How Great CEOs Position Their Companies for Success

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The management guru Peter Drucker always recommends that you examine every part of your business regularly to determine if there is anything that you are doing that you wouldn’t get into again today if you had it to do over. I call this the process of “zero-based thinking.” It is one of the most important thinking tools you can use to remain fluid and flexible in a fast-changing environment.
Apply the following question to every part of your business: “Is there anything that I am doing today that, knowing what I now know, I wouldn’t get into again today if I had to do it over?”

This is what I call a “KWYNK Analysis.” KWYNK stands for “Knowing What You Now Know.” Asking and answering this question of everything you do can save or gain you enormous amounts of time and money.

Start with your products or services. Is there any product or service that you are offering that, knowing what you now know, you wouldn’t bring to the marketplace?

Investments in managerial ego are often the main obstacle to discontinuing a product or service that is obviously unsuccessful. This happens because people become confused over the difference between variable costs and sunk costs. People become determined to recoup the costs of bringing a product to the market because they don’t realize that those are sunk costs.

A sunk cost is an amount that you have spent that is irretrievable. It is gone forever. You can never get it back. If the sunk cost has yielded a profitable product or service as the result of research, development, production, sales, and marketing, you are fortunate. You must face the fact that most products eventually fail, no matter how much intelligence and research has gone into developing them in the first place.

Be willing to admit that your business is full of sunk costs. Be willing to “cut your losses” if you are currently promoting a product or service that the market does not particularly want or is not willing to pay for. Focus on the product and service opportunities of tomorrow rather than on the problem products or services of yesterday. Focus on the products and services that yield the very highest profits, and commit more of your resources to selling more of these products or services into your current market before it changes.

The Battle of Waterloo

At 6:00 P.M. on June 18, 1815, the Duke of Wellington was losing the Battle of Waterloo. He turned to the officers around him and said, “Give me Blücher or give me night.” He was referring to the anticipated arrival of the Prussian army under General Blücher, without which the advancing French forces would soon overwhelm him.

At this critical moment, the French General Ney urged Napoleon to order his Imperial Guard, a crack veteran force of 10,000 troops, into the final attack. But Napoleon felt that the battle was won and refused to commit his final reserves. At that moment, General Blücher and the 50,000 men of the Prussian army emerged from the woods and attacked the French right flank, causing it to reel backward and begin to roll up like a carpet.

At 6:30 P.M., Napoleon realized his mistake. He quickly reversed his division and ordered his Imperial Guard to go for- ward. But it was too late. The defeat of the French had already begun. The British troops under Wellington, excited and exhil- arated by the appearance of Blücher, counterattacked all along the line.

The French forces, who had been on the verge of victory just minutes before, were pushed back. When the Imperial Guard finally went forward, it was beaten back and forced to retreat for the first time in its history. The French were soon overwhelmed and surrounded by the onrushing British forces. By 7:00 P.M., the battle became a rout. The French army was scattered, chased, and hunted down across the countryside. They lost more than 50,000 men. The age of Napoleon was over. He died in exile on St. Helena a few years later.

Many companies make similar mistakes. They spend their time, money, energy, and valuable resources promoting prod- ucts or services that the market does not want or that are not superior to others offered by competitors. Meanwhile, their very best products and services languish on the shelves with- out sufficient money or energy behind them to maximize their possibilities and profits. Don’t let this happen to you.