In many studies such as that done by McKinsey & Co this year because of the crisis, maybe the first global crisis, the practices or what companies have done in the past to survive previous crisis and changes have been analyzed.
Among these distinctive characteristics, these companies demonstrate in a countable way throughout time the following:
- An analysis of their background and context and the possible changes and implications these can have in their organizations.
- They have a clear intention and a consistent strategic vision.
- They have clear and differentiating capacities and a culture aligned with that strategic vision.
- They have the ability to change, to learn and to modify their configuration throughout time.
Let’s see in detail what we mean by some of these practices and characteristics.
1. Vision or Strategic Intention.
The vision or strategic intention firmly and clearly summarizes the intention towards the future of the organization. This intention has to be oriented to give the greater value to the groups of interest in the organization, their shareholders, employees, customers and other. This vision can be quantitative or qualitative, this last being the most appropriate for the long term in my opinion.
One key point for a good strategic vision is that this has to join, align, and fascinate all the groups of interest towards that shared intention. Better we see some examples:
• To put a man on the Moon at the end of the decade (Kennedy and NASA 1962)
• To became a company of 125 trillion $ in the year 2000 (Wal-Mart, 1990)
• To became in the best well-known company by changing the image of bad quality of the Japanese products (Sony, early 1950s)
• To be the most powerful, the most helpful, the most attractive financial world institution ever created (City Bank, predecessor of Citicorp, 1915).
• To be the dominant organization on civil aviation and to take the world into the Jets time (Boeing, 1950).
Sometimes the strategies can be “a bit” aggressive, challenging or facing the bigger rival or competitor searching to generate big inner competitiveness:
• To thrash ADIDAS (NIKE in 1960)
• To knock out RJReinolds as the first tobacco company of the world. (Phillip Morris 1950’s)
• To destroy Yamaha (Honda in 1970´s)
From my point of view, this kind of visions can be very challenging and competitive but they are not sustainable long term since it will be easy that within and outside the organization – clients, partners, etc. are not comfortable with the values under this type of strategic intentions.
In fact, the NIKE’s vision here commented took it to beat in short time its biggest rival, and even to take it to the edge. Nowadays, Nike keeps being the first trademark in the world but its aggressiveness helped to create a favorable atmosphere towards ADIDAS, which turned it to be the most selected, historic, exclusive and European trademark again.
In short, the vision or strategic intention defines which is and will be the competitive positioning of the company, which will be its value proposal, the different or competitive advantages to base on and with which products and services or in which market the organization will successfully work.
2. Differentiating Capacities.
Once the strategic vision being defined and concreted, it is necessary to know the differentiating capacities or competences the organization has to have to successfully attain the designed strategic intention.
These competences or capacities have to be perfectly aligned with the defined strategic vision. They will let align the rest of the parts or organizational infrastructure with the strategy. Among these differentiating capacities, there can be ones related with the processes (the way things are done), with the competences of the key people, with cultural elements or with the organizational behavior, with technological or innovation capacities.
These differentiating capacities also define the approach of the organization towards customers, their value proposal towards them. To understand it, let’s see one example with the restoration sector:
These three companies of the same sector have value proposals and strategical orientations towards clearly different customers and therefore their differentiating capacities have to be totally different. In the case of McDonalds, its main capacities are based in the “operative excellence”, in the centralization and innovation of the work processes by means of which repeatability and standards are guaranteed in any of the thousand of centers all over the world. Being this its main capacity, it does not need highly-qualified people (many are students), neither innovating the product (its BigMac is the most sold and oldest product) neither offering a careful or different service to each customer.
On the other hand, “Le Manoir” has its main capacities based on the “intimacy and unique experience of the customer”, making each customer has a unique and unforgettable experience, careful and differentiated service. This means capacities with very high personal competences of its human team (great chefs, cookers, aids of kitchen, heads of rooms, waiters, etc.), permanent innovation and creativity in products and continuous training. Quite the opposite to the case of McDonalds.
Finally, in Tchibo the differentiating capacities to offer to their customers are based on the “speed to create products”. This is done with organizational competences such as the innovation understood as a process of main management of the business model and the creation of fashions and tendencies.
We see that different strategic intentions mean different orientations towards customers and markets, different value proposals and, therefore, they need different differentiating capacities.
These differentiating capacities to have, define or condition how the organization must be. They define their employees, the capacities to have, they define the task to perform, the processes to be perfectly defined and which not, how many and which technology is going to be necessary, the kind of objectives and performances to measure and manage and the kind of values, cultures and behaviors to promote.
The reality is that in many companies and organizations, this does not work this way and sometimes the organizations are defined without the differentiating capacities the company has to achieve to successfully compete and make real their strategic vision.
3. Ability to learn, change and adapt throughout time.
Maybe this is the most important and the scarcest of the mentioned practices and characteristics and, undoubtedly, its absence is the cause of many of the disappearances and failures of many organizations.
The key of this practice or ability is, from my point of view, in the consciousness by the key people in the organization of the “change”. This that can seem so evident is a deficiency in many organizations and leaders who do not live this conscious of permanent change and believe that making the same will guarantee them success in the present and future. Experience says to us that nothing further from the truth.
We have hundreds of cases of organizations not conscious of the changes of their backgrounds at social, demographic, technological, political, economical or environmental level and they could not adapt on time.
I will not give names in this case but many of us know about shops and enterprises which did not see that the labor and social changes would make many of their customers going to shopping centers and commercial areas. Or any company of typewriters which did not see that computer technologies would lead to the personal computers and kept on betting on the carbon paper to make copies. Recently some companies which were leaders in photography which did not see the impact the digital technology could have in their sector and kept on betting on the “old” films or auto-developed paper. Recently, nowadays, big world car manufacturers over dimensioned their productive capacity with factories all over the world thinking the market can grow without limits and they did not imagine an economical and financial crisis could reduce the demand of cars 50% and limit the credit until putting them really on the edge.
The change takes place in a countable way in the background of the organization and in the most general context in a quick and unstoppable way throughout time. It is a change that does not depend in anything on the own organization, that will happen in spite of which this does.
Before this situation, organizations first and in a regular way have to analyze their background, to estimate and plan possible scenarios, then to study the impact of these changes and new scenarios on them and, finally, to change, to adapt, to modify their strategies, strategic intentions, differentiating capacities and organizations to keep on being competitive and successful in the future.
© Pablo Riera, Grupo P&A, The Change Leaders-Oxford