A few weeks before Steve Jobs passed away, I was at Apple having lunch with a leader there. We revisited the well-known story of Jobs returning to an almost-bankrupt Apple. Jobs could have tried to maximize profits by squeezing every cent out of each of the existing product lines. But instead, he led the charge to remove scores of products. (At the time, Apple had a dozen versions of the Macintosh alone.)
Jobs cut out profitable business lines at a time when the company appeared it could least afford to do so, culling the business down to four clear product lines. My lunch companion and I agreed that this atypical move was critical to the Cupertino company's transformation into what is arguably the most valuable business in the world.
But then my Apple lunch companion wondered aloud: "Why don't more CEOs bring greater clarity to what their companies should not be doing?" It's a significant question.
I'm surprised by how often CEOs pursue the opposite approach. The CEO of a major corporation that makes security for computers, where I have worked extensively, is a good example. He is clearly intelligent and has significant executive experience. Yet, he has unintentionally overseen growing ambiguity inside his company. Employees from Silicon Valley to Singapore can explain the problem: he is not facing the tough trade-offs. People are unclear about which of the six major product lines they should really focus on.
When he was given the opportunity to clarify, the CEO published six priorities for the year: one for each of the product lines. Emphasis on everything has led to no emphasis at all. And employees are experiencing motion sickness instead of momentum. Why doesn't he answer the question?
In some ways, it makes perfect sense. CEOs often want to keep their options open. If they put all of their energy behind a single idea and it goes wrong, they will feel the full brunt of the blame. Yet, by pursuing too many priorities, these CEOs may actually be risking future success even more.
For example, according to a source inside Google who wanted to remain anonymous, the proliferation of products at Google in recent years has been so extreme that some executives don't know how many products they have anymore. If they don't even know the numbers, do you think they understand what those products are and what functionality they possess? Each of these products drains resources. Each requires updates and support.
Deciding to cut options can be terrifying — but it is the very essence of what we mean by making strategic decisions. The Latin root of the word "decision" — cis — literally means to cut.
I spent an hour with a CEO of a Silicon Valley company currently valued at about $40 billion. We went back and forth on the principle of strategic clarity. He argued that his company could not be compared to Apple because Apple is a consumer products company with a relatively simple product line. He would love to have such simplicity, he argued, but his business is much more complex.
But such logic is backwards. Apple doesn't enjoy product and customer clarity because it is lucky. It didn't drift into simplicity. Rather, Apple selected it by design. And by "selected," I mean it wrestled with the complexity, debated the issues, threw out hundreds of possible directions, and eventually arrived on the other side of complexity with the kind of sophisticated simplicity people know and love.
As one example, Jobs explained at D8 (All Things D conference in 2008) that Apple was working on the concept for the iPad long before the iPhone but stopped working on it to focus solely on the iPhone (Here's a video of him talking about it.) The focus Apple enjoys required sacrifice.
Jobs said in an interview with Betsy Morris in 2008, "People think focus means saying 'yes' to the thing you've got to focus on. But that's not what it means at all. It means saying 'no' to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things we have done."
Since my initial conversation at Apple, I have made a point of asking leaders to define strategy. I've polled more than 200 leaders since and they have universally defined strategy as: "Saying what you want to do and how to do it." Not one person has opted for Jobs' definition.
Curiously, the very essence of strategy, which is embedded in classic research such as Michael Porter's What is Strategy? doesn't make it into these leaders' practical definitions. The key to Porter's logic is that business reality necessitates trade-offs.
So next time you're leading an off-site strategy session, don't be satisfied with a list of priorities that you're going to say "yes" to. Go through the process of answering the essential strategy question: "What will we say no to?" It is that question that will reveal the real tensions in your team. It is that question that will uncover the core trade-offs in your organization. It is that question that can deliver the rare and precious clarity necessary to achieve game-changing breakthroughs in your business.
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