Strategic Business Change: Seven Phases to Non-Displace-Ability — Part 2
This is part two of a series on strategic business change. In part one, we looked at what drives a developmental approach to achieving non-displace-ability in the market. The evolution of a non-displaceable business tends to happen in seven phases over a period of years. In this part, we’ll review the first three phases.
Phase One: Setting the Direction for a Self-Aligning Organization
Each business must begin by defining itself clearly and distinctively. However it is not sufficient to select a “key or sole” strategic path for the organization to follow and pursue. The main focus selected must have two characteristics. It must have singularity and therefore be differentiated, authentically, from others in the field (i.e. can be competitively positioned) and it must reflect the essence of the business based on its founding vision, its people, and its offerings. Where such thinking has been developed, it is possible to build the organizational processes necessary to have each person in the organization and each functional group wrap its work around such a direction and to be self-directing in their work. For responsibility to be embedded in the corporate direction, there are deeply considered conversations of the effect on global imperatives — those considerations about what make Earth and society vital and viable. The idea of imperative is that they cannot be negotiated or traded off, or vitality is lost.
Phase Two: Performance Indices — Stakeholder Alignment
The self-alignment must be consistent with the business context made up of shareholders, customers, communities, and other stakeholders to the business and its performance. This set of work, although distinctive in its own right, is evolving as the self-aligning direction work is being done. The most effective means of developing performance indices for the corporation, and that, which creates self-aligning energy, is by making the indices external to the organization. A series of indices are developed for each of the core stakeholders that makes clear what is a “life-giving” outcome in those stakeholders’ terms. (I.e. what they consider is their Stakeholder’s highest measure of effectiveness) An example of one stakeholder and their related metric is the stock analyst. The stock analyst, when reviewing the company, is looking for “a steady increase in Return on Equity that exceeds other investment opportunities in the same class and reliable information from the company in predicting its performance”. This can have a numeric attached to it also, but your people are aware that it is fluid and that the critical pursuit is the qualitative description of what that represents.
For individual customers, there will be performance indices that increase the desirability of our base product over other options that have seemingly the same value. The key idea here is that the front-line performance indices cause the organization as a whole to look external and to develop internal performance measures based on the “real wins”, which is making our stakeholders effective. When internal measures are used as the “front-line” metrics, they do not provide the same base for self-alignment, since the drive to achieve a collective success is less clearly defined. And they leave out many stakeholders like the earth.
Phase Three: Creating a Value-Adding Mindset and Leadership Team
Organizations that are truly self-aligning, have people from the top to the bottom who can think about the business as a whole, its stakeholders, and can translate “daily” the strategic direction of the business into sound decisions and activities that have integrity with the direction. Mental capability is built across the organization to think in a more holistic, systemic and organic way, which is necessary to create self-organizing and self-aligning units. The traditional model is to pass the new Business Strategy down into the organization without this capacity being built. The “receivers” continue in their old way of working and tend to segment the work into elemental pieces, losing the connection to the whole that is necessary to be truly self-aligning with a corporate vision and singular direction. It is a bit like the metaphor of “putting new wine into old wineskins” that cannot support the new ideas and values embedded in them.
A significant part of this development process is connecting each and all the organization’s members to the external stakeholders and global imperatives to which we must all attend. The thinking needed to develop the natural working teams around particular customers, markets, and core processes of the business must be developed. It basically requires developing a “Value-Adding Mindset” into the organization.
In organizations that have done this work, you can ask any salesperson, any operating person, or any member of a functional group, “what is the core direction and strategy of the business?” Not only can they tell you the answer, but they can also tell you how they are to be achieved and what their personal role is in that effort. They can also explain how their actions will affect earnings, margins, and cash flow and be explicit about the nature of value their effort contributes to their company’s customers and stakeholders. Such understanding converts a static organization, which is only experienced in “taking direction” into a living organism which works as a single entity being self-directed toward unified strategic business change.
For the next four phases in creating a non-displaceable business, see the third and final part of this series.
About Carol Sanford
Carol Sanford is a regenerative business educator, the award winning author of The Regenerative Business: Redesign Work, Cultivate Human Potential, Achieve Extraordinary Outcomes, and executive in residence and senior fellow in social innovation at Babson College. She has worked with fortune 500 executives and rock star entrepreneurs for 40 years, helping them to innovate and grow their businesses by growing their people. Learn more about Carol and her work at her website.