Reinforcing Clarity Through Systems

The need for and challenge of strategic adaptability and evolution is not going away any time in the near future. Sooner or later, each of us will need to transform our organization in response to market shifts, introduction of new technologies, arrival of new low-cost competition, or in response to state or federal changes.  What we have to realize first is that such a transformation is really two transformations, namely Transformation A - the adaptation of the core business to the realities of the disrupted marketplace, and Transformation B - the creation of a new disruptive business that will become the company’s next source of growth.

At the exact same time, both transformations will require the sharing of resources without interfering with each transformation. Clark Gilbert, Matthew Eyring, and Richard N. Foster in their article “Two Routes to Resilience: Rebuilding your core while you reinvent you business model” in the December 2012 issue of the Harvard Business Review calls these shared resources a “capabilities exchange.” Now, we need to remember that individual competencies refer to a specific person’s knowledge and skills required to fulfill specific role requirements. Organizational capabilities, on the other hand, are collective abilities of the firm required to execute the business strategy.  

As the above authors note, “The goal of transformation A is to find the strongest competitive advantage your current model can sustain in the disrupted market place.” As they continue, “Too often companies ... focus only on preserving their margins by reducing costs.” Their example of this is Borders closing store after store in response to Amazon, “vainly hoping to hold on to its profits by shrinking.” 

A broader view is needed with new strategic questions when dealing with this level of transformation. As they suggest:

- “What can we still do better than both our traditional rivals and the upstarts?”

- “What must we give up?”

- “Why do our customers come to us?

- “What is the real need that connects them to our brand?”

The second transformation has a different focus. As they write, “To realize their fullest growth potential, incumbents need to embrace the possibilities of the new marketplace as energetically as the disruptors do. That’s the purpose of transformation B.” To do this successfully, do not ask this question, “What do we do that customers still want?”, because “that’s the focus of transformation A.” Instead, ask the following new question, “What unmet needs do customers have in today’s environment?” As they explain, Transformation B is about “the construction of a separate business with its own profit formula, dedicated staff, distinct processes, and singular culture.... The idea is to exploit the disruption without being encumbered by the legacy margins,revenue requirements, or practices of the core business.”

Here is where the capabilities exchange concept fits in. “Launching a successful start-up inside a threatened legacy business takes creativity and grit.... Scaling up the new business requires something more - a structure that allows the two organizations to live together and share their strengths.... That’s the role of the capabilities exchange, which coordinates the two transformation efforts so that each gets what it needs and is protected from interference by the other.” The key is to determine which capabilities the B organization can borrow from the core to gain a competitive advantage over independent start-ups.

Here is an example from the aforementioned article. Barnes & Noble sells books and reading devices. “As Amazon’s online sales cut into bookstore profits, the Kindle burst onto the scene in 2007. In three and a half years, e-books sales surpassed bound-book sales on Amazon.com.”

As a result, the authors pointed out that Barnes & Noble repositioned their core into “a chain of retail outlets that are designed to be enriching places to shop for gifts and spend time with children and that focus less on lower-margin high-volume book selling and more on higher-margin children’s books, coffee-table books, and gifts.”

At the same time, Barnes & Noble delivered a new business model: “The Nook e-reader business, which leapfrogged Amazon’s Kindle technology and used the chain’s brick-and-mortar stores to give customers physical access to the product in a way that Amazon couldn’t match.”

The shared resources for Transformation A and Transformation B were the following: “Branding, publisher relationships, customer intelligence, physical merchandising space.”

The results so far have been the following: “B&N’s $7 billion in 2012 revenues came mainly from its profitable chain of 700 retail bookstores. The Nook captured 27% of the e-reader market in two years, growing revenues from $ 105 million to $ 933 million. While the Nook division remains unprofitable, it recently received a $ 300 million equity investment from Mircosoft.” In short, Barnes & Noble is transforming itself from a book-seller to a technology company. 

The is a great article and I encourage all of you to read it. Here is the link: http://hbr.org/2012/12/two-routes-to-resilience/ar/1

Happy Reading!

Geery Howe, M.A. Consultant, Executive Coach, Trainer in Leadership, Strategic Planning and Organizational Change Morning Star Associates 319 - 643 - 2257

Creating, Communicating & Cascading Clarity - part #2

So how do I create a clear message as a leader?

In the world of leadership communication, our goal is to describe what needs to get done “simply, but without oversimplification,” to quote Marcus Buckingham, from his book. The One Thing You Need to Know ... About Great Managing, Great Leading, and Sustained Individual Success, Free Press, 2005.

In a world of ambiguity and subtlety, creating a clear and definitive message is hard work. The pathway to creating a clear message that can be cascaded effectively begins by taking time to reflect. First, talk to someone like a colleague or executive coach and share your ideas, challenges and problems. If this person is experienced in this level of work, they can reflect the essence of your message back to you in a helpful manner.

Second, once you have your message, be very careful in the selection of your role models or examples which live up to or embrace this message. In particular, make certain that your role models are people whose performance role models the key parts of message on a regular basis.

Third, practice giving your message. Rather than coming up with a new and better speech every time, successful leaders focus on refining what they are talking about and then seeking out a diversity of audiences to whom they can share it with through out the company. As Buckingham reminds us, “Discipline yourself to practice your descriptions of the future. Experiment with word combinations. Discard the ones that fall flat and keep returning again and again to the ones that seem to resonate and provide us with the clarity we seek.”

At the Fall 2012 and Spring 2013 From Vision to Action Executive Roundtable, I talked about the importance of developing a quarterly message. Many people since then have asked me how do you keep it fresh so people listening are not bored by what you are saying? First, I tell them their message needs to be one people can see, hear and feel. Second, there needs to be systematic communication, i.e. a regular system of communication like an internal company newsletter, an internal senior level e-mail plus quarterly strategic updates and dialogues. Third, there also needs to be symbolic communication which is a way to make sure the message is noted and understood in a special way. For example, if the message is about wellness, then the symbolic message may be for the leader to commit and follow through on participating in Weight Watchers to loose some extra weight.

As a leader, one must not only have a message and communicate it well but also make sure it is getting cascaded down into the organization. According to Patrick Lencioni in his superb book,  The Advantage: Why Organizational Health Trumps Everything Else in Business (Jossey-Bass, 2012), “There are three keys to cascading communication: message consistency from one leader to another, timeliness of delivery, and live, real-time communication.” 

Which ever every pathway you choose to creating, communicating and cascading clarity into your organization, I have one small tip to share with you. By the time you are bored and tired of what you are saying, I guarantee you that someone is probably hearing it for the first time given how busy every one is with issues, problems and distractions these days.

Geery Howe, M.A. Consultant, Executive Coach, Trainer in Leadership, Strategic Planning and Organizational Change Morning Star Associates 319 - 643 - 2257

Creating, Communicating & Cascading Clarity - part #1

When working in a world filled with back to back meetings, each requiring a different focus, a leader is expected to have the mental agility to leap from subject to subject without any missteps. Furthermore, they are expected to create clarity and build perspective in each of these meetings. The difficulty is that this is easier said than done.

In the beginning, having a well crafted and specific message is important but the way in which you communicate it is also important. To many leaders have a great message but it is the misalignment between their verbals and non-verbals that causes them to have problems. Furthermore, if they do not role model excellent listening skills and respect, then they will live and die by their say-do ratio. Too many leaders and managers end up, using an old Texan phase, becoming a person with “all hat and no cattle.”

Marcus Buckingham in his excellent book, The One Thing You Need to Know ... About Great Managing, Great Leading, and Sustained Individual Success, Free Press, 2005, says an effective message should include the answers to the following questions: 

- Who do we serve?

- What is our core strength?

- What is our core score?

- What actions can we take today?

My insight when reflecting on his work and my own experience these last 2+ decades is that organizational clarity and successful organizational decision making are inter-related. While I may be stating the obvious, the former significantly impacts the later, i.e. clarity before a decision improves the decision.

However, we need to remember the insights shared with us by Noel M. Tichy and Warren Bennis in their October 2007 Harvard Business Review article called “Making Judgment Calls: The Ultimate Act of Leadership.” Here, they point out that during the early stages of decision making, effective leaders do three things successfully. First, they sense and identify the problems before the organization. Second, they frame up and name these problems. Third, they mobilize and align people and resources to solve them. These critical skills could be significantly impacted if one is not very clear.

From my vantage point, the core parts to a leader’s message need to be the following:

- the prequel to the message which creates clarity about context and urgency.

- the core message which creates clarity about where to focus. 

- the action which goes with the message that translate it into effective service delivery.

As Buckingham explains in the afore mentioned book, “Show us clearly whom we should seek to serve, show us where our core strength lies, show us which score we should focus on and which actions must be taken today, and we will reward you by working our hearts out to make our better future come true.” 

As leaders, we need to remember that clear people make better decisions and work harder to make goals become reality. 

Geery Howe, M.A. Consultant, Executive Coach, Trainer in Leadership, Strategic Planning and Organizational Change Morning Star Associates 319 - 643 - 2257