Burnout and the destruction of wealth

Volume 10 Letter 3

In 1987 the Swedish Asea Group merged with the Swiss Brown Boveri Group and formed ABB. In their first two years ABB purchased fifty five companies! ABB continued on this blistering expansion pace for about eight years with more acquisitions and steady growth each year. Then the wheels started to fall off. New acquisitions stopped being well integrated into the company and different parts of ABB often found themselves competing against each other for the same projects leaving customers frustrated and confused. As ABB continued to expand they burdened their people with too much… too much restructuring, too many integrations and far too many action plans. Employees became de-motivated and burned out. [1]

Growth, simply for the sake of growth, is not a strategy! The ultimate goal of any business is to generate profits and create wealth. How a company plans to do that is their strategy. Because growth is often a pre-cursor to higher profits many managers get focused on it. Our story about ABB shows us that too much growth too fast can destroy value rather than create it! Without a clear strategy to create greater value (more wealth using less resources) growth for the sake of growth leads to purposeless busyness. Constant change, frequently changing priorities and elevated time pressures leave people frustrated and cynical.

With the rash of recent mergers, downsizings and other economic pressures created by this recession many companies find themselves trying to do too much. Is your company in this trap? To answer this here is a quick test: (five minutes maximum and bullet points only).

  1. Write down the two or three key objectives that you and your business or business division need to accomplish this year in order to reach your goals?
  2. Write down and rank from most important to least important the projects you and your team are engaged in that will lead you to reach your goals.
  3. Ask people who work with you and for you to do the same.
  4. Now compare the results.
  5. (For those of you in the middle of an acquisition or an integration of an acquisition do the same but with the integration team.)

Does the team agree on what needs to be accomplished? Does the team agree on the importance of the projects? There should be >80% agreement. If not, there is no strategy and here is what you should do about it:

  1. Gather your team together and agree on two or three key objectives that you need to accomplish over the next three years in order to create the most profit or the biggest profit opportunity for your business.
  2. As a team and with your objectives in mind classify all current and future projects as a. Critical, b. Important and c. Nice to do.
  3. Concentrate your resources on the “Critical” and ” Important” projects – drop the “Nice to do’s”.
  4. Post these on your wall and keep all resources (time, money and people) focused on these goals.
  5. Plot / measure the progress and review with your team each quarter.
  6. Constantly remind your team that any task, any meeting, any email that does not move your team closer to accomplishing these goals is wasted effort. (Of course there must be time set aside for administration but schedule it in)
  7. Whenever there is a major shift in your market (and these are infrequent) go back to step 1

Business leaders are charged with setting goals that will lead to the creation of greater wealth. Too many or constantly changing objectives, initiatives and projects lead to “burn out” which ultimately destroys wealth. There is a time for everything … a time to build and time to consolidate. Stop the burn out!

 

[1] “The Acceleration Trap” by Heike Bruch and Jochen Menges HBR April 2010 PP 80 – 86

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