The Guessing Game

A business’ strategy should last longer than the tenure of the person in charge.

It never ceases to surprise me just how many businesses don’t really have a very well thought out strategy. If they did it is unlikely that they would end up in quite the pickle that they so often find themselves in. After many years of pondering this sad situation, I have reached the conclusion that this is because managers often have only a vague, or incomplete, idea of what makes a business successful. That’s a pity because they are surrounded by many pretty successful businesses that they could learn from and copy if only they could see what was going on. The other conclusion that I have come to is that rather than approaching strategy in an organized way, perhaps by deploying a proven process, many business leaders prefer to do little more than a guess. Yes, really they do, although they call it something else, and this is most evident the bigger and more important the decision is.

I got to thinking about all this when reading about Speedy Hire, the UK based tool rental company, and how it is suffering from the fall-out of an accounting scandal in the Middle East which had been the focus for an overseas expansion drive under its last CEO. Speedy only has 5% of its revenues coming from outside the UK so, in my book, they are novices at managing a business over such a cultural and geographic distance; I know from personal experience how a foreign subsidiary can so easily go out of control. It all seems so easy to the un-initiated but any diversification is prone to huge risk if you haven’t done it before. It is a fundamental strategic precept of mine that if you are going to do something new you need to not only take very small steps but also either hire or collaborate, with someone who knows how to do this difficult thing. Strategic choices need to include a realistic evaluation of risk and your ability to deliver and it is very common mistake for a diversification to seem much easier than it really is: you just don’t know what you don’t know.

Not only did Speedy’s overseas diversification seem poorly executed but its marketing strategy seems to be rather vague and also to have changed now that there is a new man at the Speedy helm. The previous CEO had decided to move away from the “Bob the Builder” tool hire segment and concentrate more on bigger and more important strategic partners. That in itself was a pretty brave call as smaller builders and tradesmen make up about half of UK revenues. The new guy has a more inclusive approach saying “There’s no reason why we shouldn’t be able to service everybody”. Well, I beg to differ. Speedy has already proven that serving clients in the Middle East has been rather fraught and I believe that the best business strategies target some segments rather than others because you are able to offer differentiated services to them that others can’t compete with. Strategy implies choice, focus, and clarity of positioning, which Speedy ignores at its peril.

The reason that people get confused by strategy, and don’t do it at all well, is that think they know what it is when in fact they don’t. This isn’t helped by the various definitions that abound in the academic and business press. I have my own very simple definition: a good business strategy is one that encourages “consistent behavior that makes the most of what you have.” Consistency is key: you need a strategy that is well thought out so it doesn’t change with each new boss; it also needs to be based on a real and meaningful difference that your business has which you then leverage in an optimal way. Anyone can do this, but first, you need to really understand what strategy really is. If you have big, strategic, decisions to make, please don’t guess, no matter how big, or small, your business is – give me a call first.