The right people

I was listening to an audio clip of Jim Collins (Author of Good to great) in which he defined “the right people.” A phrase often used, and somewhat understood. I think he’s got a great definition, so I thought I’d share it here too.

The right people…

1) Are predisposed with the right core values – you can’t teach this
2) Don’t need to be managed (just coached) – simply unleash and steer them
3) Have POTENTIAL to become one of the best in the industry in their role – not always today, but the potential for this
4) Understand the difference between having a job and holding a responsibility (they find and solve problems – productively neurotic)
5) You would re-hire into that role knowing what you know now about them – perhaps this says the most

Each organization is just a collection of the kind of people you hired. A lot of leading companies have many phases to their screening/hiring process. I’ve heard that at Google, there are up to 8 interviews. What that says to me is that they understand what they’re trying to do, and they have a value proposition worth protecting.

Any road

Too many organizations see planning as a means to get a list of things to work on for the next year. While it does that, it’s first and foremost about positioning your organization in a desired market then about aligning the business model to that picture. Without the context of the first, any decisions you make around activities aren’t going to be ideal because there isn’t a reference point to guide activity. This is so common that many people don’t even miss the context.

If you don’t know where you’re going, any road will take you there.

Functional strategy precursors

It’s important to have created a complete picture as it relates to strategy. Having filled in “all of the boxes” is quite a bit less important than having filled them out with the right things. One of most critical components of developing strategy that makes sense is sorting out functional strategy in the right order. Each decision needs to be done within the context of the information that guides and makes the resulting direction relevant.

You can decide what the culture of the organization should be, once you decide what the strategy is. If for some reason, you choose to clarify strategy or reposition yourself in the market, at the very least you need to ensure the connection is still strong. Choosing a culture, then choosing a competitive strategy or customer experience generally results in disjointed direction that confuses your employees and customers alike. The one decision is irrelevant without the context of the other.

Start at the top of your strategy map and work your way back down from there.

“I lose sales, because it always comes down to price”

While I won’t suggest that some customers don’t value price over everything else, not all customers see it this way. There is always someone who would pay more for a specific form of value outside of price tag. Example: Have you ever seen a BMW? As we’ve said, when you choose your value discipline, you have already chosen who you will and won’t appeal to. If you’re going to compete on price, say goodbye to customers who want product excellence or customer intimacy because you can’t have all three to any great extent. The good news is that you have increased your potential to truly please the customers who your business model and offering appeals to.

If you have been caught in the pricing trap (thinking that everything boils down to just price) realize that you may have educated your customers to ignore other forms of value and have allowed profitability to be drained from your market. You will not only have to re-align your brand to the value discipline you have chosen, but you may have to educate your market that you are now bringing a new form of value to the table. You will need to highlight the degree of differentiation between you and your competitors. Help your customers understand and feel good about the form of value they choose.

This is a great way to remove competitors… once you clearly deliver a different form of value, if you have limited competition, you are not really competing any more, especially once your customers have been educated to recognize the difference. This allows the customers in that market to be better aligned with providers and also creates an environment where profitability isn’t needlessly removed from excess focus on price.

A complete strategy management system

People love doing a great job, and want to work for a company that has exciting and compelling direction. We want to win, and make a difference in the world we live in. This can only happen when the hard decisions are made on what to focus on (taking a chance) and when the company has the mechanisms in place to consistently follow through on those changes. In a recent study by the Conference Board of Canada involving 769 global CEOs for 40 countries, strategy execution is emerging as the single greatest concern of CEOs, even higher than top line growth. This is all for good reason, as most companies have an idea of strategy and the need for a consistent culture but have gaping gaps in the area of strategy execution mechanism.

Elements of a corporate strategy:

We provide employees with a complete description of what we’re here to accomplish and how we plan to do that. Silos occur because we don’t arm people with the information they need. Executives taking the bold steps of defining direction is part of the strategy culture.

More specifically, this is what you need to articulate:

– Vision: Why are we here
– Strategy Map: What are we here to create, value discipline, the linked set of improvements that describe how we will achieve this
– Balanced Scorecard: Measuring the elements of the strategy map to monitor your improvement
– Environmental assumptions, resulting risks, opportunities, projected future:
– Corporate alignment initiatives:
– Customer experience / Brand strategy:
– Desired Culture:

Elements of a corporate strategy mechanism:

When you involve enough people, it’s not enough to just have an idea in your head. The mechanism serves as the vehicle to create consistency of communication and alignment – this is the secret ingredient in making a strategy work.

Focus on these elements as you design you strategy management system:

Alignment structure:
– Core strategy alignment
– Divisional Planning and alignment:

Employee Engagement
– Wisdom of crowds – input to environmental monitoring and exec planning
– Input to development of major functional strategies (desired culture, customer experience, etc…)
– Engagement on all major corporate issues and opportunities

Accountability structure:
– Planning standards
– Corporate reporting
Contributory planning system:
Environment monitoring system
– Environmental factor development, implications and extrapolation as an input to planning (division, team, corporate, board)
– Balanced scorecard driver monitoring and analysis (using core strategy leads and subject matter experts)
Strategy review:
– Increasing the potential relevance of our enterprise by accurately identifying factors, trends and resulting implications in the current and emerging business environment
– Focusing our resources on change based on well thought out assumptions about the emerging environment, thereby positioning the organization for future relevance
– Ensuring that all core areas of business are well timed and positioned in their alignment to the desired future state of the organization
– Building a stronger understanding of what our customers are telling us and determine how to correlate that back to required strategic and operational improvements
– Identifying areas where gaps exist, assigning accountability and closing them
Integration across functional strategy lines
– Purposeful integration through development of functional strategies aligning with the corporate strategy map, partnership in the development of employee engagement

Elements of a corporate strategy culture:

A strategy culture emerges in an organization that understands the importance of purposefully positioning itself in a market with a set of choices. Think about these attributes as you create the norms around management behaviors:

– Engaged culture – employees involved the development of functional strategies and the collective best thinking model
– Accountability culture – organization is capable of taking new direction or strategy and putting it into action consistently
– We make the hard decisions about what the organization exists to accomplish, what we’re moving toward, what market we are focusing on (and not), so that people don’t work in an environment void of context.

What are your strategy reviews for?

Don’t underestimate the value of these meetings, they are a linchpin in your strategy system. More than just a check-in for your plan, they can be built to close a lot of gaps. I recommend using them to do the following:

1. Increasing the potential relevance of our enterprise by accurately identifying factors, trends and resulting implications in the current and emerging business environment
2. Focusing our resources on change based on well thought out assumptions about the emerging environment, thereby positioning the organization for future relevance
3. Ensuring that all core areas of business are well timed and positioned in their alignment to the desired future state of the organization
4. Building a stronger understanding of what our customers are telling us and determine how to correlate that back to required strategic and operational improvements
5. Identifying areas where gaps exist, assigning accountability and closing them

Your desired footprint of competitive strategy:

The size of your niche depends upon the capacity of your organization, what you want to be known for, how profitable you want to be and what your vision is. When you extend beyond a competitor in any direction (of value creation), that is the degree of differentiation you have created. Here are some things you want to think about when you consider the degree of differentiation you should be working to create:

– Your potential niche is proportional to your capacity
– Various niche positions conflict with each other (you can’t be known for all things to all people so be known for something specific)
– Price competition intensity is usually higher where more competitors exist, but it’s often where more potential profitability exists (Intensity of competitive rivalry)
– Too great a focus on price sucks profitability out of a market
– With a lower degree of value proposition differentiation, the threat of substitute products is very high
– While it’s on everyone’s radar, price is not the #1 factor impacting purchase intent of potential customers
– Threat of new entrants is tempered through the creation of deeper forms of loyalty
– Loyalty is sometimes associated with more personal forms of contact, moving away from commoditized product lines
– You don’t have the potential to make every potential customer in the potential market equally as happy – any clear form of value both attracts and deters customers simultaneously
– Customers may value both sides of each axis, but most tend to focus on one more than the other