Why Having a Clear Focus is the Key to a Competitive Edge in Business Strategy

Focus is a foundation of both organizational and individual success. When you think of successful companies, they typically begin by focusing in one area to become great—Google in search, Nvidia in graphics processing units, Amazon in online retailing, Nordstrom in service, etc.

As Kevin Plank, self-made billionaire, and founder of sports equipment maker Under Armour said, “Focus is one of the most important things to have in your business. For the first five years, as we grew our company from zero to $5 million, we made really one shirt. Another way to say it is that a company needs to become famous for something, to find that niche.”

The challenge is that it in a world of more, it’s easier to not focus. A survey of 350,000 people worldwide conducted by Franklin Covey found that 40% of people spend their time on things that are completely irrelevant to their goals and work. This equates to wasting two out of five days of the work week, so in a 50-week working year, erasing any and all productivity in 100 of 250 days. Ouch.

Here are two reasons why we fail to focus along with tools and techniques to overcome them.

1. Unclear on the core. If focusing means we’re directing attention toward a single point, we’d better make sure that it’s the right point. The right point is an activity, area, offering, or initiative that will help you progress toward a predetermined goal. Are you and your team spending time on products or services that don’t offer customers superior value relative to the competition? If so, why? What are the core competencies (areas of expertise) and capabilities (skill sets) that are most responsible for your success? Would everyone in your business agree on the same 3-5? How much time is your team spending on these competencies and capabilities versus other less valuable aspects of the business?

   A Bain & Company study of 8,000 companies found that, “…the most common strategic root cause of stall-out is the premature abandonment of the core business, or the inability to say no to new opportunities that don’t fit with a company’s core mission.” Once a company has stalled out, the research found that only 1 in 10 was able to regain their market position. Therefore, it’s critical that your team is not wasting time chasing the shiny objects outside of the core of the business without a solid innovation strategy in place. Apple CEO Tim Cook advises, “One traditional management philosophy that’s taught in many business schools is diversification. Well, that’s not us. You can only do so many things great, and you should cast aside everything else.”

2. Inability to make trade-offs. In order to effectively allocate resources, trade-offs are required. Trade-offs are the ability to make judgments about competing alternatives with the 63 intent of choosing one path and not the other paths that may appear equally promising. Trade offs are a prerequisite of strategy. If you cannot identify the trade-offs inherent in your strategy, then you don’t have one.

   In order to make trade-offs, we need to make decisions. The Latin term for decision is decidere, which means “to cut off.” If you have trees on your property, you know that every few years, you should cut off or prune the lower or dead branches in order to promote new growth in the tree. However, in business, we have a harder time pruning—cutting things off from our attention, time, and other resources. A survey of 463 managers by McKinsey & Company asked if their senior leadership team cut off unsuccessful initiatives quickly enough, and 52 percent responded “no.”

When you agree to pursue a new opportunity that’s not related to your goals or serve on a committee with little connection to your priorities, you’ve also agreed to not invest your time and talent in other potentially more valuable areas. By not making a trade-off, you’ve actually decided, even if you didn’t consciously state the decision. In economics, it’s referred to as the opportunity cost: the loss of potential gain from other alternatives when one alternative is chosen. Before agreeing to put your time, talent, or budget to something, consider the opportunity costs involved and then determine if it still makes sense.

Making Trade-offs

The inability to make trade-offs has serious repercussions throughout an organization, including overworked employees, poor morale, toothless strategies, and middle-of-the-roadkill offerings. Another key consequence is a lack of priorities, or stated differently, “everything is a priority.” Research found that when it comes to employee’s issues understanding and implementing corporate strategies, mid-level managers are four times more likely to point to too many priorities rather than unclear communication . John Chambers, former executive chairman and CEO of Cisco Systems said, “My biggest challenge is not growth but how well we prioritize.”

To improve your team’s ability to make trade-offs, consider the following techniques:

1. Clarify priorities. A survey of 5,000 managers and employees found that 24 percent of people blamed their inability to focus on bosses who set too many priorities. Morten Hansen, the University of California, Berkeley professor who led the research, concluded: “People who focused on a narrow scope of work, and said no to maintain that strategy, outperformed others who didn’t. They placed an impressive 25 percentage points higher in the performance ranking.”

   The next time your team gets together for a staff meeting, ask each person to write down what they believe are the organization’s top three priorities. Read the cards aloud and see how many people had similar priorities listed for the organization. Then have them write down their top three priorities and see how many are aligned at the individual level. Once priorities have been whittled down and agreed upon, implement a Zero-Based Priority approach where no new priorities may be added without first eliminating an existing one.

2. Say no. If on a daily basis dozens of people asked you for money in varying amounts, from 50 cents to $50,000, you wouldn’t say yes to all of them. If you did, you’d be bankrupt in a few days. We’ve heard the adage “Time is money.” Now, it’s time to start acting that way. When people request your time for meetings, committees, or special projects, ask yourself if these requests are directly related to your goals or are valuable in helping others reach their goals. If the answer is no, then your response should be as well.
3. Visualize the trade-offs. A powerful technique for creating a short-list of priorities and not continually adding things to your team’s already overflowing plate is to create a graph of trade-offs. When I facilitate the Prioritization Matrix exercise with teams, we first create a list of everything that’s considered a priority. We then plot the priorities on a graph by evaluating each item on two criteria: Probability of Achievement, and Impact to the business using a numerical rating scale from 1 (low) to 10 (high) for each. Once priorities are plotted in this manner, it becomes clearer which should remain, and which are ripe for pruning. As Instagram co-founder Kevin Systrom said. “It’s prioritizing that makes us efficient and makes us succeed.”

Focus saves us from the swamp of meaningless activity. Focus separates us from being middle-of-the-roadkill. Focus demands our full attention, and deserts us without discipline. Focus is our friend if we intentionally invite it into our day. Focus slaps more in the face, throws its arm around less, and responds to no. Focus…until it’s gone.

Written by Rich Horwath.
Excerpted with permission from the publisher, Wiley, from Strategic: The Skill to Set Direction, Create Advantage, and Achieve Executive Excellence by Rich Horwath.

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