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How Outdated Thinking Can Put Your Family Business At Risk

“Strategy development is the most important leadership competency...just 4% of CEOs fall into the strategist category.” 

-       American Management Association, ‘A Global Study of Leadership’ (2005-2015)

Ask yourself honestly…

Are you an accurate, foresight based strategist?  Are the strategies you create for your business based on history, or on your ability to see around corners, and identify opportunities coming toward you? 

For most CEOs, the answer is no...and their businesses are quickly losing momentum and dying because of it.

There is no time like now to change your thinking, grow your leadership, and update your paradigms…

In fact, it is a measure of your business’s life or death.

Why Change?

Many CEOs today learned the rules of business in the 80s and 90s...a time of steady growth, relatively benign competition, and predictable outcomes. 

Back then, prediction and planning was relatively simple.   Creating a 3, 5, and 10 year plan based on historical data was the norm.

We could use the tools and tactics used in business school...the linear equations to develop our expectations of the future.  After all, time and again we had been shown that we could ride the wave of forward momentum by simply focusing on tactics to create better-operating efficiencies. 

Not so today.

In today’s rapidly changing new world order, businesses face an increasingly fast paced and non-linear competitive landscape.  Established brands are crumbling.  Constant connectivity is changing the way our customers relate to us.  Lightening fast innovation favors the start-ups and entrepreneurs with little overhead or obsolete infrastructure.

We are in a new business paradigm.  Business school tactics improved operational efficiencies based on prior year results, and riding a wave of historical momentum will drown any corporation...especially a corporate family business.

To achieve long term profitable growth in this environment, we must focus on strategies.  Leaders must learn to be foresight-based insight strategists.  CEOs must see around corners to identify new and fast approaching opportunities.

The Dumbest Idea In The World

What Jack Welch, former Chairman, and CEO of GE, calls “the dumbest idea in the world” may also be the most critical metric by which we have been judging our business. 

“On the face of it, Shareholder Value is the dumbest idea in the world.  Shareholder value is a result, not a strategy” (italics added for emphasis)

Yet, we learned in business school the maximization of shareholder value is the goal of a business.  And shareholder value tactics and measures often focus only on profitability in the short term

Remember, not all profits are good for your business.  Bad profits kill future profits...because they are focused on a short term surge, versus a long term sustainable strategy. 

In today’s world...focusing on shareholder value is very dangerous. 

Customer Value

Accurate Thinker Strategists understand the concept of shareholder value is a result and not a strategy for a profitable business.   Instead, these strategist CEOs focus on the real goal of business today:

To attract and keep a customer.

Customer value is the critical measure of the sustainability of profits in a business.  By focusing on maximizing bad profits to increase short term shareholder value, we often cannibalize a customer relationship...selling them cheap goods that don’t meet their expectations to earn a high margin and a quick short term profit. 

Today, with so many eager competitors just waiting to take our customers, we must focus on strategies to make our customer relationships long lasting and committed, by innovating based on their needs and desires.  Innovations like these may cost us more in the short term but will create massive customer commitment and referrals over time.

In this video, we delve deeper into these concepts and provide you with examples of companies who have embraced the strategies of the non-linear world and thrived.  Click below to watch this short video.