Businesses are doing their best to produce top results in a tough market. It is not easy. It is made even more difficult because too many businesses succumb to common myths–myths called best business practice by trusted advisers such as business schools, the papers, or most often, other business leaders. Many of the myths seem logical on the surface–it is the long-term implications that are harmful to business success. As a result, hard work and dedicated executives continue to struggle. Let’s take a look at five common myths.
- “Our business is so complex, we couldn’t possibly just have one strategy.” Every business is unique, no doubt about that. However, from my experience, every business is more complex to those that run it than to anyone else–especially it’s customers. For a business to work, all the moving parts need to be integrated and aligned under a simple value proposition–easy to communicate, and understand, and targeted to specific market needs. Yet there are those that feel if they commit to a clear focus they are leaving other things they could do off the table and will suffer as a result. The truth is, most companies have plenty of bandwidth to provide products and services; the issue is whether they have been able to connect with customers in a manner that starts the relationship. Having a clear, focused and consistent message, a easily communicated value proposition targeted to a specific market is a more successful approach than trying to be everything to everyone. If you are committed to growing, stay focused on what you do best.
- “Focus on the financials”. It is hard to find a company that doesn’t want to make money. I have even heard some give the definition or even the mission statement of a company as that of creating profit. What successful companies know is that the financials are the outcome of a well-managed, focused company, but not the “work” of the company. Businesses that focuses on having many loyal customers, and operations that are productive and efficient, will make money. The more customers that buy the product, the better the company is run, the more money the company will make. Financial results are lagging indicators of the actions a company takes. They are a “rear view mirror” report card. To grow, emphasize what products or operations to improve or change, and the rewards will be reaped in future financial performance.
- “If it works for our competitors, we should do it too.” Companies’ products or services become commodities because competitors copy each other. When differentiation is gone–so is profit margin. What drives this tendency to copy competitors? Fear. Businesses think they will lose customers if they don’t offer what their competitors do. The truth is that the more a company can find a market-acceptable way to offer a product differently or better, the more potential they have to grow, with profitable margins. Know what your competitors are doing, but rather than copy them, ask what you can do to better satisfy needs that hasn’t been done yet. Find open or “white” competitive space.
- “More is better”. There are a number of companies dealing with the economy by working harder. Nothing wrong with that. The question is whether the hard work is focused on the right things. Many companies take on too many initiatives, limiting resources they can apply, and in the process, undermining results. Studies show only 25% of growth initiatives pay out. The #1 cause of unrealized value is lack of resources. In fact, 60% of “strategic leaders” say they are seeking changes in process and strategy because they see such inconsistent results, with some projects paying out and others don’t. What is the key? Rather than throw a bunch of things against the wall and see what sticks, develop a clear strategy (see #1 myth), develop a handful of initiatives that can be adequately resourced with new or re-allocated resources (yes, it is ok to stop doing some things to fund the best things) and give them full attention, with measures, milestones and accountability.
- “We need to cut back on marketing.” In this case, I am defining marketing broadly, as does Peter Drucker “everything you do seen through the eyes of your customer.” In lean times, the most valued resource is the customer. Retention is everything–keeping customers and keeping their order volume. New customers take many more resources, and as important as they are, the ROI on keeping current customers is the top priority. So does that mean you can cut advertising? Maybe. That is not the point. The key is to be sure each customer believes they are valued–that means keeping the brand consistent, meeting or even exceeding expectations, solving their problems quickly and satisfactorily. Yet, what I hear sometimes is that “we can’t afford to give them what they asked for–besides it isn’t really our fault.” Companies who manage budgets over relationships often find themselves with fewer relationships to manage. When making decisions on what to keep and what to give up, ask if it matters to the customer.
Effective high-performance strategic leaders don’t fall for these myths and realize there is only one “court” that will issue a verdict about their future–the customer. Put them first, keep it simple, be better than their alternatives and your business will get the desired results.
Have more myths to share or comments on these? Please share your thoughts.