Peter Drucker, the famous management/leadership guru, has made some very famous statements relating to the importance of focus. Here is one of the most instructive:
“If there is one secret of effectiveness, it is focus and concentration. Effective leaders do first things first and they do one thing at a time.”
Check out these two companies, and how one continually ignores Drucker’s advice and the other uses it to drive to incredible heights in the microprocessor business.
- Campbell Soups – This company has been floundering for many years. After posting yet another bad quarter of financial results recently, with sales down -4% and operating income off -13%, one Wall Street analyst said: “Campbell always seems to be a step or two behind.” Another commented: “Campbell’s continual problems are primarily due to their stodgy brands, particularly its namesake soups. They have never focused of the core issue; making Campbell contemporary.”
- This ongoing problem of not facing up to its situation has generated pathetic results for shareholders. Specifically, for the past 12 months the stock price was down -10% versus year ago, while the S&P 500 index was up 32%. Over the past five year, Campbell was down -26% while the S&P 500 registered a positive +113%.
- Advanced Micro Devices (AMD) – In stark contrast to Campbell, in early 2015, AMD named a new CEO who immediately launched a plan to get the company out of if its doldrums. The stock price had been bouncing around $7/share for over a decade. The plan tightly focused on developing an industry-leading high-performance chip to be used in gaming devices, and high-end graphics and artificial intelligence applications. The CEO made the following statement at the time she launched AMD’s plan: “In developing a direction for a company, it is all about making choices and getting tight focus on a plan to win.”
- Those high-performance chips were highly successful. AMD then quickly doubled down and took the design of those chips and modified it to generate an ideal chip for the powerful servers in cloud computing data centers, which generated huge new sales volumes for the company. It then modified the high-performance design again to maximize performance on a personnel computer, resulting in the launch of the Ryzen line of chips that have given Intel some stiff competition in the PC business. The AMD stock price now stands at $110/share and is up +34% over the past year and up by a factor of 15 versus 5 years ago.
Leadership is all about making tough choices and focusing on a plan to get you to new heights. Some leaders just get too comfortable to even bother to face reality and tackle the future.