Chapter 6 Strategic Quitting – How Successful Engineers Become Great Business Leaders

CHAPTER 6

Strategic Quitting

How do you find the time, money, and energy to continue moving toward your goals?

Why Strategic Quitting Matters

When I was a young boy, I was totally in love with playing chess. I was also clumsy, skinny, and somewhat pale. My parents decided that something needed to be done, so they took me to the doctor. The doctor was quick in her diagnosis that I needed to be outside in the sunshine. My father promptly took me to a playground and pointed at the monkey bar: a horizontal set of bars hanging in the air. Children were having fun moving from bar to bar. My father lifted me up and I was hanging there with white knuckles and stiff as a board. After a few seconds my father advised that if I wanted to move ahead, I had to let go in order to reach out. I was an obedient boy, thus I let go. Unfortunately, I let go with both hands, so half an hour later I was back in the doctor’s office with a sprained ankle. The doctor, helpful as always, told me next time I was dangling in the air, I had to let go strategically. This seems to be good advice for businesses as well. If you want to cross the Valley of Death and move toward your goals, you have to quit existing activities in order to engage in new activities. This is called strategic quitting.

The ability to let go of existing activities in order to do new and better ones is key for business success. For example, when Jack Welch became CEO of General Electric (GE) in the 1980s, he applied strategic quitting vigorously. GE was a conglomerate of many businesses. He decided that if a business could not be number one or number two in the marketplace, GE would discontinue this business in its portfolio. Doing so would free up time, energy, and leadership focus to make strong businesses even stronger. His philosophy was if you’re not competitive, simply don’t compete. This strategy proved to be the basis of one of the most successful business turnarounds of the past century.

Strategic quitting is not limited to businesses, but can be applied to individuals as well. It’s probably surprising to many people that Albert Einstein was relatively weak in mathematics. Thus, while he developed the theory of relativity, he had an advanced team of very smart mathematicians work out all the details. He let go of the ambition to become excellent at mathematics to focus on his true strength of physics.

Why Strategic Quitting Is Effective

Many great goals are abandoned because of procrastination while crossing the Valley of Death. We have covered several ideas to overcome procrastination, such as portfolio thinking, triage, and focus on the vital few. Strategic quitting provides another tool to help achieve big goals. This tool acts on a very deep emotional level. Chapter 4 introduced the tug-of-war between the lizard brain and neocortex. Unstoppable goal achievers know another secret of the lizard brain: Its favorite activity is to quit. For example, imagine you make a new year’s resolution to become serious about your health and fitness. Thus, you buy a trendy workout outfit, load your iPhone with energizing music, and obtain a fitness center membership. Typically, after a few workout days, you start to reduce the amount of exercise and even skip sessions. Before long, you may quit it altogether. This pattern is due to sabotage from your lizard brain. It slowly convinces you that it’s no use and you should quit now to get back to your general comfort zone. It wins when you finally quit.

An interesting way to use this lizard brain tendency while you are crossing the Valley of Death is to simply give in and give it other things to quit. Yet, make sure these things are not important to achieve your goals. Metaphorically speaking, you are feeding the crocodile—the hungry lizard—to ensure it stays quiet and let you finish your work. Practically speaking, a focus on strategic quitting will significantly increase your chances of crossing the Valley of Death. Yet, this approach is counterintuitive to how organizations usually work, which entails a somewhat different script:

  • A new, big initiative/strategy/goal is dreamed up, usually at headquarters.
  • Key executives are rallied to communicate the big thing throughout the organization.
  • With various levels of enthusiasm, employees start to focus on making the big thing work. This, however, is usually on top of their existing workload, which often causes them to overstretch and unfortunately creates additional stress.
  • The additional stress has a negative impact on operational performance and productivity. Instead of exploring new frontiers, the employees in the organization have to play catch-up.
  • Naturally, seeing the numbers slide, leaders challenge their people to work harder. They don’t realize that doing more is not the answer to too much to do.
  • When an organization reaches breaking point, senior executives are forced to embrace triage: something needs to be done. The initiative is either quietly abandoned, or tough decisions are made, usually involving quitting stuff.
  • Only after freeing up energy and time by strategically quitting activities, is progress finally made on the new big thing.

The question, therefore, is not if you will adopt strategic quitting. The question is when you will adopt strategic quitting. Your role as a leader is therefore to think big and at the same time have the courage to drive strategic quitting as a core activity in your organization.

How to Apply Strategic Quitting to Achieve Strategic Goals

Your most important growth goals are usually part of a corporate strategic plan. The chance of a new strategy succeeding depends on including strategic quitting as a core part of this plan. Signals that this part is missing are:

  • Limited or no written statements in the strategy on what exactly will be abandoned in order to make the new strategy work.
  • Mention of vague and unspecified productivity improvements to release time and energy to make the new strategy work.
  • Timid statements about studying possible future business decisions regarding quitting activities.
  • Fluffy and uncommitted language, such as “Based on progress, we will evaluate how to proceed with other initiatives.”

Your role as a leader is to flesh out in detail the strategic quitting part of any goal, strategy, or initiative before you commit the organization to the Valley of Death. One of the most powerful tools to do so is zero-based thinking. This is how zero-based thinking works: If you want to find areas where you can apply the concept of strategic quitting, look at your business as a consultant and ask yourself, “Knowing what I know right now, which activities would I not have started if I could do it all over again?” This is a powerful question, because many actions were started to meet a need or solve a problem. Yet, the environment has changed and these actions may no longer serve the need or solve the problem. The activities, however, have become an organizational habit and people tend to only become aware of their habits when they consciously think about them. Thus, quitting a habit is a deliberate and conscious activity that doesn’t come naturally to any organization. This phenomenon is called the momentum fallacy. Once an object or activity is in motion, it takes a lot of effort to stop it. This truth explains why the best predictor of what you will be doing 5 minutes from now is what you are doing at this moment.

We see examples of the momentum fallacy everywhere. Take for example the Mini car. When the Mini was developed in the 1950s, an important design consideration was low cost. Thus, to paint the car, the chassis would be held in the air by a pole that protruded from the back to the front of the car. This pole caused a hole in the middle of the dashboard. The design engineers were classical pragmatists and decided to use this hole to fit the instrument cluster. Thus, the iconic design feature of having an instrument cluster, not in front of the driver, but in between the driver and passenger, was born. Though this setup was arguably inferior to an instrument cluster placed in front of the driver, it has been mindlessly copied in many other automobiles, despite the fact that modern technologies have rendered the pole-painting technique obsolete. This example shows that behaviors and activities will last until long after the reason for having them to begin with has disappeared. Killing activities is hard, and is why challenging assumptions with reality-based thinking is so important to make strategic quitting work.

Practical Application

Zero-based thinking helps you apply reality-based thinking and identify activities to quit. A zero-based thinking exercise, called Lights on, now what?, has the following setup:

  • Imagine you just bought the company you are currently working for. You’re part of the new management team and this is your first day in the office. You switch on the lights, and ask yourself: Now what?
  • Imagine you have no history and not a single constraint, and then ask yourself the following:
    • Which activities would I start immediately?
    • Which activities would I stop immediately?
    • Which activities would I do more of?
    • Which activities would I do less of?
  • Define the most important activities that help you cross the Valley of Death and start taking action.

How to Apply Strategic Quitting in Your Organization

Time, money, and energy in any organization are by definition limited. As a business leader, it’s therefore important to constantly look for opportunities to free up time, money, and energy. Thus, you need to understand where to apply strategic quitting in order to have the biggest impact. To understand how, it’s important to fully understand the 80/20 rule. This rule was originally coined by the Italian statistician Vilfredo Pareto, who discovered that 80 percent of the land in Italy was owned by 20 percent of the people. This observation expanded to other areas of economic life as well and was called the 80/20 rule. Upon further study, it became clear the 80/20 rule was not limited to human endeavors, but extended to other fields as well. For example, 80 percent of the lion cubs born in nature come from 20 percent of the lion males. The 80/20 rule tells you that nature is unbalanced. It also means that the results of your efforts are unpredictable, and the relationship between input and output is not linear. The good news is you can make use of this law to get extraordinary results with the least amount of effort.

There are certain areas where the benefits of strategic quitting with the 80/20 rule in mind may have a huge impact on any business.

Training

Approximately $130 billion is spent on training every year in the United States. The idea is that training is an essential component for productivity growth. Yet, measurement of training effectiveness is rather uncommon. When was the last time the return on investment of an actual training was calculated? Furthermore, most training evaluations tend to focus on smile sheets and happiness of the participants, which is hardly a proper yardstick. It’s much better to measure the impact of the participant’s performance by simply asking his or her boss. An effective training is therefore focused on improving performance rather than potential. From a leadership point of view, the difference is between actual immediate application and future possible application. If I train my people to improve the sales conversion of proposals, I’ll improve business quickly. If I train my people to design a launch strategy for some future breakthrough product, I may have to wait a long time to see any benefits.

Executive Question

Before committing to a training program, ask yourself: Will the participants be able to apply the new skills to accelerate achievement of the most important growth goals of the business? If the answer is no, the training is a good candidate for strategic quitting.

Performance Reviews

A performance review is only effective when the feedback is immediate, so people can adjust quickly and improve. In many organizations the ritual of the performance review happens every year. This is odd. First of all, you’ve seen how frequency, size, and speed of feedback drives accelerated learning. Thus, a year is a very long period between feedback. Any new issues should have been brought up way before any lasting damage occurs. Second, performance reviews typically focus on the weaknesses, or in corporate jargon: development areas. As argued before, it’s much easier to build on strengths than try to compensate weaknesses.

Executive Question

How would you apply strategic quitting regarding the performance review system to improve the speed and quality of feedback in your organization?

Innovation

The vast majority of your innovation initiatives will fail. That’s the nature of doing things differently. Effective leadership should focus on spending the least amount of resources on the initiatives that are doomed to fail anyway.

Typical signs that an innovation is doomed to fail are:

  • Has it been done before? If not, what makes the organization qualified to make it happen this time?
  • Do we see a similar approach or application elsewhere in a different industry or marketplace? For example, some approaches to safety systems of nuclear plants can easily be used as input for the design of self-driving cars. Don’t reinvent the wheel if you can get a proven blueprint somewhere else.
  • Can you reduce the downside while increasing the upside? If the downside of failure is huge, why would you want to put your eggs in this particular basket? If the upside is small (a better mousetrap), you could ask the same question.

Customers

Strategic quitting is especially relevant when it comes to customers. If you look at your client list, you will typically notice that 80 percent of your revenue and/or margin will come from only 20 percent of your customers. The opposite is also true: 80 percent of your headaches will come from 20 percent of your customers as well. The interesting thing is that these two sets of customers are very different.

Practical Application

A good way to grow a business and get better customers is to go through your customer list and fire the bottom 20 percent of your customers every year. This exercise will free up time, energy, and money to find better customers, or improve your service to your existing customers. If this sounds too radical, don’t fire your bottom customers, but simply introduce them to your competition.

Cost Reduction

Cost reduction acts as an advanced form of organizational hygiene. It keeps an organization on its toes and ensures a smooth operation by taking out weed so the garden can bloom. However, you can go too far in cost cutting. A constant obsession with cutting costs will typically lead to more organizational time and energy focused on squeezing the last dollar out of your operation. The problem here is twofold. First of all, the relative impact of additional cost savings on your bottom line is limited. If the first 5 percent of cost reduction costs a certain amount of energy, the second 5 percent will cost exponentially more. This is the reverse 80/20 rule in action: After quitting the easy stuff that yields the bulk of savings, you will have to move to the hard stuff, which will hardly improve your bottom line. Since energy is a limited resource, cost cutting cuts directly into more important initiatives like innovation, marketing, or strategy. No organization has ever overcome huge obstacles by simply cutting cost, and the message you send to your organization is that cost cutting is the default solution to improvement. Nothing can be further from the truth. Don’t confuse organizational hygiene with growing the top line of your organization.

Executive Question

If it’s necessary to focus on cost reduction, ask yourself where can you use 20 percent of the effort to quickly meet 80 percent of the cost-saving objectives?

Meetings

The corporate joke is that if you’re bored, call a meeting. Many organizational cultures are choked by meetings deemed necessary to keep an organization running. To streamline your meetings, it’s important to realize that meetings have only three purposes: decision making, brainstorming, or driving a project. Virtually all other meetings can be replaced by a more efficient method of information exchange, such as email. One of the most powerful things you can do as a leader is evaluate your meetings on whether they can be cancelled or made more effective.

Practical Application

To make meetings more effective, make use of Parkinson’s law, which says that a meeting expands to fill its scheduled time. If you have scheduled an hour, you will probably meet for an hour, even if the key decision was made after 10 minutes. A simple way of overcoming Parkinson’s law is to schedule all meetings in half the time. You will see that the meetings not only become much shorter, but the quality will improve as well.

Reporting

Sometimes the major product of any given business is to produce paper driven by huge reporting efforts. A limited amount of time is spent analyzing reports and taking necessary actions. Reporting is therefore typically an area that should be viewed with a keen strategic quitting eye. Many reports were historically triggered by a need. Because the world has changed, the question is whether reporting still fills this need. There is no such thing as a sunshine clause in reporting. Once a report is produced, it typically continues to be produced.

Practical Application

An interesting idea to fight reporting clutter is, compile a report but don’t send it out. If after 6 weeks no one has mentioned the missing report, it may be something to strategically quit. If doing so goes too far out of your comfort zone, send out a password-protected report. If nobody asks for the password, draw your own conclusions.

How to Apply Strategic Quitting in Your Job

Taking yourself out of the equation is the ultimate form of strategic quitting. It means that you work hard to make yourself redundant. If you make yourself redundant and reduce the effort required by your current job, you can spend more time working on your job. This action will massively boost your ability to achieve big growth goals and accelerate your career. To make matters simple, there are only three ways to apply strategic quitting as individual leaders.

The first is to delegate. In the classic sense, delegation means handing down work to your employees, freeing up your time to focus on more important things. This is actually a good definition of management and, though valuable, is only one part of the story. An even better approach is to give something that is work to you to someone else who considers it play. The idea is that we are all wired differently. For example, each year thousands of people sign up at universities to become dentists. For many of us, being a dentist is probably not an attractive profession. Think of fast-moving, high-pitched drills, mini fountains of blood and fearful, moaning patients. Yet, this picture is very different for our aspiring dentists, who seem to love the work! When people do the work they love, they tend to be very good at it and view it as play. This is the road to high-performance teams in which each individual operates in the field of his or her strengths.

The second way to apply strategic quitting is by elimination. The worst use of your time isn’t doing things inefficiently, but doing what shouldn’t be done in the first place. In view of our discussion about goal achieving, the obvious candidates to eliminate are activities that simply don’t support progress on your most important goals.

The third way is to outsource, which means handing down an activity to a specialized third party so you can focus your precious effort on achieving your big goals. Outsourcing can be very straightforward, but also has a subtle application for people trained as engineers. It’s possible to outsource an activity to a process. If you program a recurring data analysis in a spreadsheet, suddenly this activity is outsourced to an efficient process.

Executive Question

Where can you use your engineering strengths to delegate, eliminate, and outsource to free up time for yourself and focus on marketing, innovation, and strategy?

Summary and What’s Next

In order to maintain momentum and continue to execute activities to achieve your goals, you must focus on strategic quitting: Doing more is not the answer to too much to do. Instead, you must free up time, money, and energy, which can be used elsewhere. This is necessary to achieve your strategic goals, develop your organization, and accelerate your career. Reality-based thinking helps you apply the 80/20 rule to achieve the biggest impact with the least amount of effort, both for yourself and for the organization. Process design helps you apply strategic quitting proactively and systematically.

The next chapter will discuss how to overcome inaccurate thinking and provide proper judgment to keep from getting bogged down by the thinking biases that are common in leaders with engineering backgrounds.

External Perspective

Interview of Aloys Kregting, CIO, AkzoNobel

What Has Been the Most Fascinating Aspect of Business Leadership for You?

How can you initiate collective change with a big group of people? Often the technological changes are swift, yet a group of people will generally change slowly. To deal with this, you need to appeal to the two parts of the human brain. First of all, the story must be rationally sound. Second, it must be emotionally engaging. Generally speaking, leaders with an engineering background can successfully deal with change by using two strengths. They like procedures, which makes things logically sound and they like to play in a team, which facilitates emotional engagement.

What Are Some of the Most Important Behaviors for Business Leaders with an Engineering Background to Improve their Effectiveness?

As a CIO, I once received one of the biggest compliments from a CEO: He told me that I had the ability to demystify IT. What he appreciated was my ability to use language and terminology, which aligned with where the company was heading. A message contains both content and packaging. Successful business leaders with an engineering background are not only able to focus on how their efforts will help the explicit and implicit goals of the company, but are also able to frame this in the language of their peers and bosses.

What Are Some of the Most Important Behaviors that Leaders with an Engineering Background need to Unlearn to Improve their Effectiveness?

Don’t focus on perfection. Often 80 percent is good enough. For example, will a further improvement in a customer satisfaction system really help the organization further, or is it better to spend time and energy somewhere else? This requires opening your eyes to other functions in the organization and the willingness to step out of your own silo.

Which Trends Do You See that May Be Relevant for Leaders with an Engineering Background to have a Bigger Impact in the Future?

I believe that the application of robotics and artificial intelligence will have a huge impact on business processes. For example, in the United Kingdom, computer algorithms have a better track record of predicting the outcome of legal cases, than expert opinions. This means that explicit knowledge is becoming less important in the future. Business leaders with an engineering background will have an advantage, because they drive and understand technology. However, engineers who want to grow as a business leader will need to make the shift from specialist—knowing a lot of a few things, to generalist—knowing little about many things. Once they make this shift, they become a very valuable connector.

What Is Your Approach to Learning and Improving as a Business Leader Yourself?

I was working for a CEO and he told me once that we must assume there is more intelligence and knowledge outside our company than inside our company. To me, learning means a constant focus on the external world. For example, I’m a member of the Research Board: a network group consisting of senior-level CIOs. In this way, I’m actively expanding my horizon together with my peers. I do the same with vendors and customers.