Is Your Company’s Strategy in Focus?

I did a stint in a corporate planning department some time ago.   It was a large sector of a Fortune 100 company, with global operations in OEM automotive components.  During my tenure the company was doing a major strategy review.  They hired the well-known strategy gurus of the time as consultants, including strategy king Michael Porter.  They trained key executives and division general managers in the process and tasked them with articulating the strategies for their business units.  I had the interesting experience of participating in several of their presentations and the resulting feedback the corporate team gave.

The first thing that made an impression on me was that every one of the presentations by these divergent business units were almost exactly the same.  I think I can sum their strategies up this way: “We will be all things, in all places, at all times, to all customers in every geography that we can reasonably reach.”  These division general managers waxed eloquently about how they would grow their base business and also expand into new products and geographic areas.  There was little justification of the market conditions that would allow such expansion, but they sure seemed certain they could do it.

The response from the consultants and corporate planning people was also the same for every presentation: These were not strategies likely to be successful.  They wanted these business units to be the leaders in their main products, increase efficiency and maintain the customers they had.  The corporate folks articulated the “be first or second in a market or be sold” portfolio mentality often ascribed to GE.  Not surprising, since several of the folks in the room, including my boss the Planning VP, came from GE.

I saw the light right away, unlike some of the GMs of the business units.  The “kitchen sink” strategies spread the resources too thin and seemed to leave the base business open for attack.  Plus, in a large multinational organization with dozens of business units, which new product or geographic areas to go after and what resources to use to execute on them is a top down decision, not a bottom up one.

The main take away for me was once again, focus.  These businesses served competitive markets in an ever changing landscape and would need every resource to protect and grow their base business.  In businesses where I have had my hand on the steering wheel, I have always pushed for focus.  Let’s become leaders in our key area and have a profitable and defensible base position.  Then, and only then, can we think about adjacent markets or bringing out new products.

My observation is that far too many businesses ignore this.  They go forth, believing that every potential customer in the world can’t wait for their cool product and end up looking mediocre next to firms that focus in on serving a tighter set of customer needs. They often don’t know who their customer really is and frankly, that one sin will destroy you quite quickly.

Lastly, this is not a limiting strategy.  If you quickly establish strong positions in your core markets, you can use that success and cash flow to go after the next one.  The quicker you execute these advances, the larger you grow.  It’s the age old saying “How do you eat an elephant?  One bite at a time.”

How has your business grown?  Are you a leader in your core markets?

You can connect with Eric on LinkedIn: www.linkedin.com/in/ericlundbohm/

Follow his updates on Twitter @lundbohm

2 thoughts on “Is Your Company’s Strategy in Focus?

  1. Great thoughts Eric! Far too often large corporations spread their resources too thin, and small companies lose their identity by trying to grow too fast. A solid business and market strategy must come first before identifying where and how to grow.

  2. This post reminds me why being persistent is a tactic, but not a strategy. Wikipedia defines “strategy” as a long term plan of action designed to achieve a particular goal. Imagine you are driving a Ferrari at 80 mph headed straight toward San Antonio – but you really want to go to Los Angeles. Accelerating to 120 mph may give you the sense that you are really making progress, temporarily. But what you really need to do is change direction.

    We all have to be careful of being “persistent” in the wrong direction. Right direction is more important than persistence.

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