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
In my experience there are five main reasons underpinning
executives' inability to prioritise:
- A lack
of strategic clarity. I have written
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!
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".
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."
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.
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Problem-Solving's Not Enough
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from the BNET business website
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