There are always trade-offs in strategic planning.
To create space for new, high-value activities, some things have to go.
It’s the only way to deliver impact and grow.
Most companies allocate the same resources to the same business functions every year. They don’t change. Inertia reigns.
But failing to be flexible undermines their performance.
In 2012, global management consultancy McKinsey & Co looked at corporate resource allocation patterns, their relationship to performance, and the implications for strategy.
They found that returns to shareholders are higher in companies where capital and other resources flow more readily from one business opportunity to another. The risk of bankruptcy and takeover is lower.
And companies that reallocated more of what they earned returned an average of 30 per cent more to their shareholders.
So, what does this have to do with strategy?
It’s all about priorities.
I love this quote from Steve Jobs.
“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.”
A good strategy allows you to try new and innovative things and to assess the success of what you’re doing. It’s also about saying no.
You must be flexible.
Set clear targets. Assess the results against your targets. Allocate resources accordingly.
Do you do anything that takes lots of time and effort but doesn’t help realise your goals?
If it’s truly low value, stop now.
#Strategy #DoWhatMatters #SayNo