THE STORY
Once upon a time, there was a man being chased by a wolf through the forest. The man knew that if he could just outrun the wolf and get to the town on the other side of the forest, he would be safe.
As he was running through the forest, the man came to a fork on the path through the woods. He knew that eventually either fork in the path would get him out of the forest to safety at the town on the other side. However, he did not know which path would be the most ideal way to get to the other side.
Not wanting to make a poor choice, the man stopped to carefully consider the two alternatives. One path was slightly shorter, but it was hillier and not as well developed. The other path was wide and smooth, but required running a longer distance.
While the man was standing there contemplating the merits of the two alternatives, the wolf caught up to him and ate him.
THE ANALOGY
Life is full of choices. For example, when a person get up in the morning, they have to choose what to wear, what to eat for breakfast, what tunes to listen to on the ipod during the morning commute, and so on. However, although there are many choices in life, not all critically important.
In the story, the man had a major choice to make—how to best avoid getting eaten by the wolf. He decided that his best alternative was to quickly get to the town on the other side of the woods before the wolf could catch him. Then he had a lesser choice to make—which path to take to get through the woods. In trying to optimize the lesser choice (which path), he lost sight of the greater choice (outrun the wolf). By stopping to over-think the lesser decision, he was no longer outrunning. As a result, he was eaten.
In reality, stopping to ponder his path choice was not the best use of his time. Even if he took the longer path, the wolf would follow the scent and have to take the longer path as well. The need to run quickly was more important than the path chosen, since both would have gotten him to the desired endpoint (if he continued to run fast enough).
In the business world, we can sometimes fall into the same predicament as the man in the woods. We can become so obsessed with optimizing minor choices that we lose sight of the larger goal.
In the case of the man in the woods, success would be determined more by his ability to outrun the wolf than his ability to choose which path to take. In other words, execution was more important than optimization. The man did not execute well on the running (he stopped). As a result, he did not succeed on the larger plan.
This is also often true in business. Our ability to execute can be more critical to success than ensuring that every fork in the road is optimally taken.
THE PRINCIPLE
The principle here is that degree to which we pursue our strategy can be every bit as critical to success as the choice of which strategy we pursue.
Many times throughout my career, I have been asked what I believe to be the best strategy for a retailer. The way I answer that question is as follows:
There are lots of strategic options for retailers. And for virtually every one of them, I can find you a retailer who is succeeding extremely well with that strategy as well as a retailer who is failing miserably with that same basic strategy. Since each strategic option can produce both winners and losers, there must be something more than just strategy choice which creates success.
At some point, it doesn’t really matter which strategy you choose. So long as you meet the following criteria, any strategic option can be good enough:
1) It must provide a solution desired in the marketplace;
2) It must be a solution your firm is capable of profitably winning at versus other alternatives available to the customer;
3) It must be a large enough business to provide a sufficient return.
If these criteria are met, then the battle shifts to pursuit. It is the firm that best pursues this strategy which will win. Out-pursuing the competition tends to involve several elements:
A) Speed – Am I the first to hold the position in the mind of the marketplace? Am I the first to build sufficient capacity to support the solution? Am I able to outrun the competition as the solution evolves over time? Am I considered a leader in the business?
B) Magnitude – Am I building a large enough capacity to satisfy demand? Am I putting enough resources towards the solution in order to outperform the competition? Am I building such a strong position that others find it difficult to attack?
C) Efficiency – Am I doing things in a manner which reduces waste (of time, of money)?
D) Effectiveness – Am I focusing my efforts in the direction which noticeably improves my ability to best satisfy the solution (and not diverting attention and resources to activities superfluous to the solution)?
If you can out-pursue on these four factors, then you can win the battle. Conversely, if you let someone out-pursue you on these four factors, it becomes almost irrelevant which strategy one chooses, because you will end up losing.
And finally, if you spend all of your time sitting back contemplating which is the single best strategic option (and never get around to pursuing any of them), I can assure you that you will never win in this manner, either.
This is not to imply that effort spent in choosing a proper direction is a total waste of time. You still need to discover a path meeting the three criteria mentioned above (desirable, winnable, and sizable solution). Out-pursuing in an area that is undesirable, unwinnable, or too small is a path to failure as well.
Sometimes, finding a strategy meeting these three criteria can take some time and research. This is time well spent. After all, although many strategies could be potentially successful, many may not. You have to eliminate the options where you could never win, no matter how much you pursue. But after that, just choose one from the set of potential winners, get out of your chair and pursue, pursue, pursue.
Now, let’s look at this principle in action. Back in the late 1950s and early 1960s, it was becoming obvious that the discount department store was going to become a large, profitable solution in the retail marketplace. During that time, a number of firms got into the business and built their first discount store. This list included K Mart (1962), Wal-Mart (1962), Target (1962), Woolco (1962), Shopko (1962), Ames (1958), Hills (1957), Bradlees (1958) as well as a host of others like Zayre, Turnstyle, Spartan-Atlantic, Shoppers Fair, and so on.
Virtually none of these companies survived. Is it because the discount department store strategy was a failure? Of course not. Wal-Mart and Target are doing quite well, thank you. Why did Wal-Mart and Target survive while most everyone else failed? My contention is that Wal-Mart out-hustled or out-pursued everyone on the low end and Target out-hustled and out-pursued on the high end.
Their dedication to speed, magnitude, efficiency and effectiveness was legendary. They didn’t just sit back and say, “Well, I’ve got stores in a winning format, so I guess that makes me a winner.” Instead, Wal-Mart and Target did a superior job of:
1) Working hard to pursue excellence in delivering the solution (always looking for ways to be better than everyone else)
2) Working hard to blanket markets with stores so as to capitalize on their position
3) Using their economies of scale to further their pursuit.
So yes, Wal-Mart and Target were correct in choosing a good strategy. But that only allowed them to play the game. To win the game, they had to out-pursue others in the same space.
SUMMARY
At the end of the day, the ultimate goal is not to pick the optimal strategy. The goal is to win with whatever strategy was chosen. So although it is important to pick a good strategy, it is as important (if not more so) to design your organization so as to out-pursue others in making that strategy a reality. There may be several strategies which could equally work for your firm. Don’t paralyze your actions by spending endless years trying to figure out which one is slightly better. Instead, just pick one and then move your focus to pursuit.
FINAL THOUGHTS
Yogi Berra once said, “When you come to a fork in the road, take it.” This would have been good advice for our man in the woods being chased by the wolf. By not taking any fork, he ended up standing around and getting eaten by the wolf. Running down either fork would have been a better alternative.
No comments:
Post a Comment