan. 

For a football team, the week prior to a game is spent understanding the competitive environment - which, in football, means the next opponent.  Coaches and players study film of past games, both your own team's and the oppositions, learning strengths and weaknesses, analyzing past performance in excrutiating detail.  The purpose is not to place blame for past problems, but to learn and improve.  

As this work progresses,  the coaches begin to develop the game plan.  What is the game plan? It's the specific plays - actions, activities, strategies, tactics - that the team intends to use to win the next game, based on their analysis of their opponent.  

Coaches build the game plan by making assumptions about what the opponent is going to do, through careful, in-depth study of what it has done in the past in similar situations and the results of those actions.  The game plan includes those plays that a team is best at executing.  The game plan also includes plays designed specifically to exploit the opponents' weaknesses.   The plan is then broken down, player by player, position by position, so that each person on the team knows exactly what he needs to do in order for the team to execute its game plan successfully.   

If the plan is executed as designed, the team expects success and, in the end, to win the game. Sound familiar?

Here's the key lesson:  The plan, however, is exactly that - it's a plan.   No matter how much time and effort the team spends preparing the plan for Saturday's or Sunday's game, the best are willing to throw the plan away if they get into the game and find out the plan isn't working.  

Sometimes, the plan doesn't work because the opponent doesn't do what was expected.  Sometimes, the designed plays aren't working the way they were designed, either from poor design, lack of execution, or unexpected responses from the opposition.  Whatever the reason, a team can't stick with a game plan that isn't working.  That's a recipe for failure. 

If you're a fan, you know about "half-time adjustments"  - the changes that coaches make to their game plans at half-time, based on the results of the first half of play. My (completely unscientific) observation is that the teams that win the most games, and are the most successful overall, are those teams that do the best job of adjusting their game plan in the midst of the game.   These adjustments can be of any type, but they have one thing in common:  An assumption that the coaches made when preparing the game plan turned out false  - so the game plan has to be adjusted based on new information.

This is where I'm going to stop for today - but only after making this point crystal clear.   A plan is great as a starting point, but success in strategy execution requires much more than a good plan.  It means being willing to adjust the plan in the heat of the battle, to recognize when the plan isn't working, or when key assumptions are no longer true.  It means measuring performance against clear metrics, and changing when performance is not meeting the desired goals.  And it means recognizing that the plan is only a means to an end - the end being winning the game.  

It may have been a great plan, but if it's not working - change it.  The goal is not to stay true to the plan.  The goal is to win the game.

Obama: Socialist or Savior?

It is amazing how many people I know who are scared to death of what President-elect Obama is going to do to the economy and their individual businesses. So, here's my view:

1) Our economy is driven by consumer spending. Right now, consumers aren't spending because they don't have any money. They've used up credit cards and home equity lines.

2) If consumers don't have jobs, the problem gets even worse.

3) Without consumer spending, the economy goes into (excuse the hyperbole) a death spiral, where loss of jobs and no spending puts other businesses out - which in turn leads to more job losses and less spending which, in turn, leads to... well, you get the (ugly) picture.

4) So, President-elect Obama's first responsibility is to shore up the jobs market and assure that consumer spending doesn't get worse. How does he do that? (Hint: It ain't through a one-time stimulus package or cutting the capital gains tax.) We need:

• A jobs program, whether it be in alternative energy, infrastructure repair, some other area, or a combination;
• Tax cuts, allowing consumers to retain a larger percentage of the money they make;
• A moratorium on foreclosures, to avoid even greater disruptions (and downward price pressure) in the housing market;
• Selective investments (see: investments - we buy stock, bonds, preferred shares - it ain't a give-away) in existing industries and specific companies within those industries to reduce further job losses;
• The willingness to let other companies fail, as our markets require, for failing to successfully define or execute an appropriate strategy (you knew it would get back to Successful Strategy Execution, didn't you?)

This cannot be a bail-out, but a temporary investment program intended to avoid economic catastrophe. As a result, we need the smartest people available to make decisions - and a president willing to make some very hard choices.

No, this is not the complete program. There are other elements needed to support these primary steps - but it's a good start.

And the last question: What does this have to do with Strategy Execution? It's simple: This is a lesson in metrics, risk monitoring, and risk mitigation.

We never know, when starting down the path of executing a strategy, if our key assumptions are going to hold. We must identify those assumptions clearly, note how we will know if those assumptions are no longer valid - and actively monitor trends. When the assumptions aren't holding, we need to send up a red flag - if the assumptions are no longer valid, there is a good chance the strategy is no longer valid either. And if the strategy is no longer valid, it no longer makes sense to execute that strategy. We need a new strategy.

We have gotten our economy into the shape it is by ignoring the red flags and refusing to recognize when key assumptions were no longer valid. As such, businesses (particularly financial institutions) continued to pursue strategies that were no longer appropriate for the situation - and you see where we are now.

I am optimistic about our long-term future and quite concerned about the short-term. As for President Obama, he is neither savior nor socialist. I am encouraged by the fact that he does not seem to be an ideologue, who believes he holds a hammer and that every problem is a nail. No, to the contrary, he strikes me as calm, considerate, and careful, one who takes input from the very best people from all points of view, and then makes the best possible decision. That's exactly the kind of leader we need during these challenging, uncharted times.