To compete effectively in business usually requires that you can do many things well. But, there will always be ‘one thing’ that you must truly excel at. However, more often than not, the culture that is required to uplift that ‘one thing’ is not recognised and a different culture takes hold. And unless leadership knows how to design their business to bring order to the many tasks required to make that business competitive, its true potential will never be reached.
Active Knowledge Question:
Are you asking your business to excel at different tasks which are in conflict with each other, or are you unsure if this is even the case?
All Things
It is not possible for a single person to excel in every possible skill. When you interview someone for a role in your business, you look to their experience, qualifications and character. The type of person who will make a great CFO will not be the same person who will make a great marketer, creative design lead or in human resources. It’s not just their training and experience, but who they are as a person. Their personality and character play a critical foundation in allowing them to excel in their chosen profession.
When we bring all these various roles together around the table to discuss an issue, we expect them to bring their different perspectives along, and it is the blending of these views that we hope will deliver the best outcome.
But when you step away from your business and look at the various capabilities that it must excel at to compete effectively, there is often a conflict. The conflict arises because we don’t think what is the ‘one culture’ to underpin excellence across all these skills, even though each may require a different culture to succeed. And we end up not being particularly good at many things.
The ability to do many different tasks well lies in your organisational design. And organisational design has little to do with the organisational chart, which reflects the way you allocate decision-making across your business.
Culture
Culture is most easily described as a business’s personality and includes its traits and attitudes. You develop the culture of your business to underpin its competitiveness as a business. There is one right culture for your business, an all-embracing culture.
Every business should craft a competitive posture that will lift their strengths to the forefront and minimise any strengths that competitors may possess. A competitive posture that is focused on delivering more customer value than anyone else.
What is the right culture for your business? The one that lifts your tailored competitive posture to the forefront. And although it may have some elements in common with other businesses, it is tailored and designed to position your business to win.
The design of your business will be a critical element of your competitive posture as it will place, prioritise and align the various capabilities that form part of that posture.
Capability
Capabilities cannot be left to chance or at what exists today. And while capability will influence how you compete, ultimately it must be tailored, crafted and built to enable you to outcompete all others in your chosen market.
Your competitive posture is a deliberate outcome of your customer focus and the capabilities you have built to deliver more customer value than anyone else in your chosen marketplace.
Your business was likely formed to meet a need in the marketplace that you recognised and believed you could meet better than others in that market. That need is your customer focus and the domain in which your business must excel and lead the market.
It is also likely that when you entered the marketplace, you did so with a specific – and possibly unique – value proposition that you believed would outcompete others in the market. That value proposition is reflected through your competitive posture, being where you had decided to position your offering in the market so that it represents greater value than others could offer. It is an outcome of the way you viewed customer need in your market.
Not everyone can excel at every task, nor can every business. Their personality, their culture will determine what they can be really good at and hopefully, you have selected a competitive posture that draws upon what you can be really good at, to the forefront. However, there will be a multitude of capabilities that will be required to allow you to deliver your customer value. And this is where leadership is often caught out.
Without a clear understanding of:
- Your competitive posture;
- The core capability required to deliver on it:
- The culture needed to underpin that capability, and
- How everything else stacks around it:
it tends to get very muddled.
And often you will find a culture that does not support the competitive posture of the business being lifted to the forefront. A profit-first motive is usually the culprit that has elevated the wrong culture to the fore.
But the correct design of your organisation will allow you to blend different capabilities in a way which will enable you to excel at the tasks that comprise your competitive posture.
This correct design arises from understanding how the various capabilities that comprise the customer value you compete on work together in delivering that value. There will be a very clear interdependency, sequencing and hierarchy of capabilities.
Organisational Design
The way you design your business will have a significant impact on the culture that will thrive within that design. Culture is determined by leadership, but it is also the subtle – and sometimes not so subtle – systems and process that are put in place that shape that culture. And therefore, shape the level at which you can excel at various capabilities.
The big broad design areas that significantly mould the culture within your business are:
- The goals you set.
- The way the activities that comprise your business are structured.
- The basis and manner in which decisions are made and the actual decision.
- The guiding principles that exist within a business.
- How success is measured.
- The nature and granting of rewards.
In crafting the perfect design for your business there are two design aspects that you must consider:
- Functionality: firstly, you must create a ‘clear articulated image of how your business needs to function to outcompete everyone else in your chosen market’. This image must be so welded in everyone’s mind that they know exactly where their activities fit and how they support the delivery of value and achievement of the competitive posture.
- Alignment: Secondly, you will need to review all the moving parts ‘to ensure that every process, action, measurement, reward and decision is aligned and focused on the right outcome.’
Draw a picture of how the various activities in your business work together to support your competitive posture and the value you intend to deliver to your customer. In creating this image, you will begin to understand what value you are really competing on and how it is created and delivered through your various capabilities. And you will quickly recognise the ‘one-thing’ at which you must truly excel and the culture that will support it.
All the other supporting capabilities can then fall into place in underpinning that capability and value and be allowed to develop their individual cultures of excellence but all of which have one role, to underpin the ‘one thing’.
And it all starts with recognising the ‘one-thing’ around which you must excel to compete effectively and then designing an organisation to deliver on that promise.
An entirely new level of performance.
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All the best in the success of your business,
Richard Shrapnel
