As marketers, we sometimes struggle to turn our strategies into results. We asked renowned decision-making expert Cheryl Strauss Einhorn to explain how to execute on good ideas.
Recently there’s a lot of evidence of high profile strategy failures, whether it’s the healthcare overhaul in Congress, the inability of the Organization of Petroleum Exporting Countries to bolster oil prices by cutting supplies, or disappointments from hot start-up initial public offerings like photo-sharing app maker SNAP and meal-kit service Blue Apron that haven’t delivered on their expected growth strategies leading shareholders to punish their stocks.
It’s not that these organizations lack strategy. It’s that they haven’t produced results. The difference is critical; these groups had a clear vision or purpose –although it’s up for debate whether the strategies were good ones –but weren’t able to execute their vision. They lacked the ability to translate from a vision into a practical solution.
Republicans had a plan to repeal and even to replace parts of the healthcare law. OPEC has production quotas for each of its members and SNAP and Blue Apron have designs for their respective futures. The problem: A plan is meaningless unless there is a clear system for how to make decisions and solve problems. An organization is not its leader alone; the leader can only achieve his or her goals if she creates a system for buy-in.
That means that leaders have to know not only what to do but also how to carry it out so that each individual responsible for participating in the plan’s delivery knows the process and its practices; The leader needs a clear roadmap for what to do, when, in what way, why and with whom, both inside and outside of the organization. Doing that effectively means that leaders need to pay homage to incentive structures to ensure that employees or other stakeholders align with the priorities of the organization as a whole. Therefore, good decision making, to my thinking, needs to combine the social performance side of human behavior with the metric aspect of decision making.
Positive organizational change needs a collaborative backbone married with a rigorous research process to collect and vet hypotheses and data. What this means in practice is that a leader may want to execute a strategy with a decision-making system that uses the following tools:
- A perspective taking process that investigates the incentives and motives of stakeholders to create buy-in and solve problems holistically.
- A rigorous research process that collects data and tests assumptions against evidence
- An audit trail that encourages transparency and records a team’s thinking, assertions and facts making it easier for employees and stakeholders to understand how and why tasks were completed the way they were. It also allows for the capture of corporate knowledge and allows the success of one team to impact the whole organization.
These three steps together enable organizations to work collaboratively without barriers in a non-threatening way. The perspective-taking acknowledges and clarifies the different vantage points that exist within a team or organization and the rigorous research demands that evidence and not assertion ground the work. Together this kind of a system combines critical thinking with performance. In short it enables a strategy to have the potential to succeed.
Let’s take SNAP’s problem. SNAP, the messaging and chat app that shares and distributes images and videos that viewers only have ten seconds to view before it automatically deletes itself, just missed three big growth targets: earnings, revenues and users. Shareholders have punished its stock, sending shares down almost by half since its initial public offering in March.
The company’s strategy has been to claim that it’s no longer a camera company but an advertising platform. The problem: There’s scant evidence. Too, with social media giant Facebook buying competitor Instagram and copying SNAP’s basic model, the company is under pressure to show that there’s a strong link between its process and outcomes.
Yet it failed on all accounts. In its earnings release this week and its conference call SNAP wasn’t able to demonstrate that it understood how to translate from a vision into a practical solution. It couldn’t articulate the perspectives of its users, a research process that might uncover data to support its assertions or an audit trail recording how and why it is executing its plans the way it says it wants to.
The goal for any leader is to know how to work with and through ambiguity. Companies need to have a system to triangulate missing facts so that they may assess the rapidly changing environment in which they operate with both confidence and conviction. It means dealing with failures of both data and analysis since the most likely hypothesis is not the one with the most confirming data but instead is the one with the least disconfirming data. It doesn’t matter if all looks well and yet there is one insurmountable hurdle; that’s when the plan fails, as sadly SNAP’s shrinking user base may indicate.
The bottom line is that leaders may want to consider what systems they are using to execute their strategies. Effective execution needs a focus on human behavior and incentives as well as thoughtful data collection: A good process plus good information equals great decisions.
As a journalist, teacher, consultant, mother, sister, wife, daughter, and friend, I’ve learned that there are few absolutes—and many gray areas. We each experience the world differently, bringing our own viewpoint— and biases—to everything we do. That’s why I put together my decision making system that I call the AREA Method, a perspective-taking system that enables us to solve problems holistically by zeroing in on stakeholder incentives and managing for assumptions. It enables leaders to navigate gray areas and avoid those mental shortcuts that enable us to make small decisions easily but may impair our judgment when making big decisions. In short, I developed it to make big decisions better.
But in developing AREA, I realized that the process does much more than provide a research and decision-making roadmap. It makes your work work for you. It heightens your awareness of the motivations and incentives of others. It helps you to avoid bias in your work and to engage with people and problems more mindfully. For while decision making is about ideas, ideas aren’t enough; there is an important gap between having ideas and making good decisions about what to do with those ideas.
The AREA process gets its name from the perspectives that it addresses: absolute, relative, exploration & exploitation and analysis. The first A, or Absolute, refers to primary, uninfluenced information from the source, or sources, at the center of your research and decision making process. R, or relative, refers to the perspectives of outsiders around your research subject. It is secondary information, or information that has been filtered through sources connected to your subject. E, or exploration and exploitation, are the twin engines of creativity, one being about expanding your research breadth and the other about depth. Exploration asks you to listen to other peoples’ perspectives by developing sources and interviewing. Exploitation asks you to focus inward, on you as the decision maker, to examine how you process information, examining and challenging your own assumptions and judgment. The second A, analysis, synthesizes all of these perspectives, processing and interpreting the information you’ve collected.
By emphasizing perspective-taking, AREA acknowledges that although you may think that you understand how to solve a particular problem, your understanding of that problem is most likely incomplete and different from how other key actors see it. By walking in their shoes, you will better recognize their considerations and incentives. You may even come to understand the facts differently. Further, by moving through a research and decision making process that acknowledges the need for empathy and understanding, you can also better manage your own perspective, assumptions and judgments and more easily make a thoughtful and successful decision.
In addition, AREA inverts traditional decision making. It begins with framing your decision not as a problem per se, but instead asking you something that you can often much more easily define: What constitutes a good outcome for you personally? It turns decision making upside down so that instead of focusing on what you don’t know, you can focus on what matters to you in the outcome.
By defining what matters, what I call your “critical concepts,” AREA gets at what you are really solving for. The critical concepts not only get at the driving purpose behind your decision but also they keep your work targeted and focused on the few key factors that you really need to understand. With the right framework, the right approach to decision-making—the right process—you can turn good ideas into great results.
For a similar analysis of the OPEC situation click here >>