--Tom Siebel, Founder of Siebel Systems Whether in business or military strategy, the ability to focus one’s resources has always been a key determinant of success. As a matter of fact, I’ve never heard anyone disagree with the importance of focusing resources. Trouble is, the majority of companies still don’t do it. If focus is such an important practice, why isn’t it performed more effectively or more often? Four reasons: 1. Unclear purpose 2. Lack of business intelligence 3. Action orientation 3. Unwillingness to make trade-offs
It all begins with your business purpose, which is most completely expressed in the following way: Current Purpose Æ Mission statement Future Purpose Æ Vision statement Guiding Purpose Æ Values statement An organization or department that does not have a clearly articulated purpose in the form of mission, vision and values statements is like a rudderless ship. It floats along, being pushed by competitors and customers into all kinds of strange places—places that usually waste valuable time and resources. The purpose serves to assist in developing focus because it sends a clear message to employees, customers and the market. That message contains what products and services are offered, who they are intended for and how they are unique. Once these areas are identified, employees can use them as a guide to ensure that their decisions and activities are directed in support of the purpose. In turn, the purpose limits the range of strategic choices available and concentrates resources accordingly.
Lack of Business Intelligence
The esteemed business philosopher Vinny Barbarino (a.k.a. John Travolta on the ‘70’s TV sitcom
“What…. Where…. When..?” ) would often respond with the following when faced with a question: This indicated he wasn’t quite sure what to do and usually bought him some time. How many Vinny Barbarino’s do you work with? Now when we say lack of business intelligence, we’re not talking about IQ. We’re talking about the insights derived from strategic thinking— methodically and comprehensively assessing the market, customers, competitors and the organization. Once the insights and intelligence are gathered, one understands where to focus resources in order to maximize their opportunities. Without the generation of intelligence, effective resource allocation is a crapshoot. Copyright © 2006. Strategic Thinking Institute. All rights reserved.
An additional note on intelligence. A glaring need I’ve noticed in a number of organizations is a central and real-time repository for intelligence on competitors, customers and the market. Too often, a key competitor’s activity is discovered and passed around via voice mail. After a few days, it’s all but forgotten. However, if that activity were recorded and added to another competitor activity one month later and to a new customer trend in six weeks, an important insight may have developed. That’s one of the reasons I’ve eschewed the lengthy, narrative strategic plans for the StrategyPrint. The StrategyPrint is a two-page strategic plan that acts as a real-time repository for intelligence and aligns the group’s goals, objectives, strategies, tactics and metrics.
As we are now all technologically-tethered to one another and expected to be “on” 24/ 7, activity is the name of the game. Most managers want to be where the action is and if they’re not conscious of that fact, they will spend all their time there. While an action orientation certainly improves our operational effectiveness, it can hinder our ability to focus resources. Focusing resources requires us to periodically step back out of the fray and thoughtfully assess the situation. A good strategist isn’t driven by the calendar or the clock— they’re driven by those few things that are the difference makers in their business. Taking time to identify those things and focus resources on them is essential. A tool for harnessing the action orientation and ensuring activities are all working together in a tightly interconnected system of strategy is the Activity System Map. The Activity System Map requires you to document your group’s primary activities to visualize their relationships and understand how they support— or don’t support— one another. The following is an example of an Activity System Map for the fragrance and cosmetics retailer Sephora. Sephora’s activities are focused around three areas (denoted by the larger purple spheres): 1. Convenience 2. Environment 3. Access Those three activity centers are comprised of multiple activities which serve to support and strengthen the company’s strategy.
Unwillingness to Make Trade-offs
Trade-offs occur when more of one thing necessitates less of another. While most managers relish the “more of one thing… ” aspect, it’s the “… less of another” part that separates the successful firms from those rearranging the proverbial deck chairs on the Titanic. Focus requires trade-offs and trade-offs require calculated risk. I always get a kick out of a line business newspaper reporters write quite often: “The strategy is fraught with risk.” That’s as irrelevant a statement as saying the air is fraught with oxygen. Strategy, by definition, will always Copyright © 2006. Strategic Thinking Institute. All rights reserved. 2
contain risk because it requires choosing to do something different than your competition. The element of risk is why focus is so difficult for managers to effectively accomplish. Focusing scarce resources also creates vulnerability in the areas that we haven’t allocated them. That’s why it’s common to see big companies spreading their resources around like a farmer systematically covering his soil with fertilizer. By throwing a little bit everywhere, you’re reducing your vulnerability and lowering your risk. However, just like financial investing, the more you reduce your risk, the more you reduce your chance of great financial success.
The Power of Focus
One of the creators of the positioning concept, Al Ries, uses this example to underscore the power of focus. “ The sun is a powerful source of energy. Every hour the sun washes the earth with billions of kilowatts of energy. Yet with a hat and some sunscreen you can bathe in the light of the sun for hours at a time with few ill effects. A laser is a weak source of energy. A laser takes a few watts of energy and focuses them in a coherent stream of light. But with a laser you can drill a hole in a diamond or wipe out a cancer.” Focusing resources allows you to generate the same power in your marketplace. Failing to muster the discipline to focus weakens efforts and diffuses your ability to impact the business. So where is your “ laser-like” focus?
Rich Horwath helps managers develop the skills and expertise to create great strategy and fulfill their leadership potential. He is the president of the Strategic Thinking Institute, a former Chief Strategy Officer and professor of strategy at the Lake Forest Graduate School of Management. Rich is the author of
Sculpting Air: The Executive’s Guide to Shaping Strategy
Storm Rider: Becoming a Strategic Thinker
. Please contact Rich at (847) 756-4707, email [email protected] or visit www.strategyskills.com 3