Monday, June 27th, 2016
Choice is a major problem in today’s fast moving world. Globalization and new technologies offer so many opportunities, that it becomes very difficult for companies to choose the right investments.
If we are developing products, we have to do many investments to have enough winning investments in our portfolio. In this case, we don’t have to worry about winning all of them. Our value comes from minimizing our losses.
The earlier we realize that the product is not what we expected, the sooner we must stop that investment. Thus, strategy is becoming a matter of saying no to some of our initiatives. We will do more but smaller projects, and “kill” those ones that are determined to fail as fast as we can. Then, we have to focus on the most promising ones.
It’s always tempting to say yes when a client or customer wants something new from us. But before we say yes, we have to ask ourselves 3 questions:
- Does this new service offering have long-term potential? If it’s a one-time assignment, or if it’s not ever going to be part of our core competency, then we should say no.
- What effect will learning this new skill have on my existing operations? Will we spend more time patching things up than we’ll make back from this new service offering? If so, then we must say no.
- Can I outsource this assignment and still make a healthy profit? If the answer to this is yes, then we should outsource the assignment.
The point in this case is to focus on our core competency. Accepting the wrong business saps not only our time and energy but our profits. We have to say no to the wrong kind of clients and offerings, those that take us away from a business model based on our mission, values, and areas of expertise.
Summing-up: if we are investing in new products, the point is to minimize the loose by stopping (saying no) the sooner we can detect it. Moreover, in order to be sustainable, companies need to focus on something they do best, their core competency.