Why executives try to do too much
The biggest flaws I see in most executive teams are their desire to do too
much and their inability to prioritise. In the current economic climate the
temptation to add a few more projects to the agenda, in a bid to mitigate
against declining sales and profits, is understandable but mistaken.
The end result is a strategic agenda that is as long as the receipts from
my weekly supermarket shop. Last year, for example, an executive director
told me his executive team had identified 20 strategic priorities. Unfortunately
he was unable to name more than half of them.
If company leaders can't remember the strategic priorities they have decided
upon, what chance do the rest of the organisation have of understanding what's
important, let alone of being able to deliver the agenda?
In my experience there are five main reasons underpinning executives' inability
to prioritise:
- A lack of strategic clarity.
I have written elsewhere
that it's difficult for business managers to make real choices if the
organisation's leaders are unable to clearly articulate what kind of organisation
they are trying to build. One of the first actions Sir Stuart Rose took
on becoming CEO of M&S was to set one or two corporate priorities, which
allowed him to cut the number of strategic projects from over 30 to 10.
According to Sir Stuart, this gave the company a sense of focus and clarity
it had been lacking.
- A fear of missing out. A consequence
of an unclear strategy is that managers will fill the void by pursuing
initiatives that are working for their competitors. If you don't know
which port you're heading for, you'll always feel that you're missing
the boat. Conversely, it is little surprise that McDonalds have delivered
70 months of consecutive sales and profit growth primarily by focusing
on improving what they already do well, not by blindly trying everything
Starbucks or their other competitors did. As they say in McDonalds, they
kept their eyes on the fries!
- Corporate ego exceeding organisational
capability. In his book, Execution,
Larry Bossidy tells the story of how Xerox, in the late 1990s, simultaneously
tried to consolidate 90 customer administration centres into four and
reorganise the company's 30,000-strong sales team from a geographical
structure to an industry focus.
Within a year, Xerox was in crisis. Invoices were regularly lost, service
levels slumped and sales representatives were so busy focusing on the
internal issues they didn't have the time to build relationships with
their reassigned customers. Performance plummeted and the share price
fell by over 80%! As Bossidy (obviously a master of understatement) notes,
"Launching two such enormous initiatives
at the same time was an execution error".
- Misguided risk management. When
you are trying something new it is tempting, particularly for our accountancy
colleagues, to be prudent and give the initiative a low forecast for performance
improvement. The problem with this approach is that you then need to take
on more initiatives in order to hit your overall targets. And, returning
to the argument with which I started this article, the consequence of
doing too much is that you are less likely to achieve anything of worth.
It is far better for you to keep the bar raised high and then identify
the real winners. Tesco, for example, have consistently set themselves
stretching goals (e.g. making non-food sales as big as food sales, delivering
£1 billion profit from its retailing services business) and then sought
to identify, build and drive the few, big initiatives that will help them
achieve their ambitions.
- An inability to welcome failure.
Failure is not a concept many executives are comfortable with. A project
that is not working is therefore often covered up and continues its ineffective
course until there is a change of executive sponsor. But this is precisely
the wrong attitude. At a recent session of the Morgan Cross Strategy Directors'
Forum, our guest speaker was Mike Harris, the founding CEO of both First
Direct and Egg. As Mike argued in the session, "Innovation is built on
the learning that comes from failure. Be happy to fail - most ideas will
fail, so fail quickly and cheaply."
The bottom line
When did you last do some real weeding of your strategic initiatives and related
programmes? Which projects are off-strategy, beyond your current capabilities
or are simply not delivering the results you need? Identifying and removing
the losers will help you drive your remaining priorities harder, give your
organisation a refreshed sense of direction and help deliver the improvements
in performance you are seeking.