#6 I’ll Bet This Is Missing in Your Business Strategy
A true story: At a very well known manufacturer, there was a line worker in one of the company’s plants. The job, as explained to her, was to install a specific part as part of the assembly of a larger component. She had no idea what the part she installed did or what the component she contributed to would ultimately become.
One day when visiting, someone asked her how it felt to build parts for our military’s helicopters. She was stunned. She had no idea. Suddenly, coming to work felt a whole lot different. She understood that the company was there to design and make the absolute best quality components needed to make a helicopter perform in combat. It felt important. She looked at her job with pride, not boredom. She came to work with the attitude that every piece she installed had to be exactly right. If she saw something wrong, she did whatever it took to make it right.
Why doesn’t this company make sure she knows why the company exists?
This is a huge financial question. They have everything to lose if their components are flawed.
Many research studies* have found that between 60% of employees on the low side, and up to 85% on the high side, do not understand why the company in which they work exists (beyond making money), where the company is trying to go and why, and why it believes it can get there. This is despite the fact that 60% of employees have just experienced big changes in their company, and another 28% anticipate big change.
People are hard-wired to solve problems. We crave knowing why. Our brains are built that way. The more important the problem is perceived to be, and the more it creates emotional attraction to solving it, the more engaged and committed people get. The more clear and committed employees are, the better company’s perform. (see the statistics below)
Why don’t companies get people to understand and support why they exist?
Lack of compelling clarity. A CEO of a Fortune 500 food company once rolled out why the company exists: To be the best food company in the world. Employees immediately asked, “What does this mean? How will we know when we have achieved this?” The response, “We’ll know it when we see it.” The employee’s reaction, of course, was to dutifully hang the wall plaque and promptly talk with each other about how stupid it was. This company was acquired a short time later.
The CEO and the President of a very large financial services company formed from a merger, sat down with over 100 key leaders to articulate the mission and vision for the company. Two and a half hours and seventeen pages later, no one in the room had a clue what they were talking about, nor could they repeat it to their employees. To say the least, trust in the leadership and commitment to the company did not improve that day.
Belief that it’s not important. Two owners of a mid-size services firm began to create a new strategic plan for growing the company. They flat out resisted creating a “mission” statement because their experience was a lot like those of the employees above. But they conceded to the facilitator working with them. When they rolled out the new strategy and a clear, compelling mission, the employee feedback? “The mission of the company is something we can really get behind, and critical to understanding the strategy.” The owners almost fell off their chair.
Confusing what and why. Simon Sinek describes Apple’s mission as “challenging the status quo and thinking differently in everything we do.”³ This is what customers would truly miss if Apple were suddenly to disappear off the face of the earth. As Steve Jobs summed it up, “Man … should be above systems and structures, not subordinate to them.”⁴ This is why Apple exists. This is the driving foundation of their strategy. It is what they do better than anyone else. Apple’s employees believe this totally. Apples customers believe this totally. Strategic glue.
Contrast this with the Asus mission statement: “As a major player in the IT industry, ASUS’ corporate mission is to provide innovative IT solutions that empower people and businesses to reach their full potential. ASUS’ philosophy behind product development—which is to accomplish the fundamentals well first before moving forward—has resulted in a dependable backbone of computer components … such as motherboards, graphics cards, and optical storage devices.⁴ It describes their products and services… what Asus does. There is nothing compelling in which to engage and believe.
Assuming everyone knows. What is clear to the CEO and leaders often goes unsaid, or it’s assumed that once said, everybody got the message, understood it, and remembers it. Or it just gets lost in the crush of to-do lists that are way too long. Sound familiar. Remember, it’s likely that seven out of every ten employees don’t know.
To build a compelling why, try completing these statements:
- If our customers believe _____________________, then we are the right company for them.
- If our employees believe ____________________(how we make a difference), then they are probably the right employees for us.
- If we were to disappear tomorrow, our customers would not find another company that believes _______________________ , which is exceedingly important to them.
- Define, in this order:
- What services/products you offer.
- How the capabilities you have allow you to offer services/products better than any competitor. The most common are customer knowledge, proprietary technology or process, market knowledge, marketing and sales capability, control of a scarce resource, control of distribution (location, channel, method), production capability (lowest cost, capacity). One capability is the primary driver of your difference.
- Why customers want the difference you offer compared to competitors. Use the “5 whys” technique.
Some Performance Statistics
Engaged organizations grew profits as much as three times faster than their competitors. They report that highly engaged organizations have the potential to reduce staff turnover by 87% and improve performance by 20%.⁵
Across all companies, 49% of employees are not engaged plus another 18% are actively disengaged (67% total). Companies with world class engagement average 26% not engaged and only 7% actively disengaged (33% total).⁶
Between 1988 and 1998, seven out of eight companies in a global sample of 1,854 large corporations failed to achieve profitable growth. 90% of these companies had detailed strategic plans. 95% of employees in these companies were unaware, or did not understand, its strategy.⁷
Sources:
* http://www.forbes.com/sites/johnkotter/2013/07/09/heres-why-ceo-strategies-fall-on-deaf-ears/
* http://hbr.org/2005/10/the-office-of-strategy-management/ar/1
* http://www.businessweek.com/managing/content/mar2010/ca2010035_940515.htm
¹ http://www.forbes.com/sites/johnkotter/2013/07/09/heres-why-ceo-strategies-fall-on-deaf-ears/
² http://www.businessweek.com/managing/content/mar2010/ca2010035_940515.htm
³ http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html
⁴ http://www.businessinsider.com/apples-new-mission-statement-2013-8#ixzz2gZmSsbeJ
⁶ http://www.gallup.com/strategicconsulting/121535/Employee-Engagement-Overview-Brochure.aspx
⁷ http://hbr.org/2005/10/the-office-of-strategy-management/ar/1