Musings on Strategic Investigation, Performance Improvement, and Rhetoric

The Sign of a Good Answer

In stage 16 of the 2006 Tour de France, the favourite, Floyd Landis fell badly off the pace in the last 8 minutes and crawled to the finish with his chances in tatters. The next day, stage 17, he produced the most inspiring comeback many cycling fans have seen. He attacked early, broke away from the favourites and alone sustained a pace to which the peloton, with all its wind-saving advantages, couldn’t respond. He made up enough time to eventually be crowned Tour champion.

Explanations came flooding in for this stirring physical achievement. To many fans it was a story of the triumph of human spirit and athletic supremacy. But the accepted explanation in knowledgeable circles was that Landis, by being out by himself, could to keep his body temperature under control, giving him a major physiological advantage. You see, it was an incredibly hot July day, and the riders in the peloton were suffering from sky high temperatures; meanwhile Landis spent the day pouring cold water over his head, supplied by the team car.

Seems reasonable?

A few days after Landis’ victory, his urine sample, taken after stage 17 tested positive for a banned performance-enhancing substance - synthetic testosterone.

OK, which explanation for the inspirational performance do you believe now?

You see, as we all know, it’s very easy to come up with a reason or theory for any phenomenon: why our competitor is doing twice as well as we are; why we’re not as profitable as we once were; why we’re struggling to get a foothold with a customer group; why growth has fallen off, or whatever is puzzling us.

When you review businesses and markets, as you unearth the facts and analyse the data, you come across a whole raft of potential explanations and solutions for the business’s condition and theories on what it should do next. The first set you come across is usually complex, nuanced and subtle, often received wisdom from proclaimed experts, and very tempting to believe. But if you have the gumption to ignore these temptations; if you carry on researching, challenging and turning over stones, I guarantee that you will eventually come up with a better answer that’s as plain as the nose on your face.

Scientists have a principle called Occam’s Razor, the common understanding of which is as follows, “Of several acceptable explanations for a phenomenon, the simplest is preferable, provided that it takes all circumstances into account.”

At my company, we describe it differently. We just carry on investigating, testing and searching for explanations until we uncover the one that fits our golden rule: when looked at in retrospect, it must be absolutely obvious.

Copyright Latitude 2009. All rights reserved.

Latitude Partners Ltd
19 Bulstrode Street, London W1U 2JN

The Next Level of Analysis - It Makes All the Difference

Malcolm Gladwell’s “Outliers” is a treat. It gives fascinating insights into what really lies behind world class performers, destroying the superficial romantic myths about poor kids defeating the odds with a combination of god-given talent, inspiration and succeeding against the odds. I’d sum up the Gladwell’s conclusion of what makes world class performance with the phrase “practice makes perfect”, though I’m sure my performance coaching colleagues would justifiably emphasise the importance of creating environments and cultures that stack the odds in favour of practising the right things.

Gladwell’s conclusions were fascinating, but what caught my attention was his method – how he got to the insightful conclusions that gave the myth to some romantic, but ultimately incorrect and misleading, received wisdom. In a nutshell, all he did was this: he took the analysis to the next level. That’s it. Here’s an example from the book.

A US study analysed the improvement in reading performance of school children from different social classes. Though the social groups had similar aptitude for the youngest children studied, the gap between wealthier and poorer classes grew as the children got older. Policy makers had concluded that the education system was failing the poorer children.

However, analysis of reading performance before and after summer recess revealed an interesting insight – that the entire difference in improvement could be explained by what happened when children weren’t in school. During the main school holiday, children from the wealthier classes improved their reading ability, whereas the poorer children regressed. In fact, during the school year, the poorer classes actually improved marginally more than the richer children. So by trying to raise the relative level of the poorer children through the traditional school system with traditional school hours and a traditional school year missed the crucial point - that they regressed outside class. A simple answer was a very popular, successful school that kept children at school for longer and kept them focused on their work.

The useful insight for me here wasn’t about schools or policy or social justice. It was that by getting under the skin of things, you get the insight that allows you to take the most effective actions.

Critics of Gladwell's book say he's superficial. But all these critics are saying is that he'd have got even more insight if he'd gone to the next level, so the importance of analysing to the next level still stands.

So what is the relevance of this to business strategy? It is the immense value of analysing to the next level, beyond the superficial received wisdom, and the risk of not doing so and missing the obvious actions. I’ve been analysing businesses and their markets for more than 15 years, with more than 200 companies, including my own. From that 200+ sample, I cannot think of a single example of a company that hasn’t understood its markets or the value of its services differently after making that next level of analysis. Some of these companies even acted on that insight and turned around their performance as a result.

So does this mean for the provider and buyer of strategic advice? I was speaking at a Chairmen’s dinner recently about the benefits of performing an external review, and the host asked me a very similar question: do I, as a reviewer of businesses and markets, provide information or do I provide advice? I bungled an answer, but I should have said this:

"If you keep asking the right questions; if you get under the skin of the issue, not being satisfied or fobbed-off by superficial hearsay, then the answer and the advice comes out all by itself."

Copyright Latitude 2009. All rights reserved.

Latitude Partners Ltd
19 Bulstrode Street, London W1U 2JN