Why companies (like Nike or Starbucks) make good or bad decisions
Why companies (like Nike or Starbucks) make good or bad decisions
A look at why Starbuck's mission is too clever, why Nike cares about marathon world records and why words like culture or strategy have lost their meaning.
Greetings from Vancouver! 👋
There are many dichotomies within organizations that can lead organizations to make smart or dumb decisions. In this week’s newsletter, I explore three that have been playing out often in several organizations in recent months. Here’s what to expect:
Why words like strategy or culture are becoming meaningless (see idea one)
Why Starbuck’s mission statement is too fluffy (see idea two)
Why Nike cares about marathon records (see idea three)
As you read through each dichotomy, think of how your organization handles them. Does your team have a preference for one or the other, and what are the implications of that bias? If you would like to share your insights with myself and others, leave a comment at the end.
Let’s jump right in!
Thinking Things vs Words
In 1899, U.S. Supreme Court Justice Oliver Wendell Holmes, Jr. said that we “We must think things not words, or at least we must constantly translate our words into the facts for which they stand, if we are to keep to the real and the true.” This has often been shortened to simply “think things, not words”.
Mr. Holmes was referring to our first dichotomy, where words can sometimes obfuscate meaning. In organizations, words start as placeholders for ideas but eventually those words become meaningless and counterproductive. Words like culture, diversity, customer-driven and even strategy, start with exciting and clear definitions, only to become murky.
This is why the act of “thinking things” is important. It’s not enough to say that “we need a strategy,” we need to define exactly what it means by this statement. Do we need clarity on the overall vision? Do we need next steps that other people can follow? Do we need to wrestle with the identity of our organization? The answers will lead to drastically different starting points, perhaps even away from what we could reasonably consider “strategy,”.
I helped an organization with their strategy, which they needed, and one of the most helpful exercises for them was fleshing out their vision. Their initial answer was full of platitudes instead of concrete actions. They were simply using the word “vision” without thinking deeply about what it actually meant for their organization.
We cannot let words replace the act of thinking, otherwise, we will end up with empty language that is simply parroted ad nauseam.
Takeaway: Organizations need to “think things,” and not just assume that everyone knows what key words such as strategy, culture or diversity means.
Cleverness vs Factfulness
In a similar vein to our first dichotomy, we turn our attention to our second dichotomy of cleverness versus factfulness. Thomas Sowell, an economist and social commentator, once said that, “cleverness is not wisdom, and artful insinuations are no substitute for factual evidence, if your goal is knowing the facts.” He was referring to political ideology but the same principles apply within organizations.
Cleverness can seep into organizations without much effort. I constantly see cleverness in areas such as mission and vision statements. Organizations need a mission and vision that is factual and helpful but not one that is clever.
Look at the Starbucks mission statement:
To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.
The second half makes sense, Starbucks is primarily a local neighborhood business (albeit global in nature) that serves coffee but the first half is too clever. It sounds nice to talk about the human spirit, positioning Starbucks on a similar level as religions and grand political theories but it is not necessary. Worse of all, the first half doesn’t provide guidance on present-day issues such as labor relations and the decreasing amount of people who prefer to take out coffee.
Cleverness feels good but it can hide the facts. Organizations who spend months crafting the perfect mission or vision statement are wasting their time. They are better off allocating that time to tackle the facts facing them.
Takeaway: Don’t get caught up trying to come up with clever mission statements. Focus on tackling the hard facts instead of playing with words.
Pragmatism vs Ideology
Before we tackle the third dichotomy, we need two definitions on pragmatism and ideology. I’ll save you the effort needed to pull a Webster dictionary and list them out below.
Ideology refers to a system of beliefs, values, and ideas that form the basis of a political, social, or economic theory or policy. It often involves adherence to a particular set of principles or doctrines, which can be rigid and inflexible.
Pragmatism, on the other hand, is a philosophical approach or mindset that prioritizes practicality and the evaluation of ideas and actions based on their real-world consequences and effectiveness.
You can likely see where I’m going here. Organizations make all kinds of decisions and my contention is that all decisions should be passed through a pragmatic lens and not an Ideological one.
For example, Nike made headlines recently when Kelvin Kiptum, a marathon runner, set a world record while wearing the company’s Alphafly 3. Nike made a big deal of this event, which could come across as ideological.
What does marathon records mean for someone who just wants to go for a run around the neighborhood? As it turns out, quite a bit. Nike’s mission has always been centered around bringing inspiration and innovation to every athlete around the world. Innovation, in this world, means being at the cutting edge of technology and world records. Nike’s decision comes across as pragmatic.
A different example comes from Target, who faced heavy backlash from an LGBTQ+ promotion the company ran, resulting in a drop of sales by 5%. Target’s mission is “to help all families discover the joy of everyday life.” Putting aside the content of the decision, which happens to be a battlefield in the culture wars, we need to ask if this decision is helping Target deliver on their mission.
I personally would lean towards no, as Target can still deliver results without undertaking this specific campaign. Pragmatism means letting go of certain decisions if they won’t help the organization better serve its customers. Ideology means holding on regardless of the potential consequences. Every organization would respond to this situation differently, and the key is making the right decision for your situation.
There’s ever more ideology in today’s organizations and that’s a shame because it distorts the decision-making process. Like the other dichotomies, we need to think through decisions, using a pragmatic lens. That’s the only way to move forward sensibly.
Takeaway: All decisions should be run through a pragmatic lens. If not’s pragmatic, you may be doing something simply to conform or push a specific ideology.
Weekly Video
I recently started making longer form videos for Youtube and I thought I would share the latest one with all of you. The video below gives you a 10-minute overview on how to create a strategic plan, whether you’re doing it yourself or with an external facilitator.
That is all I have for this edition. Enjoy the remainder of your week and talk next week!
Cheers,
Ruben
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