One of the questions that I frequently ask during a strategic planning session is “what business are you really in?” It is a simple question but one that is often hard to answer. There is a sudden realisation that they are now in several businesses, the core mission has multiplied to become several missions and the organisation is now involved in projects and services that are not part of the core strategy … how did this happen?
One of the reasons is that as companies grow, managers have more autonomy, the pressure to deliver the numbers increases and that spirit of entrepreneurship that has been fostered, gives rise to strategic creep.
To see strategic creep in action … your local pharmacist is often a great example. I often think that I might have stumbled in to a gift shop, a card shop, even a shoe shop … the till points are overflowing with nougat, novelty door stops, felt book marks and the list goes on! It is only when you wade through to the back of the store you find their core business!
If you take a close look at your own business, you might realise a bit of consulting revenue is cropping up here and there, perhaps a client is now paying for some training or you are representing additional product lines on behalf of a supplier.
But does it matter if the activities are bringing in profitable revenue? The answer is probably yes. No-one wants to turn down revenue or quash entrepreneurial spirit but strategic creep can be diluting investment in the core business, damaging the brand and distracting the team from delivering on the vision. So what can you do?
- Track it … obvious but you need to be aware of what non-core business activities are happening in the organisation. Are they on brand and are they adding real value to your business and your customers?
- Ring fence it … if it is not core business and not aligned to the vision, but the revenue can not be lost … acknowledge this and ring fence it. In my own business … I call these revenue streams ‘essential petty cash revenue’ I will not invest any further time in developing the revenue stream but I will complete the project and move on.
- Learn from it … the creep could stem from a specific demand from the market … perhaps indicating a growing trend or change in your operating environment. Is it time to re-evaluate your strategy and incorporate the creep into core?
- Kill it … tough decisions may be needed to nip these activities in the bud. It is always painful to turn down revenue but a short term gain could result in creating longer term problems and putting the business at risk.
Strategic creep can be a powerful tool to force fresh thinking in the organisation so don’t ignore it, learn from it and always know the answer to “what business you are really in?”
Mary-Clare Tomes 