Core competency is back in fashion

FEWER, BIGGER, BOLDER
From Mindless Expansion to Focused Growth
Sanjay Khosla and Mohanbir Sawhney
Portfolio
272 pages; Rs 699

Growth begets complexity. You open up one new market and then another; in no time your organisation resembles a maze of subsidiaries and reporting relationships. You acquire a new company and then another; chances are you will end up with a portfolio of unrelated businesses or brands that demand huge investments in terms of management attention and money. Is it any wonder that chief executive officers, or CEOs, across the world today identify complexity as the primary challenge before them? (In earlier studies by various authors and management consultancies CEOs would identify "change" as their most pressing challenge.)

So what is the solution? "Fewer, bigger, bolder," say authors Sanjay Khosla and Mohanbir Sawhney in their eponymous new book. To enable this they have devised a seven-step framework: how to focus, where you can win, prioritising resources, when to stop, how do you unleash the potential of people, the concept of blank checks and, finally, how to execute. The idea is 10 per cent strategy and 90 per cent execution. The authors have applied these principles to experiences of companies such as Kraft Foods and dairy company Fonterra.

They could as well have named this book "Focus, focus, focus". But that would make it old wine in a new bottle, right? At the risk of sounding impolite, once you have gone through the 250-odd pages, Fewer, Bigger, Bolder does leave an old-wine aftertaste. But look at the bright side: some of the lessons in this book could equally apply to any team sport like, say, football.

Take this. The authors say that in business it can be easy to get so enamoured with your growth strategy that you forget to step back and ask yourself where you started and where you would like to go. You may get so caught up in the momentum that you forget to check whether you were headed in the right direction. The authors cite the example of Hewlett-Packard (HP) and the problems it has faced recently (chapter two: "The wisdom of less"). The company has had four CEOs in less than a decade, lurched from one strategic initiative to another, and has seen a huge drop in market capitalisation. "The culprit: the acquisition binge that included buying up massive and troubled businesses such as EDS and the dying smartphone software from Palm. The binge pushed HP into a mind-boggling array of ventures, and, as a result, HP took its eyes off the ball in its core printing and personal computer business … the company has lost its focus and lost its way," they conclude.

Another lesson. In chapter four, the authors urge, "pick your bets". Consider the example of Dell here. In the early 2000s, Michael Dell invited one of the authors (Mr Sawhney) to speak to the company's leadership team. During the conversation Mr Sawhney remarked that the company's research and development, or R&D, budget was a minuscule percentage of its revenues and was way smaller than the R&D spending of companies such as HP and Intel. Mr Dell offered him a response he wasn't expecting. He said that the company was proud because it viewed itself as a supply-chain company and focused on two key capabilities - making custom computers and delivering them directly to the customer. It was not a company that made the most innovative machines, but won with the most cost-efficient supply chain and distribution. Investing in the supply chain and not defending products was a calculated risk for Dell.

As I watched this football World Cup, I noticed a team couldn't win on the field unless it was willing to take the risks of dashing down the field and kicking that ball into the net. United States goalie Tim Howard's 16 saves against Belgium were good insofar as it broke some World Cup records, but his brilliant defence wasn't good enough to push the team ahead in the competition.

Perhaps the biggest takeaway from Fewer, Bigger, Bolder is that an organisation is as good as its people and unless the people work as a cohesive team, all its goals could well turn into distant dreams (Chapters five, six and eight). Look at the World Cup-winning team from Germany for evidence. While none of its players rank higher in terms of individual skills or fan following than stars such as Lionel Messi of Argentina or Cristiano Ronaldo of Portugal, the collective might of its team was enough to leave every team behind - including those that came into the spotlight on the back of a lone star among middling teammates.