6 Bold Moves Every Business Should Consider This Year

Stop One-and-Done Thinking

Cornerstone begins: “In prior eras, banks could modernize in pieces: a system upgrade here, a branch makeover there, a new digital feature added as the cherry on top. Today, that approach is like playing a game of Jenga, where the structure weakens if the wrong block is pulled.”

The piecemeal approach is quite common. AI applications particularly suffer from that phenomenon today. In a past article I argued for a roadmap or portfolio approach. More generally, all the effort for upgrading the organization can be part of a plan to implement a particular strategy.

The Winner Doesn’t Take It All

That is, the winning strategy does not entail grabbing all possible business. A banking example might be an institution that has never lent to a sector which has particular needs and risks but sees one good opportunity. The management attention needed for that one opportunity won’t justify the earnings. On the other hand, the bank might look at the sector and decide that it wants to be a player there. It hires lenders and credit analysts experienced in that sector, people who understand the particular needs and risks of the companies the bank will be lending to.

More broadly, companies must focus on selected products and markets, avoiding the temptation to chase every possible sale. Last week I was shopping at a store that was soon to close as part of a Chapter 11 bankruptcy. I told the clerk I had loved the store back in its heyday. He pointed to some very expensive products on display and said, “Our long-time customers, like you, never bought those. And the people who buy those products never come into this store.”

That story plays out in services, manufacturing, wholesaling, as well as finance and retailing.

Defining What’s Next Is The Definition Of Smart

Having a plan for upcoming projects is a corollary of Bold Move 1, stop one-and-done thinking. Cornerstone recommends a roadmap of where the organization wants to be, ensuring that the projects to be completed in the upcoming year align with this goal. “Bolder banks embrace roadmaps because they outline what must happen next and will help financial institutions move faster with fewer missteps.”

The roadmap, however, must be updated regularly. The challenge with updates is to avoid bouncing around with the latest fad or responding to the latest crisis in the news headlines. It’s perhaps an art to keep a vision of a long-term result while navigating quarterly changes in the business environment as well as operational challenges and opportunities that arise. But the best leaders deal well with both long-term and short-term issues.

Treat Culture And Bureaucracy As Balance-Sheet Issues

The stereotype of the penny-pinching CFO is often wrong—but the attitude is common on the part of many other executives. A good example is employee retention strategy. When consultant Richard Finnegan begins an assignment to reduce turnover in a company’s workforce, his first stop is the CFO, not the human resources department. He wants the finance people to estimate the cost of employee turnover. He writes that he wants to “dump a bucket of ice water over executives’ heads so that they see employee retention as an extremely costly business issue rather than an HR issue.” The same could be said of customer satisfaction and other “soft” issues.

Business procedures designed to control costs can add additional expenses as the process expands to involve more sign-offs and check-lists. The end results can be extra expense as well as frustration to the best employees.

Better customer service, for example, can be a revenue enhancer. I shared an AI example in a past article. Good analysis is necessary, as some ideas for improving service won’t move the sales needle at all.

Operationalize AI Or Fall Behind Peers

The Cornerstone paper is bullish on AI, quoting its director Elizabeth Gujral: ‘‘It’s not ‘if we spend X on this AI solution, we’ll be able to cut back on staff.’ It’s more ‘If we spend X on AI, these are all of the things we can now do because our team has more capacity.’”

Not only can AI tools improve productivity, which means getting more results from existing staff without working them harder, but those tools can improve the customer experience as well.

Executives across the economy should keep in mind economists’ conclusion about businesses that adopted past labor-saving technologies. Those that adopted the new technology expanded their workforce because they enjoyed a cost advantage over their competitors. Those that lagged at technology adoption were the ones that had to lay off employees.

Use M&A As A Forced Value Creation Tool

Most mergers and acquisitions are motivated by strategic goals, but they can also lead to operational changes that add value. “The transaction creates a moment of leverage that management rarely gets otherwise. Boards tolerate disruption. Vendors are vulnerable. Systems are re-evaluated. Cost structures are exposed.” That’s from Cornerstone managing director Mary Eyre. This move will be less common and perhaps harder to execute. Mergers involve a great deal of work simply integrating two companies. Using the merger to create value in operations and purchasing is difficult. But if done well, it can be excellent icing on the cake.

Bold Moves Versus Ordinary Business

Most executives have plenty to do with day-to-day issues. The 6 Bold Moves attempt to pull time and attention to longer-term strategy, with a structure for decision-making. That’s good advice not just for bankers, but for all business leaders.