Strategic

CHAPTER 2Resource Allocation

“How resources are actually allocated and used determines strategic outcomes—not the words on paper or policies. The allocation of resources and execution of process determines strategic outcomes.”

—Authors Joseph Bower and Clark Gilbert

A company is only as good as its people. People are only as good as their actions. And actions are only as good as the thinking behind them. If your team's modus operandi can best be described as “Fire, aim, ready!” perhaps it's time to take a step back and ask two important questions:

1. Are we thinking about what we're doing before we do it?
2. Are the majority of our actions proactive or reactive?

The answers to these questions indicate your approach to resource allocation, which in turn determines your strategy, and whether you will outperform or underperform your competition in delivering value to customers. Accomplished leader Meg Whitman offers this advice: “You must actively instill an awareness of the importance of conserving resources in your company. Whenever you attack waste, one of the first reactions you get is an outcry from folks who say that you are cutting into muscle, not fat, and that quality will suffer. People generally hate change. My response as a manager is that it's important to cut until you get that reaction. By forcing people to justify what they're doing and what they're spending on it, you're instilling a healthy discipline. Some will be able to justify what they spend; others will not, ...