1 pathway to greatness: four essential factors for organizational success in a changing economy...

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Pathway to Greatness: Four Essential Factors for Organizational

Success in a Changing Economy

Presented AtPresented AtNPES Annual Conference

November 4th-6thPonte Vedra Inn and Club

Presented ByPresented ByPhilip G. Kuehl, Ph.D.

Senior Staff ConsultantWestat

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Session Objective: Explore a Session Objective: Explore a Pathway to Greatness in Your Pathway to Greatness in Your CompanyCompany

Leadership at all levels

Clear strategic intent

Strong execution and performance

Comprehensive measurement and control

“Good is the enemy of great”. —Jim Collins, Author

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Pathway Elements are Clear-Pathway Elements are Clear-cut and Straight Forwardcut and Straight Forward

Environmental Scan

Strategy

Alliances-Acquisitions

Innovation

Culture

People

Organization

Resources

Customer Perspective

Internal Business Perspective

Financial Perspective

Innovation and Learning

Leadership at All Levels

Clear Strategic IntentStrong Execution-

PerformanceComprehensive

Measurement-Control

“Lots of companies claim to be high-performance organizations. The real thing is rare, however, but instantaneously recognizable”. —Thomas A. Stewart

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Leadership at All LevelsLeadership at All Levels

Highly intelligent and very skilled executives often fail in leadership positions

Intelligence, toughness, determination, and vision are required but not sufficient for effective leadership success

A high degree of emotional intelligence is a critical but often overlooked factor

“IQ and technical skills are important, but emotional intelligence is the sine qua non of leadership”. —Daniel Coleman

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Components of Emotional Components of Emotional IntelligenceIntelligence

Component Definition Hallmarks of Success

Self-Awareness

Recognize and understand your moods, emotions, drives, etc. and their effect on others

Self-confidence Self-depreciating sense of humor

Self-Regulation

Ability to control or redirect impulses and moods Propensity to suspend judgment: think before

acting

Trust worthiness and integrity Comfort with ambiguity Openness to change

Motivation A passion to work for reasons beyond money or status

Ability to pursue goals with energy and persistence

Strong drive to achieve Optimism in face of failure Organizational commitment

Empathy Ability to understand emotional makeup of others Treat people based upon their emotional reactions

Recognize, develop, and retain talent

Cross cultural sensitivity

Social Skill Effectiveness in managing relationships and building networks-teams

Ability to find common ground and build support

Effectiveness in leading change Persuasiveness Expertise in building and leading

teams

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What is Your Emotional What is Your Emotional Intelligence Rating?Intelligence Rating?

HallmarksRating?

(1-7 Scale) Reason for Rating? Ways to Improve Rating! Self-confidence ________ _____________________

______________________

_ Self-depreciating sense of humor ________ _____________________

______________________

_ Trust worthiness and integrity ________ _____________________

______________________

_ Comfort with ambiguity ________ _____________________

______________________

_ Openness to change ________ _____________________

______________________

_ Strong drive to achieve ________ _____________________

______________________

_ Optimism in face of failure ________ _____________________

______________________

_ Organizational commitment ________ _____________________

______________________

_ Recognize, develop, and retain talent ________ _____________________

______________________

_ Cross cultural sensitivity ________ _____________________

______________________

_ Effectiveness in leading change ________ _____________________

______________________

_ Persuasiveness ________ _____________________

______________________

_ Expertise in building and leading teams ________ _____________________

______________________

_

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Basic Responsibilities and Basic Responsibilities and Functions of LeadershipFunctions of Leadership

Get right people on and off your organization’s bus

Seek and facilitate vigorous debate on key issues

Make people change when a change is needed

Put best people on biggest opportunities, not on biggest problems

Emphasize planning and understand dynamics of implementation

Identify successors and nurture their success

“To be effective, organizations need people with a healthy disrespect for the boss… people who can and will engage in active give and take so cultivate truth tellers”.

—Manfred F.R. Kets de Vries

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How Well Do You Perform in Basic How Well Do You Perform in Basic Responsibilities and Functions of Responsibilities and Functions of Leadership?Leadership?

Responsibilities and FunctionsRating?

(1-7 Scale) Reason for Rating? Ways to Improve Rating!

Right people on/off bus _________ ________________________ ________________________

Seek debate-input _________ ________________________ ________________________

Force change _________ ________________________ ________________________

Best people—best opportunity _________ ________________________ ________________________

Planning and implementation _________ ________________________ ________________________

Identify and develop successors _________ ________________________ ________________________

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Clear Strategic IntentClear Strategic Intent

Strategic intent focuses on 5 questions

Customer selection: What customers will we choose to serve and not serve?

Value proposition: What will we offer our customers and how will we bedifferentiated from our competitors?

Value capture: How will we make money?

Scope of activities: What will we do and on what activities will we rely onpartners?

Strategic control: How will we defend our profitability?

“Sustainable competitive advantage is achieved when a firm is able to do things that add value for the customer but that are difficult for competitors to imitate or replicate”.—Charles D. O’Reilly

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Environmental ScanEnvironmental Scan

“Predictions are hard to make...especially when they are about the future”.—Yogi Berra

External Industry Trends and

Issues

Current and Potential

Customers

Internal Structure, Process, and

Resources

Conclusions and Implications

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Environment Scan FactorsEnvironment Scan Factors

External—Industry Trends and Issues Government Policies Globalization—Internationalization Industry Consolidation Technology Innovations—Applications Human Resources Cost-of-doing Business

Internal Structure—Process—Resource Issues Reporting Relationships—

Accountability—Responsibility Work Process and Communications Development and Training Resource Adequately

Current and Potential Customers Composition—Profitability Analysis Requirements and Determinant Attributes Perceptions and Feedback Competition Decision-making processes

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Environment Scan PrioritiesEnvironment Scan Priorities

What are your top 5 planning issues?

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Environment Scan AnalysisEnvironment Scan Analysis

Conclusions and Implications: Future Objectives and Strategies

Planning Issues #1

“It is very important to know as much as possible about one’s customers… but it is especially important to study non-customers”. —Peter Drucker

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Strategy OverviewStrategy Overview

Strategies should “stretch an organization” and create a sense of urgency

Environmental scan analysis will identify opportunities and opportunities

Participation builds consensus commitments, implementation motivations

Provides consistency at all levels

“The strategist’s goal is not to find a niche within an existing industry space, but to create a new space that is uniquely suited to their company’s own strength…space that is off the map”. —Gary Hamel and CK Prahalad

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Strategy Overview (cont’d)Strategy Overview (cont’d)

Re-engineering and regeneration are universal core strategies

Reengineering of Core Processes

Regeneration of Core Strategies

Introduction Growth Maturation Decline Reinvention

Dev

elo

pm

ent

“If the rate of change outside a company is greater than the rate of change inside…the end is in-site”. —Jack Welch

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Creating StrategyCreating Strategy

Rating

(1-7 Scale)

1. What is your company’s strategic intent and is it meaningful? _______

Ways to improve your rating:___________________________

____________________________________________________

2. Are your company’s strategy elements directly aligned with its strategic intent? _______


____________________________________________________

3. Have you identified and communicated exactly what is required if strategies are to be successfully implemented? _______


____________________________________________________

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Creating Strategy (cont’d)Creating Strategy (cont’d)

Rating

(1-7 Scale)

4. Have you provided the right resources, training, processesetc. to ensure implementation success?_______


____________________________________________________

5. Have you established clear milestones and review mechanism to track progress, provide recognition, reinforce denied behavior? _______


____________________________________________________

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Creating Strategy: ExampleCreating Strategy: Example

Strategies-Weaknesses Strategy-Elements Strategies-Strengths1. Undergraduate student body size and

quality

2. Facilities, equipment, and technology

3. Business community involvement and support

4. Governmental recognition and support

5. MBA program structure, quality and visibility

6. Faculty quality, productivity and compensation

7. On-campus visibility and politics

8. Washington, DC metro location

“Be a nationally recognized school of business.”

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Alliances and AcquisitionsAlliances and Acquisitions

Collaborations can enhance competitiveness, provide a solutions focus on meeting customer needs, and strengthen long-term profitability

Guidelines or criteria for assessing alliances and acquisitions exist

Acquisitions

Joint ventures or equity alliances

Partnering or non-equity alliances

“As companies find it increasingly tougher to achieve and sustain growth, they have placed their faith in alliances and acquisitions to boost sales and profits. However, most acquisitions and alliances fail”.

—Jeffrey H. Dyer, Proshant Kale, and Harbor Singh

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Framework for Alliances and Framework for Alliances and AcquisitionsAcquisitions

Analysis Factors Strategy Options

1. Types of Synergies or Relationships

ModularSequentialReciprocal

Nonequity alliancesEquity alliancesAcquisitions

2. Extent of Redundant Resources

LowMediumHigh


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Framework for Alliances and Framework for Alliances and Acquisitions (cont’d)Acquisitions (cont’d)

Analysis Factors Strategy Options

3. Degree of Market Uncertainty

LowMediumHigh

Nonequity alliancesAcquisitionsEquity alliances

4. Level of Competition

LowMediumHigh


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Creating Alliances-Creating Alliances-AcquisitionsAcquisitions

1. Would implementation of your strategy priorities and specific task definitions benefit from collaborations?____________________________________________________________________________________________________________________________________

2. Does your company have a process to evaluate exactly how a collaborations would benefit all partners and strategy implementation?____________________________________________________________________________________________________________________________________

3. What skills and tasks are needed to execute the right collaboration with the right partner?____________________________________________________________________________________________________________________________________

4. Are you sure collaborations would not strengthen strategy development and implementation?____________________________________________________________________________________________________________________________________

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InnovationInnovation

All great organizations in every industry improve and innovate

Re-engineer core processes

Re-generate core strategies

Requirements and opportunities for innovation are everywhere

Customers

Partners

Competitors

Technology

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Innovation (cont’d)Innovation (cont’d)

Innovation in any organization requires

Mind stimulation Minimizing hassles Recognition and rewards Multiple initiatives Disciplined processes

Innovation can drive complexity and complexity drives costs that

Lean processes can not overcome Customers might not pay for

“A companies most important asset isn’t raw materials, transportation systems or political influence…its creative capital needed to turn ideas into valuable products and services”. —Richard Florida and Jim Goodnight

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Key QuestionsKey Questions

1. How can your company perform similar activities better than competitors by re-engineering core processes?____________________________________________________________________________________________________________________________________

2. How can your company perform different activities from competitors or perform similar activities differently be re-generating core strategies?____________________________________________________________________________________________________________________________________

3. Can you transform your customer’s purchasing and related service experiences?____________________________________________________________________________________________________________________________________

4. Should you redefine your company’s profit drivers to charge customers differently?____________________________________________________________________________________________________________________________________

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Strong Execution-Strong Execution-PerformancePerformance

Companies lose about 35% of strategy value through poor execution

Execution is linked to strategy by key success factors so distill strategy into specific tasks and activities

“Brilliant execution is much more important than brilliant strategy…Dell gets every detail right every single day”. —Richard Owen

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Implementation and Implementation and ExecutionExecution

Rating

(1-7 Scale)

1. Does your company’s implementation suffer from clearly defined strategy actions and poor communications? _______


____________________________________________________

2. Does unclear accountability and inadequate consequences, for success or failure, impede execution in your company? _______


____________________________________________________

3. Does a silo mentality or other organizational barriers impede execution? _______


____________________________________________________

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Implementation and Execution Implementation and Execution (cont’d)(cont’d)

Rating

(1-7 Scale)

4. Are resource gaps or inadequacies a major cause of poor execution in your organization? _______


____________________________________________________

5. Do you constantly monitor and provide feedback on performance? _______


____________________________________________________

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CultureCulture

Culture is based upon organizational values and normative attitudes behaviors

Good or poor cultures are based on:

Selective hiring

Training

Rewards

Information sharing

Long-term views

Leadership

“Competitive advantage comes not from strategy but from execution…and culture is execution”. —Charles D. O’Reilly

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Culture at Southwest Culture at Southwest AirlinesAirlines

Openness

Celebration

Family

Team work

Equality

Initiative/Hard work

Underdog

StrategicIntent

StrategicIntent

Strategy Elements

Strategy Elements

CultureCulture

“What keeps me awake at night are the intangibles. It’s the intangibles that are the hardest things for competitors to imitate…and if we lose these we lose our competitive advantage”. —Herb Kelleher

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Lego DiagnosisLego Diagnosis

Internal Focus

Polite—Accommodating

Slow

Long-term thinking—not doing

Quality

Customer Oriented

Competitive

Speed—Urgency

Team work

Ownership

Execution

Current Culture Required Culture

CLOSE THE GAP

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Your CompanyYour Company

____________________

____________________

____________________

____________________

____________________

____________________

____________________

____________________

____________________

____________________

____________________

____________________

Culture Today Culture Needed

CLOSE YOUR GAP

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Implementing Cultural Implementing Cultural ChangeChange

Ownership and senior management clarity on cultural norms and their importance

Clear, consistent, and relentless communications for shared understanding

A few simple metrics to chart progress

Involvement, engagement, and participation

Vivid examples of how the new culture is rewarded and the old is not

“In the absence of a strong corporate culture…organizations turn bureaucratic”.—Andy Grove

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PeoplePeople

People can reinforce culture but culture can shape people

People must have needed skills and a capacity to operate successfully within a company’s culture

Successful hiring for “fit” is difficult but most important in the long-term

Rewards, training, advancement, etc. reinforce cultural fit

“If I am going to cook the meal…I want to select the ingredients”. —Bill Parcells

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People (cont’d)People (cont’d)

Team player

Carefully selected

Positive attitude

Flexible

Enthusiastic

Committed

___________________

___________________

___________________

___________________

___________________

___________________

Assessing Your People

Southwest Your Company

“You win with people”. —W. Woodrow Hayes

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OrganizationOrganization

Structure and processes must:

Result in the execution of success factors

Reflect-embody key elements of culture

Enable the “right” people to be highly successful

Every formal organizational structure-process will have informal equivalents

“How often should a company reorganize itself? As often as necessary”.—Peter Drucker

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ResourcesResources

Resource generation is hedgehog centric

Understand your economic engine

Achieve world class competence in key functions

Be passionate in everything you do

Avoid “BHAG” thinking

Resource utilization forces development of plan driven budgets and execution processes

Resources include financial, human, information etc. dimensions

“Only an actuary can look in the rearview and have his foot on the throttle and tell you where you are going and how fast you will get there”.

—Society of Actuaries

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Comprehensive Comprehensive Measurement and ControlMeasurement and Control

“Assess everything! You get what you measure”. —Gary Hamel

Type of Control Prime Responsibility Purpose Focus

Strategic Control

Ownership and top management

Examine if you are pursuing its best opportunities with respect to markets, products, and channels

Balanced scorecard

Annual Plan Control

Top and middle management

Examine whether the planned results are being achieved

Sales analysis Market-share analysis Sales-to-expense ratio

Profitability Control

Controller Chief Financial Officer

Examine whether you are making or losing money

Profitability:ProductTerritoryMarket segmentOrder sizeROI

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Balanced ScorecardingBalanced Scorecarding

Link and assess key performance measures

Customer perspective: How do customers see us?

Internal business perspective: What costs must we control?

Innovation-learning perspective: Can we continue to improve and create value?

Financial perspectives: How do we look to stakeholders?

Creates a straight forward single management report

Guards against suboptimization

“The balance scorecard is well suited to the kind of organization many companies are trying to become. The scorecard puts strategy and vision, not control, at the center”.

—Robert S. Kaplan and David P. Norton

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Balanced Scorecarding Balanced Scorecarding (cont’d)(cont’d)

1. Balanced Scorecard: Customer Perspective

Goals Measures

2. Balanced Scorecard: Internal Business Perspective

Goals Measures

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Balanced Scorecarding Balanced Scorecarding (cont’d)(cont’d)

3. Balanced Scorecard: Innovation and Learning

Goals Measures

4. Balanced Scorecard: Financial Perspective

Goals Measures

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ConclusionsConclusions

Your pathway to greatness exists in a landscape of opportunity

You have the opportunity and obligation to shape your company’s…

Leadership focus

Strategic intent

Execution

Performance measurement

Speed down the pathway is less important than steady, deliberate progress!

“The buck stops here”. —Harry S. Truman

“The buck starts with you”. —NPES 2006 Annual Conference

1 pathway to greatness: four essential factors for organizational success in a changing economy...

Documents

emotional intelligence

emotional reactionsrecognize

ambiguity openness

leading teamswhat

persistencestrong drive

actingtrust worthiness

organizational success

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