During a Cocktail party in 1890 Pittsburgh Steel Titan Andrew Carnegie met the original management consultant, Fredrick Taylor. Carnegie dismissively told Taylor, “if you can tell me something useful about management that is worth hearing, I’ll send you a check for $10,000.” This equaled almost $300,000 in today’s terms.
Without pause, Taylor told Carnegie to make a list of the ten most important things to do. Then start working on number one. A week later, Taylor received a check for $10,000.
A graduate of Princeton and later Columbia Law School, Moe Berg was known as the most knowledgeable professional baseball player. As a journeyman Catcher he played from 1923 to 1941 when he retired from baseball to help the war effort by joining the U.S. intelligence agency, the OSS.
Spending his baseball days behind the plate he was able to analyze the game over 18 years plotting pitches against batters. He observed that the skill level of pitchers in most cases was too high for a batter to see the ball off the hand to be able to hit it effectively. The batter that would wait and see what pitch was to be thrown was typically fooled by off-speed pitches or that they couldn’t catch up with their fastballs.
These pitches beyond moving up and down and side to side would also vary in speed by up to 20 miles per hour. Berg later codified his findings in an academic journal. Statistically, hitters would increase their odds of success at the plate by guessing beforehand which pitch to hit. He adamantly preached that key to success was to eliminate options to solely focus on being ready to hit the right pitch for you.
Richard Rumelt believes that at the core, strategy is about focus and maximizing resource usage. This focus creates an advantage as your competition is not addressing that area. When understanding focused resource usage, think of flipping an old house. Your goal is to buy a cheap housing property, fix it up, and resell that property for a profit. When you are fixing the house up you can improve only the structurally damaged areas but may have trouble reselling the house. You can expend extra efforts to overhaul the entire house with the most modern features but may over price the house for the neighborhood and again struggle with selling the house. Or you can focus your resources on making the key upgrades specific to selling the house and maximizing your return on investment.
Your organization will naturally have limitations in what it can do. You must decide what will make you the most competitive and focus on those efforts. I reflect on the many brainstorming sessions that I would facilitate and having leaders want to capture all the ideas because they were just too good to lose so we must do it all. Having conflicting goals, dedicating resources to unconnected targets are the luxuries of the rich.
Napoleon learned early in his military career that the most effective path to victory was the concentration of fire as it overwhelms the enemy. The same is true when facing off against your competition in the business world. By focusing energy and resources on a few pivotal objectives this leads to a cascade of favorable outcomes.
Companies naturally expand and grow. New revenue streams are continuously sought; however, this also leads to multiple priorities. The catch-22 is that the more revenue streams you’re involved in, the decreased ability you will have to take advantage of a frontier market. Frontier markets create rich environments of unmet local needs and create openings for quick scaling.
Parts of the company Amazon would pit goals against one another in a gladiatorial format. The opposing goals are responsible for two divisions if one succeeded it killed the other. If you didn’t kill off the one that lost, you would have created more clutter in the organization and decreased its agility.
All strategy is disruption to an organization. Disruption is when a firm faces a dilemma when the choices that once drove their success now become that which destroys its future. Neste corporate was once a powerhouse in oil that was able to successfully pivot to renewables. That is a seismic shift in an organizational structure, yet it may have provided the lifeblood for the companies next 50-years.
Self-reflection is mandatory to truly understand the organization, what is essential, what isn’t, and what are the roots to issues. Sears & Roebuck famously attacked symptoms instead of root causes leading to their eventual corporate death. Lack of self-understanding leads to your failure in identifying and analyzing obstacles. Without identifying those challenges, you don’t have a strategy, you have a stretch goal or budget.
Understanding self and market are critical to success. Talented leaders can identify the one to two critical issues in any situation and then focus their resources on making progress. Qualcomm’s emphasis on 5G had doubters on time how far away the market was to implement. Unlike their competitors, Qualcomm raced to 5G and invested more to become the early leader.
When I looked at my own company and life, I realized that I had undertaken multiple opportunities. When starting a new business, a founder will look for multiple revenue streams to see which ones will hit. This reflection helped me realize that I was manually going through numerous marketing efforts with very little return. I also realized that I had to narrow my message and efforts to achieve my company pivot towards helping companies transform. This also meant that it was time to drop one of my clients. They were a high touch, low pay-out engagement building business continuity plans. While the revenue was welcome, if I wouldn’t have dropped them, I would have never had time to focus on gaining new clients with a higher bill rate in transformation work.
Our world is one of chaos, making it incredibly hard to run a business consistently. At these times a pause should be given towards long term strategic planning as the market is on the verge of change that cannot be predicted. Strategic theorists would suggest that during situations as these to take a position and create as many options as possible.
Effective strategy only becomes effective when priorities align across the organization. You don’t want to embark on a strategy without specific choices for if everything is a priority then nothing is. Once the strategy is decided, you will not want to confuse the organization and take away from the team’s efforts by being unclear or trying to do too much.
One definition of complexity is strategy. This is not supposed to be easy to recognize or to be developed within an hour of loosely associative thinking. Typically, the fastest and easiest solutions lead back to the problem reoccurring. Early in my career we would experience extensive audits on how to run the organization. These reached into deep cultural problems; however, the response was typically a tangible action that would attack a symptom because the true resolution would have taken too much effort to resolve. Those root causes were never explored nor were those issues ever solved.
As mentioned earlier, Napoleon found early in his career the power of concentrating his efforts. The principle of war, sieges, and even business are all the same. Offensive fire must be concentrated on one point. As soon as the breech is made, the equilibrium is broken, and the rest is nothing.
Centuries later in World War Two the French could never stop the Germans. By the time the French changed to address the Germans their tactics had changed already. The best defense against concentrated efforts is enhanced speed and agility. If your opponent can not concentrate their attack due to your agility, they will be forced into a reactionary role and lose their ability to shape the battlefield and dictate their terms.
We now live in a heightened state of global terrorism. Even though this style of fighting has been around since the origin of war. The original belief is that terrorism is used to scare the world, but the intent is different. Guerrilla attacks do psychological damage but make little overall damage. Its main impact is keeping an Army from being able to concentrate. Focusing on tamping down insurgents instead of focusing on its main objective. I try to think about this in the business world context. Whose the agile up and comer that moves too quick to be beaten by their Goliath competitor. That’s the one I want to invest my retirement in?
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