The Top 5 Stupid Moves in Cannabis
Win by not losing
Stupid is as stupid does’ Forest Gump
Managers can improve their company’s fortunes by avoiding self-inflicted wounds. Put another way, many firms will succeed not by making brilliant or innovative decisions but rather by avoiding common strategic and organizational land mines.
I’m not saying cannabis people are incompetent, though many are. Most cannabis executives I’ve worked with are not and came into the industry with good track records and the right intentions.
Below are 5 missteps I regularly encounter through my consulting work:
1. Reducing your prices too quickly – I recognize the short-term exigencies of price-cutting but you may end up sabotaging long term competitiveness by degrading your brand image and training buyers to always expect a discount;
2. Cutting operational corners – Your profitability margin of error is razor thin. Cheapening out in terms of inputs, equipment and people is a ‘penny wise, pound foolish’ approach to operational excellence;
3. Maintaining a bloated product portfolio – Adding more SKUs without pruning underperformers is guaranteed to increase complexity and reduce overall revenue and profits;
4. Having a weak understanding of key concepts – Take quality. It is a subjective, relative and price-based concept that is neither a target or a consumer end state. Companies need to align around precise and actionable definitions of strategic drivers;
5. Ignoring corporate governance – You are the custodian of millions of dollars of other people’s money and a participant in a sector that remains stigmatized and misunderstood. Act responsibly.
Why is this stupidity ostensibly so rampant? The Ancient Greeks would recognize human foibles such as hubris and greed. Management pundits would criticize the lack of strategic clarity and OG’s would lament the prioritizing of the wrong stakeholder (the investor) over the consumer.
To be fair, managers (typically) don’t aim to make the wrong decisions. Quite often, decisions turn out poorly because of bad luck.
Leaders can avoid stupid mistakes and increase organizational IQ by taking these steps:
> Seek out the opinions of informed outsiders
Go beyond the usual suspects like consumers and suppliers to include knowledgeable people such as reporters, consultants and regulators;
> Take ‘conventional wisdom’ with a grain of salt
The definitive industry playbook has not been written, despite what the cannabis event and social media echo chamber says. When all firms pursue the same corporate and product strategies, most will end up failing;
> Try stuff but fail fast
Success in this business is part art and part science. Its difficult to uncover this alchemy without product and operational innovation & experimentation. Failing fast ensures you cut your losses and can then reallocate scare capital and talent.
#strategy #execution #products #pricing #governance