The Difference Between Success and Failure

Posted by Greg Bustin (June 1, 2004)

Excerpted from the book, Take Charge! How Leaders Profit From Change, by Greg Bustin.

There’s rarely a single silver bullet that will enable a company to profit from the uncertainties of change. Usually, a combination of factors leads to success or failure.

In my book, I provide a side-by-side comparison between two companies that highlights how different approaches to seven crucial steps made the difference between success and failure.

Two companies: same needs, different outcomes
As you might expect, the identities of these two companies remain confidential. But the situations, lessons and results of addressing (or failing to address) change head-on are clear enough. I should know; my firm worked with both companies.

The first company is a fast-growing Fortune 500 healthcare services company that sought to refine and clarify its business direction in order to maximize shareholder value. The company’s success was a result of the chief executive’s vision and an aggressive acquisition strategy to build critical mass. But the growth-by-acquisition approach was in danger of running out of steam. Changes in healthcare regulation and mounting price pressures threatened to erode the company’s market position and depress its stock price. Furthermore, few people outside the top leader’s inner circle understood where the company was headed, why it was headed there, or what was in it for them.

The second company, a mid-sized technology company operating as the U.S. subsidiary of an international conglomerate, faced a rapidly changing environment that threatened its existence as new competitive offerings overtook its core products. But it enjoyed solid relationships with a client roster of blue-chip companies across a range of industries. It had a war chest equal to 50% of its annual revenues that could be applied to new initiatives and acquisitions, and it had secured the buy-in of its parent company to move forward on a growth strategy. Company leaders saw an opportunity to create a new market offering that blended existing products with innovative solutions capabilities.

Seven crucial steps

There are seven crucial steps that can make the difference between success and failure, and each of these steps is examined in detail. Let’s look at three of the steps in a side-by-side comparison showing how one company embraced change while the second company fought it.

Find your intrinsic competitive advantage and leverage it. As noted throughout the book, it’s critical to uncover the competitive advantage that exists within every company. In the case of the healthcare services company and the technology company, a positioning statement was developed for both reflecting the essence of why each company exists. What, in other words, differentiates you from your competitors? What is your competitive advantage? The healthcare services company fine-tuned its strategy by building on the company’s successful past and offering a clearer and more compelling explanation of the benefits it provided its stakeholders. The technology company redefined itself, too, building on its successful manufacturing track record to create a new category with comprehensive solutions that addressed key needs championed within customer and industry circles. In both cases, each company found an opportunity to identify hidden value and then they each articulated that value in a way that differentiated them from the competition. So far, so good.
Begin with the end in mind. Credit Stephen Covey with the eternal truism to pursue actions based on a clearly identified outcome, which, of course, makes it harder to do. Over a period of months, the leaders of both companies brought key groups of decision-makers together to analyze the competitive environment, assess their own capabilities, and ask and answer the tough questions. What is the desired outcome we want to achieve? What do we hope to accomplish by pursuing this strategy? How will executing this tactic help support our plan? “End in mind” questions help keep you focused and on track. In both cases, the two companies’ leaders emerged from the strategic planning process with a set of clearly identified objectives and a well-thought-out implementation plan to achieve them. Executives at both companies were excited about their respective responses to a changing market, believed the objectives they had set were attainable and that their plan to pursue them was reasonable. Both teams committed, at least at first, to thinking strategically about how to accomplish their objectives before plunging into tactics. It can be tedious work, and often, leaders give up too soon on ironing out the strategic decisions before rushing into what may be perceived as the “fun” of developing tactics. Remember: tactics without strategy is stupidity.
Align interests. Having analyzed the changing market conditions that had prompted the hard look at corporate strategy, both companies began implementing their plans. Yet market conditions began to exert negative pressure and this pressure was felt acutely at both companies in terms of regulatory changes, increasing investor demands and sales and profit targets that were growing harder to achieve. In the face of increasing pressure, executives at the healthcare services company remained aligned and committed to the objective and aligned in their actions. Executives at the technology company did not. The healthcare services team pursued a growth strategy relentlessly even when their stock price dropped by half. The team at the technology company began to vacillate on plans and commitments and soon implemented cost-cutting tactics that were equally relentless – even as these same executives talked about the need to grow bigger, faster. Alignment and consistency matter, especially in times of change and uncertainty. The lack of alignment and lack of commitment to the plan was the beginning of the end for the technology company. Continued alignment at the healthcare services company meant the start of something new and increasingly valuable.

These first three steps as well as the remaining four steps are not difficult to understand and appreciate. Yet it is amazing to think about how uncommon common sense really is. In these two cases, the ability (or inability) to implement these seven deceptively simple steps when confronting change and uncertainty has made all the difference.

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