Cannabis Leaders: What Business Are You In?

In two weeks, the biggiest cannabis event in the world, MJBizCon, kicks off.  If a Martian descended from space, it wouldn’t take long for he/she to be overwhelmed by the sheer number of producers selling every type of cannabis product – flower, vapes, extracts, pre rolls, edibles - under the sun.

A plethora of me-too players is a function of new, growth-fixated sectors like cannabis.  However, it also symptomatic of a deeper, potentially fatal problem:  strategic confusion.  Companies that try to do everything are at risk of doing nothing well.  Fundamentally, there is just not enough time, capital, shelf space, talent and resources to be all things to all customers, particularly when margins are tight and regulatory compliance is critical.  

Credit for the powerful yet beguiling question, ‘What business are you in?’ goes to Harvard Business School professor and father of modern marketing, Theodore Levitt.  His extensive research found that companies that didn’t know who they were, what operational activities they could efficiently undertake or which customers & markets they could serve with elan were vulnerable to underperformance and eventual failure. 

Answering TL's question is not a trite exercise. Every important corporate decision around the 3 Cs – your Corporate value proposition, Capital deployed and Customer’s served – flows from how managers define their business. 

How do you know if you have an organizational identity crisis?  First, roll up your sleeves and analyze your business versus your competitors and organizational goals. For example, is your company…

- Experiencing below average financial performance when compared to your peers;

- Failing to hit top quartile market share performance by geography;

- Encountering internal & stakeholder conflict over capital, resources and focus.

The cure for a scatter-brained firm is a bitter but necessary medicine: 

1. Drop the growth ‘at any cost’ obsession.  Insist on applying the prefix ‘profitable’ or ‘ROI-positive’ to any growth initiative;

2. Implement strategic discipline through fact-based strategic planning, tight financial controls and enhanced Board governance;

3. Be mindful of inflection points that could ferment strategic confusion such as the arrival of new leadership or falling under the influence of overly active investors;

4. Know your organizational strengths and weaknesses - and run your business accordingly;

5. Be wary of the ‘new shiny thing’.  They are often necessary but need to be considered in terms of strategic, resource and financial tradeoffs.

#strategicplanning #strategy #TheodoreLevitt #MSOS #LPS #businessdefinition #management