In business, people often equate strategy with activity - doing things. The thinking goes that the active pursuit of trying to improve one’s position means a company should constantly be trying new things to try to determine its best course. While elements of this are true, we find that among the companies we work with, the most successful are relatively slow to move on new strategic initiatives.
They are not slow because they are complacent. They appear slow because they say no to more opportunities than they say yes. They exercise a high degree of discipline in determining which are the best opportunities in the best markets with their best targeted customers.
The reason for this is that these companies are usually producing very high returns on equity and assets and choosing new strategies only makes sense to the extent that they improve those returns. They exercise significant discipline and patience in making decisions to deploy the company’s assets for new opportunities. This filtering of opportunities is actually much harder to do than taking the approach of doing a lot of things and seeing what might stick.
Bottom line: Don’t confuse activity with good strategy.
Mario O. Vicari is a director with Kreischer Miller and a specialist for the Center for Private Company Excellence. Contact him at Email.
How do you determine which opportunities are best to pursue for your business? Share in the comments.