Corporate Stewardship

Posted by admin on August 28th, 2010

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Let’s pause here for a moment. I said that if the organization could speak, the core values are what it would say are essential to its success. But the organization clearly has no voice. No brain. The idea that the organization is an entity may seem somewhat bizarre. But think about it. Most organizations have longevity. Their people come and go. Their leaders are its stewards, the keepers of the organization for a period of time, with a responsibility to turn it over to the next group of leaders in as good if not better shape than when they received it. It follows logically that their leaders must articulate what is essential to the success of the organization.

This notion of stewardship is critical. When the leaders in an organization view themselves as stewards, it enables them to take a longer view – and to articulate the organization’s core values. Google reflects this kind of stewardship. It has gone through the exercise and has articulated its core values in the following way:

Google’s Core Values

1. Creativity and challenge.
2. Unbiased, accurate and free access to information.
3. Independence and focused objectivity.
4. Long-term financial sustainability.
5. Investment in talented employees.

These core values define what is essential for Google to succeed. Underlying these core values are specific statements about what each means. We’ll get to those next time.

Leading at Light Speed© is a new leadership book for anyone and everyone who cares to build organizations that perform at very high levels, as measured by profitability, growth, and customer retention. In a hyper-connected world, change is occurring at accelerating rates of speed. Leading at Light Speed describes in detail ten quantum leaps to higher levels of organizational performance for leaders at all levels.

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The Problem with Mission Statements

Posted by admin on August 27th, 2010

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What is the problem with organizational mission statements? The problem is that most organizational mission statements try to say too much – and wind up saying nothing.

Consider the following hypothetical example:

“Synsios Inc. supplies technically innovative software and hardware solutions to the OEM computer market that provide long-term benefits to our customers and our investors.”

This is a hodgepodge mixture of purpose and values, making it difficult to know what the organization is all about. Separating and clarifying purpose and core values may take more time. But doing so builds trust and enables companies to make the right plays, inning after inning after inning, because the right plays are ingrained. That’s a hallmark of a light speed organization.

By the way, I like the idea of mission – of having a deep purpose. That’s clearly consistent with the Six Rings Model. I also think mission statements have their place to describe a goal. “Our mission: increase market share 25%,” reads a sign in Volvo’s marketing department. “Our mission is to build home ownership,” reads a sign at Fannie Mae’s home loan division. Putting a man on the moon was NASA’s famous mission in the 1960′s. Mission statements like these work fine if used to communicate specific priorities.

This tool details the content of a successful business plan. It provides a framework for writing a business plan and a checklist of information that you will need to gather. It also tells you some of the questions that savvy investors will ask. (1 page)

Components of a Successful Business Plan
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Strategic Planning Model – The Third Ring – Vision

Posted by admin on August 26th, 2010

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A clear vision sharpens the focus. It says, “Here’s our direction, here’s where we’re going, here’s how we’re going to change the world.” Vision is the third ring in the Six Rings Model (see below).

strategic planning model

Great leaders build trust by defining vision. People want to know that there’s a plan and a direction. Vision has two components. The external vision defines the outcomes that the company wants to achieve. Sony ’s vision in the 1950s was that “fifty years from now, our brand name will be as well known as any on earth.” General Electric’s vision in the 1980s was “to become number one or number two in every market we serve.”

The second component is an internal vision of change. GE said it would “revolutionize the company to have the speed and agility of small enterprise.” Sony said it would “create innovative products that become pervasive around the world.” Vision needs to be linked to a clear understanding of the strengths and assets of the organization along with the opportunities in the marketplace. Often it means a dramatic shift in focus and direction. Occasionally it requires a full-scale revamping of the company’s business model. Typically, it takes months to develop a fully-understood and fully-realized vision.

Here are the crucial steps:

Step 1: Pick a Time Horizon

The first step is to decide on a time horizon. For some organizations, vision spans a ten-to-fifteen year period. But in others a shorter horizon – three years – is just fine. At Teradyne, a fast-moving maker of software that monitors web performance, the time horizon was one year. Why? Because the software industry was moving so quickly its CEO didn’t see any value in planning beyond a 12-month time horizon.

Step 2: Map the Strategy

Once you decide on a time horizon, the planning team needs to meet and have initial discussions about vision. Ask people to think about these questions in advance. (For this example, I’m assuming a typical time horizon of three years.)

1. What are our strengths as an organization? What do we do exceedingly well?
2. What are our weaknesses? Where do we consistently fall down?
3. What are our opportunities? What’s new that we could be capitalizing on?
4. What are the challenges? What alternatives to our products and services do our customers have? How are those alternatives changing?
5. Who are our primary customers? Who are the people for whom we are trying to create the most value?
6. What trends are affecting our customers? How might their perceptions of the value of our products and services change over the next three years?
7. Are we focusing on the right customers? What would happen if we shifted our customer focus? What could we do more of (or less of) to create increased value for our customers?
8. What is our current business model? How do we create value for customers? how does that translate into profitability?
9. What might be some essential innovations in our way of doing business that would create added value for our customers? How could we re-define our way of doing business?
10. Based on the above, what should be our external vision? What outcomes are we trying to achieve in three years? What are the rationales for that vision?
11. Based on the above, what is our internal vision – how do we envision our organization changing over the next three years to support the external vision?
12. What do we see as the major priorities for change and investment to realize this vision?

Once everyone has discussed these questions, you can create a map, laying out the components of your emerging vision. Plotting them on paper enables people to visualize the emerging vision (see the example below).

strategic planning map

This tool is used to develop a vision statement a clear picture of where the organization wants to be in the future. It helps leaders identify the vision “drivers” of the organization. (2 pages)

Developing a Vision Statement
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Strategic Planning Model – The Second Ring – Core Values

Posted by admin on August 25th, 2010

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Let’s move to the second ring. Core values define what is essential to the success of the organization. Let’s be sure everyone understands what I mean. For example, if I say my house has a lot of “value,” I mean it’s worth a lot of money. But that’s not the same as a core value. If I say: “What I value is my family,” I am stating what is of utmost importance to me. That begins to capture the meaning of “core values.” There are different systems of values orbiting around us.

First, we have our personal values. These are what we value most as an individual: survival, family, personal dignity, and freedom. Beyond these lie other personal work values. Some people value amassing a vast fortune. Others value public service. Some people value creativity, teamwork, or hard physical labor, while others may value intellectual activity. It’s probably safe to assume that Donald Trump holds a different set of personal values than Ralph Nader.

Another layer of values are our community values. These are the things we consider important in our immediate communities. Some value development; some value green space; some value conservative politics; others value progressive politics.

Orbiting around our personal and community values are cultural values. Cultural values vary greatly. Freedom of individual expression is highly valued in the United States. People in Denmark value egalitarianism. Deference to authority is valued in Saudi Arabia. Close-knit families are highly valued in Mexico. Clearly, a culture’s values permeate the people who live within it.

Finally, there are the organization’s core values. When I talk about an organization’s “core values,” I’m referring to the things that are essential to its success, such as product reliability, customer satisfaction, financial success and ethical integrity. These are the values that the organization, if it could speak on its own behalf, would say are essential to its long-term success.

core values

Here is an example of a balanced scorecard tied to an organization’s core values. (1 page)

A Balanced Scorecard Tied to Core Values
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Strategic Planning Model – The First Ring – Purpose

Posted by admin on August 24th, 2010

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Purpose is the first ring of the Six Rings Model. It communicates why the organization exists. Purpose is fundamental. By clarifying purpose, you sharpen the direction of the entire organization. The test of a purpose is this: Does it tell people why the organization exists and what it fundamentally does? Is it concise and easy to understand? Does it communicate by implication what you don’t do?

A company should know why it exists, right? Yet purpose can be exceedingly elusive to define. Disney and Merck have both struggled to reconcile their shareholders’ demands for quarterly profit growth with the goal of innovation, whether it be artistic excellence (Disney) or basic scientific research (Merck). Their purpose statements have provided them with needed clarity during these clashes.

A purpose statement doesn’t sum up everything that the organization does. It’s just the first ring. But it needs to be very clear. Disney’s purpose is to make people happy. Southwest Airlines’ purpose is to provide low fares. That’s it. Clear and simple.

Leading at Light Speed is a new leadership book for building a high-performing organization. It synthesizes over 20 years of consulting experience into 10 Quantum Leaps. Take this free work survey to assess your organization’s strengths and weaknesses.

Every organization needs a purpose statement. This tool explains what a purpose statement is and provides examples. It includes a four-step process for developing a purpose statement. It also includes a series of questions that need to be answered in order to develop a strong purpose statement. (3 pages)

Developing a Purpose Statement
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The Strategic Framework

Posted by admin on August 23rd, 2010

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In order to align the core values, you need to view them as part of a coherent framework, a way of communicating what the organization is all about and where it is going. “The Six Rings Model” is this framework. The Six Rings Model looks the same whether you are JC Penney or the White House. The beauty of this model is that you start in the first ring and work your way outward. Each ring provides a different perspective – or lens- with which to define your company. When one ring is done you move on to the next. It’s an iterative process: the work on one ring informs the work on the others. Each successively narrows the aperture and defines the specific ways in which the organization creates value for its owners and its customers.

The first three rings together form what I call the “strategic focus,” a nexus around which all activities are coordinated and organized. Will we make this product? Yes, because it’s consistent with our strategic focus. Will we enter this market? No, because it conflicts with one of our core values. In short, when you have a well-defined strategic focus, you can make sound, consistent decisions at all levels. Having the strategic focus is the first quantum leap that leaders make to build a light speed organization.

The strategic framework is discussed in Chapter One of Leading at Light Speed, a groundbreaking leadership book describing 10 Quantum Leaps to build trust, spark innovation, and create a high-performing organization. Take this free work survey to assess how well your company measures up to the 10 Quantum Leaps.

This tool defines the six elements of a strategic plan and shows their relationship and inter-dependence. This is a valuable tool to use in guiding an effective strategic planning process.

The Six Rings Model
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The Benefits of Core Values

Posted by admin on July 22nd, 2010

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Aligning people around core values is the first thing leaders must do. It is the framework that enables you to start moving at light speed. “We are constantly making sure people are aligned with our values,” says Laura Batten, the CEO of a consumer goods manufacturing company. When people truly understand the core values of their organization, they become aligned. The long-term drivers of the company’s health are widely understood. People start to make decisions based on the core values. The enterprise starts picking up speed.

When an organization feels united around well-understood core values, performance is no longer about what’s good for you or me, but what’s good for the long-term. Employees trust the company’s direction. Talented people are motivated to join the team. Customers are drawn to its products and services. Think about Apple and its core value of innovation. Or Starbucks and its core value of consistent quality. Those are not empty promises; they are reflections of the values-driven nature of those enterprises. Think about Nordstrom, Southwest Airlines, and 3M Corporation. These are all companies driven by a framework of core values.

There is a clear link between core values and performance. A grocery chain’s revenues rose 24 percent the year after our firm facilitated its shift to core values. A $200 million software company’s profit margins rose 37 percent. There are many other examples I will describe in detail in this chapter. As Larry Johnston, the CEO of Albertson’s supermarket chain puts it: “There are two dimensions to leadership. Performance and values. You can’t have one without the other.”

Focusing on core values attracts and retains talented people. It’s easier to get the right people to join your organization when you can clearly communicate what’s important, and what behaviors you’re looking for. This reduces turnover, thereby cutting the costs associated with recruiting, retaining, and retraining employees. In a service economy with higher intrinsic labor costs and increasing labor mobility, this is an important source of competitive advantage and profit.

Focusing on core values also attracts and retains loyal customers. People are attracted to companies that are value-driven. Smart companies use this to build tight bonds with their customers. Starbucks, Google, Apple, Southwest, Nordstrom, IBM, and Porsche are all examples of companies that have effectively aligned their employees and customers around a set of core values.

The benefits of core values for an organization are reported in Chapter One of Leading at Light Speed, a groundbreaking leadership book describing 10 Quantum Leaps to build trust, spark innovation, and create a high-performing organization.

Once you have defined your organization’s core values, you can reinforce them by incorporating them into your performance appraisals and organizational assessments. In order to do that, you need to identify the specific behaviors associated with each core value. For example, “being flexible and adapting to changes in customers’ needs” might be a core behavior associated with customer service. (3 pages)

Aligning Behaviors with Core Values
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Learning Loops Part I

Posted by admin on July 20th, 2010

Learning loops are described in detail in Leading at Light Speed. Download the podcast:

One CEO describes his experience leading people through change as follows: “It’s a race where you run the first four laps as fast as you can – and then you gradually increase the speed.” In order to lead at light speed, you have to accelerate the pace of learning inside the organization. It sounds easy, but it’s not. People are naturally resistant to changing their ways. The secret is what I call “learning loops.”

Learning loops are a process of sharing performance information with people and empowering them to make the changes needed to improve performance. They are similar to feedback loops except they are deliberately designed to achieve organizational change at maximum speed. It means giving the right people the right information at the right time – and sparking their creativity and innovation.

Learning loops should encourage change at the cognitive level. Think about what happens when you’re breezing down the freeway at a brisk 90 m.p.h. and you see a police car in your rear-view mirror. Your brain compares the data on your speedometer to the posted speed limit. Your brain sends an immediate message to your foot to slow down. In other words, data related to performance has been shared immediately with the people empowered to improve it. The right people have gotten the right information at the right time – and are motivated to improve! The learning loop has resulted in a change in behavior – and saved you a speeding ticket.

Learning loops depend on communicating information about performance in a way that’s easy for people to understand. How are we doing on customer satisfaction? how about service reliability? What about finance? Assuming you have a balanced scorecard in place, you can tie it to a performance dashboard that visually depicts whether the organization is achieving its performance goals. You can signify with green, amber and red areas of relative strength and weakness. You can provide detailed comparisons of past and present performance. Arming people with data that is reliable, easy to understand, and has sufficient background detail makes it easy for them to see where they need to make adjustments.

Learning loops need to be immediate. People need to know as quickly as possible what’s going on. It’s not good enough to have quarterly or bimonthly performance “updates.” Feedback needs to occur as soon as the information is available, so that people can communicate and adjust their plans in a way that can actually influence outcomes.

Learning loops need to be shared with people who have the authority and responsibility for improving the performance levels. Start with the people who wield the most influence – typically the members of the senior leadership team. As soon as information becomes available, they need to be talking about which targets are being met – and which are not. It’s not enough to email the report or publicize it on a web site. People need to hear the report as a group, think through the implications, discuss options and share ideas. If progress seems too slow, ratchet up the pressure. That’s how learning loops work.

Take this free work survey to assess your organizational strengths and weaknesses based on the leadership book Leading at Light Speed.

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The Five Types of Decisions

Posted by admin on July 1st, 2010

This tool describes five types of decisions (and two levels within each type). Managers and leaders can use this tool to clarify the types of decisions that are made every day – and the respective roles that people play in making them. This is an invaluable tool for improving organizational communication and performance.

Five Types of Decisions
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The Five Types of Decisions

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Autocratic Decisions

Posted by admin on June 30th, 2010

Autocratic decisions are discussed in Leading at Light Speed.

The easiest type of decision is autocratic: It’s a decision you make yourself. You pick out your shirt in the morning. You decide how to respond to your email. No one else gets involved. I divide autocratic decisions into two sub-types:

• You make the decision by yourself using the information you have available,
• You obtain information from another person (or other people), and then decide by yourself.

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Many decisions are autocratic, but they are also relatively trivial. What you eat for breakfast, where you park your car, the color of the socks you wear – these are decisions you make on your own. If you reflect on all the decisions you make during a day, you can appreciate how much of life is filled with autocratic decisions.

I can only think of three situations in which a leader should make important decisions in this manner: 1) when the decision is straightforward and you have all the information necessary – in which case you still need to communicate what you’ve decided and why; 2) when time pressure forces you to make the decision quickly – in which case you need to explain those circumstances to people who are affected; or 3) when there’s an overarching imperative to maintain secrecy.

Leaders who want to build an organization capable of operating at light speed should not make important decisions autocratically. Instead, they need to use one of the other four processes.

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Take this free work survey to assess your organizational strengths and weaknesses based on the leadership book Leading at Light Speed.

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