The plethora of recent surveys probing CEO’s concerns point to the same conclusion – most CEOs’ biggest worry is profitable growth. No surprise therefore, that plenty of management and leadership advice is available on the subject. In fact a search for the words ‘business growth’ in the books section of amazon.com threw out over 50,000 results. Yet, only a handful of corporate bosses succeed in driving growth successfully and profitably.
My own conclusion after observing successful profitable growth leaders over more than two decades: success is less about new uniquely “growth oriented” management techniques, and more about disciplined commitment to activities already proven to bring success in the long run. At the risk of over-simplifying a very complex challenge, it is clear that successful leadership teams never stop asking themselves the following three questions:
- Do we still have a compelling mission, vision and differentiated strategy that all our people fully understand and accept?
- Do we have the right people, processes and organizational structure to achieve our aspirations?
- Do we have an organization-wide culture that helps us grow profitably and ethically?
Obvious questions, right? If you are wondering what’s new about these questions, you are not alone. After all, we have known for a long time that leaders must focus on strategy (Question 1); people, processes & structure (Question 2); and culture (Question 3) to achieve success.
So what’s the big idea here? There isn’t one. Leadership teams that drive sustainable, profitable growth don’t do different things, they do the same things differently by focusing on questions 1, 2 and 3. If there is a “difference,” it is their sincerity of purpose and consistency of focus. In today’s ever changing business landscape, leadership teams need to ask these questions at ever more regular and frequent intervals, and take appropriate action to address emergent issues.
Here’s my take on the most important elements of each question:
Q1. DO WE STILL HAVE A COMPELLING MISSION, VISION AND DIFFERENTIATED STRATEGY THAT ALL OUR PEOPLE FULLY UNDERSTAND AND ACCEPT?
Mission and Vision:
Mission and vision are often misunderstood concepts in business. Ask average corporate bosses to articulate his company’s mission and vision is, and expect to hear something like, “We want to grow our market share by 15%,” or “Our mission and vision is to be the best and biggest in our industry.” You might also hear something like, “Our mission is to consistently earn 18% ROE return on equity.”
Then, consider two examples of a different kind. One – “Our mission is to give ordinary people a chance to afford the same things as rich people, and our vision is to become a $125 billion company by the year 2000.” Two – “Our vision is to be the earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”
The difference between the two sets of responses? The average boss only articulates what the organization aspires to get for itself from the marketplace, the latter also state what they want to give to the marketplace.
An organization’s mission is the core purpose behind its existence. Through its mission, an organization provides a core product or service that meets a critical need of society in a meaningful way. That the organization makes a profit while doing so is a by product of pursuing the mission, not the core purpose in of itself. In other words, mission is an honest articulation of what the organization gives to the marketplace – the difference it makes in the lives of the people it touches.
Vision on the other hand is the leadership position the organization wants for itself. Nothing wrong with wanting to be bigger and more profitable as long as it is accompanied by a clear mission.
The “giving and getting” examples above are real. If you hadn’t guessed already, the first was Walmart’s 1990 articulation of mission (giving ordinary people a chance to afford the same things as rich people) and vision (to become a $125 billion company by the year 2000). The second is Amazon.com’s vision (to become the earth’s most customer centric company) and mission (to create a place where people can find anything they might want to buy – online).
Increasingly, employees want to align themselves to a worthy mission. It inspires them. The key task for business leaders, therefore, is to define both a mission and a vision that truly mean something to both employees and customers. Does your organization, division or department have both?
A recent study conducted by branding and consulting firm Hinge compared high growth professional services firms with average growth firms to understand the difference. Amongst the sample size of 102 firms, high growth firms were identified as those that grew 9 times faster and were 50% more profitable than their average growth peers. Three key differences: High growth firms were more specialized, had stronger differentiators, and pursued a narrower client base.
Thanks to connectivity and the efficiency of capital and labor markets, almost anyone can enter many industries. To counter this rampant and near universal decline in barriers to entry, it is increasingly important for companies to establish crystal clear differentiators. If everyone in the company cannot consistently articulate what it does better than others, the management team has a problem.
Understanding and Acceptance of vision, mission and strategy
Alas, the world’s most compelling vision, mission and highly differentiated strategy do not guarantee success. Everyone in the organization must fully understand, accept, be inspired by them.. Not only is it important for leadership teams to regularly check for understanding of strategy within its ranks, they must also assess how people feel about it. A simple pulse survey will usually do the job. Ask employees how well they understand the company’s strategy, and to what extent are they inspired by it. Low scores on one or both questions means you have work to do.
Q2. DO WE HAVE THE RIGHT PEOPLE, PROCESSES AND ORGANIZATION STRUCTURE TO ACHIEVE ARE ASPIRATIONS?
In today’s knowledge economy, no one doubts that at the end of the day, people make the difference. Yet, senior corporate bosses all over the world cite the identification and hiring of talent as their key challenge. This problem is even more acute in Asia. According to one survey, over the next decade emerging economies like China and India will account for 60% of the world’s wealth. Even though 2 out of every 7 people in the world are Indian or Chinese, there is a huge shortage of qualified candidates for key positions as reported by headhunters and executives alike in these markets. With over two billion people just in India and China, how can this be true?
Human capital development has not kept pace with economic development in Asia. While markets are getting more and more sophisticated, companies need equally sophisticated talent. It is therefore more important than ever before to have a clearly laid out strategy for attracting, recruiting and retaining top talent. Does your organization ask itself the people question with enough regularity?
Nothing frustrates high performers more than bureaucracy and cumbersome internal processes or systems. While most processes are instituted for good reason, they tend to get outdated over time, and start to put a drag on the organization. Yet, most organizations don’t act swiftly enough to change or remove such policies, processes or systems. Everyone talks about the breakneck speed of change happening around them, but hardly anyone acknowledges that as a result internal processes and polices have a much shorter shelf life now, and must be reviewed regularly.
In his classic Academy of Management article titled “On the Folly of Rewarding A While Hoping for B,” Steve Kerr very nicely shows how companies and governments all over the world make the same mistakes again – that of instituting processes in the hope of achieving a desired result, but ending up getting the opposite impact. A recent example is a rule imposed by India after the 2008 terrorist attacks in Mumbai. Because foreigners planning the attacks were able to freely visit India multiple times leading up to the horrific events, they (foreign visitors) can now only visit India once every two months. Will this rule really prevent future attacks? Has anyone considered the negative impact on business and tourism? Similarly, a new Indonesian rule prohibits carrying tennis rackets as carry on baggage on all flights originating from that country, supposedly to make flying safer.
Does your organization have rules, polices and processes that have either lost their relevance or have begun to hurt your organization? Is there someone in your organization that reviews such processes on a regular basis?
It is time for large organizations to re-think their entire approach to organization design, and create fluid systems and structures. Unfortunately, while we gasp at the speed of change happening to us, we seek stability within our organizations, and, when it comes to change, we dislike change of structure the most.
While everyone complains about the speed of change, too often they fail to cast a critical eye on their own siloed, rigid or complicated organizational structure. In a world where response time is everything, organizations must get comfortable with an ever changing structure to remain nimble. To help employees cope with this reality, they must be trained to handle ambiguity.
Have you ever wondered why smaller companies are often much more successful at innovation? One reason is their ability to remain flexible amidst a constantly changing business landscape. They are able to quickly move resources to where they are needed the most depending upon market opportunities. Unfortunately, even while some of the biggest economic power houses of today were created by a handful of people in a garage, we still evaluate jobs based on scope (number of people, size of budget, etc.) and pay accordingly. Is your organization nimble enough to face today’s challenges and opportunities? If not, what can you do about it?
Q3. DO WE HAVE AN ORGANIZATION WIDE CULTURE THAT HELPS US GROW PROFITABLY AND ETHICALLY?
Ask a lot of successful companies what makes them tick and they will cite their strong culture as one of the factors. The reverse is also true. Unsuccessful companies blame their culture for their lack of performance. A recent survey of 12,423 business leaders and 1,897 HR professionals conducted by human capital consulting firm DDI found that organizations with more evolved management cultures were three times more likely to outperform their competitors in terms of metrics such as financial performance, productivity, quality of products or services, and customer satisfaction. Yet, very few organizations get their culture equation right.
Most corporate bosses believe that it is extremely hard to change company culture. Their belief is based on the assumption that people naturally resist change. One CEO I spoke to recently said this, “I am totally frustrated with my people. They don’t work hard enough, they walk out of the building on the dot at 5 p.m., and I am not sure what we can do to change this culture because getting people to change behavior is one of the hardest things to do.”
Contrary to conventional belief, people do not naturally resist change. Most people are driven by self interest. If they fully understand how the proposed change will benefit them personally, they will support it and if they really understand the adverse consequences of not changing, they will not resist it. The problem is not the fact that people naturally resist all change; the problem is, most senior management teams do a poor job of explaining the benefits and/or the necessity of change. When you want to drive change, do you communicate clearly, honestly and repeatedly?
If a management team is serious about changing the culture, they must first live and demonstrate the new norms themselves. Too frequently, management sees culture change as something they need to do to their people. Unfortunately, such teams miss the point completely. Culture change is what they should do to themselves. If they model the new behaviors everyday, people will get the message about what is important, and the desired culture will take root. People listen to management’s actions louder than its words. I have come across many management teams that do not walk the talk, but complain that changing culture is hard. As a senior leader, do you set an example with your own behavior? And do you communicate the obvious again and again?
In the fast changing landscape of today, management teams must be ready change their strategies, decisions and policies as often as the fast changing landscape. I am not recommending change for change’s sake here. The point is, the world around you is moving incredibly fast – be prepared to make frequent yet judicious adjustments to your way of functioning. One way of keeping on top of this game is to ask and discuss the three questions at a management meeting once every quarter for half a day. Most management teams are made up of very smart people. If they follow a disciplined routine devoting time to self-assessment and honest discussion, they can be even more successful.
Photo User: Flickr firstindy