November 20, 2015

By Tim Kerstein, Director of Solutions Development

My father was—and still is today—quick to interject whenever I used the word "if." He believes the word "if" implies improbability. I vividly remember hearing him say, "It is not a matter of 'if' but 'when'." He used this tactic with me and my sisters so we would focus on setting, maintaining, and achieving goals as well as accepting challenges—especially the "improbable" ones.

I was thinking about this story one day on a long, straight road in Indiana, and I had a startling thought… "What if he was right and wasn't just pestering me?" I realized the irony of using “if” in the question, but I also had a more worrying question follow: Is our use of the word “if” in business stunting our strategic planning?

“If” at its core is based on chance and probability. We use “if” a great deal in agriculture, including these two from recent memory: "If corn goes to $8…" and "If corn goes back to $4…" Both statements were made with a certain level of improbability at the time, but then they came true. Statements starting with "when" inherently have a greater level of urgency because they feel more probable compared to “if” statements. That brings us back to the article title—“Is a two-letter word getting in the way of comprehensive strategy?" I firmly believe the answer is "yes."

Was the industry adequately prepared for recent shifts in commodity prices? There is truth to the metaphor "a rising tide raises all boats," but you can manage the big waves better when you are closer to the crest than the trough.

As my thoughts continued to wander on an infinitely straight road, I became more and more compelled to admit my father was right. I understand no one has a crystal ball and you have to invest more resources in the most probable outcomes. So the word 'if' can serve a purpose. But are we less prepared when we let improbability influence our strategic planning?

All of our clients are impacted by forces they cannot control, and preparing for those uncertainties is difficult. For starters, it seems fruitless to prepare market responses for scenarios you cannot yet see. It is also difficult because of that ever-prevalent fear of change. But, if you make preparing for change and uncertainty part of your daily routine, that fear subsides and the process becomes more of an evolution.

In previous articles we have talked about using better analytics to understand sales effectiveness and how customer segmentation provides sales teams with actionable direction leading to success. Both activities create evolution in your business and are critical components to running an effective business. With the insight and data gained from these activities, you are on the path to be ready for “when.” I would argue you cannot develop a comprehensive strategy without them.

One of the biggest corporate strategic planning blunders of all time gave new meaning to the phrase “having a Kodak moment.” During the past couple of decades, Kodak was in denial about the magnitude and staying power of digital photography. What was essentially dismissed as a potential threat to its film-based business went far beyond disruptive to catastrophic. Believe it or not, the base technology of digital photography was actually created at Kodak. Still, the company could not fathom such a technology would be a threat to its core business, so they ignored it. It is a lesson to businesses to what you need to do to help your company avoid its “Kodak moment.”

If your mindset is to address the improbable only if it happens, then you’re already too late. The most resilient companies are those that are truly ready for anything. Though the scenarios seem farfetched, it’s smart to be ready to act whenever “when” becomes a reality. Consolidation in the ag industry has been making headlines, but uncertainty remains on who moves first and if/how those actions will force the hands of others. This and other “when” moments are ideal scenarios for utilizing business war gaming

So, when the big wave comes, will it crash over you or will you ride with it?

Unless you are taking the “whens” seriously, you could find yourself facing very serious consequences. In most cases it requires simple steps to be ready for every wave that comes your way, no matter how likely or unlikely they may be. What if the thing you expect to never happen, happens? Think about where you’d be with a plan vs. without a plan. It’s the difference between scrambling to address it, or pivoting. It is the difference of having a black year vs. a red year; of having a job vs. no longer having one. Keep in mind your decisions impact your business at so many levels—customers, employees, partners—so even though some scenarios may not be realistic, know that people below and around you may not be able to weather that storm.

One thing we can learn from Kodak is that no one is immune to improbability. Working in the agriculture industry has taught us that, too—to expect the unexpected. We saw it recently with corn prices, we might see it soon with industry consolidation, and quite frankly we witness this season after season.

If you want to talk about these or other ways to prepare your business for “what happens when,” contact me at tkerstein@entira.net.