Middle market CEO’s and entrepreneurs, like other business people and executives, are prone to believe in a one word mantra: “execution.” They are inclined to put their faith in what has been called: “Middle” Leadership - the view that a company’s strategy and goals are basically right. If the business strategy or even the entire company fails, they are inclined to point the finger of blame at the way it was executed.
In big companies this is typically seen as the fault of middle management. In No Man’s Land companies, which are often too small to have a level of middle management, the fault is seen as lying with the founder/entrepreneur. They are often distracted, acting as a one-person band, doing everything from developing new products or services to intervening in the smallest details of customer service. They have not yet built a management team capable of turning concepts into reality by executing at every stage of the company’s business process.
But consider how often those who think “it’s all about execution” are wrong. The right product, market, technology, geography and business model are critical components of business momentum. There is no making up for poor choices in these areas - even through the most flawless execution.
The fact is that business strategies based on wishful thinking tend to defeat even the best management. As Warren Buffett has said: “when a manager with a reputation for brilliant performance meets an industry with a reputation for lousy results, the industry usually wins.” In businesses like health care, banking, telecom, media and technology, almost two thirds of all organic growth can be attributed to being in the right segments and geographies with the right offerings. Executing well on a strategy to offer products or services that people don’t really want, or to attack sectors that are stagnant or shrinking, is an uphill task, which usually fails.
The problem is that people often are good at executing - on their own view of reality. If that view is based, for example, on the conviction that your product is innovative when in fact it is more or less like those of better established or financed competitors, it will likely fail.
The underlying cause of nearly every business failure is a blind spot, a flawed perception of reality that sets people on the wrong course and keeps them there. Consider:
-
How could Polaroid go bankrupt with more patents to its name than Thomas Edison?
-
How could Webvan, a famous dot com era disaster, believe that customers would want to have most of their groceries delivered instead of buying them at stores?
-
How could Schwinn have let the mountain bike movement pass it by?
-
How could Johnson & Johnson have dropped from 90% to 8% share in cardiac stents?
-
How could Quaker Oats have paid $1.7 billion for Snapple, then sold it for $300 million?
These are only super-sized versions of a problem that No Man’s Land companies are, unfortunately, also prone to. Sure, execution matters - but not nearly as much as having the right aim. Before trying to shape reality with their strategy, entrepreneurs must be sure that their business strategy is based on reality - not wishful thinking.
Interested in learning more about how to guide your company through the inevitable business growth phase called No Man's Land?
As a CEO, Director and Advisor to CEO’s on strategy and governance, Mike Kipp has compiled a track record of navigating complexity, refining business models and cultivating leadership. Contact Mike or learn more about him here.
