By Verne Harnish and Tom Krekel Hunkering down in year-end strategic planning sessions, you and your team are probably thinking hard about what’s next for the economy and how that will affect your business. Slow down. You should really be laser focused on maximizing what Jim Collins, in his book Great by Choice, calls your “return on luck” – what we consider one of the most important business concepts ever articulated.
As Collins points out, great companies don’t have better luck than other companies. Sometimes, they get a bum deal. After all, they’re subject to the same economic forces as any other companies competing within the same regions.
But what differentiates the great companies is their attention to maximizing their return on luck. They look for opportunities in whatever hand they’ve been dealt—and then find ways to grow from the situation exponentially.
This point often comes into my mind when we are talking with growth-company CEOs. The standouts among them—the folks we consider the next Steve Jobs or Michael Dell—don’t view their companies as victims of economic uncertainty or market forces. No matter what the economy does, they will find opportunity in it.
They think like one of my mentors, who made a fortune in commercial real estate. He invested in an empty, commercial high-rise in Houston during the depths of a severe recession—and turned it into a thriving storage facility at a time when no one could find ways to rent out commercial properties in that market. That smart move enabled him to ride out the recession and, once it was over, make a bundle when he sold the building.
Rapid changes in the global economy can shake up your company’s current situation at any time, so we all need to be prepared to maximize our return on whatever lucky, and unlucky, breaks we face. Once you and your entire leadership team start consciously thinking about doing so, every day, you will be surprised by how much power you can unleash by simply asking this question.
Your year-end strategic planning sessions are an ideal place to do this. When you’re thinking about your goals for 2013, it’s important to take a look back at your luck in 2012. Ask yourself and your team: Where did we maximize our return on luck? And where did we fail to do this? This will give you some ideas on what to continue doing – and lead you to untapped opportunities to act upon.
Then look at the situations you’re facing currently. Where are you experiencing good luck—and bad luck? How can you make the most of your current fate, and turn the situation to your advantage? By incorporating your ideas into your plans for the year, you will find it easier to execute them rapidly.
But strategy sessions will only get you so far. Execution is key when it comes to maximizing your return on luck, as I’ve seen time and time again with fast-growth companies. You’ve got to be ready to act on your ideas for maximizing your luck all the time, or you will miss out on valuable opportunities.
To execute your ideas successfully, however, you need to create the right environment. We came across some great ideas for doing so in a recent post by Sardek Love, president and founder of Infinity Consulting and Training Solutions, on his Think2Success Now! Blog.
Love, also a fan of Great by Choice, suggests building a “luck network.” By bringing more successful people into your professional network—perhaps by taking a leadership role in an industry organization or through social media—you can add to the pool of opportunities available to you, he explains.
Perhaps Love’s most valuable piece of advice is to create a “luck investment account.” Often, it takes capital to invest in new ideas. If you don’t have any cash on hand, you’ll miss out, which ties to one of the other findings in Great by Choice – the winners had multitudes more cash reserves than the comparable companies – and thus had enough staying power to weather the bad luck and capitalize on the good luck.
The time to start tucking money into your account, of course, is long before you find yourself with a great idea to pursue. Once you get in the mindset of maximizing your return on luck—whether it’s good luck or bad luck—you’ll be surprised by how quickly you can grow your company.