In business, as in soccer, strategies require time to play out

by Sunny Bindra on March 12, 2012 · 4 comments

in Business Daily

“Our strategy requires time to play out. It is a strategy designed to build sustainable long-term value for our constituents, beginning with serving our customers best. The performance metrics that matter to us are not the typical Wall Street trailing financial output indicators. Instead, they are the metrics that reflect industry thought leadership, high customer satisfaction, low employee turnover, increasing market share and traction in changing our business model to delivering more solutions-based offerings rather than cost-based services. These are the metrics that will tell us if we are making progress in achieving our longer-term goal of building the leading company in our industry.”

DAVID LANGSTAFF, Brookings Institution Keynote Address (December 13, 2011)

The excerpt is from a very thoughtful speech made by David Langstaff recently.

The first sentence shown is one of the most forgotten of modern business life: “Our strategy requires time to play out.” Whose strategy doesn’t? It wouldn’t be a strategy if it provided instant gratification or immediate impact. Strategies, by their vary nature, unspool slowly. Nothing seems to happen for a long while, and then suddenly…boom. Yet most CEOs and boards have forgotten this basic fact.

It took Walmart’s Sam Walton a very, very long time to get going. For years he sat in the same corner shop; and for decades with just a small bunch of chain stores. All that time, however, Sam was refining his strategy: interlinked, out-of-town stores offering the lowest prices. When he got it right, boy, did he get it right: Walmart now has thousands of huge hypermarts all over the world, and is the globe’s largest private employer. It also made Sam the world’s richest man of his time.

At the other end of the scale we have Chelsea Football Club. I wrote on this page that that this club was on the wrong path in 2009, when Russian oligarch owner Roman Abramovich was on his 5th club manager. In 2012 nothing has changed: Roman is now looking for his 8th manager in 9 years. The latest, Andre Villas-Boas, lasted just 8 months in charge before he was unceremoniously tossed out, like so many before him.

What’s the problem here? Roman is very rich. Roman is very impatient. Roman wants trophies for his cabinet, and Roman wants them fast. Unfortunately, Roman thinks everything hinges on just two things: having the right man in charge; and throwing easy money at the problem.

That’s not how it works. Football is about culture and systems, not just talent. You can’t buy those things off the shelf, you have to develop them over the years. Having the right leader in place is indeed a prerequisite; giving that leader time and space in which to develop the winning ingredients is equally a very necessary condition. That condition is not present at Chelsea FC.

That’s why David Langstaff’s point is so important. You don’t win by focusing on the trophies – the return to shareholders. You win by slowly but surely building the sources of competitive advantage. Trophies and shareholder returns are outcomes, not strategies. They happen when other things happen. In business as in soccer, those other things are high-quality thinking, customer and employee loyalty and competitive positioning. Then the success, when it finally comes, will be robust and long-lived.

It’s time for CEOs to come clean on this fact. They can’t live quarter by quarter, announcing airbrushed results to cheering analysts and impatient shareholders. A corporation is not just a dividend-producing milch cow; it is a social entity that can produce great value for a wide variety of constituencies, not least its own employees and customers.

The greatest returns to shareholders always come from the companies with the best products, culture and intangible bonds. But shareholders must learn patience; the trophies will eventually arrive in the cabinet when other things are done properly.

Related posts:

  1. Chelsea FC: Lessons in how not to recruit leaders
  2. ‘Me-too’ strategies are a waste of time
  3. It’s decision time. Let’s play big
  4. Michael Porter in Nairobi – Part 3: Time for business to lead
  5. When do these business leaders spend any time in their OWN businesses?

{ 3 comments… read them below or add one }

1 socrates March 12, 2012 at 7:00 pm

Big fan from Canada. Very informative article.
Unfortunately, in our current quarterly-based financial-market driven corporate culture, short term instant gratification has become the perennial problem, which has trickled over to the rest of society in terms of our unrealistic expectations or visions of the future. We see this in politics, in its short-term election cycles that encourage politicians to enact unsustainable populist measures at the expense of the long term, in the financial markets participants, who sell at the slightest whiff of bad quarterly results, thinking more like speculators rather than owners, and on and on.

Thank you for an informative article. I’m not sure if you’ve read these but i’d like to recommend two excellent books “The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations” by Ori Brafman and “Rework” by Jason Fried .

[Reply]

2 wamoronjia March 14, 2012 at 12:50 pm

Hi Sunny
How does a company intending to go public balance the short-term market expectations and the patience required for results to show?
I think this is one factor that makes many private companies in Kenya fear going public.

[Reply]

Sunny Bindra Reply:

Wamoronjia:

And they should fear it! It’s not obvious that all companies should seek public listing. Many adjustments needed, which don’t suit everyone. Look at Branson.

[Reply]

3 Livvie November 21, 2012 at 12:54 pm

And on this day 21/11/2012 Chelsea fired RDM, a day after the defending champs are knocked out at the group stages, six months after winning major. AND IT GOES ON…

[Reply]

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