Winning - Jack Welch [59]
Going into this exercise, I’ll assume that you have a strategy to begin with, either written somewhere or in your head.
That said, having a strategy doesn’t mean it’s working.
The five slides we’re going to look at here are a way to test your strategy, to see if it’s getting you where you want to go, and figure out how to fix it if it’s not, even to the point of changing it entirely.
I strongly believe this questioning process should not be a wide-scale, bottom-up event. While others may disagree, I know that strategy is the job of the CEO or the unit leader, along with his or her direct reports. If the culture is healthy, they can see the organization in all its various, interdependent parts. They know its people, as well as its sources of ideas and innovation, and can best determine where the most exciting opportunities lie. Moreover, they are the ones who will ultimately commit the resources the strategy requires. They get the plaudits if the strategy succeeds and hold the bag if it fails.
If you have a good team—candid, insightful, passionate about the business, and willing to disagree—completing this exercise should be fun and energizing. With intensity, it should take somewhere between a couple of days and a month. After that, it’s time to act.
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SLIDE ONE
What the Playing Field Looks Like Now
Who are the competitors in this business, large and small, new and old?
Who has what share, globally and in each market? Where do we fit in?
What are the characteristics of this business? Is it commodity or high value or somewhere in between? Is it long cycle or short? Where is it on the growth curve? What are the drivers of profitability?
What are the strengths and weaknesses of each competitor? How good are their products? How much does each one spend on R & D? How big is each sales force? How performance-driven is each culture?
Who are this business’s main customers, and how do they buy?
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Over the years, I have been amazed at how much debate this simple grounding exercise can spawn. In fact, it’s not unusual for people who share the same office space to have widely different views of the same competitive environment.
Many people have a terrible time admitting their business is a true commodity. No matter how hard we tried, it was next to impossible to get people in our motors business, for instance, to accept this reality. And I have sat through countless meetings where this set of questions has surfaced that discomfort and generated enormous heat about the level of resources to commit to R & D and marketing in an attempt to make the product more unique.
Another of the many important issues this slide surfaces is market size. Too often, people like to call themselves the market leader, so they end up limiting the scope of their playing field to make that happen. In our case, the No. 1 or No. 2 mantra inadvertently had that exact effect. After more than a decade, we realized that businesses were increasingly tightening their overall market definition so that their shares were enormous.
We fixed that by saying that businesses had to define their market in such a way that their share of any market they were in could not be more than 10 percent. With that restriction, people were forced into a whole new mind-set, and opportunities for growth were suddenly everywhere.
On the road in Q & A sessions, this is how I talk about the market definition dynamic: Since I am usually sitting in a chair, I ask audience members to imagine that they are a chair manufacturer. They can define their market as the kind of chair I am usually in—with curved metal arms, blue fabric, and wheels. Or they can define it as all chairs. Best yet, they can define their market as all furniture. Imagine the share differences and the implications for strategy!
This kind of discussion