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The Six Disciplines Blog


Friday, September 06, 2013

The Economics Hurdle

For the Execution Revolution to occur in small and mid-sized businesses, the acquisition cost equation for adopting a strategy execution program based on proven best practices must be proportionate to its outcome. No program can be practical if the cost to implement it is prohibitive.

Larger businesses spend about two percent of sales to maintain their IT operations. Assuming this same rate of investment, a $10 million company would invest $1 million over a five-year period and a $1 billion company would invest $100 million. Clearly, there is much more opportunity to invest in best practices when the budget is large.

Remember that investments in software and technology are, in essence, investments in more effective business best practices. Small and mid-sized businesses simply don’t have the economies of scale to invest in the array of technologies and programs described in Chapter 4, not to mention the expertise to integrate and utilize it effectively.

The sobering conclusion is that mastering even one of these business improvement disciplines requires a substantial investment. None of them comes cheaply, and there are no shortcuts. In the past, taking your company from good to great in one or more of these disciplines required money, time (maybe decades) and expertise (in-house experts or external consultants). And until now, these developments were only affordable to big business.

Six Disciplines Execution Revolution by Gary Harpst.

THE Resource to Improve Your Organization's Performance

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Since 2005, the Six Disciplines blog offers posts about performance excellence, strategy execution, business coaching, leadership development, innovation, and business process improvement. This blog has received prestigious awards for leadership and management and has been syndicated by several major media sources.