Leadership Lesson: Less Is Better

Freek Vermeulen, an associate professor at London Business School, just completed research on the Chinese pharmaceutical industry. He examined the success that companies had when they used multiple growth strategies (e.g., diversify, innovate, add new products to the portfolio; partnerships; etc.).

He found that companies failed when they did too much. Why? They ran into an unforeseen obstacle: management capacity. Here’s an excerpt from Vermeulen’s blog post about the research:

The results showed that, in isolation, each of these initiatives indeed stimulated growth; yet when used excessively or in combination they actually had a negative impact and hampered a firm’s growth prospects.

Hence, stop trying so hard! You might do better…

My take: Organizations almost always underappreciate two key constraints. The first is limited management capacity, as Vermeulen highlights in his research. The second constraint is the ability for an organization to absorb change. All too often, leaders focus on only one constraint: funding. Hopefully executives will learn that success takes more than just money.

The bottom line: Don’t lose sight of the less obvious constraints.

Written by 

I am a customer experience transformist, helping large organizations improve business results by changing how they deal with customers. As part of this focus, I examine strategy, culture, interaction design, customer service, branding and leadership practices. I am also a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Simply put, I am passionate about spotting emerging best practices and helping companies master them. And, as many people know, I love to speak about these topics in almost any forum. My “title” is Managing Partner of the Temkin Group, a customer experience research and consulting firm that helps organizations become more customer-centric. Our goal is simple: accelerate the path to delighting customers. I am also the co-founder and Emeritus Chair of the Customer Experience Professionals Association (CXPA.org), a non-profit organization dedicated to the success of CX professionals.

4 thoughts on “Leadership Lesson: Less Is Better”

  1. I would agree with results of the study. Generally, when we overstretch, not only from a business standpoint but also from a personal standpoint, we tend to fail. Only handle as much as you can – successfully that is. Good suggestions.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.