How desire for success ruins businesses

Organisations too comfortable with their "natural" drives may get counter-productive results, Chris Gonsalves discovers

It's a human drive as strong as our urges for survival itself: the need to succeed, or perhaps more accurately to not fail.

That would seem like a decent motivator in business, where a great deal of emphasis is put on avoiding failure and hitting targets, no matter how arbitrarily derived. But could our instincts for success be letting us down? Is our fear of failure forcing us to 'short-arm' our goals?

These "comfort traps" can have a withering effect on business strategies, according to Roger Martin , the Premier's Chair in Productivity and Competitiveness at the University of Toronto's Rotman School of Management.

"Instead of doing the difficult work of making a coherent set of choices to position themselves to win, most companies default to writing a strategic plan that lists a bunch of initiatives with associated financial projections," Martin, who authored book Playing to Win: How Strategy Really Works.

"If you hate failure, you have a wonderful way of ensuring that you don't experience it. Play the game you know you can win. The natural reaction is to make the challenge less daunting by turning it into a problem that can be solved with tried and tested tools. This is a truly terrible way to make strategy."

Martin's challenge is an important one in the channel, where tech providers have a spotty track record of effective strategic planning.

In 2112 Group research, 69 per cent of respondents appeared to believe that solution providers should have a formal growth strategy, or a plan that sets growth targets and identifies the elements required to achieve goals.

However, that strong belief in strategic planning does not translate into action, as 45 per cent of the channel players that responded to the survey do not have a formal growth strategy.

The lack of business plans and growth strategies aren't keeping providers from making investments: 91 per cent of respondents say they're investing in growth. But the disconnect between channel investments in growth and strategic planning can be seen in the returns on those investments.

Most solution providers we spoke to say an acceptable annual growth rate is 16 per cent or higher. However, 46 per cent had a rate of growth of less than 15 per cent annually, with the majority of low-growth businesses recording gains of less than five per cent.

Martin offers three rules for pulling your business strategy away from comfort traps:

Keep it simple. "Focus your energy on the key choices that influence revenue decision makers-that is, customers," says Martin, who suggests narrowing down the strategy to a target market and value proposition decision which can be summarised in one page with simple language.

"Characterising the key choices as where to play and how to win keeps the discussion grounded and makes it more likely that managers will engage with the strategic challenges rather than retreat to their planning comfort zone," he says.

Eschew perfection. "Managers unconsciously feel that strategy should achieve the accuracy and predictive power of cost planning," Martin says. "[But] perfection is an impossible standard."

Strategy is not planning, it's a bet. Trying to certify the absolute accuracy of a strategic plan actually weakens it -- leading to "lots of excuses down the line about why the revenue didn't show up", he adds.

Use explicit logic. The best way to tighten up your strategic decisions is to test the logic of every assumption you make about customers, markets, competition, et cetera.

"Write down the answers to those questions, because the human mind naturally rewrites history and will declare the world to have unfolded largely as was planned rather than recall how strategic bets were actually made and why," Martin adds.

Martin has created a quick and helpful online assessment to determine if your strategic thinking is being clouded by your drive for comfort and your fear of failure.

"As managers apply these rules, their fear of making strategic choices will diminish," says Martin. "That's good - but only up to a point. If a company is completely comfortable with its choices, it's at risk of missing important changes in its environment."

For more US-related channel coverage, see www.channelnomics.com