I recently read a white paper entitled “The Focused Company”, produced by Bain and Company. As a business coach, I have found that while most clients understand the importance of prioritization and focusing, they fail to achieve either. Why does this occur?
As an owner of three businesses, I can appreciate the challenge. There are so many things that must be done in order to be successful in business. As a result, it can be hard to see what is crucial. The natural entrepreneur has the “shiny object” syndrome. We are interested in pursuing the “shiny object”, which distracts us from concentrating on the matter at hand.
Business executives mainly fail to focus because of the way in which the human mind works. We operate more on a subconscious versus a conscious level. We tend to learn by repeated behaviors and allow those repeated behaviors to take precedence over conscious learning. In other words, our brains have us operating on auto-pilot. We may know consciously that the way we have behaved in the past is not working, but our subconscious knowledge still drives future behavior.
According to the Bain report, “… 80% of CEOs expect high levels of complexity over the next five years. Far fewer feel prepared to cope with it. A truly focused company, one that has cut complexity to the minimum, does not invest to win in every element of its business. It invests primarily in its core, the business in which it can outperform everybody else. A focused company does not try to appeal to every potential customer. It concentrates on the most profitable customers, those who it can serve better than any competitor can.”
As many of my readers know, I am a certified Gazelles Coach. As such, we take our clients through a process known as the “Four Decisions,” which was derived from a well-read book, “Scaling Up” by Verne Harnish. The power of the “Four Decisions Program™” process is not producing the “one-page business plan.” While that is the output of the process, the true value derives from the discovery that occurs by going through the process.
We recently worked with a multinational public company that operates with several billion in revenue and has little-to-no profit to show for it. By working with their coaches, they found that the secret to achieving greater growth and profitability is predicated upon how well they are able to focus. The leadership team was stunned to realize that they had grown to several billion in revenue, and they were struggling because of their failure to have a focused strategy. Our client discovered that their focus had been on how much supply of product they had versus possible customer requirements. If you wanted to analyze their customer base and go-to-market strategy — there was none. As a result, they had no customer loyalty and were more susceptible to market pricing than if they had focused on a core customer and mastered those variables in their business that were important to the core customer.
Now that this has been discovered, it will be important that their coach continues to help them focus products and services in a way that best addresses the needs of the customers that they believe have the highest profit potential and will stay loyal as a result of addressing these needs. We concluded that, if they do this well, they will be able to use up 100% of their manufacturing capacity by serving much fewer customers well. Rather than being supply-driven they will become customer-driven. To accomplish this, it will be important to design the organization in a way that supports making critical decisions rather than supporting existing processes. Also, by being customer-driven rather than process-driven will result in integrated process efficiency rather than functional efficiency.
In the end, companies must attack complexity in their business. Focus is a never-ending journey. Business must focus the majority of organizational emphasis on a very few key areas that are costing too much or causing some type delay in order to best serve core customers. We also recommend that businesses should focus their activity by quarter, treating each quarter as a 13-week race. Race to improve one major area of your business. What you will find is that fixing one area will reveal sizable opportunities for simplification elsewhere for the next quarter.
Howard Shore is an executive leadership coach and founder of Activate Group Inc. based in Miami, Florida. His firm works with companies to deliver transformational management and business coaching to executive leadership. To learn more about executive leadership coaching through Activate Group, please contact us today or give us a call at 305.722.7213.