304 How to Apply Strategic Thinking at All Levels to Set Direction and Achieve Sustainable Competitive Advantage with Rich Horwath | Partnering Leadership Global Thought Leader

***DISCLAIMER: Please note that the following AI-generated transcript may not be 100% accurate and could contain misspellings or errors.***

[00:00:00] Mahan Tavakoli: RIch Horwath, welcome to partnering leadership. I am thrilled to have you in this conversation with me. 

[00:00:05] Rich Horwath: Mahan, it's great to be with you today. Thanks for having me. 

[00:00:08] Mahan Tavakoli: Looking forward to learning more from you on strategic thinking, Rich and sharing it with the partnering leadership community.

But before we do that, we'd love to know whereabouts you grew up and how your upbringing impacted the kind of person you've become. 

[00:00:21] Rich Horwath: I'm a Midwesterner by trade. So I grew up just outside Chicago in Illinois and have lived here all of my life, really. I spent four years out East doing college and really the Midwestern upbringing, I think helped me understand that it's important to listen to people.

And that's really been a driver for me. I'm a lifelong learner. And for me, the best way to learn is to really listen to people. So your podcast has been a blessing to many great insights that you've shared and your guests have shared. So over the years, it's been wonderful to gain those insights.

And so what I've really tried to do is act like an explorer and really think of a discoverer's mindset as I enter every interaction that I'm in with people, whether it's a client or an audience I'm speaking with someone I'm coaching a fellow colleague. Someone like yourself who's a thought leader, always trying to discover what makes them tick.

What are the things that interest them and what are the things that I can learn from them, whether it's knowledge, skills, tools, tips, techniques. So again, a great opportunity to be with you today and excited to share some thinking. 

[00:01:28] Mahan Tavakoli: Same here, Rich, and I love what you mentioned because that listening and curiosity plays a critical role in strategy.

Now, how did you get involved in strategic thinking, writing about it, working with clients? What got you initially into strategic planning? 

[00:01:47] Rich Horwath: I'm going to date myself here a little bit, Mahan. So about 25 years ago, I was working for a marketing strategy firm and I was writing strategic plans for other companies and we were doing a strategic planning offsite meeting and about halfway through the session, we had a coffee break and one of the managers came up to me at the break and he said, Rich, I just had my performance review with my boss last week and she told me.

I'm much too tactical. I need to be more strategic. He said, how do you do that? And so I said let me think about that. And Mahan, as back then, 25 years ago, most of the books on strategy by people like Michael Porter, CK Prahalad were really around corporate strategy. So how does a corporation, a multi global organization develop strategy?

There really wasn't anything. That was a road map for the individual manager leader contributor to be strategic day in and day out. So that was that light bulb moment for me to say this might be something where I can try to contribute value to other people. So that one question.

How do I be more strategic? i really started my journey through research writing and working with lots of wonderful people across lots of different industries around the world. 

[00:03:01] Mahan Tavakoli:  From your perspective, what is this thing called strategy or what is strategic thinking?

[00:03:07] Rich Horwath: So when we think about strategy, really, what we're talking about is the answer to two questions. So when we think about a plan, it might be a plan that you have at work for marketing or sales. It might be a plan that you have at your community food bank that you volunteer for on the weekends.

But a good plan, Mahan, is going to answer two questions. What are we trying to achieve? And how are we going to do it? And so when we think about those two questions, the way that I break it down is what we're trying to achieve is really represented by goals and objectives. Those are the things that we're trying to achieve strategy then.

Is going to be our path or our bridge to getting to that goal and objective. So if we think about a real world example, the goal might be, let's say we're hiking. The goal might be to get to the peak of the mountain. That's what we're trying to do. The objective then is going to be more specific. So maybe we want to ascend 3000 feet each day for four days.

Till we reach that 12, 000 foot summit. So goals and objectives answer that first question. What are we trying to achieve? This is where strategy then comes in. How generally are we going to get to the top of that mountain? Can we go straight up? Do we need to zigzag? Do we need to go around the other side?

The general approach to achieving our goal. And then the tactics are going to be those specific tangible things that would help us get up that mountain. So in simple terms, strategy is really how you plan to achieve your goal. So how do you plan to achieve your goal? And then to your point, because strategy oftentimes is done once a year, it's like a birthday where it happens once a year, there's a lot of signage, fanfare, and then it goes away for 11. So strategic thinking Mahan.

I love that you brought that up. Strategic thinking the way that differs is it's really the generation of insights on a continuous basis that leads to competitive advantage. So that's really the big difference is strategy. Typically people are doing it once a year and then they're leaving it alone.

They're setting it strategic thinking is really a continuous learning about what's making my business go, what's working, what's not. And then how do we channel that into advantage? 

[00:05:19] Mahan Tavakoli: So Rich, how do the best organizations do that? I work with a lot of different clients and interact with lots of different senior leaders and in most instances they say, yep, we went through a strategic planning process and we have a strategic plan two years ago, three years ago. 

Sometimes it's four or five years ago, some revisited on an annual basis, typically more from a budgeting perspective than a real strategic planning perspective.

So how can leaders of whether organizations or teams incorporate the mindset that you're talking about, which is an ongoing process with strategic thinking? 

[00:05:58] Rich Horwath: Yeah, so that's a great point. I'm a big believer, Mahan. I know you are too from listening to some of your other interviews that we need to be lifelong learners.

We need to constantly push ourselves out of our comfort zone and look to grow and to learn. And so I'm a big believer, as you are, that we need triggers to help us do that, to change our habits to really shape our behaviors. And so I developed a 3 A strategic framework. So 3 A's Acumen, Allocation and Action.

So no matter what level in the organization you are, whether you're the executive assistant, you're an individual contributor, a sales rep, a marketing manager, or the CEO, those three A's can really help trigger your thinking strategically, daily, in and out. And so Acumen is insight. We always want to start with.

What's the new value that we can bring in this situation, whether it's to our internal colleagues, to our external customers, to people that we're working with? What's the new solution to bring value? What's that new in solution? So that's Acumen. Then once we've got that new idea, that new approach, that new solution, then we go to allocation, that second aid.

Now we think about how do we need to focus our resources, our time, Acumen. Our talent and any budget that we have in order to achieve that insight to bring that insight to fruition and achieve our goals. And then that third A is Action. Action is really how do we stay focused on what's important, our priorities, and not get distracted on the things that are urgent.

So if we use those three A's, Acumen, Allocation, Action, that can act as a trigger to help us behave strategically day in and day out.

[00:07:38] Mahan Tavakoli: I love that framework rich now, specifically with the acumen portion, which I find a lot of clients struggle with and the greater piece of change and uncertainty has made that piece harder.

So where do you guide teams and organizations to spend their time on to? Have the right acumen before focusing on the allocation and action. 

[00:08:06] Rich Horwath: Excellent point, Mahan. And I completely agree with that. So one thing I'd recommend is let's say this past weekend, we were playing some touch football and we twisted our ankle.

And so by Monday, the ankle wasn't getting any better. We go to the doctor. The doctor comes in the exam room. She looks at us. She doesn't ask us any questions. She doesn't take any tests. She just writes a prescription, hands it to us and leaves now behind, we would never accept that because in medicine, we know the adage is prescription without diagnosis equals malpractice. 

In business, we fail oftentimes to diagnose what's happening. We don't diagnose our situation. So I would say the first way that you increase your acumen, that insight, is to step back. And think about what's happening in my situation. So in business, we can think about four areas, the market, customers, competitors, and our own company, those four areas.

So if you think about a circle, radar screen, those four areas, market, customers, competitors, company, and I would even recommend folks out there, draw that out and think about that. What's top of mind for you in each of those areas? What's happening from a market trend standpoint, your customers, either internal or external, what's driving their thinking and behavior today, the competitive landscape, what are some of the key activities that are happening there?

And then within the company, is the culture changing? Do we need to improve systems or procedures or the organization? What does that look like? So I think the biggest thing I see to your point, Mahan, is we've got to step back and diagnose what's happening first. Too often, we rush to a solution, to a new tactic, to a new initiative without first stopping to diagnose what's happening around us.

[00:09:53] Mahan Tavakoli: And with that diagnosis, one of the things that I see, Rich, is that it's very difficult when we've had. Exposure to our organization, to the same industry over a period of time to be able to effectively diagnose. So that's one of the areas where I find a lot of executives, more experience actually gets in the way of them being able to clearly diagnose and see new patterns, new behaviors.

There are a couple of things I wanted to get your thoughts on though. One with respect to customers, there are thoughts on the fact that you should assess and determine what customers needs are and have those guide the organization strategy or your team strategy. And there are thoughts that maybe you can understand the needs.

When the customers don't understand it, so I want to give your thoughts. At what points do you want to focus primarily on what the customer's needs are as part of this process? At what points do you want to get to the jobs to be done and skip over the customer, knowing that the customer doesn't know what she or he really wants and needs?

[00:11:07] Rich Horwath: I love the way you put that, Mahan, and I think you call out the jobs to be done, which is a really powerful process as well. To your point, what I've seen, I think, primarily is when we're trying to innovate, and I define innovation as really just creating new value.

When we're trying to create new value. Here's an example, perhaps I was working with a company that's in the medical device field. So they make machines and this company was in the cardiovascular. So for heart devices, heart machines, and one of the things that they were trying to do was grow their business.

So they were talking to their customers who were cardiologists, but they weren't really getting anywhere. They weren't coming up with anything new. And so to your point, what they did is they said let's just go in as observers into cardiac surgery. So they went in as observers, they observed the procedure, and they came up with some ideas.

And then afterwards, they interviewed the nurses that were there in the surgeon. And they said, that was a great procedure. Are there any issues or challenges that you see with the procedure during so or after it? And so what came up from both the nurses and their observations was there was a lot of fluids and materials that need to be disposed of.

They didn't have a simple, easy, convenient way to do that. And so that wasn't a heart device. It wasn't a heart machine. But it was a new idea. And when we first surfaced this idea in a strategic thinking session, a lot of people rolled their eyes and said, we would never do anything like that.

That's not our business. That's not what our customers told us they want, but they pursued it. They did a pilot. They built out a service to go into operating rooms, take out all of the materials and fluids that needed to be disposed of. Four years later, that was 100 million piece of their business, even though it wasn't something the customer told them.

So to your point, Mahan, I'm a big believer that we want to observe our customers. We want to understand what are their problems or challenges, and then use our expertise. And then maybe look at other domains to help solve those issues. 

[00:13:11] Mahan Tavakoli: I love that example, Rich, because there is value in seeking feedback from customers, but there's also value in observing and determining what the real needs in the market are that sometimes customers cannot describe effectively.

What I find a lot of times when people quote Steve Jobs or others in this regard is that people are looking for binary answers. Rather than it's a combination of the above. The answer is not, no, the customer doesn't know what they want. Just go wherever you want to go. And it's not that you only get the customer feedback. It's that there is a piece of each that needs to be incorporated into your strategic thinking. 

[00:13:57] Rich Horwath: Yes, that's beautifully said, Mahan. I absolutely agree. The other area I see that often where you have the binary is strategy more important or is culture more important? People want that either or, and to your point, it really should be an and.

You need great strategy, you need great culture, you need that combination. 

[00:14:15] Mahan Tavakoli: Oh, I totally agree with you, Rich. One of the quotes that I Don't particularly like, and actually this is not how Drucker had said it, is culture eats strategy for breakfast. And I can point out a lot of organizations that had great cultures, but not having the right strategy got them decimated.

So I understand that. And I totally appreciate as And advisor and a coach, the value of that culture, but there is no need to prioritize one over the other. You need the culture, you need the strategy, but it doesn't make for a good meme. Good memes are. Put it in one sentence and people can run with it.

Now, what other area that we'd love to get your thoughts on is with respect to competition. I also had a great conversation with Ron Adner and he talks about ecosystems with respect to strategy and love his perspectives on that. Part of what he also mentions is that to a certain extent traditional competitors are becoming less important because the biggest threats are from outside of what is perceived as an industry and industry barriers are coming down.

Would love to get your thoughts with respect to that as organizations are thinking about their strategy, which. 

[00:15:40] Rich Horwath: Yeah, I agree, Mahan. I see that quite a bit in a lot of different industries. And one of the ways to potentially think about it is the idea of symmetric competition and asymmetric competition.

So symmetric competition are other folks that have similar capabilities And competencies. So similar areas of expertise, similar skill sets, similar resources to us. And so in, let's say transportation, you've got rental car agencies, you've got car manufacturers most of those folks have similar capabilities and competencies.

Then, let's say from an auto example, then Tesla comes in and, takes basically a whiteboard approach to automobiles. And so they changed the game. By, not having car dealerships initially using electric vehicles, creating their own power systems and things.

So that was asymmetric competition. When you start competing with somebody who has different capabilities, different areas of expertise. So I would agree. I think we've got to always be thinking about what are our competencies and capabilities and where can we provide superior value to.

Because at the end of the day, when you look at the definition of competitive advantage, it's providing superior value to customers. So in order to do that, one of the mindsets, especially in America, I think we're guilty of is who's better. Are we better or they better? And that's not what's important.

What's important is how are we different? In ways that customers value, we can argue is blueberry pie better than banana cream. You might like blueberry pie. I might like banana cream and we can argue all day. But what we can say is that they're different. They have different ingredients.

They have potentially different antioxidants. So there's differences there that you might value or I might value. So we need is especially in this country to move out of how are we better to how are we different in ways that people value. Oh, 

[00:17:34] Mahan Tavakoli: I love, love, love that Rich. And we can talk for hours just on that point.

I also really like Christopher Lockett's work and thinking on that part of what he says is be different, don't be better and how everyone seeks to be better and. Leading a category by being different is what has established the effective strategy of many organizations. So I love that kind of thinking.

However, it's very hard because when I have conversations with executives and leadership teams, what they see as being different is marginally different or slightly different or really it's actually better rather than truly being different. So when you are talking through and thinking through strategy with the organizations that you work with and guide, how do you get them to think different rather than better?

[00:18:31] Rich Horwath: So I'm very big on practical simple ways to do things. I would say let's create two columns. The first column on the left is the norm. So when we think about the norm, let's think about any industry.

We've got the ways that people buy the product, the way that people use the product, any services that are involved, and then the evolution to the next product. So what's the norm in your industry in each of those areas? How are things done today? And then the right column, the second column is the deviation from the norm.

How are ways that we can deviate from what's the normal course of business today? And so what I've found is if we take the time to write down what's the norm in providing service, providing product, the benefits, all of those things on that left column, then we go to the right column. We say, how then could we deviate from that norm?

All of a sudden we start to have different ideas, new ideas. So again, let's use a general example. Let's say movie theaters, have gone through, a lot of changes, but the movie theater that I grew up with, there was one hot dog rotating on the silver spinner, stale popcorn, some soda.

You had to get there early, stand in line and fight for your seat so you could sit with your friends. And if you put all of those things in that left norm column, then it becomes easy to say, okay if we don't want stale popcorn and one hot dog, how could we deviate from that? We could create much better food.

We could create higher end food. We could have tenderloin sliders and we could have seared ahi shish kebabs and those types of things. If we didn't want just. Stale, flat Coca Cola. What could we do? We could offer people wine and champagne and other things. So again, I think what we've often failed to do to your point is we don't establish the baseline.

What's the norm? Then once we've got that established, now we can say, how might we deviate? 

[00:20:23] Mahan Tavakoli: The other thing that at least I think is important, especially now rich is that sense of paranoia. I love Andy Grove's quote only the paranoid survive in that what I find is that There is a level of overconfidence in many executive teams as they approach thinking through the strategy of the organization because in many instances, unless a new CEO has come in and a new leadership team has come in, they have contributed to where the organization is at.

Therefore, there is a lot of pride and they are less likely to take bold steps. So how do you see leadership teams and executives having that sense of paranoia, taking bold steps with strategy, even if they have had success in the past? 

[00:21:15] Rich Horwath: Yeah, it's a great question, Mahan. So there's two things I would recommend.

Number one is I recommend when the senior leadership teams get together. So you've typically got your 7 to 11 or 12 people on your top team. I recommend bringing in 3 to 5 high potentials in the organization that are much closer to the customer. And much closer to what's happening in the market, because the reality is, even if the CEOs and C level people are riding with people or visiting customers, they're not there day in and day out.

So I recommend having three to five high potentials, more junior people close to the customer in those sessions, so that they can surface some of the challenges, and some of the new non-traditional competitors that are coming out in potentially changing the dynamics there.

So I think that's one way to do it. And the other thing I always like to do is I provide pre reads, and I'll typically give two to three articles book chapters that involve organizations that were at the top of their game. And then five or six years later, we're bankrupt. And again, oftentimes, to your point, it's complacency.

You look at Circuit City, the former CEO before they went bankrupt, he had left the organization and he wrote a book. It was funny because Circuit City was cited by Jim Collins and good to great as one of the top 11 companies in the world. And then the former CEO wrote a book called Good to Great to Gone about how Circuit City went bankrupt.

What he said is they got complacent and they stopped thinking about what is the next evolution. And so again, I think it's creating that sense of urgency by showing executives here were top companies, whether it's BlackBerry, Circuit City Blockbuster, whoever it might be and saying, they were in the number one position.

And then all of a sudden they weren't because of these reasons. 

[00:22:55] Mahan Tavakoli: So  as you mentioned, there is that need for reinvention, which is something that I think we need to do faster and faster. So what is the formalized cadence that you typically find yourself recommending to organizations, rich leadership teams and all teams need to constantly be thinking about strategy understood.

However, there is a reality where some of this effort takes time to pause other things to focus on strategy. So what cadence that you typically recommend for organizations to redo and or revisit their strategy? 

[00:23:33] Rich Horwath: It's an important question behind because we're inundated with meetings already and there's lots of topics on the meeting agendas, especially for senior team members who are being called into lots of areas.

So one of the things we want to be considerate of is spending the right amount of time. And so I actually am a believer in what I call a strategy tune up. Similar to your car. We wouldn't leave our cargo for two or three years without having the tires checked, the oil change, things like that.

But oftentimes we will go a full year without really doing a diagnostic on our strategy. So again, that doesn't have to be a four or five day adventure, but I would recommend at least quarterly. Probably monthly spending 60 to 120 minutes, one hour to two hours going through two to three key questions to determine if there's been any substantial changes in the marketplace with the competitors or customers that would warrant us.

Modifying the strategy. I think that's important to do. And I think again, if senior leadership teams are having strategic level conversations, then it's a much smoother process versus if all of their conversations are around operations and tactics each month, then getting them to do strategy sometimes feels like it's a big ask.

So I'm much more of a believer that we need to be thinking strategically in each meeting, even if it's dedicating only 15 or 20 minutes to that topic. 

[00:24:59] Mahan Tavakoli: That's great advice for people to keep in mind it does require a certain level of discipline and structure to follow through with that.

Now, one of the things that we alluded to before is that once you have strategy culture does play a role. So we'd love to get your thoughts with respect to. executing strategy. What are the critical pieces when you have a strategy to effectively execute and or adjust based on the feedback that you get?

[00:25:27] Rich Horwath: I would say the biggest thing Mahan is priorities I work with organizations I'll work with the C suite team, but I also work at the VP level the director level to really understand the first line managers what's happening in the organization and what I always hear from the people that are at the VP.

Or divisional vice president level or director level is, yes, we have a strategy. We have a direction, but now I have 20 priorities. And Mahan, if we have 20 priorities, we have no priorities. So I think one of the things that senior leadership teams overlook is it's not enough to pass off the strategy as the tablets and say, go forth and strategize.

What we need to do is then really communicate clearly what are the one to three priorities. That you and your team are responsible for in the next 90 days. I don't look at it just as the full year, even though that's a lot of times are planning horizon in the next 90 days. What are the top 1 to 3 priorities?

Because if you as a leader don't articulate that, then that's when you get people working in all different directions. You 

[00:26:33] Mahan Tavakoli: know, Rich, it sounds simple. It's hard to do. And one of the most powerful things that I believe organizations can do. Leidy Klutz, he's a professor at UVA, Darden and the school of design. So he's a multidisciplinary professor, wrote an outstanding book called Subtract and in all the strategic planning conversations I've been involved with, I facilitated, I participated on a leadership team. I think Subtraction has been the hardest thing because the way it happens is that there is strategic thinking and then priorities that come from that strategic thinking and they are overlaid on top of all those other priorities that people have, which By default makes sure that there isn't effective execution.

So I love that point and it's one of the biggest challenges that I see With all kinds of strategic plans and executing them. 

[00:27:32] Rich Horwath: Yes, and I'm a big fan of the subtract book too. There's a great study in there on lego and when people are given lego pieces do they add pieces or do they subtract pieces?

By and large, people is to your point will add pieces. So to your point, when we develop strategy in our sessions, one of the exercises we do is what I call a trade off matrix. And the first part of the trade off matrix, I asked people, what are you going to stop doing? What are you going to eliminate your investment of resources in projects, initiatives, systems, parts of the organization?

What are you going to stop doing? And to your point, Mahan, people for the first five minutes, they're sitting there and they're not writing anything down it takes a while but I would encourage all of you. If you try this exercise, give yourself past that first hurdle of the first three to four minutes and things will start to come.

And then, do that individually, then do it collectively with your team and you will come up with some things. I really think it's a great point that you bring up behind, because that's where we don't need more resource. We don't need more money. We don't need more budget or capital. In order to really exponentially create greater efficiency or effectiveness 

[00:28:40] Mahan Tavakoli: that's also the value, which I know you bring to your clients in pushing them to do that. As I mentioned, including when I was on leadership teams myself and very highly functional leadership teams, when it got to the point of subtraction, there are lots of. Conversations that go on in the back of our minds from what this means to future budgeting to what this means to future personnel and everything else. Which is why sometimes it's helpful for A credible source to push for the team to go there because otherwise they're not going to be able to effectively execute. Now, another thing that I love your perspective on is that once there is strategy, once there are these priorities, one of the mantras that has become popularized based on a lot of Silicon Valley startups is fail fast.

But I know you don't. Totally agree with that. Why is that?

[00:29:42] Rich Horwath: To your point, Mahan, and I'm glad you brought that up because the fail fast did come out of Silicon Valley, and the reason it originated there was people were trying all kinds of different things, and some of them would work, some of them were well thought out, most of them weren't well thought out, so they did have to pivot very quickly all the time.

The challenge what I've seen now is a lot of more mature companies have adopted that fail fast. And what happens is, again, it goes back to our failing to diagnose, right? When, we're the doctor writing a prescription, without really understanding our patients. So again, in a mature organization, the reality is, at the CEO level, the research shows that that CEOs That don't move resources quickly enough time people money when the strategic demands require them to do that.

They typically last 18 months to two years in that role and they're out. And so what I'd suggest is whether it's the CEO level or other levels, failure by itself is not terrible, but I'm much more proponent of let's think first. Instead of fail fast. Let's think first. Let's do some planning.

Then let's execute. We can still do pilots and things like that. But I see most of the failures really not necessarily being learned from. And that's what the data shows. People don't really learn from their failures because They're not diagnosing again, doing that after action review, like they do in the military to really understand what was the cause of that failure, because a lot of times it's systemic in nature.

There's not just one reason. So again, to your point, let's really think about who we are as a company, where we are in our life cycle. And let's think about, having a culture that accepts risk and innovation, but in doing so in a thoughtful way 

[00:31:31] Mahan Tavakoli: john Rossman, he's written the Amazon way series of books launched the Amazon marketplace when he was at Amazon also talks about that where it's mindful experimentation.

With well planned execution that might end up not working that you learn from as opposed to just go anywhere, do anything real fast, which unfortunately is one of the excuses that I find in some organizations. It requires a certain mindset to be open to. Experiment and learn from it rather than feel fast just because someone in Silicon Valley VC funded firms tried it and that's what we need to do with our established organizations as well.

[00:32:17] Rich Horwath: Yeah, exactly. Jeff Weiner was running LinkedIn and had said the key of time management is carving out time to think as opposed to constantly reacting. And I think that's the world we live in, Mahan. We're reacting to a text message, to an email. And what I would really challenge everybody out there that's listening to think about is how much time are you carving out in your calendar to think?

Not to react to an email, not to react to something else, but to proactively think about a topic about an issue or project that's important to you. So really start to think about, are we thinking or are reacting? Because if we're just reacting, we're that bumper car at the carnival and we're always going to just be opportunistic.

[00:33:00] Mahan Tavakoli: And that's why you also mentioned that Strategy is not just the purview of the leadership team of the organization. We can all play a role, whether it is with our divisions or teams and groups. So what is the advice that you have, Rich, in addition to taking the time to reflect and plan, how can.

People who are not guiding the entire organization incorporate some strategic thinking in leading their teams or their divisions within a larger organization. 

[00:33:35] Rich Horwath: One of the things I see oftentimes Mahan and I hear from people as well, strategy is not my job. We get the strategy from the brand team or we get the strategy from the C suite and that's not my job.

And I would make the case that strategy is. Everyone's job, because again, if we think about what strategy is, it's the intelligent allocation of our resources, time, talent, budget, through a unique system of activities to achieve our goal. So we all have time. We all have talent and many of us have budget.

So how we use our time and our talent each day is the actual real world strategy. That's being implemented in our organizations, we can have the fanciest PowerPoint deck in the world. But if we've got 20 people trying to sell low price, and the strategy says we're the premier brand in the market, and we're going to, exact a high premium.

Then that doesn't mean anything if people are going out just trying to sell because they don't have the right consultative selling skills or questioning skills. And so they're just relying on low price. So again, it's how we use our time and our talent every day. That's going to be strategic. So we want to really think about individually, where are we focused?

What are our one to three priorities? And how could we be doing things differently or better to achieve our goals? 

[00:34:52] Mahan Tavakoli: That is relevant, as you mentioned, to whether we are individual executives or leading a team within the organization. And I find Far too often, it's one of those well intentioned things that we're going to get to, but we never get to.

So prioritizing it is really important. Now, Rich, you've been in this space, as you mentioned, for a quarter century. I've written outstanding books, work with clients on it. Would love to know what mistakes have you seen on strategy? I am sure almost every one of the organizations that has gone bankrupt and has done horribly at one point or another has had one of the large consulting firms come in and help them with their organizational strategy.

So they all must have great strategies, but they fail, or maybe they don't come up with great strategies, even with the large consulting firms helping them. So what mistakes have you seen in strategy that we can learn from in guiding our teams and organizations? 

[00:36:00] Rich Horwath: Yeah I'll start with my own mistake, Mahan.

One of the mistakes that I've made in the past is I assumed, so I would go into a situation and assume this team, this leadership team has 30 years of experience in this industry. So they're going to know all about the competition. They're going to know all about the customers and know about the market.

So that was a mistake that I've made in the past. So one of the ways I've tried to improve or enhance that is I'll give people what I call a strategy survey before a meeting and anybody can do this. And really what you want to do is ask them questions about who's your most dangerous competitor, what's your value proposition, how is it different than the competition, what's the Two or three biggest market changes that you're seeing from a trend perspective.

So ask them those questions beforehand in a written way. And then maybe two weeks before you get together to talk about strategy. And what happens then, Mahan, is people come into the meeting and they say, I didn't know as much about my competition as I thought I did. I didn't really. How do I make sure that I understand, you know the changes in my customers business, So I think that's one of the important things that I've made a mistake on and other people do is assuming that our experience always equates with expertise, and so that would be the first one.

The second one, I would say is really being complacent and not having a growth mindset coming into the session. Just because we've been in the business for 20 years. And to your point earlier, you made a great point. Oftentimes that can be negative or baggage because it doesn't allow us to look at new ways to do things.

So in order to get through that complacency, I'd really recommend this concept of domain jumping. So when you're exploring the challenges in your industry, the challenges that your business faces, ask yourself, how would a different industry or a different company approach this. So how would a museum approach this challenge?

How would a Formula One pit crew approach this challenge? How would Google approach this challenge? So get yourself out of your own domain. So I would say those are probably the two biggest issues are number one having that complacency. And then the second piece is just, assuming that we know everything that we should know based on experience. 

[00:38:11] Mahan Tavakoli: And it's really hard. The more experience we typically have, the more right decisions in many instances we've made. That's why people have gotten promotions and moved up in their organizations and the more convinced we become that we know it. So it's a real challenge to challenge ourselves and our thinking on that.

And I love the perspective you shared with respect to domain jumping. One of the people I've learned a lot from served as the chief marketing officer for Chick fil A and was talking about what Chick fil A did in trying to improve their operations was to benchmark and go to Amazon, go to BMW. Organizations in very different industries to try to learn, how do they manage their operations? So you would wonder why would a fast food chain want to learn from those organizations or Nordstrom or whoever else domain jumping can really give you insight. So you become different within your domain.

So I think that is. of tremendous value, but it does take some effort time and energy rich. 

[00:39:23] Rich Horwath: Absolutely. And to that point, Mahad, I think we live in such an action oriented world that many people almost feel guilty by taking the time to stop and think even individually or collectively.

But I would encourage everybody again, the folks I've worked with, if you don't put that time in your calendar and block that off and have your assistant or yourself blocked it on your calendar, it's not going to happen. So again we don't want to be just on that activity treadmill running and running.

We need to step off the activity treadmill and get on the thinking treadmill occasionally.

[00:39:56] Mahan Tavakoli: So as we do that, rich, one of the other things that has been happening And it has accelerated over the past couple of years, most especially because of generative AI is the ability to tap into both internal and external data more so than ever before. So we'd love to get some of your thoughts with respect to the impact of AI and the data that now you can access through AI with respect to strategy.

What advice do you have on those fronts?

[00:40:28] Rich Horwath: First of all, it's going to be an amazing benefit to be able to have a distillation of competitor activity, marketplace activity, trend activity, typically that's a very manual process, and we've got people spending hundreds or thousands of hours collecting those types of things.

So that data is going to be much more readily available. I think what's going to be required is people to be able to pull the insights out of the data the learnings that are going to lead to competitive advantage. So one of the things I'd recommend is, as you start to use AI and start to look at much more data, much more information.

What we want to really be thinking about is what are the two or three things that can build on the capabilities, skill sets, competencies, and knowledge that we have today that can help us extend what we do from a value perspective. So if you're a manufacturer, I would challenge you to think about how can you now use these insights from the AI to create services that would extend the value you can provide.

If you're a service provider, how can you use these insights to create products that you can use to serve? So I think what AI is going to do for many of us is give us the opportunity to greatly extend the value that we can provide if we have the mindset that's going to allow us to be open to those possibilities. 

[00:41:58] Mahan Tavakoli: I couldn't agree with you more. I love A. J. Agarwal's work. His book started beyond the process of trying to understand A. I. Half a dozen years ago prediction machines. And more recently, he's written power and prediction. Part of what A. J. Mentions is the fact that the data enables prediction, very accurate, low cost prediction.

However, that makes And that's why I love A. J. Agarwal's work. Human judgment, even more important. So it's that judgment that then can overlay on top of the more easily accessible data that AI provides to the leadership team or to the executives who want to make these decisions on strategy to be able to do a lot better with that.

[00:42:44] Rich Horwath: Absolutely. , it's just being thoughtful. I've heard now people say what's your AI strategy? AI is going to be a tool, we still need to think strategically for ourselves. To your point earlier, we need to understand our competition, the traditional, the non traditional competitors, we need to understand the challenges that our customers face, the trends in the market.

So all of those things are not going to go away. What's going to be even more important to your point is the ability to synthesize all of those areas and put it together in a way that is going to provide that superior value. 

[00:43:16] Mahan Tavakoli: So Rich, in addition to your books are there any resources or practices you typically find yourself recommending to executives as they want to think through their strategies?

[00:43:31] Rich Horwath: There's actually another book that I recommend to a lot of folks when we start working together called The Art of Learning by Josh Waitzkin. And Josh Waitzkin was a world champion chess prodigy and player as a child. The movie Searching for Bobby Fischer was actually written about him. And then he switched domains completely and became a world champion in the martial arts.

And what he talks about in his book is simply how he went about learning. The different domains. And what we talked a lot about today, Mahan, is how are we learning and are we open to learning in different ways that will move us further down the path and maybe in different paths.

So that's one resource I recommend to people because I want people open to, if I've had 20 years of experience in this industry. Maybe I need to learn more about this part of the industry or something completely different. So just getting people open to that idea of learning new things. And then the other thing I'm a big believer in experience and experiencing value, either positively.

Or situations that weren't and so I'm a big believer and what I call a value journal. So I have people write down their experiences with value. It can be at the gas station. It can be at a movie theater. It can be at a professional sports game or it can be with a client meeting. But write down your value journal.

What are you seeing that's working? What's not working? And then start to take some of those principles and use them in ways that will drive greater value for your business. 

[00:44:58] Mahan Tavakoli: What great recommendations both the book and for us to become observers of the world around us and use those insights in building our own strategies.

Sometimes I find we don't observe as much. Most specifically, now that we have technology with us, we're not observing experiences. The second we have moment to observe. We go back into our phone and scrolling through whatever feed is there.

So great recommendations as we want to tune in to what's happening in the environment, learning from it and applying it to our organizations. Now, Rich, for the audience to find out more about your work or connect with you, where would you send them to?

[00:45:44] Rich Horwath: 

So Mahan, I'm a big believer in giving back. My vision is to teach the world to be strategic. So I think it's important that we share a lot of, ideas for people. So I have a number of videos. I have a number of articles, infographics. I'm on a website called strategyskills. com. And again, I'm a big believer in sharing a lot of free resources, a lot of free tools that people can use.

So you can find a lot of things there to help you think more strategically, to plan more strategically, and then hopefully to act more strategically day in and day out. So strategy skills. com, lots of free resources. 

[00:46:18] Mahan Tavakoli: Really appreciate that and appreciate your thoughts on strategy. Thank you so much, Rich Horvath.

[00:46:25] Rich Horwath: Mahan, thank you. It was a pleasure to be with you.