A growing professional-services company suddenly became aware that over a period of several years they had somehow ended up serving several very distinct market segments. This wasn’t due to any specific strategy…it just kind of “happened” as the company’s entrepreneurial founder pursued one attractive opportunity after another.
But, as the CEO told me, it had begun to feel like things were going off-track.
As fulfilling as their growth appeared, in reality each market segment they were serving had very different operational demands. The business development approach that had worked for Market X, for example, didn’t work very well for Market Y. The company was struggling to sustain sales momentum because their delivery capacity wasn’t well aligned with their product mix.
Attracting – and retaining – the talent needed to meet even existing demand, let alone grow the business, was becoming a real challenge. The various businesses required different types of talent, and the training, development, and career pathing that took a “one size fits all” approach wasn’t working for anyone.
For a long time, no one felt any particular urgency to address the problems that had been brewing just below the surface. There was always lots to do; everyone was really busy. A clear symptom of “Focusitis” is lots of activity without a lot of progress or growth. The problems were beginning to boil over – their “strategy by chance not by choice” was catching up with them.
As a friend once told me, “There’s a high cost to maintaining optionality.” In this case, leadership had made a habit of pursuing new business opportunities – “We don’t want to be too dependent on a single business” – without carefully thinking through how that new opportunity impacted its current businesses. The thinking was that it all helped the top line…the impact on the bottom line didn’t get much attention. Until it did because the bottom line began to suffer.
In cases like this, it’s always helpful to create some breathing space for the leadership team – a way to step back from the daily demands and take a bigger-picture view. Start with answering two deceptively simple questions:
Simple, right? But amazing what begins to be uncovered in the ensuing conversation, as it did for this company. Transformation begins with acknowledging the problem. In this case what emerged was a recognition of too much complexity in the business, and an inability to say “no” to new business – even when unprofitable.
So the next question became: “Where to focus?”
For this company, transformation to a more focused strategy was going to be an evolutionary, not a revolutionary, process. They followed several principles that would enable a gradual forward-looking refocusing of the company, while making the transition away from non-focus-area legacy commitments and clients:
With its new focus, the company is seeing sales growth in fewer but more profitable market segments, and is building its organization with greater purpose and clarity. Oh ... and everyone’s having more fun because they’re scrambling and jerry-rigging a lot less!
