In a well-known quote by Theranos’ CEO, Elizabeth Homes, she stated that “I think that the minute that you have a backup plan, you’ve admitted that you’re not going to succeed.” Of course, we all know what happened to her first and only plan. Yet, granted that New England is several thousand miles away, she could have learned something from Bill Belichick, the future Hall of Fame Coach of the New England Patriots.
In American football, a team prepares for its match against the opposing team by identifying their players and nullifying them to reach a successful outcome. They stifle and frustrate the opposing team’s key quarterbacks, lead receivers and the strongest running backs. That is their core strategy. And there are finite players circled by the defense to handle. In the case of the Atlanta Falcons, the key players were Matt Ryan and their receiver, Julio Jones. New England essentially focused on them. Meanwhile, the Falcons defense narrowed down their targets on the New England key receivers, Hogan and Danny Amendola. With Rob Gronkowski out of the picture, the Falcons thought they had locked up the game by narrowing the coverage of the key New England players and relied on those defensive targets as their only strategy.
New England spotted the Falcons sole strategy and, when behind by 25 points, the Patriots adjusted their game after the second half. They had chosen an alternate receiver, in this case, James White, to be the dominant receiver. And, with him as their alternate, the Patriots won the 2017 Super Bowl. Who was White some football commentator asked? Simply, the alternate strategic option not expected by the defense. The Patriots, he recited, had a leading receiver through Hogan a couple of weeks ago. Amendola before then. The defense plans for those players based on the previous football matches. The Patriots relied on another player with little or no previous exposure not anticipated by the defense.
Interestingly, a Belichick biography described that the coach’s book shelves contained every book related to football, except for one, “Art of War”, which clearly recommends modifying strategies according to the military theater. And, as everyone knows, there is not much difference between business and warfare. If the Patriots followed Theranos’ paradigm, the results would have been the opposite. Having one solution as the only strategy can spell the death knell for any enterprise or, in this case, a football game.
Alternative execution schemes are part of classical marketing strategy. In the business school text book, “Principles of Marketing” by Philip Kotler, the author recommends the development of alternative strategies to achieve objectives. Contingency plans are designed to encounter unexpected occurrences. They must be drafted in the business plan. And, whenever I draft a business plan, I myself always include alternative strategies in the event that, after certain quantified objectives are not met or fail, the plan shows another approach to reach the final objectives.
Ms. Holmes should have considered an alternate plan. What is interesting is that the investors never identified that major defect in the Theranos “only” strategy. And the lean startup principles, well promoted throughout Silicon Valley, fail to acknowledge alternative options. What lean startup does is produce a lean product and monitor customer adoption. Alternative plans are not in the picture in case of product failure. And there have been many failed companies applying the lean startup principles that have cost investors hundreds of millions of dollars.
There is nothing new here. None of these alternative choices to business execution philosophy is terribly unique. Kotler’s book is decades old. But I don’t see it mentioned in the many business plans or pitchdecks presented in the many pitches in Northern California. What else can be said about this myopic strategy? Maybe there is so much capital on the San Francisco streets that speed to market under the lean startup principle is more important than considering alternative strategies. Yet, think about the Falcons-Patriots game where seconds and inches matter in an one hour game, broken up into four quarters. Alternative strategies are part and parcel of the Patriots game. Did the alternative strategy work in such fast and precise competition? No one can debate that. And it applies to business planning as well.