As a manager and leader of your business, how much of your time is spent fixing problems? A quarter? Half? More? Whilst problem-solving activity is inevitable, organisations do not deliver great results simply by addressing problems.
For too many business leaders solving problem-solving is exactly how they spend the majority of their time. Worse still, executives can convince themselves that problem-solving is a credible strategy.
In a recent McKinsey Quarterly article, Professor Richard Rumelt remarked that when he questioned CEO’s about their company strategy, “I heard a lot about doorknob polishing. They were doing 360-degree feedback, forming alliances, outsourcing, cutting costs and so on.”
The problem of problem-solving is that it can lead to insularity and incrementalism. Whilst it may work in a steady-state environment, it cannot help businesses succeed in a non-linear world. You therefore run the risk that you:
- Fail to identify important changes in your market;
- Do not build the capabilities required to exploit these changes; and
- Lose out to new and more agile players
For example, the major UK airlines were caught in mid-air by the rapid rise of low-fare competitors. Whilst they were busy improving their loyalty schemes, menu choices and the logos on their tail-fins, new and focused players such as Ryanair and Easyjet replaced them in huge segments of their market.
Winning strategies and great results begin with a focus on identifying market opportunities. By looking outwards you are in a position to identify emerging changes in the market and are able to plan and deliver your response before your competitors do.
Whilst problem-solving takes a microscope to the organisation, opportunity-seeking takes a telescope to the world. A key job of in developing winning strategies, therefore, is to pick up the telescope and scan the horizons for changes and opportunities.
Of course, I am sure that you know this already. Rumelt contrasted how CEO’s saw their own strategy (of “doorknob polishing”) with their view of the strategy of the leading players in their market. The CEO’s could easily explain that the market leaders had obtained their position by successfully jumping through a window of opportunity that had developed.
The issue is whilst you may know you need to pick up the telescope, it is often only the market leaders who actually do it. With more than a dash of name-dropping, Rumelt related how he had talked to Steve Jobs in 1998 and had asked him what his longer term strategy for Apple was. Jobs reply? “I am going to wait for the next big thing.” The end result was i-tunes and the i-pod!
Environmental changes and the rapid emergence of new opportunities are not confined to high-tech markets. Take my old employer, Alliance Boots, as an example. It operates in the relatively low-tech world of pharmacy retailing and wholesaling. And it has recently been taken over by majority shareholder, Stefano Pessina, and private equity giant KKR for £11 billion so that the new owners could better pursue the same strategy as Jobs.
When asked why he had bought the business, Pessina told The Times “We are living in a world where the pharmacy model is changing. In some markets you need to move rapidly or you can miss opportunities. Sometimes in private you can do in three years what you can do in five years in public.”
The bottom line
Opportunities cannot be identified when you are busy fixing and steadily improving your current business model. I therefore invite you to review the strategy of your business, your meeting agendas and your own diary to understand whether you are stuck endlessly in your laboratory or are also spending time on the high seas scanning the horizons.
To find out more contact Stuart by clicking here or call +44-(0)1636-526111.