Know what matters, do what matters

Several years ago for whatever reason, I became interested in Walt Disney Company as a possible investment opportunity. The stock was trading in the low teens at the time, having hit a low of $13.48 or so in early August of 2002. As I poured through 10-K and 10-Q filings with the U.S. Securities & Exchange Commission, I was amazed that the stock was valued so cheaply. Even with a conservative estimate of value for the independent businesses and real estate holdings, it seemed to me that the market value should be far higher than that currently reflected by the stock price. I've never been a strict believer in the efficient market hypothesis, namely that the market price of a widely traded stock accurately reflects the value of the company since all relevant and important information is already reflected in the share price. I've seen too many instances where emotion and momentum have temporarily skewed stock prices and therefore believe that while the efficient market hypothesis generally manifests itself eventually, it does not necessarily do so immediately. As a result, here I was with an opportunity that had minimal downside and significant upside. However, even though I felt certain that the stock price of Disney was too low; I did not act on the knowledge by purchasing shares. Four and a half years later, instead of enjoying a rather pleasant return on investment, I find myself using the experience as an example of the consequence of inaction.

We fail to take action for a number of reasons. One of the most common and devastating is "analysis paralysis" where instead of seizing an opportunity we dive ever deeper into dissecting and evaluating the situation and circumstances. It is "analysis paralysis" that kept me from making a few dollars on a stock pick. In reality we are really just stalling, perhaps subconsciously believing that not doing anything is the least risky course. Unfortunately it is often the most risky course. History provides us with many tragic examples of the consequences of inaction. In September of 1862, Gen. George McClellan found himself in possession of the battle plans of the Confederate forces under Robert E. Lee. With that information in hand and a force twice the strength of his opponent, McClellan should have easily defeated the enemy and ended the Civil War right then and there. Instead he scouted and re-scouted the area and spent hours developing a battle plan that required almost perfect communication and execution by unit commanders in order to succeed. Because of the unwillingness of the Union commander to make a decision and act on it at the Battle of Antietam, the Southern army slipped away and continued the conflict for several more years.

Another impediment to taking action is when we confuse activity for productivity. One of the most difficult things for many managers to accept is that seeing one of their employees at a desk working is not the same as getting results from that employee. One organization with which I worked was especially adept at confusing activity for productivity, so much so that I developed a formula to describe the preferred approach to problem solving. The equation, t n+1 = A, translates to the belief that "if we talk (t) about the problem just one more time (n+1), then something will happen (A) and we'll get the desired result." Rarely did it work.

How do we keep from letting either of the aforementioned problems keeps us from taking action? First we must remember that generally, now is better than later. George Patton said "a good plan violently executed right now is far better than a perfect plan executed next week." We should develop a predisposition to act and remember that money is not the only thing for which there is a time value. Analysis and committees and thoughtful contemplation have their place, but in a world economy that is speeding up and ever more competitive, the advantage is to those who can act quickly and effectively. Secondly we should remember that something is always more than nothing, even if the something is not all it can or should be. This might seem obvious. It might seem trite or even ridiculous. Yet often we sacrifice something good now, for something else better later. Too often though later means never. Doing something when something needs to be done is infinitely better than doing nothing. I would rather do something that is directionally correct and make small adjustments as I go, than not do anything and find myself falling further and further behind.

At this point one could legitimately ask "how do I make sure that the something I do is actually moving me in the right direction?" The means of assuring the highest probability of doing something that matters is what I call the Know-Do Axiom. This states that in order to maximize the likelihood of taking appropriate actions we must both know what matters and do what matters as part of the decision making process. But how does one assure that they both know and do the thing that matters? It is by developing a living breathing purpose for the organization. It is by holding up the contemplated action against the yardstick of vision and mission that you are able to gauge the rightness of the decision. And if the opportunity measures up, pull the trigger.

As a chief operating officer, I used to tell my people that as long as they could accomplish the mission-critical objectives, I didn't care whether they were in their office or on a beach in Mexico. It was achieving the goal that mattered far more than location. That mindset was difficult for some of my colleagues to accept, yet I was never disappointed by the performance of my organization. In fact, the better job I did of defining and explaining the vision and mission, the more frequently I was pleasantly surprised by results that exceeded my expectations.

As businesses and organizations improve their ability to make good decisions faster, they also find themselves reaping improvements in financial performance. An orientation toward action leads to an increased ability to identify and eliminate unnecessary and wasteful activities. It increases the likelihood of the organization's long-term economic viability. It results in tangible gains in operational performance. And for most of us, it feels a lot better to do something than nothing. Especially if we can see how that something is getting us closer to our goals.

Alan L. Austin is managing director of Efficio Consulting Group LLC, a Sparks-based firm Contact him by email at alan.austin@efficioconsultinggroup.com or call him at 224-4175.