Do you find your business in any of the following situations?
- Doing a bit of everything for a bit of everybody
- Pushing to satisfy a few demanding customers
- Playing a catch-up game with competing products
- Continuing to invest in those few non-growing products that no one knows how to get rid of
If you do, then your business approach might be lacking the Power of Strategic NO.
Many companies focus a lot of attention on what they should be adding: what new markets to enter, what new services to provide, what hot functionality to beef the product up with. Yet often, the very same companies overlook that decisions about what to strategically DO should go hand-in-hand with decisions about what to strategically NOT DO. This oversight, especially when compounded over time, increases the cost of running the business and leaves less and less sources to invest in those few projects that do matter and support your strategic YESes.
Importance of being strategically selective has been repeatedly stressed by Michael Porter in his statement,” The essence of strategy is choosing what not to do.” Popularized concepts of Blue Ocean Strategy framework extensively elaborate on “Eliminate” and “Reduce” actions on your way to establishing a Blue Ocean strategy. Some might even argue that the necessity to be strategically selective is driven by common sense.
Why then do so many companies find themselves in situations that are listed above?
Picture this example:
You have a customer. A big customer. A loyal customer who has for years been investing in your products.
This customer surely expects attention towards their requests, which you’ve been diligently responding to, for years. At some point, you might find yourself realizing that the functionality you’ve been adding for this customer is actually swaying your product away from its strategic course and is neither benefiting the rest of your customer segment nor contributing to the company’s overall goal. At the same time, it is effectively taking away the resources from other projects that have much higher potential to set you apart from the competition. Who, when, and how would make the hard decision that this practice should stop? Who would bring this news to the customer?
Or picture another example:
Your small, starting-up company has been driven by a certain vision: this is who we are, this is what we do best, and this is the unique value we provide to our clients.
Your team strongly believes this vision has a great deal of potential. Meanwhile, an opportunity arises with a real cash value attached but which falls outside of your strategic intent. In fact, it will not only take away the much needed development resources but might even hurt your carefully crafted image in the eyes of your core market segment. Would you or would you not say NO to this opportunity?
These are cases that are not easy to decide-upon with potentially far-reaching consequences.
You could help yourself navigate these challenging decisions by:
- recognizing the circumstances,
- having a mindset and process in place to be able to make a decision,
- having the discipline to act upon the decision.
First, you need to be able to recognize when you are facing a possible “Strategic NO” situation.
Strategic NO situations span across:
- your choices of market segments,
- your choices of a business model,
- your choices of product lines,
- individual products within a product line,
- individual features or themes of features within the product.
Of course, this step is only feasible if your company and product have a clear vision to start with. If the vision is blurred, recognizing which efforts do not fit its boundaries becomes an elusive task.
Second, you need to have a process in place for raising a concern and for conducting its fair evaluation.
Going back to the story with the loyal yet demanding customer, does your company have an accepting mindset and a process for people in your organization to voice a concern, conduct a cost assessment, and deliver a proposal on how to address resource-consuming non-strategic work?
Third, you must have the discipline to make and commit to your Strategic NO decision.
Every day of a delayed or non-acted upon decision costs your business in terms of wasted resources and wasted strategic opportunities.
Think about it: The opportunity that COULD make that much sought-after leap from competition possible might be just one Strategic NO away.