Sunday, February 7, 2010
Strategic Planning Analogy #306: Focus
One upon a time, there was a seven day race across the desert. One of the runners believed that the best equipped runner would win the race. Therefore, he packed the following:
a) The ingredients for seven days worth of balanced, nutritious meals, specifically suited to his metabolism (and the equipment to prepare them and cook them).
b) A comfortable cot and bedding (and a tent to sleep in—after all, a good athlete performs best when well rested)
c) Seven different running outfits (optimized for various weather conditions)
d) Four different sets of running shoes (each specialized for different running terrains)
e) A complete medical kit
e) Enough water to keep well-hydrated for the entire seven day race.
Another runner packed just the essentials:
a) Some energy bars and energy drinks.
b) A day’s worth of water.
c) A simple bed roll with netting to keep the sand off.
d) A map showing where to get additional food and water along the race.
When they got to the starting line, the second runner was able to put everything he brought in a backpack. The first runner found himself pulling a large cart behind him, loaded with gear.
Which one do you think won the race?
Even though the first runner had the best equipment and was prepared for more conditions, he was not going to win the race. His gear was too heavy. All his energy had to go into pulling the cart, rather than running the race.
The second runner focused on just a few essentials. That lightened his load so that he could run faster with less effort. This allowed him to win the race.
Businesses are also in a race and trying to win. Like the first runner, many businesses try to be the best equipped for all situations. They want to do well at everything, for every customer, in every way. Unfortunately, trying to be superior at everything is a tremendous burden. It takes a lot of time, money and effort. It weighs a company down.
If you want to win, you need to just focus on the essentials for the race you are running. The lighter load will make you more nimble and better able to excel in getting to the finish line.
The principle here has to do with focus. Successful companies tend to focus their efforts on the essentials needed to execute their strategy. They become the best at those aspects most critical to their strategic position and often ignore, downplay or outsource other factors.
Look at Toyota. They built their strategic position around dependability. For years, the key focus of their efforts was around improving the dependability in the way they designed and manufactured cars.
This focus was very successful—Toyota consistently was ranked among the best in building dependable cars—year after year.
The result of this achievement? First, Toyota became a highly desired brand. Apparently, a large sector of the car buying community desire reliable cars. Owning the position of reliability made Toyota the brand of choice for this community.
Second, Toyota was able to charge a premium price for their cars. Apparently, these customers were willing to pay extra for reliability. High demand and higher prices leads to becoming a highly profitable company. The focus on dependability was a winning strategy.
Over time, however, Toyota became like that first runner. They lost their focus and wanted to do it all. They wanted to build cars as well as trucks. And they wand to do it for every consumer segment, even segments that may not be able to afford reliability (or make it a key priority). They wanted to be the leading brand in all parts of the world, so. growth was added as another passion. And they wanted to achieve it all very quickly—so speed became yet another passion.
Trying to be the most dependable and the fastest growing automotive company, while designing the broadest assortment of cars and trucks, is a big burden. It is like trying to run a race while pulling a heavy cart. Eventually something has to give.
And that “eventually” has recently come to pass. As it turns out, some of that old passion and focus on dependability was not as strong as it used to be. That focus was lost a bit in the rush to do everything else. Toyota cars are not as dependable as they used to be. Other firms, like Ford, now achieve as good (or better) quality. Massive recalls and quality embarrassments are tarnishing the Toyota image.
The result? I suspect that those who desire reliability will no longer automatically flock to Toyota. In addition, Toyota will probably no longer be able to get away with automatically charging a premium price for those cars. In other words, Toyota will have to work harder to sell fewer cars. That’s what happens when you lose your focus.
Therefore, the key to strategy is to first find a strategic focus—a place where you can be the best and win the race. Trying to be all and do all won’t work. First of all, it is an impossible goal. You cannot be highest quality, cheapest price and fastest to market at the same time. Second, the lack of clarity probably means that you will be mediocre across the board and not win at anything.
The other strategic key is the need to make trade-offs on what is essential to carry on that race. In the case of Toyota, manufacturing and design excellence is critical to a focus on dependability. This is something that cannot be allowed to slip. It must be included in Toyota’s backpack. And other things need to be left behind so they don’t hold you back.
Depending on your focus, you will make different trade offs. While manufacturing was essential to the Toyota focus, it is not as essential to the Nike focus. Therefore, Nike can outsource manufacturing, just like the second runner outsourced the preparation of his food. By not putting manufacturing in the backpack, Nike has more room to focus on design and marketing—the two most essential skills for its strategic focus.
A winning strategy points out your company’s point of focus (where it will win) and then makes trade-offs on where to place your energy so that you can win the race at that point of focus.
To win horse races, the owners put blinders on the eyes of the horses, so that they can only look forward. The visual distractions to their sides are blocked. This makes the horses run faster. Are you focused on the forward goal, or is a lack of focus allowing your company to be distracted by everything that is peripheral to your goal?