Simple but Not Simplistic
Just as it is impossible to describe all of a river’s currents and eddies, it is very difficult for you to assess all the forces acting on your business. Many of these forces appear contradictory or paradoxical. Globalization is an important force, but so is awareness of local culture. Technology is becoming a force in instant mass marketing, but you must still customize it. People need to be treated as individuals, even though you are selling to them on a global scale.
Be sure you understand your competitive advantage and recheck your thinking often. Examine your human resources policies to see if they are helping you compete for the right workforce. Rethink your corporate bureaucracy and how you can make it more flexible. Do you fully understand your intellectual capital? What are you doing to use it to full advantage? How do you know what your customers truly want from you?
Make sure your decision-making process is well defined, especially as your organization increases in size and scope. What can you improve today? Be especially careful about your financial planning. Don’t follow fads that will weaken your financial position today with the hope of making any losses back later. These disastrous bets often come up empty. Use technology, but use it wisely and for specific purposes. Gather the data that will best benefit your process and methods of decision making, and make sure what you gather is reliable. This information is expensive to collect, so learn to use it in multiple ways.
Making Good Decisions
Any business demands quick decision making. In some situations, an imperfect decision now is immeasurably better than a perfect decision made too late. Some situations are too complex and difficult to analyze for rapid action but don’t make this call too quickly. Decisions involving creative judgments can be the most difficult to analyze in a “just the facts” scenario. To make effective business decisions, follow this simple six-step process:
Clearly, understand the issues – Understand not only your apparent choices but also their context.
Define the issues – Consider the implications of the decision you are making.
Specify the decision – Actually putting your decisions into words makes it more concrete and points out inconsistencies in your thinking.
Make the decision – Now that you have a solid foundation, this will be a much easier step.
Implement the decision – Put it into action.
Monitor the effects of the decision – If you still made a bad choice, admit it quickly. If it is a serious mistake, abandon it before it does any damage.
Thinking About Growth
The general idea of business is growth, which takes five general paths:
Growth from within – Organic growth is the usual course of action.
Mergers and acquisitions – Taking over a company or merging involves important due-diligence issues. Be alert for the problems provoked by merging corporate cultures.
Nonmerger acquisitions – These include partnerships and joint operating agreements. Although the cultural issues are somewhat less intense, contract and performance factors may be more important.
Diversification – Developing new product lines or opening new markets can invite attacks from more established competitors and spread your resources very thin.
Retrenchment – Dumping noncore product lines or getting out of certain unproductive markets can help you focus on improving the most profitable parts of your business.
Never forget the financial aspects of growth. Your backers are an important resource. If they lose faith in your future, the lack of cash will kill your plans no matter how much you believe in them.
Certain simple rules for leadership will help keep you on the right path. Involve others in making decisions: You will get a better range of ideas and they will feel more committed to the outcome. Be honest and ethical. Know the precedents created by previous decisions in your company, and be consistent and supportive of your people. Nothing builds confidence like effectiveness in action, so have a method to your madness. Deal with bad news right away without wasting time on recriminations. Be positive in everything you do and say, and – if possible – do it all with a sense of humor. Finally, lead others as you would want to be led yourself.
Those are quite a lot of points to start thinking about… take some time today or this week to go through your business strategy.