Cutting Out to Climb Up

Strip Your Strategy to the Bone

“There is nothing so useless as doing efficiently that which should not be done at all.” Peter Drucker

Could you intentionally stop selling your most profitable product tomorrow morning?

Sometimes, the best strategic decisions look like this.

Strip to the bone: Two stories

In September 1997, when Steve Jobs returned to Apple, its product lineup was a mess. The company tried to be what Samsung became a decade later.

It offered a wide range of computers, and customers saw little difference. It sold printers, peripherals, and Apple Newton MessagePads.?

Steve Jobs stripped the company to its core. He cut all the desktop models back to one. He cut out all the printers and peripherals. He cut out distributors and most of the company's resellers.?

He made a big spring cleaning and won.?Apple has become a legend.

In September 2006, when Alan Mullaly joined Ford as a CEO, the company was deteriorating rapidly and losing money.

Mullaly also stripped the company to the core. He sold Aston Martin, Land Rover, Jaguar, and Volvo. He focused on profitable brands and models. He fixed all the problems Ford was facing at the time.

But did he turn Ford into a legend? No, Elon Musk did it with Tesla.

According to the statistics, Ford Motor Company is a profitable carmaker today, one of many. Its market share in the US is 13%, not too impressive.

Paraphrasing the old Porsche 911 ad, honestly now, did you spend your youth dreaming about someday owning a Ford?

Cutting back business to favor profitable products is investing in yesterday's wins.

Perfecting your business

“Perfection is achieved not when there is nothing more to add, but when there is nothing left to take away.” Antoine de Saint-Exupéry?

You may have heard Michael Porter's famous statement: "The essence of strategy is choosing what not to do."?

But after conducting hundreds of strategic off-cites and workshops, I’ve come to think that if we start asking ourselves directly about what we should ditch, we’ll never succeed for two reasons.?

Reason #1

It's tough to say no.

We tend to fall in love with projects or products we initiate or manage. We always want to give them a second chance.

Discontinuing a product may negatively affect someone’s status, budget, or promotion prospects.

So, if you ask your team to make a list of products or activities you should discontinue so that you can focus on the core, you'll get a concise list of insignificant items.

Reason 2 – profit

When Mullaly was cleaning up a mess in Ford, he ditched some loss-making brands and focused on profitable products.

I believe it was the best short-term decision for the business that was bleeding cash. But concentrating on profitable products and units is a dangerous strategy.

iPhone is supposed to be Apple's most profitable product. Should the company place a strategic bet on it? I doubt that.

I don't think Apple should stop developing iPhones today. But there will come a day when the company will have to cease selling iPhone to allocate resources for more promising projects.

However, the decision to kill the goose laying the golden eggs is very hard.

Even if a product brings in as little as $1 per year, it still seems like much more than zero.

Saying no is difficult. Try to say yes instead.

Saying yes

When I conduct strategic off-cites, I never ask teams to make a chopping list of products and initiatives.

Instead, I help them devise a strategy and make a list of strategic priorities:?

–????? Target customers

–????? Core products

–????? Key initiatives

–????? Focus Value Waves

Then, I insist that they discontinue every single product, business unit, activity, or initiative that doesn't help them implement the strategy.

We shouldn’t discuss whether we need to continue a project. The project team must prove it has the right to stay.

You need to strip your strategy to the bone. You must ditch everything that doesn’t contribute significantly to your success.

You have to 'fire' all the projects first and then 'hire' some of them back, but only if they prove to be indispensable.

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