In business, there’s a prevailing belief amongst leaders that “doing more and more” is the only way to increase sales and profit. It is an easy notion to nod to because inherent in the assumption is a paradigm – the belief that additional activity such as new brand introductions or entry into a new markets or geographies bring incremental rewards. And, in many cases this is true. But there’s a downside, a nasty one. “Doing more and more” can create cultures of complexity, and left unchecked, complexity stifles, stagnates, and eventually brings organizations to their knees.
No Growth in Complexity
There are plenty of examples of excessive complexity in the food industry where giants such as Kraft Heinz, Kellogg’s, General Mills, and Campbell’s Soup have forgotten how to create organic growth. Without the confidence to grow the old fashioned way, they seek growth the easier way – they buy it. They dig into their deep pockets to acquire new businesses and brands in the hope of boosting their income statements and stock prices. Sure, there’s often an immediate boost in sales and stock value, but at the same time, the resulting complexity smothers clarity, and further curtails innovation. I’ve included links to the 5-year income statements of these companies. There is no growth.
Take Campbell’s, the world’s largest soup maker with a 60% market share of a $4 billion market. The company is very profitable—but there’s a problem, a big problem. Campbell’s is struggling with decades of stagnation within its core soup franchise. Initially, a simple business of shelf stable products, this company’s tentacles have extended to an array of fresh, frozen, organic, and refrigerated foods. With this diversity, comes indigestion. Complexity rears its ugly head from inbound logistics and operations all the way to outbound logistics and sales and service.
Advantage: Focus
Principle number one: the less coherent the businesses, the greater the complexity within the corporate culture and throughout the value chain. Sadly, this erroneous road to growth has become part of Big Food’s DNA. Sacrifice existing lines for clarity and cohesion? Not a chance. It goes against the grain of Big Food to suggest “doing less, better,” so that focus and specialization becomes the competitive advantage over the long haul like it has with Coca Cola. Coke has resisted diversification and concentrated on non-alcoholic beverages. This single-mindedness continues to deliver outstanding shareholder value because they run this business better than their rival PepsiCo, a company engaged in far more than soft drinks.
‘Doing less, better’ hinges on sacrifice. I’m the first to admit that this is easier said than done. Dumping pet projects, reducing the customer list, or turning down new sales opportunities can be incredibly difficult to do. It can feel impossible to ‘think smaller’ when everyone around you is firmly entrenched in the ‘do more’ strategic paradigm. Culturally, enacting the ‘do less, better’ strategy requires accepting the theory that 20% of the effort delivers 80% of the rewards. Focusing on that 20% generates a high ROE (return on effort). Doing less, better can work throughout an organization. It starts with the corporate strategy, includes marketing and sales strategy, and the all-important human resource strategy.
Make no mistake; strategic sacrifice doesn’t mean doing less work. Those who are devoted to focus, work harder because they are passionate and emotionally-connected to a much clearer vision. Bulldozing the walls of complexity in companies and departments is never achieved without sacrifice. The earlier and the bigger the sacrifice, the easier it gets afterward. Sacrifice must remain a part of the organization’s culture to sustain competitive advantage.
Are you seeing this “doing more and more” scenario playing out in your organization? If so, are you getting the organizational results you want? I welcome your comments and thoughts, please share them on social media.