Happy New
Year. Now Stop Trying to Make Everyone Happy.
This
is the time for you to allocate more resources to your winners and kick the
losers to the curb. Good leaders learn to use the word "No" and to
stop propping up mediocre products—or people.
Executive director, Ed Kaplan Family Institute for Innovation
and Tech Entrepreneurship, Illinois Institute of Technology
As you wrap up 2018, and start thinking about your business's
budget for the next year, the toughest single task is always the allocation of
inevitably scarce resources among competing ideas, opportunities and
commitments. The hardest single word to say is "No" -- and also the
most important. Because smart strategy in times like these is all about what
you don't do.
Saying "Yes" is so much easier and a relatively
painless way, at least in the short run, to keep poor projects alive or to try
to do things cheaply. Things that you shouldn't do at all. And saying
"Maybe" when you should just say "No" isn't doing anyone a
service; it merely postpones the inevitable.
Get used to the idea that there's never enough to go
around and you can never make everyone happy or please all of the people even
some of the time. Don't even start down that path. Absolutely the
most important thing not to do is to try to treat everyone
"fairly" - by which I mean equally - because nothing about business
is fair.
Business is all about frankness, not fairness. Telling
your people the truth is the greatest favor you can do for them. Splitting the
baby or trying to give everyone a little something dilutes the overall
enterprise and diminishes everything you're trying to accomplish. It's a proven
formula for stagnation, mediocrity and eventual demise.
This kind of equitable treatment, where every department
gets a similar budget, or every department head gets the same raise and bonus,
feels good in the moment. But it's a stupid plan to try to placate everyone
instead of making the hard choices to assure the survival of your firm. And
it's a lazy and cowardly way out. I understand that no one wants to be the bad
guy in someone else's day and that these messages are always difficult to
deliver, but not only is it a part of every leader's job, if you're not
personally up to the task, then you shouldn't be in the position in the first
place. The buck really does stop with you.
And believe me, survival isn't too strong a term these
days; it's exactly the level of significance and severity that these choices
and decisions deserve. I see businesses every day where the management is
treading water, waiting to retire, and/or afraid to bite the bullet, shoulder
their responsibilities, and take the necessary actions. As a result, time
quickly passes, momentum and opportunities are lost, investors, donors and partners
lose interest, funding disappears, and one day they turn around and there's
nothing left to pursue.
The market for talent, as just one example, is fierce and
unforgiving. If you aren't smart enough to understand that you've got to pay
your best people better than the rest of the team and, if you still think that
it makes sense to be equitable based simply on longevity or titles or job
descriptions, you're living in the past. Those peak performers, who are the
only ones that matter to your future, will soon be hired away. Not because
they're ungrateful or disloyal; because they're not stupid.
It's the same with (1) businesses you're in that are going
sideways, (2) products you're producing that are getting tired and losing
market share, or (3) departments where there's no longer the same demand for or
the value attributed to the services that they're providing.
Spending money or other resources to prop these losers up,
to keep failing operations afloat until they become someone else's problems, or
because you're afraid to shrink them, sell them or shut them down means you're
not doing your job, that you're kidding yourself and a lot of other people as
well. Things only move all by themselves in one direction: downhill. Face the
facts and fix the problems so that you have the funds to invest and bolster the
businesses that are healthy and growing. Facts are stubborn things. They don't
go away or change because you ignore them - they fester.
You've got to have a strict set of metrics (rank 'em or
yank 'em), a clear view of where the future of the firm is likely to be
(winners and losers), and some idea of the path(s) that will get you there.
Every good venture investor will tell you the same thing: you starve your
losers and feed or double down on your winners. This isn't rocket science. Most
of the time, an outsider with even a fraction of the information you have can
tell you which of your people are winners and what parts of the business are
destined to grow dramatically and which ones are already the walking dead. Of
course, if you were being honest with yourself, you'd admit that you also know
who and what has to go. You just need to screw up your courage and get the job
down.
And it's at budget time that things really come to a boil
because the choices couldn't be clearer or more immediate. Are you really going
to fund a flailing business for another year when every metric is headed in the
wrong direction because things might get better? Are you
really gonna lose a couple of your superstars just because you were afraid to
pay them what the market made clear they're worth in order to keep the rest of
the team happy? And, worst of all, are the people who once bet on you tiring of
the same sad stories and mediocre results and getting ready to put their money
and their attention to better and more productive uses elsewhere?
PUBLISHED
ON: DEC 31, 2018