Have you ever wondered how they build a big dam like the Hoover Dam? The Colorado river isn’t some little stream that just stopped and waited for them to pour the concrete. When you build a damn you actually have to build two dams. In the case of the Hoover Dam they had to blast multiple holes in the canyon wall the size of a four lane freeway and then build a temporary diversion damn to redirect the flow of the water until they could build the dam.
Let me ask you another question? How do you change your business strategy? I’m not talking about evolving your business strategy. At big companies, evolving your business strategy is usually done through acquisitions. I’m talking about radical changes to your strategy. How did HP go from being an engineering company that built engineering tools for other engineers to being the largest consumer electronics manufacturer in the World?
The prevailing wisdom states that the worst strategy is to cross a chasm in two leaps. I think this is a faulty metaphor for business strategy.
HP started by building products that engineers and consumers wanted, like calculators. Really awesome calculators. Then they started branching out to other crossover devices like printers. (Here’s a trivia question for you in case they ever create IT Trivial Pursuit. What’s the most profitable IT product ever? Answer: The LaserJet printer.) Then once they had diverted the flow of the river they spun off the original part of the engineering business.
This doesn’t just apply to big companies and big corporate strategies. Right now I’m working with a lot of smaller business groups build temporary diversion dams to change their communications strategies in order to first incorporate social media and then optimize around social media.
This is a different approach than most business strategy consultants. The big consulting groups like to come in and tell you how to jump the chasm in one leap. Of course they don’t stick around to help you actually execute it and more often then not change management initiatives almost always fail. The problem is that they’re really trying to build the Hoover Dam in the middle of the raging Colorado River. It’s foolish.
Strategists (myself included) like to envision the perfect strategies. This is the jump the chasm in one leap approach. While it’s important to know what the end goal is you still have to grapple with the realities of the business today and deal with the limitations in resources that are dedicated to managing the flow of the river. Diversionary strategies can be frustrating for employees because it seems like multiple, unnecessary cycles of change.
Change management almost always fails and the few times it doesn’t is when a companies livelihood depends on it. This is when a company makes huge, deep cuts and through shear will power manages to pull themselves out of the jaws of death and change strategies. Companies that don’t commit fully to change fail.
Using a diversion strategy shouldn’t be viewed as a lack of commitment or jumping a chasm in two steps. Instead it needs to be taken on with the same level of commitment but something that has planned, multiple steps to it. Think of it as agile development for change management.
Build a group to handle the new business strategy. This can be kick-started with an acquisition but the acquisition should not be the start or the core of the new business, just a differentiator.
Scale the new business to fit with the existing business realities like resources and culture. Integrate, replace, supplant or infuse the new business with the old business. Or spin-off the new business on it’s own.
Release the floodgates. At some point you have to takeaway the temporary strategy and rely on the new strategy to carry the weight of the business.