By Any Other Name
Would Smell as Sweet
Without ever using the word “strategy” or “strategic thinking” or, God forbid, “strategic planning”, Dr. Kenn Sullivan and I discuss managing risk through a process of strategic thinking in our book, Managing the Profitable Construction Business.
Many contractors tend to be “action oriented” rather than strategic thinkers and some even avoid the use of the term strategic planning. I have often wondered why do so many men of action resist the concept of strategic planning? After interviewing hundreds of contractors over the years, here’s what they say:
“Long range planning is a waste of time in a highly volatile, ever-changing industry. Managers must be ready to act and react, often using only their gut. That’s the only way to run a construction company.”
Because of long-held, unexamined beliefs like the statement above, the truth about strategic thinking has not been communicated effectively to construction industry management. In fact, many of the contractors we talked to had it right. They just didn’t use the term strategic thinking. Which of course means:
- Strategic plans are not cast in stone.
- The very nature of strategic planning is versatility (react-ability)
- Strategic planning is an interactive process that responds to changing conditions.
- Strategic planning is an attempt to evaluate the implications of all possible alternatives and to react (tactics) accordingly.
- A strategic plan attempts to predict variables and sort out the best responses.
- The basic strategic planning formula is: “If this, then that.”
The Art of War
The Art of War, an ancient Chinese military treatise from the 5th century BC, was a popular business book in the 1980s because it introduced to American industry the concept of strategic thinking. Sun Tzu, long considered one of history’s finest military tacticians and analysts, went beyond tactics to teach his Generals how to think strategically. Rather than simply advising them on how many troops were required for a certain conflict, he offered the following strategic thoughts for managing their armies to victory:
- Avoid what is strong and strike at what is weak.
- Supreme excellence consists in breaking the enemy’s resistance without fighting.
- Know your opponent’s weaknesses and exploit them.
- Know yourself.
- It’s more important to outthink your enemy than to outfight him.
The book was all the rage among top managers because it taught management to consider the implications of all variables.
Closer to Home
In Managing the Profitable Construction Business, Dr. Sullivan, nationally known Construction Accountant John Murdough, and I attempt to look at managing risk from the same perspective. For example, in Chapter One, we discuss auditing your company’s status during periods of growth.
“Attending to the following indicators of a possible underlying problem will help keep an organization on track:
- Unexplained tight cash flow
- Decline in profit margin
- Disproportional increase in overhead
- Increase in the turnover of personnel
- Increase in claims activity
- Late accounting information
- Unexpected borrowing
- Increase in internal disputes…
This list is an example of a strategic way of looking at your company’s performance to evaluate the affect growth is having on your company’s health.
Examine Your Beliefs
Published in 2014, Managing the Profitable Construction Business was designed to awaken strategic thinking in construction management. The book was well received by contractors across the country because it offered a list of practical tips on how to manage risk. If we had entitled the book “Strategic Planning Made Easy” no one would have read it even though most contractors are actually adept strategists. We recommend contractors resist any bias against the term “strategic planning”, and aggressively put their native strategic talents to thoughtful and proactive use.