The siren song of lucrative but tangential opportunity
The siren song of lucrative but tangential opportunity
James R. Van Scotter II, College of Business, Colorado Springs Business Journal
Growing organizations can make intentional decisions about which opportunities to accept by paying attention to their strategy and strategic fit.
Problem: We're a young and growing company that has developed a reputation for delivering value to clients and we have aggressively sought new growth opportunities. We were just presented a new opportunity that could substantially grow our business, but it is tangential to our core capabilities. How should we decide whether to seize this opportunity or pass on it?
Founders usually have specialized skills that enable them to generate financial returns while providing value for customers. Perhaps the founder is an accountant, a hairdresser or a construction contractor who used to be an employee, but decided to go out on his or her own. In the beginning, the goal is often just to break even while building a customer base and a good reputation. Within a few years, a founder might be managing a growing organization with dozens of employees, but without ever having considered a long-term strategy.
The absence of strategy is still a strategy, but it is an ad-hoc strategy that results from merely following the path of opportunities as they arise. As organizations grow, emergent strategies fail to promote sustainable competitive advantage or maximize performance.
This scenario presents a dilemma for many growing companies: the problem of identifying strategic fit of new opportunities. How can a business owner decide if an opportunity is a good strategic fit if she has never really considered strategy? Surely, some opportunities are clearly a fit, while others are not.
The problem resides in the middle gray area and is exacerbated by the attractiveness of potential financial returns. While chasing every opportunity that comes up sounds like a great way to grow, the result is often a strategically incoherent entity governed only by opportunism. Unfortunately, this can result in companies pursuing opportunities that are a poor fit for their resources, capabilities and human capital. It can frustrate the workforce, reduce morale and create a toxic culture driven by opportunism.
Growing organizations can make intentional decisions about which opportunities to accept by paying attention to their strategy and strategic fit. Developing a positive organizational strategy can yield numerous benefits for organizations:
- Increase strategic fit by linking opportunities with existing resources and capabilities;
- Improve the organizational culture by providing a sense of purpose that transcends opportunism and fosters positive employee engagement;
- Guide decision-making throughout all levels of the organization by reinforcing a shared vision, mission and a set of core values; and
- Intentionally position the organization for competitive advantage and profitability.
While creating an intentional strategy sounds easy, in reality conversations around strategy are often the most challenging. Disagreements among managers can be profound and difficult (or impossible) to reconcile. It can take hours of heated discussion in order to get the leadership team on the same page. Achieving consensus agreement among leaders is essential for obtaining buy-in from employees.
Here are some things leaders can do to start building a positive organizational strategy:
- The top leadership team must develop and communicate an aspirational vision that includes:
- A customer-focused BHAG (Big Hairy Audacious Goal) that would be realized if everything worked out perfectly over time; and
- A good vision statement which presents an idealized version of the future. Use visual imagery in language to paint a motivating picture of an ideal future in the minds of employees.
2. Develop a memorable mission statement that:
- Focuses on customer solutions rather than specific product features; and
- Guides the organization by stating how it will achieve the vision.
3. Create a clear statement of core values that:
- Defines what the organization cares most about - integrity, safety, quality, etc.
- Focuses on values for benefiting employees, customers, and key stakeholders; and
- Considers ethical dilemmas in work activities and core values to guide behavior.
When integrated into onboarding and employee training, these basic elements of strategy inspire, motivate positive behavior and provide guidance for decision-makers. With these in place, organizations can begin working on a balanced scorecard with performance metrics for customers, finances, processes and learning and growth goals. It all starts with getting the team on board with the same shared vision.
James R. Van Scotter II, Ph.D., is an assistant professor of strategy in the College of Business at UCCS. His current research is focused on executive succession and compensation, personality and leadership, organizational design and culture, and strategy and firm performance. Contact: OPED@uccs.edu.
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