- Increasing Your Company’s Surface Area
- Suggestions on driving value-based growth from a leading organization expert
- What’s Your Organization Effectiveness IQ?
- Take a Quiz to test your Organization Effectiveness savvy!
- Run Baby Run
- CFO’s of The Year offer their strategies for dealing with a down economy
- Get Ready for the Recovery - Your Competition Is!!!
- The recession will eventually end, will you be ready when it is over?
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Maximizing Your Company’s Surface Area
The guest on the inaugural episode of my radio show on the Voice America Business Network was Dr. Ed Lawler, prolific author and founder of the Center for Effective Organizations. Ed described how difficult it is in today’s rapidly changing economic climate to find a long-term sustainable competitive advantage. Some companies have been able to sustain an advantage in the markets in which they choose to compete, like Starbucks, but this has not been the norm.
So how does a company maintain a competitive advantage? Dr. Lawler highlighted two key factors. One dealt with the strategy process itself and the other with organization design.
Strategy work in the past has more typically been a once a year effort to create a strategy that was deployed and not changed for a set period. Dr. Lawler related the growing trend of businesses moving away from “making a strategy” to a “strategizing process” - an on-going process of regularly reviewing and updating strategy. This means that strategy work occurs more frequently and more rapidly. (For more details on how to accomplish this type of strategy work, check out: Five Keys to a Successful Strategy.)
From organization design perspective, businesses are benefitting by connecting more employees with the external environment. That way, employees can understand what’s happening and quickly determine how they can contribute. Ed called this “maximizing the surface area” of the organization. Sustainable advantage requires a flatter organization with fewer degrees of separation between employees, customers and key business partners. A corollary to this key is that employees in these pivotal, external facing roles must be your top talent.
So, are you making strategy or strategizing? What have you done to increase the surface area of your business?
What’s Your Organization Effectiveness IQ?
I recently gave a quiz to an audience of business people that included the following oft-mentioned organization effectiveness maxims. (I call them maxims because a maxim is defined as a pithy saying that has some proven truth to it.) No one in the audience got them all right. So how about you? What’s your Organization Effectiveness IQ? Take the quiz. If you get a 100%, I’ll send you a copy of my recently published resource guide, Competing Through People: How to Build A Strategy Driven Organization. (Let me know through the contact page on my website http://www.mcassociatesinc.com/contact-us/index.php). Remember, honesty is the best policy!
OK, here are the questions. True or False:
- People are a company’s most important asset.
- People can be a company’s competitive advantage.
- Improving people-related costs is HR’s biggest impact.
- HR is the keeper of the company’s culture.
- “Employees First” is an effective business strategy.
Now the answers from my admittedly contrarian perspective:
- People are NOT a company’s most important asset. More and more, intangibles are driving the valuation of a company. The three most important intangibles are Customer Base, Brand or Image, and Intellectual Property (think Google). Wait a minute . . . don’t people create those intangibles! That's right, but it's not just anyone or all your people. To me, the more precise maxim would be "The RIGHT people in the RIGHT roles doing the RIGHT things are your most important asset". (See Assessing Your Organization's Talent for more on this perspective)
- As strategy and business process improvement expert, Alan Brache, is fond of saying, “I’ve never met a competitive advantage.” The answer is “False”. Competitive advantage comes from an overt initiative defined in a business strategy that delivers a valuable product or service offering that buyers recognize. People are a source of advantage and carriers of value but they are not “the” competitive advantage. This distinction is important and not just quibbling. It can make a difference in strategy development.
- False. If you have the right people in the right roles doing the right things (the right things being the delivery of your value proposition), then people costs should not be HR’s top concern. The real value that the HR function can provide is sustaining the capability and productivity of the organization over time. (Learn more at Strategic Talent Management).
- Organization culture is often described as some ethereal, intangible quality of an organization that is difficult to manage. Fortunately, there are over 25 years of good culture research and practice that shows otherwise, including the work of Kotter & Heskett (Harvard), Dan Denison (University of Michigan), and my colleague Lou Musante at EchoStrategies. The conclusion – culture is a measurable, definable, manageable set of behaviors that can drive key business outcomes. Effective cultures are the result of thoughtful leadership that creates the behaviors that support desired results. Effective culture is not the sole province of HR, so the answer is False.
- “Employees First” is not a strategy. It can be a very effective tactic if a clear choice is made in the business’s strategy to follow this approach. Just saying that your strategy is “Employee’s First” says nothing about what business you are in, how you will grow, where you will grow, and how you will compete – all questions that a meaningful strategy should answer.
Did you catch the trend? All the answers are false. I tried to throw you off by pointing out that maxims have some proven truth. In the case of these Organization Effectiveness maxims, I think the truths have been stretched.
Run Baby Run
I attended a breakfast meeting that featured the four CFO of the Year award winners for companies in southwestern Pennsylvania. I was impressed by two themes in their comments and wanted to pass them along.
- The award winning CFO’s placed an emphasis on having the right talent, particularly in a tough economic climate. They highlighted the important role their staffs played in their success and the importance of having innovative people that could think out of the box all the time. Creativity was mentioned several times. They described their best people as collaborative and able to take on more as staffing was cut. One CFO’s advise to her team this year was “Run Baby Run”. Several of the CFO’s wanted to be in a position to handle growth by not adding people.
- The CFO’s viewed the recession as an opportunity, not a threat. Their attitude seemed to be “why waste a good recession?” As business leaders, they viewed the economic challenge as an opportunity to raise expectations and re-energize their teams. One CFO saw the downturn as a time to effect change that was not possible before and to “do what we do better”. Another saw it as a great time to revisit the strategy and to make sure that her group’s work was aligned to it. As financial leaders, they also saw now as an opportunity to reduce risk and be better poised for growth.
Great perspectives from impressive leaders.
Get Ready for the Recovery - Your Competition Is!!!
By: Eric W. Wiedenmann
Market Development Group, Inc.
Depending on which economist that you talk to, we are about 16 to 17 months into this recession, which is probably the worst since the Great Depression from almost all accounts. There have been business cycles for over 5,000 years – the good news is that they always end.
The one common trait for companies that survive the business cycles and come out stronger in the long-term is that they plan for future success. NOW is the time to plan for future success when we will eventually come out of this recession. Here is a list of what best-in-class companies do to set themselves up for success.
- GET TO KNOW YOUR CUSTOMERS – Through customer surveys and focus groups, get to know what really makes them tick and how to better serve them. Find out how you can partner together to minimize the affects of this recession.
- STUDY YOUR OLD DATA FOR HIDDEN SECRETS – Analyze the data that your computers spew out. You will be able to find valuable data on customer purchasing habits, customer profiles, and seasonal quirks.
- GET TO KNOW YOUR COMPETITION – Understanding the strengths and weaknesses of your major three or four competitors is critical for increasing your sales closure rate.
- WORK ON YOUR BEST PRACTICES – Put in writing a detailed account of best ideas on how to increase sales. It is best to do this in slow times because sloppy practices that lead to mistakes often occur when business is strong.
Market Development Group, Inc can help set your company up for success so that you can leap frog over the competition through customer satisfaction surveys, competitive data gathering, and Marketing Assessments.