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Leading Edge

Published December 2009

Renovations

  Dr. Jac Fitz-enz

I am in the early stages of renovating my 40-year-old house in Saratoga, Calif. I'm faced with a number of important decisions similar to those you have to make as you try to renovate your organization coming out of the recession.

There is no question that you must renovate — the structure of pre-recession 2008 has been badly worn and needs updating. With the dissolution of 401(k) accounts and the abundance of layoffs, the boomer generation is not going to retire soon. This has changed the demographics of your workforce. Technology in all disciplines is improving rapidly. Performance demands will be crushing, and these are only a few of many market-changing issues you are facing.

What Is Good Enough?

If I want to be comfortable in my home, I have to make a certain level of investment. If you want a certain position in your market, you have to do the same. Your question is the same as mine. How far do you update things? How good is good enough? While I have to decide to live in, rent or sell the house, you have to decide what you will keep and what you will outsource or discard in order to compete.

If I decide to live in this house for another 20 years, I have a basis to make decisions regarding the quality of paint, windows, appliances, lighting, roof, deck, fence, garden and so forth. If I want to rent it, I probably won't want to go top end to rehab the building. If I decide to sell, I must decide to position the house on the high end of its range or just paint it and dump it.

It is the same for you. If your company aspires to be a leader in its industry, you have to spend time and money to make high-quality decisions. You need intelligence regarding industry trends and competitors. You also have to contemplate the corporate navel to ask what you need to change or improve internally to gain the market position you want. These strategic questions must be asked around the executive table. Buying another software package will not answer them. If you want a seat at that table, you better have strategic recommendations to offer, backed by projected costs and payoffs for each.

Just One Example

I have to replace windows and doors due to warping and seal breakdown. I'm going to choose double pane no matter which decision I make. You have to decide how effective your structure and processes are. Can they handle the market storms that are certain to come? How effective will they be in the continuing war for talent? Beyond that, do I choose good, better or best quality doors? The cost differential is 50 percent between best and better. Good is just not good enough; not for me or for you, unless you are headed for the bottom of the market.

What is the cost differential for you to choose between being better than average for your industry in hiring, paying, developing and retaining or being the market leader? Everyone can't lead, but can you stand not to go for the top? Every investment decision we make has trade-offs. Are you comfortable going to the boss and recommending a better than average solution, but not the best? In some cases that may work if your CEO does not aspire to lead the market. It's no problem if both of you are OK with being mediocre.
How Much More

Does the Best Truly Cost?

For decades there has been a high-end gift and furnishings store in San Francisco named Gump's. It is a great place for exceptional merchandise. If you want something special for your home, you shop at Gump's. If friends see something truly beautiful in your home, they often ask, "Did you get that at Gump's?" They know the best can only be found in a few stores, and Gump's is among the most prominent. Its slogan is "The Best Costs No More." The best does not cost more when we match it to the value or return on the investment. It is a more positive way of saying what you put out is what you get back.

Do people react that way about your product or service? Are you prepared to make the investment to be the best? Can you afford not to be the best you can be? That stands for HR as well as your company.     

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