Posts Tagged ‘weakness’

Focus, Simplicity and Common Sense…..

Tuesday, November 13th, 2012

I’m not a big fan of business journalists.

That’s because many of them talk at length and opine about how to run a company without ever having had a single day’s practical experience as an entrepreneur or business owner.

(Hmm, I guess that makes them like many consultants ………..)

But there are exceptions –Jason Fried and Norm Brodsky in Inc. magazine are 2 great examples. And this week I stumbled across 2 posts by Randall Litchfield on the Profitguide.com site that caught my attention.

Litchfield was a journalist when corporate strategy was the focus of business schools, executives and strategy gurus. During that time he interviewed companies; spoke to academics and management consultants; and read every new strategy book published.

He made the switch to entrepreneur in 1990 and, since then, has made the PROFIT 200 ranking of Canada’s Fastest-Growing Companies 4 times.

Both posts reflect his somewhat unique experience, a product of this combination of careers.

In the first post Litchfield praises Richard Rumelt’s book “Good Strategy, Bad Strategy” as the best business book he’s read. Why does that push my opinion of him way up there? Because I agree and, if you follow this blog, you’ll remember I wrote 3 pieces from the book last year.

The first point he makes in the second post was that he realized that the really important stuff – how to achieve the goal—was getting lost as the strategic process became increasingly complex.

As a result he turned to examples of military strategy because “Corporations can hide a bad strategy (or no strategy) for years while ………military battles……tend to be over more quickly and the superior strategy revealed.” Nicely put!

Litchfield’s third point is that a military strategy can usually be articulated in a phrase or sentence of crystal clarity (e.g. Hannibal’s “envelopment” of the Romans or “Stormin’ Norman” Schwarzkopf’s “left hook”). However, in my opinion, it also suggests that some concepts are ageless and can be adapted to wildly different environments.

The final thing he says that I really like is that a good strategy boils down to a simple rule – bring relative strength to bear against relative weakness. This is the “indirect approach”, used by great commanders like Alexander the Great, Cromwell and Napoleon, who chose the line of least expectation and struck at the point of least resistance.

So for any company that has to take on larger competitors with resources that are much greater than their own, success will come by finding the competitor’s relative weakness and concentrating their relative strength(s) precisely there.

And that covers every company either in startup mode or which is a “small to medium sized enterprise”.

Here’s someone successful who has both theoretical knowledge and practical experience confirming that focusing on execution (the how to) is important; that things work better when they’re simple, not complicated; and that common sense delivers results.

You can read Litchfield’s 2 posts here and here.

 

Click here and automatically receive our latest blog posts

Share

Have You Ever Seen a Business Plan that Worked?

Saturday, October 3rd, 2009

Well have you? Personally, I’d say “Yes, but….” But what you may ask? Well, firstly the plan wasn’t written from the back forwards. In other words it wasn’t written as a result of a statement like “We need to get $X thousand/million from the bank/lenders.” Secondly, it wasn’t written because someone (I hope it wasn’t a consultant) said “A company of our size should have one”. Thirdly, once written it wasn’t put on the shelf and forgotten for the rest of the year. And, finally, no one expected things to happen exactly, and I mean exactly, the way the plan predicted.

A plan that starts with a look at what’s going to happen in the industry and then at how the competition are positioned, helps highlight opportunities and threats. Combine this with an honest assessment of the company’s own strengths and weaknesses and you’re on the way to developing a fairly logical strategy. Using that to develop three financial forecasts – a “best case”, a “worst case” and a “most likely case” helps keep people’s feet on the ground. It also helps if the assumptions made in each case are carefully recorded. Compare this approach to starting to write a plan knowing what the final financial numbers have to look like and you can figure out, fairly quickly, which of the two plans is most likely to “work”.

A good reason to write a plan is to figure out the answer to a question – like “What would we have to do to increase our profits in each of the next 3 years?” People will be more motivated to approach the process in a logical, thoughtful way than if we’re doing it because “we should have one”. Part of the answer is working out what the company will have to do – for example buy plant and equipment, add people, and change the way things are done. Those things would probably be written down somewhere anyway – with, once again, all of the assumptions made – so why not put them in a plan? If the money we’ll have to spend and the people we’ll have to hire are related to the increases in sales they’ll help to generate, it becomes easier to see them as investments instead of expenses.

Plans that work are dog eared. Why? Because they’re pulled out regularly and reviewed. During the planning sessions the “big” goals – increase sales by $500K – are broken down into smaller actions – introduce a new product, hire new sales people. Action plans – with SMART (specific, measurable, attainable, realistic and time related) objectives – are developed and written right into the business plan. Someone is designated as the “champion” for each action. She/he is responsible for getting it done. It’s easy to check, for example once a quarter, whether well defined actions like these have been completed. At the same time actual developments in the economy, industry and marketplace are compared to the assumptions and the strategy updated. Financial results are compared with the forecasts and adjusted if necessary. These are “no blame” sessions – if there are performance problems with some individuals they’re dealt with separately – just an opportunity to update some projections with reality.

Why aren’t these guilt filled, finger pointing sessions? Because the people who did the planning know that they can’t predict what the weather will be tomorrow, what the stock market will do next week or how their favorite sports team will finish the season. They measure how well their plan has worked by how close their estimates came to reality. If any of us could exactly predict the future – well, I wouldn’t be writing this and you wouldn’t be reading it.

I tell myself that one of the advantages of getting older (there have to be some surely) is that you gain a lot of practical experience – both good and bad. A couple of the things I’ve noticed, along the way, are related to business plans. Firstly, the companies that I’ve been involved with which had good business plans always performed better than those which didn’t. Secondly, those companies hadn’t written their plans to meet some predetermined outcome; they’d written them to help answer key questions affecting the future of the business. Finally the owners had a realistic approach to forecasting the future and, most importantly, they made their plan come to life.

Post History