In today’s competitive markets businesspeople must carefully pick – and win – their battles. What do I mean? Some companies focus on the wrong things to the detriment of their core business. For example, you might think expanding into a new industry or broadening your customer base should be your top priority, but if you don’t have sufficient inventory management tools to keep up with new demand and control your costs, your business could implode.
3 Steps to Success
The landscape is littered with organizations that fought the wrong battles. I have found that the key to long-term success is to 1. Define the one thing you do that creates a competitive advantage, 2. Make sure you are better at what you do than anyone else on the face of the earth, and 3. Dramatically (and I do mean dramatically) simplify everything else you do. Here is my rationale:
- You typically do not have the resources to fight – and win – every battle. Defining the one thing you do that creates competitive advantage gives you the organizational, innovation, and resource allocation focus you need to succeed.
- You need to constantly innovate – but only around the one thing that creates your competitive advantage. In other words, you need to be better than everyone else at just one thing.
- In order to focus your entire organization on your one thing and do it better than anyone else, you need to create capacity and agility in every part of your organization. Avoid fighting with process complexity, decision-making bureaucracy, exception handling, etc. Dramatically simplifying how you do what you do sets you up for long-term success.
Building a Road Map
In what areas should you dramatically simplify what you do? In general, any area that is not directly related to the one thing you do better than everyone else. This case study might help:
A few months ago, I got a call from a wholesale distribution company. They were doing some strategic planning and wanted my advice. I shared with them my thoughts about picking and winning the right battles. We then met to work through the battles they had picked and compared those to the battles they should have been fighting.
Our starting point was to define the one thing they do better than anyone else. In their competitive industry, this took some doing. They are not the cost leaders or technology leaders. What then, creates their competitive advantage? I took them through a couple of exercises that finally yielded the answer: in their chosen markets, they provide the highest service levels.
With this defined, we identified the things they did and could do to make them the absolute best at service level delivery. This was an extensive list that we then prioritized and mapped to future projects and plans.
Putting It into Practice
We now knew where and how to win in the marketplace. Next, we needed to create the organizational capacity, resource availability, agility, and operational focus to deliver on those projects and plans. How could we pull this off? By dramatically simplifying everything else this company did. We started with inventory management. Over the years, they had – in a drive to handle every known and potential exception – created incredibly complex business rules for inventory management, planning, and accounting.
These rules had become a ball and chain that slowed everything the company did. These rules also resulted in a wide range of cascading complexities – their information systems were highly customized and a nightmare to manage and change, it was difficult to measure their process effectiveness, it was impossible to relate cause and effect, and how they accounted for their operations was a mystery.
Simplifying with Lean Inventory Management
Clearly, their complex operations were not leading to improved service levels. In fact, their complexity was the biggest barrier to their being better at service delivery. Simplifying their inventory management was their greatest opportunity. With simplified business rules and information systems, they would take one battle they were fighting – and losing – right off the board.
How could we get from where they were to where they needed to be? I recommended that they adopt inventory management best practices. How could they quickly implement best practices? By selecting and implementing, without making any customizations, an inventory management system with best practices built into it. Something lightweight and simple. Something based on lean inventory management principles. Something they could start to use immediately.
We did a rough estimate of how much IT, accounting, business analysis, and operational capacity this would create for them. We then applied that capacity to their list of innovation projects and plans and were able to accelerate their entire innovation portfolio by months. They improved their operations while also creating capacity they could apply to getting better at the one thing that created their competitive advantage. Now that is picking and winning the right battles!