As I discussed in my previous post, when companies grow they tend to lose strategic focus. This happens as they change their business model over time to find more effective ways of doing business, and as they tactically chase revenue from the customers they manage to get. The way out to get out of this quagmire is by taking three steps:
Step I: The Deep Dive of Awareness
Normally, day-to-day activities consume our time and we take the strategy of our company for granted. Most issues with focus come from small, incremental decisions taken over time. This is why the first step in refocusing is to step back and do a deep dive where you review the company from all perspectives, including value proposition, go-to-market model, capabilities and financials.
In this exercise, it will become very obvious that you have a collection of offerings, customer segments and go-to-market capabilities that is too complex for the size of your company, or too expensive for your current revenue level.
Step II: Select the target
The best way to decide where to go is to refresh the vision for the company (What is the fundamental need that you are addressing? How is the world better because of what you do?) by matching it with your current business model. Find what is common amongst your products and services, customers, capabilities and go-to-market models. Look at the size of the markets you can effectively address. Identify sources of friction. Think about competitors and barriers to entry. Define what is the best possible combination with the highest potential for growth.
There is only one rule: force yourself to pick one. No matter how strong the temptation might be, pick only one business model. One value proposition with one go-to-market model for a single customer segment. This is what you will focus on.
The key reason is that it is very hard to turn down revenue (or even opportunities for revenue), so the way to refocus your company is not by saying “No”, but by refocusing your efforts into areas where you will say “Yes”. Invest every available resource, every available dollar, every minute of your creative mind into developing opportunities that are in your target area.
Step III: Enable and drive execution
To effectively implement your strategic transformation, you will need four things:
- Define strategic metrics. Many companies I come across tell me they are in the midst of a transformation, but are unable to tell me how they measure this progress. You need to have a few, easy to understand metrics that show where you are and where you want to be so the organization can rally around them.
- Create an action plan. Work with your team to form initiatives that will help these metrics improve – as usual, all initiatives should have clear owners with SMART goals.
- Establish a governance process. It is important to create the spaces where you can review progress and make adjustments. In my experience, a quarterly deep dive where you review all initiatives followed by monthly status checkpoints works well.
- Align incentives. It is not enough to say “this is important” – the organization needs real incentives to move things along. It is critical to set both hard (monetary) and soft (visibility, reputation, praise) incentives to individuals so they implement the changes that need to happen.
Doing a concentrated effort to refocus your strategy is not easy. It demands time and energy – which is always at a premium. However, the benefits far outweigh the costs. Over time, you will see a virtuous circle happening and you will feel the benefits of the synergies that come from focus and the power of simplicity: customers will understand your company better, sales will become easier, your products and services will be more competitive, employees will know exactly how they fit into the company, and your overall operations will become more effective.