Last month I introduced the topic of business culture and core values. This month I will discuss a couple of examples to highlight the difference a bit of effort and passion can make in building an organisation that differentiates your business and attracts top talent.
You can search for Netflix Culture and get a lot of information on how they built a very effective culture. I ended up with a 125-slide deck and have no hope of jamming it all into this article. Here are the highlights for me:
An important point here for me is this didn’t take five minutes. It took many years of building up, learning and refining, getting clearer and more confident, taking pains to document the outcomes carefully. And not being afraid to be different – for example eschewing brilliant jerks and management control. With the company values at the centre, they built six other aspects of their culture around helping them to achieve excellence. The key is to build a cohesive culture based on authenticity.
“Culture eats strategy for breakfast.” A quote attributed to Peter Drucker, one of the most admired leadership academics of all time.
While a brilliant strategy may be admired, it is an organisation’s culture, supported by leadership, that attracts, engages, energises and aligns great employees to the achievement of business goals.
“So what exactly is business culture?” you ask. Good question. For me, it is a combination of an organisation’s ideology and personality. “The way we do things around here.” “The things that matter to us.” We will explore this in the next column or two.
The foundation of a business culture is a set of Core Values. According to Collins and Porras in “Built to Last” (2002 paperback edition), Core Values are a business’ “essential and enduring tenets – a small set of timeless guiding principles that require no external justification.”
Along with a Core Purpose (covered in The Beacon in October 2017), they make up an organisation’s Core Ideology – a “self-identity that remains consistent through time and transcends product/market life cycles, technological breakthroughs, management fads, and individual leaders.” These don’t sound a lot like “maximise shareholder wealth,” or “make the boss obscenely rich.” But time and time again, when studies are undertaken about enduring business success, these very “unbusinesslike” Core Values lurk in the findings.
My favourite set of Core Values are The Body Shop’s:
In previous articles in The Beacon on Execution, we have covered the imperative of prioritising strategic execution time in your calendar, focus, and accountability. This month I want to finish off the topic with two more items – cadence and review.
During these meetings you decide on the tasks that must be completed each week, in order to be on track for successful execution of your 90-Day Actions by the end of the quarter. I suggest an agenda like this:
The next most important cadence is quarterly. At the end of every 90 Days, take a half day out to review your execution performance for the quarter. Again, all your management team should attend. Be brutally honest with yourselves. What went well? What went badly? Did you achieve all your 90-Day Actions? If not, why not? What are our major learnings about how to execute? How will we apply them in this next quarter to execute better? Document and circulate your findings, and go again. Update your SWOT Analysis and decide on your next 90-Day Actions. Once a year, when your 1-Year Actions are due, take a whole day, review some elements of your strategic plan, and start the whole execution cycle again.
Last month in The Beacon we discussed focus, one of the most important disciplines in successful execution. This month I want to focus on Accountability, but before we get into that I’m going to briefly cover off a very important tool – the SWOT Analysis.
The SWOT Analysis identifies positive and negative influences on your business originating from inside the organisation (Strengths and Weaknesses) and from outside (Opportunities and Threats). Its purpose is to help you identify factors you can take advantage of, or ones you need to mitigate, in order to successfully complete your priority actions. You should review this analysis quarterly and only include the five most important factors in each category. Only include factors that you can act on – “plummeting exchange rate” is a threat I sometimes come across, but as I have not yet been engaged by the Reserve Bank, I have never met anyone who can fix it, so it doesn’t make the cut.
The willingness to focus on just a few key actions at a time is the biggest differentiator between teams that can execute and teams that can’t. The second most important is the willingness to be individually accountable for actions. Mediocre teams prefer to hide in a group – “we’re all in this together.” At the end of the quarter failure, confusion, finger-pointing and sometimes scapegoating reign. Co-accountability is no accountability.
When someone is accountable for something, it means they are on the line for the end result. Doing their best, or putting in a good effort, is not good enough. They have to make sure the Action is completed. Part of the deal is that you give them all the resources, time and support they need to get these actions done. Plus, encouragement to sing out as soon as they encounter obstacles. Team members who don’t have an action of their own proactively seek out those that do and offer their time and resources to perform some of those tasks. These teams know that they really are all in this together – it’s just that they have clarity about who’s on point for what.
In the March Beacon we talked about your big three strategic moves which you should make in the 3-5-year timeframe, and how if you try to achieve more than three goals, you will actually complete fewer than if you just went for three.
To have any chance of success, you must limit your strategic projects to two or three. When I introduce this concept to clients, I often get a vibe that goes something like, “Yeah, that might be the case for mere mortals, but I can multi-task” (they can’t) or “I’m more motivated than everyone else, (they aren’t) I’m going for six”. Three months later they have to admit they took on too much. Focus.
Take your 3-5-year Strategic Moves and figure out how much of each one you can achieve over the course of one year.
Now, in the one-year space we need to be more specific than in the strategic timeframes. We want 1-Year Actions that start with a meaningful verb like “complete”, “develop”, or “design, build and install”. We also need a deadline, a specific date – this is frequently the last day of your financial year but does not have to be. And we need to know which individual in the business is accountable to you for making sure this action is completed by the deadline. Note this does not mean they have to do all the work themselves.
Once the 1-Year Actions have been documented, decide how much of each one can be completed in a quarter, and generate 90-Day Actions to a similar format.
A word to those of you who are sole traders or who have a very small number of employees who might not be able to help you to execute your strategic objectives – in your case, one or two is better than three.
Next month we will cover a couple of equally important disciplines that will help you excel at execution.
In my first post I wrote that the US Ivy League university Dartmouth College conducted research that showed that, in order to succeed in business, you must excel at four primary management practices:
There are also four secondary management practices, of which you have to excel at two, but we’ll leave those till later. This month I’m moving on to the second primary practice – Execution.
Whereas strategy is about deciding what you’re going to do to achieve your goal, execution is about actually doing those things. It is where the rubber hits the road. Hopefully the rubber is on a Tesla in ludicrous mode, because the faster you execute, the sooner you will hit your BHAG.
The nemesis of strategic execution is Business as Usual (BAU) or the Whirlwind. You know, serving customers, ordering inventory and supplies, payroll and bookkeeping, updating the website, doing sales calls, etc. They are all extremely important tasks, in fact your business would cease to exist without most of them. You can’t fail to do them, or more accurately, you can’t fail to ensure they are done. The truth is, however, that BAU will always expand to fill 100% of the time available, if you let it.
You must carve out some time. Without fail. Every week, you must do the one thing that will take you closer to your BHAG. This is the mindset change – ruthless refusal to allow your strategic execution time to be stolen from you by anything.
Over the last few months we have covered most of the major items needed for creating your vision and strategy. This month we will pull all of this material together and develop some strategic objectives.
Just before we do that though, I’ll cover off one more important issue. It is not good practice to develop strategy without some understanding of trends in your industry, your market, and the overall context within which you are running your business. Useful analyses include the Porter’s 5 Forces Analysis, and PEST Analysis, both easily googled.
I recommend that you take the time to carefully consider the questions and answer them as comprehensively as you can. It would be very unusual for there to be no insights for you from these analyses, and you should be as thorough as you need to be to discover them.
Review all the possible moves you could make, based on your work on your target market and its greatest need, your value discipline and competitive advantage, and your environmental analyses. The idea is to select the three moves that together, will take you furthest along the journey toward your BHAG. Picture yourself three to five years out into the future, with your three strategic moves completed – have you made satisfactory progress toward your BHAG? If not, see if you can identify more challenging strategic moves.
To give you a better idea of what a strategic move looks like, I have included some of my clients’ below (suitably camouflaged).
OK, that’s enough strategy for now. Next month, we will start a new topic – Execution, or getting stuff done.
Happy New Year! I hope you had a wonderful Christmas, a restful break, and can still remember both of them.
In the December Beacon, I wrote about identifying your ideal Target Market Customer, and their greatest need. This month we’ll look at Competitive Advantage – a strategic position that is favourable compared to your competitors. Your competitive advantage answers the question, “Why should your target market buy from you instead of someone else?” If you want your business to grow, you need a competitive advantage.
I like to use a model called Value Disciplines described in the book The Discipline of Market Leaders by Treacy and Wiersema. I recommend you read this book. The basic idea is to build market leadership (competitive advantage) in one of the three value disciplines. They are:
Focus! Place the vast majority of your investment (time, money, energy, learning) into your chosen value discipline. If you are at the minimum level required for survival in your industry for the other two disciplines, leave them be!
This competitive advantage should drive all your marketing and branding messages – including your positioning statement and brand promise. Everything should be consistent so that your overall message to your target market is unmistakable.
Next month we will draw all of the vision and strategy stuff together into some strategic objectives.
My first two columns dealt with Vision. This month, I’ll cover Target Market, a key element of Strategy, which is the set of choices you make to try to achieve your Vision.
A golden rule of strategy:
Imagine trying to build a car that pleases everyone. Some will want it to be as environmentally friendly as possible. Some think internal comfort and luxury are the most important things. Lots of people choose price as their top priority. Others will choose speed and power. There’s no way you can give everyone exactly what they want, and the harder you try, the more everyone will go “Meh.”
Philip Kotler, professor of marketing at Northwestern University in the US, states, “There is only one winning strategy. It is to carefully define the target market and direct a superior offering to that target market.” This is not to say that you will only ever sell to your target market. Apple’s target market for the iPhone has been mid-30s males – will they stop females from buying an iPhone? Of course not. The idea is to ‘delight the few to attract the many’. When your product really delights your target market, other customers are attracted too. (pull-quote)
Get very specific about the narrow segment of people you are targeting. Find out which type of customer is your most profitable, the best opportunity for growth, and the most influential. Then make a call on which is the most attractive segment overall. Analyse this segment across the following criteria:
Once you have identified your target market segment, delve deep to find out what their greatest needs are. This can be a very tricky business, as often your customers don’t know what their root cause needs are. As Henry Ford is quoted as saying, “If I had asked people what they wanted, they would have said faster horses.” But it is your job to uncover their real greatest need. When you have done that, your next job is to figure out how to meet those needs more effectively than anyone else – that superior offering referred to above by Philip Kotler. We will cover this in the new year.
Last month, as well as a brief introduction to the management practices that really work, I covered Core Purpose, one of three elements of a good vision. This month, I’ll cover off another vision element, the Big, Hairy, Audacious Goal (or BHAG). The remaining vision element, Core Values, will be covered later on in a series on culture.
The BHAG, normally pronounced “Bee Hag”, is a huge, very challenging goal, designed to stimulate progress. If your Core Purpose is the “why,” your BHAG is the “what.” It should be:
Perhaps the most quoted BHAG is J F Kennedy’s challenge to NASA in 1961, “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.” Brilliant. Clear and compelling. Certainly beyond their capabilities (especially the bit about returning him safely to earth, hence a distinct lack of volunteers). Nearly 10 years out, and it definitely stimulated progress at NASA, because they achieved it in 1969.
Other cool BHAGs:
“How do I find my BHAG?” you might ask. Jim Collins, the co-author of last month’s book Built to Last, followed up with a solo effort Good to Great. According to Collins, one of the characteristics of great companies is that they all boil everything down into one idea – land on the moon, predator-free, car safety.
When you deeply understand these circles and find your single organising concept at their intersection, your BHAG will be somewhere nearby.
In the next issue of the Beacon I’ll start looking at some key elements of strategy, which is the art of making a cohesive set of decisions that enable you to achieve your BHAG.
Let's Talk Business
by Chris Bunce
Chris has 28 years’ experience as a management consultant and business coach. During this time he has worked with clients in many industries and of all shapes and sizes, including some in Australia, Asia and the US. Nowadays he is passionate about improving the lives of Aucklanders by helping business owners to master the very few management practices that actually make a difference to their success. Chris lives in Blockhouse Bay with his wife, Cathie, having lived in or around the area for most of his life.