I recently witnessed a discussion panel with two venture capitalists arguing whether identifying an attractive market or assembling a credible executive team was more important in gaining funding for a new venture. Both parties agreed that both elements are mandatory for entrepreneurial success. Yet, both had it in their mind to pick one over the other.  Similarly, I’ve seen managers argue about whether to improve process or personnel. Sadly, many executives fail when they pick one path when there really isn’t a choice being presented.

Having too narrowed a focus is usually the culprit for leaders acting on these faux choices. A business is system that includes people, structure, process, strategies, and incentives. What managers sometimes forget is that acting on any one of these elements will have an impact on all the other elements. In a down economy, managers can obsess on cost and cash flow. Enacting cost reductions without accounting for employees’ reaction will have undesirable consequences. A leader’s insensitivity to employee attitudes or belief that they lack the time and resources to manage all the proper elements can lead an organization down the same rat hole. Studies estimate that only 16% of employees are engaged. This means that in a 20-person company, only three people understand the organizational goal, understand their role, and are enthusiastic about achieving the goal.

Managers can avoid these pitfalls with a complete strategy that addresses not only markets and products, but organizational needs as well. Please share your comments if you’ve witnessed a business strategy that had unintended consequences.

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