Shooting yourself in the foot
If you can't fulfil your promises and resolutions, maybe you need an incentive in the form of punitive measures for failure
Let's pretend for a moment that you have made a New Year's resolution. For example, you've promised to yourself that you will stop smoking, or go to the gym regularly or call your mother more often. The same promises you make every year, and fail to keep.
But this year, let's pretend you do something differently. You hire a gunman and tell him that, on January 15, if you don't fulfil your promise, he is to shoot you in the foot.
Now you are scared. You've got this gunman outside your house, and he is happy to shoot you the moment you fail. And you try, you really try, to stop smoking, go to the gym and call your mother. But you can't. You just can't do it. You know this gunman is waiting, but you can't fulfil your resolution.
What do you do?
Before we answer this question, let's go to the US Congress for a minute. Last year, Congress finally realised it had a spending problem and needed to cut back. So it passed a law which gave two options: either Congress could cut spending or raise revenue by itself, or an automatic mechanism would arbitrarily cut spending across all areas of the federal government.
This is the famous "fiscal cliff" everyone is talking about. While it is a situation arising from Congress's inability to keep its fiscal house in order and pay for the expensive legislation it authorises, more than that it is a consequence of Congress's inability to do anything about its own actions. It is the congressional equivalent of hiring someone to shoot you if you don't follow through with something that can be difficult to achieve.
It's easy to stop the gunman. Just go to him and say you changed your mind and you don't want him to shoot you. After all, you hired him in the first place, so you can "unhire" him just as easily.
Although Congress last week passed some sort of interim measure, it could have averted the fiscal cliff in about 30 seconds by repealing the mechanism it passed to punish itself if it didn't enact sensible spending cuts and raise revenues. Of course, there would still have been the issue of how to pay for long-term overspending, but that's an issue that could have been pushed down the road a bit.
Since this is a column on business strategy, not on US politics, what are the implications for us trying to build a company?
When business leaders are asked what is the most difficult thing they have had to do over the course of their careers, they often respond that it is when they have had to lay off people. Business cycles being what they are, unfortunately it is quite common for a businessman, at one point or another, to have to order layoffs. It is a decision that is often postponed as long as possible.
Another decision that businessmen hate to take is when they have to change their corporate strategy. A businessman, especially when he has been successful doing one thing very well, is quite uncomfortable when conditions dictate a change in course. He has to take his company into uncharted territory, and do something that perhaps his people are not trained to do. So he delays taking that step he knows he must take.
So you know you must lay off people, or change your strategy, or do something else you find unpleasant. So you delay. Nothing gets done, and things get worse. What to do? You could pass a law, like the US Congress, or hire a gunman.
Many companies, when faced with situations like this, hire an outside consultant. The consultant tells them what they already know, but now the company can go to people and say, "It's not me, it's the consultant. I paid him a lot of money so I have to do what he tells me to do."
We all know that delaying implementation of a necessary decision makes the problem worse. In Macbeth, Shakespeare wrote, "If it were done when 'tis done, then 'twere well it were done quickly." Delaying the inevitable is never a good thing.
Decide what you need to do, then do it. Move on.
Those are great thoughts with which to begin the new year afresh.
Eric Rosenkranz runs a strategic advisory in Southeast Asia assisting existing companies as well as start-ups to develop their long-term strategy and achieve success in their business. He can be reached at firstname.lastname@example.org and www.ethree-asia.com