Why CEOs Should Do Less, Better
Management guru Peter Drucker was the first to express the difference between doing things right and doing right things. Naturally, corporate boards and CEOs want their companies doing things right. That’s the proof of a well-managed organization.
According to Drucker, doing things right is management, doing right things is leadership. Put another way, doing things right is operational, doing right things is strategic. Strategic leadership is the window to strategic change, the critical forerunner to strategic advantage.
CEOs have plenty of generic strategic choices to drive an enterprise forward. Yet, in healthy markets and vibrant economies, they often fall into the trap of trying to do more of the same, but better. That’s a “minding the store” mode of leadership.
Here is the problem: the moment there is a downturn in the economy or a couple of bad quarters, “minding the store” leaders are quick to cut costs and revert to doing more of the same, but this time with less. (That’s a nice way of saying lay-offs.) This does not bring strategic change.
I prefer the strategy of doing less, better. The company I headed as a CEO thrived in just two business categories, chocolate and coffee. We prided ourselves as a specialist, personified by our premium brands Toblerone, Milka, Côte d’Or, Nabob and Swiss Water decaffeinated coffees. The acquisition of this company by Kraft Foods put an end to this specialty market mindset. I should know; I worked under the acquirer for the better part of a year.
Inherent in Kraft’s mass market mindset is a culture of doing more with less. They acquire companies at a frantic rate and then enact synergies to boost the bottom line and accelerate the payout of the acquisition cost. Wall Street couldn’t be happier with Kraft/Mondelez. Clout is their strategy—a very effective growth stratagem for a “minding the store” company short on innovation.
For companies short on clout, the trick to sustainable competitive advantage is setting the strategic game rules for the industry or the category and shattering those market paradigms with entrepreneurial thinking. Make the right move and your competitors follow. And while they scramble to catch up, be working on the next move that will alter the strategic game board once again.
That culture has to emanate from the CEO’s office and permeate every nook and cranny of the operation. The leader cannot do it alone. He or she needs other leaders. And they are everywhere, just waiting to be unleashed.
Be aware; if a board injects an organization with a risk-averse CEO, an entrepreneurial spirit can dissipate in days. On the other hand, a new boss charged with transforming a bureaucracy into nimbleness must shift the headset of the entire organization. No matter how hard he or she tries, some people never change. Dismissals can awake the rest, but shifting paradigms takes time.
Early in my career, 3 years would pass before our struggling Canadian unit (then known as Nabob Foods) fully embraced the “do right things” culture. Minding the store was not an option. We began scrapping hundreds of stock keeping units and several product categories. By the end of those “turnaround” years, people who weren’t focused, passionate, creative and competitive didn’t do well within that organization.
In those days, success wasn’t enough; the other guy had to fail. Over the years, I’ve learned that this isn’t necessarily the way to succeed in business. That mentality worked for us when the bank was at our door with a hungry wolf tugging on a frayed leash. But when we did less, better—when we restored profitability and strategic health—I came to realize that it was senseless to engage in bitter wars that challenged the profit margins of the entire industry.
A rival doesn’t have to fail; they too, can make a profit. But they cannot be permitted to lead; they must play catch-up. That is how strategic CEOs play the game.