(To read previous “themes”, click here:
Theme 1: It’s Not Data, It’s Decision Making
Theme 2: It’s Not Value Capture, It’s Value Creation)
Imagine an officer in the military addressing his troops. The time period doesn’t matter, be it the Peloponnesian War of ancient times or the Iraq War of the 2000s. I’ll give you two versions. Here’s version one:
“So we’re heading out to confront the enemy. Our goal is to bring decisive energy to the battlefield. We’re going to overwhelm them with superior firepower, ensuring we make decisive action. Once we defeat the enemy, we’re going to consolidate our gains, ensuring we have accounted for stable post-conflict efforts to capture our gains.”
That hurt me to write. If you’re a subordinate, what do you even do with that?
It’s pretty much the worst possible version of a mission you could give. It’s like the consultant or PR speak version of a mission statement: all buzz words with no actual meat or substance. (And yeah, I hear you. The mission statement for the Iraq invasion probably had a slide with that sort of non-speak on it.)
What’s the better real world mission statement? Here:
“Our mission is to conduct an ambush on location WT 8940-4569 in order to destroy enemy patrols no later than 1700. We’re going to depart at 0700. We’re moving from this location…”
[point at a map]
“…to this location”
[point at another location on the map]
“and lay in an L-shaped ambush here. This will look like this…]
[Point to a sketch of the position with unit names.]
“First squad, your task is to lay a support by fire here in order to…”
Then the hypothetical officer would continue.
Though I’m a little rusty, that second briefing is pretty close to the textbook version—technically Ranger Handbook version—an American officer would give his troops in today’s U.S. Army. (Maybe I would know.)
What’s the difference between the two briefings? Well, one is completely vague and the other is detailed. But the main difference is the second briefing has the locations on the map.
In the military, you can’t have a strategy without a map. If you don’t have locations, you don’t have a strategy. Sure, you can talk about Hannibal conducting a pincer movement, but really without a map you can’t visualize it. Sure, you can “defeat Hitler”, but you can’t say that to your men. You have to tell them you are invading, and point out where and when with a specific unit (or tons of different divisions and brigades), moving along given routes. Even a counter-insurgency campaign is about controlling territory, winning elections and decreasing violence. A map helps explain all those things.
Another way of saying this is that to win wars, you need a strategy that understands the territory. That understands that you have to seize territory to win. Yes, lots of factors go into it, but controlling territory (with the people on it) is the point.
So what’s the business equivalent? Well, numbers.
Strategy—in business—is numbers.
You can have a great company culture and be innovative or be disruptive. Those are all things. But what matters—the point in business—is how the numbers move. The vague version? Deliver customers a great product. The specific version is answering the questions: How much revenue will a new product generate? Is your company earning more money than it sends out? What is its return on investment on its assets? What is its profit? Those are the numbers. Hypothetically, they directly impact the stock price. (There is an argument about the efficient market hypothesis I don’t feel like getting into here.)
What aren’t numbers? Feelings. Strategic focus. Energy. Motivation. Even culture.
(Those things are important, but at the end of the day they can’t be strategy on their own.)
A lot of other things could be quantified, but aren’t. Customer experience. Brand equity. Customer affection (or hatred). Investments into strategic priorities
(These are also important, but without quantification you can’t judge how well you’re doing. Or effectively build plans to improve them.)
Put at the end of the day, any business strategy is a business strategy with numbers. Usually, an income statement/pro forma/business model that explains how the company will make money. That model is the business equivalent of the army’s map. The numbers are the territory being fought over.
I bring this up, because I see this all the time.
In business—and worse at business school—the powerpoint presentation is the easiest way to obscure the numbers. You use big fonts, shiny graphics, lots of stock photos with smiling Millennials (see above) and a few, purposefully selected charts/graphs. You have a lot of opinion without a lot of numbers. Or numbers that haven’t been interrogated properly. Consultants may be the experts in the field.
In journalism, I see even more of this. Journalists have pressures to get stories out. Building an income statement takes lots of time. So I don’t really blame them. They’re mostly trying to get news out quickly.
However, I do blame anyone who is providing an “opinion”. Opinions are easy; numbers backing those up are a lot tougher. It’s the the primary thing that takes up my time writing for this site.
For example, I had a big article I wanted to publish last year, but I just hated it. It’s my titanic battle between three huge fantasy franchises on three (!) competing streaming services. HBO versus Amazon Prime/Video/Studios versus Netflix. Game of Thrones versus Lord of the Rings versus The Chronicles of Narnia. But the first few drafts were missing something. That something was numbers. I made a lot of predictions, but didn’t have the numbers to hold myself to. So I’ve been waiting until I could get numbers I feel better about it. (That and I realized I needed to explain a lot of accounting to get there.)
It’s tough though. The problem with numbers is they put problems into sharp relief. They can also be wrong. Every time I put numbers into the world I stress and stress and stress that I got something wrong. That I’m missing some key detail. With numbers, it’s really easy to hold me accountable. Undoubtedly I’ve made some mistakes. That’s even truer for business. (Without the holding accountable part.)
I don’t want to gloss over, the numbers, though. I want to do strategy right, and that means giving the numbers. That’s why this is a theme of this website.
