Are you stuck in the +/-5% box?

‘Thinking outside the the box’ is an oldie but goodie. While I’ve known what it means for a long time, a more defined meaning of it recently dawned on me.

I’ve worked with a few mature businesses where management rotates through the same sets of actions, over and over again. Lower price. Raise price. Increase marketing. Decrease marketing. Open more stores. Close stores. Cut costs. Rinse and repeat.

In mature and declining businesses, these actions generally have an impact on sales and the bottom line in the range of plus or minus 5% for a and long-term trends continue after that.

Few seem to notice.

They push these actions as if this time the results will be different than the previous dozen times and they are disappointed when performance comes in-line with those previous tries instead of moving the company into a new growth phase.

They then shake off their disappointment to develop the next plan, which contains more of the same types of actions.

Basic questions like these tend to escape scrutiny:

  • Why did the action not drive big growth last time?
  • What has changed since then that makes us think the results could be different?
  • In the best case scenario, what can we reasonably expect to happen?
  • Are there cases of companies being successful with this strategy? If so, why? If not, what makes us think it can work for us?

They escape scrutiny because managers believe it is their job to have the right answers to lead the company to the future and entertaining such questions hints that they don’t.

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