Nothing is ever exited

Every product, market and project from the last decade is still alive. Exits are discussed each year and deferred each year. The strategy names priorities, and the money to fund them is tied up in things the strategy stopped mentioning years ago.

Stopping is the cheapest source of funding a business has. Yet most businesses never use this one.

The first sentence above is the lowest stage of this practice on our strategy grid, word for word. That sentence is one of the most common answers we see. It also explains another pattern on the grid: the strategy the budget never met.

Why exits stall

Each thing in the tail has an owner, and the owner is in the room. The product manager for the declining line, the country manager for the small market and the sponsor of the pilot all argue well. Nobody argues for the priority that would get the released money. It has not been funded yet, so it has no one to speak for it.

The tail looks cheap one line at a time. Each item makes a small loss, or a small profit on a margin that ignores the time it takes. None is worth a fight. Added up, they are often the largest single use of management attention in the business.

Stopping feels like admitting a mistake. The line was launched by someone still senior. The market was entered with a board paper. Exiting reads as a verdict on a decision, so the decision is renewed instead.

And "exit" sounds like one option. It sounds like closure, with redundancies and customer letters. Framed that way, the answer is almost always "not this year".

Observable example: A care provider diversified into a service line that shares no customers, staff or referrals with its core. The line has earned little for five years. The provider keeps it for mission reasons, and the board says so openly. That makes it a real decision. Most tails are kept for no stated reason at all.

Four options, not one

Exiting is four options, and closure is only one of them.

Harvest. Stop investing, keep serving, and let the line earn cash as it declines. The customers keep their product. The business stops funding its future.

Fix. Give the line one funded attempt with a date and a test. If it passes, it stays. If it fails, it moves to another option.

Close. Stop, and put the people and money on the priorities. The cleanest option, and the hardest to start.

Sell. Find the owner who is worth more to the business than you are. A good line in the wrong group is worth more to a buyer who can add something to it.

Observable example: A government-owned waste utility compares four options for one of its businesses: sell, harvest, retool or grow. It values each on cash flows. It chooses growth and phases it, with trigger points at which it would exit or partly sell. Exit was on the table from the start, and the growth plan was better for it.

Making it routine

Businesses that prune well do not rely on courage. They review the tail on a calendar and apply the four options without sentiment. Our grid's stages for the practice read:

• Lagging: Nothing is ever exited; every product, market and project from the last decade is still alive.
• Basic: Exits are discussed each year and deferred each year.
• Competent: The business has made at least one real stop-doing decision in the last two years and finished it.
• Advanced: Harvest, fix, close and sell are live options reviewed for the tail and applied without sentiment.
• Leading: Pruning is routine: resources released from the tail visibly fund the strategy.

The word that matters at the top is "visibly". The released money should appear on the priority's line in the next budget. When it does, the next exit gets easier, because people can see where the money went.

Observable example: A brands business scores each brand and market on attractiveness and on its own advantage. It assigns one of four roles to each: grow hard, improve position, turn round or harvest, or improve the economics. It says "harvest" out loud in the planning meeting, and the harvested brands fund the growth ones.

Start with one

Pick one thing the strategy says the business should not be doing. Finish exiting it this year, by whichever of the four options fits. Then show where the money went.

A business that has done that once has changed its answer on this practice. A business that has done it three years running has a strategy the budget can pay for. The strategy check shows which of the five archetypes your answers fit. The Dreamers' first move is exactly this.

• Run the strategy check
• The five strategy archetypes
• The Stages of Excellence in strategy