Better. Faster. Cheaper: The Evolution of Competitiveness

I've been getting ready for a webinar on how to design a winning strategy, which meant some research to emphasize the point that strategy isn't dead or even on life support. It's just that for some, the last decade meant getting real big (and rich) real fast; and strategy seemed so yesterday. Who had the time? Maybe if those responsible for two bubbles in the last ten years had taken time to figure out how to really create wealth and not play shell games, the global economy wouldn't be in a shambles.

When I first started in strategy development, it was called "corporate planning" and while it was valuable for decision-makers, it also had such a long cycle that the plan was out of date before it was bound (yes, we had nice binders). So, the planning part had to go away but in the process, the real substance of strategy got lost for a while.

I put my research into a timeline (see below) and it was impossible to lose sight of the enormous changes in the business climate since WWII. During each major cycle, lasting about twenty years, companies adapted to the forces shaping the economy and the climate for business. Each cycle was created by unique circumstances and the successful companies developed new strategy as well as tools and techniques that not only ensured survival but in many cases, created a unique advantage and wealth. Businesses were getting Better. Faster. Cheaper.

As the business climate entered a new cycle, what was a competitive advantage or a winning strategy had become at best, the cost of doing business and at worst, a commodity.

As we enter the 21st century, we've wrung the efficiencies from process reengineering; we've de-layered and downsized people; off-shored jobs and invested in the same technology everyone else has. Now what? Where is growth coming from?

I think companies will set themselves apart by living up to their Mission (Purpose) and by standing up for their Values. Their real competitive advantages will be people, even though the traditional workforce may not exist. Ideas will be the new currency and innovation the new capital. Even economists are using tools called "Behavioral Economics" to explain market forces instead of relying on traditional financial tools. Companies that develop strategies for this new cycle before anyone else will be Better. Faster. Cheaper. Then, I had an epiphany: this is what the Engagement Thing is all about. It's not a program or slogan or campaign. It's about design: integrating elements that are unique to you and creating a company that Engages. This could be your winning strategy for 21st century growth and business results.

Or, if you think it won't happen, sit back and watch what all of the burned out employees, self-starters, young entrepreneurs and Boomers looking for an encore career do with Engagement.

Is your business ready for this new cycle? How are you going to be Better.Faster.Cheaper. Is your company Engaging?

Values Matter: Is Your Compass Pointing to True North?

I read an interview the other day with the CEO of a major retailer who talked extensively about the impact of the company's values, called Foundation Principles, on how the company is run. I consult with clients on strategy, so I'm interested in companies that 1) have actually thought about their Values; 2) have articulated them; and 3) lead by them. Values can be the compass that guides business decisions, large and small and in my view are necessary precursors of a well designed strategy.

There are seven Foundation Principles according to the web site and each one is articulated in detail. It is interesting that the CEO blogs on the site, so at some level, he models the Leadership=Communication Principle. Job postings on Careerbuilder.com described the company history and its Principles, a departure from the usual list of job requirements. That seemed to follow the 1=3 Principle whereby one great hire is better than 3 good ones. The posting would attract those who feel a fit with the culture.

There are a lot of leaders who truly believe that their companies are run according to established values so I decided to do some research to find out if employee and customer comments mirror the Principles. Customer comments and reviews that I found were full of high praise and good reviews so the Principles of Creating Mutually Beneficial Relationships and an "Air of Excitement" seemed to be part of the customer experience. Then I looked for employee feedback and found quite a few recent ones that unfortunately were not all positive. On a 5-point scale, employees rated the company a 3.1 and gave the CEO a 47% approval rating. Why the disconnect with the other data?

Extreme views generally get posted but as there were as many 5's as 2's, the scores were not negatively skewed. Not one negative comment was about pay. Many mentioned a new scheduling system; others talked about their manager or losing a benefit or lack of a career path. They talked about how things "used to be". It's easy to dismiss disgruntled employees' rants except that sometimes, they are leading indicators of something amiss internally. Unhappy employees today; unhappy customers next week.

The funny thing about values is that when you talk about them, institutionalize them and use them as key differentiators, people tend to take them seriously. Especially employees and customers. They think you'll really do what you say. This company's values don't need to change. That's the point of values: they are enduring. They guide and are the foundation of culture, strategy and engagement. They are a bulwark against lapses of judgment. A couple of thoughts:

• Listen to your employees. Let them talk and be involved. If they are involved in a dialogue internally, it's less likely they will be ranting externally.
• Walk the talk. At all levels. Middle managers are accountable, too.
• Clear, credible communication. Communicate the tough decisions in a way that employees understand the "why".
• When your employees describe your values as "Kool-Aid", it's time to take a long look at your culture. It could be broken and that is hard to fix on the fly.

Is your company built on a foundation of values? Can your customers sense them in their interactions with your employees? Do your employees believe that your values are more than a plaque on a wall?

Too Loyal to Fail: 4 Ways to Inspire Customers

Ray's Candy Store stands on the corner of Avenue A and Seventh Street in New York City. It's an all night slice of life on the east side of Greenwich Village that for the past 37 years has delivered all kinds of food 24/7 -- essential if you've ever lived in Manhattan.

For the past few weeks, customers have been helping out at the store, running deliveries and staging two fund-raisers to help the owner, Ray Alvarez, pay overdue bills. Other customers are helping to sort out an insurance issue by providing the labor to install a necessary piece of equipment so he can continue to provide his Belgian fries, a staple of his operation.

Ray Alvarez has built up a huge store of social capital in his neighborhood. At a time when some businesses are "too big to fail", others struggle to survive. Businesses of all sizes should stake stock of their own stores of social capital if they are going to enjoy the kind of customer loyalty today that will fuel growth. Ray Alvarez's tale holds lessons for all of us who run a business, no matter what size it is.

Know Your Customers (And Let Them Know You): Nothing makes us buy more and tell people about it than companies who make us feel special. When people feel a business knows them, it creates an important emotional connection. Customers buy from companies they've researched (so feel they know), have heard about or have experienced. How are you connecting with customers? Are they part of a larger community you've created for them? Are you using social media to be part of a networked customer base? It's much more than slotting buyers into marketing segments.

Give Customers an Experience They Can't Get Anywhere Else: What experience do your customers expect from you? Does your culture support an experience your customers deserve? Ray's delivers any time of the day or night and has created an oasis of old New York in a neighborhood taken over by expensive wine bars and chain coffee shops.

Customers' Memories Are Long; Don't Forget It! The adults who now are rallying to preserve Ray's Candy Store were the children and teenagers who remembered getting a break from the owner when they didn't have the money to pay for their orders. What memories of your company do you create for your customers?

Don't Squander Your Social Capital: Over the years, Ray has employed people from the neighborhood and they've stayed for decades. His customers describe his store as "an icon of our childhood" and think of him as a friend. Even Ray's landlord, who could have attracted another trendy retail outlet to his building, is working with his tenant to ensure that the store remains part of the fabric of the neighborhood.

Social capital is a currency that is easily devalued by the memory of poor experiences and a sense of buying from a company that acts too big to care.

How are you creating memories, networks and connections for your customers? Do you really know them? Do they really know you?

The Wisdom of Strategy

In his Wisdom Manifesto, Umair Haque shreds the idea that strategy development is anything other than a wallet grabbing scam for consultants. I'm trying not to be hurt by this sentiment, but it's hard. The author suggests that strategy be replaced by organizational "wisdom" and goes on to offer some rather pithy contrasts between the two concepts. My question is: why is it either/or? Why can't strategy design and wisdom co-exist? I don't believe they have to be mutually exclusive. In fact, where would strategy be without wisdom and vice versa?



Let's start with some definitions to establish whether strategy and wisdom are exclusive. Wisdom is the ability to discern or judge what is true, right or lasting; insight. Strategy is a plan of action designed to achieve a particular goal. Logic dictates that applying wisdom to a business opportunity is absolutely correct. An example of strategy without wisdom is the Dot Com bubble, when a sock puppet could appear on television to persuade you that buying pet food over the Internet instead of the grocery store was an idea whose time had come (RIP, Sock Puppet).



Umair Haque suggests that wisdom ignites, energizes and channels. Maybe, but to what end? As Walter Kiechel, author of The Lords of Strategy suggested recently in a Harvard Business Review interview, "If you don't think strategy is important, look at what happened to GM and Chrysler when they forgot about their customers and how to meet their needs." And then there's Toyota, who seemingly abandoned a 60-year strategy that frankly had been working well, and pursued a growth-at-all-costs strategy (and what a cost) without bringing its considerable wisdom to the opportunity. Strategy without wisdom is not confined to the auto industry, sadly.



Strategy allows businesses to think about their people, operations, customers and opportunities in an integrated way. It doesn't have to be painful or drawn out or rely totally on numbers. As Walter Kiechel suggested, a new way of thinking about strategy design today is bringing together people and analytics in a systematic way to be more granular and to become adaptive.



A process I've used for twenty years, adapted over time because of shifts like globalization and prcess engineering and the like, strongly relies on organizational wisdom.

• Values: know your Purpose and what you are about. In a crunch, do you stand by your Values or jettison them?



• Know where you are now: your competitive environment, your market(s), competitive advantages, customer base and internal resources including debt structure and access to financial capital.



• Frame the opportunity(ies) that are present. Assess the risks to your existing environment that each opportunity presents and the rewards that could accrue.



• Close the gaps so that your existing business is not strained beyond it capacity to absorb the inevitable change that new opportunties bring with them.



• Develop scenarios ("What if...") Changes in strategic direction never happen in a vacuum. Assumptions should be documented and become the source of a Plan B, Plan C, etc. Scenarios allow swift course correction when necessary.



• Use action plans to execute the strategy and metrics/scorecards to measure the reality against expected results.



• Keep on keeping on. Strategy design should be on the agenda of every Executive Committee and Board of Directors meeting. This is not a once a year project.

Does your business engage in systematic thinking about your future? Do you apply organizational wisdom or fly by the seat of your pants? Or, do you think the environment is too complex to design a long term strategy?

Skies Are Friendlier When People Are Engaged

I read a good article the other day by Mila D'Antonio called The Strategy That Fuels Customer Engagement. The article outlined so clearly how a good company can stumble and recover with a laser-like focus on the five key areas of any business: Strategy, Leadership, Culture and Employee and Customer Engagement. And, what JetBlue discovered along the way has added to its understanding of the direct and quantifiable impact of these elements on business results.

When a company blunders, as JetBlue did on Valentine's Day 2007 at JFK Airport in New York, when thousands of passengers were stranded for hours aboard planes, one course of action that has become popular is to not respond to the incident at all or respond only if pressed and, if at all possible, pass the blame to someone else. Instead, JetBlue took responsibility and created its Passenger Bills of Rights. Its founder and CEO paid the ultimate price with his job. But, dig a little deeper, as the article outlined, and you'll discover that JetBlue took a systematic view of the problems and, rather than engage in a short-term PR exercise, overhauled the way employees and customers viewed the company, for the long-term.


JetBlue's strategy is to differentiate itself through a customer-and employee-centric culture. Leadership would not tolerate any declines in employee or customer perceptions of the airline as a good place to work or a good flying experience. The changes started with a plan for improving employee engagement results as the thinking was, if the company improved those metrics, customers would receive great experiences (what we call the Spillover Effect).


What the JetBlue executives learned was:

• Engagement is highly correlated with the liklihood that an employee would recommend JetBlue as a good place to work.



• JetBlue's revenues are closely tied to engagement so small improvements in key driver metrics generate big results.



• Key drivers of crewmember engagement are pride/personal commitment, brand, crew leaders, executive leadership, team/people and work environment.



• These six dimensions of engagement are now mapped to revenue growth and shareholder value.

• Listening to employees in terms of what they like about JetBlue and their jobs has resulted in many cost-saving ideas and efficiencies.



• Data gathering is only part of the story. Real insight comes from taking the right qualitative and quantitative approach, including linking behaviors and outcomes to hard results like shareholder value and growth targets.



• Designing an engaged company is not an event or a rah-rah program but a systematic approach to questioning the status quo, learning and adapting in order to execute a successful strategy.

Leaders make mistakes; it's how you recover from them that people remember. The core elements of the business are interdependent and should be viewed that way because they impact your results in a big way.

What drives engagement at JetBlue isn't necessarily what drives engagement in your organization. What are your engagement drivers?

What is This Engagement Thing?

For about a year, I've been receiving Google Alerts with tags that contain the word 'engagement'. Sometimes the articles or blogs have useful information; sometimes they are just sales pitches.

Nevertheless, the concept of engagement in the workplace is fascinating because, for me, it's a "Duh" kind of idea. Isn't it common sense that when people are engaged in what they do, they perform better; they are more attached to the organization and they contribute at a higher level than less engaged people? Ah, but common sense isn't common practice.

We are complex creatures, we humans. We tend to be engaged by an idea or a cause that is meaningful, maybe bigger than ourselves and which enriches our lives. Unfortuately, in a lot of workplaces, work has been reduced to activities and tasks. Senior mangement may not even be recognized (see Undercover Boss) or is the sender of an occasional email. Financial performance is not shared or discussed widely and the company's Mission is engraved on a plaque in the lobby. Maybe it's time to connect the dots and see that for an employee to be engaged, the organization must be engaging. It's easier to see how the concept works in a model:

Vision and Mission: They are foundational elements of an engaged company. People know what you stand for and why you exist. Decisions are based on these elements and behaviors are driven by them.

Strategy: Engagement starts here. People see the "big picture" and hear about organizational strategy because it's part of everyday activity. They are part of something bigger than the jobs they are paid for and can see how their work fits in.

Leadership: Listens actively and communicates frequently. Leaders are trustworthy and believe evangelically about the potential of the company, the people who work there and the customers they serve.

Culture: The way things really get done in an organization; the stories and the rituals; the practices and the collective tone. If Strategy is the Head of the organizational body, Culture should be the Heart. Culture can deliver or derail any leader's strategy if it isn't designed to support it. Cultivating an engaging environment is a key priority.

Employees: The lifeblood, the true asset of every company. Most of us WANT to be engaged but our companies often don't give us sufficient reason. I agree with Dan Pink in his new book, Drive. People are motivated by Purpose, Autonomy and Mastery, assuming basic needs are met (Thank you, Abraham Maslow).

Customers: The reason we get up every day and go to work, remember? As Peter Drucker said so often, management is about knowing what your Purpose is, who your customers are and how you're going to make a profit. Designing an engaging customer experience is an Outside-In job.

So, engagement is not a slogan, a program or a one-time initiative. Connecting the organizational dots is what engagement is all about. What do you think?

Reviving Our Resourcefulness

In a presentation I wrote late last year, I suggested that 2009 was the year of resilience. Companies that weathered the economic storm were flexible, prepared and displayed a spirit that carried them and their employees and customers over the waves that were crashing around them. Maybe we were battered but we were standing.

For 2010, I suggest that we and our businesses build on our resilience and harness our resourcefulness to be successful. In my blog a couple of weeks ago, I predicted that companies would be Bold or Bewildered this year. Bold companies will be resourceful. Americans and the businesses we've built have demonstrated for the past 234 years that we can be inventive and practical; optimistic and realistic. In 2009, we made do with less and hoped for the best. In 2010, we need to make better with the same and achieve greater results.

In a new book called Identity Economics, economists George Akerlof and Rachel Kranton suggest that an economy works well when people personally identify with it, so that their self-esteem is tied up with its activities. The military has known this and employed it with its mission-critical message. Few soldiers enlist for the pay, so why are they willing to sacrifice their lives? It's because they believe in the cause, in themselves and in one another.

While few jobs can match the cause of defending one's country, it's not a stretch to suggest that our businesses cannot be resourceful with a disinterested and insecure workforce. It's time to restore that faith in what we all are capable of doing in our organizations. Here are a few thoughts:

• Have a Mission that clearly articulates your Purpose. Leaders have to carry that banner wherever they are. They talk about it. They write about it. They act on it. Do it often enough and employees will believe it, your customers will feel it and your competition will worry about it.

• High Aspirations, Modest Resources: A phrase coined by Sir Richard Branson when asked how Virgin Airways took on British Airways and won the transatlantic air war. Keeping vision and strategy clearly in mind; conveying their importance and making decisions based on both creates an authenticity that people recognize and like. Branson said that his winning secret was creating a "we're all in this together" mindset by involving everyone who worked for him and their customers in the process of defining a fun, cost-effective and different flying experience.

• Make Better With the Same: Notice I didn't say do more with less. What have you got in your company that hasn't been used, deployed, exploited or improved in a long time? Employees' ideas? Loyal customers? Old procedures? Half-used technology? This is the time to harness the brainpower you have, the revenue you've acquired, the technology you've bought and the processes you've grown and take a critical look at how you can get more out of what you have.

What are your companies doing to make 2010 better than 2009? Are you hunkering down or rediscovering how resourceful you are?