Last month I was a bit naughty. I hid a whole world of pain under a short point on strategy when I asked: “Do you understand how tough your chosen industry is to make money in?”
If you read it, you may have chosen to consider the end of my statement: “Then you can decide if you pack up and go home or carry on playing.” A lighthearted joke? It wasn’t. As an example, Jack Welch, legendary CEO of General Electric over one if its greatest periods of success, started his tenure by selling off more than 200 businesses worth more than $11 billion and using that money to make more than 370 acquisitions in different industries. Why? Because the original industries were too difficult to make money in.
It got me thinking about how many massive realities we tend to ignore in business because they don’t fit with our expectations or the stories we’re telling ourselves as leaders and entrepreneurs. The whole article last month is a good example. It defined good strategy as being about serving an unmet need. Doing something unique, or uniquely well. Most of you who read it will have nodded sagely, then totally dismissed the fact that your business is not serving an unmet need uniquely or uniquely well. Therefore it doesn’t really have a good strategy. Gulp.
Profit is another good example. Pretty much every entrepreneur I meet is apparently just about making profit. Until I ask them to deduct the market salary they’d receive if they went back to employment. And then to deduct the real salaries of all the extra roles they’re juggling during ‘the early years’. Don’t forget the other directors/ consultants not on full salary. Any costs going through the business that shouldn’t be? When they’ve finished adding up the true position they can just about see all that red through their tears.
You as leader. Now this is a bit of an existential one. Unfortunately, because you’re the chief strategy officer, if you can’t do this job well then you’re probably the reason for your businesses failure to succeed or grow. This leads to the self-perpetuating ignorance of the other features that indicate your business is dying. If you can’t execute a good strategy, it’s only a matter of time before you’ll have killed your business.
Business finance providers are like zombie radars. If you can’t raise the money required to grow it’s normally because everyone else has spotted what you’re choosing to ignore. You have a zombie business with no strategy. Oh, and you probably don’t have private assets they could use as an excuse to lend you money.
So where’s the zombie at? Unfortunately it may well be your whole business if any of the points above have resonated. It looks like a good business until you get a bit closer and notice it shuffling inexorably forward, dead-eyed but looking for more cash to consume. Not a good industry and not a strong strategy funded by short term measures like reduced salaries or expensive lending because nobody else believes it’s a real business. They see the zombie, but are too afraid to tell you.
So, what’s the answer? You may have started to get the hint when you realised I’ve written for two months on the same point. STRATEGY. You have to have a good strategy, and be a good enough leader to recognize that a good strategy is constantly evolving. You have to know how to execute it. Everything else is essentially playing at businesses rather than running a good business.