One of the most frustrating and disheartening things that someone in my position has to deal with are leaders who have a tendency to ignore reality and follow a flawed strategy or other key decision off a cliff. Pride almost always gets in the way as he/she thinks that changing course would represent failure or unnecessary pain. Usually there is a difficult decision that has to be made about people, finances or the current business model (sometimes all three). The inability to make these types of decisions tends to lead to one outcome – failure. A reasonably competent leader may delay the timing but the end result is inevitable.
When what you are doing isn’t working, then you need to try something different. To paraphrase Einstein, “doing the same thing over and over again and expecting different results is insanity.” This doesn’t mean you always chart a new course at the first sign of adversity. However, if consistent negative patterns are emerging, you must pay attention and act accordingly. Some typical signs are flat-lined revenues, constant cash worries, diminishing profitability, and a growing debt burden that is out of synch with expected business results. If you are continually borrowing money just to make payroll and keep your doors open, you really aren’t growing a for-profit business. The goal in business should be to get better problems, not continually revisit the same old ones. And, believe me, the universe will keep pushing you to learn a lesson until you get it.
Don’t get me wrong, change just for the sake of change is never good. There are certainly many strategies that need some time to come to fruition. Don’t bailout just because you’ve hit a bump in the road and it’s hard. It’s equally important not to be pig-headed, fearful, or persistent to the point of being illogical or naive. Usually, there are people around you who care about you and see what you don’t see or choose to ignore. Listen to them! Courage isn’t about proving yourself right, it’s about accepting the brutal facts of your reality and doing the right thing.
I’ve witnessed the following areas where business leaders get stuck far too often:
- Embracing old market paradigms of doing business when things have irrevocably changed;
- Holding on to technological solutions that are no longer responsive to industry/market needs;
- Not rethinking the product/marketing strategy when sales trends are flat or trending downwards;;
- Getting too comfortable with existing market dynamics and being too slow to expand and diversify;
- Under-investing in sales capacity and putting the business development burden on too few people;
- Under-capitalizing the business given your growth strategy – you cannot consistently grow on the cheap;
- Using a pricing model that no longer reflects market realities;
- Treating variable expenses like fixed expenses especially when it comes to labor costs;
- Continually growing in-house administrative capacity/expenses without properly vetting outsourcing options;
- Offering employee benefit packages the business can’t really afford due to profit margin realities;
- A regular pattern of maximizing debt burdens/ceilings and keeping it that way, allowing no margin for financial error;
- Going into more debt when you are already losing considerable money;
- An unwillingness to confront problem employees who are doing damage to your culture and adversely affecting customer relationships;
- Sticking with a vendor out of personal loyalty that you have outgrown and who cannot get you to the next level;
- Hiring and promoting family members/friends who are unqualified for the job and making everyone else cover up for their non-performance;
- Saving the jobs of a few at the expense of the many;
- Listening to only those people who validate what you are doing rather than actively encouraging constructive feedback.
- When Your Best Strategy is an Exit Strategy (tcuregroup.wordpress.com)
- How to make sure there’s a market for your Business Idea! (belizeinvest.net)
- The Way of Doing Business is Changing (lveasyapps.wordpress.com)
- Basics of Small Business Funding (newbusinessplanners.wordpress.com)
- The Best Business Advice to Ignore (openforum.com)
- Did You Revisit Your Strategy? (rajshankar.wordpress.com)
- Small Business Success Study Report (thehartford.com)
- Learn from My Bad Business Decisions (1stclasscreativity.com)
- Lessons From A Failed (Billion Dollar) Business Model Innovation Attempt (rmukeshgupta.wordpress.com)
- “Pride” (kelvintim.wordpress.com)