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O P I N I O N
What stays and what goes? The rationalization process is all about determining what is working and what is not – especially with a sharp eye to the future.
M ost companies are doing very well these days and the effort to create or update their strategic direction is clearly on the rise. There certainly is no shortage of strategic choices to make with a healthy economy. My observation is that companies struggle in taking on too much and then figuring out how to prioritize what they keep and what they let go. Failure to divest yourself of areas of the business that don’t deliver an acceptable return dilutes your leadership talent as we always tend to spend more time on things that need attention than areas that don’t. It also allows a company to become “fat,” ensuring a harder fall when an economic downturn occurs.
Gerry Salontai
❚ ❚ What part of your business do you rationalize? Any portion of the business that is large enough to have a material impact on the profitability of the firm, takes away human resources, and uses finan- cial capital. The process of rationalizing what you do brings clarity to not only the present, but more importantly, helps shape the desired future for the company. We find the very best firms periodically rationalize the markets they are focused on, clients or client groups, service offerings, initiatives that had been launched previously and are still not con- sidered established, and each established functional
A timeless saying related to strategy and planning for the future is, “Strategy is as much about what you are not going to do as it is about what you are going to do.” Many leaders don’t account for all that is not going well and instead focus almost entirely on where the company can go in the future. The reality is that all companies have parts of their business that are not performing well, have been marginalized, or are not a good fit for the firm’s future. Assessing – or as some refer to it, rationalizing each aspect of what the company does – is needed on a near-continuous basis.
See GERRY SALONTAI, page 10
THE ZWEIG LETTER August 14, 2017, ISSUE 1212
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