Strategy Dollars versus Bake Sale Bucks

August 23, 2009

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My first post-business-school job was at a shrinking company in a shrinking market space. My role was to provide the data analysis and support on major deals. Often those deals amounted to trying to reduce the bleeding by retaining large customers at reduced rates – deals our VP would call “strategic wins.” The other analyst and I joked that the day would come when we’d get paid in strategy dollars. We had a mock strategy dollar (with a picture of the VP) that we’d pass back and forth to whoever was working on the biggest, losingest, most strategic win.

In other roles I’ve seen even Fortune 500 companies hold bake sales. Think of a retail store that is short of the mark and starts selling off the fixtures. Yes, they hit the monthly goal, but would you invest in that store? Those are bake sale dollars. You can hold a bake sale to make up a cash shortfall on any given day, but it’s not a sustainable business model (unless you’re a bakery). Bake sales can take the form of a holiday discount that’s a few points deeper every year or of selling the intellectual property that the core business model is based on. Can you repeat what you did this month and scale it up? If you can’t, you have a bake sale where you need a business model.

Would you invest in a company that promised to pay you returns in strategy dollars? How comfortable would you be with an investment that generated this month’s return from a bake sale that couldn’t be repeated next month? If we wouldn’t invest under those conditions, how can we as managers possibly claim those as wins?

Photo by tiny banquet committee

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