Craig McIvor: Don't let detail get in the way of bold decisions

After 20 years of crafting strategies for companies I have led, and now assisting other companies in the pursuit of their strategic goals, I have come to several conclusions.

First, modern leaders are drowning in detail and this is hampering the quality of their decision-making. Second, few businesses understand the drivers of their business and what competitive advantage really means. Finally, our leaders' risk-aversion is limiting the ability to change towards more sustainable business models.

During the strategic planning process I see companies collecting endless amounts of information. Sadly, our perceptions of the world are clouded by this self-imposed information overload.

At some stage in the process you have to stop the research stage and do some thinking. You will never have all the information you would like.

Remember that the purpose of all this information is to make informed strategic decisions, so make sure you spend more time in the process of decision-making.

It is very difficult to develop a strategy for a business that does not know what it does and what constitutes its competitive advantage.

Most business models are quite simple. Too often, businesses entomb themselves in a complexity of activities around their core activity, to a point where the underlying objective is obscured.

Segmentation of duties within companies certainly has not helped, as it has placed too many people away from the front line of customer interaction.

The greater the number of staff, the less likely the people in the business understand its value proposition to customers and how it makes money. And executives do not want to admit to a simple business model, as their value is tied up in the detail.

To be effective, businesses need to shed this extraneous layer of complexity to get to the real purpose of the business.

When companies are asked about their competitive advantage, rarely do they nominate the correct issues. Typically businesses overestimate the value of their workforce.

Culture is helpful, of course, in motivating the team you have, but working hard will never overcome a poor strategy. I am sure there have been many fine, powerful climbers who worked hard and died - going up the wrong side of the mountain.

Many large businesses succeed in spite of themselves. Over time they do accumulate competitive advantage, market share and great profits, but without understanding the reasons for this, their ability to sustain this position is unlikely.

Increasingly, businesses are caught up in the issues of today. Little time is spent on trying to discern trends. Sometimes we need to sit back and ask "where is this all taking us?"

If we look at chess masters, they will often resign the game when it is clear they cannot win. The analogy for business is that when you cannot see a future - bail. If you see great potential then put your money behind it and go for it.

The new perception of risk, however, prohibits radical changes resulting from strategic planning. This means that every business, even a smaller one, can become a dinosaur in a fast-changing environment. So why are some businesses unwilling to change and survive?

There are two key issues here. The first has to do with ego. Let's imagine we are coaching Tiger Woods, and suggest he has to go back to basics, to develop a new way of playing that will take him beyond the limitations of his current game.

A pro like Woods can handle this. He is willing to sacrifice short-term pain for long-term gain. For many business leaders this is impossible to contemplate as it will seem like failure on their part. The second reason is that self-interest prohibits many mid-level managers from suggesting downsizing.

To succeed over time, we need strategies that are going to work today, but will also help us survive tomorrow. I constantly hear the need to go after the low hanging fruit first.

But this sort of thinking does not put you in the crucible of competition, which drives efficiencies and performance. Sometimes companies have to put themselves in competitive arenas to learn the right lessons.

Why do major car companies get involved in Formula 1? In this highly competitive environment they are forced to look outside, beyond and at the square to find better ways of doing things.

You should be looking for ways to hone and develop your competitive advantage. Winning the battle of customers' minds is ongoing and no business proposition can stand the test of time without constant refinement.

Craig McIvor is the managing director of Corporate Management Advice Ltd www.managementadvice.org