How to Invest for the Future
It’s part of every business leader’s mandate to take care of two things: keeping the business healthy today, and positioning it for health in the future. This is the yin and yang of the leader’s role, and to be successful leaders need to keep the two in balance, never focusing too much on one aspect at the expense of the other.
Health for Today
Executing on the current business model is crucial. This involves acquiring and serving customers, maintaining the supply of products or services, and keeping an eye on the numbers to ensure it is done profitably. Smart leaders use a handful of Key Performance Indicators (KPI) to monitor the current health of the business, and when a KPI identifies an issue, leaders take action.
Another focus for the present is maintaining the culture. Ensuring that the core values and purpose for the company are clear and operationalized in all people systems within the company from recruiting through to performance management.
Health for Tomorrow
Health today does not guarantee a healthy tomorrow. Given the pace of change, what made a company successful in the past is likely not the same as what will be needed in the future. Therefore, time and energy must be invested in strategic change projects to position the firm for the future.
Once leaders make a commitment to invest in the future the question becomes, “Invest in what?”. How does a leader identify the threats and opportunities on the horizon in order to charter the strategic change projects.
It’s never easy to predict the future. And is rare to stumble upon an idea that turns into an accidental success, like the advent of baby carrots by Mike Yurosek in the 1980s. However, there are several principles and tools that leaders can put in place to help identify and confirm the right strategic moves:
- PEST analysis – As part of a regular strategic planning rhythm, leadership teams need to consider pending changes in the Political (including regulatory), Environmental, Societal, and Technology environments. This is called a PEST analysis, and is a simple thinking tool to direct attention to each of these areas. One of our clients, Cashco Financial, capitalized on a significant regulatory change in Alberta because the leaders frequently did a PEST analysis for their business.
- Asking customers – It sounds simple, but many firms do not have a structured process for gathering and using customer feedback. There are many ways to collect feedback including Voice of the Customer sessions with clients.
- Hire smart people and listen to them – leaders need to recognize they are not the source of all the best ideas. In many cases leaders may be quite far away from the real needs and wants of customers. Therefore, leaders must tap into collective intelligence from everyone in the firm to identify opportunities.
- Explore the Innovation Ambition Matrix – In 2012, Bansi Nagji and Geoff Tuff introduced a simple tool for exploring potential opportunity areas. Here at Results, we’ve found introducing this tool with leadership teams sparks many powerful discussions leading to innovation ideas.
Generating an opportunity idea for the company is just the first step; it’s the intention. But as the saying goes, “the road to hell is paved with good intentions”. Success lays in taking action on the intention.
Here is where the balancing act comes into play. To invest a firm’s focus, money and resources too heavily in a new idea or opportunity could be a recipe for disaster. Similarly, investing in just one opportunity may be a risky strategy given that the future is always uncertain.
A better approach is to always be “firing bullets before cannonballs”, as introduced metaphorically by Jim Collins in his book Great by Choice. The idea is to make small investments (bullets) in new ideas with an experimental mindset. Fire the bullet and collect feedback; adjust then fire another; adjust and then another. Continue this process carefully collecting feedback to reduce uncertainty, until enough data is gathered to ensure that full implementation will be a success.
Leadership Yin and Yang
Success is about balance. Investing in health for today and for the future. This only happens if leaders consciously create the yin and yang in their organization. Health for the present and health for the future.
Article by Tim O’Connor