Monday, June 8, 2009

How to keep your business healthy.

The Chinese say, “The beginning of wisdom is calling things by their correct names.” When focusing on a firm’s purpose, remember that customers don’t want drills; they want holes. Making money isn’t a reason for being in business; rather, it’s a condition for staying in business. Disney’s stated purpose, “to make people happy,” is about reassurance, not theme parks. For the $$ people pay to get into Disneyland, they want experiences that will make them feel good, that will make them hopeful that all will be right with the world. The Auto Club isn’t in the business of running garages even though its employees spend a lot of time dispatching tow trucks for cars with breakdowns. Its core purpose is giving people peace of mind.

Successful companies frame their identity around their core purpose rather than in terms of their products or services. What they stand for is more important and more permanent than what they sell. For example, Motorola initially grew and prospered because it based its identity on “applying technology for the benefit of the public.” It focused its energies not just on what it currently did (making televisions), but on what it could become in the future as well.

As previous posts have illustrated, leading edge companies today are adopting organizations and configurations that few people would have imagined possible ten years ago. Many of these novel arrangements have demonstrated their effectiveness by delivering world-class performance. Behind each of these business breakthroughs is a leadership team that was willing to stretch, improvise and create a supportive atmosphere that integrated beliefs and goals, culture and strategy, and performance and rewards.

In a fast changing world, there’s no permanent “right” way to be organized. In creating organizations for the future, rather than trying to sell people on the answers, it’s more effective to engage them in an investigation where choices about relationships, structures and policies can emerge from a joint search. Involving people directly in discussions about the future is very important because resistance mostly comes when people aren’t able to see themselves in the new state. By taking part in conversations about shaping the future, people get to hear the same things at the same time and can contribute to shaping the outcomes.

Yes, today's world is complicated, fast-moving, uncertain, and unforgiving. As an old man in a pub in Ireland once told me, “If you’re not confused, you don’t know what’s going on.” In surfing terms, if you’re not making waves, you’re probably not kicking hard enough! “Companies don’t change incrementally. They change in quantum lumps," according to Larry Bossidy. "If you shoot for anything less, you don’t get any change. So aim big. Even if you fall short, you’ll still make a big difference.”

An alliance of partners provides more sources of field intelligence to spot changes in the marketplace. Having partners from different industry backgrounds and corporate cultures provides a diversity of perspectives and ideas for responding to new situations. Part of the dilemma in getting managers and employees excited about change is that, over time, most businesses don’t noticeably change for the worse; they simply fail to change for the better. You need continuous improvement and periodic reinvention to stay healthy.

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