Sometimes a product offering or business model runs out of steam. Maybe your customers no longer value your product or service as highly. Or your partners find other ways to create value and no longer need to partner with you. Or your cost structure is no longer competitive.
This is a natural part of capitalism’s “creative destruction”: that which created value yesterday may destroy value today and tomorrow. If you’re in this situation, you need to make tough decisions about how to evolve your business model:
- Do you reorient your business toward new, risky, yet potentially greener pastures?
- Do you lay off employees who can no longer create value?
- Do you replace your management team with one that can better face the future?
- Do you shut down operations that have served you well for years but are no longer economically viable?
These are all difficult decisions that many companies have faced in the recent downturn. Management teams tend to hesitate pulling the trigger on any of these moves, for several reasons:
- Leaders have an emotional attachment that makes them reluctant to follow the facts.
- The future may be uncertain, allowing a management team to invent scenarios whereby the old model works well, while ignoring more plausible scenarios that demand change.
- Leaders are reluctant to flip flop on a strategic direction they previously put in place.
- Leaders may be incentivized to avoid making tough decisions; why risk making a bad choice that can damage their careers?
Whatever the reason, delaying a tough decision only makes the challenge more difficult and riskier to address later. A company can burn through a lot of cash, customer goodwill and employee morale by postponing a necessary change of direction.
If you’re wary of making a tough strategic decision, here are six tips to help you move forward:
- Gather the facts quickly. Don’t let “analysis paralysis” serve as an excuse for delay.
- Make your best call. The facts are rarely conclusive, and your experience in the business likely puts you in the best position to decide, so make your best judgment.
- Don’t second-guess yourself. Once you’ve decided on a plan, commit to seeing it through and accepting the consequences.
- Rally your team. Make a compelling, focused case for your path forward and communicate, communicate, communicate. Make sure the key people on your team are fully on board and are adding their voices to yours.
- Prepare yourself to take the hit. Change is stressful. Some will disagree with your decision and may be hurt or resentful. You cannot lose courage nor let confidence waver, because if you do you risk executing your new direction poorly, which may be the worst of possible outcomes.
- See it through. To paraphrase Shakespeare, “If it is to be done, best to do it quickly.” Push hard to reorient your business to your new course as forcefully and quickly as possible.
At the end of the day, you should recognize that delaying tough decisions does you and your business no favors.