When you see a shiny new penny on the ground, what’s your first thought? Pick it up.
Ignore that you never pay with change. Forget that you have a bad back and reaching down isn’t a wise move. Never mind that new pennies are practically worthless (unless you find a Lincoln Penny worth over $100,000).
The flash of copper on the ground sparks an instinctual urge.
That’s the “shiny penny syndrome” – and it could be hurting your business.
The Shiny Penny Syndrome: What is it?
This syndrome affects most business owners and leaders at some point. You’re presented with an opportunity, and your first instinct is to grab it – just like that penny.
It could be a new piece of business, an acquisition, or anything that makes dollar signs illuminate in your head.
Your goal as a leader is to learn when to leave pennies on the ground…when to say “no.”
A Penny for My Thoughts: How Saying “Yes” to a $1 Million Job Hurt My Business
About 15 years ago, I picked up a shiny penny when I ran a learning and consulting business. My client’s fiscal year was winding down, but he had money left in the budget. Over $1 million to be exact. He’d lose it if he didn’t spend it…could I help?
After a few meetings, we set up a plan. My client would bill my company before year’s end, then we’d deliver the project over the next six months. Ah, how great to be an entrepreneur, I thought. All I saw was the extra cashflow…$1 million!
The problem was, my company did not have the expertise nor the internal talent to deliver the work when I said “yes” to the shiny penny. I had to start a new division and hire a new manager plus technical employees. What I thought would be a slight learning curve proved to be a steep mountain that took me two years to climb! Thankfully, the client was patient. Even with the delay, we delivered results and the client was pleased.
However, the project cost me $1.2 million.
I also spent many sleepless nights dealing with HR struggles as we built out the new team.
On top of losing $200,000, the “shiny penny” took my team’s focus away from our core business which was our real cash cow. The work we performed for the client was not repeatable. We couldn’t resell our newfound expertise or monetize it effectively.
Looking back, I should have left that penny on the ground for someone else.
What to Do When You See a Penny
The “Shiny Penny Syndrome” is still going strong 15 years later. It is creating the same havoc that I encountered years ago. Almost every business I consult with today faces tempting challenges to say yes when new prospects and ventures arrive at their doorstep.
It’s hard to say “no” because we’ve all been taught to “seize the opportunity because you never know when the next one will arrive.”
However, great companies do know what their next move will be! They create a process for evaluating opportunities, research new markets, and thoroughly vet potential acquisitions.
Aspire to Be a Hedgehog
As an EM Advisor, I work with executive teams to help them make the hard decisions about what markets they should be in – and what they should avoid. Part of our process is based on the Hedgehog Concept derived from Jim Collins’ classic Good to Great.
Collins presents the story of the fox and the hedgehog where “the fox knows many things, while the hedgehog knows one big thing.”
The great companies studied in the book were seen as hedgehog companies with a laser focus that drove outstanding execution and results. The comparison companies or “foxes” didn’t stick to a particular focus area and therefore came up short in achieving their objectives.
To help uncover your own hedgehog advantage, answer these three questions:
What can you be best in the world at?
What drives your economic engine?
What are you deeply passionate about?
These questions often lead to spirited conversations, where healthy conflict should occur. By going through the process, your team will gain alignment and eventually land on the same page. Together, you can answer: what business are we in?
This is a much better approach to decision making and collaboration as opposed to the CEO making unilateral decisions then expecting the team’s full support.
Saying “No” Isn’t a Bad Thing
Give yourself and your company permission to say no to shiny pennies. It is about truly knowing who you are and removing the bravado or ego from your decision making.
You will have opportunities to say yes and that is where innovation can occur.
It’s also a good idea to pilot or incubate to test out new ideas. However, these tests should be structured. Outline which employees own this task, the expected results, and of course, the timeframe.
Ultimately, when you say yes to an opportunity, it should be because the prospect aligns with your company’s primary mission and purpose. Your rule going forward is this: leave the shiny new pennies for the foxes, hedgehogs wait for the Lincoln pennies.
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