Strategy Through Thrift
Two different ideas of how to achieve competitiveness are vying for prominence. The first is "thrift", a careful and diligent use of resources, and the second is "savings", the restraint of deploying resources.
The current economic and financial downturn could offer those who think diligently an opportunity to gain a competitive edge over those frozen by fear. When business had access to easy money, more often than not, decision thoughtfulness had little value. Any half-cooked idea could be funded and the business results ended up being tertiary because the primary objective was getting money, not the business objectives the money was financing.
In these days of lean, the concept of thrift should be the path business decision makers take in order to promote long-term competitiveness. Thrift rationally distributes resources to the best ideas and those involved know exactly where the resources are going and why.
Business success has never been achieved through savings. Even if saving was the initial intent, success was only achieved by deploying the savings in a careful and diligent manner. The act of savings would be moot if the accumulated resources were squandered. At times, savings can be an action because it is the most diligent use of resources at one point in time. The decision to save, in this case, is the result of thriftiness. The distinction is important because savings is not a long-term answer for success because it lacks action on its own.
Decision-making through the lens of thrift requires that the ones making the decisions know the why, what and how of the intended decision. In other words, the decision-makers have a strategy.
Since strategy is thoughtful, below are some questions that encourage thrifty decision-making:
What is the business or decision problem?
Why does it require a decision?
Why does the problem exist?
Does it require immediate management attention?
What is the data, information and / or knowledge required to make a decision and how will it be
acquired?
What are the multiple decision potentials?
- What are the spin-off problems and consequences of each potential decision?
What are the financial, economic, cultural, technological, organizational and market components of the problem?
What are the spin-off problems and consequences of each potential decision?
- How do these components influence each other?
- What is the component hierarchy?
- How do the hierarchy components interact with each other in terms of complexity, time and precedence?
The intellectual influence of thrift could positively influence the complex business demands of a global economy. The depth and complexity of global business requires a company to hold tremendous, highly specific expertise in strategic domains in which they are competing. This expertise is mandatory to compete, but is prone to isolation and silo thinking.
Today's business organizations require the ability to manage highly specific expertise but also not fall victim to myopia. The problem with expert power is it knows what it knows very well but will completely miss changes that affect its strategic domain that are outside its expert knowledge base. Applying thriftiness to ones thinking could allow business leaders to manage this paradox. Being careful and diligent about an organization's intellectual and knowledge resources makes sure all is not expended on expertise, but also allows for broad, non-linear information and ideas to influence decision making. This is strategy through thrift.
Originally published December 8, 2009