Ever since I started blogging about leadership and strategy, I’ve been harping about the notion of “doing less, better” as a business modus operandi. Wall Street is against the idea. They think companies have to “do more and more” to get bigger and bigger. Recently, they’ve been pushing Starbucks to expand beyond coffee into a variety of foods. It will be interesting to see whether Howard Schultz will give in to them. My former employer, Kraft Foods “does more and more” quite well, albeit through acquisitions – a bit of a cheat in my view. Jacobs Suchard, the coffee/chocolatier that I headed in North America was just one of a long list of Kraft acquisitions that started with General Foods in the eighties. Suffice to say deep pockets, rather than business brilliance snatches the prize.
The value of focus is knowhow, nimbleness and strategic insight. Successful multi-product companies in various markets achieve success by narrowing their businesses into manageable units. We use to call them SBU’s, strategic business units. Procter and Gamble do this like no other. Last year, Booz & Company conducted a broad study amongst 1,800 executives on the power of focus in business. They refer to it as corporate coherence, but the concept is the same. The study substantiates my theory of ‘doing
less, better’, whether that focus be on projects, product lines or markets.
Booz & Co. determined that 64% of executives say their company has too many conflicting priorities, and 49 percent say a list of strategic priorities doesn’t exist at all. Here are some other relevant details.
The survey indicates that the companies who focus and prioritize are the ones who outperform their respective competitors. In fact, only 18% of executives of incoherent companies say their firms are performing above the industry average versus 59% of the coherent company executives.
So here’s the obvious question: If the majority of executives claim their companies are not coherent, and yet performance amongst coherent companies is superior, who is to blame for incoherence? In the comments section, please cast your vote for the main culprit of incoherence. I’ll tell you my vote in next week’s blog.
1. Wall Street?
2. The Board of Directors?
3. The CEO?