Moving on
The best way to get out of a hole is to cut your losses and climb out.
By Fred Koury
December 2007
There’s an old saying that the best
way to get yourself out of a hole is
to stop digging.
The problem is that, too many times,
you think there’s a treasure lurking just
a few more shovelfuls down, so the digging continues. As the hole gets deeper,
you keep at it because
you’ve already put so much
effort into it that it would
be a waste to stop now.
There are many examples in business of these
ever-deepening holes that
eat up manpower, time
and money. Sometimes,
the elusive treasure is a
product that’s sputtering
along but just can’t quite
get going like you had hoped. Other
times, it is a person who has all the
promise in the world but doesn’t have
much to show for it other than a warm
chair and a lot of frustration on your
part. The “hole” might even be an entire
division that is underperforming or a
vendor that just isn’t meeting your
needs.
Corporate America is littered with
decisions that seemed like a good idea
at the time but that just didn’t work out.
Remember New Coke? It was meant to
replace the Coca-Cola that everyone
grew up with, but it lasted only 77 days
before the classic formula was reintroduced to the market.
The Coca-Cola Co. wisely made the
tough decision that its reformulation
didn’t pan out the way it had hoped and
brought back the old formula. The
result was that while New Coke may
have failed, the company retained its
top spot. It realized the hole was getting
too deep with no return in sight, so it
got out.
If you’re going to be successful, then
you will have to make tough decisions.
No matter how close to the buried
treasure you think you are, at some
point, you have to take your shovel and
climb out of the hole and move on.
It’s called cutting your losses. Coke executives could have stuck to their
decision because every bit of market
research showed that people liked the
taste of the new formula better, but it just
wasn’t showing up in the sales figures.
Maybe you’ve invested a lot of time and
money into a product or a person, but
there comes a point where
you have to give up and
focus your resources on
more productive areas.
You can’t be afraid to
make these tough decisions.
It might be easier to justify
further expense to keep
going, but don’t wait any
longer. Pull the plug.
Ending a project that’s
bleeding money is an easy
decision. The really tough choices
come with the marginal performers —
people included. To know when enough
is enough, you need to set up accountability for projects and people so you
can measure how well things are going
compared to the standards you’ve set.
If something isn’t measuring up, get rid
of it. In today’s business world, profit
margins are too thin to waste money on
unproductive portions of your business.
You can’t afford to have a nonproductive anything — be it a person, division
or product — weighing you down. Do
everything you can to help the people
affected move on, but make the decision and stick with it.
These types of decisions are never
easy. You never know how they will
affect your business. It will always be
easier to keep going after that elusive
return on your investment, but you
have to hold yourself accountable, as
well. If it’s not working, it’s time to
make a change.
So stop digging now before the hole
gets so deep that you are unable to
climb back out of it.
FRED KOURY is president and CEO of Smart Business
Network Inc. Reach him with your comments at (800) 988-4726
or fkoury@sbnonline.com.
