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.
To find out more contact Stuart by clicking here or call +44-(0)1636-526111.