The Law of Unintended Consequences

9 October 2008
CF-18 in high-g pull-up
CF-18 in high-g pull-up

Akin to Murphy’s Law, the Law of Unintended Consequences is a warning against the belief that you can control the world around you.  As well as the direct consequences, any action will also have other consequences which were unintended and which may be counter to the original intent.

As an example, in my early military career, I was an aeronautical engineer, a maintainer, working with CF-5 and CF-18 aircraft in Cold Lake.  In the early years of the CF-18 introduction, the maintenance community became concerned with the stresses imposed on the airframes by high-g loads.  Repeated stresses would shorten the life cycle of the airframe and could possibly create a flight safety issue.  To prevent these over stresses, the aircraft was modified with a g-limiter which would limit the g-loads in normal operation to about 7.5g.  The pilots could override this in emergencies and pull up to the aircraft’s limit which was above 11g.
Prior to the addition of the g-limiter, the maximum g pulled on any flight followed a statistical bell curve that averaged about 5g for all flights.  At the high end, there was a small percentage of flights with maximum g loads above 7.5 g.  After the g limiter was installed, the average g for all flights went up despite the fact that there were fewer cases of high-g maneuvers.  This higher average, the unintended consequence, represented more danger to the aircraft structural life than the small number of high-g maneuvers.
How did this happen?  The pilots, informed about the g-limiter, started to use it as a guide.  They no longer judged how much acceleration was required, they just pulled until they hit the limiter and felt safe doing so.  The statistics of the flight loads became very skewed towards 7.5g and the stress on the fleet went up not down.
What does all this have to do with business?  It is just an anecdote to highlight the need to always be measuring the results of your strategic decisions and to look for the effects of the unintended consequences.  In the story above, the maintenance community was tracking the aircraft stress loads and was intent on extending the life of the airframes.  The analysis of the data showed that the opposite effect was occurring so action was taken – not to remove the limiter, but to better inform the pilots about the original problem so that they could use their judgement as well as the limiter.
In business, many strategic decisions and tactical actions are taken but once taken, leaders and managers need measure the results and ensure the actions are having the intended results. 
MJM Consulting – helping companies grow.

Alternatives to Layoffs

8 October 2008

If you are preparing for the downturn by cutting costs, consider the advice of Mike Elgan.  In his article on “Three Ways SMBs can Survive the Economic Meltdown“, Mike highlights three alternatives to layoffs that can help reduce the overhead costs of running a business:

  1. Send people home.  Companies often consider transport and associated costs as included in employee pay.  Consider cutting a portion of this pay and let employees work from home.
  2. Use all the on-line tools to travel virtually and collaborate without actually leaving home.
  3. At the extreme, consider closing your office and becoming a Bedouin organization.

I like these ideas but I have to ask, why wait for a downturn?

Pragmatism Always Wins

3 October 2008

Pick your niche and stick to it.  Focus focus focus.  Stand for something. Don’t waiver. Stay on message.  Stay on target.  Damn the torpedoes.  And while you’re at it, go down with the ship.

Following the tech crash in 2001, Sun Microsystems did not change its strategy.  It continued to invest heavily in R&D at a rate nearly twice as large as its competitors.  It did not adapt its product lines to meet the customer demands for cheap off-the shelf products.  They stuck to their strategy but they lost their competitive advantage.

Now consider the Republican move to shore up the financial system. (Shore-up is a much better description than bailout, don’t you think?)  This is a clear departure from their message.  It is a socialist move that is not consistent with Republican values.  Does that make it wrong or is it more likely that these extraordinary times do not fit nicely with the policies of any political party.  New thinking is required because sticking to the message in times like these does not make sense.

Being dogmatic about your strategy in the face of external changes that affect your business is wrong.  Predict, plan, adapt is better advice. There are things that happen to businesses that require you to change.  Being stuborn and dogmatic about it won’t help you.  In these cases, pragmatism always wins.

Thanks to Seth Godin for getting me on the soap box.

MJM Consulting – Helping companies grow.

No Strategy Survives Contact with the Market

29 September 2008

The recent collapses of the financial markets highlights the existence of change as a force of nature in the business world.  Change happens. All the time.  If stability doesn’t exist, it doesn’t make sense to plan strategy around stable business markets.

To paraphrase Helmuth von Moltke the Elder, the Chief of Staff of the German Army in the 1800’s: no strategy  survives contact with the market.  Rather than indicating that strategy is pointless, the comment is meant to show that strategy must react to changes in the market.  It must be fluid rather than fixed, open-minded rather than dogmatic.  It is a game of options and optimization.

The key, then, to effective strategy development is to ensure you have options and contingency plans and that you are continuously working to develop and optimize these plans.  To quote Moltke again, “Plans are nothing, Planning is everything”.  The essence of this thought is that the plan will invariably change before it is completed so don’t concentrate on the plan, concentrate on the processes of planning.  The plan will be obsolete as soon as you e-mail it.

MJM Consulting – Helping companies grow.