Digital technologies have spawned a continual explosion of ideas and business models, enabling businesses to achieve more with less, reach new markets and engage with consumers in creative ways. They have created an environment in which the opportunities for innovation and growth are endless. But this world of possibilities also means a million directions a business and its workforce can go at any one time.
In this climate, it’s very easy to get distracted. There is a danger of diluting itself and its workforce when an organisation spreads its resources over too many ventures, constantly changes priorities or when focus is directed to the wrong priority.
“A company’s competitiveness derives from its core competencies and core products.” Written more than a quarter of a century ago, these words ring truer than ever in today’s digital world. Organisations that thrive in the digital world need to stay focused on what they’re good at and remain disciplined about prioritising what enables them to do it well.
The danger of losing strategic focus
One of the world’s most admired brands of the 80s, IBM had become a dinosaur in the 90s, posting a US$8 billion loss in 1992, the biggest loss in America’s corporate history at the time. From being king of the mainframe business, IBM went to expand its operations in other categories, from personal computers to copiers, telephones, satellites and software. In doing so, it lost focus on customers and could not see where the market was heading. Critical to its turnaround was IBM’s ability to refocus its efforts and reconsider its entire portfolio. The company found its way back to growth by gaining a deeper understanding of the IT industry and digital technologies and adjusting the portfolio to meet customers’ needs. That meant selling the personal computers, copier and other non-core businesses and making a push into the services and software categories.
IBM survived its near-death experience but not all companies get a second chance. Eastman Kodak is a picture-perfect example of how even a global leader in the industry can lose strategic focus. The company was so focused on its profitable business model of selling cheap cameras and making money on film that it failed to see that the world was changing and missed the opportunity to scale up its offering to digital. By the time Kodak realised that the new disruptive technologies were breaking that model apart, it was too late to refocus.
Gaining focus with discipline
Our recent research on what makes organisation digitally sustainable identifies Discipline and Focus as one of the five critical capabilities that enables organisations to succeed in the digital world. To develop focus, companies need to gain a solid understanding of the market and industry and, become disciplined about drawing on the company’s strengths to overcome challenges and achieve the desired outcomes. Central to this is knowing whether the company plays the market as a traditional or tech organisation.
- Traditional corporates:
These businesses rely on scale as their core focus and they organise their employees, processes and technology around this. They are masters of scale.
Unfortunately, scale means working with complex structures which deter agility and weaken the ability to respond to changes.
- Tech disruptors:
Tech disruptors belong in the digital domain because they started small, built innovative businesses with new technology and respond well to change. They are masters of agility.
They do not compete effectively with traditional corporates that can compete globally and can leverage the competitive advantages of scale, such as production, cost and reach.
Despite the distinctions, both types of organisations have the same ultimate objectives: growth and creating value in the market that will generate revenue, and ultimately be profitable. To achieve this requires both agility and scale so, successful business cannot be one or the other, they need flexibility to bring together the best of both worlds.
Take tech disruptor Tesla for example. Elon Musk has many enterprises that seem disconnected such as electric cars, energy storage, space travel and hyper speed transport but his core focus is developing and providing solutions to customers through an integrated ecosystem of products, services and transport across the whole value chain. This agile organisation advocates flat organisation structures and shuns silo mentality. The excerpt below from an internal email from Elon Musk summarises well the culture at Tesla:
“Anyone at Tesla can and should email/talk to anyone else according to what they think is the fastest way to solve a problem for the benefit of the whole company. You can talk to your manager’s manager without his permission, you can talk directly to a VP in another dept, you can talk to me, you can talk to anyone without anyone else’s permission. Moreover, you should consider yourself obligated to do so until the right thing happens.”
Tesla is also making inroads in scaling the business. With the acquisition of SolarCity, Tesla became “world’s only vertically integrated sustainable energy company.” The maker of electric cars and energy storage systems finds synergies in customer profiles and cost savings. And as the cost of hardware manufacturing and technology lowers, more customers will be able to afford Tesla products, giving the business more economy of scale and more ability to innovate.
Bringing it all together
Focus and discipline does not happen in the vacuum. Direction must come from the leadership to clearly define the priorities and to align the efforts of all employees to ensure that there is clarity on what is expected from each member of the staff. Good leadership is a prime factor in building bridges between agility and scale and ensuring that employees understand and are motivated by the company’s core business.
Great leaders don’t set the focus and forget about it. They have the discipline to continually scan the environment for opportunities to scale the business for future success and create the condition for the organisation to act with agility.
Top 4 things leaders can do to ensure the organisation stays focused:
- Understand the core of the company: What are the processes, technologies and skills that combined add value and sets the company apart from its competitors. How you can leverage them to expand, growth or protect the company’s position in the market? How can them be used to preserve the company’s competitiveness and what can you do so the company does now walk away from the core?
- Choose your company’s priorities carefully. When considering where to invest resources, identify urgent, critical and high impact projects and opportunities so you don’t dilute the efforts or distance the business from its core.
- Be flexible: The organisation’s core competencies should enable a company to identify and follow the right opportunities. Core rigidity restricts a company from meeting consumer needs as the market evolves.
- Set a clear vision and engage the workforce around it: all employees must understand the organisation’s core strategy and how the business is structure to support them achieve the company’s objectives.