Willie’s Blog Posts

Escaping the Tyranny of the Day-To-Day

“It’s not enough to do your best. You must know what to do, then do your best.”

                                                                                                 – W. Edwards Deming

We are all familiar with the seductive distractions of the here and now that commandeer our attention, control our thinking, and scatter our exertions.

The average American spends 3.3 hours a day on a mobile phone, 10 times the duration in 2008. Total usage, including all IT devices, adds up to nearly 6 hours, which rivals sleep time.

The rapid flow of information demands our immediate reaction. We harbor a fantasy that when we finish these “urgent” tasks, we will have the time to tackle the important ones. But our “to do” lists never end as the additions outrun our accomplishments. Our lives are becoming like Sisyphus who was condemned for eternity to push a boulder up a hill, only to watch it roll down again.

The experts say that we fool ourselves when we think we are multitasking. Only about 2.5% of the population can actually concentrate effectively on more than one thing at a time. The rest of us are “task switching” – moving rapidly between tasks – dissipating rather than concentrating our cognitive energy. Neuroscientists Kubu and Machado report that the more we switch tasks the less we are able to accomplish because we slowly lose our ability to focus deeply enough to learn.

This is not just a problem. It’s a crisis. Immediacy has overtaken purpose. Yet it is purpose that gives our lives meaning. We need to make a major adjustment to the way we focus our energy.

The distraction epidemic spans both the personal and organizational domains. 54% of executives feel that being consumed by day-to-day activities is the main barrier to organizational success according to a recent survey. And 45% of these executives believe that this lack of strategic thinking is also the biggest obstacle to their individual leadership potential.

To concentrate effectively, we have to tune out the rest of the world. As an example, Kubu and Machado cite the skill of a surgeon: “The proficiency of surgery is the ability to single-mindedly focus on a single patient and complete a series of tasks, all in pursuit of a given outcome that may take many hours to finish.”

Leadership experts stress that, just like a surgeon’s intense focus, the single-minded commitment to a common purpose is an essential factor for organizational success. This is the role of strategy, whose main job is to define a firm’s purpose in terms that everyone can relate to and act upon.

The starting point is to develop a shared understanding of what strategy is and what it must deliver for an organization. Strategy is about making choices on how an organization will concentrate its scarce resources in order to achieve competitive advantage. Its aim is to create an intense focus on the right things.

Strategic choice-making requires answers to three fundamental questions:

– Where will we compete and what is our aim?

– How will we win the competition for value creation in our chosen arenas?

– What will be our key priorities for success?

To achieve unity of action, the sum of a company’s actions must cascade from these choices so that all of its constituent parts are acting in concert.

It is crucial to understand that in a competitive world strategy is about winning. The heart of a company’s strategy is its Winning Proposition – the unique difference in its offering that provides a compelling reason for customers to choose it over its competitors. Its Winning Proposition is the central animating idea – the rallying cry – that unifies an organization’s priorities, decisions and activities.

Google’s Winning Proposition for its search business provides a good example:

We organize the world’s information and make it universally accessible and useful. 

Google’s key priorities are centered around three action verbs: organizing information, creating access and making the result useful. All its resources and the energies of its people are concentrated on providing and constantly improving those three interrelated outcomes.

How can organizations craft a shared framework for creating unity of action behind their strategic purpose?

The graphic below offers such a framework that I have found works well in practice.

Each sub-unit needs to develop a clear line of sight to the enterprise’s strategic goals (what the military calls “commander’s intent”) and translate these down into set of aligned priorities within each function, business unit and geography. By doing so, they relate all their efforts mindfully to the organization’s core purpose.

A parable about three workmen illustrates the point. A passer-by comes across a construction site, and asks each worker in turn, “What are you doing?” The first worker answers: “I am digging a hole.” The second worker says, “I’m laying bricks.” The third worker stands proudly erect and replies, “I’m building a cathedral.”

It is the role of leaders to remind their employees that they are dedicated to a cause larger than themselves, with the opportunity to make a difference to the outcome. The first worker is not simply digging a hole but creating strong foundations so that the cathedral will stand for a thousand years. The second worker is not simply laying bricks but creating a beautiful façade so that travelers will come from the ends of the earth to admire his handiwork.

The same principles should guide our personal lives. To quote Seneca, “Our plans miscarry because they have no aim. When a man does not know what harbor he is making for, no wind is the right wind.”

When Hans Vestberg was CEO of Ericsson, (he is now CEO of Verizon), he regularly gave a talk to Ericsson executives in seminars that Columbia Business School ran for the company. He explained a simple yet effective method for ensuring that his daily activities aligned with the organization’s strategic purpose. He kept two “to do” lists. On his left were his tasks for the day. On his right he kept his list of the company’s strategic priorities. Each morning he studied both lists. Then he identified the items on his daily list that most strongly supported the strategic priorities and tackled those first.

Hans’s practical example provides a powerful way for us all to mobilize the urgent in service of the important.

Posted by Willie Pietersen at 11:37 AM | 0 Comments

The Five Best Business Ideas of 2017

In turbulent times, concentrate on what’s important – not what’s new

After a year has passed it is customary to take stock. What were the major developments of the year?  How should they guide our thinking on managing our businesses more effectively?

As a professor of strategy for nearly 20 years now, my mind turned to this question: what were the most powerful business ideas of 2017?

My reflections produced answers that surprised me: none of the best ideas are new. Indeed, some are centuries old. But more than any others, they have deepened our understanding of how to thrive in today’s dynamic world.

Our only sustainable competitive advantage is our ability to learn faster than our competitors.

In his 1997 article, “The Living Company” Arie de Geuss asserted that sustainable competitive advantage cannot be achieved through particular products or strategies. These are soon overtaken by fast-moving events. Instead, he argued, an organization’s survival depends on its ability to build an adaptive enterprise – one that constantly learns and renews its strategies as the environment changes.

The Darwinian logic of this idea is inescapable. Learning must be imbued in the culture of every organization for it to sustain itself as a “living company.”

Organizational learning, however, does not happen by itself. It must be ignited, sustained and directed through a deliberate company-wide process. There is no greater leadership responsibility than this.

To contend with today’s dynamic world, this must be a dynamic process – a learning cycle that guides organizations continuously from the discovery of fresh insights to the implementation of innovative actions. This requires an essential shift of gear from strategy as planning to strategy as learning.

Consider the US military’s technique of action-learning. After every engagement it applies its famed “After Action Review” to examine what worked and what didn’t, to ensure that every subsequent engagement will be an improvement over the prior one. This makes a huge difference to its prospects of winning. 

Success means putting the customer at the center of business decisions  

As a young brand manager at Unilever, I became fixated on emphasizing the distintive product attributes of my brand and presented my strategy to my boss accordingly. He gave me a chilly reception. “Your thinking is back to front,” he said. “Customers don’t buy attributes. They are looking for solutions to their needs. You must learn to think outside-in, not inside-out.” With that, he handed me Theodore Levitt’s 1960 masterpiece, “Marketing Myopia.” Levitt’s ideas have influenced my thinking ever since.

Products, Levitt argues, are a means to an end, not an end in themselves. Their job is to satisfy customer needs. As a result, a product-centered, rather than a customer-driven, orientation can destroy a company’s ability to survive change. The railroads failed, according to Levitt, “because they assumed themselves to be in the railroad business rather than in the transportation business.”

Levitt’s underlying idea is that companies don’t sell products. They sell benefits. Competition expresses itself through the provision of benefits that transcend the product itself.

Take Hallmark Cards’ statement of purpose: “We help people connect with one another and give voice to their feelings.” The cards themselves are simply a vehicle. Human connection is the value they provide.

This means there is no such thing as a commodity. There are human beings at either end of any transaction and the service model – the way the transaction is conducted – is the key benefit.

In the burgeoning “tech revolution” we see dangerous signs that product centricity is beginning to eclipse customer centricity. Customers are too often offered acronyms or buzzwords – Al, IoT, Cloud Computing, Big Data – rather than the benefits they confer. To compete successfully, claims Levitt, companies must build “a customer-satisfying process, not a goods-producing process.”

Strategy is about achieving differentiation by making choices 

Strategy is plagued by greater confusion than any other business discipline. Ask five companies to explain their strategy and you will get five very different notions of what a strategy looks like.

Strategy was born in the military, then co-opted by  business. Businesses, however, court failure by neglecting to apply the key concepts of this essential leadership domain.

Michael Porter, in a 1996 article titled “What is Strategy?” and in a subsequent interview with Fast Company magazine, defines strategy’s essentials as follows:

1) Strategy is a process of making choices on where to compete, what to offer, and how to differentiate your business by creating greater value for customers than competing alternatives.

2) Such choice-making requires balancing trade-offs. The essence of strategy is deciding what not to do.

3)  Operational effectiveness is not a strategy. It is necessary, but not sufficient.

There is a dangerous notion that in a world of rapid change, strategy is no longer necessary. This, Porter calls “ridiculous” and  “a deeply flawed view of competition.” While strategies may need to be updated more frequently, without a clear direction, no company can succeed for long.

Customers have choices. To succeed, companies must have what I call a “winning proposition”, a compelling reason why customers should choose their offering over their competitors.

Amazon provides a striking example: “We make it easy for people to buy things by offering a wide range of products at great prices with fast delivery.” This statement not only explains the benefit to the customer, it tells employees what (and what not) to concentrate on every hour of every day to enhance that benefit.

Leaders must be able to simplify a complex world  

In the mid-90s the United States Army War College introduced a new acronym to describe the confusing world order left behind in the wake of the Cold War: VUCA. Today the business world, no less than the military one, is beset by the same forces of Volatility, Uncertainty, Complexity and Ambiguity.

It is the responsibility of leaders to create clarity from a bewildering world. Effective leadership is impossible without the ability to distill an organization’s challenges and its strategic focus.

Simplicity is not a short cut: it is hard, messy work. Blaise Pascal, the seventeenth-century French mathematician and philosopher, captured this aptly when he said: “I am sorry to write you this long letter, but I didn’t have time to write you a short one.” 

No organization’s strategy should be longer than 10 pages. Boiling it down in this way is in itself an exercise in clarity of thought which can then be shared by the entire organization.

Sam Palmisano, the former CEO of IBM, insisted on this clarity of thought, requiring that every executive in IBM be able to answer these 4 questions in a concise and compelling way:

1)  Why should customers choose to do business with us?

2)  Why should investors choose to give us their money?

3)  Why should employees choose to work for us?

4)  Why should communities welcome us in their midst?

By laying out these simple, yet profound questions, Palmisano forced his executives to address the needs of all the company’s key stakeholders and to understand how they fit together.

To move people at the deepest level, you need compelling stories 

The  final deliverable of a strategy is not simply a document.

People don’t follow documents, they follow leaders and ideas. Of course, it is important to record your strategy for easy reference, but that is only where the main task begins. The ultimate aim of leadership is to win the hearts and minds of your employees in support of your strategy.

Howard Gardner, the developmental psychologist, in an interview in Strategy + Business, emphasized the importance of story-telling as a way to engage and motivate employees. “People have a real thirst for stories that give them a better sense of how they belong” he said. He emphasized that effective leadership involves the creation of powerful narratives, and that the greater the change you aim to make, the more important the story becomes.

3M has embraced this concept by transforming business planning from a list of bullet points into a narrative that not only tells everyone what the goals are, but also how to reach them.

The crucial task is to translate the strategy document into a compelling leadership message, then to convey that message repeatedly with impact and sincerity. Leaders must return to one of our oldest human traditions, that of story-telling. As the poet Muriel Rukeyeser observed, “the universe is made of stories, not atoms.”

What are the elements of an effective story? I suggest they contain the following essentials:

–  They simplify complexity

–  They engage people emotionally through vivid metaphors and examples and pictures

–  They raise – and resolve – an important issue

–  They clearly frame a “call to action”

–  They are embodied by their tellers

Stories arise from our universal search for causes and effects, for purposes and ideals. Stories create meaning. Increasingly, this desire for meaning and authenticity is being subjugated to the deadening dominance of PowerPoint presentations.

These five ideas convey an overriding truth. In our world of escalating change, the core principles of strategy have not only remained the same; they are now more important than ever for creating enduring success.

 

 

Posted by Willie Pietersen at 11:49 AM | 0 Comments