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[photo_box title=”Why do leaders make bad bets?” image=”2333″]Betting the Company [/photo_box]

Betting the Company (every day): Driving the Top Line

The most painful business speech I ever witnessed was the farewell address of a Fortune 100 CEO.

It was not a graceful exit.  His chosen successor was fired by the board.  The CEO’s planned retirement was delayed for a revised succession.  After a couple of years of chaos, he was finally on his way out.

The CEO’s theme was “betting the company.” And his message was simple; “Please!!! Don’t make my mistake, and think you are in a safe place because…you are betting the company every day.”

What caused his problems was the same thing that causes most business problems; bad bets.

Why do companies and their leaders make bad bets?

More importantly, how SHOULD they make good bets?

  1. Bad deals;

    Companies “win” competitions for new business, or to acquire assets only to find they really bought a “winner’s curse.” This happens in competition to win new business, in the competition to acquire another firm, or the competition to obtain assets like an oil lease, or a block of spectrum. Or, they offer bad deals, and fail to win the new business they need.

 

  1. Doubling Down;

    Companies tend to dance with the tactics they know. The problem is everything else is changing.  The customers are changing.  Technology is changing.  Competitors are changing.  Most companies struggle with knowing when to stick with their current bets, when to test a new tactic, or when to switch to a completely new strategy.

 

  1. Running out the odds;

    High probability bets can seem safe. But even a bet that pays off 90% of the time has less than a 50-50 chance if you do it seven times.  Most things in life are not 90% probable.  Most businesses keep doubling down more than seven times.  The math is brutal.

 

  1. Groupthink;

    The social structure of most corporations is loosely federated tribes. Each tribe has some shared beliefs and norms.  Interaction among tribes is defined by the norms.  In equilibrium, the norms create a comfortable groupthink driven by internal factors, not by forces of the market.   Jeff Bezos calls this “a tendency to manage to proxies.” Which means internal norms and processes take over, not focus on customers. (see http://www.businessinsider.com/read-amazon-ceo-jeff-bezos-2016-letter-to-shareholders-2017-4)

Lone Star’s Competitive Differentiation group helps our clients overcome all these problems.

Our advanced modeling methods allow our customers to simulate any type of economic competition.  Lone Star customers richly understand when it’s time to stick with a strategy, when it’s time to change, and how to avoid the winner’s curse.

Our advanced methods for competitive intelligence collection lets customers see new ways to look at their business, and to understand why a competitor’s mindset is different than their own.

Perhaps most importantly, blending competitive intelligence and advanced modeling methods defines compelling value propositions for customers, while creating powerful profit opportunities.

This is why our customers have won billions of dollars of business; we help drive their top line with good deals.

About Lone Star

Lone Star provides powerful solutions that improve operations. We serve industrial markets, aerospace & defense, oil & gas, transportation & logistics, and the public sector. Our analytics products and technology-enabled services are proven; we deliver the right answer for your operational needs. We are committed to generating improved operational and financial performance through accurate and actionable answers to our client’s most critical business challenges. Our reputation is built on creating lasting value for our clients. Headquartered in Dallas, Texas, Lone Star is found on the web at http://www.Lone-Star.com.

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