Focus remains key

Holly AbbottUncategorized

resize618xgbr00lyye1j51tx(a)(a)coz_1_0

We recently read this old but still very relevant article by Matt Gottfredson at Bain and Company. Matt reminds us that focus is crucial to business success. As we wrote last month, focus and simplicity is actually incredibly hard, but we thought we’d revisit the theme.

Businesses and people tend towards complexity. Cynics say that it’s because people can hide behind complexity. The more bureaucratic and convoluted a process is, the less responsibility people can take for it. Matt offers a nicer explanation. As a business grows and it tries to address its customer’s problems, it creates new processes, roles or tasks. “Growth begets complexity”. As Matt also points out, fighting complexity in one area means it usually just appears somewhere else.

This reminded us of Richard Rumelt’s chapter in his book, Good Strategy/Bad Strategy, on chain-link systems, and how businesses should understand how problems are often interlinked and have deeper roots than first appears. Rumelt is also a big advocate of simplicity. The best section of his talk on Youtube at the LSE is where he discusses Steve Jobs’ return to the near bankrupt Apple in the mid-90s. Jobs slashed product lines, software engineers, outsourced manufacturing, and got a huge loan from Microsoft, playing to their fears of anti-trust action. People, Rumelt says, were shocked. They were shocked because Jobs was pursuing a survival, “business 101” strategy so coherently and completely. People, Rumelt points out, are surprised when they see a genuine, focussed strategy. That’s because they are used to business and political leaders telling us we can have it all, and delivering nothing.

Matt’s article uses the recent example of Ford. In 2006, Ford’s new chief executive, Mulally, acted to massively reduce Ford’s convoluted, ‘all things to all people’ product line, which saw it shed British brands such as Jaguar¬†and Aston Martin. Mulally wanted his staff to focus their attention and resources on a limited number of products. This way, they could focus on a core group of customers, produce great products around their needs, and focus on delivering efficiencies in production. Rumelt’s book contains a cautionary tale of a company that did not follow Mulally’s lead. General Motors once had a highly segmented and focused product line. It’s massive diversification and a lack of discipline in its subsidiaries led to its internal brands competing against each other in the same markets. It was one of the factors that led to the group’s bankruptcy in 2009.

It is important for leaders and managers to keep reminding themselves of the importance of focus and simplicity. A failure to do so can lead to disaster.

(P.s. Excuse the title picture! We hope its relevance became more clear as the post went on …)