The fundamentals of running a business haven’t changed all that much over time.
Sure, business tools — the micro technologies applied to specific functions in a business — have been revolutionized by the Internet and the new capabilities it has spawned.
The ability to personalize offers and advertising messages, for example, has introduced an entire new dimension in marketing and sales that wasn’t possible a decade ago.
But the basic business principles espoused by some of the more noteworthy thought leaders of the past are still held to have just as much relevance today as they were then.
For example, Peter F. Drucker had simple yet compelling views of how businesses should be led and his guidance remains as vital signposts for business leaders to follow.
- “There is only one valid definition of business purpose: to create a customer.”
- “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”
- “Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes.”
But there are some things that are practised in business today that need to stop; these remnants from the past — and many of them remain as examples of what leaders ignored from icons like Drucker — continue to find their way into business plans and marketing strategies and are a drag on business performance.
These are the five worse things that suck in business and they need to be expunged from how organizations are run.
Most business leaders ask the question “How can it be scaled?” when presented with a new business opportunity for a product or service. What they want to know is how the new product can be economically supplied to as many people as possible.
How the supply chain can be ramped up to produce the maximum number of units within an acceptable cost envelope.
The problem with scaling is that it takes an idea that was likely hatched from an analysis of a single customer or small customer group with narrowly defined needs and wants and is transformed into one which will be force fed to the largest population possible.
The demand-centric idea is subsumed by supply and cost considerations; the customer is lost in the process.
The reason scale thinking sucks is that supply should never rule the roost; demand should. And the real question that should be asked by leaders is “How can we efficiently provide this new product to its intended audience at a price that reflects its intrinsic value?”
Truly unique ideas in business are few and far between, notwithstanding the emphasis given to organizational programs around how to generate new ideas and how to be more creative.
The fact is that a new idea being adopted in one organization is most likely an old idea in another. Many businesses pride themselves in being competent in spotting best practices and adopting them; in fact the process of benchmarking best in class and robbing their ideas is often expressed as a core competency of a firm.
Innovation and creativity can’t be achieved by stealing an idea belonging to someone else; all that you really achieve is you increase the herd of copycats by one.
The reason copying sucks is that the process works against the natural process of discovering new ideas that might improve performance. As long as employees are on the hunt for an idea they can copy (under the guise of innovation) they will NEVER apply themselves to finding something revolutionarily new for their customers and their business.
There is a misguided notion in business that if you have a great plan, success is a stone’s throw away. As a result, strategic planning, marketing planning, sales planning and ”everything planning” is given a high priority and employee education is littered with planning techniques and boilerplates to ensure the process is as sophisticated as possible and that it employs all the tools espoused by the planning experts.
My observation over my career is that the lions share of leadership time is spent charting the right course for an organization with little time left to ask the question “How can we execute the plan?”
Plans are only good intentions unless they immediately degenerate into hard work — Drucker
The reason planning sucks is that it trumps execution in most organizations; it assumes implementation will happen by serendipity. The reality is, however, it almost never happens because it requires people to do it with their vagaries of individuality and diversity.
If individuals don’t believe the plan will satisfy their own unique wants and desires — if they can’t buy in — they won’t be advocates to the change and the plan will die.
Success doesn’t come from throwing the plan over the wall and expecting employees to dutifully and effectively execute it. It comes from leadership spending 80% of their time on figuring out how to execute an imperfect plan and to find a way to engage the hearts and minds of every employee to make it their own.
Businesses love crowds; the attraction that a large population or mass market brings to profitability potential if it can be converted to a large volume of product and service sales.
Whereas scale addresses how supply can be economically increased to provide large volumes, crowd or mass market thinking addresses how a product or service can be designed to appeal to the greatest number of potential buyers.
This infatuation with the masses tries to find the lowest common denominator solutions that appeal to everyone — to the average individual.
The market reality is, however, is that watering down the features and benefits of a product to try and meet the needs of the many, makes it appeal to no one. It’s bland and insipid. It’s value proposition is vague and unclear.
The reason mass marketing sucks is that it forces the business away from individuals who each have special wants and desires to the herd and numbers that define a potential opportunity. A people-focus is replaced by a superficial numbers one. Furthermore it results in a culture of pushers rather than creators of special value based on what individuals desire not on what you suspect the herd wants.
In business, there is a thirst for precision; to be as accurate as it can be in the solutions it creates to meet the challenges it faces. It’s a fallback to the scientific method which postulates that a finite number of independent variables can be combined in a unique way to produce a predictable outcome.
The d = s x t thinking in business produces, for example, forecasting models that predict consumer demand and market share in a world of chaos and randomness.
The truth is, markets can’t be formularized; outcomes can’t be represented by the results of combining inputs in any particular way. At best, outcomes can be extrapolated or approximated but must always be taken with a grain of salt because before you know it, something unexpected happens that rocks your world and renders your good intentions invalid.
The reason precision sucks is that it sets up unrealistic expectations that things will work out the way they were intended. And it furthermore reduces the capacity of the business to respond and adapt when they don’t (and they never do).
Successful businesses definitely have a “Plan A” that is constructed with the best analytical tools at leadership’s disposal, but they also have contingencies in the wings to draw on when things start to go awry. And they invest heavily in tracking and monitoring to know when Plan A is at risk; they never let their defences down.
The successful businesses I know:
- are good at anticipating but GREAT at responding to unforeseen events;
- are comfortable with an imperfect let’s head west strategy;
- view the ability to execute as a competitive advantage;
- focus on the individual and creating value that satisfies their special needs;
- build a culture to create original and different ideas; they see themselves as best in class.
They’ve found a way to get rid of what sucks.
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