Preventing Strategy Scope Creep

My daughter encountered scope creep recently after spotting a cockroach in her old, Queens, N.Y., apartment building. In a moment of courage for someone with an insect phobia, she grabbed a broom and a dustpan, scooped up the cockroach, and quickly walked the insect out the front door to dispose of it outside.

Unfortunately, standing in her pajamas at 2:30 a.m., with no door key or cell phone, she realized the building’s self-locked door had shut itself after she stepped outside. A project with a simple, singular purpose — disposing of an annoying cockroach — had now expanded to something much larger.

Scope creep is quite common in the business world. An organization with a clearly defined business vision gets so far away from the original purpose, it is unrecognizable. The consequences of scope creep are strategic distractions, inefficiency, financial disruptions, and overall poor performance.

Are you causing scope creep?

Scope creep is usually unintentional. Leaders undertake a single action that deviates from the company’s definition of success, and all appears to be well. Then comes the next step outside the vision, then a third. Initially, leaders are convinced of their decision-making acumen.

In my book, Leading from Zero: Seven Essential Elements of Earning Relevance, I highlight the notion of unconventional wisdom — the perception that because we think differently in our organization, we must be right. When leaders hold this mindset, they expose their organizations to the risk of taking on activities that may not be a good fit. This is not to say a company should never expand its activities; it means leaders need to dig deeper to understand a fact pattern that will contribute to (or distract from) their success.

A great example of how this phenomenon leads to scope creep came to light with a residential home builder I consulted for. The Southern California company specialized in developing modestly priced, single-family, tract homes and defined success as building great, affordable starter homes for starter families. For years, the company was successful and profitable.

Over a two-year period prior to my engagement, the company’s performance results had deteriorated. They engaged me to identify and address the root cause driving the decline in profitability.

Compare and contrast to prevent scope creep

During a growth cycle in the real estate market, the company noticed that affluent Californians were selling their expensive homes and moving to Nevada and Arizona, where they could buy fancier but less expensive homes and still have money left over.

The home builder interpreted this migration and the demand for upscale, custom homes as a market expansion opportunity. Because of their success in developing tract homes, company leaders decided to enter the custom home market outside Las Vegas, chose and purchased undeveloped land, and started building high-end homes on speculation, believing the buyers would come.

But the economics of the custom home business meant investing money up-front, while its tract homes were built under contract, which they used as collateral for construction loans. Each custom home required a unique design, while the tract homes were all of similar designs. The custom homes required different materials, which required finding new suppliers. Even the Nevada and Arizona subcontractors worked differently than California’s tract home subcontractors. The further the company got into building custom homes, the more they had to change the way they did business.

What to ask before embarking on something new

In this case, scope creep led the company away from what it did extremely well. The questions they didn’t ask before expanding activities were: What do custom homebuyers expect? How does that differ from entry-level, tract homebuyers’ expectations? What are our company’s core competencies? How do those competencies apply in each of our market segments (tract and custom)? How do these two segments differ in terms of allocating our people, time, and capital?

Scope creep is avoidable when leaders ask:

  • How does this new (or expanded) activity align with our definition of success or our company’s vision?
  • How do our core competencies lend themselves to this activity/strategy?
  • How would engaging in this activity/strategy impact our human and capital resources?
  • How would we ensure that engaging in this new activity/strategy will not distract from our primary business objectives?
  • What conditions lead us to believe this is the right time to engage in this new activity/strategy?

Back in Queens, my daughter worked through the best options she had that night to get back inside her apartment, with no luck. She spent hours trying to wake up local family, friends, and neighbors to ask for help, all to no avail. She ended up sitting in a corner of a 24-hour CVS until daylight when a neighbor was available to unlock the door and let her into the building.

It was a scope creep moment she will always remember. I suspect the next cockroach will be flushed.


Originally published on SmartBrief, June 21, 2022
Image credit: Jessica Tan/Unsplash

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