The Art of Not Doing: The Lazy CEO’s strategy

When Inaction Drives Success

“There is nothing so useless as doing efficiently that which should not be done at all.”  Peter Drucker

If you are a business leader, you may see yourself as the captain of a ship. You gaze intently at the horizon, make wise decisions, and give commands to turn the helm. 

Unfortunately, our brain runs our thoughts on rail like a train, following tracks we didn’t lay. Thus, we slip into various mental traps.

And one of them is that we believe that adding is better than subtracting. 

In many, many cases, doing nothing or doing less is a much more efficient strategy than working hard. 

Strategic thinking biases – part 4

Drastic movements 

In early 2020, my strategic consulting business dried up. I couldn’t conduct strategic workshops on-site, and many customers were reluctant to move them online. 

Others said they needed a break to reconsider their strategic priorities. 

I had never had so much spare time before. I was locked in my house and could do many exciting things. I could sleep more. I could read, write, learn, or exercise. 

But even strategists are humans. They have their fears and misconceptions. And sometimes, under the influence of emotions, they may make moves they’d never advise others to make. 

I was panicking. 

I decided to protect my business from recession by adding many side products to my lineup. As a seasoned CEO, I could help clients with the development of sales, corporate culture, logistics, operational and personal efficiency.

I didn’t realize I could destroy the professional image I had built for so long. It didn’t come to my mind that my customers could not see me as an expert in so many domains. I worked so feverishly that I didn’t have time to think.

I had taught students about strategic focus in my lectures for years. But then, in 2020, I was a perfect example of an entrepreneur who had lost his way. 

Two cognitive biases made me do it. They also may make you take the wrong steps. 

The IKEA effect

We like IKEA not only for affordable prices and a wide selection of products. And not even for Swedish meatballs. It gives us a chance to believe we’ve got a good set of hands.

In 2011, Michael I. Norton, Daniel Mochon, and Dan Ariely of Duke published the results of three studies they conducted. They called what they found out The IKEA Effect. 

Quote:

“Labor alone can be sufficient to induce greater liking for the fruits of one’s labor: even constructing a standardized bureau, an arduous, solitary task, can lead people to overvalue their (often poorly constructed) creations.”

In other words, we love what takes us much effort to build. Even if it wasn’t worth building. 

Dr. Azim Shariff, a Canadian social psychologist, calls it “effort moralization.” 

He says: “Effort moralization is a heuristic that leads us to value displays of effort. That can be a sensible at the individual level, but that tendency to attach moral value to effort leads us, as a society, to overvalue jobs that show off industriousness, rather than the creation of value.” 

So, we worship those who work hard. We do it even if the work is meaningless. And we are proud of ourselves when we burn the midnight oil.

Add the sunk cost fallacy to it, and you’ll see a society of people who are so busy working that they don’t have a second to think about the purpose of what they do. 

Adding, Not Removing

Researchers conducted a study of 8 different experiments. 1.585 people participated. The scientists discovered that “our brains tend to default to addition rather than subtraction when it comes to finding solutions. In many cases, it seems we just don’t consider the strategy of taking something away at all.” 

Are our sales on the decline? Let’s add new products to our lineup!

We have invested millions in a product, but the sales are just peanuts. Let’s invest more in the product!

We run subsidiaries in five countries and don’t hit our annual targets. Let’s open branches in five more countries!

Does it sound familiar? I’ve heard it many times.

Steve Jobs and Apple

In September 1997, when Steve Jobs agreed to return to Apple, its product line was a mess. The company sold a wide range of computers – and customers didn’t see much difference between them. It offered printers, peripherals, and Apple Newton MessagePads. 

And Steve Jobs didn’t start his second coming by adding new great products to the mess. He cut almost everything. And he won. 

In some circumstances, removing things is a much better strategy than adding them.

But what is worth removing?nbsp;

Removing things instead of adding them is easier said than done. Even if you feel you have too many items in your product line or projects in your pipeline, what exactly should you scrap?

Some CEOs believe they should discard the least profitable products or initiatives first. 

But I disagree. 

A product is profitable if the business meets two conditions:

– The product provides excellent value to customers

– The company can keep the cost of production below the price

And the first condition is more critical. 

If the product fails to deliver value, its production cost becomes irrelevant. 

But if your customers like the product, or if you believe that slight modifications can make them like it, it has a chance to become a linchpin of your assortment. 

Answer the following strategic questions:

1. Who are our target customers?
2. What are their needs?
3. What customer values would we like to deliver them?
4. What products (projects, subsidiaries, initiatives, programs, etc.) provide more value for them than others, directly or indirectly?
5. Which of them should we scrap to free up precious resources?

Abandoning products or initiatives that do not create value for your customers is just as effective a strategic decision as creating such products.

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