When people think about strategy, they often ask what should we do? But it’s just as important to inquire in the other direction: what should we stop doing?
This can help you ferret out investments of time, energy and money that fail to add value to your core customers. The recent history of J.C. Penney is a good example of just how effective it can be to exercise restraint.
Having lost its compass in the Ron Johnson years, J.C. Penney will likely record $1 billion in profits this year for the first time since 2012. It is now one of the best-performing retail stocks in the country, with a 50 percent increase so far this year.
CEO Marvin Ellison knew what J.C. Penney needed to stop doing. As you may remember, an “elimination diet” had also been a big part of Ellison’s widely admired turnaround of The Home Depot, where he ended the chain’s aggressive store rollouts and pulled the plug on many of its money-losing businesses.
But restraint works for more than just retailers. Real estate companies also tend to thrive when they stay focused on a limited number of initiatives and core competencies, resisting the temptation to follow fads or jump into altogether-new pursuits. We throw around terms like “best in class” and “industry standard” but oftentimes fail to property define what that means, or worse, use those guidelines to move to the mean. Be selective about where your company can be the very best and pursue that relentlessly. Being the very best, after all, is a pretty solid formula for success.