Is your business still heading in the right direction?
Brutal. That’s how I’d describe 2020. And 2021 isn’t shaping up much better. Here we are in our third national lockdown with all the challenges this brings to UK businesses. It’s hard to keep ploughing on when the ground you stand on is constantly shifting.
This is why you need faith. Balanced by realism about your current situation. I’ve been re-reading Jim Collins’ seminal books, ‘Good to Great’ and ‘Great by Choice’ over Christmas. He describes the experience of James Stockdale – the highest-ranked American prisoner-of-war in the Vietnam War, calling it ‘the Stockdale Paradox’.
Stockdale was locked up for a long, long time – over eight years. In this time, many of his fellow prisoners gave up the will to live. They were the optimists. The ones who were saying, we’ll be out by Christmas or Easter or their next birthday and eventually ran out of hope. In contrast, Stockdale lived day to day, accepting the reality of his situation. But he never lost faith that he would make it out alive and it would become the defining event of his life.
It’s easy to see the parallels. You need to plan for the worst, but hope for the best. As 2021 kicks off, it’s time to revisit your vision and purpose. Are you still heading towards the same long term goal? Did this serve you last year? Was it alive in your business or do you need to do more to push it down to staff? Going through this process will help to pull your head up out of the nightmare of COVID, no matter how bad it gets. You’ll recognise that growth rarely goes in a straight line. And that 2020 was just a blip. I’m here to tell you, ‘Keep the faith. You will come back bigger and stronger’.
Breathe into your stretch
Whenever I kick off a new year with clients, we review their BHAG (Big Hairy Audacious Goal), purpose, core values and profit/x. The key tools of their overall vision and direction. Are they fit for purpose? Are they still working for them? Do they still make sense? What did they achieve last year that helped to roll out their vision? Maybe we go deeper with some of the behavioural stuff using the Culture Canvas.
I ask my clients to score each of these tools out of five – where one means they’ve fully understood the concept and five is they’ve made it an asset in their business. Some clients have even pivoted their business around a tool in the last year. Income following assets. It’s clear that some tools work better in certain organisations than others.
It’s a bit like yoga and breathing into a stretch. Where are you now and where do you want to be? Where are you stuck?
There’s no strategy without a vision
A concept in ‘Good to Great’ really resonated with me this time around. There’s no strategy without a vision. How can you define your strategic priorities if you don’t know where you’re headed?
I’ve written extensively in the past about how to find your purpose, BHAG and core values. You simply can’t have a strategy without them. If you’re doing this for the first time, consider using Jim Collins’ ‘Hedgehog concept’ – it’s by far the most effective method in my mind. With your executive team, explore 1) what you are deeply passionate about (your ‘Why’) 2) what you can be best in the world at and 3) what best drives your economic engine. It’s where these things overlap that you’ll find your vision.
But visions evolve over time and may need to be fine-tuned along the way. You need regular check-ins to make sure you’re still heading in the right direction.
Sanity check your BHAG and purpose
Your BHAG should be a big part of your vision and this is a great place to start. This longer-term, 10 – 25 year horizon is your north star. And it’s easy for people to lose touch with it as time passes. Likewise your purpose. So look again at why you started the business. Does your purpose still make sense?
A few years ago, I did a piece of work with one of my clients, David Tudehope, CEO of Macquarie Telecom (who’s incidentally just won CEO Of The Year at the World Communications Awards – the first Australian Telco CEO to do this. Well deserved).
David started Macquarie during telco deregulation in the 1980s. His original purpose was to ‘make a difference in a market that is underserved and overcharged.’ Years later, our research revealed that whilst the Executive team could still articulate this purpose, the rank and file couldn’t. The problem lay with middle management who had lost faith. I spoke to some of them asking, ‘Is this real to you? Is it true? Does it still make sense?’ Their answers were less than convincing.
So we revisited it. If the purpose had changed, what was it? Back to the hedgehog concept, applying it to the business as it was now. Macquarie is a service business. More than that, they love being a service business and they’ve used NPS (Net Promoter Score) highly effectively to drive their churn. Hence, their customer LTV (Life Time Value) is high – this flywheel of low churn and high LTV has driven their growth. But over the years, they’ve moved from being a telco into cloud so their competitors have changed. They’re operating in a very different market. We asked the question, ‘Are our customers still being underserved or undercharged?’ And the answer was yes.
Their business had moved on, they were selling different things to different people, their staff had changed but their fundamental purpose remained true. They were still passionate about the same things. They were back in tune with their purpose.
Crucially, this exercise reconnected the cloud services division to David’s original founder story. As a communication exercise, it was invaluable. By bringing the middle managers in to explore this at depth, he got to the root of any issues or problems and sold them the vision. A fantastic way to re-energise his company.
As companies grow and change, it’s easy to lose sight of the vision. Often this is because distance grows between the Executive Team and other staff. When companies are small, they tend to be staffed by generalists on a mission together. As they grow and split into functions, this inevitably declines. You have to work harder to make sure vision and values are communicated more widely.
Take Cloud IQ – another of my clients. A couple of years ago, we realised that the CEO hadn’t told his founder’s story to the rest of his Executive team. As he described the reasons why he’d set up his company, it had a palpable effect on the rest of the people in the room. It meant something profound to him, but he hadn’t shared it.
So now, whenever I’m kicking off with a new Executive team, I start by asking the CEO to tell me why he started the company so everyone can feel this at a visceral level. I recommend embedded this oral history into the rest of the company. Like the founding story of Apple – Steve Jobs working in his garage – these stories need to be told. Not just to the Executive team but during the onboarding process, on the website, in recruitment. This is part of your business’ personality. Why wouldn’t you want to share it with as many people as possible?
Review core values
Core values should be a central part of your vision – how you go about doing business. Again, you need to check-in with these to see if they’re working for you. Are they real? Many companies have fake ones. I worked in an organisation that said one of its values was excellence. Boll*cks! It couldn’t have been further from the truth!
Every day I saw evidence that it wasn’t. Frugal, yes. Excellent, no. I suggested they change this value to frugality. To my mind, this wasn’t a bad value to hold. If it was good enough for Cisco, then it was good enough for us. Nothing wrong with being careful. But there’s no point saying your organisation values something when it isn’t true in practice. This undermines the whole concept of values.
It’s about signposting behaviour for people. So they know whether they’d enjoy working for you. Does your mission excite them? Do they want to get on your bus? Your values should communicate the behaviours in staff that you want to see. And by implication, the ones you’re not prepared to tolerate.
They’re only real if you do something with them. Putting them up on the wall and then promoting people who don’t exhibit them is no good. I see that a lot. Particularly in sales-driven organisations. When I work with companies on their values, I see the penny drop. They’re thinking, ‘Damn. We shouldn’t have promoted x. They don’t fit with what we believe in.’
So as part of your review, look at whether you hired, fired and promoted using your values. Were there discussions, or decisions, or behaviours that were impacted at exec level by the values? Go through each of them. What did you do last year as a result of having this value? Hand on heart, did it genuinely make a difference? If it didn’t, scratch it off. Or change it to something more meaningful.
I use the Culture Canvas to work through beliefs and truths. The ‘even over’ technique is useful here. It helps clarify what’s most important, e.g. customer satisfaction ‘even over’ profit. And that forces people to be selective. To prioritise. It makes it easy for your employees, customers and suppliers to know what you’re about. They can see the behaviours that you value above all else.
Is your profit/x still right?
Profit/x is a fundamental component of Jim Collins’ hedgehog concept. It’s how you choose to make money – a strategic metric that’s central to your vision. As such, it should be part of any check-in. Look back to review decisions you’ve made to spend money – products you’ve launched, people you’ve hired etc. Have those decisions been guided by asking how they maximise your profit/x?
Collins describes the example of Walgreens, the American pharmacy store chain. They realised that their competitors were focused on profit/store. But this was contradictory to their purpose of convenience – Walgreens wanted a local presence similar to McDonald’s or Starbucks. So, they adopted the metric used in these companies – profit/customer visit. This strategic choice drove their growth. It increased the likelihood that people coming to one of their stores because it’s conveniently located would spend more money each time they visited. Powerful stuff!
You can find more lessons from the works of Jim Collins in the post 7 important lessons from Jim Collins’ ‘Good to Great’.