Value Drives Strategy | Technological Leadership Institute
Anyone who works for an enterprise, whether large or small, has heard a new “strategic plan” trumpeted by management. Those plans range from a reaffirmation of the existing path to a new direction advertised to re-energize the organization, and often revive flagging financial results.
Many of us have had the opportunity to participate in the planning sessions that arrive at that shining document. Often using consultants, and always involving food and coffee, these are opportunities to “stand back” from day-to-day pressures, and think about the “long term.” Many people I know react with dread to the long, meandering conversations, often ending with a long document written by a few, read by fewer, that reasserts the greatness of the current plans.
But strategic planning does not have to be that way. Done well, it is an opportunity to re-energize an organization. At best, it is an opportunity to bring everyone along in the changes needed to succeed in a changing world.
These discussions can result in a common understanding of the competitive environment and a point-of-view about the future. Armed with such foresight, a good strategic process articulates how the company will utilize its available resources to compete over the next several years. As strategy guru Michael Porter of Harvard has written, a good strategy finds a unique way of competing. It determines what an organization WILL do, and most critically what it WILL NOT do. As Porter says, “Strategy sets limits.”
For me, the most successful strategic processes start with a common understanding of the values of the organization. These are the basic beliefs that are so ingrained that they are actually hard to identify and articulate.
This goes beyond the HR principles so many organizations have engraved into the glass in the lobby. It gets to what the organization actually rewards. Who are the heroes? What are the success stories that everyone knows? Those are the real values of the enterprise, and any strategy that does not begin with those values is doomed to failure.
A great example of this is Southwest Airlines. Before starting Southwest, Herb Kelleher outlined his thoughts about a new airline on a napkin with cofounder Rollin King. He defined the mission as exceptional customer service with a sense of family warmth, friendliness, individual pride, and a corporate spirit fueled by a large dose of fun.
Knowing how challenging it is to reinforce such values with thousands of employees over many locations, Southwest has been deliberate about building demonstrations of those values into training. They ran an advertising campaign, “The Southwest Spirit”, that both communicated to employees and customers the kind of environment they wanted. Starting with hiring people who had these values themselves, Southwest has been able to build strong teamwork around exceptional customer service.
How does that reflect in business strategy? Southwest built their cost advantage around high utilization of their capital assets. In other words, keep the planes in the air! Waiting for a cleaning crew to come and get a plane ready for the next flight is lost revenue. So skip the cleaning crew! The flight attendants can tidy up themselves, taking less time, and saving costs. Without a strong value of customer service and a fun “vibe” in the crews, that would not work.
3M is another company with a strong culture of innovation. I am convinced that part of that comes from the story of Dick Drew. It was 1925 when Drew was trying to sell sandpaper to the embryonic automobile manufacturing industry. This was the “Roaring 20’s”, and customers wanted to move beyond basic black to two-tone cars. But a clean paint line was very hard for workers on the factory floor to achieve.
On the factory floor, Drew saw the frustration. Nobody asked him to help, and indeed everyone was happy with his sandpaper. But Drew remembered some work in the 3M laboratory, connected it with the frustration of those factory workers, and invented Masking Tape. He saw an “unarticulated need”, and used science to address it.
I suspect almost every 3M employee worldwide can tell you that story. Dick Drew is still a well-known hero to 3Mers, and his seeing of unarticulated innovation opportunities is a core value in the company today.
What does your enterprise value? I mean REALLY value? Any solid strategy for going into the future has to start there. It is worth taking the time to articulate those values, and then test your intended strategy against those values. If they are not in alignment, you have work to do!
This blog is part of a 14-week series by TLI Senior Fellow and Honeywell/Edson W. Spencer Chair in Technology Management, Steve Webster. Each post will focus on one concept or idea discussed in his course MOT 5001- Technological Business Fundamentals. Other posts in the series can be found here.