In our last article we reviewed what a “Business Playbook” (BP) is, and why we need a new one. In this article we will break down the elements of the BP, and give an overview of how that element is used / described in the “Old Business Playbook” (OBP).
As we discussed last time, everyone has a playbook. Playbooks are critical to you being able to function in the world. When you are fulfilling business responsibilities, you are unconsciously referencing a business playbook. Each playbook is unique, based on an individual’s experiences and beliefs. Yet most business playbooks contain common elements, which will explore in this article. And our experience is that many people’s playbooks are based on accepting conventional thinking, unexamined outcomes, and overconfidence in their own perception of events.
There are always winners and losers in the business world. But just because someone is winning doesn’t mean their playbook is unique, or better than the loser’s. Dumb fortune frequently plays a part in business success. It would be dangerous to believe that you have the right playbook just because you are winning. The goal is to win consistently, to beat the odds over extended periods of time, and that requires building a playbook based on your reality and goals. Hoping that the playbook you have built by happenstance will lead to continual victory is folly. We believe in building a “New Business Playbook” based on a fearless view of reality, goals, and methods that align to people’s strengths and passions, mindfulness, and the compulsion to continually improve.
Common Elements of a Business Playbook
The mind must categorize experience in order to navigate complexity. Otherwise every experience would pose its own unique thinking challenge. You wouldn’t ever get out the door in the morning, because you would constantly have to remember that the round thing in your hand is edible, can be toasted, is good with cream cheese, etc. Better to just have a category called “bagel.” What are the “bagels” of the business playbook?
ENVISION Whether you are creating an entirely new business, turning around a struggling division, or developing a new product or service, you are engaging in an act of creation. You are trying to build something that didn’t exist before, or existed differently than the way it should be. In order to create you must first visualize, or “envision” the thing that you want to bring to reality. The OBP tells you that there is a market that exists, and you just need to analyze that market to find the best possible place for you in it.We can use two different types of business situations to illustrate what we are talking about:
FOOTWEAR: You are an entrepreneur who wants to start a new business. You hear from a friend that the footwear market is growing rapidly. The OBP tells you to dive into the market data: who are buying footwear, what do they want, and where are gaps in what is currently provided you can exploit?
HR: You are a seasoned business manager who is assigned a head of HR job as part of your job rotation. How are you going to make your mark and keep climbing that corporate ladder? You survey all the current line managers and ask them questions about what they want from HR.
STRATEGY Even if you know WHAT you want to do, you still need to figure out HOW. How are you going to take this new idea and make it a winning reality? How do you think about creating an overall plan when there are so many possible routes to success? The OBP says that all problems of this nature are a data and logic problem: gather information relevant to the question, and then use logical thinking to select the best possible strategy. To continue with our scenarios:
FOOTWEAR: You found a gap in the market: “Handles”, sandal-type shoes for people who enjoy performing handstands. How are you going to get rich selling Handles? You dive into the data about people who enjoy doing handstands and find that there are handstand clubs. Your strategy: create market demand by delivering free samples to the leaders of these clubs.
HR: The survey data tells you that line managers want want more and better hires. You decide to focus on employee referrals programs as your way to build good talent flow, fast.
DESIGN Now that you have a target product or service you want to sell, and a strategy (supported by the data) for the best way to achieve your goals, you need to get people together to make your strategy into a reality. The OBP tells you that the best way to create an organization (i.e., a group of people working together towards common goals) is to break your strategy down into a structure with logical parts.
FOOTWEAR: The “Handles” strategy requires creating a product, identifying all the handstand clubs, selling to those clubs, manufacturing at volume, and shipping to the customer. Your new footwear organization (which you call “Well In Fingered Foot Inc”, or WIFF for short) must have different functions accomplishing those needs.
HR: The “Employee Referral” (ER) strategy requires that you have systems in place to capture data, training for generalists to drive the program, and marketing materials. You do a quick check to make sure that your information systems, training & development, and marketing communications departments are on board with making this new program a success.
JOBS Now that you have a plan with a logical structure, the next thing you need to do is create jobs. What are individual people going to be doing to help you achieve your goals? Jobs are just practical clustering of responsibilities. The OBP not only tells you how to structure your organization (e.g., marketing is one job, sales is another, facilities a third), but tells you how to create jobs that are easily replicable. This helps when you achieve success, since you will have to hire more people to keep providing your great product/service to more customers.
WIFF: Your new VP of Marketing tells you that she needs to hire 100 sales people to meet the sales goals. Each sales job is the same: sales people own a territory and are accountable to meet quota.
ER: Your training & development department manager explains that she needs to add another trainer to have capacity to meet the launch plan.
RECRUIT Jobs need people to fill them, so you have to go recruit. But how? The Old Business Playbook tells you: start with the reality that you need “A-level Players”, or “stars.” You need to find people who know the right things and have the right motivation. The OBP says that you need to look for people who have gone to the right schools and held the right jobs previously.
WIFF: The VP of Marketing posts a job to an internet site that says, “Looking for sales people who have consistently beat quota in the footwear business.”
ER: The T&D manager calls her outside recruiter and asks to see the list of people who a degree in psychology and have worked in great training organizations, like GE.
PAY You have to pay people you recruit. The Old Business Playbook is clear: pay for the title. For instance, if your job is programming (i.e. responsibilities to design and develop computer code), you might be a “Programmer Level 4”, which is worth between $100,000 and $120,000 per year. On the other hand, if you are a “Programmer Level 3” you are only worth between $80,000 and $100,000. There are numerous services that will tell you what the titles should be and how much to pay for them, reinforcing the playbook’s perspective.
WIFF: “All entry level sales people make $20,000 base salary per year.”
ER: “We need an experienced trainer. We call that “Senior Trainer 2.” That’s a $60,000 a year job."
INCENTIVIZE You don’t get stars unless you give them the right incentives. And we all know that the best way to get people to work harder is to pay them more when they produce better results. The conventional thinking is largely unquestioned: use cash and cash equivalents to help the good employees be great, and the great employees be astounding.
WIFF: “At-target performance for salespeople is worth a 50% bonus. But 200% of target performance for salespeople is worth a 120% bonus.”
ER: “If the trainer gets class reviews of 4.5 or above, there is a 20% performance bonus available.”
CHANGE Sometimes the incentives just don’t work. No matter how much you tell them they can earn, most people’s performance doesn’t seem to noticeably improve. What then? The OBP tells you that you can close performance gaps through “training.” If the motivation isn’t the problem, it must be knowledge. You get people in a classroom (or, increasingly, on a computer) and you give them information so that they can close their performance gap.
WIFF: “Sales people who fail to meet or beat quota receive 2 days of remedial sales training.”
ER: If you don’t achieve the grading goal then we will spend more time teaching the trainer about employee referral programs so they “get it.”
MANAGE Everyone makes mistakes. Even the stars need to be corrected and held accountable on occasion. This is management’s job. “Management” is one of those words that is so widely used that people rarely think about what it means. But the OBP tells you that you have to make sure that people who work for you don’t make mistakes. Mistakes cost money. The best way to do that is to hold people accountable. When someone does something wrong, catch them in the act and let them know the consequences if bad performance continues.
WIFF: You ask your VP of Marketing how she intends to close a sales gap in first quarter performance. She replies “I am going to fire the bottom third performers to send a message to everyone that a failure to meet quota won’t be tolerated.”
ER: Your program success metrics indicate that the number of Employee Referrals has actually gone down over the first six months. You contact the training and development manager and let her know that her training better noticeably improve or you will find someone else to manage the program.
Those are the elements of the business playbook. It works like this:
Motivating Question => Old Playbook Tells You
“What do I create, build or change?” => Choose opportunity based on market
“How do I create a winning plan?” => Select the logical strategy given available data
“How do I structure the team to accomplish the plan?” => Design the organization to achieve the plan
“How do I create jobs that fit the structure?” => Standardize to enable scale
“What people will be great performers in my open jobs?” => Recruit people who have the right expertise and motivation (i.e. “stars”)
“How do I pay people fairly?” => Pay for Title
“How do I inspire the best performance out of the people I have?” => Biggest lever = cash
“How do I close performance gaps when cash doesn’t work?” => Change skills through training
“How do I make sure that people are doing their jobs?” => Hold your direct reports accountable
None of this should sound crazy to you if you are a business person. In fact, it probably all sounds very familiar; a good way to build and run a business. This, in a nutshell, is your Old Business Playbook. And it is hard to argue with its success. Over the last 150 years billions of people have been productively employed, turning out millions of useful products and services that have dramatically increased the standard of living for an increasing portion of the population.
The trouble is, as we have discussed, the past is prologue(1). The Old Business Playbook worked because of a set of contexts and situations that were mostly stable and knowable. Dramatic changes in the world mean this is no longer the case. In our next article we will start diving into each of the elements, and describing a rationale and approach for a New Business Playbook.