Quick wins in business strategy: tips and traps

Quick wins should only ever be the first steps of a longer-term strategy.

If they are not, you risk "local optimisation at the expense of the whole".

What is "local optimisation at the expense of the whole"?

Imagine you have a production line with five stations.

At each station, a worker performs the next step in a series of activities to make a finished product.

Now imagine that you spend money to train the worker in the middle. After the training, they can work twice as fast as they could before.

But they spend half their time waiting for the worker in the step before them.

The investment in training has been wasted.

Now imagine, instead, that you provide the training to the first worker. After training, they too can work twice as fast. But now you get a build-up of products that have had step one completed, but that the worker at step two is not ready to work on.

Before you know it, your bill for raw materials has increased, your factory is overflowing with unfinished work, and your sales revenues have not increased at all.

The investment in training has made things worse!

These are both examples of local optimisation at the expense of the whole.

To prevent local optimisation at the expense of the whole, you must look at the whole production line together, rather than at the individual steps in isolation.

The same is true of business strategy. It must look at the whole organisation, rather than isolating parts of it. A shared evidence base can help leaders understand those interdependencies and avoid siloed decisions; see this case study on moving from silos to shared action. You can also use value chain analysis to understand how activities work together to create value.

The quick wins trap

Quick wins are a mantra, and sometimes an obsession, in many corporations. They can be useful: an early success can build confidence, demonstrate momentum and create the space needed for a longer-term strategy.

But quick wins become a trap when they substitute for tackling root causes. It is easy to choose an initiative that produces a visible result quickly, especially when the underlying problem is complex, politically difficult or requires sustained investment to solve.

In that sense, quick wins can become a form of procrastination. They allow you to appear busy and decisive while avoiding the real issue and the hard problems that will determine long-term performance.

Over time, this can create layers of temporary fixes, extra processes and workarounds. The organisation becomes more complex and less efficient, while the original constraint remains in place.

Before pursuing a quick win, ask: does this remove a genuine barrier to our aspirations, or does it merely make one small part of the organisation look better? If it is the latter, it may be local optimisation at the expense of the whole. Capturing and testing the evidence behind such decisions is an important part of evidence-based strategy.

The Theory of Constraints

1. Identify the constraint: Determine what is impeding progress and how to correct it.
2. Exploit the constraint: Use existing resources to quickly improve the constraint's throughput.
3. Subordinate everything to the constraint: Ensure all activities support the constraint's needs.
4. Elevate the constraint: Take actions to eliminate the constraint.
5. Repeat: Repeat the cycle to improve new constraints that arise.

The Theory of Constraints was introduced by Eliyahu M. Goldratt in his 1984 book, The Goal.

Most businesses are not as simple as this five-step production line. But it is still important to know what the constraints on performance are, and to focus your efforts there rather than elsewhere.

One of the challenges for business strategy is to identify the bottlenecks or barriers to your aspirations and to focus your attention there. Reviewing the relationships between your key performance indicators can help reveal where the real bottleneck lies. A Balanced Scorecard can also help you consider financial, customer, process, and learning perspectives together rather than improving one measure at the expense of the rest.

In this way, business strategy helps you to identify the smallest amount of effort that will make the most difference to your business.

The Pareto Principle

We sometimes call this the Pareto Principle. The Pareto Principle is also known as the 80:20 rule.

It shows us that:

1. 80% of problems are caused by 20% of causes
   and similarly
2. 80% of the benefits derive from 20% of the effort.

The exact numbers are not important. You can consider 80% to mean "most" and 20% to mean "a few" or "a small amount".

It has been shown to be true in a wide variety of situations.

In business strategy

Two authors have more recently explored this idea in the field of business strategy.

1. Peter Compo calls the constraint "the bottleneck" in his book The Emergent Approach to Strategy.
2. Richard Rumelt calls it "the crux" in his book The Crux.