FUTURE PICTURES: SOME EXAMPLES
In 1990, Saddam Hussein ordered his troops to invade and seize control of Kuwait. The egregious act of aggression horrified the world and a coalition of forces was organized under the command of President George H.W. Bush. On the eve of a military operation in the Middle East, President Bush gave his commanders a clear Future Picture: “Iraq will be out of Kuwait. Allied casualties will be low. Collateral damage will be minimized (so Iraq can recover quickly). Saddam’s Army will not be a regional power for at least ten years. Oil will flow freely in the region.” Pretty simple. Very direct. Easy to understand, and yet, it’s a Future Picture with resolution and detail sufficient to give his commanders a starting point for the planning process that would lay down the specific strategies necessary to achieve his Future Picture.
Let’s look at what President Bush did not say. President Bush could have said: “I see a future where the Middle East is stabilized.” Noble. Admirable. Easy to understand. But how would one translate that into an action plan? How does a military operation proceed? It doesn’t. The Future Picture is too general. There is no focus, nothing to act on, no leverage points.
At the other extreme, President Bush could have micro-managed the process. He could have said, “I want fleets of B-52 bombers dropping bombs, Navy ships launching F/A-18s on the hour, and all of our soldiers on the ground attacking Baghdad relentlessly pouring shells on government buildings until they agree to sign an armistice.” To do that it would probably take all of our B-52 bombers and most of our soldiers, and it would, of course, handcuff our military experts. Moreover, by inserting a condition for the end of the war, the Future Picture turns the power over to the enemy.
No, instead of either of these Future Picture statements, the commander-in-chief empowered his best minds with a simple but clear Future Picture, and the results were nothing short of phenomenal. To this day I would contend we have never been involved in a more successful military campaign.
What about the business world? Let’s look at Amerada Hess; they sell gasoline. Ten years ago, maybe fifteen, that’s about all they sold: gasoline. But the industry evolved and they successfully made the migration to the convenience store-plus-gasoline model and were thus able to increase the average sale per customer. So far so good. But, over the years, the margins on gasoline were shrinking and the basic business of the tobacco, candy, and soft drinks store was under the gun. Moreover, every Tom, Dick, and Harry was getting into the gasoline business. Kroger. Wal-Mart. You name it. So, not only were margins slim but volume was shrinking, too. How do you survive? How do you grow revenues and maintain profits when the business is going elsewhere and the margins are razor thin? Future Picture.
The CEO of Amerada Hess saw a future where the very survival of his stores depended on his ability to make his stores a far more desirable place to go to than a Kroger or a Wal-Mart or, for that matter, any other gas station. To survive, better yet, to thrive, his thousands of outlets had to be viewed as more than a place to buy gas and incidentals like tobacco and candy. He saw something radically different. Wal-Mart was a destination store; why not Amerada Hess? In the CEO’s Future Picture, Amerada Hess would be a destination. Drivers would leave their homes (or hop off the interstate) to go to an Amerada Hess gas station for all of those things that we need but likely don’t want to suffer the hustle and bustle of a grocery store or a Wal-Mart to get. Make our stores a destination, he said to his managers; give the people in our adjoining neighborhoods the products they want. Give it to them in a self-service environment that’s clean, with a shopping experience that’s quick. And, oh by the way, don’t charge more than the local grocery store but make me a good return on my money. After that, he left it to his vice presidents to iron out the details, which they did. First they studied their customers and found out what they wanted, talked to designers, and worked on the layout of the stores and the positioning of the gondolas and shelves. They worked on their retail appearance, redesigned logos, and put together the pieces that made gas stations into convenience stores.
Today, they are called Hess Express. Listen how the company described these remarkable stores: “The newly opened Hess Express convenience centers represent the state-of-the-art of this retail expression. They are consumer destinations in their own right. This is accomplished by offering a blend of traditional convenience store items, a proprietary gourmet coffee, and nationally branded fast food services in a physically attractive presentation that is both high-tech and friendly” (www.hess.com). Hess Express is a place you go to for high-quality fast food like TCBY, Godfather’s Pizza, or Blimpie. They have a wide assortment of groceries and sundries. The merchandising is attractive. The stores are absolutely clean. The transactions are smooth. The training of their service staff is continuous. Quality is a high priority. And the target audience is the family. “Fast, fun and family oriented” is their mission statement. The results? Despite a bleak economy and a competitive universe where it now seems everyone is selling gas, Amerada Hess has recorded consecutive quarterly increases in revenues and profits that are the envy of the industry.
That’s Future Picture. The Future Picture gave the corporate mission planners a clear picture of the future that the CEO saw in his mind. With that picture, each of the internal silos started to build their plans—marketing, advertising, business development, product development, store design, purchasing, training, and so on. Weaving those plans together had only one possible outcome: Hess Express is now a destination shopping experience.
Rule 1. Focus on the Future
A Future Picture statement opens the door to creativity and outside-the-box thinking at exactly the right moment in the process—before anyone has locked down plans and started the execution phases. It also focuses the commanders on the future. If it doesn’t contribute to the Future Picture, it doesn’t belong on the table. If it doesn’t contribute to pushing Saddam Hussein out of Kuwait, it doesn’t belong on the table. If it doesn’t make me want to go to a Hess Express, then why are we talking about it? This is the purpose of a clear Future Picture. It is designed to draw out the best of an organization while at the same time serve as a beacon, an aiming point for everyone’s actions.
Rising out of the ashes of the battered telecommunications industry is a true phoenix. It’s a technology called 802.11 or “Wi-Fi” or wireless. Wi-Fi is a low-cost, fast-deployment, radio-based infrastructure that can deliver broadband Internet connections to businesses and residences. It can as easily connect entire rural towns as it can your laptop to the Internet at a Starbucks. Read the press and you’ll see a story about it. Wi-Fi has certainly been a disruptive technology.
But that’s today. Three years ago few people knew of Wi-Fi. It was relegated to a few tinkerers in their garages. Venture capitalists had no interest in it.
One entrepreneur had a different Future Picture. He saw a future where broadband would travel through the air wirelessly to connect people anywhere, yet cost just half of what the big companies were charging. His Future Picture of wireless broadband was not unlike Herb Kelleher’s of Southwest Airlines. It’s not about the planes. We all have the same planes. It’s about being affordable, reliable, and fun.
Taking a well-textured Future Picture, the entrepreneur engineered a network using this forlorn technology called Wi-Fi, painted his picture before angel investors, and raised a few million dollars. Soon he had hundreds of customers flying onto the Internet across his low-cost wireless infrastructure and he was taking money and market share away from the local DSL and cable modem providers. And not just one entrepreneur was doing it. Dozens, then hundreds, of entrepreneurs saw the same thing. All across the nation they started to build their own wireless Internet data networks. The FCC loved it and opened up the rules to encourage even more investment and even more deployments. Venture capitalists started to listen to the story; monies flowed into business plans. Future Pictures were refined and evolved. Wireless Internet providers are now approac
hing 10 percent of the Internet connection market—and they were nothing more than a playful idea five years ago.
Rule 2. Key Descriptors: Painting with Colors
How do we develop a Future Picture? Colonel Warden studied this in detail, looking at the attributes that made the military process work so well, then observing the behavior of business organizations. Warden merged the military processes with the organizational needs he identified and came up with a list of key descriptors that make up the Future Picture. Renoir would call them the colors on his palette. In either case, there are exactly twelve key descriptors that must be included in your Future Picture.
Financial Position. Describe your company’s financial position as you would like to be in a reasonable amount of time, say three to five years. Will you measure internal rate of return (IRR), earnings, revenues, EBITDA (earnings before interest, taxes, depreciation, and amortization), or what?
Market Position. Describe your market position. Will you be a leader or a follower? Are you a fringe segment? Elaborate.
Business Areas. What business(es) do you intend to be in?
Innovation. Will you innovate or use off-the-shelf technology? Is R&D an essential part of your future?
Insider Perception. What is the insider view of the company? How do the various stakeholders view the company? Is it a good place to work, a good investment? Elaborate.
Outsider Perception. What should the outsider perception be? A growing company, profitable, customer-oriented? Professional, competent?
Workforce Characteristics. What are the features of your workforce? What are their skills, special talents?
Brand: Yes or No. Are you going to have a branded product or a commodity product? Will you be an OEM (original equipment manufacturer) to another company?
Corporate Culture. What is your vision of your corporate culture? Are you entrepreneurial with a minimum of bureaucratic layers? Are you productivity driven like Dell Computer?
Corporate Citizenship. What is your vision of corporate citizenship? Will you make a contribution to the quality of life in your communities? Why?
Ownership. Will your company be public, private, or have an employee stock plan?
Incentive Philosophy. What will your incentive plans be based on? Straight pay, shared risk, rewards based on results?
In developing the Future Picture, we blend those twelve key descriptors into a detailed picture of the company. The results don’t have to portray a dramatically different company or in any manner go over the top. Future Pictures are horses-for-courses—they’re unique to you; they’re unique to your company. But they need the twelve descriptors. Again, the Future Picture is a view of the future as we’d like something to be. That “something” can be a new company, the person you want to be in three years, or the reorganized mega-corporation that needs to adapt to change. It’s a well-written, clear, high-resolution, and easily communicated big picture of what you want the future to be.
Future Picture is a beacon that pulls the team into the designed future.
Future Picture Sits on Top of the Flawless Execution Pyramid
Viewed within the Flawless Execution Model, the Future Picture is always at the top of the pyramid. It is the starting point for mission execution, and it is the end point. Get Saddam Hussein out of Kuwait. Keep allied causalities low. Reduce Saddam’s military’s effectiveness. Get oil flowing again. That tells us what we need to do and what signifies success. Now we communicate.
Communicating the Future Picture across the organization assures management that everyone knows what the company is intent on doing. Confident in the knowledge of what their company wants, people can draw up and execute their own plans. They know what type of hot dog you want. They understand your vision of the perfect picnic—you won’t sit down to a platter of cold cuts on the ground with ants crawling over everything; you’ll be in Renoir’s boat excursion. The Future Picture sees to that. The Future Picture ensures that your Flawless Execution teams will not be executing against the wrong things, things of their own experiences or past performance, but toward the future you intend.
Future Picture is the starting point for Flawless Execution.
Rule 3. Measures of Merit
To achieve the Future Picture you must attach to each key descriptor a succinct measure of merit. What are measures of merit? Measures of merit are the measures of success we attach to each key descriptor. These are the things that have to happen in order to achieve the key descriptors, which in turn, realize our Future Picture. They tell us we’re making progress—that the future is materializing.
Measures of merit are absolutes, not comparative, and are written to focus on strategic progress versus any sort of tactical success. They are clear, concise, and easily communicated.
In the section on key descriptors (Rule 2) we talked about branded versus nonbranded. If your key descriptor painted a Future Picture with a product that is branded, a concise, absolute measure of merit might be a high product rating by J.D. Power or high product awareness among the target audience.
If your financial descriptor called for profits that doubled in three years, a measure of merit might be a quarterly measure of EBITDA, or, better yet, net profits.
No matter what you choose, the measures have to be strategic, not tactical.
Here are some examples of Future Picture key descriptors and their measures of merit (MOM):
Financial Position
Key Descriptor: $50 million, 15 percent EBITDA. Disburse 75 percent of net income on cash basis method to stakeholders assuming no debt.
MOM: Meet or exceed $50 million and 15 percent EBITDA by normal accounting procedures; 75 percent of net income is distributed to stakeholders; no debt.
Market Position
Key Descriptor: Premier company in our market with number one brand in segment.
MOM: Market share hits 80 percent; maintain top honors in industry reviews, continually receive positive articles in our industry’s trade magazines.
Business Areas
Key Descriptor: Highly differentiated integrated products; no commodity products.
MOM: Profitability selling our products; not manufacturing or selling commodity products.
Innovation
Key Descriptors: Company known for creating next generation products.
MOM: New products launched within last twelve months account for at least 20 percent of annual revenue. Portfolio of next generation patents filed; multiple requests to license.
Insider Perception
Key Descriptor: The place to invest our time, energy, and money.
MOM: Insiders buying stock; multiple applicants for all positions; lights on late into the night.
Outsider Perception
Key Descriptor: Profitable, growing, customer oriented company.
MOM: Earnings per share growing at 12 percent per annum; bookings, revenue, and profits up.
Workforce Characteristics
Key Descriptor: Passionate, self-starters well educated in technology and business.
MOM: Multiple volunteers to speak on company’s behalf; multiple proposals for new business lines accepted. Twenty-five percent of our directors attend continuing education training in information technology and business courses.
Brand
Key Descriptor: Well known by customers and end users.
MOM: Customers and end users request our products by name.
Corporate Culture
Key Descriptor: Entrepreneurial with minimum bureaucracy and focus on productivity.
MOM: Everyone within four levels of CEO; productivity up from $300K per employee to $600K.
Corporate Citizenship
Key Descriptor: Dedicate a percentage of net profit (not to exceed 3 percent) to charities that align with core customer bases.
MOM: Annually donate set percentage of net profit.
Ownership
Key Descriptor: Everyone a stockholder.
MOM: Treasurer’s
records compared to payroll.
Incentive Philosophy
Key Descriptor: Reward results with money; recognize effort with thanks.
MOM: Bonuses paid to top individual and team achievers; hard workers recognized daily in bulletins and meetings.
CHAPTER 5
Strategy
You can have the best execution in the world…
but if you execute against the wrong things you will lose.
Whether you’re planning an air war or the launch of a new product, strategy is the connective tissue between the Future Picture and the individual plans that your execution teams will develop. Unfortunately, strategy means a lot of things to a lot of people, and rarely do any two agree on the definition. Let’s look at how we’ll be using it.
Flawless Execution Page 4
