When is it time to abandon your current business strategy?

How do you decide to invest your time and critical resources? Fourth quarter is the time for entrepreneurs to assemble their plans for the coming year. I thought it might be helpful to share my favorite Peter Drucker planning concept. It has generated significant results for every client I’ve ever used it with. It’s a simple concept that is extremely powerful when you use it. It has helped many of my clients become market leaders in many different industries and markets.

This question appeared in Peter’s book Post Capitalist Society, a book that challenges many of the ways you do business. Here’s the question, “If we did not do this already, would we go into it now, knowing what we now know? “

Take this question and use it with your most challenging management decisions. It changes the way you make your decisions forever. I’ve found most managers struggle with their answer. They can’t imagine it could be this easy to decide what actions they should take. It provides clear guidance on to what your next action should be.

Why do so many leaders fail to move on their answer to this question? I have found three reasons why people won’t move on their answer.

1. They have too much invested in the current direction they are leading their organizations. We don’t put the same high value on cancelling a project as we do on starting one. Many leaders feel they are paid to power through problems versus taking time make the better decisions. Take time to evaluate your projects on regular basis.  This provides you with the feedback you need to decide if a project is going to meet or exceed your expectations, or fail miserably.

2. No one wants to leave money on the table. We are taught to maximize the value that we get out of the projects in which we invest our time and resources. Many leaders are greedy.  This greed can appear in many forms, but the one we see most often is refusing to believe a project has failed. Put additional money or resources into a project and it will turn around. We are eternal optimists and we think more effort changes a situation. If you did everything right on initiation, your results should be there, if not move on. I’ve seen less than 5% become successful by throwing more money and resources at the problem.

3. Our society values persistence. We were all brought up with stories of heroic leadership from a very early age. We are told to keep at it; if you’re just a bit better you could make it work. We let our egos get involved and we fail to succeed. No one loves a failure. Remove your ego and you begin to get better results. One of my favorite Warren Buffett quotes is,“I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”  This practice has allowed him to walk away from deals that turned out to be unsuccessful.  His candor should make you think, “How many 7 foot bars am I trying to go over?”  For most of us it’s too many.

Today, we talked about some of the roadblocks to getting clarity about your plans for the coming year. Tomorrow, we talk about how you can identify the right opportunities to work on in the coming year. See you here.