I was listening to a discussion of environmental issues on the radio the other day, and the scientist speaking compared the world’s current global warming dilemma with the French parable of the lily pads. Say there is a pond with one lily pad. Without some intervention, every day the number of lily pads in the pond doubles. In theory, the pond will be completely filled with lily pads in 30 days --- choking off all other forms of life in the pond and killing it biologically. On what day will the pond be half full, allowing time to stop the process before it’s too late? The answer is the 29th day. On that day it will be half full, and when the lily pads double, cause it to be filled to capacity on the next day, then too late to react before the pond dies.
The lesson of this parable is to realize that there is a 29th day, and to understand, anticipate, and plan for your options before your entity dies.
The 29th day parable can be applied to American business as well. What did the Ford Motor Company see that others did not, allowing it to adjust for the approaching 29th day and to survive the current economic recession (and even make money in this horrible climate for auto companies)? We realize now that GM didn’t look toward, nor even understand, that the 29th day was coming. And although Chrysler may have seen it approaching, they did nothing to prepare themselves.
Alan Malally, Ford’s President and CEO was recruited from the Boeing Company. Many scoffed at the time that Bill Ford was crazy to offer the job to someone without any automotive industry experience. But Mr. Ford saw and understood what others in his industry did not: that what his company needed was a leader who knew how to look out and see the 29th day, and drive his organization in directions appropriate to anticipate it.
Airline manufacturers must plan their businesses decades in the future. Some initial orders are for delivery 10-12-15 years later. This has forced the industry to take a long view and manage their business based on long-term cash flows, capital demands, and economic conditions. Technology, plant and equipment, and labor contracts all fall within the view of the 29th day, and must be developed within a variety of contingencies so that the organization can remain nimble and flexible based on actual business conditions over time. That is what Malally brought to Ford.
American businesses such as the food industry need to work toward seeing the 29th day as well. I have spent most of my career working in large --- primarily publicly-owned ---- corporations and have participated in many “strategic planning sessions” with the top executives and boards of these organizations. The saying “…to a worm in horseradish, the world is horseradish” applies, as the majority of these planning sessions focused only on the next year or 18 months, and never on the global macroeconomics or geopolitical issues that would affect our market economies, consumer trends, or demand cycles. We focused on the horseradish that was our immediate environment, and often didn’t anticipate (or even think about) what the world outside the horseradish might hold for us.
Although I am no longer directly involved in the corporate planning environment, I have sensed from my clients that the current severe economic downturn has empowered executives and boards with a newfound mission to begin looking out toward the 29th day and discuss, identify, and plan for various scenarios they may face. This is also the reason that the economy has been slow to recover, as corporations who are preparing for the 29th day have become more risk averse and perhaps even slightly more controlling of their yearly budgets. But the lesson from Ford provides insight that not only did the company reorganize (and reduce) their plants and workforce, but redoubled their research, design, and marketing investments toward building products that better fit the marketplace. Malally created a revolution of structure and development within Ford; not merely an evolution of plans, as with most other automobile manufacturers.
The element of investment in innovation still seems to be lacking in most American businesses. The food industry, for example, has focused on line and brand extensions rather than invest in new food technologies that will address environmental, nutritional, and regulatory demands that stand between now and the 29th day. Significant competitive advantage and demand creation come not from line extensions, but from true innovation in product and process. Is this part of your organization’s investment strategy?
So, will your organization be Ford or GM in this scenario? Are you aware of and prepared to anticipate the effect of your 29th day? Think about it.
“Unless you’ve moved beyond fighting fires and are managing based on your business priorities, your strategy isn’t as brilliant as you think…” --- Tom Peters