There are some obvious differences in running a small private company and in running a large public company. However, while there are some differences I would suggest that at the most basic levels it is much the same. One of the mistakes that I see companies, big and small, make is to become totally defensive rather than offensive in their strategies … and when I see that , my perception is that they are in decline. So what does that mean?
Strong companies know what business they are in, they adjust their strategies over time to meet an ever changing landscape and they focus on growing sales, winning customers, entering new markets, innovating, hiring great people and most importantly on executing with excellence! They have energy and they believe in themselves. These companies win … they are confident and they portray that energy to the market!
What do companies with defensive strategies look like? These companies focus on cost-cutting, they really don’t have a clear picture of the business they are in, they do not have strong “go to market” strategies. These companies have a focus on their legal departments, their purchasing departments and their finance departments. They do not have the right focus on their sales and marketing departments. These companies lose consistently when competing with their competition. These companies react to situations rather than develop proactive strategies. These are companies that have lost their way! The big ones try to buy their way back, and often get that wrong. They might even have high profile CEOs who have written books and do the speaker circuit, but those CEOs most often don’t have a clue what happens at the sharp end of their ship.
Don’t get me wrong, good cost management is absolutely essential in any company. Good legal advice is a must. However these are support departments (overhead) and they are there to help the sales and marketing team do their job. They are there to help the delivery people deliver. They are there to keep the company on the straight and narrow. They should NEVER be the drivers of the company strategy.
As CEO I rely on all of these “overhead” functions, they are essential to our company survival never mind success! My job as CEO is to take the advice and wisdom of all of these groups and make the right decisions for my company in any particular situation. What risks should we accept and what should we not accept? What is the ROI of accepting some risk? What do we lose if we say no? What do we gain if we say yes?
It is sometimes easy to be an armchair quarterback and without all of the facts decisions can seem very clear. I can sit in my chair and second guess decisions that CEOs make at huge corporations and generally I don’t know all the facts but I can see when companies have an obvious focus on the wrong things. When they are in that situation then it is a matter of time. The question then is will they turn it around, like Apple (under Steve Jobs) or will they do down like so many have … Compaq, Digital Equipment and many, many more! Company watching can be interesting, I don’t dabble in the stock market but there are a bunch of companies I would not be investing in right now!