Does your company really need to be "world class," or just incrementally better than every other competitor in the market?  Quite frankly, many companies will benefit far more from a strategy to "just suck less" than from any bold new vision.  We have christened this approach "negative" strategy, because it centers on removing the key sources of competitive weakness.

But when the inspiring story ends, we return to the reality of our own situation: slow growth, intensifying margin pressure and ever more demanding customers. We certainly have little money to invest in sexy new business models. Realistically, what power do we have to "create imperfect competition," "become an innovation factory," or adopt any of the other theories from those Harvard Business Review articles? How do we boldly march into the future when we can barely manage the present? Who's kidding who?

A Dirty Little Secret

Our firm has done strategy work with hundreds of distributors, manufacturers and trade associations in a variety of industries. Many are market leaders and trend-setters - "best in class" by any definition. The executive teams behind these champions are usually extremely impressive and far more savvy than any consultant or business professor. Many have been able to drive a high performance culture through all levels of their organization. But the ugly truth is that, at some level, the overwhelming majority of US corporations are dysfunctional. Beneath the veneer of excellence, you're likely to find a cesspool of inter-departmental combat, seat-of-the-pants forecasting, incoherent pricing and inflexible IT systems. While the company president aspires to world class customer service, branch managers would be happy to just stop the customer screaming.

In many firms, these shortcomings are not just irritants; they are fundamental constraints that prevent the organization from thriving under any scenario.

I believe that this dirty little secret is the reason that so many of us are uncomfortable applying the lessons of strategy success stories to our own organizations. We simply can't relate to tales of perfect foresight, painstaking design and effortless implementation. They seem like a fantasy far removed from the trench warfare we face everyday.

The Anti-Vision

Academic case studies typically describe what I consider a "positive" strategy. By this I mean that it involves adding new elements or approaches to the business. The classic positive strategy focuses on:

• Breaking with the existing paradigm. The starting assumption is that the current business model is broken, or at least severely threatened, and that management cannot continue with the same old ways of thinking.
• Setting a bold new direction. The fundamental opportunity for the business comes from a new vision rather than better execution. "Don't do things different, do different things." The implication is that a market strategy is the most important element, or even the only element, of the company strategy.
• Applying innovative approaches at the highest levels of the organization. Incremental improvements will be insufficient and it's up to top management to invent the winning solution.

In some industries these are indeed the strategic imperatives, because existing business models are not sustainable. And all companies must keep one eye on the horizon, watching for potential game changers like new technology, demographic trends, etc. However, for many firms, radical change is neither realistically achievable nor strategically vital. Does your company really need to be "world class," or just incrementally better than every other competitor in the market? Do you have to re-engineer your entire business, or simply make continuous, incremental improvements that keep you one step ahead of squeezing margins? Quite frankly, many companies will benefit far more from a strategy to "just suck less" than from any bold new vision.

We have christened this approach "negative" strategy, because it centers on removing the key sources of competitive weakness. Ideally, such a strategy involves:

• Clarifying and narrowing strategic objectives. The negative approach attempts to focus the organization's energy by keeping objectives clear, simple and practical. Here is an exercise that will drive home the importance of this seemingly mundane suggestion. Walk over to your call center and ask a customer service representative to describe your current strategy or value proposition. Dollars to donuts you will get a blank stare, followed by some mumbling about "doing whatever it takes" or providing "great service." That CSR may well be the most vital link in your relationship with customers. Does it really make sense to embark on a new strategic direction when the old one has never been communicated clearly to the only people who can really make it work? Is having the wrong vision the true limitation, or is it the inability to implement any vision?
• Identifying and acting on critical constraints. The key to fixing a problem once and for all is to identify its fundamental source. A negative strategy focuses on knocking down root causes rather than building up grand projects that will never achieve their objectives because they fail to confront the real issue. This type of analysis can be painful. It requires brutal honesty, perseverance and a "no sacred cows" approach sanctioned from the very top. (We have found that chief executives' personal delusions of strategic grandeur are among the more common critical constraints.) A skilled outside facilitator is often essential for cutting through the posturing and implicit assumptions that have perpetuated the problem.
• Creating an environment for incremental innovation at every level in the organization. Seemingly mundane improvements, like streamlining a web order entry page or sharing consultative selling techniques, qualify as valuable innovation for your company. A constant stream of such improvements, springing from the creative minds of your entire staff, can provide a sustained competitive advantage. After all, the really big innovations are highly visible to your competitors and thus easy to copy. A negative strategy is concerned with eliminating the communication bottlenecks and de- motivators that thwart employees' natural desire for contributing their passion and ingenuity to the cause. There are several proven techniques for creating such an environment of participatory innovation.
  

Just Say No

A distribution company from the construction industry provides a great example of the power of "negative thinking." The CEO was convinced that the company needed radical new sales channels because the well-compensated field sales force was simply not able to deliver growth. The company had embarked on a flurry of initiatives to start the transformation, including web marketing, telesales and partnering agreements. Unfortunately, these efforts were uncoordinated and left many customers unsure about the company's future. The CEO appointed a strategy team to design a new structure which would address these issues.

Luckily, the team was sufficiently empowered to question some underlying assumptions. They discovered that the current sales model was in fact quite appropriate for the market but that constantly changing sales objectives issued from corporate headquarters caused enormous frustration within the sales force. The result was high turnover and low morale. There were a few superstar sales reps who were confident enough to ignore the turmoil, but their contributions couldn't offset the declines in the other territories. The best reps succeeded because they were lone rangers, so there was virtually no sharing or mentoring.

A more focused sales strategy, developed without any "help" from the corporate staff, improved both performance and retention, and ended all talk of new channels. The company now has monthly sales coaching sessions and a formal process for sharing best selling practices - two excellent vehicles for continuous incremental innovation.

Getting Back in Black

In the real world, the best strategy will probably have elements of both the positive and the negative variety. A strategy that only involves "fixing the bad stuff" can come across as unimaginative and sound depressingly reminiscent of past, failed initiatives. A bold action, such as offering a customer service guarantee or tying managers' compensation to the elimination of a problem, can dramatically demonstrate confidence in the solution and show management's commitment to killing the beast for good. The idea is to force the bad stuff to be fixed in the same way that Cortez's burned ships forced his army to defeat the Aztecs - by eliminating the option of retreat.

On the other hand, a strategy that ignores obvious operational issues, organizational dysfunctions or other negative elements will quickly become a joke throughout the organization. Even if top managers pay it lip service, it will have no buy-in and no chance of success.

Strategy is about setting a clear course and aligning the entire organization behind it. Nothing more, nothing less. A plan for eliminating your key competitive weaknesses is just as legitimate, and just as "strategic," as any grandiose vision. It may not make the Harvard Business Review, but it might make you a lot more money.

Steve Deist ( This e-mail address is being protected from spam bots, you need JavaScript enabled to view it ) is a strategy specialist at the Indian River Consulting Group. IRCG is an experienced based firm specializing in Distribution. Started in 1987 by J. Michael Marks, IRCG has specialists who consult with distributors and suppliers to make the changes necessary to maintain competitive advantage. You can contact them by calling 321-956-8617, or visit www.ircg.com for more information.

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