Often companies will make a significant investment in the strategic planning process but then find themselves with a business plan that falls on its face because of undetected deficiencies.
To protect against such an outcome, #b#David Wanetick#/b#, managing director of IncreMental Advantage, advises every company to bring in a devil’s advocate to review a business plan thoroughly before implementing it. “Before a company spends a lot of time and money executing the plan they have crafted, it makes sense for an independent third party to interview managers and try to poke holes in it,” he says.
The idea of a devil’s advocate reaches back several centuries. “The Catholic Church appointed a lawyer to take a skeptical view of candidates who were supposed to be made cardinals,” explains Wanetick.
Wanetick is offering a class on strategic planning for the Business Development Academy on Monday, April 19, at 8:30 a.m. at IncreMental Advantage, 4390 Route 1. Cost: $995. To register go to bdacademy.com, call 609-919-1895, ext. 100, or send an E-mail to: firstname.lastname@example.org.
When Wanetick is serving as devil’s advocate, his client will send him the business plan to read over, sometimes with supporting documentation. Then he will spend a day with the company talking about the plan and raising any concerns he has — the wisdom of selecting various markets or introducing particular products; insufficiently specifying a product’s overwhelming advantage in a very competitive industry; attacking too many markets at the same time; not having sufficient capital to finance the venture or market the product; not choosing the best approach to selling, whether through a direct or a distributed sales force; or whether the right people are in place to do the job.
From his experience as a devil’s advocate and as a consultant in the strategic planning process, Wanetick offers several observations:
#b#Using a devil’s advocate can help protect junior staff#/b#. Often when a strategic plan is implemented and serious problems emerge, senior executives blame the junior staff who execute the plan rather than those who crafted it. “If the program doesn’t work, maybe it’s because the plan is bad,” says Wanetick. A devil’s advocate brings fairness into the process, denying executives the easy out of blaming junior staff for what is not their fault.
Also, a strategic plan is only as strong as the information supporting it. Business decisions, including the creation of a strategic plan, must be based on strong data. A devil’s advocate might notice that people creating the plan might be using data reported by third parties and suggest that firsthand observations may be more accurate.
Wanetick offers Medtronic, which makes stents and catheters for heart surgery, as an example of the value of firsthand observations. When trying to get honest feedback from the lower-level personnel who were in close contact with customers, the company found that they were unwilling to pass any negative information up the chain of command. It just wasn’t cool for a salesperson to criticize a product to the boss.
To bypass this problem, Bill George, the CEO, went into operating rooms to see for himself how surgeons used Medtronic’s catheters and realized they had some serious problems. It was much more expeditious for him to do this, says Wanetick. “It’s better than waiting for information to percolate up. It can take six months or a year until it gets to the attention of the CEO.”
#b#Business decisions can be weakened seriously by group think#/b#. Whenever any committee gets together, the same question can be raised: “Do members say what the group thinks, or are they comfortable and confident enough to challenge the group?”
Group think is a likelihood during, for example, preparations for a product launch. “The first people who speak get very excited about the product,” says Wanetick. “If you’re fifth, and four people have said good things about the product, it’s hard to challenge what the group thinks.” For just this reason, he notes, when the Supreme Court sits behind closed doors, there is a rule that every justice speaks once before any justice speaks twice.
#b#Test different hypotheses before making a big investment#/b#. “If a company is large enough, it can make small investments to test different hypotheses — looking at a portfolio of small investments where it can dip its toes in the water,” says Wanetick. “When you actually approach an industry and try to penetrate it, you get the real feedback, and it gives you the best sense of the opportunities. You can sit around and hypothesize and do research and due diligence and think it through, but it’s not the same as really testing it.”
#b#The complete picture#/b#. When creating a strategic plan, look at worst-case as well as best-case scenarios. During planning companies will often consider how many commonalities they have with similar companies that have succeeded, but Wanetick suggests flipping this and measuring up against companies that have not done well. “Let’s look at companies that have failed,” he says. “Let’s look at the common denominators and focus on some of the risks as well.”
#b#Make clear that the bearers of bad news will not be penalized#/b#. When significant time and resources have been invested in a strategic plan, it can be difficult politically to reveal that it has major vulnerabilities. “Companies don’t want to disclose it, because if they do, it makes it seem like they have wasted a year,” says Wanetick. “There’s a political factor, and people involved in developing business plans would rather bury bad news than detect vulnerabilities.”
“The company should say, ‘We’re not going to penalize anybody,’” says Wanetick. “‘We’d much rather cover the losses developing the plan and not spend hundreds of times that actually executing it.’”
The company must create stop points — milestones that stop execution of the plan if they are not met. “Rather than the mindset of getting it out the door as quickly as possible, determine where to stop if you don’t meet certain milestones,” he says.
Set specific dates for locating a partner; finding a distributor; demonstrating a certain market size or a manufacturer’s ability to produce the product at a particular price; ensuring that an ancillary industry is developing as quickly as needed to support a product; getting people, licensing, or technology; identifying marketing channels or a specific audience; or demonstrating that the product has $50 million in potential.
#b#Leave time for a devil’s advocate#/b#. “It is important that the executives who delegate the crafting of a strategic plan try to put some buffer of time between delivery of the plan and executing it,” says Wanetick. Even if the company does not bring in an outsider as a devil’s advocate, this will leave some time at least for senior executives and the board of directors to discuss the plan. He recommends a gap of about two months to give time to ensure the plan is well considered before putting resources behind it.
The son of a surgeon in San Francisco, Wanetick majored in economics and political science at Bucknell University, where he graduated in 1988. He worked for Merrill Lynch in New York, then went off on his own to focus on research.
“It is an intellectual challenge, and I get to learn about new ideas, new technology, and see different businesses across different industries,” he says.