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Real strategy is about saying “No”

Sep 07, 2009 Business Daily, Strategy

“The very essence of having a strategy is being selective about choosing the criteria on which a firm wishes to compete, and then being creative and disciplined in designing an operation that is finely tuned to deliver those particular virtues.

…Strategy is deciding which business you are going to turn away.”

David Maister, Strategy & The Fat Smoker (2008)

David Maister’s new book is an excellent, down-to-earth and very readable guide to the fundamentals of what it means to have a strategy. It resonated deeply with me, and I will be exploring various aspects of it here in the weeks to come.

I have been shouting this on all the programmes I teach and all the clients I have advised over the years: Strategy is about making choices. No company can be all things to all customers. Unfortunately, many try. They become unfocused, expending valuable management time, energy and resources on the wrong things. The result is mere competence, not excellence.

Maister spells it out: you cannot achieve any strategic distinction until you learn to say “no” to certain customers and opportunities. Strategy devises superior delivery of benefits to customers – and you just can’t be superior on too many fronts.

The problem is that saying no is not easy. No matter what the strategy says, in most firms I know the pressure to meet short-term targets tends to overwhelm matters. CEOs are judged by the numbers they bring in, quarter by quarter, and they tend to get carried away in courting business in all directions. The sales force takes its cue from the boss, and if the message is “all business is good business”, soon the company will be lacking in any form of distinction. It is far better to choose your battlefields very, very carefully and then excel in them. Chasing every hare in the field is going to tire you out and ruin your distinctiveness.

There is also a psychological root to this behaviour. We all want to be liked by everyone, and end up trying to please many more people than we should. And saying ‘no’ makes us very insecure: we easily imagine the work may not turn up again.

Let me give a personal example. In the latter part of my consulting career, I took a decision that I would only take engagements where I work directly with the chief executive, and where I have that person’s passionate commitment. This was based on the realisation that projects that come from below rarely fly in Kenya. Senior managers can be very sincere and dedicated, but the CEO must be actively and visibly involved for anything to happen.

That has meant saying “no” to many a lucrative assignment, and it has not always been easy. We all want to be “good guys” and help people earnestly asking for that help. But I decided that the pressures on my time were such that saying “no” had to become a habit. As a result, I have succeeded in developing a brand that focuses on the things I really want to do. I have never regretted it.

At the end of the day, strategic focus is about leadership. Once the areas of distinctiveness are agreed, the CEO must ensure that there is little “mission creep” by saying “no” often and being seen to do so. No one can be committed to the strategy unless the leader is. Focus is also about measurement. If you regularly measure what proportion of business comes from on-strategy, targeted customers, you will be able to highlight the success or failure of your strategy.

If you never say “no” to new business, you simply don’t have a strategy. Opportunism and short-term profiteering may be lucrative, but they are never strategic.

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