Necessary Death and the Strategic Plan

Carl Schlachte / December 18th, 2013

Every strategic plan is an opportunity to kill our company and have it be born anew. This is a necessary thing and a good thing, but of course it does not come without fear. Do not miss the opportunity to kill your company or division or team or idea. I mean it. Look to kill your company as soon as you can. You can thank me later.

When I was younger and fresh out of school working for a big firm, the single task I dreaded the most was the once yearly “five year strategic plan”. Every year we had to review our business and fill out forms and compile data and turn in a plan that looked cautiously, five years into the future. I was never sure exactly what these plans did because I never saw any change that was directly connected to the planning we were doing. After several years of this routine a few friends and I made The Bet. We were older, more jaded and had loftier positions. By that time we were assembling the inputs from our respective teams and placing the plans into special sealed envelopes destined for headquarters. Now, in a bar somewhere in New York, we had convinced ourselves pint by steady pint that, unbelievably, no one was actually reading our opus magnums. Such was the foundation of The Bet.

The Bet

Each of us was to take a $20 bill and staple the greenback to the fifth page of our plan. Our idea was that if someone from headquarters asked about the money stapled to page five, we’d at least have some confirmation that a human being had read that far into our plan. Weeks later when I had not heard anything, curiosity got the better of me and I called my buddies from the night in the bar and checked in with them. True to form, I was the only one who had actually gone through with it. I spent the next several weeks scared to death that our stupid joke had likely torpedoed my bright future, and then promptly forgot about the whole thing. Some three years or so later I remembered and finagled my way into the room where the strategic plans were archived. There was my $20 as crisp as it was the day I sent it.

At many businesses people are engaged in the act of “strategic planning” because that is what it is: an act, a fiction. The strategic plan is the function that gets performed in the third calendar quarter of every year whereby we act like we are strategizing. But we miss the key point and value of the exercise when it is more a plan and less a strategy. The word “strategy” comes from the greek word “strategia” meaning office or command of a General–a leader commanding armies.

Perhaps we forget that death is a necessary part of any strategic planning because it seems to go against the grain of what we think a business should actually be doing. Dying? Businesses should be growing, vibrant, healthy places! Shouldn’t all our curves go up and to the right? Each quarter’s revenues are supposed to be higher than the last! Shouldn’t every powerpoint slide show some kind of slope rising to infinity? There is no room for death when all that gets rewarded is growth. And that is the problem. Intuitively we know that no curve in real life always goes “up and to the right”. Intuitively we know that real death is actually stalking our business every moment of every day either through complacency or a more aggressive competitor.

Every great stride made by your fellow humans had death at its heels and this is acknowledged as a good thing

No great General ever considered a war plan without also considering casualties. Certainly no General who loved and respected an army ever did a strategic plan that did not make the necessary deaths for the outcome actually worth something. Go further for moment though and try to think of any living process on planet earth that does not include death as part of its “strategic plan”. Foundational to Darwin’s theory on evolution is the necessary part death must play. Can you think of any serious, world changing human endeavor that does not include the possibility of death? Every great stride made by your fellow humans had death at its heels and this is acknowledged as a good thing. Why then would we ever consider any strategic plan that did not also include dying?

Death has not been altogether missed by the most successful businesses; they just don’t use the term “death”, instead preferring to use much more acceptable words like “fast failure” or “learn from our mistakes” or “cannibalization” or “planned obsolescence” or “transition plan”, or “succession planning”. The hot word these days is “pivot” meaning “our old plan wasn’t working so we have a new one”. This is all insecure justification for the reality: an old plan was killed and a new one was born. There are hundreds of ways of saying that something must die for success to occur, but perhaps it is our own human innate fear of death that prevents us from embracing “death” and facing it without fear.

Apple has death down to a science and has turned it into the world’s most successful business. Steve Jobs once said, “If you don’t cannibalize yourself, someone else will”. Cannibalization is the essence of death bringing new life in a business context. In Apple’s thinking, it is far better to kill and eat its own products with its own products than to have someone else do the killing to them. Their very survival is based on planned death.

Andy Grove, the former CEO of Intel is famous for making the decision that would kill a very profitable memory business in favor of an unproven semiconductor device called a microprocessor. He oversaw one of the largest increases in share price of a publicly traded company on the “death” of Intel’s cash cow memory products business. Perhaps it is not at all surprising that a Jewish boy growing up in a Nazi occupied Hungary, and surviving to watch dictators and regimes come and go would be so familiar with death that the death of a mere product line would seem a small thing. That experience led him to Intel and he likely saved one of America’s greatest companies as a result. Death is an excellent teacher.

Behind every great company like Intel or Apple there is a death and rebirth story, if not for the whole enterprise then a key division or product. It is a simple fact and it is not talked about enough. We have to wonder why. Why when everyone is looking for an edge, are we not looking at the only edge that matters?

Lessons Learned

Having been a part of so many deaths during my business career, I am sometimes privileged to be present when someone learns the lesson themselves. Which is how I came to share an iced tea in a cafe in Palo Alto with a good man embarking on a new business. Having recently left his job as much by suggestion as by choice, he had decided to strike out and build his own business. So pervasive was his fear regarding this decision, it was hard to think of anything else. In an entrepreneurial sense he was naked in the town square. He was betting his farm. He was pledging his reputation. He was in fact thinking a lot about things that felt like dying one way or another. I knew that no words from me were going to prepare him for the feeling of really owning his payroll, or worrying about growing a business with a wife at home and two kids in college. I could not have been happier for him though, so I asked him the only question that really mattered at the time: “Are you scared to death?”

I saw him rub some of the beads of condensation off his drink as he thought intently. I watched him die a little bit then and thought that dying should always be a difficult thing to share with someone else. I waited.

“I think so,” he said. “It’s hard to tell.”

“It’ll be okay,” I said. “You’ll be terrified and then you’ll get over it, because that’s what we do. You’ll probably be scared to death two or three more times before it works out the way it’s supposed to. You’ll be okay.”

Still staring at his glass, he asked, “You really think so?”

“Cross my heart and hope to die.”

That gave us both a good chuckle.

Carl Schlachte

Carl is a serial entrepreneur, having been Chairman and CEO of multiple public and private companies. He is currently CEO of Ventiva, a private thermal management company, as well as Chairman of Immersion (Nasdaq: IMMR ) and a director at Peregrine Semiconductor (Nasdaq: PSMI). You can follow Carl on Twitter at carlsuqupro.
  • aardman

    Apple is a company that perpetually challenges itself to win its customers over and over again each time it jettisons a supposedly entrenched/big selling feature or product and introduces a new one incorporating newer technology to supersede it. Microsoft on the other hand is deathly afraid of losing its customers and having to win them all over again. That’s how Windows got to be so bloated, with all the legacy features that they did not want to let go out of fear that they would lose customers. You’re a monopoly, how could you ever lose customers? Another company that was averse to having to win their customers all over again was the pre-bailout GM.

    • DarwinPhish

      Microsoft’s problem is that they are not “deathly afraid” of anything. Microsoft always acts like it has more time, not that it is running out of time,

      • Shameer Mulji

        MS has a huge foothold / lead in the enterprise space in addition to its major financial resources. It can afford to think like that.

        • aware

          The MS balloon has been popped and the air is leaking out – but you don’t know it.

  • FalKirk

    “No one wants to die. Even people who want to go to heaven don’t want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new.” ~ Steve Jobs

    • Randy Mann

      Such a great quote. Thanks for posting it. I might mention that Life’s change agent works on the most basic level as well. http://en.wikipedia.org/wiki/Apoptosis If it weren’t for this process, evolution would have halted with single cell organisims.

  • James King

    Great perspective. I really enjoyed the article.

  • stefnagel

    Sometimes that death means your death. Don’t presume that initiating organizational “shell death” will stop somewhere short of your career. Big change changes everything. Move ahead cus’ you must. Keep a job offer in your pocket.

  • Bill Esbenshade

    Great, great article!

  • Bill Smith

    Am I seeing things, or is the tag line for the web site misspelled?

    • steve_wildstrom

      Well, that’s obviously misspelled. But what page did it come from?

      • Bill Smith

        Tomorrow, I’ll check the history of the machine I was using. Seems to be fine now.

        If someone did fix it, many thanks and Merry Christmas!

  • Bill Smith

    Mr. Schlachte, I tell you, with great sincerity, as someone who consumes editorial comment on the web, and in print, voraciously, that this is the best article I’ve read in 2013.

    This is the singular most important thing that most CxO need to learn. I applaud you.

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