Wednesday, April 26, 2017

The Importance of Knowing Yourself

David J. Collis and Michael G. Rukstad's ask a question with their article's title: "Can You Say What Your Strategy Is?" I was particularly struck by their emphasis on a company knowing what it is and what it stands for, regardless of how challenging it might be to convert ideated corporate self-image into realized corporate reality. More importantly, such a choice requires both bravery and fortitude.

In my own experience in the startup world, I have far too often seen companies that attempt to shift gears based on every barrier encountered. Working for an ed tech startup in Pittsburgh, for example, in the few months I was with the company we shifted multiple times from being teacher-facing to student-facing, with other markets under constant consideration. This led to a situation wherein employees were really unsure as to what to focus on, whether that be in sales, product development, or user experience.

The temptation to pivot is quite strong in the startup world, and it should be: startups are - ideally - lean, flexible, and staffed with individuals possessing broad skillsets. Where pivoting becomes problematic, however, is when it is viewed as an antidote for challenging situations. It is all too easy to pivot when encountering a challenge. Students aren't interested? Focus on teachers. Teachers aren't interested? Well maybe we should focus on students. Rather than optimizing a product for a given market segment - as Edward Jones has focused on conservative clients - startups can pivot themselves into oblivion, lacking the fortitude to optimize a product to fit customer needs.

Family-owned companies will often face the same challenges as startups, simply because there is often little in the way of leadership structure, with one or a few individuals making all major decisions with as much or as little input as they want. I experienced this firsthand working for a family-run, closely-held contact lens company. Ownership would visit our stateside offices once or twice per year, and each time they visited we were given different instructions as to what our business focus should be. Exacerbating this problem, the company in question had operations worldwide without the resources to properly service all of them, ultimately resulting in frequent resource shifts that left all outfits under-resourced and often prioritized resources based on the flavor of the moment - or the last office visited - rather than prioritizing the best business-case and focusing resources on developing in that market-segment or region.

Ultimately, I think this comes down to a similar problem in both startups and closely-held family companies: an unwillingness or inability to recognize the necessity of tradeoffs, as outlined by Collis and Rukstad. This makes sense; both startups and family companies tend to have an emotional hold on their managers. These companies are somebody's baby, and it stands to reason that in many cases people who might otherwise be excellent managers suffer due to their emotional investment in their company. While they might be capable of recognizing and realizing tradeoffs in someone else's company, to do so on their own requires developing a certain emotional distance that can be quite challenging to achieve (doubly so when we're discussing companies where people - founders or business-owners - have invested their own funds). Collins and Rukstad's article highlights just how critical it is to make these decisions, even when they are incredibly challenging.

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